EXHIBIT 10(ad)
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WAIVER AND FIRST LOAN MODIFICATION AGREEMENT
This Waiver and First Loan Modification Agreement (this "Loan
Modification Agreement") is entered into as of the First Loan Modification
Effective Date by and between SILICON VALLEY BANK, a California corporation,
with its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and with a loan production office located at One ▇▇▇▇▇▇
Executive Park, Suite 200, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Bank") and SPIRE CORPORATION, a Massachusetts corporation, SPIRE SOLAR, INC.,
a Massachusetts corporation, SPIRE BIOMEDICAL, INC., a Massachusetts
corporation, each with offices located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and SPIRE SEMICONDUCTOR, LLC, a Delaware limited liability
company (formerly known as Bandwidth Semiconductor, LLC), with offices at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (jointly and severally, individually and
collectively, the "Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of March 31, 2008,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of March 31, 2008, (as amended, the "Loan Agreement"). Capitalized terms used
but not otherwise defined herein shall have the same meaning as in the Loan
Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by
the Collateral as described in the Loan Agreement (together with any other
collateral security granted to Bank, the "Security Documents").
Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall (except this Loan Modification
Agreement) be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modifications to Loan Agreement.
1 The Loan Agreement shall be amended by deleting the following
text appearing as subsection (a) of Section 2.3 thereof,
entitled "Interest Rate; Advances":
" (a) Interest Rate; Advances. Subject to Section 2.3(b), the
principal amount outstanding under the Revolving Line shall
accrue interest at a per annum rate equal to the Prime Rate
plus one percent (1.00%)."
and inserting in lieu thereof the following:
" (a) Interest Rate; Advances. Subject to Section 2.3(b), the
principal amount outstanding under the Revolving Line shall
accrue interest at a per annum rate equal to the Prime Rate
plus one and three quarters of one percent (1.75%); provided,
however, that beginning the month following the date that
Borrower provides evidence satisfactory to Bank, in its sole
discretion, that Borrower has maintained Net Income, based on
the trailing six (6) months ending on the date of measurement,
for three (3) consecutive fiscal quarters of at least One
Million Dollars ($1,000,000), then, subject to Section 2.3(b),
the principal amount outstanding under the Revolving Line shall
accrue interest at a per annum rate equal to the Prime Rate
plus one percent (1.00%)."
2 The Loan Agreement shall be amended by deleting the following
text appearing as subsection (a)(ii) of Section 6.8 thereof,
entitled "Operating Accounts":
" (ii) Borrower is permitted to maintain Spire Corporation's
account nos. 113759-490-7 and 1165-123685 and Spire
Semiconductor, LLC's account nos. 330400-908-9 and 330918-730-8
(collectively, the "Citizens' Accounts", provided that (A) on a
weekly basis, on the last Business Day of each week, and in any
event when the aggregate balance in the Citizens' Accounts
exceeds One Hundred Thousand Dollars ($100,000) , transfer such
amounts in the Citizens' Accounts to Bank for deposit into
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such account as Bank shall specify; and (B) within thirty (30)
Business Days' after the Effective Date, Borrower shall have
either closed the Citizen's Accounts or shall have entered into
a blocked account agreement with RBS Citizens, N.A. in favor of
Bank, in form and substance reasonably acceptable to Bank. In
any event, Borrower shall promptly notify its Account Debtors
to remit payments to Borrowers' Collateral Account maintained
at Bank."
and inserting in lieu thereof the following:
" (ii) Borrower is permitted to maintain Spire Corporation's
account nos. 113759-490-7 and 1165-123685 and Spire
Semiconductor, LLC's account nos. 330400-908-9 and 330918-730-8
(collectively, the "Citizens' Accounts", provided that (A) on a
weekly basis, on the last Business Day of each week, and in any
event when the aggregate balance in the Citizens' Accounts
exceeds One Hundred Thousand Dollars ($100,000) , transfer such
amounts in the Citizens' Accounts to Bank for deposit into such
account as Bank shall specify; (B) within thirty (30) days'
after the First Loan Modification Effective Date, Borrower
shall have entered into a blocked account agreement with RBS
Citizens, N.A. in favor of Bank, in form and substance
reasonably acceptable to Bank; and (C) within one hundred
twenty (120) days' after the First Loan Modification Effective
Date, Borrower shall have closed the Citizen's Accounts and
shall have transferred all funds held in such Citizens Accounts
to an account maintained by Bank or Bank's Affiliates. In any
event, Borrower shall promptly notify its Account Debtors to
remit payments to Borrowers' Collateral Account maintained at
Bank."
3 The Loan Agreement shall be amended by deleting the following
text appearing as Section 6.9(b) thereof, entitled
"Profitability":
" (b) Profitability. A minimum Net Income, on a trailing six
(6) month basis, of (i) not less than ($1,000,000), for each
monthly period beginning on the Effective Date through and
including May 31, 2008; and (ii) not less than $1.00, for each
monthly period beginning June 1, 2008 and thereafter." and
inserting in lieu thereof the following:
" (b) Profitability. A minimum Net Income, on a trailing six
(6) month basis, of (i) not less than a maximum loss greater
than ($1,000,000), for each monthly period beginning on the
Effective Date through and including August 31, 2008; and (ii)
not less than $1.00, for each monthly period beginning
September 1, 2008 and thereafter."
4 The Loan Agreement shall be amended by inserting the following
new definitions to appear alphabetically in Section 13.1
thereof:
" "Equipment Line Reserve" is, until such time as Borrower has
achieved Net Income, based on the trailing six (6) months
ending on the date of measurement, of not less than One Million
Dollars ($1,000,000) for two (2) consecutive fiscal quarters,
an amount equal to one hundred percent (100%) of the aggregate
amount of outstanding Equipment Advances. Thereafter, until
such time as Borrower has achieved Net Income, based on the
trailing six (6) months ending on the date of measurement, of
not less than One Million Dollars ($1,000,000) for three (3)
consecutive fiscal quarters, an amount equal to fifty percent
(50%) of the aggregate amount of outstanding Equipment
Advances. Thereafter, the Equipment Line Reserve shall be zero
($0.00).
"First Loan Modification Agreement" is that certain Waiver
and First Loan Modification Agreement entered into by and
between the Bank and the Borrower, dated as of the First Loan
Modification Effective Date.
"First Loan Modification Date" is the date indicated on the
signature page to the First Loan Modification Agreement."
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5 The Loan Agreement shall be amended by deleting the following
definition appearing in Section 13.1 thereof:
" "Availability Amount" is (a) the lesser of (i) the Revolving
Line or (ii) the amount available under the Borrowing Base
minus (b) the amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) plus an
amount equal to the Letter of Credit Reserve, minus (c) the FX
Reserve, minus (d) any amounts used for Cash Management
Services, and minus (e) the outstanding principal balance of
any Advances.
"Eligible Inventory" means, at any time, the aggregate of
Borrower's Inventory (valued at the lower of cost or wholesale
fair market value) that (a) consists of (i) raw materials, (ii)
work-in-progress Inventory, to the extent such work-in-progress
Inventory is the subject of a purchase order, backed by a
letter of credit acceptable to Bank, and (iii) 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, packaging or shipping materials, or supplies; (b)
meets all applicable governmental standards; (c) has been
manufactured in compliance with the Fair Labor Standards Act;
(d) 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; (e) is located at Borrower's
principal place of business (or any location permitted under
Section 7.2), and, in the case of Inventory in the possession
of third parties, Bank has received written acknowledgment from
such third parties of Borrower's ownership of such goods, in
form and substance satisfactory to Bank; and (f) is otherwise
acceptable to Bank in its good faith business judgment."
and inserting in lieu thereof the following:
" "Availability Amount" is (a) the lesser of (i) the Revolving
Line or (ii) the amount available under the Borrowing Base
minus the Equipment Line Reserve minus (b) the amount of all
outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit) plus an amount equal to the Letter of Credit
Reserve, minus (c) the FX Reserve, minus (d) any amounts used
for Cash Management Services, and minus (e) the outstanding
principal balance of any Advances.
"Eligible Inventory" means, at any time, the aggregate of
Borrower's Inventory (excluding Inventory owned by Spire
Semiconductor, LLC, unless approved by Bank in writing, in its
sole discretion) valued at the lower of cost or wholesale fair
market value that (a) consists of (i) raw materials, (ii)
work-in-progress Inventory, to the extent such work-in-progress
Inventory is the subject of a purchase order, backed by a
letter of credit acceptable to Bank, and (iii) 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, packaging or shipping materials, or supplies; (b)
meets all applicable governmental standards; (c) has been
manufactured in compliance with the Fair Labor Standards Act;
(d) 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; (e) is located at Borrower's
principal place of business (or any location permitted under
Section 7.2), and, in the case of Inventory in the possession
of third parties, Bank has received written acknowledgment from
such third parties of Borrower's ownership of such goods, in
form and substance satisfactory to Bank; and (f) is otherwise
acceptable to Bank in its good faith business judgment."
6 The Loan Agreement shall be amended by deleting the following
clause (s) and clause (t) of the definition of "Eligible
Accounts" appearing in Section 13.1 thereof:
" (s) Accounts in which the Account Debtor disputes liability
or makes any claim (but only up to the disputed or claimed
amount), or if the Account Debtor is subject to an Insolvency
Proceeding, or becomes insolvent, or goes out of business; and
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(t) Accounts for which Bank in its good faith business judgment
determines collection to be doubtful."
and inserting in lieu thereof the following:
"(s) Accounts in which the Account Debtor disputes liability or
makes any claim (but only up to the disputed or claimed
amount), or if the Account Debtor is subject to an Insolvency
Proceeding, or becomes insolvent, or goes out of business;
(t) Accounts for which Bank in its good faith business judgment
determines collection to be doubtful; and
(u) without the prior written approval of Bank, in its sole
discretion, Accounts of Spire Semiconductor, LLC."
7 The Borrowing Base Certificate appearing as Exhibit B to the
Loan Agreement is hereby replaced with the Borrowing Base
Certificate attached as Exhibit A hereto.
8 The Compliance Certificate appearing as Exhibit C to the Loan
Agreement is hereby replaced with the Compliance Certificate
attached as Exhibit B hereto.
B. Waivers.
1 Bank hereby waives Borrower's existing defaults under the Loan
Agreement by virtue of Borrower's failure to comply with the
Profitability financial covenant set forth in Section 6.9(b)
(as required prior to this Loan Modification Agreement) thereof
as of the month ended March 31, 2008, and the anticipated
failure of Borrower to comply with such covenant as of the
month ended April 30, 2008 (provided, however, that minimum Net
Income, on a trailing six (6) month basis for such period ended
April 30, 2008 shall not exceed a maximum loss in excess of
($1,500,000)). Bank's waiver of Borrower's compliance with said
covenants shall apply only to the foregoing specific periods.
4. FEES. Borrower shall pay to Bank a modification fee equal to Twenty
Five Thousand Dollars ($25,000.00), which fee shall be due on the date hereof
and shall be deemed fully earned as of the date hereof. Borrower shall also
reimburse Bank for all legal fees and expenses incurred in connection with this
amendment to the Existing Loan Documents.
5. RATIFICATION OF PERFECTION CERTIFICATE. Borrower hereby ratifies,
confirms and reaffirms, all and singular, the terms and disclosures contained in
a certain Perfection Certificate dated as of March 31, 2008 between Borrower and
Bank, and acknowledges, confirms and agrees the disclosures Borrower provided to
Bank in the Perfection Certificate, as amended, has not changed.
6. AUTHORIZATION TO FILE. Borrower hereby authorizes Bank to file UCC
financing statements without notice to Borrower, with all appropriate
jurisdictions, as Bank deems appropriate, in order to further perfect or protect
Bank's interest in the Collateral, including a notice that any disposition of
the Collateral, by either the Borrower or any other Person, shall be deemed to
violate the rights of the Bank under the Code.
7. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.
8. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.
9. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that,
as of the date of this Loan Modification Agreement, Borrower has no offsets,
defenses, claims, or counterclaims against Bank with respect to the Obligations,
or otherwise, and that if Borrower now has, or ever did have, any offsets,
defenses, claims, or counterclaims against Bank, whether known or unknown, at
law or in equity, all of them are hereby expressly WAIVED and Borrower hereby
RELEASES Bank from any liability thereunder.
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10. CONTINUING VALIDITY. Borrower 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 of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this Loan Modification Agreement.
11. COUNTERSIGNATURE. This Loan Modification Agreement shall become
effective only when it shall have been executed by Borrower and Bank.
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Modification Agreement to be executed as a sealed instrument under the laws of
the Commonwealth of Massachusetts as of the Effective Date.
BORROWER:
SPIRE CORPORATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer Title: Chief Financial Officer
SPIRE SOLAR, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer Title: Chief Financial Officer
SPIRE BIOMEDICAL, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer Title: Chief Financial Officer
SPIRE SEMICONDUCTOR, LLC f/k/a BANDWITH
SEMICONDUCTOR, LLC
By: Spire Corporation, a Massachusetts
corporation, its sole Member and Manager
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer Title: Chief Financial Officer
BANK:
SILICON VALLEY BANK
By /s/ ▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇
Title: Relationship Manager
First Loan Modification Effective Date: May 13, 2008
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