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Exhibit 10.14
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made and
entered into as of August 15, 1998 ("AGREEMENT"), by and among IMPERIAL BANK
("IMPERIAL"), as Collateral Agent and a Bank, the BANKS, and TEGAL CORPORATION,
a Delaware corporation ("BORROWER"). This Agreement amends, restates and
supersedes in its entirety the Prior Loan Agreement (as hereinafter defined).
RECITALS
A. Borrower, Imperial and Sanwa Bank California ("SANWA") entered
into a certain Loan and Security Agreement dated as of August 15, 1997 (the
"PRIOR LOAN AGREEMENT"), pursuant to which Imperial and Sanwa agreed to extend
and make revolving loans available to Borrower thereunder.
B. Borrower and Imperial desire to amend and restate the Prior Loan
Agreement in its entirety to, among other things, remove Sanwa as a Bank
thereunder, reduce the amount of the Committed Revolving Line and to modify
certain covenants and reporting requirements of the Borrower, all as more fully
set forth herein. There are currently no Advances outstanding under the
Committed Revolving Line.
C. Imperial has agreed to continue to make and maintain the
Committed Revolving Line as described in this Agreement, but only upon the terms
and subject to the conditions hereinafter set forth and in reliance on the
representations and warranties set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants hereinafter set forth, and intending to be legally bound, the
parties hereby agree as follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"ACCOUNTS" means all presently existing and hereafter arising accounts,
contract rights, and all other forms of obligations owing to Borrower arising
out of the sale or lease of goods (including, without limitation, the licensing
of software and other technology) or the rendering of services by Borrower,
whether or not earned by performance, and any and all credit insurance,
guaranties, and other security therefor, as well as all merchandise returned to
or reclaimed by Borrower and Borrower's Books relating to any of the foregoing.
"ACQUISITION" means any transaction or series of transactions, by which
Borrower or any of its Subsidiaries directly or indirectly acquires all or
substantially all of any ongoing business, whether through the purchase of stock
or assets for cash, a cash merger, or consolidation.
"ADVANCE" or "ADVANCES" means an advance or advances under the Committed
Revolving Line.
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"AFFILIATE" means, with respect to any Person, any Person that owns or
controls directly or indirectly such Person, any Person that controls or is
controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, and partners.
"BANK EXPENSES" means all reasonable costs or expenses (including
reasonable attorneys' fees and expenses) incurred in connection with the
preparation, negotiation, administration, amendment, and enforcement of the Loan
Documents; and each Bank's reasonable attorneys' fees and expenses incurred in
enforcing or defending the Loan Documents, whether or not suit is brought.
"BANK" or "BANKS" means Imperial and/or the banks, financial
institutions and other institutional lenders which have executed signature pages
to this Agreement and such other assignee as shall hereafter execute and deliver
an Assignment and Acceptance with respect to all or any portion of the Committed
Revolving Line and the Advances made and maintained pursuant to the Committed
Revolving Line, in each case pursuant to and in accordance with SECTION 13.4(B),
or otherwise become a party to this Agreement.
"BORROWER'S BOOKS" means all of Borrower's books and records including
ledgers; records concerning Borrower's assets or liabilities, the Collateral,
business operations or financial condition; and all computer programs, or tape
files, and the equipment containing such information.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, or other
day on which banks in the State of California are authorized or required to
close.
"CLOSING DATE" means the date of this Agreement.
"CODE" means the California Uniform Commercial Code.
"COLLATERAL" means the property described on EXHIBIT A attached hereto.
"COLLATERAL AGENT" means Imperial or such entity as may succeed to such
position.
"COMMITTED REVOLVING LINE" means Twelve Million Five Hundred Thousand
Dollars ($12,500,000.00).
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to (i)
any indebtedness, lease, dividend, letter of credit or other obligation of
another, including, without limitation, any such obligation directly or
indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by
that Person, or in respect of which that Person is otherwise directly or
indirectly liable; (ii) any obligations with respect to undrawn letters of
credit issued for the account of that Person; and (iii) all obligations arising
under any interest rate, currency or commodity swap agreement, interest rate cap
agreement, interest rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; provided, however, that the term "Contingent
Obligation" shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith; provided, however, that such
amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement.
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"CURRENT LIABILITIES" means, as of any applicable date, all amounts that
should, in accordance with GAAP, be included as current liabilities on the
consolidated balance sheet of Borrower and its Subsidiaries, as at such date,
plus, to the extent not already included therein, all outstanding Advances made
under this Agreement, but including all other Indebtedness that is payable upon
demand or within one year from the date of determination thereof unless such
Indebtedness is renewable or extendable at the option of Borrower or any
Subsidiary to a date more than one year from the date of determination, but
excluding Subordinated Debt.
"DAILY BALANCE" means the amount of the Obligations owed at the end of a
given day.
"EQUIPMENT" means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 8.
"FEDERAL FUNDS RATE" means, for any period, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such day under the caption "Federal Funds Effective Rate".
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System and any successor thereto.
"GAAP" means generally accepted accounting principles as in effect from
time to time.
"IP SECURITY AGREEMENT" means that certain Collateral Assignment, Patent
Mortgage and Security Agreement dated of even date herewith, entered into by and
between Borrower and Imperial.
"INDEBTEDNESS" means (a) all indebtedness for borrowed money or the
deferred purchase price of property or services (other than trade payables not
past due incurred in the ordinary course of business), including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.
"INSOLVENCY PROCEEDING" means any proceeding commenced by or against any
person or entity under any provision of the United States Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency law, including assignments
for the benefit of creditors, formal or informal moratoria, compositions,
extension generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INVENTORY" means all present and future inventory in which Borrower or
its Subsidiaries has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service,
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of every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and Borrower's Books relating
to any of the foregoing.
"INVESTMENT" means any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"LIEN" means any mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Note or any
other note or notes executed by Borrower in favor of any Bank in connection with
this Agreement, the IP Security Agreement and any other agreement or document
delivered by Borrower or entered into between Borrower and Imperial or any other
Bank in connection with this Agreement, in each case as originally executed or
as the same may from time to time be modified, amended, supplemented or
restated.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business operations or condition (financial or otherwise) of Borrower and its
Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents.
"NEGOTIABLE COLLATERAL" means all of Borrower's present and future
letters of credit of which it is a beneficiary, notes, drafts, instruments,
securities, documents of title, and chattel paper, and Borrower's Books relating
to any of the foregoing.
"NOTE" means that certain Note dated of even date herewith in the
principal amount of Twelve Million Five Hundred Thousand Dollars
($12,500,000.00), made by Borrower and payable to the order of Imperial.
"OBLIGATIONS" means all debt, principal, interest, Bank Expenses and
other amounts or obligations owed to any Bank by Borrower pursuant to this
Agreement or any other agreement, whether absolute or contingent, due or to
become due, now existing or hereafter arising, including any interest that
accrues after the commencement of an Insolvency Proceeding and including any
debt, liability, or obligation owing from Borrower to others that any Bank may
have obtained by assignment or otherwise.
"PAYMENT DATE" means the fifteenth (15th) calendar day of each month.
"PERCENTAGE SHARE" means, as to each Bank, the percentage calculated in
accordance with SECTION 13.6 hereof.
"PERIODIC PAYMENTS" means all installments or similar recurring payments
that Borrower may now or hereafter become obligated to pay to the Banks pursuant
to the terms and provisions of any instrument, or agreement now or hereafter in
existence between Borrower and the Banks.
"PERMITTED INDEBTEDNESS" means:
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(a) Indebtedness of Borrower in favor of the Banks arising
under this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed
in the Schedule;
(c) Indebtedness in Japan under the note discount facility
as disclosed in the Schedule;
(d) Subordinated Debt;
(e) Letters of credit;
(f) Indebtedness incurred in connection with mortgage
financing and purchase money security interests as defined in Section 9-107 of
the UCC;
(g) Guaranties of Indebtedness or other obligations
permitted hereunder;
(h) Obligations related to stock options, provided that such
stock options have been approved by Borrower's Board of Directors;
(i) Extensions, renewals or refinancings of Indebtedness
permitted under this Agreement, other than clause (d) above; and
(j) Other Indebtedness in the aggregate amount not exceeding
One Million Five Hundred Thousand Dollars ($1,500,000.00).
"PERMITTED INVESTMENTS" means:
(a) Investments existing on the Closing Date disclosed in
the Schedule;
(b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having one of the two highest ratings obtainable
from either Standard & Poor's Corporation or Xxxxx'x Investors Service, Inc.,
(iii) any Investments permitted by Borrower's investment policy, as amended from
time to time, provided that such investment policy (and any amendment thereto)
has been approved in writing by the Banks, which approval shall not be
unreasonably withheld, and (iv) certificates of deposit maturing no more than
one (1) year from the date of investment therein issued by any Bank; and
(c) Investments constituting Acquisitions permitted under
SECTION 7.3 hereof.
"PERMITTED LIENS" means the following:
(a) Any Liens existing on the Closing Date and disclosed in
the Schedule or arising under this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over any of
Collateral Agent's or any Bank's security interests;
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(c) Liens (i) upon or in any equipment acquired or held by
Borrower or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time of
its acquisition, provided that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;
(d) Liens incurred for the purchase or improvement of real
property;
(e) Liens for taxes, assessments or governmental charges or
claims the payment of which is not at the time required hereunder;
(f) Statutory Liens of landlords and depository institutions
and Liens of carriers, warehousemen, mechanics, materialmen and other Liens
imposed by law incurred in the ordinary course of business for sums not
delinquent for a period of more than sixty (60) days or being contested in good
faith, provided, however, that Borrower shall have made such reserve or other
provision therefor as may be required by GAAP;
(g) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(h) Any attachment or judgment Lien, if the judgment it
secures shall, within sixty (60) days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall have been
discharged within sixty (60) days after the expiration of any such stay;
(i) Easements, rights-of-way, zoning and similar
restrictions and other encumbrances affecting real property which do not in any
case materially interfere with the ordinary conduct of the business of Borrower
or any of its Subsidiaries;
(j) Any interest or title of a lessor under any lease not
prohibited hereunder; and
(k) Liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (j) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase.
"PERSON" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.
"PRIME RATE" means the variable rate of interest, per annum, most
recently announced by Imperial, as its "prime rate," as applicable to the
Advances made hereunder by Imperial whether or not such announced rate is the
lowest rate available from Imperial.
"QUICK ASSETS" means, at any date as of which the amount thereof shall
be determined, the consolidated cash, cash-equivalents, accounts receivable and
investments of Borrower determined to be quick assets in accordance with GAAP.
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"RESPONSIBLE OFFICER" means each of the Chief Executive Officer, the
Chief Financial Officer and the Controller of Borrower.
"REVOLVING MATURITY DATE" means August 15, 1999.
"SCHEDULE" means the Schedule of Exceptions attached hereto as SCHEDULE
1.
"SUBORDINATED DEBT" means any debt incurred by Borrower that is
subordinated to the debt owing by Borrower to the Banks on terms reasonably
acceptable to the Banks (and identified as being such by Borrower and the
Banks), where the subordinated lender has executed a subordination agreement (in
a form provided by the Banks) in favor of the Banks.
"SUBSIDIARY" means any corporation or partnership in which (i) any
general partnership interest or (ii) more than 50% of the stock of which by the
terms thereof ordinary voting power to elect the Board of Directors, managers or
trustees of the entity shall, at the time as of which any determination is being
made, be owned by Borrower, either directly or through an Affiliate.
"TANGIBLE NET WORTH" means at any date as of which the amount thereof
shall be determined, (1) the consolidated total assets of Borrower and its
Subsidiaries minus, without duplication, the sum of any amounts attributable to
(i) goodwill, (ii) intangible items such as unamortized debt discount and
expense, patents, trade and service marks and names, copyrights and research and
development expenses except prepaid expenses, and (iii) all reserves not already
deducted from assets, minus (2) Total Liabilities.
"TOTAL LIABILITIES" means at any date as of which the amount thereof
shall be determined, all obligations that should, in accordance with GAAP be
classified as liabilities on the consolidated balance sheet of Borrower,
including in any event all Indebtedness, but specifically excluding Subordinated
Debt.
"YEAR 2000 COMPLIANT" means, in regard to Borrower or any Person, that
all software, hardware, firmware, equipment, goods or systems utilized by or
material to the business operations or financial condition of Borrower or such
Person, will properly perform date sensitive functions before, during and after
the year 2000.
"YEAR 2000 PROBLEM" means the risk that any computer applications used
by Borrower and its Subsidiaries may be unable to recognize and properly perform
date-sensitive functions involving certain dates prior to and any date on or
after December 31, 1999.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP and all calculations made
hereunder shall be made in accordance with GAAP. When used herein, the terms
"financial statements" shall include the notes and schedules thereto.
SECTION 2. LOAN AND TERMS OF PAYMENT.
2.1 ADVANCES. Subject to and upon the terms and conditions of this
Agreement, each Bank severally agrees to make its Percentage Share of each
Advance to Borrower in an aggregate amount not to exceed such Bank's Percentage
Share of the Committed Revolving Line. Subject to the terms and conditions of
this Agreement, amounts borrowed pursuant to this SECTION 2.1 may be repaid and
reborrowed at any time during the term of this Agreement.
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Whenever Borrower desires an Advance, Borrower will notify each
Bank by facsimile transmission or telephone no later than 11:00 a.m. Pacific
time, on the Business Day that the Advance is to be made. Each such notification
shall be promptly confirmed by a Loan Payment/Advance Telephone Request Form in
substantially the form of EXHIBIT B attached hereto ("ADVANCE FORM"). Each Bank
is authorized to make Advances under this Agreement, based upon instructions
received from a Responsible Officer. Each Bank shall be entitled to rely on any
telephonic notice given by a person who such Bank reasonably believes to be a
Responsible Officer, and Borrower shall indemnify and hold such Bank harmless
for any damages or loss suffered by such Bank as a result of such reliance. Such
Bank will credit the amount of Advances made under this SECTION 2.1 to
Borrower's deposit account held by Imperial or Collateral Agent not later than
3:00 p.m. Pacific time on the Business Day such Advance is to be made.
Borrower's Obligations under the Committed Revolving Line shall be evidenced by
this Agreement and by the Note, in the form attached hereto as EXHIBIT C.
The Committed Revolving Line shall terminate on the Revolving
Maturity Date, at which time all Advances under this SECTION 2.1 and other
amounts due under this Agreement (except as otherwise expressly specified
herein) shall be immediately due and payable.
(a) FOREIGN EXCHANGE USAGE AND SUBLIMIT. Subject to the
availability of the Committed Revolving Line and in reliance on the
representations and warranties of Borrower set forth herein, at any time and
from time to time from the date hereof through the Banking Day immediately prior
to the Revolving Maturity Date, Imperial shall arrange the purchase by Borrower
of foreign exchange futures contracts ("EXCHANGE CONTRACTS") as Borrower may
request, which request shall be made by delivering to Imperial a duly executed
exchange contract application on Imperial's standard form; provided, however,
that the maximum aggregate notional contract amount under all such Exchange
Contracts shall not at any time exceed $15,000,000.00 and provided, further,
that Imperial shall only advance up to ten percent (10.0%) of said maximum
aggregate notional contract amount under all such Exchange Contracts, the
amounts so advanced of which shall be deemed to constitute outstanding Advances
for the purpose of calculating availability under the Committed Revolving Line.
Unless Borrower shall have deposited with Imperial cash collateral in an amount
sufficient to cover all undrawn amounts under each such Exchange Contract and
Imperial shall have agreed in writing, no Exchange Contract shall have a due
date that is later than the Revolving Maturity Date. All Exchange Contracts
shall be in form and substance acceptable to Bank Imperial in its sole
discretion and shall be subject to the terms and conditions of Imperial's form
exchange contract application. Borrower will pay any standard issuance and other
fees that Imperial notifies Borrower will be charged for issuing and processing
Exchange Contracts for Borrower. After and during the continuance of an Event of
Default, Imperial may, in its sole and absolute discretion, terminate any or all
of the Exchange Contracts. Borrower agrees to indemnify and hold harmless
Imperial from and against all loss, costs and expense associated with any such
termination of any Exchange Contract.
2.2 INTEREST RATES, PAYMENTS, AND CALCULATIONS.
(a) INTEREST RATE. Except as set forth in SECTION 2.2(b),
any Advances of each Bank shall bear interest, on the average Daily Balance, at
a rate equal to the Prime Rate.
(b) LATE PAYMENT RATE. All Obligations which have not been
paid when due shall bear interest at a rate equal to two (2) percentage points
above the interest rate applicable immediately prior to the date such payment
was due.
(c) (1) PAYMENTS. Interest hereunder shall be due and
payable on the Payment Date of each month during the term hereof. Borrower
hereby authorizes Imperial or Collateral Agent to
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debit any accounts with Imperial or Collateral Agent, including, without
limitation, Account Number 00017057057 for payments of principal and interest
due on the Obligations and any other amounts owing by Borrower to the Banks.
Imperial or Collateral Agent will promptly notify Borrower of all debits which
Imperial or Collateral Agent makes against Borrower's accounts. Any such debits
against Borrower's accounts in no way shall be deemed a set-off. Any interest
not paid when due shall be compounded by becoming a part of the Obligations, and
such interest shall thereafter accrue interest at the rate then applicable
hereunder.
(ii) DISTRIBUTION OF PAYMENTS. All amounts received
by Imperial or Collateral Agent shall be allocated and paid to the Banks as
necessary to ensure a sharing of all amounts received by Imperial or Collateral
Agent as set forth in SECTION 13.6. Imperial or Collateral Agent shall
immediately distribute to each Bank, at such address as each Bank shall
designate, such Bank's interest in all repayments and prepayments of principal
and all payments of interest, loan fees, commitment fees and other fees,
expenses and costs received by Imperial or Collateral Agent on the same day and
in the same type of funds as payment was received. In the event Collateral Agent
does not distribute such payments on the same day received, such payment shall
accrue interest at the Federal Funds Rate, which shall be payable by Imperial or
Collateral Agent. Imperial or Collateral Agent shall indemnify and hold Borrower
harmless from any claim for overnight interest by any Bank under this SECTION
2.2(C)(II).
(d) COMPUTATION. In the event the Prime Rate is changed from
time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased effective as of 12:01 a.m. on the day the Prime Rate is
changed, by an amount equal to such change in the Prime Rate. All interest
chargeable under the Loan Documents shall be computed on the basis of a three
hundred sixty (360) day year for the actual number of days elapsed.
2.3 CREDITING PAYMENTS. Prior to the occurrence of an Event of
Default, each shall credit a wire transfer of funds, check, or other item of
payment to such deposit account held at such Bank or Obligation as Borrower
specifies. After the occurrence of an Event of Default, the receipt by a Bank of
any wire transfer of funds, check, or other item of payment shall be immediately
applied to conditionally reduce Obligations, but shall not be considered a
payment on account unless such payment is of immediately available federal funds
or unless and until such check or other item of payment is honored when
presented for payment. Notwithstanding anything to the contrary contained
herein, any wire transfer or payment received by a such Bank after 2:00 p.m.
Pacific time shall be deemed to have been received by a Bank as of the opening
of business on the immediately following Business Day. Whenever any payment to a
Bank under the Loan Documents would otherwise be due (except by reason of
acceleration) on a date that is not a Business Day, such payment shall instead
be due on the next Business Day, and additional fees or interest, as the case
may be, shall accrue and be payable for the period of such extension.
2.4 FEES. Borrower shall pay to the Banks the following:
(a) CLOSING FEE. A Closing Fee equal to Twenty-Five Thousand
Dollars ($25,000.00), which fee shall be payable to Imperial on the Closing Date
and shall be fully earned and non-refundable;
(b) FACILITY FEE. A Facility Fee equal to one-half of one
percent (0.50%) per annum of the average unused amount of the Committed
Revolving Line, which fee shall be due quarterly, beginning with the quarter
ending December 31, 1998, and payable in arrears to each Bank based upon such
Bank's Percentage Share of the Committed Revolving Line. Notwithstanding the
foregoing,
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Borrower shall also pay to Imperial on September 30, 1998, a
pro-rated Facility Fee covering the period from August 15, 1998 through
September 30, 1998;
(c) FINANCIAL EXAMINATION AND APPRAISAL FEES. Each Bank's
customary and reasonable fees and out-of-pocket expenses for such Bank's audits
of Borrower's Accounts, and for each appraisal of the Collateral and financial
analysis and examination of Borrower performed from time to time and, if an
Event of Default does not exist, at reasonable intervals by such Bank or its
agents; and
(d) BANK EXPENSES. Upon the date hereof, all Bank Expenses
incurred through the Closing Date, including reasonable attorneys' fees and
expenses, and, within thirty (30) days of demand, other Bank Expenses as they
become due from time to time hereunder.
2.5 ADDITIONAL COSTS. In case any law, regulation, treaty or
official directive or the interpretation or application thereof by any court or
any governmental authority charged with the administration thereof, in any such
case enacted or made effective after the date hereof, or the compliance with any
guideline or request of any central bank or other governmental authority
(whether or not having the force of law) made effective after the date hereof:
(a) subjects any Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by Borrower or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of such Bank imposed by the United States of America
or any political subdivision thereof);
(b) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against assets held
by, or deposits in or for the account of, or loans by, any Bank; or
(c) imposes upon any Bank any other condition with respect
to its performance under this Agreement, and the result of any of the foregoing
is to increase the cost to such Bank, reduce the income receivable by such Bank
or impose any expense upon such Bank with respect to any Advances, such Bank
shall notify Borrower thereof. Borrower agrees to pay to such Bank the amount of
such increase in cost, reduction in income or additional expense as and when
such cost, reduction or expense is incurred or determined, upon presentation by
such Bank of a statement of the amount and setting forth such Bank's calculation
thereof, all in reasonable detail, which statement shall be deemed true and
correct absent manifest error. No Bank shall be entitled to any compensation
pursuant to this SECTION 2.5 in respect of any such event (i) for any period of
time in excess of ninety (90) days prior to such notice or (ii) for any period
of time prior to such notice if such Bank shall not have given such notice
within ninety (90) days of the date on which such event shall have been enacted,
promulgated, adopted or issued in definitive or final form unless such event is
retroactive.
2.6 TERM. Except as otherwise set forth herein, this Agreement shall
become effective on the Closing Date and, subject to SECTION 13.7, shall
continue in full force and effect for a term ending on the Revolving Maturity
Date. Notwithstanding the foregoing, the Banks shall have the right to terminate
any obligation to make Advances under this Agreement immediately and without
notice upon the occurrence and during the continuance of an Event of Default.
Notwithstanding termination (but subject to SECTION 13.7), Collateral Agent and
the Banks shall retain their Lien on the Collateral which shall remain in effect
for so long as any Obligations are outstanding.
SECTION 3. CONDITIONS OF LOANS.
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3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of any
Bank to make the initial Advance is subject to the condition precedent that such
Bank shall have received, in form and substance satisfactory to such Bank, the
following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower with respect
to incumbency and resolutions authorizing the execution and delivery of this
Agreement;
(c) a certificate of the Secretary of State of Delaware and
California with respect to Borrower's standing (and foreign qualification) in
said states;
(d) financing statement amendments (Form UCC-2);
(e) insurance certificate;
(f) payment of the fees and Bank Expenses then due (to the
extent invoiced) specified in SECTION 2.4 hereof; and
(g) such other documents, and completion of such other
matters, as the Banks may reasonably request prior to the Closing Date.
3.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of any Bank
to make each Advance, including the initial Advance, is further subject to the
following conditions:
(a) receipt by each Bank of the Advance Form as provided in
SECTION 2.1; and
(b) the representations and warranties contained in SECTION
5 shall be true and correct in all material respects on and as of the date of
such Advance Form and on the effective date of each Advance as though made at
and as of each such date, provided, however, that those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date, and no Event of Default shall
have occurred and be continuing, or would result from such Advance, or with the
lapse of time or the giving of notice or both would constitute an Event of
Default. The making of each Advance shall be deemed to be a representation and
warranty by Borrower on the date of such Advance as to the accuracy of the facts
referred to in this SECTION 3.2(b).
SECTION 4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower grants and pledges to
Collateral Agent on behalf of the Banks a continuing security interest in all
presently existing and hereafter acquired or arising Collateral in order to
secure prompt repayment of any and all Obligations and in order to secure prompt
performance by Borrower of each of its covenants and duties under the Loan
Documents. Such security interest constitutes a valid, first priority security
interest in the presently existing Collateral, and will constitute a valid,
first priority security interest in any Collateral acquired after the date
hereof. From and after an Event of Default, Borrower acknowledges that the Banks
may place a "hold" on any Deposit Account pledged as Collateral to secure the
Obligations.
4.2 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Borrower shall
from time to time execute and deliver to Collateral Agent, at the request of any
Bank, all Negotiable Collateral, all
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financing statements and other documents that any Bank may reasonably request,
in form satisfactory to such Bank, to perfect and continue perfected such Bank's
security interests in the Collateral.
4.3 RIGHT TO INSPECT. Any Bank (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower's usual business hours, and, if an Event of Default
does not exist, at reasonable intervals, to inspect Borrower's Books and to make
copies thereof and to check, test, and appraise the Collateral in order to
verify Borrower's financial condition or the amount, condition of, or any other
matter relating to, the Collateral.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND QUALIFICATION. Borrower and each Subsidiary
is a corporation duly existing and in good standing under the laws of its state
of incorporation and qualified and licensed to do business in, and is in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be so qualified except where the failure to be so
qualified would not reasonably be expected to have a Material Adverse Effect.
5.2 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Certificate of Incorporation or Bylaws, nor
will they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound. Borrower is not in default
under any agreement to which it is a party or by which it is bound, which
default would reasonably be expected to have a Material Adverse Effect.
5.3 NO PRIOR ENCUMBRANCES. Borrower has good and indefeasible title
to the Collateral, free and clear of Liens, except for Permitted Liens.
5.4 MERCHANTABLE INVENTORY. All Inventory (net of reserves) is in
all material respects of good and marketable quality, free from all material
defects.
5.5 NAME; LOCATION OF CHIEF EXECUTIVE OFFICE. Except as disclosed in
the Schedule, Borrower has not conducted business under any name other than that
specified on the signature page hereof. The chief executive office of Borrower
is located at the address indicated in SECTION 10 hereof.
5.6 LITIGATION. Except as set forth in the Schedule, there are no
actions or proceedings pending by or against Borrower or any Subsidiary before
any court or administrative agency in which an adverse decision would reasonably
be expected to have a Material Adverse Effect or a material adverse effect on
Borrower's interest or any Bank's security interest in the Collateral. Borrower
does not have knowledge of any such pending or threatened actions or
proceedings.
5.7 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All
consolidated financial statements related to Borrower and any Subsidiary that
have been delivered by Borrower to the Banks fairly present in all material
respects Borrower's consolidated financial condition as of the date thereof and
Borrower's consolidated results of operations for the period then ended. There
has not been a change in the consolidated financial condition of Borrower since
the date of the most recent of such financial statements submitted to the Banks,
which in the reasonable determination of the Banks has a Material Adverse
Effect. Notwithstanding the foregoing, if Borrower suffers any losses as
described in SECTIONS 6.11 and/or 6.12 hereof, but remains in compliance with
said financial covenants, the Banks
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agree that such losses will not, in and of themselves, be considered to
constitute as having a Material Adverse Effect on Borrower's financial
condition.
5.8 SOLVENCY. Borrower is solvent and able to pay its debts
(including trade debts) as they mature.
5.9 REGULATORY COMPLIANCE. Borrower and each Subsidiary have met the
minimum funding requirements of ERISA with respect to any applicable employee
benefit plans subject to ERISA. No event has occurred resulting from Borrower's
failure to comply with ERISA that is reasonably likely to result in Borrower's
incurring any liability that would reasonably be expected to have a Material
Adverse Effect. Borrower is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940. Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations G, T and
U of the Board of Governors of the Federal Reserve System). Borrower has
complied with all applicable provisions of the Federal Fair Labor Standards Act
to the extent failure to comply would reasonably be expected to have a Material
Adverse Effect. Borrower has not violated any statutes, laws, ordinances or
rules applicable to it, violation of which would reasonably be expected to have
a Material Adverse Effect.
5.10 ENVIRONMENTAL CONDITION. None of Borrower's or any Subsidiary's
properties or assets has ever been used by Borrower or any Subsidiary or, to the
best of Borrower's knowledge, by previous owners or operators, in the disposal
of, or to produce, store, handle, treat, release, or transport, any hazardous
waste or hazardous substance other than in accordance with applicable law except
where failure to act in accordance with applicable law would not reasonably be
expected to have a Material Adverse Effect as determined by the Banks; to the
best of Borrower's knowledge, none of Borrower's properties or assets has ever
been designated or identified in any manner pursuant to any environmental
protection statute as a hazardous waste or hazardous substance disposal site, or
a candidate for closure pursuant to any environmental protection statute; no
lien arising under any environmental protection statute has attached to any
revenues or to any real or personal property owned by Borrower or any Subsidiary
which would reasonably be expected to have a Material Adverse Effect as
determined by the Banks; and neither Borrower nor any Subsidiary has received a
summons, citation, notice, or directive from the Environmental Protection Agency
or any other federal, state or other governmental agency concerning any action
or omission by Borrower or any Subsidiary resulting in the releasing, or
otherwise disposing of hazardous waste or hazardous substances into the
environment that would reasonably be expected to have a Material Adverse Effect
as determined by the Banks.
5.11 TAXES. Borrower and each Subsidiary has filed or caused to be
filed all tax returns required to be filed, and has paid, or has made adequate
provision for the payment of, all taxes reflected therein.
5.12 SUBSIDIARIES. Borrower does not own any stock, partnership
interest or other equity securities of any Person, except for Permitted
Investments.
5.13 GOVERNMENT CONSENTS. Borrower and each Subsidiary has obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower's business as currently conducted in all
material respects.
5.14 FULL DISCLOSURE. No representation, warranty or other statement
made by Borrower in any certificate or written statement furnished to the Banks
contains any untrue statement of a material
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fact or omits to state a material fact necessary in order to make the statements
contained in such certificates or statements not misleading.
5.15 YEAR 2000 PROBLEM. Borrower and its Subsidiaries have reviewed
the areas within their operations and business which could be adversely affected
by, and have developed or are developing a program to address on a timely basis,
the Year 2000 Problem and have made related appropriate inquiry of material
suppliers and vendors, and based on such review and program, the Year 2000
Problem will not have a Material Adverse Effect upon its financial condition,
operations or business as now conducted.
SECTION 6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as any Bank may have any commitment to
make an Advance hereunder, Borrower shall do all of the following:
6.1 GOOD STANDING. Borrower shall maintain its and each of its
Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify would reasonably be expected to have a Material Adverse
Effect. Borrower shall maintain, and shall cause each of its Subsidiaries to
maintain, to the extent consistent with prudent management of Borrower's
business, in force all licenses, approvals and agreements, the loss of which
would reasonably be expected to have a Material Adverse Effect.
6.2 GOVERNMENT COMPLIANCE. Borrower shall meet, and shall cause each
Subsidiary to meet, the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which would reasonably be expected to have a Material Adverse Effect or a
material adverse effect on the Collateral or the priority of any Bank's Lien on
the Collateral.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower shall
deliver to the Banks: (a) as soon as available, but in any event within
forty-five (45) days after the end of each fiscal quarter, a company prepared
consolidated and consolidating balance sheet and income statement covering
Borrower's consolidated operations during such period, certified by an officer
of Borrower reasonably acceptable to Bank; (b) as soon as available, but in any
event within one hundred twenty (120) days after the end of Borrower's fiscal
year, audited consolidated and unaudited consolidating financial statements of
Borrower prepared in accordance with GAAP, consistently applied, together with
an unqualified opinion on such financial statements of an independent certified
public accounting firm reasonably acceptable to Bank; (c) within five (5) days
of filing, copies of all statements, reports and notices sent or made available
generally by Borrower to its security holders or to any holders of Subordinated
Debt and all reports on Form 10-K, 10-Q and 8-K filed with the Securities and
Exchange Commission; (d) promptly upon receipt of notice thereof, a report of
any legal actions pending or threatened against Borrower or any Subsidiary that
would reasonably be expected to result in damages or costs to Borrower or any
Subsidiary of Two Hundred Fifty Thousand Dollars ($250,000.00) or more; and (e)
upon the reasonable request of any Bank, such budgets, sales projections,
operating plans, consolidating financial statements or other financial
information as such Bank may reasonably request from time to time.
Borrower shall deliver to the Banks with the quarterly financial
statements a Compliance Certificate signed by a Responsible Officer in
substantially the form of Exhibit D attached hereto.
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Any Bank shall have a right from time to time hereafter to audit
Borrower's Accounts at Borrower's expense, provided that such audits will be
conducted no more often than every twelve (12) months unless an Event of Default
has occurred and is continuing.
6.4 INVENTORY; RETURNS. Borrower shall keep all Inventory (net of
reserves) in good and marketable condition, free from all material defects.
Returns and allowances, if any, as between Borrower and its account debtors
shall be on the same basis and in accordance with the usual customary practices
of Borrower, as they exist at the time of the execution and delivery of this
Agreement. Borrower shall promptly notify the Banks of all returns and
recoveries and of all disputes and claims, where the return, recovery, dispute
or claim involves more than Two Hundred Fifty Thousand Dollars ($250,000.00).
6.5 TAXES. Borrower shall make, and shall cause each Subsidiary to
make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to each Bank, on demand, appropriate certificates attesting
to the payment or deposit thereof; and Borrower will make, and will cause each
Subsidiary to make, timely payment or deposit of all material tax payments and
withholding taxes required of it by applicable laws, including, but not limited
to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, and federal income taxes, and will, upon request, furnish each Bank with
proof satisfactory to such Bank indicating that Borrower or a Subsidiary has
made such payments or deposits; provided that Borrower or a Subsidiary need not
make any payment if the amount or validity of such payment is contested in good
faith by appropriate proceedings and is reserved against (to the extent required
by GAAP) by Borrower.
6.6 INSURANCE.
(a) Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain insurance
relating to Borrower's ownership and use of the Collateral in amounts and of a
type that are customary to businesses similar to Borrower's.
(b) All such policies of insurance shall be in such form,
with such companies, and in such amounts as reasonably satisfactory to the
Banks. All such policies of property insurance shall contain a lender's loss
payable endorsement, in a form satisfactory to the Banks, showing the Banks as
additional loss payees thereof and all liability insurance policies shall show
the Banks as additional insureds, and shall specify that the insurer must give
at least twenty (20) days notice to the Banks before canceling its policy for
any reason. Borrower shall deliver to the Banks certified copies of such
policies of insurance and evidence of the payments of all premiums therefor. All
proceeds payable under any such policy shall, at the option of the Banks, be
payable to the Banks to be applied on account of the Obligations.
6.7 PRINCIPAL DEPOSITORY. Borrower shall maintain its principal
depository and operating accounts, other than cash management accounts, with
Imperial or Collateral Agent.
6.8 QUICK RATIO. Borrower shall maintain on a consolidated basis, as
of the last day of each fiscal quarter, a ratio of Quick Assets to Current
Liabilities of at least 1.75 to 1.00.
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6.9 DEBT-NET WORTH RATIO. Borrower shall maintain on a consolidated
basis, as of the last day of each fiscal quarter, a ratio of Total Liabilities
to Tangible Net Worth of not more than 0.75 to 1.00.
6.10 TANGIBLE NET WORTH. Borrower shall maintain on a consolidated
basis, as of the last day of each fiscal quarter, a Tangible Net Worth of not
less than Twenty-Eight Million Dollars ($28,000,000.00).
6.11 MAXIMUM QUARTERLY LOSSES. Borrower shall not suffer a pre-tax
loss in excess of: (a) Six Million Five Hundred Thousand Dollars
($6,500,000.00), measured as of the end of each fiscal quarter for the two
quarter period ending September 30, 1998, (b) Seven Million One Hundred Thousand
Dollars ($7,100,000.00), measured as of the end of each fiscal quarter for the
two quarter period ending December 31, 1998, (c) Eight Million Two Hundred
Thousand Dollars ($8,200,000.00), measured as of the end of each fiscal quarter
for the two quarter period ending March 31, 1999 and (d) Six Million Eight
Hundred Thousand Dollars ($6,800,000.00), measured as of the end of each fiscal
quarter for the two quarter period ending June 30, 1999. For purposes of these
calculations, the pre-tax loss shall exclude (1) non-recurring income and
expenses as determined by the Banks and (2) research and development costs in
excess of Five Million Dollars ($5,000,000) for the two quarter period then
ended.
6.12 MAXIMUM ANNUAL LOSSES. Beginning with the fiscal year ending
March 31, 1999, Borrower shall not suffer a pre-tax loss in excess of Fifteen
Million Dollars ($15,000,000.00), measured as of the end of the fiscal year then
ended. For purposes of this calculation, the pre-tax loss shall exclude (a)
non-recurring income and expenses as determined by the Banks and (b) research
and development costs in excess of Ten Million Dollars ($10,000,000.00) for the
two quarter period then ended.
6.13 FURTHER ASSURANCES. At any time and from time to time Borrower
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by the Banks to effect the purposes of this
Agreement.
SECTION 7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the outstanding Obligations or
for so long as any Bank may have any commitment to make any Advances, Borrower
will not do any of the following without the prior written consent of each Bank:
7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise dispose
of (collectively, a "TRANSFER"), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, other than: (i) Transfers of
Inventory in the ordinary course of business; (ii) Transfers of non-exclusive
licenses and similar arrangements for the use of the property of Borrower or its
Subsidiaries; (iii) Transfers of worn-out or obsolete Equipment; or (iv)
Transfers in the aggregate amount not to exceed One Million Five Hundred
Thousand Dollars ($1,500,000.00) in any fiscal year.
7.2 CHANGE IN BUSINESS. Engage in any business, or permit any of its
Subsidiaries to engage in any business, other than the businesses currently
engaged in by Borrower and any business substantially similar or related thereto
(or incidental thereto), or suffer a material change in Borrower's ownership or
directors. Borrower will not, without thirty (30) days prior written
notification to each Bank, relocate its chief executive office.
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7.3 MERGERS OR ACQUISITIONS. Enter into any Acquisition, or permit
any of its Subsidiaries to enter into any Acquisition, having an aggregate cash
purchase price in excess of Ten Million Dollars ($10,000,000.00) for any fiscal
year; provided, however, that the aggregate cash purchase price for such
Acquisitions shall be subject to SECTION 7.8 hereof. Borrower or its
Subsidiaries may enter into such Acquisitions at or under the Ten Million Dollar
($10,000,000.00) per fiscal year limitation, provided that no Event of Default
has occurred and is continuing or would result from such Acquisition.
Concurrently with any Acquisition, Borrower or its Subsidiaries shall execute
and deliver to the Banks such documentation, in form and substance satisfactory
to the Banks, as the Banks may request to perfect their security interest in
such assets.
7.4 INDEBTEDNESS. Create, incur, assume or be or remain liable with
respect to any Indebtedness or any Contingent Obligations, or permit any
Subsidiary to do so, other than Permitted Indebtedness.
7.5 ENCUMBRANCES. Create, incur, assume or suffer to exist any Lien
with respect to any of its property, or assign or otherwise convey any right to
receive income, including the sale of any Accounts, or permit any of its
Subsidiaries so to do, except for Permitted Liens.
7.6 DISTRIBUTIONS. Pay any cash dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock, provided, however, Borrower may (i) make such
distributions or payments subject to the terms of employee stock option plans
which have been approved by Borrower's Board of Directors, or (ii) repurchase
capital stock in an amount not to exceed Five Million Dollars ($5,000,000.00)
per fiscal year.
7.7 INVESTMENTS. Directly or indirectly acquire or own, or make any
Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments.
7.8 LOANS. Make any loans or advances to any person or other entity
other than in the ordinary and normal course of its business as now conducted;
provided, however, that Borrower may make such loans or advances to its
Subsidiaries in an amount not to exceed Eleven Million Dollars ($11,000,000.00)
net of any loans or advances made by such Subsidiaries to Borrower.
7.9 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into
or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a nonaffiliated Person.
7.10 SUBORDINATED DEBT. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without the Banks' prior written consent.
7.11 INVENTORY. Store the Inventory with a bailee, warehouseman, or
similar party unless the Banks have received a pledge of the warehouse receipt
covering such Inventory. Except for Inventory sold in the ordinary course of
business and except for such other locations as the Banks may approve in
writing, Borrower shall keep the Inventory only at the locations set forth on
SCHEDULE 2 attached hereto and such other locations of which Borrower gives the
Banks prior written notice and as to which Borrower signs and files a financing
statement where needed to perfect Collateral Agent's security interest on behalf
of and for the benefit of the Banks.
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7.12 CAPITAL EXPENDITURES. Except as permitted under SECTION 7.3,
make capital expenditures in excess of Two Million Five Hundred Thousand Dollars
($2,500,000.00) per fiscal quarter.
7.13 COMPLIANCE. Become an "investment company" controlled by an
"investment company," within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose. Fail
to meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur, fail to comply with the
Federal Fair Labor Standards Act or violate any law or regulation, which
violation would reasonably be expected to have a Material Adverse Effect or a
material adverse effect on the Collateral or the priority of Collateral Agent's
Lien on the Collateral, or permit any of its Subsidiaries to do any of the
foregoing.
7.14 YEAR 2000 COMPLIANCE. Borrower shall perform all acts reasonably
necessary (a) to ensure that Borrower, its Subsidiaries and any business in
which Borrower holds a substantial interest, become Year 2000 Compliant in a
timely manner and (b) to the extent that a failure of any of Borrower's
customers, suppliers and vendors to become Year 2000 Compliant would have a
Material Adverse Effect on Borrower's business, to ensure that such customers,
suppliers and vendors become Year 2000 Compliant in a timely manner. Such acts
shall include, without limitation, performing a comprehensive review and
assessment of all of Borrower's systems and adopting a detailed plan, with an
itemized budget, for the remediation, monitoring and testing of such systems. If
requested by any Bank, Borrower shall within ten (10) business days deliver a
statement to such Bank summarizing the Year 2000 exposure, program or progress
of Borrower and its Subsidiaries or other evidence of Borrower's compliance with
the terms of this Section, certified by an officer of Borrower.
SECTION 8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement:
8.1 PAYMENT DEFAULT.
(a) If Borrower fails to pay, when due, any principal; and
(b) If Borrower fails to pay, within five (5) days of the
invoice payment date, any of the Obligations, exclusive of principal.
8.2 COVENANT DEFAULT.
(a) If Borrower fails to perform any obligation under
SECTIONS 6.7, 6.8, 6.9, 6.10 or 6.11 or violates any of the covenants contained
in SECTION 7 of this Agreement, or
(b) If Borrower fails or neglects to perform, keep, or
observe any other material term, provision, condition, covenant, or agreement
contained in this Agreement, in any of the Loan Documents, or in any other
present or future agreement between Borrower and any Bank and as to any default
under such other term, provision, condition, covenant or agreement that can be
cured, has failed to cure such default within thirty (30) days after Borrower
receives notice thereof or any officer of Borrower becomes aware thereof.
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8.3 MATERIAL ADVERSE CHANGE. If there is a change in Borrower's
business, assets, liabilities, financial condition, operations or affairs, other
than changes in the ordinary course of business, or if there is a material
impairment of the prospect of repayment of any portion of the Obligations or a
material impairment of the value or priority of the Banks' security interests in
the Collateral, which in the
reasonable determination of the Banks has, either individually or in the
aggregate, a Material Adverse Effect.
8.4 ATTACHMENT. If any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within thirty (30) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any material portion of Borrower's assets by the United
States Government, or any department, agency, or instrumentality thereof, or by
any state, county, municipal, or governmental agency, and the same is not paid
within thirty (30) days after Borrower receives notice thereof, provided that
none of the foregoing shall constitute an Event of Default where such action or
event is stayed or an adequate bond has been posted pending a good faith contest
by Borrower (provided that no Advances will be required to be made during such
cure period).
8.5 INSOLVENCY. If Borrower is not Solvent, or if an Insolvency
Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced
against Borrower and is not dismissed or stayed within forty-five (45) days
(provided that no Advances will be made prior to the dismissal of such
Insolvency Proceeding). As used herein, "Solvent" shall mean that (a) the fair
market value of Borrower's assets will be in excess of the amount that will be
required to be paid on or in respect of the existing debts and other liabilities
(including contingent liabilities) of Borrower as they mature; (b) Borrower
shall not have unreasonably small capital to carry on its business as conducted
or as proposed to be conducted; (c) Borrower does not intend to or believe that
it will incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be received by it and the amounts
to be payable on or in respect of its obligations); (d) Borrower does not intend
to hinder, delay or defraud either present or future creditors; and (e) Borrower
will have received fair consideration and reasonably equivalent value in
exchange for incurring its Obligations under the Loan Documents and Borrower
will be a direct beneficiary of the full proceeds of the credit made available
by the Banks pursuant to this Agreement.
8.6 OTHER AGREEMENTS. If there is a default in any agreement to
which Borrower is a party with a third party or parties resulting in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of Two Hundred Fifty
Thousand Dollars ($250,000.00) or that would reasonably be expected to have a
Material Adverse Effect.
8.7 JUDGMENTS. If a judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least One Hundred
Twenty-Five Thousand Dollars ($125,000.00) shall be rendered against Borrower
and shall remain unsatisfied and unstayed for a period of thirty (30) days
(provided that no Advances will be made prior to the satisfaction or stay of
such judgment).
8.8 MISREPRESENTATIONS. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to any Bank by any Responsible
Officer pursuant to this Agreement or to induce any Bank to enter into this
Agreement or any other Loan Document.
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SECTION 9. BANK'S RIGHTS AND REMEDIES.
Upon the occurrence and during the continuance of an Event of Default,
an Enforcing Bank may be appointed by the Banks to enforce the rights and
remedies herein on behalf of itself and as agent for the other Banks (the
"ENFORCING BANK"). Appointment of the Enforcing Bank shall be subject to the
approval of either (i) if there are only two Banks whose combined Pro Rata Share
(and voting interest with respect thereto) of all amounts outstanding under this
Agreement, or, in the event there are no amounts outstanding, the Committed
Revolving Line, total one hundred percent (100.0%) of all such amounts
outstanding or the Committed Revolving Line, as the case may be, then both such
Banks or (ii) if there are more than two Banks, any combination of Banks whose
combined Pro Rata Share (and voting interest with respect thereto) of all
amounts outstanding under this Agreement, or, in the event there are no amounts
outstanding, the Committed Revolving Line, total more than sixty-six and
two-thirds percent (66.6%) of all such amounts outstanding or the Committed
Revolving Line, as the case may be. Upon such appointment of the Enforcing Bank,
the Collateral Agent will transfer all of its rights under this Agreement to the
Enforcing Bank.
9.1 RIGHTS AND REMEDIES. Upon the occurrence and during the
continuance of an Event of Default, the Enforcing Bank, or any Bank, if
applicable, may, subject to SECTION 13 hereof, at its election, without notice
of its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
SECTION 8.5 all Obligations shall become immediately due and payable without any
action by any Bank);
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement or under any other agreement between
Borrower and any Bank;
(c) Settle or adjust disputes and claims directly with
account debtors for amounts, upon terms and in whatever order that Enforcing
Bank or such Bank reasonably considers advisable;
(d) Without notice to or demand upon Borrower, make such
payments and do such acts as Enforcing Bank or such Bank considers necessary or
reasonable to protect its security interest in the Collateral. Borrower agrees
to assemble the Collateral if Enforcing Bank or such Bank so requires, and to
make the Collateral available to Enforcing Bank or such Bank as Enforcing Bank
or such Bank may designate. Borrower authorizes Enforcing Bank or such Bank to
enter the premises where the Collateral is located, to take and maintain
possession of the Collateral, or any part of it, and to pay, purchase, contest,
or compromise any encumbrance, charge, or lien which in Enforcing Bank's and
such Bank's determination appears to be prior or superior to its security
interest and to pay all expenses incurred in connection therewith. With respect
to any of Borrower's owned premises, Borrower hereby grants Enforcing Bank or
such Bank a license to enter into possession of such premises and to occupy the
same, without charge, for up to one hundred twenty (120) days in order to
exercise any of Enforcing Bank's or such Bank's rights or remedies provided
herein, at law, in equity, or otherwise;
(e) Without notice to Borrower set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by such Bank,
or (ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by such Bank;
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(f) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Enforcing Bank or such Bank is hereby granted a license
or other right, solely pursuant to the provisions of this SECTION 9.1, to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks, service marks, and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in completing production of, advertising for sale, and selling any Collateral
and, in connection with Enforcing Bank's or such Bank's exercise of its rights
under this SECTION 9.1, Borrower's rights under all licenses and all franchise
agreements shall inure to Enforcing Bank's or such Bank's benefit;
(g) Sell the Collateral at either a public or private sale,
or both, by way of one or more contracts or transactions, for cash or on terms,
in such manner and at such places (including Borrower's premises) as Enforcing
Bank or such Bank determines is commercially reasonable;
(h) Enforcing Bank or such Bank may credit bid and purchase
at any public sale; and
(i) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.
9.2 POWER OF ATTORNEY. Effective only upon the occurrence and during
the continuance of an Event of Default, Borrower hereby irrevocably appoints
Enforcing Bank or the Banks (and any of their designated officers, or employees)
as Borrower's true and lawful attorney to: (a) send requests for verification of
Accounts or notify account debtors of Collateral Agent's or Enforcing Bank's
security interest in the Accounts, on behalf of and for the benefit of the
Banks; (b) endorse Borrower's name on any checks or other forms of payment or
security that may come into Collateral Agent's or any Enforcing Bank's
possession; (c) sign Borrower's name on any invoice or xxxx of lading relating
to any Account, drafts against account debtors, schedules and assignments of
Accounts, verifications of Accounts, and notices to account debtors; (d) make,
settle, and adjust all claims under and decisions with respect to Borrower's
policies of insurance; and (e) settle and adjust disputes and claims respecting
the accounts directly with account debtors, for amounts and upon terms which
Enforcing Bank or such Bank determines to be reasonable; provided Enforcing Bank
or such Bank may exercise such power of attorney to sign the name of Borrower on
any of the documents described in SECTION 4.2 regardless of whether an Event of
Default has occurred. The appointment of Enforcing Bank or the Banks as
Borrower's attorney in fact, and each and every one of Enforcing Bank's or the
Banks' rights and powers, being coupled with an interest, is irrevocable until
all of the Obligations have been fully repaid and performed and Banks'
obligation to provide advances hereunder is terminated.
9.3 ACCOUNTS COLLECTION. At any time from the date of this
Agreement, Enforcing Bank or the Banks may notify any Person owing funds to
Borrower of Collateral Agent's or Enforcing Bank's security interest in such
funds, on behalf of and for the benefit of the Banks, and verify the amount of
such Account. Borrower shall collect all amounts owing to Borrower for the
Banks, receive in trust all payments as Enforcing Bank's or the Banks' trustee,
and immediately deliver such payments to Enforcing Bank or the Banks in their
original form as received from the account debtor, with proper endorsements for
deposit.
9.4 BANK EXPENSES. If Borrower fails to pay any amounts or furnish
any required proof of payment due to third persons or entities, as required
under the terms of this Agreement, then the Banks may do any or all of the
following: (a) make payment of the same or any part thereof; (b) set up such
reserves under the Committed Revolving Line as the Banks reasonably deem
necessary to protect the
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Banks from the exposure created by such failure; or (c) obtain and maintain
insurance policies of the type discussed in SECTION 6.6 of this Agreement, and
take any action with respect to such policies as the Banks deem prudent. Any
amounts so paid or deposited by the Banks shall constitute Bank Expenses, shall
be immediately due and payable, and shall bear interest at the then applicable
rate hereinabove provided, and shall be secured by the Collateral. Any payments
made by the Banks shall not constitute an agreement by any Bank to make similar
payments in the future or a waiver by such Bank of any Event of Default under
this Agreement.
9.5 BANK'S LIABILITY FOR COLLATERAL. So long as each Bank complies
with prudent banking practices, such Bank shall not in any way or manner be
liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss
or damage thereto occurring or arising in any manner or fashion from any cause;
(c) any diminution in the value thereof; or (d) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other person whomsoever.
All risk of loss, damage or destruction of the Collateral shall be borne by
Borrower.
9.6 REMEDIES CUMULATIVE. Subject to SECTION 13, the Banks' rights
and remedies under this Agreement, the Loan Documents, and all other agreements
shall be cumulative. Subject to SECTION 13, the Banks' shall have all other
rights and remedies not inconsistent herewith as provided under the Code, by
law, or in equity. No exercise by any Bank of one right or remedy shall be
deemed an election, and no waiver by any Bank of any Event of Default on
Borrower's part shall be deemed a continuing waiver. No delay by any Bank shall
constitute a waiver, election, or acquiescence by it. No waiver by any Bank
shall be effective unless made in a written document signed on behalf of such
Bank and then shall be effective only in the specific instance and for the
specific purpose for which it was given.
9.7 DEMAND; PROTEST. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by any Bank on which Borrower may in any way be
liable.
SECTION 10. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by a recognized overnight
delivery service, certified mail, postage prepaid, return receipt requested, or
by telefacsimile to Borrower or to each Bank, as the case may be, at its
addresses set forth below:
If to Borrower: Tegal Corporation
0000 Xxxxx XxXxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Fax: 707/000-0000
If to Bank: Imperial Bank
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Fax: 650/ 000-0000
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The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other. NOTICES TO ONE BANK SHALL NOT BE DEEMED NOTICE TO THE OTHER BANK.
SECTION 11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of California, without regard to principles of
conflicts of law. Each of Borrower and the Banks hereby submits to the exclusive
jurisdiction of the state and Federal courts located in the County of Santa
Xxxxx, State of California. BORROWER AND THE BANKS EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
SECTION 12. JUDICIAL REFERENCE.
12.1 Other than (a) nonjudicial foreclosure and all matters in
connection therewith regarding security interests in real or personal property;
or (b) the appointment of a receiver, or the exercise of other provisional
remedies (any and all of which may be initiated pursuant to applicable law),
each controversy, dispute or claim between the parties arising out of or
relating to this Agreement or the other Loan Documents, which controversy,
dispute or claim is not settled in writing within thirty (30) days after the
"CLAIM DATE" (defined as the date on which a party subject to this Agreement
gives written notice to all other parties that a controversy, dispute or claim
exists), will be settled by a reference proceeding in California in accordance
with the provisions of Section 638 et seq. of the California Code of Civil
Procedure, or their successor section ("CCP"), which shall constitute the
exclusive remedy for the settlement of any controversy, dispute or claim
concerning this Agreement, including whether such controversy, dispute or claim
is subject to the reference proceeding and except as set forth above, the
parties waive their rights to initiate any legal proceedings against each other
in any court or jurisdiction other than the Superior Court in the County where
the real property, if any, is located or Santa Xxxxx County, if none (the
"COURT"). The referee shall be a retired Judge of the Court selected by mutual
agreement of the parties, and if they cannot so agree within forty-five (45)
days after the Claim Date, the referee shall be promptly selected by the
Presiding Judge of the Court (or his/her representative). The referee shall be
appointed to sit as a temporary judge, with all of the powers for a temporary
judge, as authorized by law, and upon selection should take and subscribe to the
oath of office as provided for in Rule 244 of the California Rules of Court (or
any subsequently enacted Rule). Each party shall have one peremptory challenge
pursuant to CCP Section 170.6. The referee shall (x) be requested to set the
matter for hearing within sixty (60) days after the date of selection of the
referee and (y) try any and all issues of law or fact and report a statement of
decision upon them, if possible, within ninety (90) days of the Claim Date. Any
decision rendered by the referee will be final, binding and conclusive and
judgement shall be entered pursuant to CCP Section 644 in any court in the State
of California having jurisdiction. Any party may apply for a reference
proceeding at any time after thirty (30) days following notice to any other
party of the nature of the controversy, dispute or claim, by filing a petition
for a hearing and/or trial. All discovery permitted by this Agreement shall be
completed no later than fifteen (15) days before
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the first hearing date established by the referee. The referee may extend such
period in the event of a party's refusal to provide requested discovery for any
reason whatsoever, including, without limitation, legal objections raised to
such discovery or unavailability of a witness due to absence or illness. No
party shall be entitled to "priority" in conducting discovery. Depositions may
be taken by either party upon seven (7) days written notice, and request for
production or inspection of documents shall be responded to within ten (10) days
after service. All disputes relating to discovery which cannot be resolved by
the parties shall be submitted to the referee whose decision shall be final and
binding upon the parties. Pending appointment of the referee as provided herein,
the Superior Court is empowered to issue temporary and/or provisional remedies,
as appropriate.
12.2 Except as expressly set forth in this Agreement, the referee
shall determine the manner in which the reference proceeding is conducted
including the time and place of all hearings, the order of presentation of
evidence, and all other questions that arise with respect to the course of the
reference proceeding. All proceedings and hearings conducted before the referee,
except for trial, shall be conducted without a court reporter except that when
any party so requests, a court reporter will be used at any hearing conducted
before the referee. The party making such a request shall have the obligation to
arrange for and pay for the court reporter. The costs of the court reporter at
the trial shall be borne equally by the parties.
12.3 The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the State
of California will be applicable to the reference proceeding. The referee shall
be empowered to enter equitable as well as legal relief, to provide all
temporary and/or provisional remedies and to enter equitable orders that will be
binding upon the parties. The referee shall issue a single judgment at the close
of the reference proceeding that shall dispose of all of the claims of the
parties that are the subject of the reference. The parties hereto expressly
reserve the right to contest or appeal from the final judgment or any appealable
order or appealable judgment entered by the referee. The parties hereto
expressly reserve the right to findings of fact, conclusions of laws, a written
statement of decision, and the right to move for a new trial or a different
judgment, which new trial, if granted, is also to be a reference proceeding
under this provision.
12.4 In the event that the enabling legislation which provides for
appointment of a referee is repealed (and no successor statute is enacted), any
dispute between the parties that would otherwise be determined by the reference
procedure herein described will be resolved and determined by arbitration. The
arbitration will be conducted by a retired judge of the Court, in accordance
with the California Arbitration Act, Section 1280 through Section 1294.2 of the
CCP as amended from time to time. The limitations with respect to discovery as
set forth hereinabove shall apply to any such arbitration proceeding.
SECTION 13. INTERCREDITOR PROVISIONS
13.1 OWNERSHIP OF ADVANCES. Notwithstanding any other terms of this
Agreement, each Bank shall be the holder and sole owner of the respective
Advances made by such Bank, and no Bank shall have any interest in the Advances
of any other Bank.
13.2 LIMITATION ON FURTHER LOANS. Except for daily cash transfers
that arise out of the ordinary course of Borrower's cash management operations,
no Bank may make loans to or otherwise extend credit to Borrower without the
consent of the other Banks, which consent will not be unreasonably withheld.
Except as otherwise expressly provided herein, the provisions of this Agreement
apply only to Advances arising under this Agreement.
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13.3 DISBURSEMENTS. All Advances shall be made pro rata by the Banks.
Each Bank shall make the funds it is to lend under this Agreement available to
Borrower no later than 3:00 p.m. Pacific time on the date of disbursement by
payment to such account at Imperial, Collateral Agent or Enforcing Bank as
Borrower specifies. No Bank is obligated to advance any funds in lieu of or for
the account of the other Bank if the latter Bank fails to make such Advance.
13.4 TRANSFER OF INTEREST IN ADVANCES.
(a) CONSENT. If an Event of Default does not exist, no Bank
may sell or otherwise transfer any of its interest in this Agreement without the
prior written consent of the other Banks and Borrower, which consent shall not
be unreasonably withheld, provided that any Bank may grant to up to two (2)
other financial institutions (including any Affiliate of such Bank)
participations in all or any part of such Bank's obligations, rights and
benefits hereunder without obtaining the consent of the other Banks. The grant
of a participation interest shall be on such terms as the Bank granting the
participation determines are appropriate, provided only that (1) the holder of
such a participation interest shall not have any of the rights of a Bank under
this Agreement except, if the participation agreement so provides, rights to
demand the payment of costs of the type described in SECTION 2.5, provided that
the aggregate amount that Borrower shall be required to pay under SECTION 2.5
with respect to any ratable share of the Committed Revolving Line or any Advance
(including amounts paid to participants) shall not exceed the amount that
Borrower would have had to pay if no participation agreements had been entered
into, and (2) the consent of the holder of such a participation interest shall
not be required for amendments or waivers of provisions of this Agreement other
than those which (i) increase the amount of the Committed Revolving Line, (ii)
extend the term of this Agreement, (iii) decrease the rate of interest or the
amount of any fee or any other amount payable to such participant under this
Agreement, (iv) reduce the principal amount payable to such participant under
this Agreement, or (v) extend the date fixed for the payment of principal or
interest or any other amount payable to such participant under this Agreement.
Notwithstanding the grant of participation, the Bank granting the participation
shall remain solely responsible for the performance of its obligations under
this Agreement, and Borrower shall continue to deal with such Bank in connection
with this Agreement. Each proposed transferee shall satisfy all of the
requirements of this SECTION 13.4 as a condition to any such transfer.
(b) ASSUMPTION OF OBLIGATIONS. Each assignee (other than a
participant) shall assume all obligations of the transferring Bank with respect
to the portion of the transferor's interest under this Agreement so assigned
pursuant to an Assignment and Acceptance substantially in the form of EXHIBIT E
hereto ("ASSIGNMENT AND ACCEPTANCE"). Upon such assumption, Borrower shall be
deemed to release and discharge the transferor from the transferor's obligations
to Borrower under this Agreement with respect to the portion of the transferor's
obligations assumed by the transferee, and such transferee shall be deemed a
Bank hereunder.
(c) LEGAL AUTHORITY AND FINANCIAL ABILITY. The transferee
shall provide to the remaining Banks and Borrower evidence satisfactory to the
remaining Banks and Borrower that the proposed transferee has the legal
authority and financial ability to assume and perform all obligations of the
transferring Bank under this Agreement and the Loan Documents.
(d) RECEIVE AND HOLD INTEREST. The transferee shall agree in
writing (in form satisfactory to the remaining Banks and Borrower) to receive
and hold the transferred interest subject to all of the provisions of this
Agreement.
(e) CONFIDENTIALITY. Subject to SECTION 14.8 hereof,
Borrower authorizes each Bank to disclose to any prospective transferee and any
actual transferee any and all information designated by
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Borrower as confidential, in such Bank's possession concerning Borrower and this
Agreement, subject to such prospective transferee or actual transferee agreeing
to hold such information confidential, in accordance with SECTION 14.8 hereof.
Provided that such prospective transferee or actual transferee has executed a
confidentiality agreement in favor of Borrower agreeing to the provisions of
SECTION 14.8 hereof, no Bank shall be responsible if such prospective transferee
or actual transferee fails to hold such information confidentially.
(f) VOIDABILITY. Any sale or transfer of an interest in this
Agreement shall be voidable at the option of the remaining Banks or Borrower
unless the provisions of this SECTION 13.4 are satisfied.
13.5 INFORMATION. Each Bank shall use efforts that are reasonable
under the circumstances to deliver to the other Banks copies of reports and all
other documents received from Borrower or otherwise relating to this Agreement,
and to share all other material information relating to Borrower or to this
Agreement that such Bank receives. No Bank shall be responsible for the
accuracy, of any information shared pursuant to this SECTION 13.5, nor shall any
Bank be liable to any other Bank for any damages incurred as a result of any
reliance on such shared information.
13.6 PROPORTIONATE INTERESTS. Except as otherwise provided in this
Agreement, the rights, interests, and obligations of each Bank under this
Agreement and the Loan Documents at any time shall be shared in the ratio
(expressed as a percentage) of (a) the maximum amount such Bank has committed to
advance as set forth on the signature page to this Agreement (or any amendment
thereto) signed by such Bank to (b) the Committed Revolving Line (the
"PERCENTAGE SHARE"). Any reference in this Agreement or the Loan Documents to an
allocation between or sharing by the Banks of any right, interest, or duty
"ratably," "proportionally," "pro rata," or in similar terms shall refer to this
ratio.
13.7 ALLOCATION OF PAYMENTS. All amounts received by The Banks for
the account of Borrower, whether by payment, set-off, counterclaim, or
otherwise, shall be allocated and paid to The Banks as necessary to ensure a
sharing of all amounts received on account of the Advances as contemplated in
SECTION 13.6. Each Bank shall promptly remit to Collateral Agent or Enforcing
Bank for disbursement to the other Banks such sums (whether received by such
Bank for the account of Borrower or otherwise) as may be necessary to ensure a
sharing of all amounts received on account of the Advances as contemplated in
SECTION 13.6. The Banks likewise shall contribute in such proportions as are
necessary to ensure a sharing as contemplated in SECTION 13.6 if any amount
received for the account of Borrower is required to be returned as a voidable
transfer or otherwise. All amounts received with respect to any other
obligations at the time when Borrower is not in compliance with all of the
material provisions of this Agreement and the Loan Documents shall be applied to
the Obligations hereunder unless the Banks agree otherwise.
13.8 DETERMINATION OF A COURSE OF ACTION UPON DEFAULT. Each Bank will
promptly advise the other Banks if it acquires knowledge that an Event of
Default has occurred or with the passage of time, will occur, or that Borrower
is not likely to be in compliance with any financial covenant as of any
measurement date. The Banks shall use efforts that are reasonable under the
circumstances to consult with the other Banks before taking any action to
enforce this Agreement or the Loan Documents or to collect or enforce the
Obligations under the Loan Documents. In connection therewith, the Enforcing
Bank may engage such attorneys and other agents as it may deem appropriate. The
Enforcing Bank may deduct from the gross proceeds of any action or other
collective effort any reasonable costs and expenses, including reasonable
attorneys fees, incurred in connection with such action or effort. The Enforcing
Bank will not be liable to the other Banks for any act or omission in the
absence of the Enforcing Bank's gross negligence or willful misconduct.
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13.9 FORECLOSURE.
(a) CREDIT BID BY BANKS. The Enforcing Bank shall have the
exclusive right to enter a credit bid at any foreclosure sale or other sale of
any of the Collateral on behalf of both the Enforcing Bank and the other Banks.
If the Banks cannot agree on the amount of an opening credit bid, the Bank
advocating the lower bid shall prevail in the use of such lower bid as the
opening credit bid. If the Banks are the successful bidder at the sale, then (a)
the amount to be credited against the Committed Revolving Line shall be
allocated between the Banks in proportion to the balances of their respective
Obligations under the Loan Documents; and (b) the Banks shall take title to the
Collateral so purchased together, each holding an undivided interest in that
Collateral in proportion to the amount credited against its Obligations under
the Loan Documents.
(b) CASH BID FOR ACCOUNT OF ONE BANK. Any Bank shall have
the right to enter a cash bid for such Bank's own account at any sale. If such a
bid is the successful one, then (a) the proceeds of the sale shall be allocated
and paid to each Bank in proportion to the outstanding balance of its
Obligations under the Loan Documents, and (b) the Bank that entered the bid
shall acquire the Collateral so purchased for its own account, and the other
Banks shall have no further interest in that Collateral upon payment to such
other Banks of their proportionate share of the sale proceeds in cash.
(c) THIRD PARTY BID. If the successful bid is entered by a
third party, then the sale proceeds shall be shared by the Banks as provided in
SECTION 13.7.
13.10 OTHER OBLIGATIONS. A Bank shall not obtain any interest in any
property of Borrower taken as security for any loan made or acquired by such
Bank outside of this Agreement, or in any property in the possession or control
of such Bank, unless such other property or the proceeds thereof is applied to
an Obligation arising under this Agreement or the Loan Documents, in which case
the Banks shall share proportionately in such property or proceeds.
13.11 INDEPENDENT REVIEW. Each Bank has reviewed this Agreement and
the Loan Documents, the financial statements of Borrower, and such other
materials as such Bank has deemed appropriate. Each Bank has made its decision
to execute this Agreement and the Loan Documents based upon its review and its
independent evaluation of Borrower's creditworthiness. No Bank has made any
representation, and no Bank shall rely on any alleged representation by any
other Bank, as to the form, substance, or enforceability of this Agreement or
any of the Loan Documents or the ability of any party thereto to pay any debt or
perform any obligation. Each Bank is a sophisticated commercial bank experienced
in making loans to companies similar to Borrower. Subject to SECTION 13.5, each
Bank shall make its own decision as to how to perform its obligations hereunder.
Each Bank has the capacity to protect its own interests in connection with, and
evaluate the merits and risks of, the transactions contemplated by this
Agreement. Each Bank has had an opportunity to ask questions of Borrower and its
officers, employees, accountants, and representatives concerning Borrower's
business operations, financial condition, assets, liabilities, and all other
matters such Bank deems appropriate in connection with the transactions
contemplated by this Agreement, and has based its decision to enter into those
transactions on such information.
13.12 DUE AUTHORIZATION. The execution, delivery, and performance of
this Agreement and the Loan Documents have been duly authorized by all requisite
corporate or other actions of each Bank. This Agreement, and each Loan Document
to which each Bank is a party, is a valid and binding obligation of such Bank,
legally enforceable in accordance with its terms.
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13.13 DESIGNATION OF COLLATERAL AGENT. To facilitate the
administration of this Agreement, Imperial shall act as Collateral Agent for
itself and the other Banks. Collateral Agent or Enforcing Bank shall have only
such duties as are expressly set forth in this Agreement, or as otherwise agreed
in writing by the Banks. Collateral Agent or Enforcing Bank shall be deemed to
act on behalf of all Banks whenever Collateral Agent or Enforcing Bank acts
under this Agreement.
13.14 RESIGNATION. Collateral Agent may resign as Collateral Agent,
upon thirty (30) day's written notice to the other Banks and to Borrower and
appointment of a successor Collateral Agent. Upon receipt of notice of
resignation, the Banks shall appoint a successor Collateral Agent which, if an
Event of Default does not exist, shall be reasonably acceptable to Borrower. The
resigning Collateral Agent shall cooperate fully in delivering to the successor
Collateral Agent the Loan Documents and copies of all records relating to the
Advances and payments made hereunder that the successor Collateral Agent
reasonably requests.
13.15 NO REAL ESTATE COLLATERAL. Each Bank agrees with, and for the
benefit of, the other Banks (which agreement shall not be for the benefit of
Borrower or any of its Subsidiaries) that Borrower's Obligations to such Bank
under this Agreement and the other Loan Documents are not and shall not be
secured by any real property collateral now or hereafter acquired by such Bank.
13.16 LOAN COLLECTIONS. Subject to the provisions of this Agreement,
Collateral Agent or Enforcing Bank shall have the right, and shall use
reasonable efforts, to collect all sums due under this Agreement. All sums
collected by any Bank shall be held in trust by that Bank as trustee for the
benefit of all Banks in accordance with this Agreement.
13.17 REPORTS. Collateral Agent or Enforcing Bank shall use reasonable
efforts to deliver to the Banks notices from Borrower and reports concerning
Borrower that Collateral Agent receives pursuant to this Agreement. Collateral
Agent shall have no obligation to deliver any such notices or reports that
Borrower or a third party simultaneously has forwarded to the Banks.
13.18 COLLATERAL AGENT'S AND ENFORCING BANK'S DUTY OF CARE. Collateral
Agent and Enforcing Bank shall act or refrain from acting in accordance with the
instructions of the Banks. In so doing, Collateral Agent and Enforcing Bank may
engage such attorneys and other agents to act on behalf of the Banks as
Collateral Agent or the Enforcing Bank may deem appropriate and shall make
reasonable efforts to keep the Banks appraised of all material actions taken.
Action taken by Collateral Agent or Enforcing Bank pursuant to the instruction
of the Banks shall not be deemed to be discretionary action. In any case where
this Agreement, the Loan Documents, or the Banks have not directed Collateral
Agent or Enforcing Bank to perform specific acts or omissions, Collateral Agent
or Enforcing Bank may take or omit such actions as Collateral Agent or Enforcing
Bank deems to be appropriate, and, in the absence of gross negligence or willful
misconduct, the Banks shall not later bring a claim against Collateral Agent or
Enforcing Bank if, in hindsight, they disagree with Collateral Agent's or
Enforcing Bank's acts or omissions. Collateral Agent and Enforcing Bank shall
not be liable to the Banks for any act or omission in the absence of Collateral
Agent's or Enforcing Bank's, respectively, own gross negligence or willful
misconduct.
13.19 EXPENSES. Upon request, the Banks shall promptly reimburse
Collateral Agent and Enforcing Bank for their ratable share of any reasonable
fees, costs, and expenses Collateral Agent or Enforcing Bank may incur in
connection with this Agreement. Upon request, Collateral Agent and Enforcing
Bank shall provide to the Banks written evidence of such fees, costs, and
expenses. If any Bank fails to so reimburse Collateral Agent or Enforcing Bank,
Collateral Agent or Enforcing Bank may deduct the amount due from any amount to
be remitted to such Bank. If the funds due a non-reimbursing
28.
29
Bank are not sufficient to pay the non-reimbursing Bank's share of Collateral
Agent's or Enforcing Bank's fees, costs, and expenses, the other Banks shall
make up the unreimbursed amount in accordance with the Banks' proportionate
interests as set forth in SECTION 13.6.
13.20 COMMUNICATION. Collateral Agent and Enforcing Bank shall
promptly inform the Banks if Collateral Agent or Enforcing Bank receives any
communication from Borrower calling for action on the part of the Banks, or if
Collateral Agent or Enforcing Bank concludes that an Event of Default has
occurred under this Agreement.
13.21 LIMITED LIABILITY OF COLLATERAL AGENT AND ENFORCING BANK. Except
as provided in SECTION 13.18 in this Agreement, Collateral Agent and Enforcing
Bank shall not be liable or answerable to the Banks for anything whatsoever in
connection with this Agreement or the Loan Documents, including responsibility
in respect to the execution, construction, or enforcement of this Agreement or
the Loan Documents, except to the extent of Collateral Agent's or Enforcing
Bank's Percentage Share of such liability. Collateral Agent and Enforcing Bank
have no duties or obligations to the Banks other than as provided in this
Agreement. Collateral Agent and Enforcing Bank may rely on any opinion of
counsel (including counsel for Borrower) in relation to this Agreement and the
Loan Documents, and upon statements and communications received from Borrower,
or from any other person believed by Collateral Agent or Enforcing Bank to be
authentic. Collateral Agent and Enforcing Bank shall not be liable for any
action taken or omitted on such reliance.
13.22 INDEMNIFICATION OF COLLATERAL AGENT AND ENFORCING BANK. Each
Bank shall indemnify, defend, and hold Collateral Agent and Enforcing Bank
harmless (to the extent not reimbursed by Borrower), according to its pro rata
interest, from and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses, and
disbursements of any kind or nature whatsoever (including attorneys fees) that
may be imposed on, incurred by, or asserted against Collateral Agent or
Enforcing Bank in any way relating to or arising out of this Agreement or the
Loan Documents, except that Collateral Agent and Enforcing Bank shall not be
indemnified against its own gross negligence or willful misconduct.
13.23 COLLATERAL AGENT AND ENFORCING BANK AS BANK. Collateral Agent
and Enforcing Bank shall have the same rights and powers under this agreement as
any other Bank and may exercise the same as though it were not Collateral Agent
or Enforcing Bank. The term "Banks" includes Collateral Agent in Collateral
Agent's individual capacity and Enforcing Bank in Enforcing Bank's individual
capacity. Subject to the provisions of SECTION 13.2, Collateral Agent or
Enforcing Bank and their Subsidiaries and Affiliates may accept deposits from,
lend money to, act as agent or trustee for other lenders to, and generally
engage in any kind of banking, trust, or other business with, Borrower or any
Subsidiary or Affiliates as if Collateral Agent were not Collateral Agent and as
if Enforcing Bank were not Enforcing Bank.
13.24 CREDIT DECISION. Each Bank shall make its own independent
investigations of the financial condition and affairs of Borrower and its own
appraisal of the credit-worthiness of Borrower in connection with its interest
under this Agreement. Except as set forth in this Agreement, Collateral Agent
has no duty to provide any Bank with any information (other than information
provided pursuit to this Agreement), whether coming into Collateral Agent's
possession before the Closing Date or at any time thereafter.
13.25 NO AGENCY. EXCEPT AS SPECIFIED HEREIN, NO BANK IS AN AGENT OF
ANY OTHER BANK. NO BANK HAS ANY AUTHORITY TO ACT OR FAIL TO ACT FOR ANY OTHER
BANK. THE OBLIGATIONS OF EACH BANK HEREUNDER ARE SEVERAL. NO BANK SHALL
29.
30
BE LIABLE FOR THE FAILURE OF ANY OTHER BANK TO PERFORM ITS OBLIGATIONS
HEREUNDER.
13.26 NO RELIANCE. The provisions of this SECTION 13 (except for
SECTIONS 13.3, 13.4, and 13.14) are solely for the benefit of the Banks in
specifying their rights and obligations with respect to each other, and not for
the benefit of Borrower or its assigns or successors.
SECTION 14. GENERAL PROVISIONS.
14.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
may be assigned by Borrower without each Bank's prior written consent, which
consent may be granted or withheld in each Bank's sole discretion; provided,
further, that assignment by each Bank is subject to SECTION 13.4 hereof.
14.2 INDEMNIFICATION. Borrower shall defend, indemnify and hold
harmless Collateral Agent, Enforcing Bank and each Bank and their respective
officers, employees, and agents against: (a) all obligations, demands, claims,
and liabilities claimed or asserted by any other party in connection with the
transactions contemplated by this Agreement; and (b) all losses or Bank Expenses
in any way suffered, incurred, or paid by such Bank as a result of or in any way
arising out of, following, or consequential to transactions between such Bank
and Borrower whether under this Agreement, or in connection with any matter
related hereto (including without limitation reasonable attorneys fees and
expenses), except for losses caused by such Bank's gross negligence or willful
misconduct.
14.3 TIME OF ESSENCE. Time is of the essence for the performance of
all obligations set forth in this Agreement.
14.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
14.5 AMENDMENTS IN WRITING, INTEGRATION. This Agreement cannot be
amended or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents.
14.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
14.7 NOVATION. This Agreement is not intended to be, and shall not be
construed to create, a novation or accord and satisfaction, and, except as
otherwise provided herein, the Prior Loan Agreement is amended and restated in
full by the terms of this Agreement and all obligations outstanding under the
Prior Loan Agreement are governed by the terms of this Agreement.
14.8 SURVIVAL. All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify the
Banks with respect to the expenses, damages, losses, costs and liabilities
described in SECTION 14.2 shall survive until all applicable statute of
limitations periods with respect to
30.
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actions that may be brought against the Banks have run, provided that so long as
the obligations set forth in the first sentence of this SECTION 14.8 have been
satisfied, and no Bank has a commitment to make any Advances or to make any
other loans to Borrower hereunder, Collateral Agent, Enforcing Bank and the
Banks shall release all security interests granted hereunder and redeliver all
Collateral held by it in accordance with applicable law.
14.9 CONFIDENTIALITY. In handling any confidential information each
Bank shall exercise the same degree of care that it exercises with respect to
its own proprietary information of the same types to maintain the
confidentiality of any non-public information received or received pursuant to
this Agreement except that disclosure of such information may be made (i) to the
subsidiaries or affiliates of such Bank in connection with their present or
prospective business relations with Borrower, (ii) to prospective transferees or
purchasers of any interest in the Advances, provided that they have entered into
a comparable confidentiality agreement in favor of Borrower and have delivered a
copy to Borrower, (iii) as required by law, regulations, rule or order,
subpoena, judicial order or similar order and (iv) as may be required in
connection with the examination, audit or similar investigation of such Bank.
Confidential information hereunder shall not include information that either:
(a) is in the public domain or becomes part of the public domain after
disclosure to such Bank through no fault of such Bank; or (b) is disclosed to
such Bank by a third party, provided such Bank does not have actual knowledge
that such third party is prohibited from disclosing such information.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
TEGAL CORPORATION,
a Delaware corporation
By: ___________________________________________
Xxxxxxx Xxxxxx
President and Chief Executive Officer
By: ___________________________________________
Xxxxx Xxxxxx
Vice President, Secretary, Treasurer and
Chief Financial Officer
IMPERIAL BANK
By: ___________________________________________
Xxxxxx X. Xxxxxxx
Vice President and Team Leader
Maximum Commitment Amount: $12,500,000 (100%)
31.
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SCHEDULE 1
SCHEDULE OF EXCEPTIONS
ADDITIONAL PERMITTED INDEBTEDNESS: None.
ADDITIONAL PERMITTED INVESTMENTS: None.
ADDITIONAL PERMITTED LIENS: None.
SECTION 5.5 OTHER NAMES: None.
SECTION 5.7 LITIGATION: There are no material legal proceedings pending against
Borrower. However, on June 10, 1996, Lucent Technologies, Inc. ("LUCENT"), filed
a claim with the United States District Court for the Northern District of
California alleging patent infringement by Austria Mikro Systeme International
AG and AMS Austria Mikro Systeme International, Inc. ("AMS") for the sale of
integrated circuits manufactured with Borrower's dry plasma etch systems. On
March 7, 1995, Borrower executed an indemnification agreement with AMS, covering
certain uses of select equipment sold to AMS. Lucent and AMS have settled the
U.S. claim and AMS is now seeking indemnification from Borrower through an
arbitration proceeding with respect to the U.S. claim. Borrower has been
informed that Lucent recently filed a claim for patent infringement in Germany
against AMS for the sale of integrated circuits manufactured with Borrower's dry
plasma etch systems. AMS has requested indemnification for the German matter.
Borrower believes that the claims made by AMS are without merit and that the
ultimate outcome of any defense of any required indemnification obligation to
AMS is unlikely to have a Material Adverse Effect on Borrower's results of
operations or financial condition. No assurance can be given, however, as to the
outcome of such legal proceedings or as to the effect of any such outcome on
Borrower's results of operations or financial condition.
On March 17, 1998, Borrower filed a suit in the United States District
Court in the Eastern District of Virginia against Tokyo Electron Limited and
several of its U.S. subsidiaries (collectively, "TEL") alleging that TEL's
current generation of etch equipment infringes certain of Borrower's patents.
Borrower is seeking among other things, injunctive relief barring TEL from
importing or selling such products. No assurance can be given as to the outcome
of such legal proceedings or as to the effect of any such outcome on Borrower.
32.
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SCHEDULE 2
LOCATION OF INVENTORY
See Attached.
SCHEDULE 2
34
EXHIBIT A
DESCRIPTION OF COLLATERAL
The Collateral shall consist of all right, title and interest of
Borrower in and to the following:
(a) All goods and equipment now owned or hereafter acquired,
including, without limitation, all machinery, fixtures, vehicles (including
motor vehicles and trailers), and any interest in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired,
including, without limitation, all merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products including
such inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
(c) All contract rights and general intangibles now owned or
hereafter acquired, including, without limitation, goodwill, trademarks,
servicemarks, trade styles, trade names, patents, patent applications, leases,
license agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
(d) All now existing and hereafter arising accounts,
contract rights, royalties, license rights and all other forms of obligations
owing to Borrower arising out of the sale or lease of goods, the licensing of
technology or the rendering of services by Borrower, whether or not earned by
performance, and any and all credit insurance, guaranties, and other security
therefor, as well as all merchandise returned to or reclaimed by Borrower;
(e) All documents, cash, deposit accounts, securities,
investment property, letters of credit, certificates of deposit, instruments and
chattel paper now owned or hereafter acquired and Borrower's Books relating to
the foregoing;
(f) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter acquired;
all trade secret rights, including all rights to unpatented inventions,
know-how, operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or similar rights
available for the protection of semiconductor chips, now owned or hereafter
acquired; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and
(g) All Borrower's Books relating to the foregoing and any
and all claims, rights and interests in any of the above and all substitutions
for, additions and accessions to and proceeds thereof.
EXHIBIT A
35
EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 11:00 A.M., P.S.T.
TO: ___________________________________ DATE: _______________________________
EXHIBIT B
36
FAX#: _________________________________ TIME: _______________________________
FROM: __________________________________________________________________
CLIENT NAME (BORROWER)
REQUESTED BY: __________________________________________________________
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE: __________________________________________________
PHONE NUMBER: __________________________________________________________
FROM ACCOUNT # __________ TO ACCOUNT # ________________________________
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
-------------------------- ---------------------
PRINCIPAL INCREASE (ADVANCE) $_______________________________
PRINCIPAL PAYMENT (ONLY) $_______________________________
INTEREST PAYMENT (ONLY) $_______________________________
PRINCIPAL AND INTEREST (PAYMENT) $_______________________________
OTHER INSTRUCTIONS: ____________________________________________________
All representations and warranties of Borrower stated in the Amended and
Restated Loan and Security Agreement dated as of August 15, 1998 are true,
correct and complete in all material respects as of the date of the telephone
request for and Advance confirmed by this Borrowing Certificate; provided,
however, that those representations and warranties expressly referring to
another date shall be true, correct and complete in all material respects as of
such date.
BANK USE ONLY
TELEPHONE REQUEST:
------------------
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
________________________________________ Phone # ____________________________
Authorized Requester
________________________________________ Phone # ____________________________
Received by (Bank)
---------------------------------------
Authorized Signature (Bank)
EXHIBIT B
37
EXHIBIT C
FORM OF NOTE
$12,500,000.00 August 15, 0000
Xxxxxxxx, Xxxxxxxxxx
Xx the Revolving Maturity Date, and as hereinafter provided, for value
received, the undersigned promises to pay to IMPERIAL BANK, a California banking
corporation ("BANK"), or order, at its Santa Xxxxx Valley Regional office in San
Jose, California, the lesser of (i) the principal sum of $12,500,000.00 or (ii)
such sums up to such maximum as the Bank may now or hereafter advance to or for
the benefit of the undersigned in accordance with the terms of that certain
Amended and Restated Loan and Security Agreement dated of even date herewith, by
and among the undersigned and Bank, as the same may be amended from time to time
(the "LOAN AGREEMENT"), together with interest from the date of disbursement on
the unpaid principal balance at a rate of interest equal to the Prime Rate (as
defined in the Loan Agreement), which shall vary concurrently with any change in
the Prime Rate. Interest shall be computed at the above rate on the basis of the
actual number of days during which the principal balance of this Note ("NOTE")
is outstanding, divided by 360, which shall, for interest computation purposes,
be considered one (1) year. All capitalized terms not otherwise defined herein
shall have the meanings given to such terms in the Loan Agreement.
Interest shall be payable monthly in arrears beginning on September 15,
1998, and continuing on the fifteenth (15th) day of each month thereafter, and
if not so paid shall become a part of the principal. All payments shall be
applied first to interest, and the remainder, if any, on principal. Advances not
to exceed any unpaid balance owing at any one time equal to the maximum amount
specified above, may be made at the option of Bank.
Should an Event of Default occur and be continuing, the entire balance
of principal and accrued interest then remaining unpaid may become immediately
due and payable in accordance with the terms of the Loan Agreement. Should an
Event of Default occur and be continuing under SECTION 8.1 of the Loan
Agreement, all principal and accrued interest then due and remaining unpaid
shall thereafter bear interest, until paid, at the increased rate of two percent
(2.0%) per year in excess of the Prime Rate, as it may vary from time to time.
If this Note is not paid when due, Borrower promises to pay all costs
and expenses of collection and reasonable attorneys' fees incurred by the holder
hereof on account of such collection, plus interest at the rate applicable to
principal, whether or not suit is filed hereon. Borrower shall be liable hereon
and consents to renewals, replacements and extensions of time for payment
hereof, before, at, or after maturity; consents to the acceptance, release or
substitution of security for this Note; and waives demand and protest and the
right to assert any statute of limitations. The indebtedness evidenced hereby
shall be payable in lawful money of the United States. In any action brought
under or arising out of this Note, Borrower, including successor(s) or assign(s)
hereby consents to the application of California law, to the jurisdiction of any
competent court within the State of California, and to service of process by any
means authorized by California law.
No single or partial exercise of any power hereunder, or under any deed of
trust, security agreement or other agreement in connection herewith shall
preclude other or further exercises thereof or the exercise of any other such
power. Subject to the terms of the Loan Agreement, the holder hereof shall at
all times have the right to proceed against any portion of the security for this
Note in such order
EXHIBIT C
Page 1 of 2
38
and in such manner as such holder may consider appropriate, without waiving any
rights with respect to any of the security. Any delay or omission on the part of
the holder hereof in exercising any right hereunder, or under any deed of trust,
security agreement or other agreement, shall not operate as a waiver of such
right, or of any other right, under this Note or any deed of trust, security
agreement or other agreement in connection herewith.
TEGAL CORPORATION,
a Delaware corporation
By:___________________________________________
Printed Name:_________________________________
Title:________________________________________
By:___________________________________________
Printed Name:_________________________________
Title:________________________________________
EXHIBIT C
Page 2 of 2
39
EXHIBIT D
COMPLIANCE CERTIFICATE
The consolidated financial statements dated as of __________________________ of
TEGAL CORPORATION, a Delaware corporation ("BORROWER") attached hereto and
submitted to IMPERIAL BANK ("Imperial") pursuant to that certain Amended and
Restated Loan and Security Agreement dated as of August 15, 1998 (the
"Agreement"), entered into between Borrower, Banks and Imperial, shows
compliance with all financial covenants (unless otherwise noted below) as
specified therein, as follows:
QUARTERLY COVENANT:
ACTUAL:
a. Minimum Quick Ratio:
1.75 : 1.00 ____________________
b. Maximum Liabilities to Tangible Net Worth Ratio:
0.75 : 1.00 ____________________
c. Minimum Tangible Net Worth of:
$28,000,000.00 ____________________
d. Maximum Quarterly Losses not greater than:
$6,500,000.00 (2Q period ending 9/30/98) ____________________
$7,100,000.00 (2Q period ending 12/31/98) ____________________
$8,200,000.00 (2Q period ending 3/31/99) ____________________
$6,800,000.00 (2Q period ending 6/30/99) ____________________
e. Maximum Annual Losses not greater than:
$15,000,000.00 ____________________
Exceptions: (if none, so state):
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
The undersigned authorized officer of Borrower hereby certifies in such capacity
that Borrower is in complete compliance with the terms and conditions of the
Agreement for the period ending _____________________, and as of the date of
this Compliance Certificate the representations and
EXHIBIT D
40
warranties stated therein are true, accurate and complete as of the date hereof
(except as to those representations and warranties which specifically reference
a particular date and except as noted above).
The undersigned further certifies that s/he knows of no pending conditions which
may cause an Event of Default (as defined in the Agreement) to exist in the next
thirty (30) days. The required support documents for this certification are
attached and prepared in accordance with generally accepted accounting
principles, consistently applied.
Date: TEGAL CORPORATION
a Delaware corporation
By:___________________________________________
Printed Name:_________________________________
Title:________________________________________
By:___________________________________________
Printed Name:_________________________________
Title:________________________________________
EXHIBIT D
41
EXHIBIT E
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
ASSIGNMENT AND ACCEPTANCE dated ___________, ____ between
______________________ ("Assignor") and _____________________ ("Assignee").
PRELIMINARY STATEMENT
A. Reference is made to the Amended and Restated Loan and Security
Agreement dated as of August 15, 1998 (as the same may from time to time
hereafter be amended, modified, supplemented or restated, the "Loan Agreement"),
among TEGAL CORPORATION, a Delaware corporation (the "Borrower"), IMPERIAL BANK
("Imperial"), the BANKS and Imperial Bank, as the Collateral Agent for the
Banks. Capitalized terms used but not otherwise defined herein have the meanings
given them in the Loan Agreement.
B. Assignor is a Bank under and as defined in the Loan Agreement
and, as such, presently has the following Commitment to Borrower:
Committed Revolving Line $______________
C. On the terms and conditions set forth below, Assignor desires to
sell and assign to Assignee, and Assignee desires to purchase and assume from
Assignor, a _____________% interest (the "Revolving Line Assigned Percentage")
in and to all of Assignor's rights and obligations under the Committed Revolving
Line as of the Effective Date (as defined below), representing a Commitment
under the Committed Revolving Line of _________________ Dollars ($__________).
D. After giving effect to the assignments described in Section C
above, the respective Loans of Assignor and Assignee under the Loan Agreement
will be:
ASSIGNOR
Committed Revolving Line $______________
ASSIGNEE
Committed Revolving Line $______________
NOW, THEREFORE, Assignor and Assignee hereby agree as follows:
1. Assignor hereby sells and assigns to Assignee, WITHOUT RECOURSE,
and Assignee hereby purchases and assumes from Assignor, the Revolving Line
Assigned Percentage of Assignor's rights and obligations under the Loan
Agreement as of the Effective Date.
2. ASSIGNOR:
(a) represents and warrants that as of the date hereof its
principal amount outstanding under the Committed Revolving Line (without giving
effect to assignments thereof which have not yet become effective) are as
follows:
EXHIBIT E
Page 1 of 3
42
Committed Revolving Line $______________
(b) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim;
(c) makes no representations or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Agreement or any other Loan Document furnished pursuant thereto; and
(d) makes no representations or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Loan Agreement or any other Loan Document furnished pursuant thereto.
3. ASSIGNEE:
(a) confirms that it has received a copy of the Loan
Agreement, together with copies of such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
this Assignment and Acceptance;
(b) agrees that it will, independently and without reliance
upon the Assignor or any other Bank and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Agreement and any other
Loan Documents;
(c) represents and warrants that commercial loans of money
made by Assignee of the type contemplated by the Loan Agreement are exempt from
the "usury" restrictions of Section 1 of Article XV of the California
Constitution; and
(d) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Agreement and the
other Loan Documents are required to be performed by Bank hereunder.
4. Following the execution of this Assignment and Acceptance by
Assignor and Assignee, it will be delivered to the Banks for acceptance and
recording by the Banks and acceptance by the Borrower. The effective date for
this Assignment and Acceptance shall be _________________, ____ (the "Effective
Date"), subject to acceptance by the Banks and the Borrower.
5. Subject to and upon such acceptance and recording as the
Effective Date, (a) Assignee shall be a party to the Loan Agreement and shall be
entitled to the rights and benefits of the Loan Documents and, to the extent of
the percentage assigned in this Assignment and Acceptance, have the rights and
obligations of a Bank thereunder and (b) Assignor shall, to the extent of the
percentage assigned in this Assignment and Acceptance, relinquish its rights and
be released from its obligations under the Loan Agreement and the other Loan
Documents. Assignor shall retain all rights applicable to it under the Loan
Agreement relating to credits extended, acts or omissions made, or other matters
arising, prior to the Effective Date.
6. Upon such acceptance and recording, from and after the Effective
Date, Imperial or the Collateral Agent shall make all payments under the Loan
Agreement which are payable by Imperial or the Collateral Agent for the account
of the appropriate Bank to the appropriate Banks severally in
EXHIBIT E
Page 2 of 3
43
proportion to their respective percentages determined after giving effect to
this assignment, when payment is due. Assignor and Assignee shall make all
appropriate adjustments in payments under the Loan Agreement and the other Loan
Documents for periods prior to the Effective Date directly between themselves.
7. Assignee's address for the purpose of receiving notices under
the Loan Agreement is as set forth below Assignee's signature below.
8. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the law of the State of California.
ASSIGNOR
______________________________________________
By:___________________________________________
Printed Name:_________________________________
Title:________________________________________
ASSIGNEE
______________________________________________
By:___________________________________________
Printed Name:_________________________________
Title:________________________________________
Address for notices:
______________________________________________
______________________________________________
______________________________________________
ACCEPTED this ____ day of
_________________, ____
TEGAL CORPORATION,
a Delaware corporation
By:_________________________________________
Printed Name:_______________________________
Title:______________________________________
By:_________________________________________
Printed Name:_______________________________
Title:______________________________________
EXHIBIT E
Page 3 of 3
