EXHIBIT 10.1
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of May 9, 2003, by and
between SILICON VALLEY BANK ("Bank"), whose address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ with a loan production office at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and ADVANCED ENERGY INDUSTRIES, INC. ("Borrower"),
whose address is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
1. DESCRIPTION OF EXISTING AGREEMENT. Among other Obligations, which may be
owing by Borrower to Bank, Borrower is or may become indebted to Bank pursuant
to, among other documents, a Loan and Security Agreement dated May 10, 2002, as
it may be amended from time to time (the "Loan Agreement"). The Loan Agreement
provides for, among other things, a Committed Revolving Line in the original
principal amount of Twenty-Five Million and No/100 Dollars ($25,000,000.00).
Defined terms used but not otherwise defined herein shall have the same meanings
as set forth in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Obligations."
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement.
Hereinafter, the above-described security documents, together with all other
documents securing repayment of the Obligations shall be referred to as the
"Security Documents". Hereinafter, the Security Documents, together with all
other documents evidencing or securing the Obligations shall be referred to as
the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS. Bank hereby agrees to modify the Loan
Agreement as follows:
1. The first sentence in subsection (a) of Section 2.1.1 entitled
"Revolving Advances" is hereby amended to read as follows:
Bank will make Advances not exceeding (i) the lesser of (A) the
Committed Revolving Line or (B) the Borrowing Base, if
applicable, minus (ii) the amount of all outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit), and
minus (iii) the FX Reserve and all amounts for services utilized
under the Cash Management Services Sublimit.
2. Section 2.1.4 is hereby amended entirely to read as follows:
2.1.4 LETTERS OF CREDIT SUBLIMIT.
Bank will issue or have issued Letters of Credit for
Borrower's account not exceeding (i) the lesser of the Committed
Revolving Line or the Borrowing Base minus (ii) the outstanding
principal balance of the Advances minus the Cash Management
Sublimit, minus the FX Reserve; however, the face amount of
outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit) may not exceed $1,000,000. Each Letter of
Credit will have an expiry date of no later than 180 days after
the Revolving Maturity Date, but Borrower's reimbursement
obligation will be secured by cash on terms acceptable to Bank at
any time after the Revolving Maturity Date if the term of this
Agreement is not extended by Bank. Borrower agrees to execute any
further documentation in connection with the Letters of Credit as
Bank may reasonably request.
3. Section 2.3 entitled "Interest Rate and Payments on Committed
Revolving Line" is amended by changing the first sentence of
subsection (a) thereof to read as follows:
(a) Interest Rate. Advances accrue interest on the outstanding
principal balance at a per annum rate of one percent (1.00%)
below the Prime Rate; provided, however, such interest rate shall
not be less than three percent (3.0%) per annum at any time.
4. Section 6.7 entitled "Financial Covenants" is hereby amended entirely
to read as follows:
Borrower will maintain on a consolidated basis as of the last day
of each fiscal quarter of Borrower unless otherwise noted:
(i) QUICK RATIO. A ratio of Quick Assets to Current Liabilities
of at least 2.00 to 1.00; and
(ii) TANGIBLE NET WORTH. A Tangible Net Worth plus Subordinated
Debt plus the outstanding principal amount of Borrower's 5.25%
Convertible Notes due November 15, 2006 and 5.00% Convertible
Notes due September 1, 2006, of at least the sum of $220,000,000
plus 50% of the net profit for such quarter.
5. Section 13.1 entitled "Definitions" is hereby amended as follows:
(i) to change subpart (g) of the definition of "PERMITTED
INDEBTEDNESS" to read:
(g) Indebtedness of AE-Japan up to an aggregate principal amount
of $25,000,000.
(ii) to change subpart (d) of the definition of "PERMITTED
INVESTMENTS" to read :
(d) Investments of Subsidiaries in or to other Subsidiaries or
Borrower and Investments by Borrower in Subsidiaries not to
exceed $10,000,000 in the aggregate in any fiscal year.
(iii) to change the definition of "REVOLVING MATURITY DATE" to read:
"REVOLVING MATURITY DATE" is May 8, 2004.
and (iv) to change the definition of "TANGIBLE NET WORTH" to read:
"TANGIBLE NET WORTH" is, on any date, the consolidated total
assets of Borrower and its Subsidiaries minus, (i) any amounts
attributable to (a) goodwill, (b) intangible items such as
unamortized debt discount and expense, Patents, trade and service
marks and names, Copyrights and research and development expenses
except prepaid expenses, and (c) reserves not already deducted
from assets, and minus (ii) Total Liabilities.
6. Exhibit D attached hereto shall be substituted for that attached to
the Loan Agreement.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
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5. PAYMENT OF LOAN FEE AND EXPENSES. Borrower shall pay to Bank a fee in the
amount of Two Thousand Five Hundred and No/100 Dollars ($2,500.00) (the "Loan
Fee") plus all of Bank's reasonable out-of-pocket expenses in connection with
this Loan Modification Agreement.
6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of the date hereof, it has no defenses against the
obligations to pay any amounts under the Obligations.
7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing below)
understands and agrees that in modifying the existing Obligations, Bank is
relying upon Borrower's representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to
this Loan Modification Agreement, the terms of the Existing Loan Documents
remain unchanged and in full force and effect. Bank's agreement to modifications
to the existing Obligations pursuant to this Loan Modification Agreement in no
way shall obligate Bank to make any future modifications to the Obligations.
Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Obligations. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. Unless expressly released herein, no
maker, endorser, or guarantor will be released by virtue of this Loan
Modification Agreement. The terms of this paragraph apply not only to this Loan
Modification Agreement, but also to all subsequent loan modification agreements.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon receipt by Bank of the Loan Fee and a fully executed
counterpart hereof.
This Loan Modification Agreement is executed as of the date first
written above.
BORROWER: BANK:
ADVANCED ENERGY INDUSTRIES, INC. SILICON VALLEY BANK
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: VP - Finance Title: VP
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EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FROM: ADVANCED ENERGY INDUSTRIES, INC.
The undersigned authorized officer of Advanced Energy Industries, Inc.
("Borrower") certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending _______________ with all required
covenants except as noted below and (ii) all representations and warranties in
the Agreement are true and correct in all material respects on this date.
Attached are the required documents supporting the certification. The Officer
certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) consistently applied from one period to the next
except as explained in an accompanying letter or footnotes. The Officer
acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER
"COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
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Annual (Audited) FYE within 90 days Yes No
10-Q, 10-K and 8-Ks Within 5 days after filing with SEC Yes No
A/R & A/P Agings Monthly within 30 days* Yes No
Borrowing Base Certificate Monthly within 30 days* Yes No
Collateral Audit Initial and Annual** Yes No
Financial Covenant Required Actual Complies
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Maintain on a Quarterly Basis:
Minimum Quick Ratio 2.00:1.0 _____:1.00 Yes No
Minimum Tangible Net Worth + SD + $220, 000,000 plus $________ Yes No
CNs 50% of quarterly profit
*Only after outstandings exceed $10,000,000
**After outstandings exceed $10,000,000 for 30 days
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY
Sincerely,
Received by:
Advanced Energy Industries, Inc. ---------------------------------------
AUTHORIZED SIGNER
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SIGNATURE Date:
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TITLE Verified:
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----------------------------------------------------- AUTHORIZED SIGNER
DATE
Date:
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Compliance Status: Yes No
D-1
(SILICON VALLEY BANK LOGO)
SILICON VALLEY BANK
PRO FORMA INVOICE FOR LOAN CHARGES
BORROWER: ADVANCED ENERGY INDUSTRIES, INC.
LOAN OFFICER: ▇▇▇▇▇ ▇▇▇▇▇▇▇
DATE: MAY 19, 2003
DOCUMENTATION FEE 1,500.00
LOAN FEE 2,500.00
TOTAL FEE DUE $ 4,000.00
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PLEASE INDICATE THE METHOD OF PAYMENT:
{ } A CHECK FOR THE TOTAL AMOUNT IS ATTACHED.
{ } DEBIT DDA # __________________ FOR THE TOTAL AMOUNT.
{ } LOAN PROCEEDS
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BORROWER (DATE)
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SILICON VALLEY BANK (DATE)
ACCOUNT OFFICER'S SIGNATURE
