AMENDMENT
TO
LOAN AGREEMENT
This Amendment to Loan Agreement is entered into as of July 24, 1998 (the
"Amendment") by and between SILICON VALLEY BANK ("Agent") as Servicing Agent and
a Bank and BANK OF HAWAII ("BoH"); SVB and BofH are referred to individually
herein as "Bank", and collectively as the "Banks") and CREDENCE SYSTEMS
CORPORATION, a Delaware corporation ("Credence"), Credence Korea, a Korean
corporation, and Credence Systems K.K., a Japanese corporation (individually a
"Borrower" and collectively, the "Borrowers").
RECITALS
Borrower and Bank are parties to that certain Loan Agreement dated as
of July 26, 1996, and amended by that certain Amendment to Loan Agreement dated
as of July 25, 1997 (the "Agreement"). The parties desire to amend the Agreement
in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. The following definitions in Section 1. 1 are amended to read
as follows:
"Committed Line" means Forty Million Dollars ($40,000,000).
"Maturity Date" means July 23, 1999.
2. The reference in the definition of Permitted Indebtedness item (c)
in Section 1. 1 to "Ten Million Dollars ($10,000,000)" is hereby amended to read
"Twenty Million Dollars ($20,000,000)".
3. The reference in the definition of Permitted Investments item (c) in
Section 1. 1 is hereby deleted in its entirety and replaced by the following:
"(c) Any investments, including but not limited to investments
made in connection with acquisitions, or the repurchase of stock, where the
consideration paid by Borrower or any Subsidiary consists of Borrower's equity
securities and cash, and the aggregate amount of cash paid after the date hereof
does not exceed Forty Million Dollars ($40,000,000)."
4. The following new definitions are added to Section 1. 1:
"Borrowing Base" means an amount equal to eighty percent (80%)
of Eligible Accounts, as determined by Bank with reference to the most recent
Borrowing Base Certificate delivered by Borrower.
"Eligible Accounts" means those Accounts that arise in the
ordinary course of Borrower's business that comply with all of Borrower's
representations and warranties to Bank set forth in Section 5.4; provided, that
standards of eligibility may be fixed and revised from time to time by Bank in
Bank's reasonable judgment and upon notification thereof to Borrower in
accordance with the provisions hereof. Unless otherwise agreed to by Bank,
Eligible Accounts shall not include the following:
(a) Accounts that the account debtor has failed to pay within
ninety (90) days of invoice date;
(b) Accounts with respect to an account debtor, twenty-five
percent (25%) of whose Accounts the account debtor has failed to pay within
ninety (90) days of invoice date;
(c) Accounts with respect to which the account debtor is an
officer, employee, or agent of Borrower;
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(d) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, xxxx and hold,
or other terms by reason of which the payment by the account debtor may be
conditional;
(e) Accounts with respect to which the account debtor is an
Affiliate of Borrower;
(f) Accounts with respect to which the account debtor does not
have its principal place of business in the United States, except for Eligible
Foreign Accounts;
(g) Accounts with respect to which the account debtor is the
United States or any department, agency, or instrumentality of the United
States;
(h) Accounts with respect to which Borrower is liable to the
account debtor for goods sold or services rendered by the account debtor to
Borrower, but only to the extent of fifty percent (50%) of any amounts owing to
the account debtor against amounts owed to Borrower;
(i) Accounts with respect to an account debtor, including
Subsidiaries and Affiliates, whose total obligations to Borrower exceed
twenty-five percent (25%) of all Accounts, to the extent such obligations exceed
the aforementioned percentage;
(j) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Bank believes, in
its sole discretion, that there may be a basis for dispute (but only to the
extent of the amount subject to such dispute or claim), or is subject to any
Insolvency Proceeding, or becomes insolvent, or goes out of business; and
(k) Accounts the collection of which Bank reasonably
determines to be doubtful.
"Eligible Foreign Accounts" means Accounts with respect to
which the account debtor does not have its principal place of business in the
United States and that (i) are supported by one or more letters of credit in an
amount and of a tenor, and issued by a financial institution, acceptable to
Bank, or (ii) that Bank approves on a case-by-case basis.
5. Section 2. 1 (a) is hereby deleted in its entirety and replaced with
the following:
"(a) Advances. Subject to and upon the terms and conditions of
this Agreement, each Bank severally will make Advances to Borrowers as set forth
herein. BofH shall make all of the Advances requested by Borrower made in an
Optional Currency; provided that the aggregate outstanding Advances in an
Optional Currency shall not exceed Five Million Dollars ($5,000,000). Upon
BofH's funding of such Optional Currency Advances, SVB shall fund all subsequent
requests for Advances by Borrower up to an amount equal to the total outstanding
Optional Currency Advances. Thereafter, or in the event that there are no
requests for Optional Currency Advances, each Bank severally will make its
Percentage Share of Advances in United States Dollars such that the aggregate
amount of each Bank's Advances under this Agreement shall not exceed such Bank's
Percentage Share of the Committed Line minus the face amount of all outstanding
Letters of Credit (including undrawn and drawn but unreimbursed Letters of
Credit) and minus the reserve, if any, taken under Section 2. 1. 1 (d).
Notwithstanding the preceding sentence, if the aggregate amount of outstanding
Advances made by each Bank plus Letters of Credit plus the reserve, if any,
taken under Section 2. 1. 1 (d) exceed $20,000,000, then Banks will make
Advances to Borrower in an aggregate amount not to exceed (i) the lesser of the
Committed Line or the Borrowing Base plus one hundred percent (100%) of Accounts
that are supported by one or more letters of credit in an amount and of a tenor,
and issued by a financial institution, acceptable to Bank. Subject to the terms
and conditions of this Agreement, amounts borrowed pursuant to this Section 2.1
may be repaid and reborrowed at any time during the term of this Agreement."
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6. The references in Sections 2. 1 (c) and 2. 1 (d) to "200 basis
points" are hereby amended to read "150 basis points".
7. The first sentence in Section 2. 1. 1 (c) is hereby deleted and
replaced with the following:
"The maximum aggregate obligation at any one time for undrawn and
drawn but unreimbursed Letters of Credit shall be Twenty Million Dollars
($20,000,000)."
8. Section 2.2 is hereby deleted in its entirety and replaced with the
following:
"2.2 Overadvances. If, at any time or for any reason that a
Borrowing Base Certificate is required under Section 5.3, the sum of (i)
Advances owed by Borrower to Banks pursuant to Section 2. 1 (a) of this
Agreement plus (ii) the face amount of Letters of Credit issued under Section 2.
1.1 (including undrawn and drawn but unreimbursed Letters of Credit) plus (iii)
the reserve, if any, taken under Section 2.1.1(d), is greater than the lesser of
the Committed Line or the Borrowing Base, Borrower shall immediately pay to
Servicing Agent, in cash, the amount of such excess, for payment to the Banks
according to their respective Percentage Shares. If at any time or for any
reason, the Equivalent Amount of Outstanding Optional Currency Advances exceeds
Five Million Dollars ($5,000,000), Borrowers shall immediately pay to BofH the
amount of such excess."
9. The following new paragraph is hereby added at the end of Section
5.3:
"In the event that outstanding Advances under the Committed Line
exceed Twenty Million Dollar ($20,000,000), then within twenty (20)days after
the last day of each month, Borrower shall deliver to Bank a Borrowing Base
Certificate signed by a Responsible Officer in substantially the form of Exhibit
D hereto, together with aged listings of accounts receivable and accounts
payable."
10. The attached Exhibit D hereby added and incorporated by reference
into the Agreement.
11. Section 5.9 is hereby deleted in its entirety and replaced with the
following:
"5.9 Tangible Net Worth. Maintain, on a consolidated basis, as
of the last day of each fiscal quarter, a Tangible Net Worth of not less than
One Hundred Seventy-Five Million Dollars ($175,000,000)."
12. The following new Section 5.12 shall be added:
"5.12 Bona Fide Eligible Accounts. The Eligible Accounts are bona
fide existing obligations. The property giving rise to such Eligible Accounts
has been delivered to the account debtor or to the account debtor's agent for
immediate shipment to and unconditional acceptance by the account debtor.
Borrower has not received notice of actual or imminent Insolvency Proceeding of
any account debtor that is included in any Borrowing Base Certificate as an
Eligible Account."
13. Section 6.6 is hereby deleted in its entirety and replaced with the
following:
"6.6 Distributions. Pay any dividends or make any other
distribution or payment on account of or in redemption, or retirement of any
capital stock, except for so long as an Event of Default has not occurred and is
not continuing (and would not exist immediately after such payment)."
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14. On the signature page of the Agreement the reference to Silicon
Valley Bank's Maximum Commitment Amount: $10,000,000 (50%) is hereby amended to
read $15,000,000 (37.5%).
15. On the signature page of the Agreement the reference to Bank of
Hawaii's Maximum Commitment Amount: $10,000,000 (50%) is hereby amended to read
$25,000,000 (62.5%).
16. As a condition to the effectiveness of this Amendment, Banks shall
receive a fee of Seventy-Five Thousand Dollars ($75,000), payable upon the date
hereof, plus all Bank Expenses incurred in connection with the preparation of
this Amendment.
17. As a condition to the effectiveness of this Amendment, Bank shall
have received, in substance satisfactory to Bank, the following:
(a) resolutions by the Borrowers authorizing the execution
and delivery of this Amendment;
(b) Negative Pledge on Borrower's assets; and
(c) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.
18. Unless otherwise defined, all capitalized terms in this Amendment
shall be as defined in the Agreement. Except as amended, the Agreement remains
in full force and effect.
19. Borrower represents and warrants that the Representations and
Warranties contained in the Agreement are true and correct as of the date of
this Amendment, and that no Event of Default has occurred and is continuing.
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20. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the first date above written.
CREDENCE SYSTEMS CORPORATION
By: /s/ XXXXXX X. XXXX
---------------------------
Title: Chief Financial Officer
CREDENCE KOREA
By: /s/ XXXXXX X. XXXXXXX
---------------------------
Title: Chairman
CREDENCE SYSTEMS K.K.
By: /s/ XXXXXX X. XXXXXXX
---------------------------
Title: Chairman
SILICON VALLEY BANK
By: /s/ XXXXX XXXXXXXX
---------------------------
Title: Vice President, Officer
BANK OF HAWAII
By: /s/ XXXXX XXXX
---------------------------
Title: Corporate Banking Officer
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