Exhibit 10.1
LOAN AGREEMENT
March 10, 2005
Staktek Holdings, Inc.
8900 Shoal Creek Boulevard
Suite 125
Austin, Texas 78757
Ladies and Gentlemen:
This Loan Agreement (the “ Loan
Agreement ”) will serve to set forth the terms of the
financing transactions by and between Staktek Holdings, Inc.
, a Delaware corporation (“ Borrower ”), and
Guaranty Bank (“ Bank ”). Terms used
herein and not otherwise defined are used with the meanings given
such terms in Exhibit A attached.
1. Credit Facilities
Subject to the terms and conditions
set forth in this Loan Agreement and the other Loan Documents, Bank
hereby agrees to provide to Borrower the credit facilities
described below (collectively, the “ Credit Facilities
”):
1.1 Revolving Credit .
Subject to the terms and conditions set forth herein, Bank agrees
to lend to Borrower, on a revolving basis from time to time during
the period commencing on the Closing Date and continuing through
and including 11:00 a.m. (Austin, Texas time) on the Maturity Date,
such amounts as Borrower may request hereunder (the “
Revolving Credit ”); provided , however
, the total principal amount outstanding at any time shall not
exceed the Credit Limit. If at any time the aggregate principal
amount outstanding under the Revolving Credit shall exceed an
amount equal to the Credit Limit, Borrower agrees to immediately
repay to Bank such excess amount, plus all accrued but unpaid
interest on the amount of principal prepaid. Subject to the terms
and conditions hereof, Borrower may borrow, repay and reborrow
hereunder. All advances under the Revolving Credit (individually,
an “ Advance ” and, collectively, the “
Advances ”) are sometimes collectively called the
“ Loans ”.
1.2 Letter of Credit Facility
. Subject to the terms and conditions of this Loan Agreement, Bank
shall issue letters of credit for Borrower’s account
(collectively, the “ Letters of Credit ”).
Bank’s obligations under the Letters of Credit shall expire
on or before thirty (30) days prior to the Maturity Date. The
aggregate amount of the Letter of Credit Obligations (as
hereinafter defined) shall not exceed the Letter of Credit Limit.
The obligation of Bank to issue each Letter of Credit is subject to
the fulfillment to the satisfaction of Bank of the conditions set
forth elsewhere in this Loan Agreement and of the following further
conditions:
(a) Borrower shall have executed and
delivered to Bank a Letter of Credit Agreement; and
(b) Borrower shall have satisfied
each of its obligations and the conditions set forth in Section
4 of this Loan Agreement; and
(c) No Event of Default or Default
shall then exist hereunder; and
(d) The aggregate amount of all of
the Letters of Credit shall not exceed a sum equal to the Maximum
Committed Amount, less the outstanding principal amount of all
Advances under the Revolving Credit; and
(e) Borrower shall have paid the
Issue Fee to Bank.
2. Credit Provisions
2.1 Promissory Note . The
obligation of the Borrower to repay the Advances shall be evidenced
by a promissory note (together with any renewals, extensions and
increases thereof, the “ Note ”) duly executed
by Borrower and payable to the order of Bank, in form and substance
acceptable to Bank. Interest on the Note shall accrue at the rate
set forth therein. The principal of and interest on the Note shall
be due and payable in accordance with the terms and conditions set
forth in the Note and in this Loan Agreement.
2.2 Guarantors . As a
condition precedent to Bank’s obligation to make the Advances
to Borrower and to issue the Letters of Credit, Borrower agrees to
cause all of the Material Subsidiaries to each execute and deliver
to Bank one or more guaranty agreements (collectively, the “
Guaranty Agreements ”) in Proper Form, which Guaranty
Agreements shall provide (among other things) for the unconditional
guaranty of payment of the Indebtedness. Further, Borrower shall
cause each Subsidiary of the Borrower which now or hereafter exists
and which is or becomes a Material Subsidiary to each execute and
deliver to Bank a Guaranty Agreement in Proper Form, within ten
(10) days following Bank’s demand, providing for the
unconditional guaranty of the payment of the
Indebtedness.
2.3 Use of Proceeds . Subject
to the provisions of Section 4 , the proceeds of the
Advances under the Revolving Credit shall be available (and
Borrower shall use such proceeds) for general working capital, and
to fund draws received pursuant to Letters of Credit.
2.4 Default Interest . During
the continuation of (a) any Default, and (b) any Event of Default,
Borrower shall pay, on demand, at Bank=s option, interest (after as
well as before judgment to the extent permitted by applicable law)
on the principal amount of all Advances outstanding and on all
other Obligations unpaid hereunder at a per annum rate equal to the
Default Rate.
2.5 Issue Fee . In
consideration of the commitment by Bank to issue any Letter of
Credit, Borrower hereby agrees to pay Bank an Issue Fee equal to
the Applicable L/C Percent per annum of the amount of each Letter
of Credit, which fee shall be calculated from the date of the
respective Letter of Credit to the expiration date thereof. The
Issue Fee as to each Letter of Credit which is issued shall be due
and payable concurrently with the issuance by Bank of each such
Letter of Credit. In the event of the issuance by Bank of any
extension or renewal of a Letter of Credit, an
additional
fee for the extension or renewal thereof shall
be payable in an amount acceptable to Bank as a condition to the
issuance of an extension or renewal thereof. Nothing herein shall
imply an obligation on the part of Bank to issue an extension or
renewal of any Letter of Credit.
2.6 Computations and Manner of
Payments .
(a) Time and Place. Borrower
shall make each payment hereunder and under the other Loan
Documents not later than 1:00 p.m., Austin, Texas time, on the day
when due in same day funds (by wire transfer or otherwise) to Bank
at Bank’s office at 8333 Douglas Avenue, Dallas, Texas 75225,
to the attention of Loan Administration.
(b) Computation of Interest.
Interest on Advances, and other amounts due under the other Loan
Documents, shall be calculated at a daily rate based on a year of
360 days, with the daily rate so determined being applied for the
actual number of days elapsed, but not exceeding the Maximum Lawful
Rate. Such computations shall be made including the first day but
excluding the last day occurring in the period for which such
interest or payment is payable. Each determination by Bank of an
interest rate hereunder shall be presumptively correct absent
manifest error. All payments under the Loan Documents shall be made
in United States dollars.
(c) Business Day. Whenever
any payment to be made hereunder or under any other Loan Documents
shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such
extension of time shall be included in the computation of interest
or fees, if applicable.
3. Representations and Warranties
.
Borrower hereby represents and
warrants, and upon each request for an Advance further represents
and warrants, to Bank as follows:
3.1 Existence and
Organization . Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware and is authorized to transact business and is in good
standing in all other jurisdictions where the nature of its
business or the ownership of its properties requires it to be so
authorized. Borrower has all requisite power and authority to
execute and deliver the Loan Documents. As of the Closing Date, the
only Material Subsidiary is Staktek Group L.P., a Texas limited
partnership.
3.2 Binding Obligations . The
execution, delivery, and performance of this Loan Agreement and all
of the other Loan Documents by Borrower have been duly authorized
by all necessary corporate action by Borrower, and constitute
legal, valid and binding obligations of Borrower, enforceable in
accordance with their respective terms, except as limited by
bankruptcy, insolvency or similar laws of general application
relating to the enforcement of creditors’ rights and except
to the extent specific remedies may generally be limited by
equitable principles.
3.3 No Consent . The
execution, delivery and performance of this Loan Agreement and the
other Loan Documents, and the consummation of the transactions
contemplated hereby and thereby, do not (i) conflict with, result
in a violation of, or constitute a default under (A) any provision
of its articles of incorporation or bylaws, or any agreement or
other instrument binding upon Borrower, or (B) any Governmental
Requirements, court decree or order applicable to Borrower, or (ii)
require the consent, approval or authorization of any third
party.
3.4 Financial Condition . The
financial statements of the Borrower dated as of September 30, 2004
and furnished to Bank (collectively, the “ Prior Financial
Statements ”) truly disclose and fairly present the
financial condition of the Borrower as of the date of each such
statements. There has been no material adverse change in the
financial condition or results of operations of the Borrower
subsequent to the date of the Prior Financial Statement. Except for
Liabilities incurred in the normal course of business and not
material in amount (either individually or in the aggregate),
Borrower has no liabilities, direct or contingent, that have arisen
or been incurred or accrued subsequent to the date of the Prior
Financial Statements.
3.5 Litigation . Except as
set forth on Schedule 3.5 attached hereto, there are
no actions, suits or proceedings, pending or, to the knowledge of
Borrower, threatened against or affecting Borrower or any Material
Subsidiary, or the properties of Borrower or any Material
Subsidiary, before any Governmental Authority, which, if determined
adversely to Borrower, would have a material adverse effect on the
financial condition, properties, or operations of Borrower or any
Material Subsidiary.
3.6 No Default. No Event of
Default or Default exists at the date of this Agreement. Borrower
is not in default in any respect under any Governmental Requirement
binding upon or affecting Borrower or by which any of its assets
may be bound or affected, or under any agreement or other
undertaking or instrument to which it is a party or by which it is
bound (including, without limitation, this Agreement), and nothing
has occurred which would adversely affect in any material respect
the ability of Borrower to carry on its business as now conducted
and proposed to be conducted or to perform its obligations under
any such Governmental Requirement, agreement or other undertaking
or agreement.
3.7 Taxes; Governmental
Charges . Borrower and each Material Subsidiary have filed all
federal, state and local tax reports and returns required by any
law or regulation to be filed by it and have either duly paid all
taxes, duties and charges indicated due on the basis of such
returns and reports, or made adequate provision for the payment
thereof, and the assessment of any material amount of additional
taxes in excess of those paid and reported is not reasonably
expected.
3.8 Patents, Trademarks,
Franchises, Licenses, Etc. To the best of Borrower’s
knowledge, Borrower and each Material Subsidiary have obtained and
holds all franchises, licenses, governmental permits, leases,
patents, trademarks, service marks, tradenames, copyrights, and
other authorizations necessary to conduct its business as presently
conducted and as proposed to be conducted (collectively, “
Rights ”), and each thereof is in full force and
effect and no event has occurred which constitutes or, after notice
or lapse of time or both, would constitute, a default under any
thereof. To the best of Borrower’s knowledge, no claim has
been asserted by any Person with respect to the use of any of
Rights by Borrower or any Material Subsidiary which could result in
a Material Adverse Change. To the best of Borrower’s
knowledge, the use of such Rights by Borrower and each Material
Subsidiary does not infringe on the rights of any Person, subject
to such claims and infringements as do not, in the aggregate, give
rise to any liabilities on the part of Borrower or any Material
Subsidiary which would result in a Material Adverse
Change.
3.9 Securities Acts .
Borrower has not issued any unregistered securities in violation of
the registration requirements of Section 5 of the Securities Act of
1933, as amended, or any other law and is not violating any
material rule, regulation or requirement under the Securities Act
of 1933, as amended, or the Securities and Exchange Act of 1934, as
amended. Borrower is not required to qualify this Loan Agreement or
any other Loan Document as an indenture under the Trust Indenture
Act of 1939, as amended, in connection with its execution and
delivery of the Notes.
3.10 Governmental
Requirements . Borrower is conducting its business, and the
Material Subsidiaries are conducting their respective businesses,
in compliance in all material respects with all Governmental
Requirements imposed by any Governmental Authority (including
without limitation, all applicable environmental statutes, rules,
regulations and ordinances).
3.11 ERISA . Each employee
benefit plan as to which Borrower or any Material Subsidiary may
have any liability complies in all material respects with all
applicable Governmental Requirements, and (i) no “reportable
event” nor “prohibited transaction” (as defined
in ERISA) has occurred with respect to any such plan, (ii) neither
Borrower nor any Material Subsidiary has withdrawn from any such
plan or initiated steps to do so, (iii) no steps have been taken to
terminate any such plan, and (iv) there are no unfunded liabilities
other than those previously disclosed to Bank in
writing.
3.12 No Margin Stock .
Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of
Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of any Advance will be
used to purchase or carry any such margin stock and no part of the
proceeds of any Advance will be used to extend credit to others for
the purpose of purchasing or carrying any such margin
stock.
3.13 Full Disclosure .
Neither this Loan Agreement nor any certificate or statement or any
other data furnished by Borrower in connection with the negotiation
of this Loan Agreement or the transactions contemplated hereby
contains any untrue statement of a material fact or omits a
material fact known to Borrower necessary to make the statements
contained herein or therein not misleading.
3.14 Survival of Representations
and Warranties . All representations and warranties contained
in this Loan Agreement and any other Loan Documents shall survive,
and not be waived by, the execution hereof by Bank, any
investigation or inquiry by Bank, or by the making of the
Loans.
4. Conditions Precedent to
Advances .
Bank’s obligation to make any
advance under this Loan Agreement and to issue any Letter of Credit
shall be subject to the conditions precedent that, (i) as of the
date of such Advance or the date of issuance of such Letter of
Credit, and after giving effect thereto (a) all representations and
warranties made to Bank by Borrower in this Loan Agreement and the
other Loan Documents shall be true and correct, as of and as if
made on such date, (b) no Material Adverse Change since the
effective date of the most recent financial statements furnished to
Bank by Borrower shall have occurred and be continuing, (c) no
Default or Event of Default shall exist, (d) the outstanding
principal amount of all Advances Credit shall not exceed the Credit
Limit, and (ii) Bank’s shall have
received (a) all Loan Documents appropriately
executed by Borrower and all other proper parties, (b) a Compliance
Certificate, and (c) all other instruments, documents, agreements
and certificates, and satisfaction of the conditions, set forth on
the General Conditions of Borrowing attached hereto as
Exhibit B . As a further condition precedent to the
obligation of Bank to make any Advances or issue any Letters of
Credit, Borrower shall furnish to Bank documentation that
demonstrates that the proceeds of previous Advances have been used
and that the proceeds of requested Advances shall be used as
provided in Section 2.3 hereof. Bank’s right to
approve the use of proceeds of Advances as provided in Section
2.3 hereof is for the protection and benefit of Bank only and
neither Borrower, nor any third party shall have any right to rely
upon Bank’s approval or disapproval, nor shall Bank be liable
or responsible (a) should it fail to exercise its right to approve
the use of any proceeds of Advances or (b) for the application of
any proceeds in a manner not approved by Bank.
5. Affirmative Covenants
.
Until (i) the Indebtedness and all
other Obligations are fully paid and satisfied, and (ii) the Bank
has no further commitment to make Advances or issue Letters of
Credit hereunder, Borrower agrees that it will, unless Bank shall
otherwise consent in writing:
5.1 Accounts and Records .
Borrower shall maintain its books and records in accordance with
GAAP.
5.2 Right of Inspection .
Borrower shall permit Bank to visit its properties and
installations and to examine, audit and make and take away copies
or reproductions of Borrower’s books and records, at all
reasonable times following three days notice (written or oral) or
such lesser notice as may be reasonable under the circumstances and
without notice during the continuance of a Default or Event of
Default.
5.3 Right to Additional
Information . Borrower shall furnish Bank with such additional
information and statements, lists of assets and liabilities, tax
returns, and other reports with respect to Borrower’s
financial condition and business operations as Bank may reasonably
request from time to time.
5.4 Compliance with Laws .
Borrower shall conduct its business, and cause the Material
Subsidiaries to conduct their respective businesses, in an orderly
and efficient manner consistent with good business practices, and
perform and comply in all material respects with all Governmental
Requirements imposed by any Governmental Authority upon Borrower,
its businesses, operations and properties (including without
limitation, all applicable environmental statutes, rules,
regulations and ordinances).
5.5 Taxes . Borrower shall
(and shall cause each Material Subsidiary to) pay and discharge
when due all of its respective indebtedness and obligations,
including without limitation, all assessments, taxes, governmental
charges, levies and liens, of every kind and nature, imposed upon
Borrower or any Material Subsidiary or their respective properties,
income, or profits, prior to the date on which penalties would
attach, and all lawful claims that, if unpaid, might become a lien
or charge upon any properties, income, or profits of Borrower or
any Material Subsidiary; provided, however, Borrower will not be
required to pay and discharge any such assessment, tax, charge,
levy, lien or claim so long as the legality or propriety of the
same shall be contested in good faith by appropriate judicial,
administrative or other legal proceedings.
5.6 Insurance . Borrower
shall (and shall cause each Material Subsidiary to) maintain
insurance from responsible companies in such amounts and against
such risks as shall be customary and usual in the industry for
companies of similar size and capability, but in no event less than
the amounts and types insured as of the Closing Date. Borrower
shall furnish to Bank, upon request of Bank from time to time,
reports on each then existing insurance policy showing such
information as Bank may reasonably request, including without
limitation the following: (a) the name of the insurer; (b) the
risks insured; (c) the amount of the policy; (d) the properties
insured; (e) the then current property values on the basis of which
insurance has been obtained, and the manner of determining those
values; and (f) the expiration date of the policy.
5.7 Notice of Indebtedness .
Borrower shall promptly inform Bank of the creation, incurrence or
assumption by Borrower or any Material Subsidiary of any actual or
contingent liabilities not permitted under this Loan
Agreement.
5.8 Notice of Litigation .
Borrower shall promptly after the commencement thereof, notify Bank
of all actions, suits and proceedings before any court or any
Governmental Authority affecting Borrower or any Material
Subsidiary or any of their respective properties which, if
adversely determined, could result in a Material Adverse
Change.
5.9 Notice of Material Adverse
Change . Borrower shall promptly inform Bank of the occurrence
of any and all Material Adverse Changes.
5.10 Additional Costs . If
the imposition of or any change in any law, rule, regulation or
guideline, or the interpretation or application of any thereof by
any court or administrative or governmental authority (including
any request or policy not having the force of law) shall impose,
modify or make applicable any taxes (except U. S. federal, state or
local income or franchise taxes imposed on Bank), reserve
requirements, capital adequacy requirement or other obligations
which would (a) increase the cost to Bank for extending or
maintaining either of the Credit Facilities, (b) reduce the amounts
payable to Bank under this Loan Agreement or the other Loan
Documents, or (c) reduce the rate of return on Bank’s capital
as a consequence of Bank’s obligations with respect to either
of the Credit Facilities, then Borrower agrees to pay Bank such
additional amounts as will compensate Bank therefor, within five
(5) days after Bank’s written demand for such payment, which
demand shall be accompanied by an explanation of such imposition or
charge and a calculation in reasonable detail of the additional
amounts payable by Borrower, which explanation and calculations
shall be presumptively correct in the absence of manifest
error.
5.11 Deposit/Sweep Balances .
Borrower shall maintain Deposit/Sweep Balances with Bank at all
times in an amount no less than $5,000,000.00.
5.12 Additional Documentation
. Borrower shall execute and deliver, or cause to be executed and
delivered, any and all other agreements, instruments or documents
which Bank may reasonably request in order to give effect to the
transactions contemplated under this Loan Agreement and the other
Loan Documents.
6. Negative Covenants .
Until (i) the Indebtedness and all
other obligations are fully paid and satisfied, and (ii) the Bank
has no further commitment to lend or issue Letters of Credit
hereunder, Borrower agrees that, without the prior written consent
of Bank:
6.1 Nature of Business .
Borrower will not make (nor permit any Material Subsidiary to make)
any material change in the nature of its respective business as
carried on as of the date hereof nor cease operations of its or
their respective business.
6.2 Liquidations, Mergers,
Consolidations . Borrower will not liquidate, merge or
consolidate with or into any other entity or change the nature of
its organization as a Delaware corporation, nor permit any Material
Subsidiary to liquidate, merge with or into any other entity (other
than a merger with Borrower, if it is the surviving entity, or a
merger between Material Subsidiaries).
6.3 Indebtedness . Borrower
will not create, incur or assume any Debt, nor permit any
Subsidiary to create, incur, or assume any Debt, other than (a)
Debt owing to Bank, (b) Debt owing with respect to which the
obligee and the obligor are both Material Subsidiaries which have
guaranteed the Obligations in accordance with the provisions of
Section 2.2 hereof, (c) Debt owing by or to Borrower and to or from
any such Material Subsidiary, (d) other Debt not exceeding the
aggregate principal amount of $10,000,000.00 at any one time, and
(e) intercompany Debt.
6.4 Liens; Other Agreements .
Borrower shall not, and shall not permit any of its Subsidiaries
to, create or suffer to exist any Lien upon any of its or their
respective properties, other than Permitted Liens. Borrower shall
not, and shall not permit any of its Subsidiaries to, enter into
any agreement, other than this Agreement and the other Loan
Documents, or any purchase money mortgages or leases permitted by
this Agreement (in which cases, any prohibition or limitation shall
only be effective against the assets financed thereby) (a) which
prohibits or limits the ability of Borrower or any of its
Subsidiaries to create, incur, assume or suffer to exist any Liens
upon any of its respective properties, whether now owned or
hereafter acquired or (b) which prohibits or requires the consent
of any Person to any amendment, modification or supplement to this
Agreement or any of the other Loan Documents.
6.5 Transactions with
Affiliates . Enter into any transaction, including, without
limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate (as hereinafter
defined) of Borrower, except in the ordinary course of and pursuant
to the reasonable requirements of Borrower’s business and
upon fair and reasonable terms no less favorable to Borrower than
would be obtained in a comparable arm’s-length transaction
with a person or entity not an Affiliate of Borrower. As used
herein, the term “ Affiliate ” means any
individual or entity directly or indirectly controlling, controlled
by, or under common control with, another individual or
entity.
6.6 Fiscal Year . Borrower
shall not change its fiscal year.
7. Financial Covenants
.
Until (i) the Notes and all other
obligations and liabilities of Borrower under this Loan Agreement
and the other Loan Documents are fully paid and satisfied, and (ii)
the Bank has no further commitment to lend hereunder, Borrower will
maintain the following financial covenants:
7.1 Tangible Net Worth .
Borrower will not allow its Tangible Net Worth as of the end of
each month to be less than $70,000,000.00.
7.2 EBITDA . Borrower shall
not permit its EBITDA to be less than $3,000,000.00 during any of
its fiscal quarters.
7.3 Senior Debt to EBITDA
Ratio . Borrower will maintain, as of the end of each of its
fiscal quarters, a Senior Debt to EBITDA Ratio of not greater than
2.0 to 1.0.
8. Reporting Requirements
.
Until (i) the Indebtedness and all
other Obligations are fully paid and satisfied, and (ii) the Bank
has no further commitment to lend or issue Letters of Credit
hereunder, Borrower will, unless Bank shall otherwise consent in
writing, furnish to Bank.
8.1 Interim Financial
Statements . As soon as available, and in any event within
forty-five (45) days after the end of each fiscal quarter of
Borrower, a consolidated balance sheet and income statement and
statement of cash flow of Borrower as of the end of such fiscal
quarter, all in form and substance and in reasonable detail
satisfactory to Bank and duly certified (subject to year-end review
adjustments) by the President and/or Chief Financial Officer of
Borrower (i) as being true and correct in all material aspects to
the best of his or her knowledge and (ii) as having been prepared
in accordance with GAAP.
8.2 Annual Financial
Statements . As soon as available and in any event within
ninety (90) days after the end of each fiscal year of Borrower, a
consolidated balance sheet and income statement and statement of
cash flow of Borrower as of the end of such fiscal year, in each
case audited by independent public accountants of recognized
standing acceptable to Bank.
8.3 Compliance Certificate .
While any Advances remain outstanding, a certificate in the form of
Exhibit C attached, signed by the President and/or
Chief Financial Officer of Borrower, (i) within forty-five (45)
days after the end of each fiscal quarter (including the fourth
calendar quarter), and (ii) within ninety (90) days after the end
of each fiscal year, in each case stating that Borrower is in full
compliance with all of its obligations under this Loan Agreement
and all other Loan Documents and is not in default of any term or
provisions hereof or thereof, and demonstrating comp
