Exhibit 10.1
EXECUTION
VERSION
LOAN AND SECURITY
AGREEMENT
THIS LOAN AND SECURITY
AGREEMENT (this “ Agreement ”) dated
as of the Effective Date between SILICON VALLEY BANK , a
California corporation, with its principal place of business at
3003 Tasman Drive, Santa Clara, California 95054 and with a loan
production office located at One Newton Executive Park,
Suite 200, 2221 Washington Street, Newton, Massachusetts 02462
(“ Bank ”), and AXCELIS TECHNOLOGIES,
INC. and AXCELIS TECHNOLOGIES CCS CORPORATION , each a
Delaware corporation with offices located at 108 Cherry Hill Drive,
Beverly, Massachusetts 01915 (individually and collectively,
jointly and severally “ Borrower ”), provides
the terms on which Bank shall lend to Borrower and Borrower shall
repay Bank. The parties agree as follows:
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ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement
shall be construed following GAAP. Calculations and
determinations must be made following GAAP. Capitalized terms
not otherwise defined in this Agreement shall have the meanings set
forth in Section 13. All other terms contained in this
Agreement, unless otherwise indicated, shall have the meaning
provided by the Code to the extent such terms are defined
therein.
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LOAN AND TERMS OF PAYMENT
2.1
Promise to Pay . Borrower hereby unconditionally promises
to pay Bank the outstanding principal amount of all Credit
Extensions and accrued and unpaid interest thereon as and when due
in accordance with this Agreement.
2.1.1
Revolving Advances .
(a)
Availability . Subject to the terms and conditions of
this Agreement and to deduction of Reserves, Bank shall make
Advances not exceeding the Availability Amount. Amounts
borrowed hereunder may be repaid and, prior to the Revolving Line
Maturity Date, reborrowed, subject to the applicable terms and
conditions precedent herein.
(b)
Termination; Repayment . The Revolving Line terminates
on the Revolving Line Maturity Date, when the principal amount of
all Advances, the unpaid interest thereon, and all other
Obligations relating to the Revolving Line shall be immediately due
and payable.
2.1.2
Letters of Credit Sublimit .
(a)
As part of the Revolving Line, Bank shall issue or have issued
Letters of Credit for Borrower’s account. Such
aggregate amounts utilized hereunder shall at all times reduce the
amount otherwise available for Advances under the Revolving Line.
The face amount of outstanding Letters of Credit (including drawn
but unreimbursed Letters of Credit and any Letter of Credit
Reserve) may not exceed Ten Million Dollars ($10,000,000.00)
minus the aggregate amount of all Credit Extensions
outstanding from time to time under Sections 2.1.3 and 2.1.4
hereof. If, on the Revolving Line Maturity Date, there are
any outstanding Letters of Credit, then on such date Borrower shall
provide to Bank cash collateral in an amount equal to 105% of the
face amount of all such Letters of Credit plus all interest, fees,
and costs due or to become due in connection therewith (as
estimated by Bank in its good faith business judgment), to secure
all of the Obligations relating to said Letters of Credit.
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 standard Application and Letter of
Credit Agreement (the “ Letter of Credit Application
”). Borrower agrees to execute any further
documentation in connection with the Letters of Credit as Bank may
reasonably request. Borrower further agrees to be bound by
the regulations and interpretations of the issuer of any Letters of
Credit guarantied by Bank and opened for Borrower’s account
or by Bank’s interpretations of any Letter of Credit issued
by Bank for Borrower’s account, and Borrower understands and
agrees except in the case of gross negligence or willful misconduct
by Bank that Bank shall not be liable for any error, negligence,
or
mistake, whether of omission or commission, in
following Borrower’s instructions or those contained in the
Letters of Credit or any modifications, amendments, or supplements
thereto.
(b)
The obligation of Borrower to immediately 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, such Letters of
Credit, and the Letter of Credit Application.
(c)
Borrower may request that Bank issue a Letter of Credit payable in
a Foreign Currency. If a demand for payment is made under any
such Letter of Credit, Bank shall treat such demand as an Advance
to Borrower of the equivalent of the amount thereof (plus fees and
charges in connection therewith such as wire, cable, SWIFT or
similar charges) in Dollars at the then-prevailing rate of exchange
in San Francisco, California, for sales of the Foreign Currency for
transfer to the country issuing such Foreign Currency.
(d)
To guard against fluctuations in currency exchange rates, upon the
issuance of any Letter of Credit payable in a Foreign Currency,
Bank shall create a reserve (the “ Letter of Credit
Reserve ”) under the Revolving Line in an amount equal to
ten percent (10%) of the face amount of such Letter of
Credit. The amount of the Letter of Credit Reserve may be
adjusted by Bank from time to time to account for fluctuations in
the exchange rate. The availability of funds under the
Revolving Line shall be reduced by the amount of such Letter of
Credit Reserve for as long as such Letter of Credit remains
outstanding.
2.1.3
Foreign Exchange Sublimit . As part of the Revolving
Line, Borrower may enter into foreign exchange contracts with Bank
under which Borrower commits to purchase from or sell to Bank a
specific amount of Foreign Currency (each, a “ FX Forward
Contract ”) on a specified date (the “
Settlement Date ”). FX Forward Contracts shall
have a Settlement Date of at least one (1) FX Business Day
after the contract date and shall be subject to a reserve of ten
percent (10%) of each outstanding FX Forward Contract in a maximum
aggregate amount equal to One Million Dollars ($1,000,000.00) (the
“ FX Reserve ”). The aggregate amount of FX
Forward Contracts at any one time shall not exceed ten
(10) times the amount of the FX Reserve minus the
aggregate amount of all Credit Extensions outstanding from time to
time under Sections 2.1.2 and 2.1.4 hereof. Any amounts
needed to fully reimburse Bank will be treated as Advances under
the Revolving Line and will accrue interest at the interest rate
applicable to Advances.
2.1.4
Cash Management Services Sublimit . Borrower may use up
to Ten Million Dollars ($10,000,000.00) of the Revolving Line
minus the aggregate amount of all Credit Extensions
outstanding from time to time under Sections 2.1.2 and 2.1.3
hereof, for Bank’s cash management services which may include
merchant services, direct deposit of payroll, business credit card,
and check cashing services identified in Bank’s various cash
management services agreements (collectively, the “ Cash
Management Services ”). Any amounts Bank pays on
behalf of Borrower for any Cash Management Services and not
immediately reimbursed will be treated as Advances under the
Revolving Line and will accrue interest at the interest rate
applicable to Advances.
2.2
Overadvances. If, at any time, (i) the sum of (a) the
outstanding principal amount of any Advances (including any amounts
used for Cash Management Services), plus (b) the face
amount of any outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of Credit Reserve),
plus (c) the aggregate amount of any outstanding FX
Forward Contract exceeds (ii) the lesser of either the
Revolving Line or the Borrowing Base (the amount by which
(i) exceeds (ii) being an “ Overadvance
”), Borrower shall immediately pay to Bank in cash such
Overadvance. Without limiting Borrower’s obligation to
repay Bank any amount of the Overadvance, Borrower agrees to pay
Bank interest on the outstanding amount of any Overadvance, on
demand, at the Default Rate.
2.3
Payment of Interest on the Credit Extensions .
(a)
Interest Rate ; Advances . Each Advance shall
bear interest on the outstanding principal amount thereof from the
date when made, continued or converted until paid in full at a rate
per annum equal to either (i) the Prime Rate plus the
Prime Rate Margin (as such term is defined in the LIBOR Supplement)
or (ii) the LIBOR Rate plus the LIBOR Rate Margin (as
such term is defined in the LIBOR Supplement). On and after
the expiration of any Interest Period (as such term is defined in
the LIBOR Supplement) applicable to any LIBOR Advance outstanding
on the date of occurrence of an Event of Default or acceleration of
the Obligations, the Effective Amount of such LIBOR Advance shall,
during the continuance of such Event of Default or after
acceleration, bear
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interest at a rate per annum equal to aggregate
of the Prime Rate plus the Prime Rate Margin plus the Default
Rate. Pursuant to the terms hereof, interest on each Advance
shall be paid in arrears on each Interest Payment Date (as such
term is defined in the LIBOR Supplement). Interest shall also
be paid on the date of any prepayment of any Advance pursuant to
the Loan Agreement for the portion of any Advance so prepaid and
upon payment (including prepayment) in full thereof. All
accrued but unpaid interest on the Advances shall be due and
payable on the Revolving Line Maturity Date.
(b)
Default Rate . Immediately upon the occurrence and
during the continuance of an Event of Default, Obligations shall
bear interest at a rate per annum which is three and one-half of
one percent (3.50%) above the rate that is otherwise applicable
thereto (the “ Default Rate ”). Payment or
acceptance of the increased interest rate provided in this
Section 2.3(b) is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default
or otherwise prejudice or limit any rights or remedies of
Bank.
(c)
Prime Rate Advances . Each change in the interest rate
of the Prime Rate Advances based on changes in the Prime Rate shall
be effective on the effective date of such change and to the extent
of such change. Bank shall use its best efforts to give
Borrower prompt notice of any such change in the Prime Rate;
provided, however, that any failure by Bank to provide Borrower
with notice hereunder shall not affect Bank’s right to make
changes in the interest rate of the Prime Rate Advances based on
changes in the Prime Rate.
(d)
LIBOR Advances . The interest rate applicable to each LIBOR
Advance shall be determined in accordance with Section 5.1 of
the LIBOR Supplement. Subject to Sections 5 and 6 of the
LIBOR Supplement, such rate shall apply during the entire Interest
Period applicable to such LIBOR Advance, and interest calculated
thereon shall be payable on the Interest Payment Date applicable to
such LIBOR Advance.
(e)
Computation of Interest . Interest on the Credit
Extensions and all fees payable hereunder shall be computed on the
basis of a 360-day year and the actual number of days elapsed in
the period during which such interest accrues. In computing
interest on any Credit Extension, the date of the making of such
Credit Extension shall be included and the date of payment shall be
excluded; provided, however, that if any Credit Extension is repaid
on the same day on which it is made, such day shall be included in
computing interest on such Credit Extension.
(f)
Debit of Accounts . Bank may debit any of
Borrower’s deposit accounts, including the Designated Deposit
Account, for principal and interest payments or any other amounts
Borrower owes Bank when due. These debits shall not
constitute a set-off. The provisions of the previous sentence shall
not apply to deposit accounts designated as, and exclusively used
for, payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of Borrower’s employees.
(g)
Payments . Payments of principal and/or interest received
after 12:00 noon Eastern time are considered received at the
opening of business on the next Business Day. When a payment
is due on a day that is not a Business Day, the payment is due the
next Business Day and additional fees or interest, as applicable,
shall continue to accrue..
2.4
Fees . Borrower shall pay to Bank:
(a)
Commitment Fee . A fully earned, non refundable
commitment fee of $500,000.00 (receipt of which Bank hereby
acknowledges); and
(b)
Letter of Credit Fees . Bank’s customary fees
and expenses for the issuance, modification or renewal of Letters
of Credit, including, without limitation, its customary fees upon
the issuance, each anniversary of the issuance, modification and
the renewal of such Letter of Credit by Bank; and
(c)
Termination Fee . In accordance with the terms of
Section 12.1, a termination fee; and
(d)
Unused Revolving Line Facility Fee . A fee (the
“ Unused Revolving Line Facility Fee ”), payable
monthly, in arrears, on a calendar year basis, in an amount per
annum equal to the Unused Line Fee Percentage of the average unused
portion of the Total Commitment, as reasonably determined by
Bank. The unused portion of the Total Commitment, for the
purposes of this calculation, shall include amounts reserved under
the Cash Management
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Services Sublimit for
products provided and under the Foreign Exchange Sublimit for FX
Forward Contracts. Borrower shall not be entitled to any credit,
rebate or repayment of any Unused Revolving Line Facility Fee
previously earned by Bank pursuant to this
Section notwithstanding any termination of the Agreement, or
suspension or termination of Bank’s obligation to make loans
and advances hereunder; and
(e)
Bank Expenses . All Bank Expenses (including
reasonable attorneys’ fees and expenses, plus expenses, for
documentation and negotiation of this Agreement) incurred through
and after the Effective Date, when due.
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CONDITIONS OF LOANS
3.1
Conditions Precedent to Initial Credit Extension .
Bank’s obligation to make the initial Credit Extension is
subject to the condition precedent that Borrower shall consent to
or have delivered, in form and substance satisfactory to Bank, such
documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate, including, without
limitation:
(a)
duly executed original signatures to the Loan Documents to which it
is a party;
(b)
its Operating Documents and a good standing certificate of Borrower
certified by the Secretary of State of the State of Delaware as of
a date no earlier than thirty (30) days prior to the Effective
Date;
(c)
completed Borrowing Resolutions for Borrower;
(d)
either (i) an Acknowledgement/Ratification duly executed by
the Trustee under the Indenture in favor of Bank confirming that
the Obligations constitute “Designated Senior
Indebtedness” as defined in the Indenture or
(ii) evidence that Borrower’s indebtedness under the
Convertible Senior Subordinated Notes has been or, upon the
application of the proceeds of the initial Credit Extension to be
made hereunder will be, satisfied in full and that the Indenture
has been terminated; provided that , in order to
satisfy this subsection 3.1(d) by compliance with clause
(ii) hereof then, after giving effect to such initial Credit
Extension (x) no Default or Event of Default shall then exist
and (y) Borrower shall have provided evidence satisfactory to
Bank that it shall remain in pro forma compliance with the
financial covenants set forth in Section 6.9 at all times
during the ninety (90) day period following the date of the initial
Credit Extension;
(e)
a payoff letter or some other evidence of the termination of that
certain Revolving Credit Agreement, dated as of October 3,
2003, by and among Axcelis Technologies, Inc. the financial
institutions party thereto and ABN Amro Bank, N.V., as agent;
(f)
evidence that (i) the Liens securing Indebtedness owed by
Borrower to ABN Amro Bank, N.V., as agent and The Equitable-Crow
Braker Center Austin Company have been or will be terminated and
(ii) the documents and/or filings evidencing the perfection of
such Liens, including without limitation any financing statements
and/or control agreements, have or will, concurrently with the
initial Credit Extension, be terminated.
(g)
certified copies, dated as of a recent date, of financing statement
searches, as Bank shall request, accompanied by written evidence
(including any UCC termination statements) that the Liens indicated
in any such financing statements either constitute Permitted Liens
or have been or, in connection with the initial Credit Extension,
will be terminated or released;
(h)
the Perfection Certificates executed by Borrower and each
Guarantor;
(i)
a landlords’ consent executed by the landlords of
Borrower’s 33 Cherry Hill Drive, Beverly, Massachusetts and
54 Cherry Hill Drive, Beverly, Massachusetts locations in favor of
Bank;
(j)
a legal opinion of Borrower’s counsel dated as of the
Effective Date together with the duly executed original signatures
thereto;
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(k)
the duly executed original signatures to each Guaranty, each
Guarantor Security Agreement, the Pledge Agreements, and the
Negative Pledge, together with the completed Borrowing Resolutions
for Guarantor;
(l)
evidence satisfactory to Bank that the insurance policies required
by Section 6.7 hereof are in full force and effect, together
with appropriate evidence showing loss payable and/or additional
insured clauses or endorsements in favor of Bank; and
(m)
payment of the fees and Bank Expenses then due as specified in
Section 2.4 hereof.
3.2
Conditions Precedent to all Credit Extensions .
Bank’s obligations to make each Credit Extension, including
the initial Credit Extension, is subject to the following:
(a)
except as otherwise provided in Section 3 of the LIBOR
Supplement, (i) for Advances, timely receipt of a completed
and executed Notice of Borrowing and, (ii) for any other
Credit Extension, timely receipt of a completed and executed
Transaction Report; and
(b)
the representations and warranties in Section 5 shall be true,
accurate and complete in all material respects on the date of the
Transaction Report and Notice of Borrowing and on the Funding Date
of each Credit Extension; provided, however, that such materiality
qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in
the text thereof; and provided, further that those representations
and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such
date, and no Default or Event of Default shall have occurred and be
continuing or result from the Credit Extension. Each Credit
Extension is Borrower’s representation and warranty on that
date that the representations and warranties in Section 5
remain true, accurate and complete in all material respects;
provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and
complete in all material respects as of such date; and
(c)
as determined in Bank’s reasonable business judgment, there
has not been a Material Adverse Change.
3.3
Covenant to Deliver . Borrower agrees to deliver to Bank
each item required to be delivered to Bank under this Agreement as
a condition to any Credit Extension. Borrower expressly
agrees that a Credit Extension made prior to the receipt by Bank of
any such item shall not constitute a waiver by Bank of
Borrower’s obligation to deliver such item, and any such
Credit Extension in the absence of a required item shall be made in
Bank’s sole discretion.
3.4
Procedures for Borrowing . In addition to and
supplemental of the requirements set forth in Section 3 of the
LIBOR Supplement, subject to the prior satisfaction of all other
applicable conditions to the making of an Advance set forth in this
Agreement, to obtain an Advance (other than Advances under Sections
2.1.2 or 2.1.4), Borrower shall notify Bank (which notice shall be
irrevocable) by electronic mail, facsimile, or telephone by
12:00 p.m. Pacific time on the Funding Date of the
Advance. Together with such notification, Borrower must
promptly deliver to Bank by electronic mail or facsimile a
completed Transaction Report executed by a Responsible Officer or
his or her designee. Bank shall credit Advances to the
Designated Deposit Account. Bank may make Advances under this
Agreement based on instructions from a Responsible Officer or his
or her designee or without instructions if the Advances are
necessary to meet Obligations which have become due. Bank may
rely on any telephone notice given by a person whom Bank believes
is a Responsible Officer or designee.
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CREATION OF SECURITY INTEREST
4.1
Grant of Security Interest . Borrower hereby grants Bank,
to secure the payment and performance in full of all of the
Obligations, a continuing security interest in, and pledges to
Bank, the Collateral, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products
thereof. Borrower represents, warrants, and covenants that
the security interest granted herein is and shall at all times
continue to be a first priority perfected security interest in the
Collateral (subject only to Permitted Liens that may have superior
priority to Bank’s Lien under this Agreement). If
Borrower shall acquire a commercial tort claim,
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Borrower shall promptly notify Bank in a
writing signed by Borrower of the general details thereof and upon
request of Bank grant to Bank in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance reasonably
satisfactory to Bank.
Bank’s lien and security interest in the
Collateral shall continue until Borrower fully satisfies its
Obligations in cash. Upon payment in full in cash of the
Obligations (except for contingent indemnification obligations for
which no claim has been made) and at such time as Bank’s
obligation to make Credit Extensions has terminated, Bank shall, at
Borrower’s sole cost and expense, release its Liens in the
Collateral and all rights therein shall revert to
Borrower.
4.2
Authorization to File Financing Statements . Borrower
hereby authorizes Bank to file financing statements, without notice
to Borrower, with all appropriate jurisdictions to perfect or
protect Bank’s interest or rights hereunder.
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REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as
follows:
5.1
Due Organization, Authorization; Power and Authority .
Borrower and each of its Domestic Subsidiaries is validly existing
and in good standing as a Registered Organization in its
jurisdiction of formation and is qualified and licensed to do
business and is in good standing in any jurisdiction in which the
conduct of its business or its ownership of property requires that
it be qualified except where the failure to do so could not
reasonably be expected to have a material adverse effect on
Borrower’s business. In connection with this Agreement,
Borrower has delivered to Bank completed certificates each signed
by Borrower and Guarantor, respectively, entitled “Perfection
Certificate”. Borrower represents and warrants to Bank
that (a) Borrower’s exact legal name is that indicated
on the Perfection Certificate and on the signature
page hereof; (b) Borrower is an organization of the type
and is organized in the jurisdiction set forth in the Perfection
Certificate; (c) the Perfection Certificate accurately sets
forth Borrower’s organizational identification number or
accurately states that Borrower has none; (d) the Perfection
Certificate accurately sets forth Borrower’s place of
business, or, if more than one, its chief executive office as well
as Borrower’s mailing address (if different than its chief
executive office); (e) Borrower (and each of its predecessors)
has not, in the past five (5) years, changed its jurisdiction
of formation, organizational structure or type, or any
organizational number assigned by its jurisdiction; and
(f) all other information set forth on the Perfection
Certificate pertaining to Borrower and each of its Subsidiaries is
accurate and complete (it being understood and agreed that Borrower
may from time to time update certain information in the Perfection
Certificate after the Effective Date to the extent permitted by one
or more specific provisions in this Agreement). If Borrower
is not now a Registered Organization but later becomes one,
Borrower shall promptly notify Bank of such occurrence and provide
Bank with Borrower’s organizational identification
number.
The
execution, delivery and performance by Borrower of the Loan
Documents to which it is a party have been duly authorized, and do
not (i) conflict with any of Borrower’s organizational
documents, (ii) contravene, conflict with, constitute a
default under or violate any material Requirement of Law,
(iii) contravene, conflict or violate any applicable order,
writ, judgment, injunction, decree, determination or award of any
Governmental Authority by which Borrower or any its Subsidiaries or
any of their property or assets may be bound or affected,
(iv) require any action by, filing, registration, or
qualification with, or Governmental Approval from, any Governmental
Authority (except such Governmental Approvals which have already
been obtained and are in full force and effect or
(v) constitute an event of default under any material
agreement 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 in which the default could reasonably be expected to have
a material adverse effect on Borrower’s business.
5.2
Collateral . Borrower has good title to, has rights in,
and the power to transfer each item of the Collateral upon which it
purports to grant a Lien hereunder, free and clear of any and all
Liens except Permitted Liens. Borrower has no deposit
accounts other than the deposit accounts with Bank, the deposit
accounts, if any, described in the Perfection Certificate delivered
to Bank in connection herewith, or of which Borrower has given Bank
notice and taken such actions as are necessary to give Bank a
perfected security interest therein. The Accounts are bona
fide, existing obligations of the Account Debtors.
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The
Collateral is not in the possession of any third party bailee (such
as a warehouse) except as otherwise provided in the Perfection
Certificate. None of the components of the Collateral shall
be maintained at locations other than as provided in the Perfection
Certificate or as permitted pursuant to Section 7.2.
Borrower shall at all times during the term of this Agreement
maintain at least two-thirds of its Inventory (based upon the fair
market value of all Inventory) at Borrower’s 108 Cherry Hill
Drive, Beverly, Massachusetts location and at other locations of
the Borrower for which Bank has received a landlord’s waiver
in form and substance reasonably satisfactory to Bank.
All
Inventory is in all material respects of good and marketable
quality, free from material defects.
Axcelis Technologies, Inc. is the sole
owner of the intellectual property set forth on the Perfection
Certificate, except for non-exclusive licenses granted to its
customers in the ordinary course of business. Each patent is
presumed valid and enforceable and no part of the intellectual
property has been judged invalid or unenforceable, in whole or in
part, and to the best of Borrower’s knowledge, no claim has
been made that any part of the intellectual property violates the
rights of any third party.
Except as noted on the Perfection Certificate,
Borrower is not a party to, nor is bound by, any material license
or other agreement with respect to which Borrower is the licensee
(a) that prohibits or otherwise restricts Borrower from
granting a security interest in Borrower’s interest in such
license or agreement or any other property, or (b) for which a
default under or termination of could interfere with the
Bank’s right to sell any Collateral. Borrower shall
provide written notice to Bank within thirty (30) days of entering
or becoming bound by any such license or agreement (other than
over-the-counter software that is commercially available to the
public). Borrower shall take such steps as Bank requests to
obtain the consent of, or waiver by, any person whose consent or
waiver is necessary for (x) all such licenses or agreements to
be deemed “Collateral” and for Bank to have a security
interest in it that might otherwise be restricted or prohibited by
law or by the terms of any such license or agreement, whether now
existing or entered into in the future, and (y) Bank to have
the ability in the event of a liquidation of any Collateral to
dispose of such Collateral in accordance with Bank’s rights
and remedies under this Agreement and the other Loan
Documents.
5.3
Accounts Receivable; Inventory .
(a)
For each Account with respect to which Advances are requested, on
the date each Advance is requested and made, such Account shall be
an Eligible Account.
(b)
All statements made and all unpaid balances appearing in all
invoices, instruments and other documents evidencing the Eligible
Accounts are and shall be true and correct and all such invoices,
instruments and other documents, and all of Borrower’s Books
are genuine and in all respects what they purport to be.
Whether or not an Event of Default has occurred and is continuing,
Bank may notify any Account Debtor owing Borrower money of
Bank’s security interest in such funds. All sales and
other transactions underlying or giving rise to each Eligible
Account shall comply in all material respects with all applicable
laws and governmental rules and regulations. Borrower
has no knowledge of any actual or imminent Insolvency Proceeding of
any Account Debtor whose accounts are Eligible Accounts in any
Transaction Report. To the best of Borrower’s
knowledge, all signatures and endorsements on all documents,
instruments, and agreements relating to all Eligible Accounts are
genuine, and all such documents, instruments and agreements are
legally enforceable in accordance with their terms.
(c)
For any item of Inventory consisting of Eligible Inventory in any
Transaction Report, such Inventory (i) consists either of raw
materials, or of finished goods, in good, new, and salable
condition, which is not perishable, returned, consigned, obsolete,
not sellable, damaged, or defective, and is not comprised of
demonstrative or custom inventory, works in progress, packaging or
shipping materials, or supplies; (ii) meets all applicable
governmental standards; (iii) has been manufactured in
compliance with the Fair Labor Standards Act; (iv) is not
subject to any Liens, except the first priority Liens granted or in
favor of Bank under this Agreement or any of the other Loan
Documents or Permitted Liens; and (v) is located at
Borrower’s 108 Cherry Hill Drive, Beverly, Massachusetts
location owned by Borrower or, provided that Bank has received
landlord’s waivers in form and substance reasonably
satisfactory to Bank, at Borrower’s 33 Cherry Hill Drive,
Beverly, Massachusetts and 54 Cherry Hill Drive, Beverly,
Massachusetts locations. In addition, in the event the Sale
and Leaseback Transaction occurs, Borrower shall concurrently
therewith furnish Bank the waiver and agreement required by
Section 7.1 which
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shall include, inter alia, a landlord’s
waiver reasonably satisfactory to Bank with respect to
Borrower’s 108 Cherry Hill Drive, Beverly, Massachusetts
location.
5.4
Litigation . As of the Effective Date, except as
disclosed to Bank in writing, there are no actions or proceedings
pending or, to the knowledge of the Responsible Officers,
threatened in writing by or against Borrower or any of its
Subsidiaries involving more than One Million Dollars ($1,000,000)
or that would reasonably be expected to have a material adverse
effect on Borrower’s business.
5.5
No Material Deviation in Financial Statements . All
consolidated financial statements for Borrower and any of its
Subsidiaries delivered to Bank fairly present in all material
respects Borrower’s consolidated financial condition and
Borrower’s consolidated results of operations. There
has not been any material deterioration in Borrower’s
consolidated financial condition since the date of the most recent
financial statements submitted to Bank.
5.6
Solvency . The fair salable value of Borrower’s
assets (including goodwill minus disposition costs) exceeds the
fair value of its liabilities; Borrower is not left with
unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade
debts) as they mature.
5.7
Regulatory Compliance . Borrower is not an
“investment company” or a company
“controlled” by an “investment company”
under the Investment Company Act of 1940, as amended.
Borrower is not engaged as one of its important activities in
extending credit for margin stock (under Regulations X, T and U of
the Federal Reserve Board of Governors). Borrower has
complied in all material respects with the Federal Fair Labor
Standards Act. Neither Borrower nor any of its Subsidiaries
is a “holding company” or an “affiliate” of
a “holding company” or a “subsidiary
company” of a “holding company” as each term is
defined and used in the Public Utility Holding Company Act of
2005. Borrower has not violated any laws, ordinances or
rules, the violation of which could reasonably be expected to have
a material adverse effect on its business. None of
Borrower’s or any of its Subsidiaries’ properties or
assets has been used by Borrower or any Subsidiary or, to the best
of Borrower’s knowledge, by previous Persons, in disposing,
producing, storing, treating, or transporting any hazardous
substance other than legally. Borrower and each of its
Subsidiaries have obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given
all notices to, all Government Authorities that are necessary to
continue their respective businesses as currently conducted except
where the failure to make such declarations, notices or filings
could not reasonably be expected to have a material adverse effect
on Borrower’s business.
5.8
Subsidiaries; Investments . Borrower does not own any
stock, partnership interest or other equity securities except for
Permitted Investments.
5.9
Tax Returns and Payments; Pension Contributions .
Borrower and its Subsidiaries has timely filed all required tax
returns and reports, and has timely paid all foreign, federal,
state and local taxes, assessments, deposits and contributions owed
by Borrower or such Subsidiary. Borrower may defer payment of
any contested taxes, provided that Borrower (a) in good faith
contests its obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (b) notifies
Bank in writing of the commencement of, and any material
development in, the proceedings, and (c) posts bonds or takes
any other steps required to prevent the governmental authority
levying such contested taxes from obtaining a Lien upon any of the
Collateral that is other than a “Permitted Lien”.
Borrower is unaware of any claims or adjustments proposed for any
of Borrower’s prior tax years which could result in
additional taxes becoming due and payable by Borrower.
Borrower has paid all amounts necessary to fund all present
pension, profit sharing and deferred compensation plans in
accordance with their terms, and Borrower has not withdrawn from
participation in, and has not permitted partial or complete
termination of, or permitted the occurrence of any other event with
respect to, any such plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the
Pension Benefit Guaranty Corporation or its successors or any other
governmental agency.
5.10
Use of Proceeds . Borrower shall use the proceeds of the
Credit Extensions solely as working capital and to fund its general
business requirements and not for personal, family, household or
agricultural purposes.
5.11
Full Disclosure . No written representation, warranty or
other statement of Borrower in any certificate or written statement
given to Bank, as of the date such representation, warranty, or
other statement was
8
made, taken together with all such written
certificates and written statements given to Bank, contains any
untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained in the certificates
or statements not misleading (it being recognized by Bank that the
projections and forecasts provided by Borrower in good faith and
based upon reasonable assumptions are not viewed as facts and that
actual results during the period or periods covered by such
projections and forecasts may differ from the projected or
forecasted results).
5.12
Designation of Obligations as Designated Senior
Indebtedness. All Obligations, including all principal,
interest (including all interest accruing after the commencement of
any bankruptcy or similar proceeding, whether or not a claim for
post-petition interest is allowable as a claim in any such
proceeding), and all fees, costs, expenses and other amounts
accrued or due under this Agreement and otherwise shall at all
times constitute “Designated Senior Indebtedness” under
the terms of the Indenture and any similar agreement.
5.13
Specific Representation Regarding Matrix Integrated Systems
Acquisition Corporation. The sole assets of Matrix
Integrated Systems Acquisition Corporation, a wholly-owned
Subsidiary of Axcelis Technologies, Inc., consist of
(a) tangible assets having an aggregate fair market value of
not more than $50,000.00, (b) goodwill and
(c) intellectual property which is immaterial to the business
of the Borrower and/or its Subsidiaries.
6
AFFIRMATIVE COVENANTS
Borrower shall do all of the
following:
6.1
Government Compliance .
(a)
Subject to Sections 7.2 and 7.3, maintain its and all its
Subsidiaries’ legal existence and good standing in their
respective jurisdictions of formation and maintain qualification in
each jurisdiction in which the failure to so qualify would
reasonably be expected to have a material adverse effect on
Borrower’s business. Borrower shall comply, and have
each Subsidiary comply, with all laws, ordinances and regulations
to which it is subject, noncompliance with which could have a
material adverse effect on Borrower’s business.
(b)
Obtain all of the Governmental Approvals necessary for the
performance by Borrower of its obligations under the Loan Documents
to which it is a party and the grant of a security interest to Bank
in all of its property. Borrower shall promptly provide
copies of any such obtained Governmental Approvals to Bank.
6.2
Financial Statements, Reports, Certificates .
(a)
Borrower shall provide Bank with the following:
(i)
upon each request for a Credit Extension and, in all events, within
thirty (30) days after the end of each month a Transaction Report
(and any schedules related thereto including, but not limited to, a
schedule of any litigation of the type described in
Section 5.4 which may arise or be threatened from and after
the Effective Date);
(ii)
within thirty (30) days after the end of each month,
(A) monthly accounts receivable agings, aged by invoice date,
(B) monthly accounts payable agings, aged by invoice date, and
outstanding or held check registers, if any, (C) monthly
reconciliations of accounts receivable agings (aged by invoice
date), transaction reports and general ledger, and (D) monthly
inventory reports for Inventory valued on a first-in, first-out
basis at the lower of cost or market (in accordance with GAAP),
Inventory backlog reports, or such other inventory reports as are
requested by Bank in its good faith business judgment;
(iii)
within forty-five (45) days after the end of each fiscal quarter of
Borrower, a Compliance Certificate signed by a Responsible Officer,
certifying that as of the end of such quarter, Borrower was in full
compliance with all of the terms and conditions of this Agreement,
and setting forth calculations showing compliance with the
financial covenants set forth in this Agreement and such other
information as Bank shall reasonably request, including, without
limitation, a statement that at the end of such quarter there were
no held checks;
9
(iv)
as soon as available, and in any event within forty-five (45) days
after the end of each fiscal quarter of Borrower, quarterly
unaudited financial statements, prepared on a consolidated and
consolidating (in a manner reasonably satisfactory to Bank)
basis;
(v)
within sixty (60) days after the end of each fiscal year of
Borrower, (A) annual operating budgets (including income
statements, balance sheets and cash flow statements, by quarter)
for the then current fiscal year of Borrower, and (B) annual
financial projections for the then current fiscal year (on a
quarterly basis) as approved by Borrower’s board of
directors, together with any related business forecasts used in the
preparation of such annual financial projections, all prepared on a
consolidated and consolidating (in a manner reasonably satisfactory
to Bank) basis; and
(vi)
as soon as available, and in any event within one hundred twenty
(120) days following the end of Borrower’s fiscal year,
annual financial statements prepared on a consolidated and
consolidating (in a manner reasonably satisfactory to Bank)
basis, certified by, and with an unqualified opinion of,
independent certified public accountants acceptable to Bank.
(b)
within ten (10) days after filing, all reports on
Form 10-K, 10-Q and 8-K filed with the Securities and Exchange
Commission or a link thereto on Borrower’s or another website
on the Internet.
(c)
Prompt written notice of (i) any material change in the
composition of the intellectual property or
(ii) Borrower’s knowledge of an event that materially
adversely affects the value of the intellectual property.
6.3
Accounts Receivable .
(a)
Schedules and Documents Relating to Accounts .
Borrower shall deliver to Bank Transaction Reports, as
provided in Section 6.2, on Bank’s standard forms;
provided, however, that Borrower’s failure to execute and
deliver the same shall not affect or limit Bank’s Lien and
other rights in all of Borrower’s Accounts, nor shall
Bank’s failure to advance or lend against a specific Account
affect or limit Bank’s Lien and other rights therein.
If requested by Bank, Borrower shall furnish Bank with copies (or,
at Bank’s request, originals) of all contracts, orders,
invoices, and other similar documents, and all shipping
instructions, delivery receipts, bills of lading, and other
evidence of delivery, for any goods the sale or disposition of
which gave rise to such Accounts. In addition, Borrower shall
deliver to Bank, on its request, the originals of all instruments,
chattel paper, security agreements, guarantees and other documents
and property evidencing or securing any Accounts, in the same form
as received, with all necessary indorsements, and copies of all
credit memos.
(b)
Disputes . Borrower shall promptly notify Bank of all
disputes or claims relating to material Accounts. Borrower
may forgive (completely or partially), compromise, or settle any
Account for less than payment in full, or agree to do any of the
foregoing so long as (i) Borrower does so in good faith, in a
commercially reasonable manner, in the ordinary course of business,
in arm’s-length transactions, and reports the same to Bank in
the regular reports provided to Bank; (ii) no Default or Event
of Default has occurred and is continuing; and (iii) after
taking into account all such discounts, settlements and
forgiveness, the total outstanding Advances will not exceed the
lesser of the Revolving Line or the Borrowing Base.
(c)
Collection of Accounts . Borrower shall have the right
to collect all Accounts, unless and until a Default or an Event of
Default has occurred and is continuing. Whether or not an
Event of Default has occurred and is continuing, Borrower shall
hold all payments on, and proceeds of, Accounts in trust for Bank,
and Borrower shall immediately deliver all such payments and
proceeds to Bank in their original form, duly endorsed, to be
applied to the Obligations pursuant to the terms of
Section 9.4 hereof. All proceeds of Accounts shall be
deposited by Borrower into a lockbox account, or such other
“blocked account” as Bank may specify, pursuant to a
blocked account agreement in such form as Bank may specify;
provided , however , in the event (i) Borrower
maintains or exceeds $50,000,000 in (A) Borrower’s
unrestricted cash plus Cash Equivalents on deposit at Bank plus
(B) unused availability under the Revolving Line, as
determined by Bank with reference to the Availability Amount and
(ii) no Default or Event of Default has occurred and is
continuing, then all payments on, and proceeds of, Accounts shall
be transferred by Bank to an operating account of Borrower
maintained at Bank.
10
(d)
Returns . Provided no Event of Default has
occurred and is continuing, if any Account Debtor returns any
Inventory to Borrower, Borrower shall promptly (i) determine
the reason for such return, (ii) issue a credit memorandum to
the Account Debtor in the appropriate amount, and
(iii) provide a copy of such credit memorandum to Bank, upon
request from Bank. In the event any attempted return occurs
after the occurrence and during the continuance of any Event of
Default, Borrower shall hold the returned Inventory in trust for
Bank, and immediately notify Bank of the return of the
Inventory.
(e)
Verification . Bank may, from time to time,
verify directly with the respective Account Debtors the validity,
amount and other matters relating to the Accounts, either in the
name of Borrower or Bank or such other name as Bank may
choose.
(f)
No Liability . Bank shall not be responsible
or liable for any shortage or discrepancy in, damage to, or loss or
destruction of, any goods, the sale or other disposition of which
gives rise to an Account, or for any error, act, omission, or delay
of any kind occurring in the settlement, failure to settle,
collection or failure to collect any Account, or for settling any
Account in good faith for less than the full amount thereof, nor
shall Bank be deemed to be responsible for any of Borrower’s
obligations under any contract or agreement giving rise to an
Account. Nothing herein shall, however, relieve Bank from
liability for its own gross negligence or willful misconduct.
6.4
Remittance of Proceeds . Except as otherwise provided in
Section 6.3(c), deliver, in kind, all proceeds arising from
the disposition of any Collateral to Bank in the original form in
which received by Borrower not later than the following Business
Day after receipt by Borrower, to be applied to the Obligations
pursuant to the terms of Section 9.4 hereof; provided that, if
no Default or Event of Default has occurred and is continuing,
Borrower shall not be obligated to remit to Bank the proceeds of
the sale of worn out or obsolete Equipment disposed of by Borrower
in good faith in an arm’s length transaction for an aggregate
purchase price of One Hundred Thousand Dollars ($100,000.00) or
less (for all such transactions in any fiscal year). Borrower
agrees that it will not commingle proceeds of Collateral with any
of Borrower’s other funds or property, but will hold such
proceeds separate and apart from such other funds and property and
in an express trust for Bank. Nothing in this
Section 6.4 limits the restrictions on disposition of
Collateral set forth elsewhere in this Agreement.
6.5
Taxes;
Pensions . Timely
file, and require each of its Subsidiaries to timely file, all
required tax returns and reports and timely pay, and require each
of its Subsidiaries to timely file, all foreign, federal, state and
local taxes, assessments, deposits and contributions owed by
Borrower and each of its Subsidiaries, except for deferred payment
of any taxes contested pursuant to the terms of Section 5.9
hereof, and shall deliver to Bank, on demand, appropriate
certificates attesting to such payments, and pay all amounts
necessary to fund all present pension, profit sharing and deferred
compensation plans in accordance with their terms.
6.6
Access to Collateral; Books and Records . Upon reasonable
notice (provided no notice is required if an Event of Default has
occurred and is continuing), Bank, or its agents, shall have the
right, with such frequency as Bank shall determine necessary in its
sole discretion, to inspect the Collateral and the right to audit
and copy Borrower’s Books. The foregoing inspections
and audits shall be at Borrower’s expense, and the charge
therefor shall be $750 per person per day (or such higher amount as
shall represent Bank’s then-current standard charge for the
same), plus reasonable out-of-pocket expenses; provided, however,
that Bank shall conduct no more than two (2) such
audit(s) per fiscal year at Borrower’s expense in the
event no Event of Default has occurred and is continuing. In
the event Borrower and Bank schedule an audit more than ten
(10) days in advance, and Borrower cancels or seeks to
reschedules the audit with less than ten (10) days written
notice to Bank, then (without limiting any of Bank’s rights
or remedies), Borrower shall pay Bank a fee of $1,000 plus any
out-of-pocket expenses incurred by Bank to compensate Bank for the
anticipated costs and expenses of the cancellation or
rescheduling.
6.7
Insurance . Keep its business and the Collateral
insured for risks and in amounts standard for companies in
Borrower’s industry and location and as Bank may reasonably
request. Insurance policies shall be in a form, with
companies, and in amounts that are satisfactory to Bank. All
property policies shall have a loss payable endorsement showing
Bank as loss payee and waive subrogation against Bank, and all
liability policies shall show, or have endorsements showing, Bank
as an additional insured. All policies (or the loss payable
and additional insured endorsements) shall provide that the insurer
shall endeavor to give Bank at least twenty (20) days notice before
canceling, amending, or declining to renew its policy. At
Bank’s request, Borrower shall deliver certificates of
insurance and/or copies of policies and evidence of all premium
payments. Proceeds payable under any property
11
policy shall, at Bank’s option, be
payable to Bank on account of the Obligations.
Notwithstanding the foregoing, (a)(x) so long as no Event of
Default has occurred and is continuing, Borrower shall have the
option of applying the proceeds of any casualty policy up to One
Hundred Thousand Dollars ($100,000.00) with respect to any loss,
but not exceeding Two Hundred Fifty Thousand Dollars
($250,000.00) in the aggregate for all losses under all casualty
policies in any one year, toward the replacement or repair of
destroyed or damaged property; provided that any such
replaced or repaired property (i) shall be of equal or like
value as the replaced or repaired Collateral and (ii) shall be
deemed Collateral in which Bank has been granted a first priority
security interest, and (b) after the occurrence and during the
continuance of an Event of Default, all proceeds payable under such
casualty policy shall, at the option of Bank, be payable to Bank on
account of the Obligations. If Borrower fails to obtain
insurance as required under this Section 6.7 or to pay any
amount or furnish any required proof of payment to third persons
and Bank, Bank may make all or part of such payment or obtain such
insurance policies required in this Section 6.7, and take any
action under the policies Bank deems prudent.
6.8
Operating Accounts .
(a)
Maintain (i) not less than 60% of the dollar value of all
Unrestricted Cash of Borrower and its Subsidiaries with banks or
financial institutions located within the United States; and
(ii) Borrower’s and its Domestic Subsidiaries’
primary operating accounts, disbursement accounts, and other
deposit accounts and securities accounts with Bank and Bank’s
Affiliates, which accounts shall represent at least 51% of the
dollar value of all of Borrower’s and its Subsidiaries’
operating and other deposit accounts and securities accounts at all
banks or financial institutions.
(b)
Provide Bank five (5) days prior written notice before
establishing any Collateral Account within the United States at or
with any bank or financial institution other than Bank or
Bank’s Affiliates. For each Collateral Account located
within the United States that Borrower at any time maintains,
Borrower shall cause the applicable bank or financial institution
(other than Bank) at or with which any such Collateral Account is
maintained to execute and deliver a Control Agreement or other
appropriate instrument with respect to such Collateral Account to
perfect Bank’s Lien in such Collateral Account in accordance
with the terms hereunder. The provisions of the previous
sentence shall not apply to deposit accounts exclusively used for
payroll, payroll taxes and other employee wage and benefit payments
to or for the benefit of Borrower’s employees and identified
to Bank by Borrower as such, or to the Borrower’s pledged
time deposit maintained with ABN Amro Bank to secure the letters of
credit issued in connection with value added tax recovery
initiatives of Axcelis Technologies GmbH, or to those Collateral
Accounts identified on Schedule 6.8(b) hereto, provided
that the amounts on deposit in such Collateral Accounts shall not
exceed the maximum amounts indicated on Schedule 6.8(b).
(c)
Notwithstanding (i) the requirement in
Section 6.8(a) that all of Borrower’s and its
Domestic Subsidiaries’ primary operating accounts,
disbursement accounts, and other deposit accounts and securities
accounts be maintained with Bank and Bank’s Affiliates; or
(ii) the requirement in Section 6.8(b) that Borrower
shall cause any bank or financial institution (other than Bank) at
or with which any Collateral Account is maintained to execute and
deliver a Control Agreement or other appropriate instrument with
respect to such Collateral Account to perfect Bank’s Lien in
such Collateral Account; Bank agrees that Borrower shall have
ninety (90) days from the Effective Date (or such longer period as
Bank may agree to in writing) to close all of Borrower’s and
its Domestic Subsidiaries’ primary operating accounts,
disbursement accounts, and other deposit accounts and securities
accounts located with banks or financial institutions other than
Bank and Bank’s Affiliates; provided , however
, that with respect to Account No. 5800355702 maintained with
LaSalle Bank (the “ Existing Lockbox Account ”),
Borrower shall cause such account to be closed within 120 days from
the Effective Date (or such longer period as Bank may agree to in
writing) provided that, at all times prior to such closure,
Borrower shall cause all deposits in the Existing Lockbox Account
to be swept on a daily basis and deposited into a lockbox account,
or such other “blocked account”, maintained with Bank;
provided further , that at all times from and after
the Effective Date, Borrower shall maintain sufficient deposits
with Bank and Bank’s Affiliates to comply with the minimum
dollar value requirements set forth in clauses (i) and
(ii) of Section 6.8(a).
6.9
Financial Covenants .
(a)
Liquidity . (i) At all times until Borrower
furnishes Bank with evidence satisfactory to Bank that Borrower, on
a consolidated basis, has achieved Net Income of at least $1.00 for
two consecutive fiscal quarters, Borrower shall maintain the
greater of (A) $50,000,000 or (B) two times (2x) the
amount of all outstanding Credit
12
Extensions (including all amounts outstanding
under the Receivables Purchase Facility), of (x) unrestricted
cash and Cash Equivalents at Bank plus (y) unused availability
under the Revolving Line, as determined by Bank with reference to
the Availability Amount set forth herein; and (ii) at all
times thereafter, Borrower shall maintain at least $40,000,000 of
(A) unrestricted cash and Cash Equivalents at Bank plus
(B) unused availability under the Revolving Line, as
determined by Bank with reference to the Availability Amount set
forth herein; provided that , in no event shall the
minimum liquidity covenant be reduced to $40,000,000 until after
such time as the Convertible Senior Subordinated Notes have been
satisfied in full and the Indenture has been
terminated.
(b)
Maximum Losses . As of the last day of each applicable
fiscal quarter, on a consolidated basis, Borrower shall not suffer
any loss in excess of: (i) $17,500,000 for the fiscal quarter
ended March 31, 2008; (ii) $7,500,000 for the fiscal
quarter ended June 30, 2008; and (iii) $2,500,000 for the
fiscal quarter ended September 30, 2008.
(c)
Profitability . As of the last day of each applicable
fiscal quarter, on a consolidated basis, Borrower shall maintain a
minimum positive Net Income of $1 for each fiscal quarter following
the fiscal quarter ended September 30, 2008.
6.10
Protection and Registration of Intellectual Property Rights
. Borrower shall: (a) protect, defend and maintain the
validity and enforceability of its material intellectual property;
(b) promptly advise Bank in writing of material infringements
of its intellectual property; and (c) not allow any
intellectual property material to Borrower’s business to be
abandoned, forfeited or dedicated to the public without
Bank’s written consent. If Borrower (i) obtains
any patent, registered trademark or servicemark, registered
copyright, registered mask work, or any pending application for any
of the foregoing, whether as owner, licensee or otherwise, or
(ii) applies for any patent or the registration of any
trademark or servicemark, then Borrower shall provide written
notice thereof to Bank on a quarterly basis upon the delivery of
the Compliance Certificate for such period, and shall execute such
intellectual property security agreements and other documents and
take such other actions as Bank shall request in its good faith
business judgment to perfect and maintain a first priority
perfected security interest in favor of Bank in such
property. If Borrower decides to register any copyrights or
mask works in the United States Copyright Office, Borrower shall:
(x) provide Bank with at least fifteen (15) days prior written
notice of Borrower’s intent to register such copyrights or
mask works together with a copy of the application it intends to
file with the United States Copyright Office (excluding exhibits
thereto); (y) execute an intellectual property security
agreement and such other documents and take such other actions as
Bank may request in its good faith business judgment to perfect and
maintain a first priority perfected security interest in favor of
Bank in the copyrights or mask works intended to be registered with
the United States Copyright Office; and (z) record such
intellectual property security agreement with the United States
Copyright Office contemporaneously with filing the copyright or
mask work application(s) with the United States Copyright
Office. Upon Bank’s request, Borrower shall promptly
provide to Bank copies of all applications that it files for
patents or for the registration of trademarks, servicemarks,
copyrights or mask works, together with evidence of the recording
of the intellectual property security agreement necessary for Bank
to perfect and maintain a first priority perfected security
interest in such property.
6.11
Litigation Cooperation . From the date hereof and
continuing through the termination of this Agreement, make
available to Bank, without expense to Bank, Borrower and its
officers, employees and agents and Borrower’s books and
records, to the extent that Bank may deem them reasonably necessary
to prosecute or defend any third-party suit or proceeding
instituted by or against Bank with respect to any Collateral or
relating to Borrower.
6.12
Further Assurances . Execute any further instruments and
take further action as Bank reasonably requests to perfect or
continue Bank’s Lien in the Collateral or to effect the
purposes of this Agreement. Deliver to Bank, within five
(5) days after the same are sent or received, copies of all
correspondence, reports, documents and other filings with any
Governmental Authority regarding compliance with or maintenance of
Governmental Approvals or Requirements of Law or that could
reasonably be expected to have a material effect on any of the
Governmental Approvals or otherwise on the operations of Borrower
or any of its Subsidiaries.
6 . 13
Designated Senior Indebtedness. Borrower shall designate
all principal of, interest (including all interest accruing after
the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim
in any such proceeding), and all fees, costs, expenses and other
amounts accrued or due under this Agreement as “Designated
Senior Indebtedness”, or such similar term, in any future
13
Subordinated Debt incurred by Borrower after
the date hereof, if such Subordinated Debt contains such term or
similar term and if the effect of such designation is to grant to
Bank the same or similar rights as granted to Bank as a holder of
“Designated Senior Indebtedness” under the Indenture
and any similar agreement.
7
NEGATIVE COVENANTS
Borrower shall not do any of the following
without Bank’s prior written consent:
7.1
Dispositions . Convey, sell, lease, transfer or otherwise
dispose of (collectively, “ Transfer ”), or
permit any of its Subsidiaries to Transfer, all or any part of its
business or property, except for Transfers (a) of Inventory in
the ordinary course of business; (b) of worn-out or obsolete
Equipment; (c) in connection with Permitted Liens and
Permitted Investments; (d) of non-exclusive licenses for the
use of the property of Borrower or its Subsidiaries in the ordinary
course of business; and (e) in the event no Default or Event
of Default has occurred and is continuing, the Sale Leaseback
Transaction, provided that (i) not less than
seventy-five percent (75%) of the proceeds of the Sale Leaseback
Transaction shall be maintained at Bank at all times, provided,
however, subject to the terms of Section 7.9, such proceeds
may be used to retire Borrower’s indebtedness under the
Convertible Senior Subordinated Notes and (ii) Borrower shall
have received a waiver and agreement from the buyer/lessor under
the Sale Leaseback Transaction in form and substance annexed hereto
as Exhibit 7.1. Concurrently with the consummation of
the Sale Leaseback Transaction in accordance with the forgoing,
Bank shall provide a discharge of the Negative Pledge.
7.2
Changes in Business, Management, Ownership, Control, or Business
Locations . (a) Engage in or permit any of its
Subsidiaries to engage in any business other than the businesses
currently engaged in by Borrower and such Subsidiary, as
applicable, or reasonably related thereto; (b) liquidate or
dissolve, other than the dissolution of the Subsidiaries identified
on Schedule 7.2 attached hereto; or (c) have a material change
in executive management (provided that Borrower shall have ninety
(90) days to retain a replacement reasonably acceptable to Bank) or
permit or suffer any Change in Control. Borrower shall not,
without at least thirty (30) days prior written notice to Bank:
(1) add any new offices or business locations, including
warehouses (unless such new offices or business locations contain
less than One Million Dollars ($1,000,000.00) in Borrower’s
assets or property or Borrower obtains a landlord agreement or
bailee agreement in form and substance reasonably satisfactory to
Bank), (2) change its jurisdiction of organization,
(3) change its organizational structure or type,
(4) change its legal name, or (5) change any
organizational number (if any) assigned by its jurisdiction of
organization.
7.3
Mergers or Acquisitions . Merge or consolidate, or permit
any of its Subsidiaries to merge or consolidate, with any other
Person, or acquire, or permit any of its Subsidiaries to acquire,
all or substantially all of the capital stock or property of
another Person. A Subsidiary (other than a Domestic
Subsidiary) may merge or consolidate into another Subsidiary or
into Borrower and a Domestic Subsidiary may merge into another
Domestic Subsidiary or into Borrower.
7.4
Indebtedness . Create, incur, assume, or be liable for
any Indebtedness, or permit any Subsidiary to do so, other than
Permitted Indebtedness.
7.5
Encumbrance . Create, incur, allow, or suffer any Lien on
any of its property, or assign or convey any right to receive
income, including the sale of any Accounts, or permit any of its
Subsidiaries to do so, except for Permitted Liens, permit any
Collateral not to be subject to the first priority security
interest granted herein, or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Bank)
with any Person which directly or indirectly prohibits or has the
effect of prohibiting Borrower or any Subsidiary from assigning,
mortgaging, pledging, granting a security interest in or upon, or
encumbering any of Borrower’s or any Subsidiary’s
intellectual property, except as is otherwise permitted in
Section 7.1 hereof and the definition of “Permitted
Lien” herein.
7.6
Maintenance of Collateral Accounts . Maintain any
Collateral Account except pursuant to the terms of
Section 6.8.(b) hereof.
7.7
Distributions; Investments . (a) Pay any
dividends or make any distribution or payment or redeem, retire or
purchase any capital stock provided that (i) Borrower may
convert any of its convertible securities into other securities
pursuant to the terms of such convertible securities or otherwise
in exchange thereof, and
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(ii) Borrower may pay dividends solely in
common stock; or (b) directly or indirectly make any
Investment other than Permitted Investments, or permit any of its
Subsidiaries to do so.
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 in the
ordinary course of Borrower’s business, upon fair and
reasonable terms that are no less favorable to Borrower than would
be obtained in an arm’s length transaction with a
non-affiliated Person.
7.9
Subordinated Debt . (a) Make or permit any payment
on any Subordinated Debt, except under the terms of the
subordination, intercreditor, or other similar agreement to which
such Subordinated Debt is subject; provided, however, Borrower
acknowledges and agrees that no payments will be made on account of
the Convertible Senior Subordinated Notes in the event any Default
or Event of Default then exists or would occur after giving effect
to any such payment having been made, or (b) amend any
provision in any document relating to the Subordinated Debt which
would increase the amount thereof or adversely affect the
subordination thereof to Obligations owed to Bank.
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