EXHIBIT 10.1
SUBORDINATION AGREEMENT
BORROWER: TEGAL CORPORATION AND ITS SUBSIDIARIES SPUTTERED
FILMS, INC., TEGAL GERMANY, TEGAL JAPAN, INC. AND
TEGAL ITALY, SRL
SUBORDINATING
CREDITOR: SILICON VALLEY BANK
DATE: JUNE 30, 2003
THIS SUBORDINATION AGREEMENT is executed by the above-named Subordinating
Creditor ("Subordinating Creditor") in favor of Xxxx Xxxxxxxxx ("Secured
Party"), as collateral agent for the holders of the 2% Convertible Secured
Debentures due June 30, 2011 of Tegal Corporation (as amended or otherwise
modified from time to time, the "Debentures"), whose address is 0000 Xxxx 00xx
Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000, with respect to the above-named Borrower
(collectively, "Borrower"). The Subordinating Creditor hereby agrees as follows:
1. SUBORDINATION OF SECURITY INTEREST. All security interests now or
hereafter acquired by Secured Party in any or all of the Collateral (as defined
below), in which the Borrower now has or hereafter acquires any ownership,
leasehold or other interest shall at all times be prior and superior to any
lien, ownership interest, security interest or other interest or claim now held
or hereafter acquired by the Subordinating Creditor in the Collateral (the
"Subordinate Interest"). Said priority shall be applicable irrespective of the
time or order of attachment or perfection of any security interest or the time
or order of filing of any financing statements or other documents, or any
statutes, rules or law, or court decisions to the contrary. Upon any disposition
of any of the Collateral by Secured Party, the Subordinating Creditor agrees, if
requested by Secured Party, to promptly execute and deliver any and all releases
or other documents or agreements which Secured Party reasonably deems necessary
to accomplish a disposition thereof free of the Subordinate Interest.
2. "COLLATERAL." As used in this Agreement, "Collateral" shall mean all of
the following types of property, in which the Borrower now has or hereafter
acquires any ownership, leasehold or other interest, wherever located:
(a) any and all copyrights (whether registered or unregistered),
copyright rights, copyright applications, copyright registrations, mask
works, mask work applications and like protections in each work or authorship
and derivative work thereof, whether published or unpublished and whether or
not the same also constitutes a trade secret;
(b) any and all trade secrets, know-how, customer lists, franchise,
systems, inventions, designs, blueprints, engineering drawings, proprietary
products, technology, proprietary rights and any and all intellectual
property rights in computer software, computer programs and computer software
products, including source code on any proprietary or licensed software;
(c) any and all patents and patent applications, and all registrations,
applications and recordings thereof, including, without limitation, all
reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, and all applications, registrations and
recordings in the United States Patent and Trademark Office or in any similar
office or agency of the United States, or any State thereof, or any foreign
country;
(d) any and all trademarks (whether registered or unregistered) and
trademark applications, trade names, fictitious business names, service marks
(whether registered or unregistered), service xxxx applications and all
registrations, applications, and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof, or any foreign country;
(e) any and all license agreements with respect to any Patent or
Trademark; and
(f) All products and proceeds of any and all of the foregoing; provided
that the Collateral shall not include (without limitation) the following
(collectively, "Excluded Assets"): any accounts or payment intangibles
generated from the licensing of any Collateral prior to the "Date of
Disposition" of such Collateral by Secured Party with respect to periods
ending prior to such date (which shall include, for example, an account for
an item of inventory sold by Borrower prior to the date Secured Party
foreclosed upon a copyright of Borrower even if software represented by said
copyright was integrated into such item of inventory), inventory, equipment,
or deposit accounts of Borrower, even if (i) the account or payment
intangible is a royalty, license fee or other proceed of the sale or license
of copyrighted material, or (ii) the inventory or equipment has an
intellectual property right of Borrower associated with it (e.g., if an item
of inventory has a logo of Borrower stamped thereon or was manufactured
pursuant to a patent held by Borrower; or if an item of equipment of Borrower
contains software necessary for the equipment's operation, which was licensed
to Borrower in connection with Borrower's purchase of such equipment). For
purposes of the foregoing, "Date of Disposition" shall mean the later of the
date Secured Party disposes of such Collateral pursuant to its remedies as a
secured party or the date Secured Party gives written notice of such
disposition to Subordinating Creditor (without limitation on any right
Subordinating Creditor may have to be given notice prior to disposition).
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3. DISPOSITION OF COLLATERAL. The Subordinating Creditor agrees that, until
Secured Party has received payment in full of all indebtedness, liabilities,
guarantees and other obligations of the Borrower to Secured Party and the
holders of the Debentures, now existing or hereafter arising (the "Secured Party
Debt"), Secured Party may dispose of, and exercise any other rights with respect
to, any or all of the Collateral, free of the Subordinate Interest without the
consent of the Subordinating Creditor, provided that the Subordinating Creditor
retains any rights it may have as a junior secured creditor with respect to the
surplus, if any, arising from any such disposition or enforcement.
4. MODIFICATIONS TO SECURED PARTY DEBT; WAIVERS. Until Secured Party has
received payment in full of all Secured Party Debt, the Subordinating Creditor
agrees that, in addition to any other rights that Secured Party and the holders
of the Debentures may have at law or in equity, Secured Party and the holders of
the Debentures may at any time, and from time to time, without the Subordinating
Creditor's consent and without notice to the Subordinating Creditor, renew,
extend or increase any of the Secured Party Debt or that of any other person at
any time directly or indirectly liable for the payment of any Secured Party
Debt, accept partial payments of the Secured Party Debt, settle, release (by
operation of law or otherwise), compound, compromise, collect or liquidate any
of the Secured Party Debt, make loans or advances to the Borrower secured in
whole or in part by the Collateral or refrain from making any loans or advances
to the Borrower, change, waive, alter or vary the interest charge on, or any
other terms or provisions of the Secured Party Debt, any Debenture, or any
present or future instrument, document or agreement between Secured Party, the
holders of the Debentures and the Borrower, release, exchange, fail to perfect,
delay the perfection of, fail to resort to, or realize upon any Collateral, and
take any other action or omit to take any other action with respect to the
Secured Party Debt or the Collateral as Secured Party deems necessary or
advisable in Secured Party's sole discretion. The Subordinating Creditor waives
any right to require Secured Party to marshal any assets in favor of the
Subordinating Creditor or against or in payment of any or all of the Secured
Party Debt. Subordinating Creditor further waives any defense arising by reason
of any claim or defense based upon an election of remedies by Secured Party
which in any manner impairs, affects, reduces, releases, destroys and/or
extinguishes the Subordinating Creditor's subrogation rights, rights to proceed
against the Borrower for reimbursement, and/or any other rights of the
Subordinating Creditor in connection with the Collateral.
5. STANDSTILL. Until the Secured Party Debt has been paid and performed in
full, the Subordinating Creditor shall not collect, take possession of,
foreclose upon, or exercise any other rights or remedies with respect to, the
Collateral, judicially or non-judicially, or attempt to do any of the foregoing;
provided that Subordinating Creditor shall not (without limitation) in any
manner be prevented or constrained from exercising any rights or remedies that
it may have with respect to any Excluded Collateral or other assets of Borrower
not constituting Secured Party's Collateral (as that term is used herein) or
from using customer information for purposes of collecting accounts and payment
intangibles. Until the Secured Party Debt has been paid and performed in full,
if (notwithstanding the foregoing limitations on Subordinating Creditor
exercising its remedies) Subordinating Creditor shall receive any Collateral in
connection with the enforcement of any of its rights and remedies with respect
to Collateral, the Subordinating Creditor shall promptly deliver such Collateral
to Secured Party.
6. NO COMMITMENT. It is understood and agreed that this Agreement shall in no
way be construed as a commitment or agreement by Secured Party and the holders
of the Debentures to continue financing arrangements with the Borrower and that
Secured Party and the holders of the Debentures may terminate such arrangements
at any time, in accordance with Secured Party's agreements with the Borrower.
7. FINANCIAL CONDITION OF BORROWER. The Subordinating Creditor is presently
informed of the financial condition of the Borrower and of all other
circumstances which a diligent inquiry would reveal and which bear upon the risk
of non-payment of the Secured Party Debt and the indebtedness of Borrower to
Subordinating Creditor.
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8. GENERAL. The word "indebtedness" is used in this agreement in its most
comprehensive sense and includes without limitation any and all present and
future loans, advances, credit, debts, obligations, liabilities,
representations, warranties, and guarantees, of any kind and nature, absolute or
contingent, liquidated or unliquidated, and individual or joint. This Agreement
is solely for the benefit of Secured Party, as the collateral agent for the
holders of the Debentures, and Secured Party's successors and assigns, and
neither the Borrower nor any other person shall have any right, benefit,
priority or interest under, or because of the existence of, this Agreement. All
of Secured Party's rights and remedies hereunder and under applicable law are
cumulative and not exclusive. This Agreement sets forth in full the terms of
agreement between the parties with respect to the subject matter hereof, and may
not be modified or amended, nor may any rights hereunder be waived, except in a
writing signed by Secured Party and the Subordinating Creditor. In the event of
any litigation between the parties based upon or arising out of this Agreement,
the prevailing party shall be entitled to recover all of its costs and expenses
(including without limitation attorneys fees) from the non-prevailing party.
This Agreement shall be construed in accordance with, and governed by, the laws
of the State of New York. This Agreement shall be binding upon the Subordinating
Creditor and its successors and assigns and shall inure to the benefit of
Secured Party and Secured Party's successors and assigns.
11. MUTUAL WAIVER OF JURY TRIAL; JURIDICTION. SUBORDINATING CREDITOR AND
SECURED PARTY EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (I) THIS
AGREEMENT; OR (II) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN
SUBORDINATING CREDITOR AND SECURED PARTY; OR (III) ANY CONDUCT, ACTS OR
OMISSIONS OF SUBORDINATING CREDITOR OR SECURED PARTY OR ANY OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
SUBORDINATING CREDITOR OR SECURED PARTY; IN EACH OF THE FOREGOING CASES, WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE. SUBORDINATING CREDITOR AND SECURED
PARTY HEREBY AGREE THAT ANY JUDICIAL PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT, WITHOUT LIMITATION, IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICATION IN THE STATE OF NEW YORK, AND THEY HEREBY ACCEPT, WITHOUT
LIMITATION, THE NON-EXCLUSIVE JURISDICTION OF SAID COURTS LOCATED IN THE STATE
OF NEW YORK. SUBORDINATING CREDITOR WAIVES ANY OBJECTION TO JURISDICTION AND
VENUE OF SAID COURTS LOCATED IN THE STATE OF NEW YORK AND SHALL NOT ASSERT ANY
DEFENSE BASED UPON LACK OF JURISDICTION OR VENUE BASED UPON FORUM NON CONVENIENS
WITH RESPECT TO SAID COURTS.
"SUBORDINATING CREDITOR:"
SILICON VALLEY BANK
BY /S/ XXXXXXX X'XXXXXXX
PRESIDENT OR VICE PRESIDENT
ADDRESS: 0000 XXXXXX XXXXX
XXXXX XXXXX, XXXXXXXXXX 00000
ATTN: XXXXXXX XXXXX AND
XXXXXX XXXXXX
CONSENT AND AGREEMENT OF BORROWER
The undersigned Borrower hereby approves of, agrees to and consents to all of
the terms and provisions of the foregoing Subordination Agreement and agrees to
be bound thereby. Borrower further agrees that, at any time and from time to
time, the foregoing Agreement may be altered, modified or amended by Secured
Party and the Subordinating Creditor without notice to or the consent of
Borrower.
BORROWER:
TEGAL CORPORATION
BY /S/ XXXXXX X. XXXX
PRESIDENT OR VICE PRESIDENT
SPUTTERED FILMS, INC.
BY /S/ XXXXXX X. XXXX
PRESIDENT OR VICE PRESIDENT
TEGAL GERMANY
BY /S/ XXXXX XXXXXX
PRESIDENT OR VICE PRESIDENT
TEGAL JAPAN, INC.
BY /S/ XXX XXXXXXXX
PRESIDENT OR VICE PRESIDENT
TEGAL ITALY, SRL
BY /S/ XXXXX XXXXXXX
PRESIDENT OR VICE PRESIDENT
ACCEPTED:
SECURED PARTY:
/S/ XXXX XXXXXXXXX
XXXX XXXXXXXXX
