EX-10.22
This Amendment
Number Two to Loan and Security Agreement (“Amendment”) is entered
into as of September 30, 1999, by and between FOOTHILL CAPITAL CORPORATION, a
California corporation (“Foothill”), and SILICON STORAGE TECHNOLOGY,
INC., a California corporation (“Borrower”), in light of the
following:
A. Borrower and
Foothill have previously entered into that certain Loan and Security Agreement,
dated as of September 22, 1998 as amended on December 8, 1998 (the “Agreement”).
B. Borrower and
Foothill desire to further amend the Agreement as provided for and on the
conditions herein.
NOW, THEREFORE,
Borrower and Foothill hereby amend and supplement the Agreement as follows:
2. DEFINITIONS.
All initially capitalized terms used in this Amendment shall have the meanings
given to them in the Agreement unless specifically defined herein.
3. AMENDMENTS.
2.1 Section 1.1
of the Agreement is amended to add the following definitions:
|
| “EBIT” means
the consolidated net income of Borrower and its Subsidiaries (excluding
extraordinary items) for the applicable period plus all interest expense and
income tax expense for the period.
|
| “Minimum
Cumulative EBIT” means the following amounts as of the following periods,
in each case evidenced by Borrower’s financial covenants delivered to
Foothill within 30 days of the end of each such period, in sufficient detail to
determine Borrower’s EBIT for such periods:
PERIOD
| MINIMUM CUMULATIVE EBIT
|
| October 1999
|
| $ 400,000
|
|
| October 1, 1999 through |
|
| November 30, 1999 |
| 800,000
|
|
| October 1, 1999 through |
|
| December 31, 1999 |
| 4,000,000
|
|
| October 1, 1999 through |
|
| January 31, 2000 |
| 5,100,000
|
|
| October 1, 1999 through |
|
| February 28, 2000 |
| 6,200,000
|
|
| October 1, 1999 through |
|
| March 31, 2000 |
| 8,000,000
|
|
| October 1, 1999 through |
|
| April 30, 2000 |
| 9,300,000
|
|
| October 1, 1999 through |
|
| May 31, 2000 |
| 10,600,000
|
|
| October 1, 1999 through |
|
| June 30, 2000 |
| $12,600,000
|
|
|
Borrower
shall not be deemed to have failed to maintain Minimum Cumulative EBIT for any
of the periods ending November 30, 1999 through June 30, 2000 unless Borrower
fails to achieve the Minimum Cumulative EBIT for two consecutive months.
Minimum Cumulative EBIT shall not apply to any periods after June 30, 2000.
2.2 The
definition of Maximum Revolving Amount in Section 1.1 of the Agreement is
amended to read as follows:
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| “Maximum
Revolving Amount” means the following, as applicable:
|
|
|
| (a)
$35,000,000 minus the amount of the outstanding Capital Expenditure Loans from
October 1, 1999 through the earlier to occur of (i) timely receipt by Foothill
of financial statements for the period ending November 30, 1999 or the period
ending December 31, 1999 reflecting, to Foothill’s satisfaction, that
Borrower has achieved the Minimum Cumulative EBIT for such period then ending
(in either case, the “Initial EBIT Compliance Documentation”), or
(ii) failure of Borrower to timely deliver financial statements for any period
ending on or after December 31, 1999 evidencing that Borrower has achieved the
Minimum Cumulative EBIT for such period (an “EBIT Noncompliance Event”);
|
| (b)
$50,000,000 minus the amount of the outstanding Capital Expenditure Loans from
January 1, 2000 through March 31, 2000 so long as Borrower has timely delivered
the Initial EBIT Compliance Documentation to Foothill;
|
| (c)
In the event that the Maximum Revolving Amount has been increased to
$50,000,000 pursuant to (b) above, such amount shall be reduced to $40,000,000
minus the amount of the outstanding Capital Expenditure Loans from April 1,
2000 through May 31, 2000;
|
| (d)
$25,000,000 minus the amount of the outstanding Capital Expenditure Loans at
all times on or after the earlier to occur of (i) July 1, 2000, and (ii) an
EBIT Noncompliance Event.
2.3 Section
2.11(b) is amended to read as follows:
|
| (b)
Unused Line Fee. On the first day of each month during the term of this
Agreement, an unused line fee, in an amount equal to 0.25% per annum times the
difference between the average daily balance of the advances that were
outstanding during the immediately preceding month and the Maximum Revolving
Amount for the period commencing October 1, 1999 through June 30, 2000.
Thereafter, the unused line fee shall an amount equal to 0.25% per annum times
the difference between the average Daily Balance of the Advances there were
outstanding during the immediately preceding month and $5,000,000.
2.4 Sections
3.4 and 3.6 of the Agreement are amended to read as follows:
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| 3.4
Term. This Agreement shall become effective upon the execution and delivery
hereof by Borrower and Foothill and shall continue in full force and effect for
a term ending on September 22, 2002 (the “Maturity Date”), unless
sooner terminated pursuant to the terms hereof. The foregoing notwithstanding,
Foothill shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
|
| 3.6
Early Termination by Borrower. The provisions of Section 3.4 that allow
termination of this Agreement by Borrower only on the Maturity Date,
notwithstanding, Borrower has the option, at any time upon 90 days prior
written notice to Foothill, to terminate this Agreement by paying to Foothill,
in cash, the Obligations, in full, together with a premium (the “Early
Termination Premium”) equal to (a) 2.00% of the Maximum Amount if such
termination occurs on or before September 21, 2000, and (b) 1.00% of the
Maximum Amount if such termination occurs after September 21, 2000 but prior to
six months before the Termination Date. If such termination occurs within six
months of the Termination Date there shall not be an Early Termination Premium.
2.5 Section
7.20 of the Agreement is hereby amended to read as follows:
|
| “7.20
Financial Covenant. Fail to maintain Tangible Net Worth of at least the
following amounts at all times during the term of this Agreement, measured on a
fiscal quarter ending basis:
Quarter Ending
| Minimum Tangible Net Worth
|
| September 30, 1999 and
|
|
|
|
| December 31, 1999 |
| $24,000,000
|
|
| March 31, 2000 and |
|
| June 30, 2000 |
| 30,000,000
|
|
| September 30, 2000 and |
|
| December 31, 2000 |
| $50,000,000
|
|
|
Provided,
however that Foothill shall be entitled to reset this financial covenant for
each fiscal quarter after December 31, 2000, based upon Borrower’s
financial projections for the year 2001.
4.
REPRESENTATIONS AND WARRANTIES. Borrower hereby affirms to Foothill that all of
Borrower’s representations and warranties set forth in the Agreement are
true, complete and accurate in all respects as of the date hereof.
5. NO DEFAULTS.
Borrower hereby affirms to Foothill that no Event of Default has occurred and
is continuing as of the date hereof.
6. CONDITIONS
PRECEDENT AND SUBSEQUENT. The effectiveness of this Amendment is expressly
conditioned upon the following:
|
| (a)
Payment by Borrower to Foothill of a portion of an amendment fee in the
aggregate amount of $20,000 on October 1, 1999, such fee to be charged to
Borrower’s loan account pursuant to Section 2.6(e) of the Agreement. The
total of the amendment fee is $100,000, which is fully-earned as of the date of
this Amendment. The balance of such fee shall be payable in four quarterly
installments of $20,000 each payable on January 1, 2000, April 1, 2000, July 1,
2000, and October 1, 2000; and
(b) Receipt by
Foothill of an executed copy of this Amendment.
Within 30 days
of the date of this Amendment, Borrower shall provide Foothill with an update
list of Borrower’s trademarks, service marks and patents.
7. COSTS AND
EXPENSES. Borrower shall pay to Foothill all of Foothill’s out-of-pocket
costs and expenses (including, without limitation, the fees and expenses of its
counsel, which counsel may include any local counsel deemed necessary, search
fees, filing and recording fees, documentation fees, appraisal fees, travel
expenses, and other fees) arising in connection with the preparation,
execution, and delivery of this Amendment and all related documents.
8. LIMITED
EFFECT. In the event of a conflict between the terms and provisions of this
Amendment and the terms and provisions of the Agreement, the terms and
provisions of this Amendment shall govern. In all other respects, the
Agreement, as amended and supplemented hereby, shall remain in full force and
effect.
9.
COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
when so executed and delivered shall be deemed to be an original. All such
counterparts, taken together, shall constitute but one and the same Amendment.
This Amendment shall become effective upon the execution of a counterpart of
this Amendment by each of the parties hereto.
IN WITNESS
WHEREOF, the parties hereto have executed this Amendment as of the date first
set forth above.
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FOOTHILL
CAPITAL CORPORATION, a California corporation
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|
By:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ Title: SR. VICE PRESIDENT
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SILICON
STORAGE TECHNOLOGY, INC., a California corporation
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|
By:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Title: VP/CFO
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