EXHIBIT 10.15
ULTRA CLEAN HOLDINGS, INC.
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT is entered into as of November 4, 2004 by
and between UNION BANK OF CALIFORNIA, N.A. ("Bank") and ULTRA CLEAN HOLDINGS,
INC. (the "Borrower").
RECITALS
Borrower wishes to obtain credit from Bank. This Agreement sets forth the
terms on which Bank will advance credit to Borrower, and Borrower will repay the
amounts owing to Bank.
AGREEMENT
The parties agree as follows:
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 receivable, contract rights, and all other forms of obligations owing
to Borrower arising out of the sale or lease of goods 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.
"Advance" or "Advances" means a cash advance under the
Revolving Facility.
"Affiliate" means, with respect to any Person, any Person that
controls or is controlled, directly or indirectly, by or is under common control
with such Person.
"Bank Expenses" means all reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
the preparation, negotiation and administration of the Loan Documents; and
Bank's reasonable attorneys' fees and expenses incurred in amending, enforcing
or defending the Loan Documents (including reasonable fees and expenses of
appeal), whether or not suit is brought.
"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 by law to close.
"Change in Control" means a transaction or circumstance in
which any "person" or "group" (within the meaning of Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934) becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, of a sufficient number of shares of all classes of stock then
outstanding of Borrower ordinarily entitled to vote in the election of
directors, empowering such "person" or "group" to elect a majority of the Board
of Directors of Borrower, who did not have such power before such transaction.
"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.
"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 of another, including, without limitation, any
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such Indebtedness 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.
"Credit Extension" means each Advance, Term Advance, or any
other extension of credit by Bank for the benefit of Borrower hereunder.
"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 Credit
Extensions made under this Agreement.
"EBITDA" means, for any period, pretax net income of Borrower
and its Subsidiaries before interest expense, interest income, and depreciation
and amortization expense, in each case for such period determined on a
consolidated basis in accordance with GAAP.
"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 Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"Excess Cash Flow" means, for any fiscal year, the sum
(without duplication) of:
(a) the consolidated net income (or loss) of the Borrower
and its Subsidiaries for such fiscal year; plus
(b) depreciation, amortization and other non-cash charges or
losses deducted in determining such consolidated net income (or loss) for such
fiscal year; plus
(c) the amount, if any, by which Net Working Capital
decreased during such fiscal year; minus
(d) the sum of (i) any non-cash gains included in
determining such consolidated net income (or loss) for such fiscal year and (ii)
the amount, if any, by which Net Working Capital increased during such fiscal
year; minus
(e) capital expenditures for such fiscal year; minus
(f) cash consideration paid during such fiscal year to make
acquisitions or other capital investments; minus
(g) the aggregate principal amount of Indebtedness repaid by
the Borrower and its Subsidiaries during such fiscal year, but only to the
extent that such Indebtedness cannot be reborrowed; minus
(h) all other cash payments made during such fiscal year on
account or fees, costs and expenses that were capitalized or otherwise did not
reduce such consolidated net income (or loss) for such fiscal year.
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"Event of Default" has the meaning assigned in Article 8.
"Fixed Charges" means, as of any day, the sum of (i) the
current portion of the Indebtedness owing to Bank as of such day and (ii) the
cash interest expense attributable to the Indebtedness owing to Bank for the
period of four consecutive fiscal quarters ended on such day, in each case
determined in accordance with GAAP.
"GAAP" means generally accepted accounting principles.
"Guarantor" means Ultra Clean Technology Systems and Service,
Inc. and each other Subsidiary of the Borrower that shall at any time after the
date hereof guarantee the obligations of the Borrower hereunder.
"Guaranty" means, with respect to any Guarantor, an
unconditional guaranty by such Guarantor of the Borrower's obligations hereunder
in form reasonably acceptable to Bank.
"Indebtedness" means (a) all indebtedness for borrowed money
or the deferred purchase price of property or services (excluding trade accounts
payable and accrued trade obligations incurred in the ordinary course of
business), (b) reimbursement and other obligations with respect to surety bonds
and letters of credit, (c) all obligations evidenced by notes, bonds, debentures
or similar instruments, (d) all capital lease obligations and (e) 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 under debtor relief laws.
"Intangible Assets" means assets that are considered to be
intangibles under GAAP, including customer lists, goodwill, computer software,
copyrights, trade names, trademarks, patents, unamortized deferred charges,
unamortized debt discount and capitalized research and development costs and
organizational expenses.
"Interest Period" means for each LIBOR Rate Advance, a period
of approximately one, two, three or six months as Borrower may elect, provided
that the last day of an Interest Period for a LIBOR Rate Advance shall be
determined in accordance with the practices of the LIBOR interbank market as
from time to time in effect, provided, further, in all cases such period shall
expire not later than the Revolving Maturity Date.
"Investment" means any beneficial ownership (including stock,
partnership interest or other securities) of 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.
"Letters of Credit" means the letters of credit described in
Section 2.1.2.
"LIBOR Base Rate" means, for any Interest Period for a LIBOR
Rate Advance, the rate of interest per annum that appears in The Wall Street
Journal three (3) Business Days before the first day of such Interest Period for
a period approximately equal to such Interest Period and in an amount
approximately equal to the amount of such Advance.
"LIBOR Margin" means 1.50% with respect to Advances and 1.75%
with respect to the Term Advance.
"LIBOR Rate" shall mean, for any Interest Period for a LIBOR
Rate Advance, a rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) equal to (i) the LIBOR Base Rate for such Interest Period divided
by (ii) 1 minus the Reserve Requirement for such Interest Period, if applicable.
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"LIBOR Rate Credit Extensions" means any Credit Extensions
made or a portion thereof on which interest is payable based on the LIBOR Rate
in accordance with the terms hereof.
"Lien" means any mortgage, lien, deed of trust, charge,
pledge, security interest or other encumbrance.
"Loan Documents" means, collectively, this Agreement, any note
or notes executed by Borrower hereunder, any Guaranty and any other agreement
entered into in connection with this Agreement, all as amended or extended from
time to time.
"Material Adverse Effect" means a material adverse effect on
(i) the business, operations, or condition of Borrower and its Subsidiaries,
taken as a whole or (ii) the ability of Borrower to repay the Obligations
hereunder or otherwise perform its obligations under the Loan Documents or (iii)
the priority of Bank's security interest in the Collateral.
"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.
"Net Working Capital" means, at any date, (a) the consolidated
current assets of the Borrower and its Subsidiaries as of such date (excluding
cash and Permitted Investments) minus (b) the consolidated current liabilities
of the Borrower and its Subsidiaries as of such date (excluding current
liabilities in respect of Indebtedness). Net Working Capital at any date may be
a positive or negative number. Net Working Capital increases when it becomes
more positive or less negative and decreases when it becomes less positive or
more negative.
"Net Worth" means at any date as of which the amount thereof
shall be determined, the sum of the capital stock and additional paid-in capital
plus retained earnings (or minus accumulated deficit) of Borrower and its
Subsidiaries, plus Subordinated Debt, on a consolidated basis determined in
accordance with GAAP.
"Obligations" means all loans, advances, debts, liabilities
and obligations for monetary amounts owing by Borrower to Bank, whether due or
to become due, matured or unmatured, liquidated or unliquidated, contingent or
non-contingent, and all covenants and duties regarding such amounts, of any kind
or nature, present or future, arising under any of the Loan Documents or any
other note, instrument or agreement. This term includes, without limitation, all
principal, interest (including interest that accrues after the commencement
against Borrower or any Subsidiary of Borrower of any Insolvency Proceeding),
fees, including, without limitation, any and all closing fees, prepayment fees,
commitment fees, advisory fees, and attorneys' fees and any and all other fees,
expenses, costs or other amounts, in each case, chargeable to Borrower under any
of the Loan Documents.
"Periodic Payments" means all interest payments and other
recurring payments that Borrower may now or hereafter become obligated to pay to
Bank hereunder.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower and any Guarantor arising under
this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed
in the Schedule;
(c) Indebtedness in an aggregate outstanding principal
amount not to exceed Five Million Dollars ($5,000,000) incurred in each calendar
year;
(d) Indebtedness of the Borrower to any Guarantor and
Indebtedness of any Guarantor to the Borrower or any other Guarantor;
(e) Subordinated Debt; and
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(f) extensions, renewals, modifications, amendments and
restatements of any of the items of permitted Indebtedness (a) through (e)
above, provided that the principal amount thereof is not increased or the terms
thereof, taken as a whole, are not modified to impose materially more burdensome
terms upon Borrower.
"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 having rating of at least A-2 or P-2 from either Standard &
Poor's Corporation or Xxxxx'x Investors Service, Inc. at the time of
acquisition, (iii) demand and time deposit accounts and certificates of deposit
maturing no more than one (1) year from the date of investment therein issued by
Bank or any commercial bank having capital and surplus in excess of $250,000,000
and (iv) Bank's money market accounts or other money market funds substantially
all of which assets are comprised of the foregoing;
(c) Investments by the Borrower in a Guarantor or by any
Guarantor in the Borrower or any other Guarantor;
(d) other Investments in an aggregate amount not to exceed
One Million Dollars Five Hundred Thousand ($1,500,000);
(e) Investments in an aggregate amount not to exceed Two
Million Five Hundred Thousand Dollars ($2,500,000) in Ultra Clean Technology
(Shanghai) Co., Ltd. and any wholly-owned Subsidiary of Borrower of which it is
a Subsidiary); and
(f) any Investment permitted by Section 7.3.
"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 and for which adequate reserves are maintained in
accordance with GAAP;
(c) Purchase money security interests on Equipment and
licenses of software purchased with the proceeds of the Indebtedness described
in clause (c) of the defined term "Permitted Indebtedness", provided such Liens
are limited to such Equipment and licenses of software and proceeds thereof;
(d) Liens of materialmen, mechanics, warehousemen, carriers,
artisans or other similar Liens arising in the ordinary course of business or by
operation of law in respect of property or assets of Borrower or any of its
Subsidiaries, which are not overdue by more than 30 days or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves are maintained in accordance with GAAP;
(e) Easements, rights-of-way, restrictions (including zoning
restrictions), covenants, encroachments, protrusions and other similar charges
or encumbrances, and minor title deficiencies affecting real property, in each
case whether now or hereafter in existence, not securing Indebtedness and not
constituting a Material Adverse Effect;
(f) Liens arising from judgments or awards in respect of
which Borrower or any Subsidiary shall in good faith be prosecuting an appeal or
proceeding for review in respect of which there shall be
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secured a subsisting stay of execution pending such appeal or proceedings and,
in each case, in circumstances not constituting an Event of Default;
(g) Liens (i) incurred or deposits made in the ordinary
course of business under worker's compensation, unemployment insurance and other
types of social security or (ii) to secure the performance of tenders, statutory
obligations, surety, stay, customs and appeal bonds, statutory bonds, bids,
leases, government contracts, trade contracts, performance and return of money
bonds (in each case, other than for the repayment of borrowed money) or (iii)
arising by virtue of deposits made in the ordinary course of business to secure
liability for premiums to insurance carriers;
(h) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by the
Borrower or any of its Subsidiaries in the ordinary course of business in
accordance with the past practices of the Borrower and its Subsidiaries;
(i) Leases or subleases and nonexclusive licenses and
sublicenses granted to others in the ordinary course of business, not
interfering in any material respect with the business of Borrower and its
Subsidiaries taken as a whole;
(j) Liens existing on any property or asset prior to the
acquisition thereof or existing on any property or asset of any Person that
becomes a Subsidiary after the date hereof;
(k) Liens not otherwise permitted by the foregoing
paragraphs (a) through (j) to the extent attaching to properties and assets with
aggregate fair value at the time of attachment not in excess of, and securing
liabilities not in excess of, $500,000 in the aggregate at any time outstanding;
and
(l) Liens incurred in connection with the extension, renewal
or refinancing of the obligations secured by Liens of the type described in
clauses (a) through (k) 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 obligations being extended, renewed or
refinanced does not increase.
"Person" means any individual, sole proprietorship,
partnership, limited liability company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.
"Quick Assets" means, at any date as of which the amount
thereof shall be determined, the unrestricted cash and cash-equivalents,
accounts receivable and investments with maturities not to exceed 90 days, of
Borrower and its Subsidiaries, on a consolidated basis, determined in accordance
with GAAP.
"Reference Margin" means zero percent (0%) for Advances, and
one quarter of one percent (0.25%) for the Term Advance.
"Reference Rate" means the variable per annum rate of interest
most recently announced by Bank, as its "reference rate," whether or not such
announced rate is the lowest rate available from Bank.
"Reference Rate Advances" means any Credit Extension made or a
portion thereof on which interest is payable based on the Reference Rate in
accordance with the terms hereof.
"Reserve Requirement" means, for any Interest Period, the
average maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during such Interest Period
under Regulation D against "Eurocurrency liabilities" (as such term is used in
Regulation D) by member banks of the Federal Reserve System. Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by Bank by reason of any Regulatory Change
(as defined in Section 2.6(c))against (i) any category of liabilities which
includes deposits by reference to which the LIBOR Rate is to be determined as
provided in the definition of "LIBOR Base Rate" or (ii) any category of
extensions of credit or other assets which include Advances.
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"Responsible Officer" means each of the Chief Executive
Officer, the Chief Operating Officer and the Chief Financial Officer of
Borrower.
"Revolving Facility" means the facility under which Borrower
may request Bank to issue Advances, as specified in Section 2.1.1 hereof.
"Revolving Line" means a credit extension of up to Twenty
Million Dollars ($20,000,000).
"Revolving Maturity Date" means June 30, 2005.
"Subordinated Debt" means any debt incurred by Borrower that
is subordinated to the debt owing by Borrower to Bank hereunder on terms
acceptable to Bank (and identified as being such by Bank), it being understood
that the terms set forth in Exhibit E hereto shall be deemed to be acceptable to
Bank.
"Subsidiary" means with respect to any Person (the "Parent")
at any date, any other Person of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned or held by the Parent or one or more of
its Subsidiaries. Unless otherwise specified, "Subsidiary" means a Subsidiary of
the Borrower .
"Tangible Net Worth" means at any date as of which the amount
thereof shall be determined, the sum of the capital stock and additional paid-in
capital plus retained earnings (or minus accumulated deficit) of Borrower and
its Subsidiaries minus (to the extent reflected in determining the foregoing)
Intangible Assets, plus Subordinated Debt, on a consolidated basis determined in
accordance with GAAP.
"Term Advance" means the portion of the outstanding Advances,
if any, that Borrower elects pursuant to Section 2.7 to repay on a term basis.
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.
2. LOAN AND TERMS OF PAYMENT.
2.1.1 Advances.
(a) Availability. Subject to and upon the terms and
conditions of this Agreement, Borrower may request Advances in an aggregate
outstanding principal amount not to exceed the Revolving Line minus any
outstanding Letters and Credit and minus the principal amount of any outstanding
Term Advance. Subject to the terms and conditions of this Agreement, Advances
may be repaid and reborrowed at any time prior to the Revolving Maturity Date,
at which time all Advances shall be immediately due and payable. If at any time
the outstanding principal amount of the Advances plus outstanding Letters of
Credit plus the principal amount of any outstanding Term Advance exceeds Twenty
Million Dollars ($20,000,000) minus the amount of any principal payments made on
the Term Advance, Borrower shall immediately pay Bank, in cash, the amount or,
in the case of outstanding Letters of Credit, cash collateralize the aggregate
face amount, of such excess.
(b) Procedure. Whenever Borrower desires a Advance,
Borrower will notify Bank by facsimile transmission or telephone no later than
1:00 p.m. California time, on the Business Day that a Reference Rate Advance is
to be made, and 1:00 p.m. California time on the Business Day that is three (3)
Business Days prior to the Business Day on which a LIBOR Rate Advance is to be
made. Each such notification shall be promptly confirmed by an Advance Request
Form in substantially the form of Exhibit B-1 hereto. Bank is authorized to make
Advances under this Agreement based upon instructions received from a
Responsible Officer or a designee of a Responsible Officer, or without
instructions if such Advances are necessary to meet Obligations which have
become due and remain unpaid. Bank shall be entitled to rely on any telephonic
notice given by a person who Bank reasonably believes to be a Responsible
Officer or a designee thereof, and Borrower shall
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indemnify and hold Bank harmless for any damages or loss suffered by Bank as a
result of such reliance. Bank will credit the amount of Advances to Borrower's
deposit account, as specified by Borrower.
Each such notice shall specify:
(i) the date such Advance is to be made, which
shall be a Business Day;
(ii) the amount of such Advance which, as to a
Reference Rate Advance shall be at least $500,000 and a LIBOR Rate Advance at
least $1,000,000 (or, in either case, the entire amount available for drawing
under the Revolving Facility);
(iii) whether such Advance is to be a Reference
Rate Advance or a LIBOR Rate Advance; and
(iv) if the Advance is to be a LIBOR Rate Advance,
the Interest Period for such Advance.
Each written request for an Advance, and each
confirmation of a telephone request for such an Advance, shall be in
substantially the form of Exhibit B-1 hereto executed by Borrower.
(c) Interest. Borrower may elect when it requests an
Advance whether the Advance is to be a Reference Rate Advance or a LIBOR Rate
Advance. The outstanding principal balance of each portion of an Advance that is
a Reference Rate Advance shall bear interest until paid in full, at a floating
rate per annum equal to the Reference Rate plus the applicable Reference Margin.
In the event the Reference Rate is changed from time to time hereafter, the
applicable rate of interest hereunder shall be increased or decreased effective
as of the day the Reference Rate is changed, by an amount equal to such change
in the Reference Rate. The outstanding principal balance of each portion of an
Advance that is a LIBOR Rate Advance shall bear interest until paid in full at a
rate per annum equal to the LIBOR Rate plus the applicable LIBOR Margin. All
interest chargeable under the Loan Documents shall be computed, in the case of
interest based on the LIBOR Rate, on the basis of a three hundred sixty (360)
day year and, in the case of interest based on the Reference Rate, on the basis
of a three hundred and sixty five (365) or three hundred and sixty six (366) day
year, in each case for the actual number of days elapsed. All Obligations shall
bear interest, from and after receipt of notice by Borrower from Bank of the
occurrence of an Event of Default and Bank's election to charge a default rate,
at a rate equal to two (2) percentage points above the interest rate applicable
immediately prior to receipt by Borrower of such notice.
2.1.2 Letters of Credit.
(i) Subject to the terms and conditions of this
Agreement, at any time prior to the Revolving Maturity Date, Bank agrees to
issue or cause to be issued Letters of Credit for the account of Borrower or any
of its Subsidiaries in an aggregate outstanding face amount not to exceed One
Million Dollars ($1,000,000). All Letters of Credit shall be, in form and
substance, acceptable to Bank in its sole discretion and shall be subject to the
terms and conditions of Bank's form of standard Application and Letter of Credit
agreement, including Bank's charge of one and one half of one percent (1.50%)
per annum of the face amount of each standby Letter of Credit and a fee quoted
from time to time by Bank on commercial Letters of Credit, payable quarterly as
a condition to the issuance of a Letter of Credit and every three months
thereafter (the "Application"), which Borrower hereby agrees to execute. On any
drawn but unreimbursed Letter of Credit, the unreimbursed amount shall be deemed
an Advance under Section 2.1.1. On the Revolving Maturity Date, Borrower shall
secure in cash all obligations under any then-outstanding Letters of Credit on
terms acceptable to Bank.
(ii) The obligation of Borrower to reimburse Bank for
drawings made under Letters of Credit shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, the Application, and such Letters of Credit. Borrower shall
indemnify, defend, protect, and hold Bank harmless from any loss, cost, expense
or liability, including, without
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limitation, reasonable attorneys' fees (collectively, "Liabilities"), arising
out of or in connection with any Letters of Credit, except for Liabilities
caused by Bank's gross negligence or willful misconduct.
2.2 Payments.
(a) Interest accrued hereunder shall be due and payable in
arrears on the first Business Day of each month. Bank shall, at its option,
charge such interest, all Bank Expenses, and all Periodic Payments against
Borrower's deposit account held at Bank or against the Revolving Line, in which
case those amounts shall thereafter accrue interest at the rate then applicable
hereunder. To the extent permitted by law, 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.
(b) Borrower may at any time prepay any Advance, in whole or
in part. Each partial prepayment of a LIBOR Rate Advance shall be in an amount
not less than $1,000,000 or such greater amount that is an integral multiple of
$500,000. Each prepayment shall be made upon the irrevocable written or
telephone notice of Borrower received by Bank not later than 10:00 a.m.
California time on the date of the prepayment of a Reference Rate Advance, and
not less than three (3) Business Days prior to the date of the prepayment of a
LIBOR Rate Advance. The notice of prepayment shall specify the date of the
prepayment, the amount of the prepayment, and the portion of the Advance
prepaid. Unless otherwise specified, a prepayment will be presumed to repay
Advances in the order in which they were requested. Each prepayment of a LIBOR
Rate Advance shall be accompanied by the payment of accrued interest on the
amount prepaid and any amount required by Section 2.6.
(c) Borrower shall pay Bank all amounts outstanding in
respect of the Revolving Facility on the Revolving Maturity Date.
(d) Borrower's payment obligation hereunder is evidenced by
this Agreement and the Revolving Promissory Note in substantially the form
attached hereto as Exhibit C.
2.3 Crediting Payments. Prior to the occurrence of an Event of
Default, Bank shall credit a wire transfer of funds, check or other item of
payment to such deposit account or Obligation as Borrower specifies. After the
occurrence and during the continuance of an Event of Default, the receipt by
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 Bank after 12:00 noon
California time shall be deemed to have been received by Bank as of the opening
of business on the immediately following Business Day. Whenever any payment to
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 Bank the following:
(a) Structuring Fee. A fee equal to Ten Thousand Dollars
($10,000), which fee shall be payable on the Closing Date;
(b) Commitment Fee. A fee equal to one quarter of one
percent (0.25%) per annum of the difference between the Revolving Line and the
average daily balance of outstanding Obligations (including outstanding Letters
of Credit and the Term Advance and any principal payments made on the Term
Advance) during each fiscal quarter, such fee to be payable in arrears on the
last day of each such quarter beginning December 31, 2004; and
(c) Bank Expenses. On the Closing Date, an amount equal to
the Bank Expenses incurred in connection with the preparation and negotiation of
the Loan Documents and, after the date hereof, all Bank Expenses, including
reasonable attorneys' fees and expenses incurred in the enforcement of this
Agreement, as and when they become due.
9
2.5 Conversion/Continuation of Advances.
(a) Borrower may from time to time submit in writing a
request that Reference Rate Advances be converted to LIBOR Rate Advances or that
any existing LIBOR Rate Advances continue for an additional Interest Period.
Such request shall specify the amount of the Reference Rate Advances which will
constitute LIBOR Rate Advances (subject to the limits set forth below) and the
Interest Period to be applicable to such LIBOR Rate Advances. Each written
request for a conversion to a LIBOR Rate Advance or a continuation of a LIBOR
Rate Advance shall be substantially in the form of a LIBOR Rate
Conversion/Continuation Certificate as set forth on Exhibit B-2, which shall be
duly executed by a Responsible Officer. Subject to the terms and conditions
contained herein, three (3) Business Days after Bank's receipt of such a request
from Borrower, such Reference Rate Advances shall be converted to LIBOR Rate
Advances or such LIBOR Rate Advances shall continue, as the case may be provided
that:
(i) no Event of Default or event which with notice or
passage of time or both would constitute an Event of Default exists;
(ii) the Borrower shall not have sent any notice of
termination of the Agreement;
(iii) Borrower shall have complied with such customary
procedures as Bank has established from time to time for Borrower's requests for
LIBOR Rate Advances;
(iv) the amount of a LIBOR Rate Advance shall be
$1,000,000 or such greater amount that is an integral multiple of $500,000; and
(v) Bank shall have determined that the Interest
Period or LIBOR Rate is available to Bank as of the date of the request for such
LIBOR Rate Advance.
Any request by Borrower to convert Reference Rate Advances to LIBOR Rate
Advances or continue any existing LIBOR Rate Advances shall be irrevocable.
Notwithstanding anything to the contrary contained herein, Bank shall not be
required to purchase United States Dollar deposits in the London interbank
market or other applicable LIBOR Rate market to fund any LIBOR Rate Advances,
but the provisions hereof shall be deemed to apply as if Bank had purchased such
deposits to fund the LIBOR Rate Advances.
(b) Any LIBOR Rate Advances shall automatically convert to
Reference Rate Advances upon the last day of the applicable Interest Period,
unless Bank has received and approved a complete and proper request to continue
such LIBOR Rate Advance at least three (3) Business Days prior to such last day
in accordance with the terms hereof. Any LIBOR Rate Advances shall, at Bank's
option, convert to Reference Rate Advances in the event that an Event of Default
shall exist. Borrower shall pay to Bank, upon demand by Bank any amounts
required to compensate Bank for any loss (including loss of anticipated
profits), cost or expense incurred by such person, as a result of the conversion
of LIBOR Rate Advances to Reference Rate Advances pursuant to any of the
foregoing.
2.6 Additional Requirements/Provisions Regarding LIBOR Rate
Advances.
(a) Each LIBOR Rate Advance shall be in a minimum amount of
$1,000,000 and whole increments of $500,000.
(b) If for any reason (including voluntary or mandatory
prepayment or acceleration), Bank receives all or part of the principal amount
of a LIBOR Rate Advance prior to the last day of the Interest Period for such
LIBOR Rate Advance, Borrower shall on demand by Bank, pay Bank the amount (if
any) by which (i) the additional interest which would have been payable on the
amount so received had it not been received until the last day of such Interest
Period or term exceeds (ii) the interest which would have been recoverable by
Bank by placing the amount so received on deposit in the certificate of deposit
markets or the offshore currency interbank markets or United States Treasury
investment products, as the case may be, for a period starting on the
10
date on which it was so received and ending on the last day of such Interest
Period. Bank's determination as to such amount shall be conclusive absent
manifest error.
(c) Borrower shall pay to Bank, upon demand by Bank, from
time to time such amounts as Bank may reasonably determine to be necessary to
compensate it for any costs incurred by Bank that Bank determines are
attributable to its making or maintaining of any amount receivable by Bank
hereunder in respect of any Advances relating thereto (such increases in costs
and reductions in amounts receivable being herein called "Additional Costs"), in
each case resulting from any change in any law, regulation, or interpretation
thereof (a "Regulatory Change") occurring on or after the date hereof that:
(i) changes the basis of taxation of any amounts
payable to Bank under this Agreement in respect of any Advances (other than
changes that affect (A) taxes measured by or imposed on the overall net income
of Bank by the United States or any subdivision thereof or therein or by the
jurisdiction in which Bank is organized or otherwise resides for tax purposes or
in which its lending office is located or in which it has its principal office
or (B) franchise taxes imposed on Bank in lieu of net income taxes), provided,
however, that no payment shall be required to compensate Bank or any other
lender or participant for Additional Costs resulting from changes in the basis
of taxation to the extent that such Additional Costs would not have been
incurred but for Bank's assignment or grant of participation in any of Bank's
obligations, rights or benefits pursuant to Section 12.1 or a change in Bank's
lending office; or
(ii) imposes or modifies any reserve, special deposit
or similar requirements relating to any extensions of credit or other assets of,
or any deposits with, or other liabilities of Bank (including any Advances or
any deposits referred to in the definition of "LIBOR Base Rate" but excluding
any references included in the calculation of "LIBOR Rate"); or
(iii) imposes any other material condition affecting
this Agreement (or any of such extensions of credit or liabilities).
Bank will notify Borrower of any Regulatory Change occurring after the date of
the Agreement which will entitle Bank to compensation pursuant to this section
as promptly as practicable after it obtains knowledge thereof and determines to
request such compensation. If Bank fails to notify Borrower within two hundred
and seventy (270) days after the date on which a Regulatory Change occurs that
entitles Bank to such compensation, Borrower shall not be required to pay any
amount attributable to such Regulatory Change. Bank will furnish Borrower with a
statement setting forth the basis and amount of each request by Bank for
compensation under this Section 2.6. Determinations and allocations by Bank for
purposes of this Section 2.6 of the effect of any Regulatory Change on its costs
of maintaining its obligations to make Advances or of making or maintaining
Advances or on amounts receivable by it in respect of Advances, and of the
additional amounts required to compensate Bank in respect of any Additional
Costs, shall be conclusive absent manifest error.
(d) Borrower shall pay to Bank, upon the request of Bank,
such amount or amounts as shall be sufficient (in the sole good faith opinion of
Bank) to compensate it for any reasonable loss, costs or expense incurred by it
as a result of any failure by Borrower to borrow a LIBOR Rate Advance on the
date for such borrowing specified in the relevant notice of borrowing hereunder.
(e) If Bank shall determine that the adoption or
implementation of any applicable law, rule, regulation or treaty regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof, in each case on or after the date hereof, by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its
applicable lending office) with respect to any directive regarding capital
adequacy (whether or not having the force of law) promulgated on or after the
date hereof, of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on capital of Bank or any
person or entity controlling Bank (a "Parent") as a consequence of its
obligations hereunder to a level below that which Bank (or its Parent) could
have achieved but for such adoption, change or compliance (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by Bank to be material, then from time to time, within 15 days after demand by
Bank, Borrower shall pay to Bank such additional amount or amounts as will
compensate Bank for such reduction.
11
A statement of Bank claiming compensation under this Section and setting forth
the additional amount or amounts to be paid to it hereunder shall be conclusive
absent manifest error.
(f) If at any time Bank, in its sole and absolute
discretion, determines that: (i) the amount of the LIBOR Rate Advances for
periods equal to the corresponding Interest Periods are not available to Bank in
the offshore currency interbank markets, or (ii) the LIBOR Rate does not
accurately reflect the cost to Bank of lending the LIBOR Rate Advance, then Bank
shall promptly give notice thereof to Borrower, and upon the giving of such
notice Bank's obligation to make the LIBOR Rate Advances shall be suspended,
unless Bank and Borrower agree in writing to a different interest rate
applicable to LIBOR Rate Advances. If it shall become unlawful for Bank to
continue to fund or maintain any Advances, or to perform its obligations
hereunder, upon demand by Bank, Borrower shall prepay the affected Advances in
full with accrued interest thereon and all other amounts payable by Borrower
hereunder with respect thereto (including, without limitation, any amount
payable in connection with such prepayment pursuant to Section 2.6(b)).
2.7 Term Option. At any time prior to the Revolving Maturity Date,
Borrower may elect to convert up to Ten Million Dollars ($10,000,000) of the
outstanding Advances into the Term Advance. Borrower shall exercise such option
by delivering a notice to Bank, which shall be irrevocable, specifying the
principal amount to be converted into the Term Advance, and specifying the
portion of the Term Advance that will be a LIBOR Rate Advance (which shall bear
interest at the LIBOR Rate plus the applicable LIBOR Margin) and which portion
shall be a Reference Rate Advance (which shall bear interest at the Reference
Rate plus the applicable Reference Margin). Borrower shall repay the Term
Advance in twelve quarterly payments of principal, plus accrued interest,
beginning on the first Business Day of the fiscal quarter following its election
to convert and continuing on the same day of each fiscal quarter thereafter
until the Term Advance has been repaid in full. Borrower may prepay all or any
part of the Term Advance at any time or from time to time. Prepayments shall be
applied first to fees, then to interest, then to principal installments in
reverse order of maturity. Borrower shall execute and deliver to Bank a term
promissory note in form acceptable to Bank on the day the Advances are converted
under this Section.
2.8 Excess Cash Flow. Unless Bank otherwise consents, the Borrower
shall prepay the Term Advance in an aggregate amount equal to 75% of Excess Cash
Flow for each fiscal year commencing with the fiscal year ending December 31,
2005. Each such prepayment, if required, shall be made on or before the date on
which financial statements are delivered pursuant to Section 6.3(b) with respect
to the relevant fiscal year. No payment shall be required under this Section 2.8
if an Event of Default would exist as a consequence of the making of such
payment.
2.9 Term. This Agreement shall become effective on the Closing
Date and, subject to Section 12.7, shall continue in full force and effect for
so long as any Obligations (other than in respect of contingent indemnities) are
outstanding. Notwithstanding the foregoing, Bank shall have the right to
terminate its obligation to make Credit Extensions under this Agreement upon
notice after the occurrence and during the continuance of an Event of Default.
Notwithstanding termination, Bank's Lien on the Collateral shall remain in
effect for so long as any monetary Obligations (other than in respect of
contingent indemnities) are outstanding. Subject to the obligations of Borrower
described in Section 12.2 and provided that all outstanding Obligations (other
than in respect of contingent indemnification) have been repaid, Borrower shall
have the right to terminate this Agreement.
3. CONDITIONS OF CREDIT EXTENSIONS.
3.1 Conditions Precedent to Initial Credit Extension. The
obligation of Bank to make the initial Credit Extension is subject to the
condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, the following:
(a) this Agreement;
(b) the Promissory Note;
(c) a Continuing Guaranty from Ultra Clean Technology
Systems and Service, Inc.;
12
(d) a Third Party Security Agreement, duly executed by Ultra
Clean Technology Systems and Service, Inc.;
(e) a certificate of the Secretary of the Borrower with
respect to incumbency and resolutions authorizing the execution and delivery of
this Agreement;
(f) a financing statement (Form UCC-1);
(g) a Compliance Certificate and Borrower-prepared financial
statements for the month ended prior to the Closing Date; and
(h) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.
3.2 Conditions Precedent to all Credit Extensions. The obligation
of Bank to make each Credit Extension, including the initial Credit Extension,
is further subject to the following conditions:
(a) timely receipt by Bank of the Advance Request 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 Request Form and on the effective date of each Credit Extension as
though made at and as of each such date, and no Event of Default shall have
occurred and be continuing, or would result from such Credit Extension. The
making of each Credit Extension shall be deemed to be a representation and
warranty by Borrower on the date of such Credit Extension as to the accuracy of
the facts referred to in this Section 3.2(b).
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Borrower hereby grants and pledges
to Bank 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 shall
constitute a valid, first priority security interest in the presently existing
Collateral, and will constitute a valid, first priority security interest in
Collateral acquired after the date hereof, in each case subject to Permitted
Liens.
4.2 Delivery of Additional Documentation Required. Borrower shall
from time to time execute and deliver to Bank, at the request of Bank, all
Negotiable Collateral in excess of $100,000 in the aggregate, and all financing
statements and other documents that Bank may reasonably request, in form
satisfactory to Bank, to perfect and continue perfected Bank's security
interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Documents.
4.3 Right to Inspect. Bank (through any of its officers,
employees, or agents) shall have the right at Borrower' expense upon reasonable
prior notice, from time to time during Borrower's usual business hours, to
inspect and audit Borrower's Books and to make copies thereof and to check,
test, and audit and appraise the Collateral, provided such inspections, audits
and appraisals shall not occur more than twice per fiscal year as long as an
Event of Default has not occurred and is continuing.
4.4 Release of Collateral. Concurrently with any conveyance, sale,
lease or other disposition of any asset permitted hereby (other than a Transfer
specified in Section 7.1(v)), the Liens on such asset (but not in proceeds
thereof) will cease without any action by Bank.
13
5. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Borrower and each
Subsidiary is duly existing under the laws of the jurisdiction of its
organization and qualified and licensed to do business in any state in which the
conduct of its business or its ownership of property requires that it be so
qualified except to the extent the failure to be so qualified or licensed could
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 to which is a party 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 except to the extent such default could not reasonably be expected to have
a Material Adverse Effect.
5.3 No Prior Encumbrances. Borrower has good and marketable title
to the Collateral, free and clear of Liens, except for Permitted Liens.
5.4 Bona Fide Accounts. The Accounts are bona fide existing
obligations.
5.5 Name; Location of Chief Executive Office. Borrower has not
done business under any name other than that specified on the signature page
hereof or except as disclosed to Bank in writing. The chief executive office of
Borrower as of the Closing Date is located at the address indicated in Section
10 hereof.
5.6 Litigation. Except as disclosed in writing to Bank and except
to the extent such actions or proceedings could not reasonably be expected to
have a Material Adverse Effect, (i) there are no actions or proceedings pending
against Borrower or any Subsidiary before any court or administrative agency and
(ii) 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 that are delivered by
Borrower to Bank 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 material adverse
change in the consolidated financial condition of Borrower since the date of the
most recent of such financial statements submitted to Bank, other than as
described in writing to Bank. No circumstance has occurred that has a Material
Adverse Effect since the date of the most recent Compliance Certificate
delivered to Bank, other than as consented to in writing by Bank.
5.8 Solvency, Payment of Debts. As of the Closing Date, Borrower
is not insolvent, as that term is defined in Section 101 of the Bankruptcy Code.
As of the Closing Date, Borrower is able to pay its debts (including trade
debts) as they mature.
5.9 Regulatory Compliance. Borrower and each Subsidiary has met
the minimum funding requirements of ERISA with respect to any employee benefit
plans subject to ERISA, except to the extent the failure to do so could not
reasonably be expected to have a Material Adverse Effect. No event has occurred
resulting from Borrower's failure to comply with ERISA that is reasonably likely
to result in Borrower's incurring any material liability. 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 the important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System). Borrower has complied with all material provisions of the Federal Fair
Labor Standards Act. Borrower has not violated any statutes, laws, ordinances or
rules applicable to it except to the extent such violation could not reasonably
be expected to have a Material Adverse Effect.
5.10 Environmental Condition. Except in each case as could not
reasonably be expected to have a Material Adverse Effect, none of Borrower's or
any Subsidiary's properties or assets has ever been used by Borrower or
14
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; 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; 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.
5.11 Taxes. Borrower and each Subsidiary has filed or caused to be
filed all material tax returns required to be filed, and has paid, or has made
adequate provision for the payment of, all taxes reflected therein, except to
the extent that the amount or validity of such tax in being contested in good
faith by appropriate proceedings and is reserved against (to the extent required
by GAAP) by Borrower or such Subsidiary.
5.12 Subsidiaries. As of the Closing Date, 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 material 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, except to the extent the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
5.14 Full Disclosure. No representation, warranty or other
statement made by Borrower in any certificate or written statement furnished to
Bank in connection with or pursuant to any Loan Document, when taken together
with all other information as a whole, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained in such certificates or statements, in light of the
circumstances under which they were made, not materially misleading as of the
date such representation, warranty or other statement is made.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, until payment in full of all
outstanding Obligations (other than in respect of contingent indemnities), and
for so long as Bank may have any commitment to make a Credit Extension
hereunder, the Borrower shall do all of the following:
6.1 Good Standing. Borrower shall maintain its and each of its
Subsidiaries' existence in its jurisdiction of organization and maintain
qualification in each jurisdiction in which such qualification is required for
the operation of Borrower's business, unless the failure to so maintain such
qualification could not reasonably be expected to have a Material Adverse
Effect; provided that this Section shall not prohibit any transaction permitted
by Section 7.3. Borrower shall maintain, and shall cause each of its
Subsidiaries to maintain, in force all licenses, approvals and agreements, the
loss of which could 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, except to the extent the failure
to do so could not reasonably be expected to have a Material Adverse Effect.
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, except (i) where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect or (ii) to the extent contested in
good faith by appropriate proceedings.
6.3 Financial Statements, Reports, Certificates. Borrower shall
deliver to Bank: (a) as soon as available, but in any event within forty five
days (45) days after the end of each of the first three fiscal quarters, company
prepared consolidated balance sheet, income statement and cash flow statement
for Borrower covering its consolidated operations during such period, in a form
reasonably acceptable to Bank and certified by a Responsible Officer; (b) as
15
soon as available, but in any event within ninety (90) days after the end of
each fiscal year, consolidated financial statements of Borrower prepared in
accordance with GAAP, consistently applied; (c) promptly upon receipt of notice
thereof, a report of any legal actions pending or threatened against Borrower or
any Subsidiary that could reasonably be expected to result in damages or costs
to Borrower or any Subsidiary of One Million Dollars ($1,000,000) or more; (d)
within forty five (45) days of the last day of each of the first three fiscal
quarters, and within ninety (90) days after the end of each fiscal year, a
Compliance Certificate signed by a Responsible Officer in substantially the form
of Exhibit D hereto, and (e) such budgets, sales projections, operating plans or
other financial information as Bank may reasonably request from time to time.
Within thirty (30) days after the Closing Date, Borrower shall cause to be
delivered to Bank an opinion of Xxxxx Xxxx Xxxxxxxx, special New York counsel to
the Borrower, substantially in the form attached as Exhibit F hereto.
6.4 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 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 Bank with proof
satisfactory to Bank indicating that Borrower or a Subsidiary has made such
payments or deposits; provided that Borrower or a Subsidiary need not make any
payment or deposit if the amount or validity of such payment or deposit is
contested in good faith by appropriate proceedings and is reserved against (to
the extent required by GAAP) by Borrower or such Subsidiary.
6.5 Insurance. Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion and 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. All such policies
of property insurance shall contain a Bank's loss payable endorsement, in a form
reasonably satisfactory to Bank, showing Bank as an additional loss payee
thereof and all liability insurance policies shall show the Bank as an
additional insured, and shall specify that the insurer must give at least twenty
(20) days notice to Bank before canceling its policy for any reason. Upon Bank's
request, Borrower shall deliver to Bank certified copies of such policies of
insurance and evidence of the payments of all premiums therefor. After the
occurrence and during the continuance of an Event of Default, all proceeds
payable under any such policy shall, at the option of Bank, be payable to Bank
to be applied on account of the Obligations.
6.6 Financial Covenants. Borrower on a consolidated basis shall
maintain and comply at all times with the following financial covenants:
(a) Tangible Net Worth. A Tangible Net Worth of at least
Twenty Three Million Dollars ($23,000,000) plus an amount equal to seventy five
percent (75%) of quarterly net income after March 31, 2004 and one hundred
percent (100%) of the amount by which Tangible Net Worth is increased after the
Closing Date as a result of the issuance and sale of equity securities of the
Borrower.
(b) Net Worth. Notwithstanding Section 6.6(a), at all times
after Borrower acquires all or substantially all of the capital stock or
property of another Person in compliance with Section 7.3 and the value of the
goodwill acquired by Borrower in any such transaction is greater than Five
Million Dollars ($5,000,000), Borrower shall maintain a Net Worth of at least
Thirty Nine Million Dollars ($39,000,000) plus an amount equal to seventy five
percent (75%) of quarterly net income after March 31, 2004 and one hundred
percent (100%) of the amount by which Net Worth is increased after the Closing
Date as a result of the issuance and sale of equity securities of the Borrower.
(c) Profitability. EBITDA not less than zero for two
consecutive quarters after adding back any acquisition and/or restructuring
related charges taken during the respective quarter.
(d) Quick Ratio. A ratio of Quick Assets to Current
Liabilities of at least 0.9 to 1.0 through December, 2004, and at least 1.0 to
1.0 thereafter.
16
(e) Indebtedness to EBITDA Ratio. On a trailing four quarter
basis, a ratio of the aggregate principal amount of all Indebtedness (including
without limitation any Obligations owing from Borrower to Bank) to EBITDA of not
more than (i) 2.0 to 1.0 beginning on the Closing Date through June 29, 2005,
and (ii) 1.5 to 1.0 beginning on June 30, 2005 and at all times thereafter.
(f) Fixed Charge Coverage Ratio. Beginning the fiscal
quarter following the date, if any, that Borrower converts any portion of the
Advances into a Term Advance, a ratio of EBITDA for the period of four
consecutive fiscal quarters ended on such day to Fixed Charges on of each day of
at least 1.2 to 1.0.
6.7 Bank Accounts. Borrower shall maintain its primary operating
and deposit accounts with Bank and/or an Affiliate of Bank.
6.8 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 Bank to effect the purposes of this Agreement.
6.9 Subsidiaries. Borrower shall cause any wholly-owned Subsidiary
organized in the United States or any subdivision thereof or therein promptly
upon Bank's request to enter into a Guaranty and to secure such Guaranty with a
security interest, subject only to Permitted Liens, in substantially all of its
collateral.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, until payment in full of the
outstanding Obligations (other than in respect of contingent indemnities) or for
so long as Bank may have any commitment to make any Credit Extensions, Borrower
will not do any of the following:
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 and leases of property 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; (iv) Transfers of Permitted Investments as defined under
clause (b) of such definition; (v) Transfers of assets by the Borrower to any
Guarantor or by any Guarantor to the Borrower or any other Guarantor; or (vi)
Transfers of other property in an aggregate amount of up to Two Million Dollars
($2,000,000) per 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 Change in Control.
7.3 Mergers or Acquisitions.
(a) Merge or consolidate, or permit any of its Subsidiaries
to merge or consolidate, with or into any other Person, except that if
immediately after giving effect thereto no Event of Default shall have occurred
and be continuing (and a Responsible Officer provides to Bank certification to
that effect), (i) any Person may merge into the Borrower in a transaction in
which the Borrower is the surviving corporation, (ii) any Person may merge into
any Subsidiary of the Borrower in a transaction in which the surviving entity is
a Subsidiary and (if any party to such merger is a Guarantor) is a Guarantor,
(iii) any Transfer permitted by Section 7.1(vi) shall be permitted, and (iv) any
transfer permitted by clause (c) shall be permitted. Following any such
transaction, Borrower shall provide such financial statements related thereto as
Bank may reasonably request.
(b) Acquire, or permit any of its Subsidiaries to acquire,
all or substantially all of the capital stock of property of another Person
(other than the Borrower or any Subsidiary of the Borrower), except that any
transaction permitted by clause (c) shall be permitted.
(c) Notwithstanding clauses (a) and (b), the Borrower may
acquire, or permit any of its Subsidiaries to acquire, including by way of
merger, all or substantially all of the capital stock or property of
17
another Person, provided that (i) the Person acquired pursuant to such
transaction is engaged solely in, or the property acquired pursuant to such
transaction is used in, a business similar or related to the business engaged in
by the Borrower as of the Closing Date, (ii) the aggregate amount of cash
consideration paid by the Borrower or such Subsidiary in connection with all
such transactions consummated during the term of this Agreement (excluding any
principal or interest paid on any seller note) shall not exceed $30,000,000,
(iii) the Borrower shall obtain the prior written consent and approval of the
board of directors of the Person acquired, or the Person whose property is
acquired, pursuant to such transaction, (iv) if such transaction is effected by
way of merger, the Borrower or a Subsidiary is the ultimate surviving entity of
such transaction (even if this is not the case during any interim steps of a
multiple stage transaction), (v) there is no change in any Responsible Officer
of the Borrower immediately after giving effect to, and solely as a result of,
such transaction, and (vi) no Event of Default shall have occurred and be
continuing immediately after giving effect to such transaction (and a
Responsible Officer provides to Bank certification to that effect). Following
any such transaction, Borrower shall provide financial statements related
thereto.
7.4 Indebtedness. Create, incur, assume or be or remain liable
with respect to any Indebtedness, or permit any Subsidiary so to do, 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 dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any of its capital stock (any such payment, a "Restricted Payment," except
that (i) the Borrower may declare and pay dividends with respect to its capital
stock payable solely in additional shares of its common stock, (ii) the Borrower
may make Restricted Payments pursuant to and in accordance with the terms of
stock option plans or other benefit plans for management or employees of the
Borrower and its Subsidiaries and (iii) the Borrower may make additional
Restricted Payments in an aggregate amount not to exceed $500,000 during any
fiscal year, provided in all cases that an Event of Default does not exist or
would not exist after giving effect to any such payment.
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 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 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, except for (i) transactions between or among the
Borrower and the Guarantors and (ii) transactions otherwise permitted hereunder.
7.9 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 in a
manner that directly or indirectly terminates or impairs the subordination of
the Subordinated Debt or the subordination of the security interest or lien that
the subordinated creditor may have in any property of Borrower without Bank's
prior written consent.
7.10 Compliance. Become an "investment company" or be 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 Credit Extension for such
purpose, or fail to meet the minimum funding requirements of ERISA with respect
to any employee benefit plan subject to ERISA, except to the extent such failure
could not reasonably be expected to have a Material Adverse Effect, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, fail
to comply with the material provisions of the Federal Fair Labor Standards Act
or violate any law or regulation to which Borrower is subject, except to (i) the
extent such violation could not reasonably be expected to have a Material
Adverse Effect or (ii) to the extent contested in good faith by appropriate
proceedings.
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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. If Borrower fails to pay the principal of, or
any interest on, any Advances within one (1) Business Day of when due and
payable; or fails to pay any of the other Obligations not constituting principal
or interest (including without limitation, Bank Expenses in accordance with the
terms hereof) within thirty (30) days after receipt by Borrower of an invoice
for such other Obligations;
8.2 Covenant Default. If Borrower fails to perform any obligation
under Sections 6.3, 6.6 or 6.7 or violates any of the covenants contained in
Article 7 of this Agreement, or 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 one or more Borrower and 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 ten (10) Business Days after
Borrower receives notice thereof or any officer of Borrower becomes aware
thereof (provided that no Credit Extensions will be required to be made during
such cure period.
8.3 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 Credit Extensions will be required to be made
during such cure period);
8.4 Insolvency. If Borrower becomes insolvent, or if an Insolvency
Proceeding is commenced by Borrower against Borrower, or if an Insolvency
Proceeding is commenced against Borrower (other than by Borrower) and is not
dismissed or stayed within thirty (30) days (provided that no Credit Extensions
will be made prior to the dismissal or stay of such Insolvency Proceeding);
8.5 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 One Million Five Hundred
Thousand Dollars ($1,500,000) or that would be reasonably expected to have a
Material Adverse Effect;
8.6 Judgments. If a judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least One Million Five
Hundred Thousand Dollars ($1,500,000) shall be rendered against Borrower and
shall remain unsatisfied and unstayed for a period of thirty (30) days (provided
that no Credit Extensions will be made prior to the satisfaction or stay of such
judgment);
8.7 Guaranty. If any Guaranty ceases for any reason to be in full
force and effect other than pursuant to its terms, or any Guarantor fails to
perform any obligation under any Guaranty or under a security agreement securing
any such Guaranty (collectively, the "Guaranty Documents"), or any event of
default occurs under any Guaranty Document or any Guarantor revokes or purports
to revoke a Guaranty, or any material misrepresentation or material misstatement
exists now or hereafter in any warranty or representation set forth in any
Guaranty Document or in any certificate delivered to Bank in connection with any
Guaranty Document as of the date such warranty or representation was made, or if
any of the circumstances described in Sections 8.3 through 8.7 occur with
respect to any Guarantor.
19
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 Bank as of the date such
representation or warranty was made by any Responsible Officer pursuant to this
Agreement or to induce Bank to enter into this Agreement or any other Loan
Document.
9. BANK'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, Bank may, at its election, upon notice of
its election and 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 or by any of the other Loan Documents, 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 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 Bank;
(c) Settle or adjust disputes and claims directly with
account debtors for amounts, upon terms and in whatever order that Bank
reasonably considers advisable;
(d) Make such payments and do such acts as Bank considers
necessary or reasonable to protect its security interest in the Collateral.
Borrower agrees to assemble the Collateral if Bank so requires, and to make the
Collateral available to Bank as Bank may designate. Borrower authorizes 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 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 Bank a license to enter into possession of such
premises and to occupy the same, without charge, in order to exercise any of
Bank's rights or remedies provided herein, at law, in equity, or otherwise;
(e) Set off and apply to the Obligations any and all (i)
balances and deposits of Borrower held by Bank, or (ii) indebtedness at any time
owing to or for the credit or the account of Borrower held by Bank;
(f) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. 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 Bank's exercise of its rights under this Section 9.1, Borrower's
rights under all licenses and all franchise agreements shall inure to Bank's
benefit except to the extent such license or other right would result in a
breach of such agreement;
(g) Dispose of 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 Bank
determines is commercially reasonable, and apply any proceeds to the Obligations
in whatever manner or order Bank deems appropriate;
(h) 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.
20
9.2 Power of Attorney. Borrower irrevocably appoints Bank (and any
of Bank's designated officers or employees) as Borrower's true and lawful
attorney to, upon and during the continuance of an Event of Default: (a) send
requests for verification of Accounts or notify account debtors of Bank's
security interest in the Accounts; (b) endorse Borrower's name on any checks or
other forms of payment or security that may come into 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) dispose of any
Collateral; (e) make, settle, and adjust all claims under and decisions with
respect to Borrower's policies of insurance; and (f) settle and adjust disputes
and claims respecting the accounts directly with account debtors, for amounts
and upon terms which Bank determines to be reasonable; provided 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 Bank as Borrower's attorney in fact, and each and
every one of Bank's rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations (other than contingent obligations in
respect of indemnities) have been fully repaid and performed and Bank's
obligation to provide advances hereunder is terminated.
9.3 Accounts Collection. Upon and during the continuance of an
Event of Default, Bank may notify any Person owing funds to Borrower of Bank's
security interest in such funds and verify the amount of such Account. After the
occurrence and during the continuance of an Event of Default, Borrower shall
collect all amounts owing to Borrower for Bank, receive in trust all payments as
Bank's trustee, and upon request of Bank immediately deliver such payments to
Bank 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 Bank 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 Revolving Facility as Bank deems necessary to protect Bank from the exposure
created by such failure; or (c) obtain and maintain insurance policies of the
type discussed in Section 6.5 of this Agreement, and take any action with
respect to such policies as Bank deems reasonably prudent. Any amounts so paid
or deposited by Bank 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 Bank
shall not constitute an agreement by Bank to make similar payments in the future
or a waiver by Bank of any Event of Default under this Agreement.
9.5 Bank's Liability for Collateral. 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, except to the extent resulting from Bank's gross negligence or
willful misconduct.
9.6 Remedies Cumulative. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Bank of one right
or remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election, or acquiescence by it. No waiver by Bank
shall be effective unless made in a written document signed on behalf of 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. Except for any notice referred to herein,
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 Bank
on which Borrower may in any way be liable.
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
21
delivered or sent by a recognized overnight delivery service, certified mail,
postage prepaid, return receipt requested, or by telefacsimile to Borrower or to
Bank, as the case may be, at its addresses set forth below:
If to Borrower: ULTRA CLEAN HOLDINGS, INC.
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
FAX: (000) 000-0000
If to Bank: Union Bank of California, N.A.
00 Xxxxxxx Xxxx., Xxxxx 000
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxx and Xxxxx Xxxxx
FAX: (000) 000-0000
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.
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. Borrower and Bank hereby submit to the jurisdiction of the
state and Federal courts located in the County of Santa Xxxxx, State of
California. BORROWER AND BANK 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. IF FOR ANY REASON THE JURY WAIVER IN
THIS AGREEMENT IS NOT ENFORCEABLE, THE PARTIES AGREE THAT ANY DISPUTE,
CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN SHALL BE SETTLED BY FINAL AND BINDING
ARBITRATION TO BE HELD IN SANTA XXXXX COUNTY, CALIFORNIA AND IN ACCORDANCE WITH
THE THEN-CURRENT COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION
ASSOCIATION. JUDGMENT UPON ANY AWARD RESULTING FROM ARBITRATION MAY BE ENTERED
INTO AND ENFORCED BY ANY STATE OR FEDERAL COURT IN THE STATE OF CALIFORNIA
HAVING JURISDICTION THEREOF.
12. GENERAL PROVISIONS.
12.1 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 Bank's prior written consent, which consent
may be granted or withheld in Bank's sole discretion. Bank shall have the right
upon notice to Borrower to sell, transfer, negotiate, or grant participation in
all or any part of, or any interest in, Bank's obligations, rights and benefits
hereunder, provided that, as long as an Event of Default has not occurred and is
not continuing, Bank shall not make an assignment or participation to any Person
as a consequence of which Borrower would incur Additional Costs or other costs
that it would not have incurred had such assignment or participation not been
made.
12.2 Indemnification. Borrower shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities (collectively, "Liabilities")
claimed or asserted by any other party in connection with the transactions
contemplated by this Agreement; and (b) all Bank Expenses incurred or paid by
Bank as a result of or in any way arising out of, following, or consequential to
transactions
22
between Bank and Borrower under this Agreement (including without limitation
reasonable attorneys fees and expenses), except for Liabilities caused by Bank's
gross negligence or willful misconduct.
12.3 Time of Essence. Time is of the essence for the performance of
all obligations set forth in this Agreement.
12.4 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.
12.5 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.
12.6 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.
12.7 Survival. All covenants, representations and warranties made
in this Agreement shall continue in full force and effect so long as any
Obligations (other than contingent obligations in respect of indemnities) remain
outstanding. The obligations of Borrower to indemnify Bank with respect to the
expenses, damages, losses, costs and liabilities described in Section 12.2 shall
survive until all applicable statute of limitations periods with respect to
actions that may be brought against Bank have run.
12.8 Confidentiality. In handling any confidential information Bank
and all employees and agents of Bank, including but not limited to accountants,
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 thereby received or received pursuant to this Agreement
except that disclosure of such information may be made (i) to the subsidiaries,
affiliates or service providers of Bank in connection with their present or
prospective business relations with Borrower, (ii) to prospective transferees or
purchasers of any interest in the Loan Documents, 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, (iv) as may be required in
connection with the examination, audit or similar investigation of Bank and (v)
as Bank may determine in connection with the enforcement of any remedies
hereunder. Confidential information hereunder shall not include information that
either: (a) is in the public domain or in the knowledge or possession of Bank
when disclosed to Bank, or becomes part of the public domain after disclosure to
Bank through no fault of Bank; or (b) is disclosed to Bank by a third party,
provided 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.
ULTRA CLEAN HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------
Title: SVP & CFO
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxxx X. Xxxxx
--------------------------
Title: Vice President
23
EXHIBIT A
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 commercial tort claims, 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, securities
entitlements, securities accounts, 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.
Notwithstanding the foregoing, the Collateral shall exclude equity interests in
any Foreign Subsidiary to the extent required to prevent the collateral from
including more than 65% of all equity interests in such Foreign Subsidiary.
"Foreign Subsidiary" means any Subsidiary which is a "controlled foreign
corporation" within the meaning of the IRC.
EXHIBIT B-1
ADVANCE REQUEST FORM
The undersigned hereby certifies as follows:
I, ________________________, am the duly elected and acting
________________________ of ULTRA CLEAN HOLDINGS, INC.
This Advance Request Form is delivered on behalf of Borrower to Union Bank
of California, N.A., pursuant to that certain Loan and Security Agreement
between the undersigned and Union Bank of California, N.A. dated November __,
2004 (the "Agreement"). The terms used herein which are defined in the Agreement
have the same meaning herein as ascribed to them therein.
Borrower hereby requests on __________________, 20__ an Advance (the
"Advance") as follows:
(a) The date on which the Advance is to be made is ____________, 20__ .
(b) The amount of the Advance is to be ___________________
($____________), in the form of a Reference Rate Advance of $__________________;
and/or a LIBOR Rate Advance of $____________ for an Interest Period of
__________________ months.
All representations and warranties of Borrower stated in the Agreement are
true, correct and complete in all material respects as of the date of this
request for an Advance; provided, however, that those representations and
warranties expressly referring to another date are true, correct and complete in
all material respects as of such date.
IN WITNESS WHEREOF, this Advance Request Form is executed by the
undersigned as of this ___ day of __________________, 20______.
ULTRA CLEAN HOLDINGS, INC.
By:_______________________________
Title:____________________________
EXHIBIT B-2
LIBOR RATE CONVERSION/CONTINUATION CERTIFICATE
The undersigned hereby certifies as follows:
I, ____________________, am the duly elected and acting
____________________ of ULTRA CLEAN HOLDINGS, INC. ("Borrower").
This certificate is delivered on behalf of Borrower to Bank, pursuant to
Section 2 of that certain Loan and Security Agreement dated November __, 2004
between the undersigned and Bank (the "Agreement"). The terms used in this LIBOR
Rate Conversion/Continuation Certificate which are defined in the Agreement have
the same meaning herein as ascribed to them therein.
Borrower hereby requests on ________________, 20___ a LIBOR Rate Advance
(the "Advance") as follows:
(a) (i) A rate conversion of an existing Reference Rate Advance from a
Reference Rate Advance to a LIBOR Rate Advance; or
(ii) A continuation of an existing LIBOR Rate Advance as a LIBOR
Rate Advance.
[Check (i) or (ii) above]
(b) The date on which the Advance is to be made is
_____________________, 20____
(c) The amount of the Advance is to be ___________________
($____________), for an Interest Period of ____________ month(s).
IN WITNESS WHEREOF, this LIBOR Rate Conversion/Continuation Certificate is
executed by the undersigned as of this _____________ day of
____________________, 20_________.
ULTRA CLEAN HOLDINGS, INC.
By:_______________________________
Title:____________________________
FOR INTERNAL BANK USE ONLY
LIBOR Pricing Date LIBOR Rate LIBOR Rate Variance Maturity Date
------------------ ---------- ------------------- -------------
--%
------------------ ---------- ------------------- -------------
EXHIBIT C
REVOLVING PROMISSORY NOTE
$20,000,000 San Jose, California
Date: November 4, 2004
ULTRA CLEAN HOLDINGS, INC. ("Borrower"), for value received, hereby
promises to pay to the order of UNION BANK OF CALIFORNIA, N.A. ("Bank"), in
lawful money of the United States of America, pursuant to that certain Loan
Agreement dated as of November 4, 2004, by and between Borrower and Bank (the
"Loan Agreement"), (i) the principal amount of Twenty Million Dollars
($20,000,000) or, if lesser, (ii) the principal amount of all Advances
outstanding as of the Revolving Maturity Date. All unpaid amounts of principal
and interest shall be due and payable in full on the Revolving Maturity Date.
This Note is referred to in the Loan Agreement. All terms defined in the
Loan Agreement shall have the same definitions when used herein, unless
otherwise defined herein.
Borrower further promises to pay interest on each Advance hereunder in
like funds on the principal amount hereof from time to time outstanding from the
date hereof until paid in full, at a rate or rates per annum and payable on the
dates determined pursuant to the Loan Agreement.
Payment on this Note shall be applied in the manner set forth in the Loan
Agreement. The Loan Agreement contains provisions for acceleration of the
maturity of Advances hereunder upon the occurrence of certain stated events and
also provides for optional and mandatory prepayments of principal hereof prior
to any stated maturity upon the terms and conditions therein specified.
All Advances made by Bank to Borrower pursuant to the Loan Agreement shall
be recorded by Bank on the books and records of Bank. The failure of Bank to
record any Advance or any prepayment or payment made on account of the principal
balance hereof shall not limit or otherwise affect the obligation of Borrower
under this Note and under the Loan Agreement to pay the principal, interest and
other amounts due and payable under the Advances.
Any principal or interest payments on this Note not paid when due, whether
at stated maturity, by acceleration or otherwise, shall bear interest at the
default rate described in Section 2.1.1(c) of the Loan Agreement.
Upon the occurrence of a default hereunder or an Event of Default under
the Loan Agreement that is continuing, all unpaid principal, accrued interest
and other amounts owing hereunder shall, at the option of Bank and upon notice
to the Borrower, be immediately collectible by or on behalf of Bank pursuant to
the Loan Agreement and applicable law.
Except for any notice required to be given under any Loan Document,
Borrower waives presentment and demand for payment, notice of dishonor, protest
and notice of protest of this Note, and shall pay all reasonable costs of
collection when incurred, including reasonable attorneys' fees, costs and
expenses. The right to plead any and all statutes of limitations as a defense to
any demand hereunder is hereby waived to the fullest extent permitted by law.
The provisions of this Note shall inure to the benefit of and be binding
upon any successor to Borrower and shall extend to any holder hereof.
ULTRA CLEAN HOLDINGS, INC.
By: ________________________________
Title: _____________________________
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: UNION BANK OF CALIFORNIA, N.A.
FROM: ULTRA CLEAN HOLDINGS, INC.
The undersigned authorized officer, on behalf of ULTRA CLEAN HOLDINGS,
INC. hereby certifies that in accordance with the terms and conditions of the
Loan and Security Agreement between Borrower and Bank (the "Agreement"), (i) no
Event of Default has occurred and is continuing as of ________ except as noted
below and (ii) all representations and warranties of Borrower stated in the
Agreement are true and correct in all material respects as of the date hereof.
Attached herewith are the required documents supporting the above certification.
The Responsible Officer further certifies that any accompanying financial
statements are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- ---------
Quarterly financial statements Quarterly within 45 days Yes No
Annual financial statements FYE within 90 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Minimum TNW $* $________ Yes No
Minimum EBITDA EBITDA not less than $________ Yes No
zero for two
consecutive quarters
Minimum Quick Ratio 0.9:1.0 through ___:1.0 Yes No
12/04; 1.0: 1.0
thereafter
Maximum Leverage (Indebtedness** to 2.0:1.0 through ___:1.0 Yes No
EBITDA Ratio) 6/29/05; 1.5:1.0
beginning on 6/30/05
and thereafter
Minimum Fixed Charge 1.2:1.0 ___:1.0 Yes No
* Borrower on a consolidated basis shall maintain a Tangible Net Worth of at
least $23,000,000 plus 75% of quarterly net income after 3/31/04 and 100% of the
amount by which Tangible Net Worth is increased after the Closing Date as a
result of the issuance and sale of equity securities of the Borrower. At all
times after Borrower acquires all or substantially all of the capital stock or
property of another Person in compliance with Section 7.3 and provided that the
value of the goodwill acquired by Borrower in any such transaction is greater
than Five Million Dollars ($5,000,000), Borrower on a consolidated basis shall
maintain a Net Worth of at least $39,000,000 plus 75% of quarterly net income
after 3/31/04 and 100% of the amount by which Net Worth is increased after the
Closing Date as a result of the issuance and sale of equity securities of the
Borrower.
** all Indebtedness (including without limitation any Contingent Obligations
owing from Borrower to Bank) COMMENTS REGARDING EXCEPTIONS: See Attached
Sincerely,
_________________________________
SIGNATURE
_________________________________
TITLE
_________________________________
DATE
EXHIBIT E
SUBORDINATION TERMS
Creditor subordinates to Bank any security interest or lien that Creditor
may have in any property of Borrower. Notwithstanding the respective dates of
attachment or perfection of the security interest of Creditor and the security
interest of Bank, the security interest of Bank in the Collateral, as defined in
that certain Loan and Security Agreement between Borrower and Bank, dated as of
the date hereof, as amended from time to time (the "Loan Agreement"), shall at
all times be prior to the security interest of Creditor.
The indebtedness owing to Creditor (the "Subordinated Debt") under the
[describe subordinated debt instrument] is subordinated in right of payment to
all obligations of Borrower to Bank now existing or hereafter arising, together
with all costs of collecting such obligations (including attorneys' fees),
including, without limitation, all interest accruing after the commencement by
or against Borrower of any bankruptcy, reorganization or similar proceeding, and
all obligations under the Loan Agreement (the "Senior Debt").
Creditor will not demand or receive from Borrower (and Borrower will not
pay to Creditor) all or any part of the Subordinated Debt, by way of payment,
prepayment, setoff, lawsuit or otherwise, nor will Creditor exercise any remedy
with respect to the Collateral, nor will Creditor commence, or cause to
commence, prosecute or participate in any administrative, legal or equitable
action against Borrower, for so long as any portion of the Senior Debt remains
outstanding. Subject to the next section, Creditor shall be entitled to receive
each regularly scheduled payment of interest and principal in respect of the
Subordinated Debt, provided that no Event of Default (as defined in the Loan
Agreement) has occurred under the Loan Agreement that is continuing or would
exist immediately after giving effect to such payment.
Upon (i) the occurrence and during the continuance of an Event of Default
(as defined in the Loan Agreement) under the Loan Agreement and (ii) written
notice thereof to Creditor from Bank (a "Payment Blockage Notice"), Creditor may
not exercise any remedy with respect to Borrower nor receive any payment from
Borrower for each period (each a "Payment Blockage Period") commencing on the
date of the Payment Blockage Notice and ending on the earliest to occur of the
following events:
such Event of Default has been cured or has been waived by Bank in
writing;
180 days have passed from the date of such Payment Blockage Notice, unless
Bank has commenced a judicial proceeding or non-judicial actions to collect or
enforce the Senior Debt or foreclose on the Collateral, or a case or proceeding
by or against Borrower is commenced under any bankruptcy or insolvency law or
laws relating to the relief of debtors, in which case the Payment Blockage
Period shall be extended during the continuance of such actions or proceedings;
or
the Senior Debt has been discharged or paid in full and Bank's commitment,
if any, with respect thereto has been terminated;
immediately after which Creditor may collect all payments then due and
owing, without giving effect to acceleration of other outstanding amounts in
respect of the Subordinated Debt.
Creditor shall promptly deliver to Bank in the form received (except for
endorsement or assignment by Creditor where required by Bank) for application to
the Senior Debt any payment, distribution, security or proceeds received by
Creditor with respect to the Subordinated Debt other than in accordance with
this Agreement.
In the event of Borrower's insolvency, reorganization or any case or
proceeding under any bankruptcy or insolvency law or laws relating to the relief
of debtors, these provisions shall remain in full force and effect, and Bank's
claims against Borrower and the estate of Borrower shall be paid in full before
any payment is made to Creditor.
Until the Senior Debt is paid, Creditor agrees that in any bankruptcy,
insolvency or similar proceeding involving Borrower, Creditor shall not accept
or reject or fail to accept or reject, as appropriate, any plan of
reorganization or arrangement for Creditor or vote such Creditor's claims in
respect of the Subordinated Debt in any way which in either case would be
inconsistent with the terms of this Agreement.
The subordination provisions are for the benefit of Bank, and may not be
amended or waived without Bank's prior written consent.
If, at any time after payment in full of the Senior Debt any payments of
the Senior Debt must be disgorged by Bank for any reason (including, without
limitation, the bankruptcy of Borrower), the relative rights and priorities set
forth herein shall be reinstated as to all such
disgorged payments as though such payments had not been made and Creditor shall
immediately pay over to Bank all payments received with respect to the
Subordinated Debt to the extent that such payments would have been prohibited
hereunder. At any time and from time to time, without notice to Creditor, Bank
may take such actions with respect to the Senior Debt as Bank, in its sole
discretion, may deem appropriate, including, without limitation, terminating
advances to Borrower, increasing the principal amount, extending the time of
payment, increasing applicable interest rates, renewing, compromising or
otherwise amending the terms of any documents affecting the Senior Debt and any
collateral securing the Senior Debt, and enforcing or failing to enforce any
rights against Borrower or any other person. No such action or inaction shall
impair or otherwise affect Bank's rights hereunder. The subordination provisions
shall bind any successors or assignees of Creditor and shall benefit any
successors or assigns of Bank. Such provisions are solely for the benefit of
Creditor and Bank and not for the benefit of Borrower or any other party.
CORPORATE RESOLUTIONS TO BORROW
BORROWER: ULTRA CLEAN HOLDINGS, INC.
I, the undersigned Secretary or Assistant Secretary of ULTRA CLEAN
HOLDINGS, INC. (the "Corporation"), HEREBY CERTIFY that the Corporation is
organized and existing under and by virtue of the laws of the State of Delaware.
I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and
complete copies of the Certificate of Incorporation, as amended, and the Bylaws
of the Corporation, each of which is in full force and effect on the date
hereof.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation,
duly called and held, at which a quorum was present and voting (or by other duly
authorized corporate action in lieu of a meeting), the following resolutions
were adopted.
BE IT RESOLVED, that any one (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
NAMES POSITION ACTUAL SIGNATURES
------ -------- -----------------
--------------------- ----------------------- -----------------------------
--------------------- ----------------------- -----------------------------
--------------------- ----------------------- -----------------------------
--------------------- ----------------------- -----------------------------
acting for and on behalf of this Corporation and as its act and deed be, and
they hereby are, authorized and empowered:
BORROW MONEY. To borrow money from time to time from Union Bank of
California, N.A. ("Bank"), on such terms as may be agreed upon between the
officers, employees, or agents of the Corporation and Bank in the aggregate
principal amount of up to $20,000,000.00.
EXECUTE LOAN DOCUMENTS. To execute and deliver to Bank that certain Loan
and Security Agreement dated as of November __, 2004 (the "Loan Agreement") in
substantially the form attached hereto and any other agreement entered into
between Corporation and Bank in connection with the Loan Agreement, including
any amendments, all as amended or extended from time to time with the approval
of the executing officer, such approval to be conclusively evidenced by such
execution (collectively, with the Loan Agreement, the "Loan Documents"), and
also to execute and deliver to Bank one or more renewals, extensions,
modifications, refinancings, consolidations, or substitutions for the Loan
Documents, or any portion thereof.
GRANT SECURITY. To grant a security interest to Bank in the Collateral
described in the Loan Documents, which security interest shall secure all of the
Corporation's Obligations, as described in the Loan Documents.
NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation may have an
interest, and either to receive cash for the same or to cause such proceeds to
be credited to the account of the Corporation with Bank, or to cause such other
disposition of the proceeds derived therefrom as they may deem advisable.
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder, and in
all cases, to do and perform such other acts and things, to pay any and all fees
and costs, and to execute and deliver such other documents and agreements as
such officer, employee or agent may in its discretion deem reasonably necessary
or proper in order to carry into effect the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
I FURTHER CERTIFY that the officers, employees, and agents named above are
duly elected, appointed, or employed by or for the Corporation, as the case may
be, and occupy the positions set forth opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Corporation; and
that the Resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on November __, 2004, and
attest that the signatures set opposite the names listed above are their genuine
signatures.
CERTIFIED AND ATTESTED BY:
_________________________________________
UNCONDITIONAL GUARANTY
Ultra Clean Technology Systems and Service, Inc.
For and in consideration of the loan by UNION BANK OF CALIFORNIA, N.A.
("Bank") to Ultra Clean Holdings, Inc. ("Borrower"), which loan is made pursuant
to a Loan and Security Agreement between Borrower and Bank dated as of November
04, 2004, as amended from time to time (the "Agreement"), and acknowledging that
Bank would not enter into the Agreement without the benefit of this Guaranty,
the undersigned guarantor ("Guarantor") hereby unconditionally and irrevocably
guarantees the prompt and complete payment of all amounts that Borrower owes to
Bank and performance by Borrower of the Agreement and any other agreements
between Borrower and Bank, as amended from time to time (collectively referred
to as the "Agreements"), in strict accordance with their respective terms. All
terms used without definition in this Guaranty shall have the meaning assigned
to them in the Agreement.
1. If Borrower does not pay any amount or perform its obligations in
strict accordance with the Agreements, Guarantor shall immediately pay all
amounts due thereunder (including, without limitation, all principal, interest,
and fees) and otherwise to proceed to complete the same and satisfy all of
Borrower's obligations under the Agreements.
2. If there is more than one guarantor, the obligations hereunder are
joint and several, and whether or not there is more than one guarantor, the
obligations hereunder are independent of the obligations of Borrower and any
other person or entity, and a separate action or actions may be brought and
prosecuted against Guarantor whether action is brought against Borrower or
whether Borrower be joined in any such action or actions. Guarantor waives the
benefit of any statute of limitations affecting its liability hereunder or the
enforcement thereof, to the extent permitted by law. Guarantor's liability under
this Guaranty is not conditioned or contingent upon the genuineness, validity,
regularity or enforceability of the Agreements.
3. Guarantor authorizes Bank, without notice or demand and without
affecting its liability hereunder, from time to time to (a) renew, extend, or
otherwise change the terms of the Agreements or any part thereof; (b) take and
hold security for the payment of this Guaranty or the Agreements, and exchange,
enforce, waive and release any such security; and (c) apply such security and
direct the order or manner of sale thereof as Bank in its sole discretion may
determine.
4. Guarantor waives any right to require Bank to (a) proceed against
Borrower, any guarantor or any other person; (b) proceed against or exhaust any
security held from Borrower; or (c) pursue any other remedy in Bank's power
whatsoever. Bank may, at its election, exercise or decline or fail to exercise
any right or remedy it may have against Borrower or any security held by Bank,
including without limitation the right to foreclose upon any such security by
judicial or nonjudicial sale, without affecting or impairing in any way the
liability of Guarantor hereunder. Guarantor waives any defense arising by reason
of any disability or other defense of Borrower or by reason of the cessation
from any cause whatsoever of the liability of Borrower. Guarantor waives any
setoff, defense or counterclaim that Borrower may have against Bank. Guarantor
waives any defense arising out of the absence, impairment or loss of any right
of reimbursement or subrogation or any other rights against Borrower. Until all
of the amounts that Borrower owes to Bank have been paid in full, Guarantor
shall have no right of subrogation or reimbursement, contribution or other
rights against Borrower, and Guarantor waives any right to enforce any remedy
that Bank now has or may hereafter have against Borrower. Guarantor waives all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance of this
Guaranty and of the existence, creation, or incurring of new or additional
indebtedness. Guarantor assumes the responsibility for being and keeping itself
informed of the financial condition of Borrower and of all other circumstances
bearing upon the risk of nonpayment of any indebtedness or nonperformance of any
obligation of Borrower, warrants to Bank that it will keep so informed, and
agrees that absent a request for particular information by Guarantor, Bank shall
not have any duty to advise Guarantor of information known to Bank regarding
such condition or any such circumstances. Guarantor waives the benefits of
California Civil Code sections 2809, 2810, 2819, 2845, 2847, 2848, 2849, 2850,
2899 and 3433.
5. Guarantor acknowledges that, to the extent Guarantor has or may have
certain rights of subrogation or reimbursement against Borrower for claims
arising out of this Guaranty, those rights may be impaired or destroyed if Bank
elects to proceed against any real property security of Borrower by non-judicial
foreclosure. That impairment or destruction could, under certain judicial cases
and based on equitable principles of estoppel, give rise to a defense by
Guarantor against its obligations under this Guaranty. Guarantor waives that
1
defense and any others arising from Bank's election to pursue non-judicial
foreclosure. Without limiting the generality of the foregoing, Guarantor waives
any and all benefits and defenses under California Code of Civil Procedure
Sections 580a, 580b, 580d and 726, to the extent they are applicable.
6. If Borrower becomes insolvent or is adjudicated bankrupt or files a
petition for reorganization, arrangement, composition or similar relief under
any present or future provision of the United States Bankruptcy Code, or if such
a petition is filed against Borrower, and in any such proceeding some or all of
any indebtedness or obligations under the Agreements are terminated or rejected
or any obligation of Borrower is modified or abrogated, or if Borrower's
obligations are otherwise avoided for any reason, Guarantor agrees that
Guarantor's liability hereunder shall not thereby be affected or modified and
such liability shall continue in full force and effect as if no such action or
proceeding had occurred. This Guaranty shall continue to be effective or be
reinstated, as the case may be, if any payment must be returned by Bank upon the
insolvency, bankruptcy or reorganization of Borrower, Guarantor, any other
guarantor, or otherwise, as though such payment had not been made.
7. Any indebtedness of Borrower now or hereafter held by Guarantor is
hereby subordinated to any indebtedness of Borrower to Bank; and such
indebtedness of Borrower to Guarantor shall be collected, enforced and received
by Guarantor as trustee for Bank and be paid over to Bank on account of the
indebtedness of Borrower to Bank but without reducing or affecting in any manner
the liability of Guarantor under the other provisions of this Guaranty.
8. Guarantor agrees to pay reasonable attorneys' fees and all other
costs and expenses which may be incurred by Bank in the enforcement of this
Guaranty. No terms or provisions of this Guaranty may be changed, waived,
revoked or amended without Bank's prior written consent. Should any provision of
this Guaranty be determined by a court of competent jurisdiction to be
unenforceable, all of the other provisions shall remain effective. This
Guaranty, together with any agreements (including without limitation any
security agreements or any pledge agreements) executed in connection with this
Guaranty, embodies the entire agreement among the parties hereto with respect to
the matters set forth herein, and supersedes all prior agreements among the
parties with respect to the matters set forth herein. No course of prior dealing
among the parties, no usage of trade, and no parol or extrinsic evidence of any
nature shall be used to supplement, modify or vary any of the terms hereof.
There are no conditions to the full effectiveness of this Guaranty. Bank may
assign this Guaranty without in any way affecting Guarantor's liability under
it. This Guaranty shall inure to the benefit of Bank and its successors and
assigns. This Guaranty is in addition to the guaranties of any other guarantors
and any and all other guaranties of Borrower's indebtedness or liabilities to
Bank.
9. Guarantor represents and warrants to Bank that (i) Guarantor has
taken all necessary and appropriate action to authorize the execution, delivery
and performance of this Guaranty, (ii) execution, delivery and performance of
this Guaranty do not conflict with or result in a breach of or constitute a
default under Guarantor's Articles of Incorporation or Bylaws or other
organizational documents or agreements to which it is party or by which it is
bound, and (iii) this Guaranty constitutes a valid and binding obligation,
enforceable against Guarantor in accordance with its terms.
10. Guarantor covenants and agrees that Guarantor shall do all of the
following:
10.1. Guarantor shall maintain its corporate existence, remain in
good standing in its state of incorporation, and continue to qualify in each
jurisdiction in which the failure to so qualify could reasonably be expected to
have a Material Adverse Effect on Guarantor. Guarantor shall maintain in force
all licenses, approvals and agreements, the loss of which could reasonably be
expected to have a Material Adverse Effect on Guarantor.
10.2. Guarantor shall comply with all statutes, laws, ordinances,
directives, orders, and government rules and regulations to which it is subject
if non-compliance with such laws could reasonably be expected to have a Material
Adverse Effect on Guarantor.
10.3. At any time and from time to time Guarantor shall execute and
deliver such further instruments and take such further action as may reasonably
be requested by Bank to effect the purposes of this Guaranty.
11. This Guaranty shall be governed by the laws of the State of
California, without regard to conflicts of laws principles. GUARANTOR WAIVES ANY
RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
2
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. Guarantor submits to the
exclusive jurisdiction of the state and federal courts located in Santa Xxxxx
County, California for purposes of this Guaranty and the Agreements. If the jury
waiver set forth in this Section is not enforceable, then any dispute,
controversy or claim arising out of or relating to this Agreement or any of the
transactions contemplated herein shall be settled by final and binding
arbitration held in San Jose, California in accordance with the then applicable
Commercial Arbitration Rules of the American Arbitration Association. Judgment
upon any award resulting from arbitration may be entered into and enforced by
any state of federal court having jurisdiction thereof.
12. All payments made by Guarantor hereunder will be made free and clear
of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any governmental authority or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding any tax imposed on or measured by the net income or profits of a
Bank pursuant to the laws of the jurisdiction in which it is organized or the
jurisdiction in which the principal office or applicable lending office of such
Bank is located or any subdivision thereof or therein) and all interest,
penalties or similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges being
referred to collectively as "Taxes"). If any Taxes are so levied or imposed,
Guarantor agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Guaranty, after withholding or deduction for or on account of any Taxes, will
not be less than the amount provided for herein and in the Loan Documents.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty
as of this fourth day of November, 2004.
ULTRA CLEAN TECHNOLOGY SYSTEMS AND
SERVICE, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Title: SVP & CFO
3
THIRD PARTY
SECURITY AGREEMENT
ULTRA CLEAN TECHNOLOGY SYSTEMS AND SERVICE, INC.
This Third Party Security Agreement (this "Agreement") is made and entered
into as of November 4, 2004 by and between the undersigned ("Grantor"), and
UNION BANK OF CALIFORNIA, N.A. (the "Bank").
RECITALS
Bank proposes to enter into a transaction with ULTRA CLEAN HOLDING, INC.
("Borrower"), which is the parent company of Grantor, pursuant to a Loan and
Security Agreement dated of even date, as amended from time to time (the "Loan
Agreement"). Grantor expects to derive economic benefit from Bank's doing so and
dealing with Borrower in accordance with the Loan Agreement, and has entered
into an Unconditional Guaranty of even date herewith with respect to the present
and future obligations of Borrower to Bank (as amended from time to time, the
"Guaranty"). Grantor wishes to secure performance and payment of all obligations
to Bank under the Guaranty (the "Guarantor Obligations") with substantially all
of its assets. All terms used without definition in this Agreement shall have
the meaning assigned to them in the Loan Agreement. All terms used without
definition in this Agreement or in the Loan Agreement shall have the meaning
assigned to them in the Uniform Commercial Code.
NOW, THEREFORE, Grantor and the Bank agree as follows:
1. Grant of Security Interest. To secure all of the Guarantor
Obligations, Grantor grants to the Bank a security interest in the property
described in Exhibit A (the "Collateral").
2. Grantor's Representations and Warranties. Grantor represents and
warrants as follows:
(a) Due Organization and Qualification. Grantor and each
Subsidiary is duly existing under the laws of the jurisdiction of its
organization and qualified and licensed to do business in any state in which the
conduct of its business or its ownership of property requires that it be so
qualified except to the extent the failure to be so qualified or licensed could
not reasonably be expected to have a Material Adverse Effect.
(b) Due Authorization; No Conflict. The execution, delivery,
and performance of the Loan Documents are within Grantor's powers, have been
duly authorized, and are not in conflict with nor constitute a breach of any
provision contained in Grantor's Certificate of Incorporation or Bylaws, nor
will they constitute an event of default under any material agreement to which
Grantor is a party or by which Grantor is bound. Grantor is not in default under
any agreement to which it is a party or by which it is bound except to the
extent such default could not reasonably be expected to have a Material Adverse
Effect.
(c) No Prior Encumbrances. Grantor has good and marketable
title to the Collateral, free and clear of Liens, except for Permitted Liens.
(d) Bona Fide Accounts. The Accounts are bona fide existing
obligations.
(e) Name; Location of Chief Executive Office. Grantor has
not done business under any name other than that specified on the signature page
hereof. The chief executive office of Grantor as of the Closing Date is located
at the address indicated in Section 12 hereof.
(f) Litigation. Except as disclosed in writing to Bank and
except to the extent such actions or proceedings could not reasonably be
expected to have a Material Adverse Effect, there are no actions or proceedings
pending by or against Grantor or any Subsidiary before any court or
administrative agency. Except as disclosed to Bank in writing, Grantor does not
have knowledge of any such pending or threatened actions or proceedings.
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(g) No Material Adverse Change in Financial Statements. All
consolidated financial statements related to Grantor and any Subsidiary that are
delivered by Grantor to Bank fairly present in all material respects Grantor's
consolidated financial condition as of the date thereof and Grantor's
consolidated results of operations for the period then ended. There has not been
a material adverse change in the consolidated financial condition of Grantor
since the date of the most recent of such financial statements submitted to
Bank, other than as described in writing to Bank. No circumstance has occurred
that has a Material Adverse Effect since the date of the most recent Compliance
Certificate delivered to Bank, other than as consented to in writing by Bank.
(h) Solvency, Payment of Debts. As of the Closing Date,
Grantor is not insolvent, as that term is defined in Section 101 of the
Bankruptcy Code. As of the Closing Date, Grantor is able to pay its debts
(including trade debts) as they mature.
(i) Regulatory Compliance. Grantor and each Subsidiary has
met the minimum funding requirements of ERISA with respect to any employee
benefit plans subject to ERISA. No event has occurred resulting from Grantor's
failure to comply with ERISA that is reasonably likely to result in Grantor's
incurring any material liability. Grantor is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940. Grantor is not engaged principally, or as one of
the important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System). Grantor has complied with all
material provisions of the Federal Fair Labor Standards Act. Grantor has not
violated any statutes, laws, ordinances or rules applicable to it extent to the
extent such violation could not reasonably be expected to have a Material
Adverse Effect.
(j) Environmental Condition. Except in each case as could
not reasonably be expected to have a Material Adverse Effect, none of Grantor's
or any Subsidiary's properties or assets has ever been used by Grantor or any
Subsidiary or, to the best of Grantor'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; to the best of Grantor's knowledge, none of Grantor'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 Grantor or any Subsidiary; and neither Grantor 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 Grantor or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste
or hazardous substances into the environment.
(k) Taxes. Grantor and each Subsidiary has filed or caused
to be filed all material tax returns required to be filed, and has paid, or has
made adequate provision for the payment of, all taxes reflected therein, except
to the extent that the amount or validity of such tax in being contested in good
faith by appropriate proceedings and is reserved against (to the extent required
by GAAP) by Grantor or such Subsidiary.
(l) Subsidiaries. As of the Closing Date, Grantor does not
own any stock, partnership interest or other equity securities of any Person,
except for Permitted Investments.
(m) Government Consents. Grantor and each Subsidiary has
obtained all material 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 Grantor's business
as currently conducted except to the extent the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
(n) Full Disclosure. No representation, warranty or other
statement made by Grantor in any certificate or written statement furnished to
Bank, when taken together with all other information as a whole, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained in such certificates or statements, in
light of the circumstances under which they were made, not materially misleading
as of the date such representation, warranty or other statement is made.
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3. Affirmative Covenants. Grantor covenants and agrees that, until
payment in full of all outstanding Obligations (other than in respect of
contingent indemnities), and for so long as Bank may have any commitment to make
a Credit Extension hereunder, such Grantor shall do all of the following:
(a) Good Standing. Grantor shall maintain its and each of
its Subsidiaries' corporate existence in its jurisdiction of organization and
maintain qualification in each jurisdiction in which such qualification is
required for the operation of Grantor's business, unless the failure to so
maintain such qualification could not reasonably be expected to have a Material
Adverse Effect, provided that this Section shall not prohibit any transaction
permitted by Section 7.3 of the Loan Agreement. Grantor shall maintain, and
shall cause each of its Subsidiaries to maintain in force all licenses,
approvals and agreements, the loss of which could reasonably be expected to have
a Material Adverse Effect.
(b) Government Compliance. Grantor 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 except to the extent the
failure to do so could not reasonably be expected to leave a Material Adverse
Effect. Grantor shall comply, and shall cause each Subsidiary to comply, with
all statutes, laws, ordinances and government rules and regulations to which it
is subject, except (i) where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect or (ii) to the extent contested in
good faith by appropriate proceedings.
(c) Taxes. Grantor 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 Bank, on demand, appropriate certificates attesting
to the payment or deposit thereof; and Grantor 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 Bank with proof
satisfactory to Bank indicating that Grantor or a Subsidiary has made such
payments or deposits; provided that Grantor or a Subsidiary need not make any
payment or deposit if the amount or validity of such payment or deposit is
contested in good faith by appropriate proceedings and is reserved against (to
the extent required by GAAP) by Grantor.
(d) Insurance. Grantor, at its expense, shall keep the
Collateral insured against loss or damage by fire, theft, explosion and
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 Grantor's business is conducted on the date hereof. Grantor shall also
maintain insurance relating to Grantor's ownership and use of the Collateral in
amounts and of a type that are customary to businesses similar to Grantor's. All
such policies of property insurance shall contain a Bank's loss payable
endorsement, in a form reasonably satisfactory to Bank, showing Bank as an
additional loss payee thereof and all liability insurance policies shall show
the Bank as an additional insured, and shall specify that the insurer must give
at least twenty (20) days notice to Bank before canceling its policy for any
reason. Upon Bank's request, Grantor shall deliver to Bank certified copies of
such policies of insurance and evidence of the payments of all premiums
therefor. After the occurrence and during the continuance of an Event of
Default, all proceeds payable under any such policy shall, at the option of
Bank, be payable to Bank to be applied on account of the Obligations.
(e) Bank Accounts. Grantor shall maintain its primary
operating and deposit accounts with Bank and/or an Affiliate of Bank.
(f) Further Assurances. At any time and from time to time
Grantor shall execute and deliver such further instruments and take such further
action as may reasonably be requested by Bank to effect the purposes of this
Agreement.
(g) Subsidiaries. Borrower shall cause any wholly-owned
Subsidiary organized in the United States or any subdivision thereof or therein
promptly upon Bank's request to enter into a Guaranty and to secure such
Guaranty with a security interest, subject only to Permitted Liens, in
substantially all of its collateral.
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4. Negative Covenants. Grantor covenants and agrees that, until payment
in full of the outstanding Obligations (other than in respect of contingent
indemnities) or for so long as Bank may have any commitment to make any Credit
Extensions, Grantor will not do any of the following:
(a) 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 and leases of property in the ordinary course of business; (ii)
Transfers of non-exclusive licenses and similar arrangements for the use of the
property of Grantor or its Subsidiaries; (iii) Transfers of worn-out or obsolete
Equipment; (iv) Transfers of Permitted Investments as defined under clause (b)
of such definition; (v) Transfers of assets to the Borrower or any between
Grantor and Guarantors; or (vi) Transfers of other property in an aggregate
amount of up to Two Million Dollars ($2,000,000) per fiscal year.
(b) 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 Grantor and any business substantially similar or
related thereto (or incidental thereto), or suffer a Change in Control.
(c) Mergers or Acquisitions.
(i) Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with or into any other Person, except that
if immediately after giving effect thereto no Event of Default shall have
occurred and be continuing (and a Responsible Officer provides to Bank
certification to that effect), (i) any Person may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any Person
may merge into any Subsidiary of the Borrower in a transaction in which the
surviving entity is a Subsidiary and (if any party to such merger is a
Guarantor) is a Guarantor, (iii) any Transfer permitted by Section 7.1(vi) of
the Loan Agreement shall be permitted, and (iv) any transfer permitted by clause
(c) shall be permitted. Following any such transaction, Borrower shall provide
such financial statements related thereto as Bank may reasonably request.
(ii) Acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock of property of another
Person (other than the Grantor or any Subsidiary of the Grantor), except that
any transaction permitted by clause (c) shall be permitted.
(iii) Notwithstanding clauses (a) and (b), the Grantor
may acquire, or permit any of its Subsidiaries to acquire, including by way of
merger, all or substantially all of the capital stock or property of another
Person, provided that (i) the Person acquired pursuant to such transaction is
engaged solely in, or the property acquired pursuant to such transaction is used
in, a business similar or related to the business engaged in by the Grantor as
of the Closing Date, (ii) the aggregate amount of cash consideration paid by the
Grantor or such Subsidiary in connection with all such transactions consummated
during the term of this Agreement (excluding any principal or interest paid on
any seller note) shall not exceed $30,000,000, (iii) the Grantor shall obtain
the prior written consent and approval of the board of directors of the Person
acquired, or the Person whose property is acquired, pursuant to such
transaction, (iv) if such transaction is effected by way of merger, the Grantor
or a Subsidiary is the ultimate surviving entity of such transaction (even if
this is not the case during any interim steps of a multiple stage transaction),
(v) there is no change in any Responsible Officer of the Grantor immediately
after giving effect to, and solely as a result of, such transaction, and (vi) no
Event of Default shall have occurred and be continuing immediately after giving
effect to such transaction (and a Responsible Officer provides to Bank
certification to that effect). Following any such transaction, Grantor shall
provide financial statements related thereto.
(d) Indebtedness. Create, incur, assume or be or remain
liable with respect to any Indebtedness, or permit any Subsidiary so to do,
other than Permitted Indebtedness.
(e) 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.
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(f) Distributions. Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any of its capital stock (any such payment, a "Restricted Payment," except
that (i) the Grantor may declare and pay dividends with respect to its capital
stock payable solely in additional shares of its common stock, (ii) the Grantor
may make Restricted Payments pursuant to and in accordance with the terms of
stock option plans or other benefit plans for management or employees of Grantor
and its Subsidiaries and (iii) Grantor may make additional Restricted Payments
in an aggregate amount not to exceed $500,000 during any fiscal year, provided
in all cases that an Event of Default does not exist or would not exist after
giving effect to any such payment.
(g) 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.
(h) Transactions with Affiliates. Directly or indirectly
enter into or permit to exist any material transaction with any Affiliate of
Grantor except for transactions that are upon fair and reasonable terms that are
no less favorable to Grantor than would be obtained in an arm's length
transaction with a nonaffiliated Person except for (i) transactions between or
among Grantor and Borrower or other Guarantors and (ii) transactions otherwise
permitted hereunder.
(i) 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 Subordination Agreement signed in connection with
this Agreement or with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt in a
manner that directly or indirectly terminates or impairs the subordination of
the Subordinated Debt or the subordination of the security interest or lien that
the subordinated creditor may have in any property of Grantor without Bank's
prior written consent.
(j) Compliance. Become an "investment company" or be
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 Credit Extension
for such purpose, or fail to meet the minimum funding requirements of ERISA with
respect to any employee benefit plan subject to ERISA, permit a Reportable Event
or Prohibited Transaction, as defined in ERISA, to occur, fail to comply with
the material provisions of the Federal Fair Labor Standards Act or violate any
law or regulation to which Grantor is subject, except to (i) the extent such
violation could not reasonably be expected to have a Material Adverse Effect or
(ii) to the extent contested in good faith by appropriate proceedings.
5. Events of Default. Any one or more of the following events shall
constitute an Event of Default by Borrower under this Agreement:
5.1 Loan Agreement Default. If an Event of Default occurs under
the Loan Agreement;
5.2 Covenant Default. If Grantor violates any of the covenants
contained in Section 4 of this Agreement, or 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 Grantor and 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 ten (10) Business Days after Grantor
receives notice thereof or any officer of Grantor becomes aware thereof
(provided that no Credit Extensions will be required to be made during such cure
period.
5.3 Attachment. If any material portion of Grantor'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 Grantor 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 Grantor's
assets, or if a notice of lien, levy, or assessment is filed of record with
respect to any material portion of Grantor'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
5
paid within thirty (30) days after Grantor 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 Grantor;
5.4 Insolvency. If Grantor becomes insolvent, or if an Insolvency
Proceeding is commenced by Grantor, or if an Insolvency Proceeding is commenced
against Grantor (other than by Grantor) and is not dismissed or stayed within
thirty (30) days;
5.5 Other Agreements. If there is a default in any agreement to
which Grantor 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 One Million Five Hundred
Thousand Dollars ($1,500,000) or that would be reasonably expected to have a
Material Adverse Effect;
5.6 Judgments. If a judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least One Million Five
Hundred Thousand Dollars ($1,500,000) shall be rendered against Grantor and
shall remain unsatisfied and unstayed for a period of thirty (30) days;
5.7 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 Bank as of the date such
representation or warranty was made by any Responsible Officer pursuant to this
Agreement or to induce Bank to enter into this Agreement or any other Loan
Document.
6. Bank's Rights and Remedies.
6.1 Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, Bank may, at its election, upon notice of
its election and demand, do any one or more of the following, all of which are
authorized by Grantor:
(a) Declare all Obligations, whether evidenced by the Loan
Agreement or by any of the other Loan Documents, immediately due and payable;
(b) Settle or adjust disputes and claims directly with
account debtors for amounts, upon terms and in whatever order that Bank
reasonably considers advisable;
(c) Make such payments and do such acts as Bank considers
necessary or reasonable to protect its security interest in the Collateral.
Grantor agrees to assemble the Collateral if Bank so requires, and to make the
Collateral available to Bank as Bank may designate. Grantor authorizes 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 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 Grantor's owned
premises, Grantor hereby grants Bank a license to enter into possession of such
premises and to occupy the same, without charge, in order to exercise any of
Bank's rights or remedies provided herein, at law, in equity, or otherwise;
(d) Set off and apply to the Obligations any and all (i)
balances and deposits of Grantor held by Bank, or (ii) indebtedness at any time
owing to or for the credit or the account of Grantor held by Bank;
(e) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Bank is hereby granted a license or other right, solely
pursuant to the provisions of this Section 6.1, to use, without charge,
Grantor'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
Bank's exercise of its rights under this Section 6.1, Grantor's rights
6
under all licenses and all franchise agreements shall inure to Bank's benefit
except to the extent such license or other right would result in a breach of
such agreement;
(f) Dispose of 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 Grantor's premises) as Bank
determines is commercially reasonable, and apply any proceeds to the Obligations
in whatever manner or order Bank deems appropriate;
(g) Bank may credit bid and purchase at any public sale; and
(h) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Grantor.
6.2 Power of Attorney. Grantor irrevocably appoints Bank (and any
of Bank's designated officers or employees) as Grantor's true and lawful
attorney to, upon and during the continuance of an Event of Default: (a) send
requests for verification of Accounts or notify account debtors of Bank's
security interest in the Accounts; (b) endorse Grantor's name on any checks or
other forms of payment or security that may come into Bank's possession; (c)
sign Grantor'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) dispose of any
Collateral; (e) make, settle, and adjust all claims under and decisions with
respect to Grantor's policies of insurance; and (f) settle and adjust disputes
and claims respecting the accounts directly with account debtors, for amounts
and upon terms which Bank determines to be reasonable; provided Bank may
exercise such power of attorney to sign the name of Grantor on any of the
documents described in Section 4.2 regardless of whether an Event of Default has
occurred. The appointment of Bank as Grantor's attorney in fact, and each and
every one of Bank's rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations (other than contingent obligations in
respect of indemnities) have been fully repaid and performed and Bank's
obligation to provide advances hereunder is terminated.
6.3 Accounts Collection. Upon and during the continuance of an
Event of Default, Bank may notify any Person owing funds to Grantor of Bank's
security interest in such funds and verify the amount of such Account. After the
occurrence and during the continuance of an Event of Default, Grantor shall
collect all amounts owing to Grantor for Bank, receive in trust all payments as
Bank's trustee, and upon request of Bank immediately deliver such payments to
Bank in their original form as received from the account debtor, with proper
endorsements for deposit.
6.4 Bank Expenses. If Grantor 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 Bank 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 Revolving Facility as Bank deems necessary to protect Bank from the exposure
created by such failure; or (c) obtain and maintain insurance policies of the
type discussed in Section 3(d) of this Agreement, and take any action with
respect to such policies as Bank deems reasonably prudent. Any amounts so paid
or deposited by Bank 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 Bank
shall not constitute an agreement by Bank to make similar payments in the future
or a waiver by Bank of any Event of Default under this Agreement.
6.5 Bank's Liability for Collateral. 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, except to the extent resulting from Bank's gross negligence or
willful misconduct.
6.6 Remedies Cumulative. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Bank of one right
or remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Grantor's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election, or acquiescence by it. No waiver by Bank
7
shall be effective unless made in a written document signed on behalf of Bank
and then shall be effective only in the specific instance and for the specific
purpose for which it was given.
6.7 Demand; Protest. Except for any notice referred to herein,
Grantor 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 Bank
on which Grantor may in any way be liable.
7. Amendment of Loan Documents. Grantor authorizes Bank, without notice
or demand and without affecting its liability hereunder, from time to time to
(a) renew, extend, or (with the approval of Borrower) otherwise change the terms
of any Loan Document, or any part thereof; (b) take and hold security for the
payment of any Loan Document, and exchange, enforce, waive and release any such
security; and (c) apply such security and direct the order or manner of sale
thereof as Bank in its sole discretion may determine.
8. Grantor Waivers. Grantor waives any right to require Bank to (a)
proceed against Borrower, any other guarantor or any other person; (b) proceed
against or exhaust any security held from Borrower; (c) marshal any assets of
Borrower; or (d) pursue any other remedy in Bank's power whatsoever. Bank may,
at its election, exercise or decline or fail to exercise any right or remedy it
may have against Borrower or any security held by Bank, including without
limitation the right to foreclose upon any such security by judicial or
nonjudicial sale, without affecting or impairing in any way the liability of
Grantor hereunder. Grantor waives any defense arising by reason of any
disability or other defense of Borrower or by reason of the cessation from any
cause whatsoever of the liability of Borrower. Grantor waives any setoff,
defense or counterclaim that Borrower may have against Bank. Grantor waives any
defense arising out of the absence, impairment or loss of any right of
reimbursement or subrogation or any other rights against Borrower. Until all
obligations under the Guaranty have been satisfied, Grantor shall have no right
of subrogation or reimbursement, contribution or other rights against Borrower,
and Grantor waives any right to enforce any remedy that Bank now has or may
hereafter have against Borrower. Grantor waives all rights to participate in any
security now or hereafter held by Bank. Grantor waives all presentments, demands
for performance, notices of nonperformance, protests, notices of protest,
notices of dishonor, and notices of acceptance of this Agreement and of the
existence, creation, or incurring of new or additional indebtedness. Grantor
assumes the responsibility for being and keeping itself informed of the
financial condition of Borrower and of all other circumstances bearing upon the
risk of nonpayment of any indebtedness or nonperformance of any obligation of
Borrower, warrants to Bank that it will keep so informed, and agrees that absent
a request for particular information by Grantor, Bank shall have no duty to
advise Grantor of information known to Bank regarding such condition or any such
circumstances. Until all Obligations have been satisfied, Grantor waives the
benefits of California Civil Code sections 2809, 2810, 2819, 2845, 2847, 2848,
2849, 2850, 2899 and 3433.
9. Borrower Insolvency. If Borrower becomes insolvent or is adjudicated
bankrupt or files a petition for reorganization, arrangement, composition or
similar relief under any present or future provision of the United States
Bankruptcy Code, or if such a petition is filed against Borrower, and in any
such proceeding some or all of any indebtedness or obligations under the Loan
Documents are terminated or rejected or any obligation of Borrower is modified
or abrogated, or if Borrower's obligations are otherwise avoided for insolvency,
bankruptcy or any similar reason, Grantor agrees that Grantor's liability
hereunder shall not thereby be affected or modified and such liability shall
continue in full force and effect as if no such action or proceeding had
occurred. This Agreement shall continue to be effective or be reinstated, as the
case may be, if any payment must be returned by Bank upon the insolvency,
bankruptcy or reorganization of Borrower, Grantor, any other person, or
otherwise, as though such payment had not been made.
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 Grantor or to Bank, as the case may be, at its
addresses set forth below:
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If to Grantor: Ultra Clean Technology Systems and Service, Inc.
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
If to Bank: Union Bank of California, N.A.
00 Xxxxxxx Xxxx., Xxxxx 000
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxx and Xxxxx Xxxxx
FAX: (000) 000-0000
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.
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 Grantor and Bank hereby submits to the non-exclusive
jurisdiction of the state and Federal courts located in the County of Santa
Xxxxx, State of California. GRANTOR AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR 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. IF FOR ANY REASON THE JURY WAIVER IN THIS AGREEMENT IS NOT ENFORCEABLE,
THE PARTIES AGREE THAT ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN SHALL
BE SETTLED BY FINAL AND BINDING ARBITRATION TO BE HELD IN SANTA XXXXX COUNTY,
CALIFORNIA AND IN ACCORDANCE WITH THE THEN CURRENT COMMERCIAL ARBITRATION RULES
OF THE AMERICAN ARBITRATION ASSOCIATION. JUDGMENT UPON ANY AWARD RESULTING FROM
ARBITRATION MAY BE ENTERED INTO AND ENFORCED BY ANY STATE OR FEDERAL COURT
HAVING JURISDICTION THEREOF.
12. General Provisions.
12.1 Successors and Assigns. This Agreement shall bind and inure to
he 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 Grantor without Bank's prior written consent, which consent
may be granted or withheld in Bank's sole discretion. Bank shall have the right
without the consent of or notice to Grantor to sell, transfer, negotiate, or
grant participation in all or any part of, or any interest in, Bank's
obligations, rights and benefits hereunder.
12.2 Indemnification. Grantor shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with Grantor's failure to comply with the terms of this
Agreement; and (b) all losses or Bank Expenses (as defined in the Loan
Agreement) in any way suffered, incurred, or paid by Bank as a result of or in
any way arising out of, following, or consequential to Grantor's failure to
comply with the terms of this Agreement (including without limitation reasonable
attorneys fees and expenses), except for losses caused by Bank's gross
negligence, willful misconduct or bad faith.
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12.3 Time of Essence. Time is of the essence for the performance of
all obligations set forth in this Agreement.
12.4 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.
12.5 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.
12.6 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.
12.7 Survival. All covenants, representations and warranties made
in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding, any Guarantor Obligations remain outstanding, or
Bank has any obligation to make Credit Extensions to Borrower. The obligations
of Grantor to indemnify Bank with respect to the expenses, damages, losses,
costs and liabilities described in Section shall survive until all applicable
statute of limitations periods with respect to actions that may be brought
against Bank have run.
12.8 Confidentiality. In handling any confidential information Bank
and all employees and agents of Bank, including but not limited to accountants,
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 thereby received or received pursuant to this Agreement
except that disclosure of such information may be made (i) to the subsidiaries,
affiliates or service providers of Bank in connection with their present or
prospective business relations with Borrower, (ii) to prospective transferees or
purchasers of any interest in the Loan Documents, 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, (iv) as may be required in
connection with the examination, audit or similar investigation of Bank and (v)
as Bank may determine in connection with the enforcement of any remedies
hereunder. Confidential information hereunder shall not include information that
either: (a) is in the public domain or in the knowledge or possession of Bank
when disclosed to Bank, or becomes part of the public domain after disclosure to
Bank through no fault of Bank; or (b) is disclosed to Bank by a third party,
provided Bank does not have actual knowledge that such third party is prohibited
from disclosing such information.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
set forth above.
GRANTOR: BANK:
ULTRA CLEAN TECHNOLOGY SYSTEMS AND UNION BANK OF CALIFORNIA, N.A.
SERVICE, INC.
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
--------------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: SVP & CFO Title: Vice President
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DEBTOR: ULTRA CLEAN TECHNOLOGY SYSTEMS AND SERVICE, INC.
SECURED PARTY: UNION BANK OF CALIFORNIA, N.A.
EXHIBIT A
COLLATERAL DESCRIPTION ATTACHMENT
TO THIRD PARTY SECURITY AGREEMENT
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 commercial tort claims, 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, securities
entitlements, securities accounts, 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.
Notwithstanding the foregoing, the Collateral shall exclude equity
interests in any Foreign Subsidiary to the extent required to prevent the
collateral from including more than 65% of all equity interests in such Foreign
Subsidiary. "Foreign Subsidiary" means any Subsidiary which is a "controlled
foreign corporation" within the meaning of the IRC.
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