EXHIBIT 10(af)
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Agreement") is
entered into as of June 22, 2009, with an Effective Date as of May 31, 2009 (the
"Effective Date") by and between (i) SILICON VALLEY BANK, a California
corporation, with its principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx
Xxxxx, Xxxxxxxxxx 00000 and with a loan production office located at One Newton
Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
("Bank") and (ii) SPIRE CORPORATION, a Massachusetts corporation, SPIRE SOLAR,
INC., a Massachusetts corporation, SPIRE BIOMEDICAL, INC., a Massachusetts
corporation, each with offices located at Xxx Xxxxxxxx Xxxx, Xxxxxxx,
Xxxxxxxxxxxxx 00000, and SPIRE SEMICONDUCTOR, LLC, a Delaware limited liability
company (formerly known as Bandwidth Semiconductor, LLC), with offices at 00
Xxxxxxxx Xxxx Xxxx, Xxxxxx, XX 00000 (jointly and severally, individually and
collectively, the "Borrower"). This Agreement amends and restates in its
entirety (i) that certain Loan and Security Agreement, dated as of March 31,
2008, as amended by a certain Waiver and First Loan Modification Agreement dated
May 13, 2008, and as further amended by a certain Second Loan Modification
Agreement, dated as of April 8, 2009 (collectively, the "Prior Revolving Loan
Agreement") and (ii) that certain Loan and Security Agreement dated as of May
25, 2007, between Borrower and Bank, as amended by a certain First Loan
Modification Agreement dated as of March 31, 2008, and as further amended by a
certain Second Loan Modification Agreement, dated as of May 13, 2009
(collectively, the "Prior Equipment Line Loan Agreement", and together with the
Prior Revolving Loan Agreement, the "Prior Loan Agreement"). The parties agree
as follows:
1 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.
2 LOAN AND TERMS OF PAYMENT
2.1 Promise to Pay. Borrower hereby unconditionally, jointly and severally,
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 One Million Five Hundred Thousand Dollars ($1,500,000) inclusive of
the Credit Extensions made pursuant to Sections 2.1.3 and 2.1.4. 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 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
Hundred Fifty Thousand Dollars ($150,000) (the "FX Reserve"). The aggregate
amount of FX Forward Contracts at any one time plus Credit Extensions made
pursuant to Sections 2.1.2 and 2.1.4 may not exceed ten (10) times the amount of
the FX Reserve. 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 One Million
Five Hundred Thousand Dollars ($1,500,000), inclusive of the Credit Extensions
made pursuant to Sections 2.1.2 and 2.1.3, 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 will be treated
as Advances under the Revolving Line and will accrue interest at the interest
rate applicable to Advances.
2.1.5 Equipment Loan.
(a) Payments. Borrower is obligated to the Bank for the Equipment Advance
(as defined in the Second Amendment to the Prior Equipment Loan Agreement and
defined herein as the "Equipment Loan"), made by Bank to Borrower pursuant to
the Prior Equipment Loan Agreement. Borrower acknowledges that, as of the
Effective Date, the outstanding principal amount of the Equipment Loan is
approximately $1,263,900.00. Borrower acknowledges there is no availability
under the Equipment Loan, and no other advances in respect of the Equipment Loan
will be made hereunder. Borrower shall continue to pay the Equipment Loan in
equal monthly installments of principal of $97,222.22, plus accrued interest,
and with a final payment of all remaining principal amounts outstanding under
the Equipment Loan and accrued interest thereon on or before June 10, 2010. The
Equipment Loan, when repaid, may not be reborrowed.
(b) Mandatory Prepayment Upon an Acceleration. If the Equipment Loan is
accelerated following the occurrence of an Event of Default, Borrower shall
immediately pay to Bank an amount equal to the sum of (i) all outstanding
principal plus accrued and unpaid interest on the Equipment Loan and (ii) all
other sums, if any, that shall have become due and payable, including interest
at the Default Rate with respect to any past due amounts.
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(c) Prepayment. So long as no Event of Default has occurred and is
continuing, Borrower shall have the option to prepay all, but not less than all,
of the Equipment Loan, provided Borrower (i) delivers written notice to Bank of
its election to prepay the Equipment Loan at least thirty (30) days prior to
such prepayment, and (ii) pays, on the date of such prepayment (A) all
outstanding principal plus accrued and unpaid interest and (B) all other sums,
if any, that shall have become due and payable, including interest at the
Default Rate with respect to any past due amounts.
2.2 Overadvances. If, at any time the sum of (a) the outstanding 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
FX Reserve (such sum being an "Overadvance"), exceeds the lesser of either the
Revolving Line or the Borrowing Base, 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;
(i) 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 percent (1.75%); provided, however, that during a Net Income
Threshold Period, 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 three-quarters percent (0.75%).
(ii) Equipment Loan. Subject to Section 2.3(b), the
principal amount outstanding under the Equipment Loan
shall accrue interest at a floating per annum rate equal to the Prime Rate plus
one and three-quarters percent (1.75%), which interest shall be payable monthly
in accordance with Section 2.3(f) below.
(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 five percentage points (5.00%) 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) Adjustment to Interest Rate. Changes to the interest rate of any Credit
Extension based on changes to the Prime Rate shall be effective on the effective
date of any change to the Prime Rate and to the extent of any such change.
(d) 360-Day Year. Interest shall be computed on the basis of a 360-day year
for the actual number of days elapsed.
(e) 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.
(f) Payment; Interest Computation; Float Charge. Interest is payable
monthly on the last calendar day of each month. In computing interest on the
Obligations, all Payments received after 12:00 p.m. Pacific time on any day
shall be deemed received on the next Business Day. In addition, so long as any
principal or interest with respect to any Credit Extension remains outstanding,
Bank shall be entitled to charge Borrower a "float" charge in an amount equal to
three (3) Business Days interest, at the interest rate applicable to the Credit
Extensions on all Payments received by Bank. The float charge for each month
shall be payable on the last day of the month. Bank shall not, however, be
required to credit Borrower's account for the amount of any item of payment
which is unsatisfactory to Bank in its good faith business judgment, and Bank
may charge Borrower's Designated Deposit Account for the amount of any item of
payment which is returned to Bank unpaid.
2.4 Fees. Borrower shall pay to Bank:
(a) Commitment Fee. A fully earned, non-refundable commitment fee of Sixty
Seven Thousand Five Hundred Dollars ($67,500.00), payable on the Effective Date;
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(b) Letter of Credit Fee. Bank's customary fees and expenses for the
issuance or renewal of Letters of Credit, upon the issuance, each anniversary of
the issuance, and the renewal of such Letter of Credit by Bank;
(c) Termination Fee. Subject to the terms of Section 12.1, a termination
fee;
(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 equal to three-quarters of one percent (0.75%) per annum of the average
unused portion of the Revolving Line, as determined by Bank. The unused portion
of the Revolving Line, for the purposes of this calculation, shall include
amounts reserved under the Cash Management 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;
(e) Collateral Monitoring Fee. A collateral monitoring fee, payable
monthly, in arrears, on the last day of each month, in the amount of Seven
Hundred Fifty Dollars ($750); and
(f) 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.
3 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 each
Borrower certified by the Secretary of State of the Commonwealth of
Massachusetts and the State of Delaware, as applicable, as of a date no earlier
than thirty (30) days prior to the Effective Date;
(c) duly executed original signatures to the completed Borrowing
Resolutions for Borrower;
(d) 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;
(e) duly executed revised Perfection Certificates;
(f) a landlord's consent executed by each landlord of the Borrower, as
required by Bank, in favor of Bank;
(g) Borrower shall have delivered a bailee's/warehouseman's waiver executed
by each bailee, if any, of Borrower as required by Bank, in favor of Bank;
(h) a legal opinion of Borrower's counsel dated as of the Effective Date
together with the duly executed original signatures thereto;
(i) 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
(j) payment of the fees and Bank Expenses then due as specified in Section
2.4 hereof.
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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 3.4, timely receipt of an
executed Transaction Report;
(b) the representations and warranties in Section 5 shall be true in all
material respects on the date of the Transaction Report 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 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) in Bank's sole discretion, there has not been any material impairment
in the general affairs, management, results of operations, financial condition
or the prospect of repayment of the Obligations, or there has not been any
material adverse deviation by Borrower from the most recent business plan of
Borrower presented to and accepted by Bank.
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. 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.
4 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 or the EXIM Loan
Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall
promptly notify Bank in a writing signed by Borrower of the general details
thereof and 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.
If this Agreement is terminated, Bank's Lien in the Collateral shall
continue until the Obligations (other than inchoate indemnity obligations) are
repaid in full in cash. Upon payment in full in cash of the Obligations 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.
Notwithstanding the foregoing, it is expressly acknowledged and agreed that
the security interest created in this Agreement only with respect to
Export-Related Accounts Receivable, Export-Related Inventory and Export-Related
General Intangibles (as such terms are defined in the EXIM Loan Agreement) is
subject to and subordinate
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to the security interest granted to Bank in the EXIM Loan Agreement with respect
to such Export-Related Accounts Receivable, Export-Related Inventory and
Export-Related General Intangibles.
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, including a notice that any disposition of the Collateral, by either
Borrower or any other Person, shall be deemed to violate the rights of Bank
under the Code. Such financing statements may indicate the Collateral as "all
assets of the Debtor" or words of similar effect, or as being of an equal or
lesser scope, or with greater detail, all in Bank's discretion.
5 REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants as follows:
5.1 Due Organization, Authorization; Power and Authority. Each Borrower is
duly 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, each Borrower has
delivered to Bank a completed certificate signed by such Borrower, entitled
"Perfection Certificate". Each Borrower represents and warrants to Bank that (a)
such Borrower's exact legal name is that indicated on such Perfection
Certificate and on the signature page hereof; (b) such Borrower is an
organization of the type and is organized in the jurisdiction set forth in its
respective Perfection Certificate; (c) each Perfection Certificate accurately
sets forth such Borrower's organizational identification number or accurately
states that such Borrower has none; (d) each Perfection Certificate accurately
sets forth such Borrower's place of business, or, if more than one, its chief
executive office as well as such Borrower's mailing address (if different than
its chief executive office); (e) each Borrower (and each of its respective
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 such Borrower and each of its Subsidiaries
is accurate and complete (it being understood and agreed that each 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 any Borrower is not now a Registered Organization but later
becomes one, such Borrower shall promptly notify Bank of such occurrence and
provide Bank with such 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 of 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. Other than defaults of the Borrower under
the Equipment Line that (X) have been previously disclosed to Bank and (Y) have
been waived by Bank, 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 xxxxx x Xxxx
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.
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.
In the event that Borrower, after the date hereof, intends to store or otherwise
deliver any portion of the Collateral to a bailee, then Borrower will first
receive the written consent of Bank and such bailee must execute and deliver a
bailee agreement in form and substance satisfactory to Bank in its sole
discretion.
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All Inventory is in all material respects of good and marketable quality,
free from material defects.
Borrower is the sole owner of its intellectual property, except for
non-exclusive licenses granted to its customers in the ordinary course of
business. Each patent is 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.
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 ten (10)
days of entering or becoming bound by any such license or agreement which is
reasonably likely to have a material impact on Borrower's business or financial
condition (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 and verify the amount of such Eligible Account. 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 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; and (v) is located
at the locations identified by Borrower in the Perfection Certificate where it
maintains Inventory (or any location permitted under Section 7.2).
5.4 Litigation. Except as set forth on Schedule 5.4 attached hereto, 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 Hundred Thousand Dollars ($100,000).
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.
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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.
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 has timely
filed all required tax returns and reports, and Borrower has timely paid all
foreign, federal, state and local taxes, assessments, deposits and contributions
owed by Borrower. 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, (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 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).
6 AFFIRMATIVE COVENANTS
Borrower shall do all of the following:
6.1 Government Compliance.
(a) 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
or operations. 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.
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6.2 Financial Statements, Reports, Certificates.
(a) Borrower shall provide Bank with the following:
(i) monthly within fifteen (15) days after the end of such period (or,
during a Liquidity Event, bi-weekly on the 15th day (or, if not a Business Day,
the Business Day immediately preceding the 15th day) and the last Business Day
of each month), and with each request for a Credit Extension, a Transaction
Report (and any schedules related thereto);
(ii) within fifteen (15) 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, backlog reports and outstanding or held check
registers, if any, (C) monthly reconciliations of accounts receivable agings for
accounts under both this agreement and the EXIM Loan Agreement (aged by invoice
date), and the general ledger, (D) monthly inventory reports for Inventory under
both this Agreement and the EXIM Agreement, computed on a first-in, first-out
basis, valued at the lower of cost or market (in accordance with GAAP), or such
other Inventory reports as are requested by Bank in its good faith business
judgment, and (E) outstanding purchase orders;
(iii) as soon as available, and in any event within thirty (30) days after
the end of each month, monthly unaudited financial statements;
(iv) within thirty (30) days after the end of each month a monthly
Compliance Certificate signed by a Responsible Officer, certifying that as of
the end of such month, 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 month there were no held checks;
(v) as soon as available, and in any event 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 month) for the
upcoming fiscal year of Borrower, and (B) annual financial projections for the
following fiscal year (on a monthly basis) as approved by Borrower's board of
directors and as amended or modified, together with any related business
forecasts used in the preparation of such annual financial projections;
(vi) as soon as available, and in any event within one hundred fifty (150)
days following the end of Borrower's fiscal year, annual financial statements
audited by independent certified public accountants acceptable to Bank; and
(vii) as soon as available, and in any event within fifteen (15) days after
the end of each month (or more frequently upon Bank's request), copies of
account statements for any Deposit Accounts, Securities Accounts or Commodity
Accounts of Borrower held at financial institutions other than Bank (for
clarity, Borrower is permitted to maintain its accounts only in accordance with
Section 6.8 hereof).
(b) In the event that Borrower becomes subject to the reporting
requirements under the Securities Exchange Act of 1934, as amended, within five
(5) 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.
6.3 Accounts Receivable.
(a) Schedules and Documents Relating to Accounts. Borrower shall deliver to
Bank Transaction Reports and schedules of collections, 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 endorsements, and copies of all
credit memos.
(b) Disputes. Borrower shall promptly notify Bank of all disputes or claims
relating to 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
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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 aggregate 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. Collections 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 in its good
faith business judgment. 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; provided, however, on
any date in which Liquidity is greater than or equal to Five Million Dollars
($5,000,000.00), and provided no Default has occurred, Bank shall transfer such
amounts on such date to Borrower's Designated Deposit Account.
(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 $25,000 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 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 pay, 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. At reasonable times, on one
(1) Business Day's notice (provided no notice is required if an Event of Default
has occurred and is continuing), Bank, or its agents, shall have the right, on a
semi-annual basis (or more frequently, as Bank shall determine necessary in its
sole discretion, or at the direction of EXIM Bank), 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 $850 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. 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,
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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 an additional 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 certified copies of policies and evidence of all premium payments.
Proceeds payable under any property policy shall, at Bank's option, be payable
to Bank on account of the Obligations. Notwithstanding the foregoing, (a) 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 Two Hundred
Fifty Thousand Dollars ($250,000) with respect to any loss, but not exceeding
Five Hundred Thousand Dollars ($500,000) 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) Subject to the following, maintain all of its and all of its
Subsidiaries' operating and other deposit accounts and securities accounts with
Bank and Bank's Affiliates:
(i) Borrower is permitted to maintain Spire Corporation's account no. 0000
2591 5267 with Bank of America, N.A., provided that the balance in such account
shall at no time exceed Twenty Five Thousand Dollars ($25,000); provided
further, that such balance in such account may exceed such amount only with the
prior- written consent of the Bank, granted in Bank's sole discretion, on a
case-by-case basis;
(ii) Borrower is permitted to maintain Spire Corporation's account no.
113759-490-7 with RBS Citizens, National Association (the "Spire RBS Account");
provided that (A) the balance in the Spire RBS Account shall at no time exceed
Twenty Five Thousand Dollars ($25,000); provided further, that such balance in
the Spire RBS Account may exceed such amount only with the prior-written consent
of the Bank, granted in Bank's sole discretion, on a case-by-case basis; and (B)
as soon as possible, and in any event no later than September 30, 2009, Borrower
shall provide Bank with evidence satisfactory to Bank, in its sole discretion,
that Borrower has closed the Spire RBS Account, and the proceeds of such Spire
RBS Account shall have been transferred to an account maintained at Bank.
Notwithstanding the foregoing, prior to the closure of the Spire RBS
Account, if any Account Debtors remit funds or payments to the Spire RBS Account
(including, without limitation, Hyundai Heavy Industries Co., Ltd., Aesculap AG,
TATA BP Solar India Ltd., Ormco Corporation and Xxxxxx Inc.), such funds or
payments shall be held in trust for Bank, and Borrower shall promptly, and in
any event within forty-eight (48) hours of receipt thereof, transfer all such
funds and/or payments to an account of Borrower maintained at Bank in accordance
with Section 6.3(c) hereof; in the event Borrower timely complies with foregoing
transfer requirements, any such additional amounts in such Spire RBS Account
shall not be deemed to cause a violation of the Dollar-balance limitation
described in clause (ii)(A) above.
(iii) Borrower is permitted to maintain Spire Semiconductor, LLC's account
no. 330400-908-8 with RBS Citizens, National Association; provided that (A) on a
weekly basis, on the last Business Day of each week, and in any event when the
aggregate balance in such account exceeds One Hundred Thousand Dollars
($100,000), transfer such excess amounts in such account to Bank for deposit
into such account as Bank shall specify; and (B) as soon as possible, and in any
event not later than August 31, 2009, Borrower shall provide Bank with evidence
satisfactory to Bank, in its sole discretion, that Borrower has closed such
account, and the proceeds of
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such account shall have been transferred to an account maintained at Bank. In
any event, Borrower shall promptly notify its Account Debtors to remit payments
to Borrower's Collateral Account maintained at Bank; and
(iv) Each of Spire Corporation and Spire Semiconductor, LLC is permitted to
open one (1) new account at RBS Citizens, National Association or Bank of
America, N.A. provided that the balance in each such Deposit Account shall at no
time exceed Twenty Five Thousand Dollars ($25,000) per account.
(b) Provide Bank five (5) days prior-written notice before establishing any
Collateral Account at or with any bank or financial institution other than Bank
or Bank's Affiliates. For each Collateral Account that Borrower at any time
maintains (other than the accounts described in clauses (a)(i) through (a)(iv)
above), Borrower shall cause the applicable 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 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.
6.9 Financial Covenants.
Borrower shall maintain at all times, to be certified by the Borrower as of
the last day of each month, unless otherwise noted, on a consolidated basis with
respect to Borrower and its Subsidiaries:
(a) Minimum Tangible Net Worth. Tangible Net Worth of not less than (i)
from April 30, 2009 through May 31, 2009, Eight Million Five Hundred Thousand
Dollars ($8,500,000.00), (ii) from June 1, 2009 through June 30, 2009, Ten
Million Dollars ($10,000,000.00), (iii) from July 1, 2009 through and including
August 31, 2009, Eleven Million Dollars ($11,000,000.00), and (iv) from
September 1, 2009 and each monthly period thereafter, Twelve Million Dollars
($12,000,000.00), which requirements shall increase by an amount equal to sixty
percent (60%) of proceeds received by the Borrower from the issuances of equity
after the Effective Date and the principal amount of Subordinated Debt.
(b) Minimum Liquidity. A minimum Liquidity of not less than Four Million
Dollars ($4,000,000.00) at any time.
6.10 Protection of Intellectual Property Rights. Borrower shall: (a)
protect, defend and maintain the validity and enforceability of its 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 prior written consent.
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.
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; and (d) of
non-exclusive licenses for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business;
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
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Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b)
liquidate or dissolve; or (c) if a Key Person ceases to hold such office with
Borrower and a replacement satisfactory to Bank is not made within ninety (90)
days thereafter. 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 Ten
Thousand Dollars ($10,000.00) in Borrower's assets or property), (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 may merge or
consolidate into another Subsidiary or into Borrower; provided that, in the case
of a merger of a Subsidiary into Borrower, Borrower shall remain the surviving
entity;
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. (a) 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 (b) 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; or (b)
directly or indirectly make any Investment other than Permitted Investments and
Investments existing as of the Effective Date and listed on Schedule 7.7
attached hereto;
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, 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;
7.10 Compliance. Become an "investment company" or a company controlled by
an "investment company", under the Investment Company Act of 1940, as amended,
or undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material
adverse effect on Borrower's business, or permit any of its Subsidiaries to do
so; withdraw or permit any Subsidiary to withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any present pension, profit sharing and deferred compensation
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;
7.11 Subsidiaries. Permit any Subsidiary other than a Borrower to maintain
assets in an aggregate amount in excess of Twenty Five Thousand Dollars
($25,000) outstanding at any time; and
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7.12 Joint Ventures. Permit any Investment (other than Investments
described on Schedule 7.7 attached hereto) in any joint venture, including,
without limitation, any Investment in Xxxxxx Xxxxx Solar, LLC.
8 EVENTS OF DEFAULT
Any one of the following shall constitute an event of default (an "Event of
Default") under this Agreement:
8.1 Payment Default. Borrower fails to (a) make any payment of principal or
interest on any Credit Extension on its due date, or (b) pay any other
Obligations within three (3) Business Days after such Obligations are due and
payable (which three (3) Business Day grace period shall not apply to payments
due on the Revolving Line Maturity Date). During the cure period, the failure to
cure the payment default is not an Event of Default (but no Credit Extensions
will be made during the cure period);
8.2 Covenant Default.
(a) Borrower fails or neglects to perform any obligation in Sections 6.2,
6.5, 6.7, 6.8, 6.9 or violates any covenant in Section 7; or
(b) Borrower fails or neglects to perform, keep, or observe any other term,
provision, condition, covenant or agreement contained in this Agreement or any
Loan Documents, and as to any default (other than those specified in this
Section 8) under such other term, provision, condition, covenant or agreement
that can be cured, has failed to cure the default within ten (10) days after the
occurrence thereof; provided, however, that if the default cannot by its nature
be cured within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is likely to
be cured within a reasonable time, then Borrower shall have an additional period
(which shall not in any case exceed thirty (30) days) to attempt to cure such
default, and within such reasonable time period the failure to cure the default
shall not be deemed an Event of Default (but no Credit Extensions shall be made
during such cure period). Grace periods provided under this section shall not
apply, among other things, to financial covenants or any other covenants set
forth in subsection (a) above;
8.3 Material Adverse Change. A Material Adverse Change occurs;
8.4 Attachment; Levy; Restraint on Business. (a) (i) The service of process
seeking to attach, by trustee or similar process, any funds of Borrower or of
any entity under control of Borrower (including a Subsidiary) on deposit with
Bank or any Bank Affiliate, or (ii) a notice of lien, levy, or assessment is
filed against any of Borrower's assets by any government agency, and the same
under subclauses (i) and (ii) hereof are not, within ten (10) days after the
occurrence thereof, discharged or stayed (whether through the posting of a bond
or otherwise); provided, however, no Credit Extensions shall be made during any
such ten (10) day cure period; and (b) (i) any material portion of Borrower's
assets is attached, seized, levied on, or comes into possession of a trustee or
receiver, or (ii) any court order enjoins, restrains, or prevents Borrower from
conducting any part of its business;
8.5 Insolvency. (a) Borrower is unable to pay its debts (including trade
debts) as they become due or otherwise becomes insolvent; (b) Borrower begins an
Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower
and not dismissed or stayed within forty-five (45) days (but no Credit
Extensions shall be made while of any of the conditions described in clause (a)
exist and/or until any Insolvency Proceeding is dismissed);
8.6 Other Agreements. There is (i) a default of the Borrower under the
Equipment Line that has (a) not been previously disclosed to Bank and (b) not
been previously waived or waived concurrently with the execution of this
Agreement by Bank, or (ii) a default in any agreement to which Borrower is a
party with a third party or parties resulting in a right by such third party or
parties, whether or not exercised, to accelerate the maturity of any
Indebtedness in an amount in excess of Fifty Thousand Dollars ($50,000) or that
could have a material adverse effect on Borrower's business;
8.7 Judgments. One or more judgments, orders, or decrees for the payment of
money in an amount, individually or in the aggregate, of at least Fifty Thousand
Dollars ($50,000) (not covered by independent third-party insurance as to which
liability has been accepted by such insurance carrier) shall be rendered against
Borrower and shall remain unsatisfied, unvacated, or unstayed for a period of
ten (10) days after the entry thereof (provided that no Credit Extensions will
be made prior to the satisfaction, vacation, or stay of such judgment, order, or
decree);
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8.8 Misrepresentations. Borrower or any Person acting for Borrower makes
any representation, warranty, or other statement now or later in this Agreement,
any Loan Document or in any writing delivered to Bank or to induce Bank to enter
this Agreement or any Loan Document, and such representation, warranty, or other
statement is incorrect in any material respect when made;
8.9 Subordinated Debt. A default or breach occurs under any agreement
between Borrower and any creditor of Borrower that signed a subordination,
intercreditor, or other similar agreement with Bank, or any creditor that has
signed such an agreement with Bank breaches any terms of such agreement;
8.10 EXIM Guarantee. If the EXIM Guarantee ceases for any reason to be in
full force and effect, or if the EXIM Bank declares the EXIM Guarantee void or
revokes any obligations under the EXIM Guarantee;
8.11 EXIM Default. After the effective date of the EXIM Agreement, the
occurrence of an Event of Default under the EXIM Agreement or the EXIM Loan
Documents; or
8.12 Governmental Approvals. Any Governmental Approval shall have been (a)
revoked, rescinded, suspended, modified in an adverse manner or not renewed in
the ordinary course for a full term or (b) subject to any decision by a
Governmental Authority that designates a hearing with respect to any
applications for renewal of any of such Governmental Approval or that could
result in the Governmental Authority taking any of the actions described in
clause (a) above, and such decision or such revocation, rescission, suspension,
modification or non-renewal (i) has, or could reasonably be expected to have, a
Material Adverse Change, or (ii) adversely affects the legal qualifications of
Borrower or any of its Subsidiaries to hold such Governmental Approval in any
applicable jurisdiction and such revocation, rescission, suspension,
modification or non-renewal could reasonably be expected to affect the status of
or legal qualifications of Borrower or any of its Subsidiaries to hold any
Governmental Approval in any other jurisdiction.
9 BANK'S RIGHTS AND REMEDIES
9.1 Rights and Remedies. While an Event of Default occurs and continues
Bank may, without notice or demand, do any or all of the following:
(a) declare all Obligations immediately due and payable (but if an Event of
Default described in Section 8.5 occurs all Obligations are immediately due and
payable without any action by Bank);
(b) stop advancing money or extending credit for Borrower's benefit under
this Agreement or under any other agreement between Borrower and Bank;
(c) demand that Borrower (i) deposits cash with Bank in an amount equal to
the aggregate amount of any Letters of Credit remaining undrawn, as collateral
security for the repayment of any future drawings under such Letters of Credit,
and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in
advance all Letter of Credit fees scheduled to be paid or payable over the
remaining term of any Letters of Credit;
(d) terminate any FX Forward Contracts;
(e) settle or adjust disputes and claims directly with Account Debtors for
amounts on terms and in any order that Bank considers advisable, notify any
Person owing Borrower money of Bank's security interest in such funds, and
verify the amount of such account;
(f) make any payments and do any acts it considers necessary or reasonable
to protect the Collateral and/or its security interest in the Collateral.
Borrower shall assemble the Collateral if Bank requests and make it available as
Bank designates. Bank may enter premises where the Collateral is located, take
and maintain possession of any part of the Collateral, and pay, purchase,
contest, or compromise any Lien which appears to be prior or superior to its
security interest and pay all expenses incurred. Borrower grants Bank a license
to enter and occupy any of its premises, without charge, to exercise any of
Bank's rights or remedies;
(g) apply to the Obligations any (i) balances and deposits of Borrower it
holds, or (ii) any amount held by Bank owing to or for the credit or the account
of Borrower;
(h) ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral. Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without
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charge, Borrower's labels, patents, copyrights, mask works, rights of use of any
name, trade secrets, trade names, trademarks, service marks, and advertising
matter, or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section, Borrower's
rights under all licenses and all franchise agreements inure to Bank's benefit;
(i) place a "hold" on any account maintained with Bank and/or deliver a
notice of exclusive control, any entitlement order, or other directions or
instructions pursuant to any Control Agreement or similar agreements providing
control of any Collateral;
(j) demand and receive possession of Borrower's Books; and
(k) exercise all rights and remedies available to Bank under the Loan
Documents or at law or equity, including all remedies provided under the Code
(including disposal of the Collateral pursuant to the terms thereof).
9.2 Power of Attorney. Borrower hereby irrevocably appoints Bank as its
lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower's name on any
checks or other forms of payment or security; (b) sign Borrower's name on any
invoice or xxxx of lading for any Account or drafts against Account Debtors; (c)
settle and adjust disputes and claims about the Accounts directly with Account
Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle,
and adjust all claims under Borrower's insurance policies; (e) pay, contest or
settle any Lien, charge, encumbrance, security interest, and adverse claim in or
to the Collateral, or any judgment based thereon, or otherwise take any action
to terminate or discharge the same; and (f) transfer the Collateral into the
name of Bank or a third party as the Code permits. Borrower hereby appoints Bank
as its lawful attorney-in-fact to sign Borrower's name on any documents
necessary to perfect or continue the perfection of Bank's security interest in
the Collateral regardless of whether an Event of Default has occurred until all
Obligations have been satisfied in full and Bank is under no further obligation
to make Credit Extensions hereunder. Bank's foregoing appointment as Borrower's
attorney in fact, and all of Bank's rights and powers, coupled with an interest,
are irrevocable until all Obligations have been fully repaid and performed and
Bank's obligation to provide Credit Extensions terminates.
9.3 Protective Payments. If Borrower fails to obtain the insurance called
for by Section 6.7 or fails to pay any premium thereon or fails to pay any other
amount which Borrower is obligated to pay under this Agreement or any other Loan
Document, Bank may obtain such insurance or make such payment, and all amounts
so paid by Bank are Bank Expenses and immediately due and payable, bearing
interest at the then highest applicable rate, and secured by the Collateral.
Bank will make reasonable efforts to provide Borrower with notice of Bank
obtaining such insurance at the time it is obtained or within a reasonable time
thereafter. No payments by Bank are deemed an agreement to make similar payments
in the future or Bank's waiver of any Event of Default.
9.4 Application of Payments and Proceeds. Borrower shall have no right to
specify the order or the accounts to which Bank shall allocate or apply any
payments required to be made by Borrower to Bank or otherwise received by Bank
under this Agreement when any such allocation or application is not specified
elsewhere in this Agreement. If an Event of Default has occurred and is
continuing, Bank may apply any funds in its possession, whether from Borrower
account balances, payments, proceeds realized as the result of any collection of
Accounts or other disposition of the Collateral, or otherwise, to the
Obligations in such order as Bank shall determine in its sole discretion. Any
surplus shall be paid to Borrower by credit to the Designated Deposit Account or
to other Persons legally entitled thereto; Borrower shall remain liable to Bank
for any deficiency. If Bank, in its good faith business judgment, directly or
indirectly enters into a deferred payment or other credit transaction with any
purchaser at any sale of Collateral, Bank shall have the option, exercisable at
any time, of either reducing the Obligations by the principal amount of the
purchase price or deferring the reduction of the Obligations until the actual
receipt by Bank of cash therefor.
9.5 Bank's Liability for Collateral. So long as Bank complies with
reasonable banking practices regarding the safekeeping of the Collateral in the
possession or under the control of Bank, Bank shall not be liable or responsible
for: (a) the safekeeping of the Collateral; (b) any loss or damage to the
Collateral; (c) any diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other Person. Borrower bears
all risk of loss, damage or destruction of the Collateral.
9.6 No Waiver; Remedies Cumulative. Bank's failure, at any time or times,
to require strict performance by Borrower of any provision of this Agreement or
any other Loan Document shall not waive, affect,
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or diminish any right of Bank thereafter to demand strict performance and
compliance herewith or therewith. No waiver hereunder shall be effective unless
signed by Bank and then is only effective for the specific instance and purpose
for which it is given. Bank's rights and remedies under this Agreement and the
other Loan Documents are cumulative. Bank has all rights and remedies provided
under the Code, by law, or in equity. Bank's exercise of one right or remedy is
not an election, and Bank's waiver of any Event of Default is not a continuing
waiver. Bank's delay in exercising any remedy is not a waiver, election, or
acquiescence.
9.7 Demand Waiver. Borrower waives demand, notice of default or dishonor,
notice of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.
10 NOTICES
All notices, consents, requests, approvals, demands, or other communication
(collectively, "Communication"), other than Advance requests made pursuant to
Section 3.4, by any party to this Agreement or any other Loan Document must be
in writing and be delivered or sent by facsimile at the addresses or facsimile
numbers listed below. Bank or Borrower may change its notice address by giving
the other party written notice thereof. Each such Communication shall be deemed
to have been validly served, given, or delivered: (a) upon the earlier of actual
receipt and three (3) Business Days after deposit in the U.S. mail, registered
or certified mail, return receipt requested, with proper postage prepaid; (b)
upon transmission, when sent by facsimile transmission (with such facsimile
promptly confirmed by delivery of a copy by personal delivery or United States
mail as otherwise provided in this Section 10); (c) one (1) Business Day after
deposit with a reputable overnight courier with all charges prepaid; or (d) when
delivered, if hand-delivered by messenger, all of which shall be addressed to
the party to be notified and sent to the address or facsimile number indicated
below. Advance requests made pursuant to Section 3.4 must be in writing and may
be in the form of electronic mail, delivered to Bank by Borrower at the e-mail
address of Bank provided below and shall be deemed to have been validly served,
given, or delivered when sent (with such electronic mail promptly confirmed by
delivery of a copy by personal delivery or United States mail as otherwise
provided in this Section 10). Bank or Borrower may change its address, facsimile
number, or electronic mail address by giving the other party written notice
thereof in accordance with the terms of this Section 10.
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If to Borrower: Spire Corporation
Spire Semiconductor, LLC
Spire Solar, Inc.
Spire Biomedical, Inc.
c/o Spire Corporation
Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxxxx Xxxxxxxx
Fax: 000-000-0000
Email: xxxxxxxxx@XxxxxXxxx.xxx
with a copy to: Xxxxxxxxx Traurig LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx, Esquire
Fax: 000.000.0000
Email: xxxxxxxxx@xxxxx.xxx
If to Bank: Silicon Valley Bank
One Newton Executive Park, Suite 200
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxx Xxxxx
Fax: 000.000.0000
Email: xxxxxx@xxx.xxx
with a copy to: Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esquire
Fax: 000.000.0000
Email: xxxxxxxx@xxxxxxxxx.xxx
11 CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE
Massachusetts law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Massachusetts; provided, however, that nothing
in this Agreement shall be deemed to operate to preclude Bank from bringing suit
or taking other legal action in any other jurisdiction to realize on the
Collateral or any other security for the Obligations, or to enforce a judgment
or other court order in favor of Bank. Borrower expressly submits and consents
in advance to such jurisdiction in any action or suit commenced in any such
court, and Borrower hereby waives any objection that it may have based upon lack
of personal jurisdiction, improper venue, or forum non conveniens and hereby
consents to the granting of such legal or equitable relief as is deemed
appropriate by such court. Borrower hereby waives personal service of the
summons, complaints, and other process issued in such action or suit and agrees
that service of such summons, complaints, and other process may be made by
registered or certified mail addressed to Borrower at the address set forth in
Section 10 of this Agreement and that service so made shall be deemed completed
upon the earlier to occur of Borrower's actual receipt thereof or three (3) days
after deposit in the U.S. mails, proper postage prepaid. NOTWITHSTANDING
ANYTHING TO THE CONTRARY SET FORTH HEREINABOVE, BANK SHALL SPECIFICALLY HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTION WHICH BANK DEEMS NECESSARY OR APPROPRIATE IN
ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE BANK'S RIGHTS AGAINST
BORROWER OR ITS PROPERTY.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH
WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF
OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
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12 GENERAL PROVISIONS
12.1 Termination Prior to Revolving Line Maturity Date. This Agreement may
be terminated prior to the Revolving Line Maturity Date by Borrower, effective
three (3) Business Days after written notice of termination is given to Bank.
Notwithstanding any such termination, Bank's lien and security interest in the
Collateral shall continue until Borrower fully satisfies its Obligations. If
such termination is at Borrower's election (regardless of the existence of any
Event of Default), or at Bank's election due to the occurrence and continuance
of an Event of Default, Borrower shall pay to Bank, in addition to the payment
of any other expenses or fees then-owing, a termination fee in an amount equal
to one percent (1.00%) of the Revolving Line Amount (i.e. Thirty Thousand
Dollars ($30,000)); provided that no termination fee shall be charged if the
credit facility hereunder is replaced with a new facility from another division
of Silicon Valley Bank.
12.2 Successors and Assigns. This Agreement binds and is for the benefit of
the successors and permitted assigns of each party. Borrower may not assign this
Agreement or any rights or obligations under it without Bank's prior written
consent (which may be granted or withheld in Bank's discretion). Bank has the
right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights, and benefits under this Agreement and the other Loan
Documents.
12.3 Indemnification. Borrower agrees to indemnify, defend and hold Bank
and its directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Bank (each, an "Indemnified Person") harmless
against: (a) all obligations, demands, claims, and liabilities (collectively,
"Claims") asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by such Indemnified Person from, following, or arising from
transactions between Bank and Borrower (including reasonable attorneys' fees and
expenses), except for Claims and/or losses directly caused by such Indemnified
Person's gross negligence or willful misconduct.
12.4 Time of Essence. Time is of the essence for the performance of all
Obligations in this Agreement.
12.5 Severability of Provisions. Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.
12.6 Correction of Loan Documents. Bank may correct patent errors and fill
in any blanks in this Agreement and the other Loan Documents consistent with the
agreement of the parties.
12.7 Amendments in Writing; Integration. All amendments to this Agreement
must be in writing and signed by both Bank and Borrower. This Agreement and the
Loan Documents represent the entire agreement about this subject matter and
supersede prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
into this Agreement and the Loan Documents.
12.8 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, constitute
one Agreement.
12.9 Survival. All covenants, representations and warranties made in this
Agreement shall continue in full force until this Agreement has terminated
pursuant to its terms and all Obligations (including, without limitation,
Obligations incurred under the EXIM Loan Agreement) (other than inchoate
indemnity obligations and any other obligations which, by their terms, are to
survive the termination of this Agreement) have been satisfied. The obligation
of Borrower in Section 12.3 to indemnify Bank shall survive until the statute of
limitations with respect to such claim or cause of action shall have run.
12.10 Confidentiality. In handling any confidential information, Bank shall
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Bank's
Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any
interest in the Credit Extensions (provided, however, Bank shall use
commercially reasonable efforts to obtain such prospective transferee's or
purchaser's agreement to the terms of this provision); (c) as required by law,
regulation, subpoena, or other order; (d) to Bank's regulators or as otherwise
required in connection with Bank's examination or audit; (e) as Bank considers
appropriate in exercising remedies under the Loan Documents; and (f) to
third-party service providers of Bank so long as such service providers have
executed a confidentiality agreement with Bank with terms no less
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restrictive than those contained herein. Confidential information does not
include information that either: (i) is in the public domain or in Bank's
possession when disclosed to Bank, or becomes part of the public domain after
disclosure to Bank; or (ii) is disclosed to Bank by a third party, if Bank does
not know that the third party is prohibited from disclosing the information.
Bank may use confidential information for any purpose, including, without
limitation, for the development of client databases, reporting purposes, and
market analysis, so long as Bank does not disclose Borrower's identity or the
identity of any person associated with Borrower unless otherwise expressly
permitted by this Agreement. The provisions of the immediately preceding
sentence shall survive the termination of this Agreement.
12.11 Borrower Liability. Either Borrower may, acting singly, request
Credit Extensions hereunder. Each Borrower hereby appoints the other as agent
for the other for all purposes hereunder, including with respect to requesting
Credit Extensions hereunder. Each Borrower hereunder shall be jointly and
severally obligated to repay all Credit Extensions made hereunder, regardless of
which Borrower actually receives said Credit Extension, as if each Borrower
hereunder directly received all Credit Extensions. Each Borrower waives any
suretyship defenses available to it under the Code or any other applicable law.
Each Borrower waives any right to require Bank to: (i) proceed against any
Borrower or any other person; (ii) proceed against or exhaust any security; or
(iii) pursue any other remedy. Bank may exercise or not exercise any right or
remedy it has against any Borrower or any security it holds (including the right
to foreclose by judicial or non-judicial sale) without affecting any Borrower's
liability hereunder. Notwithstanding any other provision of this Agreement or
any other Loan Document, each Borrower irrevocably waives all rights that it may
have at law or in equity (including, without limitation, any law subrogating
Borrower to the rights of Bank under this Agreement) to seek contribution,
indemnification or any other form of reimbursement from any other Borrower, or
any other Person now or hereafter primarily or secondarily liable for any of the
Obligations, for any payment made by Borrower with respect to the Obligations in
connection with this Agreement, any other Loan Document or otherwise and all
rights that it might have to benefit from, or to participate in, any security
for the Obligations as a result of any payment made by Borrower with respect to
the Obligations in connection with this Agreement or otherwise. Any agreement
providing for indemnification, reimbursement or any other arrangement prohibited
under this Section 12.11 shall be null and void. If any payment is made to a
Borrower in contravention of this Section 12.11, such Borrower shall hold such
payment in trust for Bank and such payment shall be promptly delivered to Bank
for application to the Obligations, whether matured or unmatured.
12.12 Borrower Agreement; Cross-Collateralization; Cross-Default;
Conflicts. Both this Agreement and the Borrower Agreement shall continue in full
force and effect, and all rights and remedies under this Agreement and the
Borrower Agreement are cumulative. The term "Obligations" as used in this
Agreement and in the Borrower Agreement shall include without limitation the
obligation to pay when due all loans made pursuant to the Borrower Agreement
(the "EXIM Loans") and all interest thereon and the obligation to pay when due
all Advances made pursuant to the terms of this Agreement and all interest
thereon. Without limiting the generality of the foregoing, the security interest
granted herein covering all "Collateral" as defined in this Agreement and as
defined in the Borrower Agreement shall secure all EXIM Loans and all Advances
and all interest thereon, and all other Obligations. Any Event of Default under
this Agreement shall also constitute a default under the Borrower Agreement, and
any default under the Borrower Agreement shall also constitute an Event of
Default under this Agreement. In the event Bank assigns its rights under this
Agreement and/or under any note evidencing EXIM Loans and/or its rights under
the Borrower Agreement and/or under any note evidencing Advances, to any third
party, including, without limitation, the EXIM Bank, whether before or after the
occurrence of any Event of Default, Bank shall have the right (but not any
obligation), in its sole discretion, to allocate and apportion Collateral to the
Borrower Agreement and/or note assigned and to specify the priorities of the
respective security interests in such Collateral between itself and the
assignee, all without notice to or consent of the Borrower. Should any term of
the Agreement conflict with any term of the Borrower Agreement, the more
restrictive term in either agreement shall govern Borrower.
12.13 Right of Set Off. Borrower hereby grants to Bank, a lien, security
interest and right of set off as security for all Obligations to Bank, whether
now existing or hereafter arising upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of Bank
(including a Bank subsidiary) or in transit to any of them. At any time after
the occurrence and during the continuance of an Event of Default, without demand
or notice, Bank may set off the same or any part thereof and apply the same to
any liability or obligation of Borrower even though unmatured and regardless of
the adequacy of any other collateral securing the Obligations. ANY AND ALL
RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF
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WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
13 DEFINITIONS
13.1 Definitions. As used in this Agreement, the following terms have the
following meanings:
"Account" is any "account" as defined in the Code with such additions to
such term as may hereafter be made, and includes, without limitation, all
accounts receivable and other sums owing to Borrower.
"Account Debtor" is any "account debtor" as defined in the Code with such
additions to such term as may hereafter be made.
"Advance" or "Advances" means an advance (or advances) under the Revolving
Line.
"Affiliate" of any Person is a Person that owns or controls directly
or indirectly the Person, any Person that controls or is controlled by or is
under common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"Agreement" is defined in the preamble hereof.
"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.
"Bank" is defined in the preamble hereof.
"Bank Expenses" are all audit fees and expenses, costs, and expenses
(including reasonable attorneys' fees and expenses) for preparing, amending,
negotiating, administering, defending and enforcing the Loan Documents
(including, without limitation, those incurred in connection with appeals or
Insolvency Proceedings) or otherwise incurred with respect to Borrower.
"Borrower" is defined in the preamble hereof.
"Borrower Agreement" is defined in the EXIM Loan Agreement.
"Borrower's Books" are all Borrower's books and records including ledgers,
federal and state tax returns, records regarding Borrower's assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.
"Borrowing Base" is eighty percent (80%) of Eligible Accounts, in each case
as determined by Bank from Borrower's most recent Transaction Report; provided,
however, that Bank may decrease the foregoing amount and/or percentages in its
good faith business judgment based on events, conditions, contingencies, or
risks which, as determined by Bank, may adversely affect Collateral.
"Borrowing Resolutions" are, with respect to any Person, those resolutions
adopted by such Person's board of directors and delivered by such Person to Bank
approving the Loan Documents to which such Person is a party and the
transactions contemplated thereby, together with a certificate executed by its
secretary on behalf of such Person certifying that (a) such Person has the
authority to execute, deliver, and perform its obligations under each of the
Loan Documents to which it is a party, (b) that attached as Exhibit A to such
certificate is a true, correct, and complete copy of the resolutions then in
full force and effect authorizing and ratifying the execution, delivery, and
performance by such Person of the Loan Documents to which it is a party, (c) the
name(s) of the Person(s) authorized to execute the Loan Documents on behalf of
such Person, together with a sample of the true signature(s) of such Person(s),
and (d) that Bank may conclusively rely on such certificate unless and until
such Person shall have delivered to Bank a further certificate canceling or
amending such prior certificate.
"Business Day" is any day that is not a Saturday, Sunday or a day on which
Bank is closed.
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"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor's Ratings
Group or Xxxxx'x Investors Service, Inc.; and (c) Bank's certificates of deposit
issued maturing no more than one (1) year after issue.
"Cash Management Services" is defined in Section 2.1.4.
"Code" is the Uniform Commercial Code, as the same may, from time to time,
be enacted and in effect in the Commonwealth of Massachusetts; provided, that,
to the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the Code, the definition of such term contained in Article or Division 9
shall govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, or priority of, or
remedies with respect to, Bank's Lien on any Collateral is governed by the
Uniform Commercial Code in effect in a jurisdiction other than the Commonwealth
of Massachusetts, the term "Code" shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes on the
provisions thereof relating to such attachment, perfection, priority, or
remedies and for purposes of definitions relating to such provisions.
"Collateral" is any and all properties, rights and assets of Borrower
described on Exhibit A.
"Collateral Account" is any Deposit Account, Securities Account, or
Commodity Account.
"Commodity Account" is any "commodity account" as defined in the Code with
such additions to such term as may hereafter be made.
"Compliance Certificate" is that certain certificate in the form attached
hereto as Exhibit C.
"Contingent Obligation" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (a) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (b) any obligations for undrawn letters of credit for the account of
that Person; and (c) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under any guarantee or other support arrangement.
"Control Agreement" is any control agreement entered into among the
depository institution at which Borrower maintains a Deposit Account or the
securities intermediary or commodity intermediary at which Borrower maintains a
Securities Account or a Commodity Account, Borrower, and Bank pursuant to which
Bank obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.
"Credit Extension" is any Advance, Letter of Credit, FX Forward Contract,
amount utilized for Cash Management Services, or any other extension of credit
by Bank for Borrower's benefit.
"Default" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"Default Rate" is defined in Section 2.3(b).
"Deferred Revenue" is all amounts received or invoiced in advance of
performance under contracts and not yet recognized as revenue.
"Deposit Account" is any "deposit account" as defined in the Code with such
additions to such term as may hereafter be made.
"Designated Deposit Account" is Borrower's deposit account, account number
700587370, maintained with Bank.
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"Dollars," "dollars" and "$" each mean lawful money of the United States.
"Effective Date" is the May 31, 2009.
"Eligible Accounts" means Accounts which arise in the ordinary course of
Borrower's business that meet all Borrower's representations and warranties in
Section 5.3. Bank reserves the right at any time after the Effective Date to
adjust any of the criteria set forth below and to establish new criteria in its
good faith business judgment. Eligible Accounts shall not include:
(a) Accounts that the Account Debtor has not paid within ninety (90) days
of invoice date regardless of invoice payment period terms;
(b) Accounts owing from an Account Debtor, fifty percent (50%) or more of
whose Accounts have not been paid within ninety (90) days of invoice date;
(c) Accounts billed in the United States and owing from an Account Debtor
which does not have its principal place of business in the United States;
(d) Accounts billed and/or payable outside of the United States;
(e) Accounts owing from an Account Debtor to the extent that Borrower is
indebted or obligated in any manner to the Account Debtor (as creditor, lessor,
supplier or otherwise - sometimes called "contra" accounts, accounts payable,
customer deposits or credit accounts), with the exception of customary credits,
adjustments and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business;
(f) Accounts for which the Account Debtor is Borrower's Affiliate, officer,
employee, or agent;
(g) Accounts with credit balances over ninety (90) days from invoice date;
(h) Accounts owing from an Account Debtor, including Affiliates, whose
total obligations to Borrower exceed twenty-five (25%) of all Accounts, for the
amounts that exceed that percentage, unless Bank approves in writing;
(i) Accounts owing from an Account Debtor which is a United States
government entity or any department, agency, or instrumentality thereof unless
Borrower has assigned its payment rights to Bank and the assignment has been
acknowledged under the Federal Assignment of Claims Act of 1940, as amended;
(j) Accounts for demonstration or promotional equipment, or in which goods
are consigned, or sold on a "sale guaranteed", "sale or return", "sale on
approval", or other terms if Account Debtor's payment may be conditional;
(k) Accounts owing from an Account Debtor that has not been invoiced or
where goods or services have not yet been rendered to the Account Debtor
(sometimes called memo xxxxxxxx or pre-xxxxxxxx);
(l) Accounts subject to contractual arrangements between Borrower and an
Account Debtor where payments shall be scheduled or due according to completion
or fulfillment requirements where the Account Debtor has a right of offset for
damages suffered as a result of Borrower's failure to perform in accordance with
the contract (sometimes called contracts accounts receivable, progress xxxxxxxx,
milestone xxxxxxxx, or fulfillment contracts);
(m) Accounts owing from an Account Debtor the amount of which may be
subject to withholding based on the Account Debtor's satisfaction of Borrower's
complete performance (but only to the extent of the amount withheld; sometimes
called retainage xxxxxxxx);
(n) Accounts subject to trust provisions, subrogation rights of a bonding
company, or a statutory trust;
(o) Accounts owing from an Account Debtor that has been invoiced for goods
that have not been shipped to the Account Debtor unless Bank, Borrower, and the
Account Debtor have entered into an agreement acceptable to Bank in its sole
discretion wherein the Account Debtor acknowledges that (i) it has title to and
has ownership of the goods wherever located, (ii) a bona fide sale of the goods
has occurred, and (iii) it owes payment for such goods in accordance with
invoices from Borrower (sometimes called "xxxx and hold" accounts);
-23-
(p) Accounts owing from an Account Debtor with respect to which Borrower
has received Deferred Revenue (but only to the extent of such Deferred Revenue);
but excluding Accounts owing from an Account Debtor with respect to which
Borrower has received Deferred Revenue that are backed by a Letter-of-Credit
acceptable to Bank.
(q) Accounts that represent non-trade receivables or that are derived by
means other than in the ordinary course of Borrower's business;
(r) Accounts subject to chargebacks or others payment deductions taken by
an Account Debtor (but only to the extent the chargeback is determined invalid
and subsequently collected by Borrower);
(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.
"Equipment" is all "equipment" as defined in the Code with such additions
to such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.
"ERISA" is the Employee Retirement Income Security Act of 1974, and its
regulations.
"Event of Default" is defined in Section 8.
"EXIM Availability Amount" is the Availability Amount as such term is
defined in the EXIM Loan Agreement.
"EXIM Loans" is defined in Section 12.17.
"EXIM Loan Agreement" is that certain Export-Import Loan and Security
Agreement by and between Bank and the Borrower, executed as of the date hereof.
"EXIM Loan Documents" are all documents and agreements executed in
connection with the EXIM Loan Agreement, including, without limitation, the EXIM
Borrower Agreement and the EXIM Promissory Note, as each may be amended from
time to time.
"Foreign Currency" means lawful money of a country other than the United
States.
"Funding Date" is any date on which a Credit Extension is made to or on
account of Borrower which shall be a Business Day.
"FX Business Day" is any day when (a) Bank's Foreign Exchange Department is
conducting its normal business and (b) the Foreign Currency being purchased or
sold by Borrower is available to Bank from the entity from which Bank shall buy
or sell such Foreign Currency.
"FX Forward Contract" is defined in Section 2.1.3.
"FX Reserve" is defined in Section 2.1.3.
"GAAP" is generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other Person as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
-24-
"General Intangibles" is all "general intangibles" as defined in the Code
in effect on the date hereof with such additions to such term as may hereafter
be made, and includes without limitation, all copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
trademarks, service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, any trade secret rights,
including any rights to unpatented inventions, payment intangibles, royalties,
contract rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income and other
tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.
"Governmental Approval" is any consent, authorization, approval, order,
license, franchise, permit, certificate, accreditation, registration, filing or
notice, of, issued by, from or to, or other act by or in respect of, any
Governmental Authority.
"Governmental Authority" is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.
"Indebtedness" is (a) indebtedness for borrowed money or the deferred price
of property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and (d)
Contingent Obligations.
"Indemnified Person" is defined in Section 12.3.
"Insolvency Proceeding" is any proceeding by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"Inventory" is all "inventory" as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrower's custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.
"Investment" is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to any Person.
"Key Person" is any of Borrower's Chief Executive Officer or Chief
Financial Officer who are, as of the Effective Date, Xxxxx Xxxxxx and Xxxxxxxxx
Xxxxxxxx, respectively.
"Letter of Credit" means a standby letter of credit issued by Bank or
another institution based upon an application, guarantee, indemnity or similar
agreement on the part of Bank as set forth in Section 2.1.2.
"Letter of Credit Application" is defined in Section 2.1.2(a).
"Letter of Credit Reserve" has the meaning set forth in Section 2.1.2(d).
"Lien" is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.
"Liquidity" is, as of any date of measurement, Borrower's (i) unrestricted
cash at Bank plus (ii) the Availability Amount plus (iii) the EXIM Availability
Amount".
"Liquidity Event" is, as of any date of measurement, the occurrence of
either (i) Borrower's unrestricted cash held at Bank is less than the aggregate
outstanding Obligations owed by Borrower to Bank OR (ii) Borrower's Net Income
for the trailing six (6) months then ended is less than One Hundred Thousand
Dollars ($100,000).
-25-
"Loan Documents" are, collectively, this Agreement, the EXIM Loan
Documents, the Perfection Certificate, any note, or notes or guaranties executed
by Borrower, and any other present or future agreement between Borrower and/or
for the benefit of Bank in connection with this Agreement, all as amended,
restated, or otherwise modified.
"Material Adverse Change" is (a) a material impairment in the perfection or
priority of Bank's Lien in the Collateral or in the value of such Collateral;
(b) a material adverse change in the business, operations, or condition
(financial or otherwise) of Borrower; (c) a material impairment of the prospect
of repayment of any portion of the Obligations or (d) Bank determines, based
upon information available to it and in its reasonable judgment, that there is a
reasonable likelihood that Borrower shall fail to comply with one or more of the
financial covenants in Section 6 during the next succeeding financial reporting
period.
"Net Income" means, as calculated on a consolidated basis for Borrower and
its Subsidiaries for any period as at any date of determination, the net profit
(or loss), after provision for taxes, of Borrower and its Subsidiaries for such
period taken as a single accounting period.
"Net Income Threshold Period" is the period beginning with the month
following the date that Borrower provides evidence satisfactory to Bank, in its
sole discretion, that Borrower has maintained Net Income, based on a trailing
three (3) month period ending on the date of measurement, of at least One Dollar
($1.00) (the "Net Income Threshold") and ending on the earlier of (i) the
occurrence of an Event of Default, (ii) the first day after which Bank
determines, in its sole discretion, that Borrower has failed to maintain the Net
Income Threshold; or (iii) the date that Borrower actually failed to maintain
the Net Income Threshold, as Bank shall determine, in its sole discretion, based
on the Borrower's Compliance Certificate and financial statements delivered in
accordance with Section 6.2 hereof.
"Obligations" are Borrower's obligation to pay when due any debts,
principal, interest, Bank Expenses and other amounts Borrower owes Bank now or
later, whether under this Agreement, the Loan Documents, the EXIM Loan Documents
or otherwise, including, without limitation, all obligations relating to letters
of credit (including reimbursement obligations for drawn and undrawn letters of
credit), cash management services, and foreign exchange contracts, if any, and
including interest accruing after Insolvency Proceedings begin and debts,
liabilities, or obligations of Borrower assigned to Bank, and the performance of
Borrower's duties under the Loan Documents.
"Operating Documents" are, for any Person, such Person's formation
documents, as certified with the Secretary of State of such Person's state of
formation on a date that is no earlier than 30 days prior to the Effective Date,
and, (a) if such Person is a corporation, its bylaws in current form, (b) if
such Person is a limited liability company, its limited liability company
agreement (or similar agreement), and (c) if such Person is a partnership, its
partnership agreement (or similar agreement), each of the foregoing with all
current amendments or modifications thereto.
"Overadvance" is defined in Section 2.2.
"Perfection Certificate" is defined in Section 5.1.
"Permitted Indebtedness" is:
(a) Borrower's Indebtedness to Bank under this Agreement and the other Loan
Documents, including, without limitation, the EXIM Loan Agreement;
(b) Indebtedness or reimbursement obligations existing on the Effective
Date listed on Schedule 7.7 attached hereto;
(c) Subordinated Debt;
(d) unsecured Indebtedness to trade creditors and with respect to surety
bonds and similar obligations incurred in the ordinary course of business;
(e) Indebtedness incurred as a result of endorsing negotiable instruments
received in the ordinary course of business;
(f) Indebtedness secured by Permitted Liens;
-26-
(g) Indebtedness of any Borrower to any other Borrower; and
(h) extensions, refinancings, modifications, amendments and restatements of
any items of Permitted Indebtedness (a) through (h) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified
to impose more burdensome terms upon Borrower or its Subsidiaries, as the case
may be.
"Permitted Investments" are:
(a) Investments listed on Schedule 7.7 attached hereto and existing on the
Effective Date;
(b) Investments consisting of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
Borrower;
(c) Investments of Subsidiaries in or to other Subsidiaries or Borrower and
Investments by Borrower in any Subsidiaries that is not a Borrower (with the
exception of Xxxxxx Xxxxx Solar, LLC, for which no further Investments shall be
permitted) not to exceed Twenty Five Thousand Dollars ($25,000.00) in the
aggregate in any fiscal year;
(d) Investments consisting of (i) travel advances and employee relocation
loans and other employee loans and advances in the ordinary course of business,
and (ii) loans to employees, officers or directors relating to the purchase of
equity securities of Borrower or its Subsidiaries pursuant to employee stock
purchase plans or agreements approved by Borrower's board of directors;
(e) Investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers who are not Affiliates, in
the ordinary course of business; provided that this clause (f) shall not apply
to Investments of Borrower in any Subsidiary;
(f) Investments (including debt obligations) received in connection with
the bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of business;
(g) Investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within one year from the date of acquisition thereof; (ii) commercial
paper maturing no more than one year from the date of creation thereof and
currently having the highest rating obtainable from either Standard & Poor's
Ratings Group or Xxxxx'x Investors Service, Inc.; (iii) certificates of deposit
maturing no more than one year from the date of creation thereof issued by
commercial banks incorporated under the laws of the United States of America,
each having combined capital, surplus and undivided profits of not less than
$100,000,000.00 and having a senior unsecured rating of "A" or better by a
nationally recognized rating agency (an "A Rated Bank"); (iv) time deposits
maturing no more than 30 days from the date of creation thereof with A Rated
Banks; and (v) mutual funds that invest solely in one or more of the investments
described in clauses (i) through (iv) above;
(h) Cash Equivalents; and
(i) Investments consisting of intercompany loans by Borrower to any other
Borrower in an amount not to exceed Five Hundred Thousand Dollars ($500,000.00)
in the aggregate.
"Permitted Liens" are:
(a) Liens existing on the Effective Date and shown on the Perfection
Certificate or arising under this Agreement and the other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, provided that no notice of
any such Lien has been filed or recorded under the Internal Revenue Code of
1986, as amended, and the Treasury Regulations adopted thereunder;
(c) purchase money Liens (i) on Equipment acquired or held by Borrower
incurred for financing the acquisition of Equipment securing no more than Five
Hundred Thousand Dollars ($500,000) in the aggregate
-27-
amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is
confined to the property and improvements and the proceeds of the Equipment;
(d) statutory Liens securing claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other Persons imposed without action of
such parties, provided, they have no priority over any of Bank's Lien and the
aggregate amount of such Liens does not at any time exceed Two Hundred Fifty
Thousand Dollars ($250,000.00);
(e) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (e), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase; and
(f) Liens securing Permitted Indebtedness.
"Person" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
"Prime Rate" is the greater of (i) six percent (6.00%) or (ii) Bank's most
recently announced "prime rate," even if it is not Bank's lowest rate.
"Registered Organization" is any "registered organization" as defined in
the Code with such additions to such term as may hereafter be made.
"Related Account Debtor" means, with respect to any Person, any Affiliate,
relative, partner, shareholder, director, officer, of employee of such Person.
"Requirement of Law" is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Reserves" means, as of any date of determination, such amounts as Bank may
from time to time establish and revise in its good faith business judgment,
reducing the amount of Advances and other financial accommodations which would
otherwise be available to Borrower (a) to reflect events, conditions,
contingencies or risks which, as determined by Bank in its good faith business
judgment, do or may adversely affect (i) the Collateral or any other property
which is security for the Obligations or its value (including without limitation
any increase in delinquencies of Accounts), (ii) the assets, business or
prospects of Borrower or any Guarantor, or (iii) the security interests and
other rights of Bank in the Collateral (including the enforceability, perfection
and priority thereof); or (b) to reflect Bank's good faith belief that any
collateral report or financial information furnished by or on behalf of Borrower
or any Guarantor to Bank is or may have been incomplete, inaccurate or
misleading in any material respect; or (c) in respect of any state of facts
which Bank determines in good faith constitutes an Event of Default or may, with
notice or passage of time or both, constitute an Event of Default.
"Responsible Officer" is any of the Chief Executive Officer, President,
Chief Financial Officer and Controller of Borrower
"Revolving Line" is an Advance or Advances in an amount up to Three Million
Dollars ($3,000,000).
"Revolving Line Maturity Date" is May 31, 2010.
"Securities Account" is any "securities account" as defined in the Code
with such additions to such term as may hereafter be made.
"Settlement Date" is defined in Section 2.1.3.
"Subordinated Debt" is indebtedness incurred by Borrower subordinated to
all of Borrower's now or hereafter indebtedness to Bank (pursuant to a
subordination, intercreditor, or other similar agreement in form and substance
satisfactory to Bank entered into between Bank and the other creditor), on terms
acceptable to Bank.
-28-
"Subsidiary" means, with respect to any Person, any Person of which more
than fifty percent (50.0%) of the voting stock or other equity interests (in the
case of Persons other than corporations) is owned or controlled directly or
indirectly by such Person or one or more of Affiliates of such Person.
"Tangible Net Worth" is, on any date, the consolidated total assets of
Borrower minus (a) any amounts attributable to (i) goodwill, (ii) intangible
items including unamortized debt discount and expense, patents, trade and
service marks and names, copyrights and research and development expenses except
prepaid expenses, (iii) notes, accounts receivable and other obligations owing
to Borrower from its officers or other Affiliates, and (iv) reserves not already
deducted from assets, minus (b) Total Liabilities, plus (c) Subordinated Debt
plus (d) outstanding preferred stock (including, without limitation, outstanding
preferred warrants) of the Borrower.
"Total Liabilities" is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness.
"Transaction Report" is that certain report of transactions and schedule of
collections in the form attached hereto as Exhibit D, containing, at a minimum,
a summary for the relevant period for sales, collections, credit memos and other
collateral adjustments, and including a Borrowing Base Certificate in the form
attached hereto as Exhibit B.
"Transfer" is defined in Section 7.1.
"Unused Revolving Line Facility Fee" is defined in Section 2.4(d).
[Signature page follows.]
-29-
IN WITNESS WHEREOF, the parties hereto have caused this 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/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxxxx Xxxxxxxx
------------------------------ -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxxxx Xxxxxxxx
Title: President and Chief Executive Officer Title: Treasurer and Chief Financial Officer
SPIRE SOLAR, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxxxx Xxxxxxxx
------------------------------ -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxxxx Xxxxxxxx
Title: President and Chief Executive Officer Title: Treasurer and Chief Financial Officer
SPIRE BIOMEDICAL, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxxxx Xxxxxxxx
------------------------------ -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxxxx Xxxxxxxx
Title: President and Chief Executive Officer Title: Treasurer and Chief Financial Officer
SPIRE SEMICONDUCTOR, LLC f/k/a BANDWIDTH
SEMICONDUCTOR, LLC
By: Spire Corporation, a Massachusetts corporation,
its sole Member and Manager
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxxxx Xxxxxxxx
------------------------------ -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxxxx Xxxxxxxx
Title: President and Chief Executive Office Title: Treasurer and Chief Financial Officer
BANK:
SILICON VALLEY BANK
By: /s/ Xxx X. Xxxxx
-----------------------
Name: Xxx X. Xxxxx
Title: Vice President
Effective Date: June 22, 2009
