Exhibit 10.3
AMENDMENT
TO
LOAN AGREEMENT
This Amendment to Loan Agreement is entered into as of February 5, 1999
(the "Amendment") by and between SILICON VALLEY BANK ("Agent") as Servicing
Agent and a Bank and BANK OF HAWAII ("BofH"; 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 and that certain Amendment to Loan Agreement dated as of
July 24, 1998 (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 and replaced in
their entirety to read as follows:
"Total Liabilities" means at any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
GAAP be classified as liabilities on the consolidated balance sheet of
Borrowers, including in any event all Indebtedness.
"Tangible Net Worth" means, at any date as of which the amount
thereof shall be determined, the consolidated total assets of Borrowers minus,
without duplication, (i) the sum of any amounts attributable to (a) goodwill,
(b) intangible items such as unamortized debt discount and expense, patents,
trade and service marks and names, copyrights and research and development
expenses except prepaid expenses, and (c) all reserves not already deducted from
assets, and (ii) Total Liabilities."
2. The references in Sections 2.1(c) and 2.1(d) to "150 basis points" are
hereby amended to read "200 basis points".
3. Section 5.8 is hereby deleted in its entirety and replaced with the
following:
"5.8 Debt-Tangible Net Worth Ratio. Maintain, on a consolidated basis, as
of the last day of each fiscal quarter, a ratio of Total Liabilities, excluding
Subordinated Debt, to Tangible Net Worth, of not more tha 1.0 to 1.0."
4. 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 plus Subordinated Debt of not
less than Two Hundred Twenty Million Dollars ($220,000,000)."
5. Section 5.10 is hereby deleted in its entirety and replaced with the
following:
"5. 10 Profitability. On a consolidated basis, sustain from continuous
operations excluding noncash events, a loss of no more than Thirteen Million
Dollars ($13,000,000) for each of the fiscal quarters ending on April 30, 1999
and July 31, 1999, provided that Borrower may not sustain from continuous
operations, excluding noncash events, a loss of more than Twenty Million Dollars
($20,000,000) in the aggregate for both quarters combined. Thereafter, on a
consolidated basis, have a minimum continuous operations net profit of at least
One Dollar ($1.00) for each fiscal year."
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6. Bank waives Borrower's obligations to comply with Section 5.10 for both
the quarter and the year ending on October 31, 1998. Bank does not waive such
obligations for any other dates or any other failure by Borrower to perform its
obligations under the Loan Documents. This waiver is not a continuing waiver
with respect to any failure to perform any obligation after the date of this
Amendment.
7. On the signature page of the Agreement the reference to Silicon Valley
Bank's Maximum Commitment Amount: $15,000,000 (37.5%) is hereby amended to read
$20,000,000 (50.0%).
8. On the signature page of the Agreement the reference to Bank of Hawaii's
Maximum Commitment Amount: $25,000,000 (62.5%) is hereby amended to read
$20,000,000 (50.0%).
9. The attached Exhibit C is hereby added and incorporated by reference
into the Agreement.
10. As a condition to the effectiveness of this Amendment, Banks shall
receive a fee of Twenty-Five Thousand Dollars ($25,000), payable upon the date
hereof, plus all Bank Expenses incurred in connection with the preparation of
this Amendment.
11. As a condition to the effectiveness of this Amendment, Bank shall have
received, in form and substance satisfactory to Bank, the following:
(a) resolutions by the Borrowers authorizing the execution and
delivery of this Amendment; and
(b) such other documents, and completion of such other matters, as
Bank may reasonably deem necessary or appropriate.
12. 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.
13. 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.
14. 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.
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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first
date above written.
CREDENCE SYSTEMS CORPORATION
By: /s/ XXXXX XXXXX
Title: V.P., TREASURER & CONTROLLER
CREDENCE KOREA
By: /s/ XXXXXX XXXX
Title: DIRECTOR
CREDENCE SYSTEMS K.K.
By: /s/ XXXXX XXXXXXXXX
Title: DIRECTOR
SILICON VALLEY BANK
By: /s/ XXXXXX XXXXXXXX
Title: SVP
BANK OF HAWAII
By: /s/ XXXXX X. XXXX, XX
Title: ASSISTANT VICE PRESIDENT
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EXHIBIT C
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
BANK OF HAWAII
FROM: CREDENCE SYSTEMS CORPORATION
The undersigned authorized officer of CREDENCE SYSTEMS CORPORATION
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower
is in complete compliance for the period ending with all required covenants
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 Officer further certifies that these 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
Form 10-K Annually within 5 days Yes No
Form 10-Q Quarterly within 5 days Yes No
A/R & A/P Agings Monthly within 20 days if Yes No
outstanding Advances exceed
$20,000,000
Financial Covenant Required Actual Complies
Maintain on a Quarterly Basis:
Minimum Quick Ratio 2.0:1.0 :1.0 Yes No
Tangible Net Worth $220,000,000 $ - Yes No
Debt/ Tangible Net Worth 1.0:1.0 :1.0 Yes No
Profitability 1 $ - Yes No
1 . Borrower shall not, on a consolidated basis, sustain from continuous
operations, excluding noncash events, a loss of no more than $13,000,000 for
each of the fiscal quarters ending on 3/31/99 and 6/30/99, provided that
Borrower may not sustain from continuous operations, excluding noncash events, a
loss of more than $20,000,000 in the aggregate for both quarters combined.
Thereafter, on a consolidated basis, have a minimum continuous operations net
profit of at least $1.00 for each fiscal year.
Comments Regarding Exceptions: See Attached.
Sincerely,
SIGNATURE
TITLE
DATE
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