EXHIBIT 10.7
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is made and entered into as of July 9, 2003 by
and between ULTRA CLEAN TECHNOLOGY SYSTEMS AND SERVICE, INC., a California
corporation ("Borrower"), and UNION BANK OF CALIFORNIA, N.A., a national banking
association ("Bank").
SECTION 1. THE CREDIT
1.1 CREDIT FACILITY
1.1.1 THE REVOLVING LOAN. Bank will loan to Borrower an amount not to exceed
Ten Million Dollars ($10,000,000) outstanding in aggregate principal amount at
any one time (the "Revolving Loan"). The proceeds of the Revolving Loan shall be
used for Borrower's general working capital purposes. Borrower may borrow, repay
and reborrow all or part of the Revolving Loan in accordance with the terms of
the Revolving Note (defined below); provided, however, that if the Loan is
subject to the Out of Debt Provision under Section 1.3 then for at least thirty
(30) consecutive days during each twelve (12) month period, the outstanding
principal balance of the Revolving Loan shall be zero ($0) (the "Out of Debt
Provision"). All borrowings of the Revolving Loan must be made before June 15,
2004, at which time all unpaid principal and interest of the Revolving Loan
shall be due and payable. The Revolving Loan shall be evidenced by Bank's
standard form of commercial promissory note (the "Revolving Note"). Bank shall
enter each amount borrowed and repaid in Bank's records and such entries shall
be prima facie evidence. Omission of Bank to make any such entries shall not
discharge Borrower of its obligation to repay in full with interest all amounts
borrowed.
1.2 TERMINOLOGY. The following words and phrases, whether used in their
singular or plural form, shall have the meanings set forth below:
(a) "Affiliate" means any person which directly or indirectly
controls, is controlled by, or is under common control with, the
Borrower. "Control" means direct or indirect possession of the power to
direct or cause the direction of management or policies (whether
through ownership of voting securities, by contract or otherwise);
provided that control shall be conclusively presumed when any person or
affiliated group directly or indirectly owns five percent or more of
the securities having ordinary voting power for the election of
directors of a corporation. "Controlled by" and "under common control
with" have meanings correlative thereto.
(b) "GAAP" means generally accepted accounting principles and
practices consistently applied. Accounting terms used in this Agreement
but not otherwise expressly defined have the meanings given them by
GAAP.
(c) "Lien" means any voluntary or involuntary security interest,
mortgage, pledge, charge, encumbrance or title retention agreement,
covering all or any part of the property of Borrower.
(d) "Loan" means all the credit facilities described above.
(e) "Loan Documents" means this Agreement, the Note, and all other
documents, instruments and agreements required by Bank and executed in
connection with this Agreement, the Note or the Loans.
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(f) "Note" means all the promissory notes described above.
(g) "Obligor" means individually and collectively, Borrower and
Guarantor (as defined in Section 2.3).
(h) "Potential Default" means a condition, event or act which, but
for the passage of time, would constitute an Event of Default.
(i) "Subordinated Debt" is defined in Section 2.4.
1.3 BORROWING BASE. Notwithstanding any other provision of this Agreement,
if the Loan is subject to the Borrowing Base, Bank shall not be obligated to
advance funds under the Revolving Loan, at any time that Borrower's aggregate
obligations in respect of principal to Bank thereunder exceed seventy-five
percent (75%) of the book value of Borrower's Eligible Accounts for all account
debtors, except eighty percent (80%) for (a) Applied Materials, Inc., a Delaware
corporation ("Applied"); (b) Xxx Research Corporation, a Delaware corporation
("Lam"); and (c) Novellus Systems, Inc., a California corporation, ("Novellus"),
as determined by reference to the most recent Borrowing Base Certificate
theretofore delivered to Bank ("Borrowing Base"); provided, however that for
each financial reporting quarter if the outstanding principal balance of the
Revolving Loan was Two Million Five Hundred Thousand Dollars ($2,500,000) or
less at all times during the previous financial reporting quarter, Borrower may
elect to be subject to (a) the Out of Debt Provision; or (b) the Borrowing Base
and the monthly reporting requirements of Section 4.5(f). If at any time that
the Loan is subject to the Borrowing Base, the Borrower's obligations in respect
of principal to Bank under the referenced facilities exceed the sum so
permitted, Borrower shall immediately repay to Bank such excess.
1.3.1 ACCOUNTS AND ELIGIBLE ACCOUNTS. The term "Accounts" means all
presently existing and hereafter arising accounts receivable, contract
rights, chattel paper, and all other forms of obligations owing to
Borrower, payable in United States dollars, arising out of the sale or
lease of goods, or the rendition of services by Borrower, whether or
not earned by performance, and any and all credit insurance, guaranties
and other security therefor, as well as all merchandise returned to or
reclaimed by Borrower, and Borrower's books and records relating to any
of the foregoing.
The term "Eligible Accounts" means those Accounts, net of finance
charges, which have been validly assigned to Bank as collateral and
strictly comply with all Borrower's representations and warranties to
Bank, but Eligible Accounts shall not include any Account:
(a) With respect to which the account debtor is an
officer, shareholder, director, or employee of Borrower;
(b) With respect to which the account debtor is a
subsidiary or Affiliate of Borrower;
(c) Relating to goods placed on consignment, guaranteed
sale or other terms by reason of which payment by the account
debtor may be conditional;
(d) With respect to which the account debtor is not a
resident of the United States or Canada;
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(e) With respect to which the account debtor is a
Federal, state or local governmental entity or agency, unless
Bank, in its sole discretion, has agreed to the contrary in
writing and Borrower, if necessary or desirable, has complied
with the Federal Assignment of Claims Act of 1940 or any
applicable state statute or municipal ordinance of similar
purpose and effect with respect thereto;
(f) With respect to which Borrower is liable to the
account debtor for goods sold or services rendered by the
account debtor to Borrower but only to the extent of the
potential offset;
(g) With respect to which there is asserted, but only to
the extent so asserted, a defense, counterclaim, discount or
setoff, whether well-founded or otherwise, except for those
discounts, allowances and returns arising in the ordinary
course of Borrower's business;
(h) With respect to which the account debtor becomes
insolvent, fails to pay its debts as they mature or goes out
of business, or which is owed by an account debtor which has
become the subject of a proceeding under any provision of the
United States Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency law, including but not limited to
assignments for the benefit of creditors, formal or informal
moratoriums, compositions or extensions with all or
substantially all of its creditors;
(i) Owed by any account debtor with respect to which
twenty-five percent (25%) or more of the aggregate dollar
amount of its Accounts are not paid within ninety (90) days of
the invoice date;
(j) That is not paid by the account debtor within ninety
(90) days of the invoice date;
(k) That portion of the Accounts owed by any single
account debtor which exceeds fifteen percent (15%) of all
Borrower's Accounts except: (A) fifty percent (50%) for
Applied, and (B) twenty-five percent (25%) for Lam and
Novellus; and
(l) Which Bank, upon notice to Borrower, deems ineligible
in its reasonable credit judgment.
1.4 PREPAYMENT. The Loan may be prepaid in full or in part but only in
accordance with the terms of the Note, and any such prepayment shall be subject
to any prepayment fee provided for therein.
1.5 INTEREST. The unpaid principal balance of the Loan shall bear interest
at the rate or rates provided in the Note.
1.6 UPFRONT COMMITMENT FEE. On or before the date of execution of this
Agreement, Borrower shall pay to Bank a nonrefundable commitment fee of Two
Thousand Five Hundred Dollars ($2,500).
1.7 COMMITMENT FEE; REDUCTION OR TERMINATION OF COMMITMENT. On the last day
of each calendar quarter commencing with the first such day to occur following
the execution of
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this Agreement Borrower shall pay to Bank a non-refundable fee ("Commitment
Fee") of one quarter of one percent (0.25%) per year on the average daily unused
portion of the Revolving Loan for such quarter, computed on the basis of a 360
day year for actual days elapsed. Borrower may at any time terminate, or from
time to time reduce, the commitment of Bank to make loans hereunder by giving
Bank five (5) days prior written notice. Any such reduction or termination shall
affect the calculation of the Commitment Fee for the calendar quarter in which
such notice is given.
1.8 LEGAL FEE. Borrower shall have reimbursed Bank for Bank's costs and
expenses, including, without limitation, reasonable attorneys' fees and expenses
(including the fees of Bank's in-house legal counsel and staff) in the amount of
$1,200, incurred in connection with the negotiation and drafting of this
Agreement and the transactions contemplated hereby.
1.9 BALANCES. Borrower shall maintain its major depository accounts with
Bank until all obligations of Borrower to Bank under the Loan Documents have
been paid in full.
1.10 DISBURSEMENT. Bank shall disburse the proceeds of the Loan as provided
in Bank's standard form Authorization(s) to Disburse executed by Borrower.
1.11 SECURITY. Prior to any Loan disbursement, Borrower shall execute one or
more security agreements on Bank's standard form, and deliver one or more
financing statements suitable for filing in the official records of the
appropriate state government and/or any other location required by Bank,
granting to Bank a first priority security interest in such of Borrower's
property as is described in said security agreement(s). Any exceptions to Bank's
first priority Lien are permitted only as provided in this Agreement (including
pursuant to Section 5.1). At Bank's reasonable request, Borrower will use its
commercially reasonable efforts to obtain executed landlord's and mortgagee's
waivers, each on Bank's form or any other form reasonably acceptable to the
Bank, covering all of Borrower's property located on leased or encumbered real
property.
SECTION 2. CONDITIONS PRECEDENT
Bank shall not be obligated to disburse all or any portion of the Loans unless
at or prior to the time of each such disbursement, the following conditions have
been fulfilled to Bank's reasonable satisfaction:
2.1 COMPLIANCE. Borrower shall have performed and complied with all terms
and conditions required by this Agreement to be performed or complied with, and
shall have executed and delivered to Bank the Note and all other Loan Documents
to which it is a party.
2.2 FINANCIAL STATEMENTS. Borrower shall have provided Bank the finalized
copies of Borrower's audited financial statements for fiscal year end December
31, 2002.
2.3 GUARANTIES. Ultra Clean Holdings, Inc., a California corporation
("Guarantor"), shall have executed and delivered to Bank a continuing guaranty
(the "Guaranty") in form and amount satisfactory to Bank.
2.4 SUBORDINATION AGREEMENTS. FP-Ultra Clean, L.L.C., a Delaware limited
liability company ("FP"), Xxxxxxxx Xxxxxxx, Xxxxx Xxxxxxx, and Xxxxx Xxxx [KG]
shall have executed and delivered to Bank their respective agreements, in form
satisfactory to Bank, subordinating all of
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Guarantor's indebtedness now or hereafter owing to said persons or entities, to
all obligations of Guarantor under the Guaranty ("Subordinated Debt").
2.5 AUTHORIZATION TO OBTAIN CREDIT. Borrower shall have provided Bank with
an executed copy of Bank's form Authorization to Obtain Credit with certified
copies of resolutions duly adopted by Borrower's board of directors and in form
satisfactory to Bank, authorizing the execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party. Such
resolutions shall also designate the persons who are authorized to act on
Borrower's behalf in connection with this Agreement to do the things required of
Borrower pursuant to this Agreement.
2.6 TERMINATION STATEMENTS. Borrower shall have provided Bank with
termination statements executed by such secured creditors as may be required by
Bank, suitable for filing with the Secretary of State in each state designated
by Bank.
2.7 CONTINUING COMPLIANCE. At the time any disbursement is to be made and
immediately thereafter, there shall not exist any Event of Default (as
hereinafter defined) or any Potential Default.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants the following. The following representations
and warranties shall be considered to have been made again at and as of the date
of each and every Loan disbursement and shall be true and correct as of each
such date.
3.1 BUSINESS ACTIVITY. Borrower's principal business is the design,
engineering, and manufacture of subassemblies and components, primarily gas
delivery systems, for semiconductor process equipment manufacturers and device
makers and other businesses reasonably related thereto.
3.2 AFFILIATES AND SUBSIDIARIES. Borrower's Affiliates and subsidiaries
(those entities in which Borrower has either a controlling interest or a
twenty-five percent (25%) or more ownership interest) and their addresses, and
the names of the persons or entities directly owning five percent (5%) or more
of the equity interests in Borrower, in each case, as of the date of this
Agreement, are as provided on a schedule delivered to Bank on or before the date
of this Agreement.
3.3 ORGANIZATION AND QUALIFICATION. Borrower is duly organized and existing
under the laws of the state of its organization, is duly qualified and in good
standing in any jurisdiction where such qualification is required, and has the
power and authority to carry on the business in which it is engaged and/or
proposes to engage.
3.4 POWER AND AUTHORIZATION. Borrower has the power and authority to enter
into this Agreement and to execute and deliver the Note and all other Loan
Documents to which it is a party. This Agreement and all things required by this
Agreement and the other Loan Documents to which it is a party have been duly
authorized by all requisite action of Borrower.
3.5 AUTHORITY TO BORROW. The execution, delivery and performance of this
Agreement, the Note and all other Loan Documents to which it is a party are not
in contravention of any of the terms of any material indenture, agreement or
undertaking to which Borrower is a party or by which it or any of its property
is bound or affected.
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3.6 COMPLIANCE WITH LAWS. Borrower is in compliance with all applicable
laws, rules, ordinances or regulations which materially affect the operations or
financial condition of Borrower.
3.7 TITLE. Borrower has good title to, or valid leasehold interests in, all
real and personal property material to its business, except for minor defects in
title that do not interfere with its ability to conduct its business as
currently conducted or Liens in compliance with Section 5.1.
3.8 FINANCIAL STATEMENTS. Borrower's financial statements, including both a
balance sheet at December 31, 2002, together with supporting schedules, and an
income statement for the three (3) months ended March 31, 2003 (the "March 31
Statement"), have heretofore been furnished to Bank, are true and complete, in
all material respects, and fairly represent, in all material respects,
Borrower's financial condition for the period covered thereby, subject, in the
case of the March 31 Statement, to normal year end adjustments and the absence
of footnotes. Since June 6, 2003, there has been no material adverse change in
Borrower's financial condition or operations.
3.9 LITIGATION. There is no litigation or proceeding pending or, to the
knowledge of Borrower, threatened against Borrower or any of its property which
is reasonably likely to affect the financial condition, property or business of
Borrower in a materially adverse manner or result in liability in excess of
Borrower's insurance coverage.
3.10 ERISA. Borrower does not have any defined benefit pension plans (as
defined in the Employee Retirement Income Security Act of 1974, as amended
("ERISA")).
3.11 REGULATION U. No action has been taken or is currently planned by
Borrower, or any agent acting on its behalf, which would cause this Agreement or
the Note to violate Regulation U or any other regulation of the Board of
Governors of the Federal Reserve System, or to violate the Securities and
Exchange Act of 1934, in each case as in effect now or as the same may hereafter
be in effect. Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock as one of its important
activities and, except as may be expressly agreed to and documented between
Borrower and Bank, none of the proceeds of the Loan will be used directly or
indirectly for such purpose.
3.12 NO EVENT OF DEFAULT. There exists no Event of Default, unless cured to
Bank's satisfaction or waived, or Potential Default.
SECTION 4. AFFIRMATIVE COVENANTS
Until all sums payable pursuant to this Agreement, the Note and the other Loan
Documents have been paid in full, unless Bank otherwise consents in writing,
Borrower agrees that:
4.1 USE OF PROCEEDS. Borrower will use the proceeds of the Loan only as
provided in Section 1 above.
4.2 PAYMENT OF OBLIGATIONS. Borrower will pay and discharge promptly all
taxes, assessments and other governmental charges and claims levied or imposed
upon it or its property, or any part thereof; PROVIDED, HOWEVER, that Borrower
shall have the right in good faith to contest any such taxes, assessments,
charges or claims and, pending the outcome of
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such contest, to delay or refuse payment thereof provided that adequately funded
reserves are established by it to pay and discharge any such taxes, assessments,
charges and claims.
4.3 MAINTENANCE OF EXISTENCE. Borrower will maintain and preserve its
existence, and all rights, franchises, licenses and other authority necessary
for the conduct of its business, and will maintain and preserve its property,
equipment and facilities necessary for the conduct of its business in good
order, condition and repair, ordinary wear and tear excepted. Bank may, at
reasonable times and upon reasonable notice, visit and inspect any of Borrower's
properties.
4.4 RECORDS. Borrower will keep and maintain full and accurate accounts and
records of its operations in accordance with GAAP and will permit Bank, at
Borrower's expense, to have access thereto, to make examination and photocopies
thereof, and to make audits of Borrower's accounts and records and Bank's
collateral during regular business hours and upon reasonable notice.
4.5 INFORMATION FURNISHED. Borrower will furnish to Bank:
(a) Within forty-five (45) days after the close of each fiscal
quarter, except for the final quarter of each fiscal year, its
unaudited balance sheet as of the close of such fiscal quarter, its
unaudited income and expense statement with year-to-date totals and
supportive schedules, and its unaudited statement of retained earnings
for that fiscal quarter, all prepared in accordance with GAAP, subject
to normal year-end adjustments and the absence of footnotes.
(b) Within one hundred twenty (120) days after the close of each
fiscal year, a copy of its statement of financial condition including
at least its balance sheet as of the close of such fiscal year and its
income and expense statement, and its retained earnings statement for
such fiscal year, examined and prepared on an audited basis by
independent certified public accountants selected by Borrower and
reasonably satisfactory to Bank, in accordance with GAAP along with any
management letter provided by such accountants. Borrower shall not
change its fiscal year end from the current December 31st without
thirty (30) days prior written notice to Bank.
(c) Prompt written notice to Bank of any Event of Default or
Potential Default under any of the terms or provisions of this
Agreement or any other Loan Document, any litigation which would
reasonably be expected to have a material adverse effect on Borrower's
financial condition, and any other matter which has resulted in, or
could reasonably be expected to result in, a material adverse change in
Borrower's financial condition or operations.
(d) Prompt written notice to Bank of any change in Borrower's
officers and other senior management and prior written notice to Bank
of any change in Borrower's name or state of organization.
(e) Such other financial statements and information as Bank may
reasonably request from time to time.
(f) Within forty-five (45) days after the close of each calendar
quarter, a copy of Borrower's quarterly accounts receivable aging and
accounts payable aging and a Borrowing Base Certificate, executed by
Borrower's chief financial officer or other duly authorized officer of
Borrower, in form acceptable to Bank, accurately reporting the
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amounts of Borrower's Accounts and Eligible Accounts as of the close of
such quarter, as the Borrowing Base may require. If the Loan is subject
to a Borrowing Base under Section 1.3, then within twenty (20) days
after the close of each month, a copy of Borrower's monthly accounts
receivable aging and accounts payable aging and a Borrowing Base
Certificate, executed by Borrower's chief financial officer or other
duly authorized officer of Borrower, in form acceptable to Bank,
accurately reporting the amounts of Borrower's Accounts and Eligible
Accounts as of the close of such month, as the Borrowing Base may
require.
4.6 WORKING CAPITAL. Borrower will at all times maintain Working Capital of
not less than Thirteen Million Dollars ($13,000,000). "Working Capital" means
the excess of current assets over current liabilities of Borrower.
4.7 TANGIBLE NET WORTH. Borrower will at all times maintain Tangible Net
Worth of not less than Twenty Million Dollars ($20,000,000). "Tangible Net
Worth" means the consolidated stockholders' equity of the Guarantor and Borrower
increased by indebtedness subordinated to Bank (including Subordinated Debt) and
decreased by (to the extent reflected in determining such consolidated
stockholders' equity) patents, licenses, trademarks, trade names, goodwill and
other similar intangible assets, organizational expenses, security deposits,
prepaid costs and expenses and monies due from Affiliates (including officers,
shareholders and directors).
4.8 DEBT TO TANGIBLE NET WORTH. Borrower will at all times maintain a ratio
of total liabilities to Tangible Net Worth of not greater than 0.76:1.0.
4.9 PROFITABILITY. Borrower shall not at any time suffer two consecutive
quarterly losses, except losses solely due to accrued but unpaid interest on
Subordinated Debt; provided, Borrower may make a one-time payment to Xxxxxx
Xxxxxxx in connection with advisory services not to exceed $1,000,000 in the
aggregate.
4.10 INSURANCE. Borrower will keep all of its insurable property, whether
real, personal or mixed, insured by financially sound and reputable insurance
companies, against fire and such other risks, and in such amounts as is
customarily obtained by companies conducting similar business with respect to
like properties. Borrower will furnish to Bank statements of its insurance
coverage, will promptly upon Bank's request furnish other or additional
insurance reasonably deemed necessary by Bank to the extent that such insurance
may be available on commercially reasonable terms, and hereby assigns to Bank,
as security for Borrower's obligations to Bank, the proceeds of any such
insurance. Prior to any Loan disbursement, Bank will be named loss payee under
all policies insuring the collateral. Borrower will maintain worker's
compensation insurance and insurance against liability for damage to persons or
property. All policies shall require at least ten (10) days' written notice to
Bank before alteration or cancellation.
4.11 ADDITIONAL REQUIREMENTS. Upon Bank's demand, Borrower will promptly
take such further action and execute all such additional documents and
instruments in connection with this Agreement and the other Loan Documents as
Bank in its reasonable discretion deems necessary, and promptly supply Bank with
such other information concerning its affairs as Bank may reasonably request
from time to time.
4.12 LITIGATION AND ATTORNEYS' FEES. Upon Bank's demand, Borrower will
promptly pay to Bank reasonable attorneys' fees, including the reasonable
estimate of the allocated costs and expenses of in-house legal counsel and
staff, and all costs and other expenses paid or incurred
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by Bank in collecting, modifying or compromising the Loan or in enforcing or
exercising its rights or remedies created by, connected with or provided for in
this Agreement and the other Loan Documents. If any judicial action, arbitration
or other proceeding is commenced, only the prevailing party shall be entitled to
attorneys' fees and court costs.
4.13 BANK EXPENSES. Upon Bank's request, Borrower will pay or reimburse Bank
for all reasonable costs, expenses and fees incurred by Bank in preparing and
documenting all amendments and modifications to any Loan Documents, including
but not limited to all filing and recording fees, and reasonable attorneys'
fees, including the reasonable estimate of the allocated costs and expenses of
in-house legal counsel and staff.
SECTION 5. NEGATIVE COVENANTS
Until all sums payable pursuant to this Agreement, the Note and the other Loan
Documents have been paid in full, unless Bank otherwise consents in writing,
Borrower agrees that:
5.1 LIENS. Borrower will not create, assume or suffer to exist any Lien on
any of its property, whether real, personal or mixed, now owned or hereafter
acquired, or upon the income or profits thereof, except (a) Liens in favor of
Bank, (b) Liens for taxes not delinquent and taxes and other items that are not
overdue by more than thirty (30) days or are being contested in good faith, (c)
minor encumbrances and easements on real property which do not materially and
adversely affect its market value, (d) existing Liens on Borrower's property and
extensions, renewals or replacements thereof, (e) purchase money security
interests encumbering only the personal property purchased, (f) Liens on fixed
and capital assets subject to capital lease obligations, and (g) other Liens
securing obligations in an aggregate amount not exceeding $1,000,000.
5.2 BORROWINGS. Borrower will not sell, discount or otherwise transfer any
account receivable or any note, draft or other evidence of indebtedness, except
to Bank or except to a financial institution at face value for deposit or
collection purposes only, and without any fees other than the financial
institution's normal fees for such services. Borrower will not borrow any money,
become contingently liable to borrow money, or enter any agreement to directly
or indirectly obtain borrowed money, except pursuant to agreements with Bank.
5.3 SALE OF ASSETS, LIQUIDATION OR MERGER. Borrower will not liquidate,
dissolve or enter into any consolidation, merger, partnership or other
combination, or convey, sell or lease all or substantially all of its assets or
business, or purchase or lease all or substantially all of the assets or
business of another.
5.4 LOANS, ADVANCES AND GUARANTIES. Borrower will not, except in the
ordinary course of business as currently conducted, make any loans or advances,
become a guarantor or surety, or pledge its credit or properties, except
pursuant to agreements with Bank and except as otherwise permitted under Section
5.1.
5.5 INVESTMENTS. Borrower will not purchase the debt or equity of another
except for savings accounts and certificates of deposit of Bank, direct U.S.
Government obligations, overnight euro investments with Bank, and commercial
paper issued by corporations with the top ratings of Xxxxx'x or Standard &
Poor's, provided that all such permitted investments shall mature within one
year of purchase.
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5.6 PAYMENT OF DIVIDENDS. Borrower will not declare or pay any dividends,
other than dividends payable solely in its own common stock, or authorize or
make any other distribution with respect to any of its stock now or hereafter
outstanding.
5.7 REDEMPTION OF STOCK. Borrower will not redeem or retire any share of
its capital stock for value.
5.8 AFFILIATE TRANSACTIONS. Borrower will not transfer any property to any
Affiliate, except for value received in the normal course of business and for an
amount, including any management or service fee(s), as would be conducted and
charged with an unrelated or unaffiliated entity. Except as permitted in the
previous sentence, Borrower will not pay any management fee or fee for services
to any Affiliate without Bank's prior written consent.
SECTION 6. EVENTS OF DEFAULT
The occurrence of any of the following events ("Events of Default") shall
automatically under Sections 6.1(a), 6.5, 6.6, 6.7, and 6.8, and upon five (5)
days prior written notice from Bank to Borrower under all other provisions of
Section 6, make all sums of interest and principal and any other amounts owing
under the Loan immediately due and payable and shall terminate any obligation of
Bank to make or continue the Loan without, except as otherwise expressly
provided herein, notice of default, presentment or demand for payment, protest
or notice of nonpayment or dishonor, or any other notices or demands:
6.1 Borrower shall default in the due and punctual payment of (a) the
principal of or (b) the interest on , in each case the Note or any other amounts
owing under any of the Loan Documents.
6.2 Borrower shall fail to perform or observe any term, covenant or
agreement contained in Sections 4.1, 4.3 (with respect to existence), 4.6, 4.7,
4.8, 4.9, or 5 on its part to be performed or observed, or a material adverse
change has occurred in Borrower's financial condition or operations.
6.3 Any representation or warranty made by Borrower herein or by Borrower
(or any of its officers) in connection with this Agreement, shall prove to have
been incorrect in any material respect when made.
6.4 The Guaranty or any subordination agreement relating to Subordinated
Debt shall be breached or become ineffective, or the Guarantor or any
subordinating creditor shall disavow or attempt to revoke or terminate such
guaranty or subordination agreement.
6.5 The insolvency of any Obligor or the failure of any Obligor generally
to pay such Obligor's debts as such debts become due.
6.6 The commencement as to any Obligor of any voluntary proceeding under
any laws relating to bankruptcy, insolvency, reorganization, arrangement, debt
adjustment or debtor relief.
6.7 The general assignment by any Obligor for the benefit of such Obligor's
creditors.
6.8 The termination of existence of any Obligor.
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6.9 FP ceases to hold, directly or indirectly, at least fifty percent (50%)
of the voting interests in Borrower and Guarantor.
6.10 The failure of any Obligor to comply with any non-monetary order,
judgment, injunction, decree, writ or demand of any court or other public
authority, if such failure would have a material adverse affect on Borrower's
financial condition or business.
6.11 Borrower shall fail to perform or observe any term, covenant or
agreement contained in this Agreement or any other Loan Document other than
those referred to in Sections 6.1 through 6.10 above on its part to be performed
or observed and any such failure shall remain unremedied or uncured in the
judgment of Bank for five (5) days after the Borrower knows of such failure.
6.12 The commencement as to any Obligor of any involuntary proceeding under
any laws relating to bankruptcy, insolvency, reorganization, arrangement, debt
adjustment or debtor relief.
6.13 The appointment, or commencement of any proceeding for the appointment
of, a receiver, trustee, custodian or similar official for all or substantially
all of any Obligor's property.
6.14 The commencement of any proceeding for the dissolution or liquidation
of any Obligor.
6.15 One or more judgments for the payment of money in an aggregate amount
exceeding $2,000,000 shall be imposed upon or rendered against one or more
Obligors.
6.16 The default of any Obligor personally liable for amounts owed hereunder
on any obligation concerning the borrowing of money (other than under the Loan
Documents or in respect of the Subordinated Debt) in excess of $ 2,000,000.
SECTION 7. GENERAL PROVISIONS
7.1 ADDITIONAL REMEDIES. The rights, powers and remedies given to Bank
hereunder shall be cumulative and not alternative and shall be in addition to
all rights, powers and remedies given to Bank by law against Borrower or any
other person or entity including but not limited to Bank's rights of setoff and
banker's lien.
7.2 NONWAIVER. Any forbearance or failure or delay by Bank in exercising
any right, power or remedy hereunder shall not be deemed a waiver thereof and
any single or partial exercise of any right, power or remedy shall not preclude
the further exercise thereof. No waiver shall be effective unless it is in
writing and signed by an officer of Bank.
7.3 INUREMENT. The benefits of this Agreement and the other Loan Documents
shall inure to the successors and assigns of Bank and the permitted successors
and assigns of Borrower, but any attempted assignment by Borrower without Bank's
prior written consent shall be null and void.
7.4 APPLICABLE LAW. This Agreement and the other Loan Documents shall be
governed by and construed according to the laws of the State of California.
Page 11
7.5 SEVERABILITY. Should any one or more provisions of this Agreement or
any other Loan Document be determined to be illegal or unenforceable, all other
provisions of such document shall nevertheless be effective.
7.6 CONSTRUCTION. The section and subsection headings herein are for
convenient reference only and shall not limit or otherwise affect the
interpretation of this Agreement.
7.7 AMENDMENTS. This Agreement may be amended only in writing signed by all
parties hereto.
7.8 COUNTERPARTS. Borrower and Bank may execute one or more counterparts to
this Agreement, each of which shall be deemed an original, but all such
counterparts when taken together, shall constitute one and the same agreement.
7.9 NOTICES. Any notices or other communications provided for or allowed
hereunder shall be effective only when given by one of the following methods and
addressed to the parties at their respective addresses and shall be considered
to have been validly given (a) upon delivery, if delivered personally, (b) upon
receipt, if mailed, first class postage prepaid, with the United States Postal
Service, (c) on the next business day, if sent by overnight courier service of
recognized standing, or (d) upon telephoned confirmation of receipt, if
telecopied or e-mailed. The addresses to which notices or demands are to be
given may be changed from time to time by notice delivered as provided above.
7.10 INTEGRATION CLAUSE. Except for the other Loan Documents, this Agreement
constitutes the entire agreement between Bank and Borrower regarding the Loan,
and all prior oral or written communications between Borrower and Bank shall be
of no further effect or evidentiary value.
THIS AGREEMENT is executed on behalf of the parties by their duly authorized
representative(s) as of the date first above written.
ULTRA CLEAN TECHNOLOGY SYSTEMS UNION BANK OF CALIFORNIA, N.A.
AND SERVICE, INC.
By: ________________________________ By: ____________________________
Xxxxxxx Xxxxxx
Title: _____________________________ Vice President
Address for Notices: Address for Notices:
000 Xxxxxxxxxxxx Xxxxx Xxxxx Xxxxx Valley Commercial Banking
Xxxxx Xxxx, Xxxxxxxxxx 00000 00000 Xxxxx Xxxxx Xxxxxxx
Telephone No. (000) 000-0000 Xxxxxxx, Xxxxxxxxxx 00000
FAX No. (000) 000-0000 Telephone No. (000) 000-0000
FAX No. (000) 000-0000
Page 12
CONTINUING GUARANTY
1. OBLIGATIONS GUARANTIED. For consideration, the adequacy and sufficiency
of which is acknowledged, the undersigned ("Guarantor") unconditionally
guaranties and promises (a) to pay to UNION BANK OF CALIFORNIA, N.A. ("Bank") on
demand, in lawful United States money, all Obligations to Bank of ULTRA CLEAN
TECHNOLOGY SYSTEMS AND SERVICE, INC., a California corporation ("Borrower") and
(b) to perform all undertakings of Borrower in connection with the Obligations.
"Obligations" means all indebtedness and obligations of Borrower to Bank under
or in connection with that certain Loan Agreement dated as of July 9, 2003,
between Borrower and Bank, as amended, extended, renewed, or replaced from time
to time ("Loan Agreement"), whether made, incurred or created previously,
concurrently or in the future, whether voluntary or involuntary and however
arising, whether incurred directly or acquired by Bank by assignment or
succession, whether due or not due, absolute or contingent, liquidated or
unliquidated, legal or equitable, whether Borrower is liable individually or
jointly or with others, whether incurred before, during or after any bankruptcy,
reorganization, insolvency, receivership or similar proceeding ("Insolvency
Proceeding"), and whether recovery thereof is or becomes barred by a statute of
limitations or is or becomes otherwise unenforceable, together with all expenses
of, for and incidental to collection, including reasonable attorneys' fees.
2. LIMITATION ON GUARANTOR'S LIABILITY. Although this Guaranty covers all
Obligations, Guarantor's aggregate liability under this Guaranty for Borrower's
Obligations shall not exceed the sum of the following (the "Guarantied Liability
Amount"): (a) Ten Million Dollars ($10,000,000) for Obligations representing
principal and/or rent ("Principal Amount"), (b) all interest, fees like charges
owing and allocable to the Principal Amount as determined by Bank, and (c)
without allocation in respect of the Principal Amount all costs, attorneys'
fees, and expenses of Bank relating to or arising out of the enforcement of the
Obligations and all indemnity liabilities of Guarantor under this Guaranty. The
foregoing limitation applies only to Guarantor's liability under this particular
Guaranty. Unless Bank otherwise agrees in writing, every other guaranty of any
Obligations previously, concurrently, or hereafter given to Bank by Guarantor is
independent of this Guaranty and of every other such guaranty. Without notice to
Guarantor, Bank may permit the Obligations to exceed the Principal Amount and
may apply or reapply any amounts received in respect of the Obligations from any
source other than from Guarantor to that portion of the Obligations not included
within the Guarantied Liability Amount.
3. CONTINUING NATURE/REVOCATION/REINSTATEMENT. This Guaranty is in
addition to any other guaranties of the Obligations, is continuing and covers
all Obligations, including those arising under successive transactions which
continue or increase the Obligations from time to time, renew all or part of the
Obligations after they have been satisfied, or create new Obligations.
Revocation by one or more signers of this Guaranty or any other guarantors of
the Obligations shall not (a) affect the obligations under this Guaranty of a
non-revoking Guarantor, (b) apply to Obligations outstanding when Bank receives
written notice of revocation, or to any extensions, renewals, readvances,
modifications, amendments or replacements of such Obligations, or (c) apply to
Obligations, arising after Bank receives such notice of revocation, which are
created pursuant to a commitment existing at the time of the revocation, whether
or not there exists an unsatisfied condition to such commitment or Bank has
another defense to its performance. All of Bank's rights pursuant to this
Guaranty continue with respect to amounts previously paid to Bank on account of
any Obligations which are thereafter restored or returned by Bank, whether in an
Insolvency Proceeding of Borrower or for any other reason, all as though such
amounts had not been paid to Bank; and Guarantor's liability under this Guaranty
(and all its terms and provisions) shall be reinstated and revived,
notwithstanding any surrender or cancellation of this Guaranty. Bank, at its
sole discretion, may determine whether any amount paid to it must be restored or
returned; provided, however, that if Bank elects to contest any claim for return
or restoration, Guarantor agrees to indemnify and hold Bank harmless from and
against all costs and expenses, including reasonable attorneys' fees, expended
or incurred by Bank in connection with such contest. No payment by Guarantor
shall reduce the Guarantied Liability Amount hereunder unless, at or prior to
the time of such payment, Bank receives Guarantor's written notice to
Page 1
that effect. If any Insolvency Proceeding is commenced by or against Borrower or
Guarantor, at Bank's election, Guarantor's obligations under this Guaranty shall
immediately and without notice or demand become due and payable, whether or not
then otherwise due and payable.
4. AUTHORIZATION. Guarantor authorizes Bank, without notice and without
affecting Guarantor's liability under this Guaranty, from time to time, whether
before or after any revocation of this Guaranty, to (a) renew, compromise,
extend, accelerate, release, subordinate, waive, amend and restate, or otherwise
amend or change, the interest rate, time or place for payment or any other terms
of all or any part of the Obligations; (b) accept delinquent or partial payments
on the Obligations; (c) take or not take security or other credit support for
this Guaranty or for all or any part of the Obligations, and exchange, enforce,
waive, release, subordinate, fail to enforce or perfect, sell, or otherwise
dispose of any such security or credit support; (d) apply proceeds of any such
security or credit support and direct the order or manner of its sale or
enforcement as Bank, at its sole discretion, may determine; and (e) release or
substitute Borrower or any guarantor or other person or entity liable on the
Obligations.
5. WAIVERS. To the maximum extent permitted by law, Guarantor waives (a)
all rights to require Bank to proceed against Borrower, or any other guarantor,
or proceed against, enforce or exhaust any security for the Obligations or to
marshal assets or to pursue any other remedy in Bank's power whatsoever; (b) all
defenses arising by reason of any disability or other defense of Borrower, the
cessation for any reason of the liability of Borrower, any defense that any
other indemnity, guaranty or security was to be obtained, any claim that Bank
has made Guarantor's obligations more burdensome or more burdensome than
Borrower's obligations, and the use of any proceeds of the Obligations other
than as intended or understood by Bank or Guarantor; (c) all presentments,
demands for performance, notices of nonperformance, protests, notices of
dishonor, notices of acceptance of this Guaranty and of the existence or
creation of new or additional Obligations, and all other notices or demands to
which Guarantor might otherwise be entitled; (d) all conditions precedent to the
effectiveness of this Guaranty; (e) all rights to file a claim in connection
with the Obligations in an Insolvency Proceeding filed by or against Borrower;
(f) all rights to require Bank to enforce any of its remedies; and (g) until the
Obligations are satisfied or fully paid with such payment not subject to return:
(i) all rights of subrogation, contribution, indemnification or reimbursement,
(ii) all rights of recourse to any assets or property of Borrower, or to any
collateral or credit support for the Obligations, (iii) all rights to
participate in or benefit from any security or credit support Bank may have or
acquire, and (iv) all rights, remedies and defenses Guarantor may have or
acquire against Borrower. Guarantor understands that if Bank forecloses by
trustee's sale on a deed of trust securing any of the Obligations, Guarantor
would then have a defense preventing Bank from thereafter enforcing Guarantor's
liability for the unpaid balance of the secured Obligations. This defense arises
because the trustee's sale would eliminate Guarantor's right of subrogation, and
therefore Guarantor would be unable to obtain reimbursement from Borrower.
Guarantor specifically waives this defense and all rights and defenses that
Guarantor may have because the Obligations are secured by real property. This
means, among other things: (a) Bank may collect from Guarantor without first
foreclosing on any real or personal property collateral pledged by Borrower; and
(b) if Bank forecloses on any real property collateral pledged by Borrower: (i)
the amount of the Obligations may be reduced only by the price for which the
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price; and (ii) Bank may collect from Guarantor even if Bank, by
foreclosing on the real property collateral, has destroyed any right Guarantor
may have to collect from Borrower. This is an unconditional and irrevocable
waiver of any rights and defenses Guarantor may have because the Obligations are
secured by real property. These rights and defenses include, but are not limited
to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the
California Code of Civil Procedure or similar laws in other states.
6. GUARANTOR TO KEEP INFORMED. Guarantor warrants having established with
Borrower adequate means of obtaining, on an ongoing basis, such information as
Guarantor may require concerning all matters bearing on the risk of nonpayment
or nonperformance of the Obligations. Guarantor assumes sole, continuing
responsibility for obtaining such information from sources other
Page 2
than from Bank. Bank has no duty to provide any information to Guarantor until
Bank receives Guarantor's written request for specific information in Bank's
possession and Borrower has authorized Bank to disclose such information to
Guarantor.
7. SUBORDINATION. All obligations of Borrower to Guarantor which presently
or in the future may exist ("Guarantor's Claims") are hereby subordinated to the
Obligations. At Bank's request, Guarantor's Claims will be enforced and
performance thereon received by Guarantor only as a trustee for Bank, and
Guarantor will promptly pay over to Bank all proceeds recovered for application
to the Obligations without reducing or affecting Guarantor's liability under
other provisions of this Guaranty.
8. SECURITY. To secure Guarantor's obligations under this Guaranty, other
than for payment of Obligations which are subject to the disclosure requirements
of the United States Truth in Lending Act, Guarantor grants Bank a security
interest in all moneys, general and special deposits, instruments and other
property of Guarantor at any time maintained with or held by Bank, and all
proceeds of the foregoing.
9. AUTHORIZATION. Where Borrower is a corporation, partnership or other
entity, Bank need not inquire into or verify the powers of Borrower or authority
of those acting or purporting to act on behalf of Borrower, and this Guaranty
shall be enforceable with respect to any Obligations Bank grants or creates in
reliance on the purported exercise of such powers or authority.
10. ASSIGNMENTS. Without notice to Guarantor, Bank may assign the
Obligations and this Guaranty, in whole or in part, and may disclose to any
prospective or actual purchaser of all or part of the Obligations any and all
information Bank has or acquires concerning Guarantor, this Guaranty and any
security for this Guaranty.
11. COUNSEL FEES AND COSTS. The prevailing party shall be entitled to
attorneys' fees (including a reasonable allocation for Bank's internal counsel)
and all other costs and expenses which it may incur in connection with the
enforcement or preservation of its rights under, or defense of, this Guaranty or
in connection with any other dispute or proceeding relating to this Guaranty,
whether or not incurred in any Insolvency Proceeding, arbitration, litigation or
other proceeding.
12. MARRIED GUARANTORS. By executing this Guaranty, a Guarantor who is
married agrees that recourse may be had against his or her separate and
community property for all his or her obligations under this Guaranty.
13. MULTIPLE GUARANTORS/BORROWERS. When there is more than one Borrower
named herein or when this Guaranty is executed by more than one Guarantor, then
the words "Borrower" and "Guarantor", respectively, shall mean all and any one
or more of them, and their respective successors and assigns, including
debtors-in-possession and bankruptcy trustees; words used herein in the singular
shall be considered to have been used in the plural where the context and
construction so requires in order to refer to more than one Borrower or
Guarantor, as the case may be.
14. INTEGRATION/SEVERABILITY/AMENDMENTS. This Guaranty is intended by
Guarantor and Bank as the complete, final expression of their agreement
concerning its subject matter. It supersedes all prior understandings or
agreements with respect thereto and may be changed only by a writing signed by
Guarantor and Bank. No course of dealing, or parole or extrinsic evidence shall
be used to modify or supplement the express terms of this Guaranty. If any
provision of this Guaranty is found to be illegal, invalid or unenforceable,
such provision shall be enforced to the maximum extent permitted, but if fully
unenforceable, such provision shall be severable, and this Guaranty shall be
construed as if such provision had never been a part of this Guaranty, and the
remaining provisions shall continue in full force and effect.
15. JOINT AND SEVERAL. If more than one Guarantor signs this Guaranty, the
obligations of each under this Guaranty are joint and several, and independent
of the Obligations and of the obligations of
Page 3
any other person or entity. A separate action or actions may be brought and
prosecuted against any one or more guarantors, whether action is brought against
Borrower or other guarantors of the Obligations, and whether Borrower or others
are joined in any such action.
16. NOTICE. Any notice, including notice of revocation, given by any party
under this Guaranty shall be effective only upon its receipt by the other party
and only if (a) given in writing and (b) personally delivered or sent by United
States mail, postage prepaid, and addressed to Bank or Guarantor at their
respective addresses for notices indicated below. Guarantor and Bank may change
the place to which notices, requests, and other communications are to be sent to
them by giving written notice of such change to the other.
17. GOVERNING LAW. This Guaranty shall be governed by and construed
according to the laws of California, and, except as provided in any addendum
hereto, Guarantor submits to the non-exclusive jurisdiction of the state or
federal courts in said state.
18. DISPUTE RESOLUTION. This Guaranty hereby incorporates any alternative
dispute resolution agreement previously, concurrently or hereafter executed
between Guarantor and Bank.
Executed as of July 9, 2003. Guarantor acknowledges having received a copy of
this Guaranty and having made each waiver contained in this Guaranty with full
knowledge of its consequences.
ULTRA CLEAN HOLDINGS, INC.
By: _________________________________
Title: ______________________________
UNION BANK OF CALIFORNIA, N.A.
By: _________________________________
Xxxxxxx Xxxxxx
Vice President
Address for notices to Bank: Address for notices to Guarantor:
00000 Xxxxx Xxxxx Xxxxxxx _________________________________
Xxxxxxx, Xxxxxxxxxx 00000 _________________________________
Page 0
XXXXX
XXXX XX
XXXXXXXXXX
SECURITY AGREEMENT
This Security Agreement is executed at San Jose, California on July 9, 2003 by
Ultra Clean Technology Systems and Service, Inc., a California corporation
(herein called "Debtor")
As security for the payment and performance of all of Debtor's obligations under
the Loan Documents to UNION BANK OF CALIFORNIA, N.A., (herein called "Bank"),
irrespective of the manner in which or the time at which such obligations arose
or shall arise, and whether direct or indirect, alone or with others, absolute
or contingent, Debtor does hereby grant a continuing security interest in, and
assign and transfer to Bank, the following personal property, whether now or
hereafter owned or in existence and all proceeds thereof (hereinafter called
"Collateral"):
All present and hereafter acquired accounts, chattel paper, instruments,
contract rights, general intangibles, goods, equipment, inventory, documents,
certificates of title, deposit accounts, returned or repossessed goods,
fixtures, farm products, poultry, livestock, crops, timber, minerals (including
oil and gas) and mineral rights, insurance claims, rights and policies, letter
of credit rights, investment property, supporting obligations, and the proceeds,
products, parts, accessories, attachments, accessions, replacements,
substitutions, additions, and improvements of or to each of the foregoing.
Entities executing this Security Agreement as Debtor agree not to change their
state of organization, principal place of business (if general partnership or
other nonregistered entity) or name, as identified below, without Bank's prior
written consent:
LEGAL NAME OF DEBTOR STATE OF ORGANIZATION/PRINCIPAL PLACE OF BUSINESS
Ultra Clean Technology Systems and Service, Inc. State of California
AGREEMENT
1. The term "credit" or "indebtedness" is used in this Agreement in its
broadest and most comprehensive sense. Credit may be granted at the request of
any one Debtor without further authorization by or notice to any other Debtor.
Collateral shall be security for all nonconsumer indebtedness of Debtor to Bank
under the Loan Documents in accordance with the terms and conditions herein.
2. Debtor will: (a) pay when due all indebtedness to Bank; (b) execute
such other documents and do such other acts as Bank may from time to time
require to establish and maintain a valid security interest in Collateral,
including payment of all costs and fees in connection with any of the foregoing
when deemed necessary by Bank; (c) keep Collateral separate and identifiable at
the locations where such Collateral is located; (d) protect, defend and maintain
the Collateral and the security interest of Bank and, unless Debtor determines
that such action would be of negligible value, economic or otherwise, initiate,
commence and maintain any action or proceeding to protect the Collateral and
upon Debtor's failure to do so Bank may pay any such charge as it deems
necessary and add the amount paid to the indebtedness of Debtor hereunder; and
(e) not use Collateral for any unlawful purpose. Debtor hereby appoints Bank
the true and lawful attorney of Debtor and authorizes Bank, during the
continuance of a default, to perform any and all acts which Bank in good xxxxx
xxxxx necessary for the protection and preservation of Collateral or its value
or Bank's security interest therein, including transferring any Collateral into
its own name and receiving the income thereon as additional security hereunder.
Bank does not assume any of the obligations arising under the Collateral.
3. Debtor warrants: (a) it has the capacity to grant a security interest
in Collateral to Bank; (b) all information furnished by Debtor to Bank
heretofore or hereafter, whether oral or written, is and will be correct and
true in all material respects as of the date given; and (c) if Debtor is an
entity, the execution, delivery and performance hereof are within its powers and
have been duly authorized.
4. The occurrence of an Event of Default under that certain Loan Agreement
dated as of July 9, 2003, as amended, extended, renewed or replaced from time to
time ("Loan Agreement"), shall constitute a default under this Agreement. All
terms not otherwise defined in this Agreement shall have the meanings set forth
in the Loan Agreement.
5. Whenever a default exists, Bank, at its option, may: (a) without notice
except as otherwise provided in the Loan Agreement accelerate the maturity of
any part or all of the indebtedness and terminate any agreement for the granting
of further credit to Debtor; (b) sell, lease or otherwise dispose of Collateral
at public or private sale; (c) transfer any Collateral into its own name or that
of its nominee; (d) retain Collateral in satisfaction of obligations secured
hereby, with notice of such retention sent to Debtor as required by law; (e)
notify any parties obligated on any Collateral consisting of accounts,
instruments, chattel paper, choses in action or the like to make payment to Bank
and enforce collection of any Collateral; (f) file any action or proceeding
which Bank deems necessary or appropriate to protect and preserve the right,
title and interest of Bank in the Collateral; (g) require Debtor to assemble and
deliver any Collateral to Bank at a reasonably convenient place designated by
Bank; (h) apply all sums received or collected from or on account of Collateral,
including the proceeds of any sales thereof, to the payment of the costs and
expenses incurred in preserving and enforcing rights of Bank (including but not
limited to reasonable attorneys' fees), and indebtedness secured hereby in such
order and manner as Bank in its sole discretion determines; Bank shall account
to Debtor for any surplus remaining thereafter, and shall pay such surplus to
the party entitled thereto, including any second secured party who has made a
proper demand upon Bank and has furnished proof to Bank as requested in the
manner provided by law; in like manner, Debtor agrees to pay to Bank without
demand any deficiency after any Collateral has been disposed of and proceeds
applied as aforesaid; and (i) exercise its banker's lien or right of setoff in
the same manner as though the credit were unsecured. Bank shall have all the
rights and remedies of a secured party under the Uniform Commercial Code of
California in any jurisdiction where enforcement is sought, whether in said
state or elsewhere. All rights, powers and remedies of Bank hereunder shall be
cumulative and not alternative. No delay on the part of Bank in the exercise of
any right or remedy shall constitute a waiver thereof and no exercise by Bank of
any right or remedy shall preclude the exercise of any other right or remedy or
further exercise of the same remedy.
6. Debtor waives during the continuance of a default: (a) all right to
require Bank to proceed against any other person including any other Debtor
hereunder or to apply any Collateral Bank may hold at any time or to pursue any
other remedy. Collateral, endorsers or guarantors may be released, substituted
or added without affecting the liability of Debtor hereunder; (b) the defense of
the Statute of Limitations in any action upon any obligations of Debtor secured
hereby; (c) any right of subrogation and any right to participate in Collateral
until all obligations
Page 2
secured hereby have been paid in full, and (d) to the fullest extent permitted
by law, any right to oppose the appointment of a receiver or similar official to
operate Debtor's business.
7. The right of Bank to have recourse against Collateral shall not be
affected in any way by the fact that the credit is secured by a mortgage, deed
of trust or other lien upon real property.
8. The security interest granted herein is irrevocable and shall remain in
full force and effect until there is payment in full of the indebtedness or the
security interest is released in writing by Bank.
9. Debtor shall be obligated to request the release, reassignment or
return of Collateral after payment in full of existing obligations. Bank shall
be under no duty or obligation to release, reassign or return any Collateral
except upon the express written request of Debtor and then only where all of
Debtor's obligations hereunder have been paid in full.
10. Debtor will not sell, lease or otherwise dispose of any of the
Collateral, provided that Debtor may do any of the foregoing unless (a) doing so
would violate a covenant in the Loan Agreement, or (b) a default shall have
occurred and be continuing and Bank shall have notified Debtor that its right to
do so is terminated or otherwise limited. Concurrently with any sale, lease or
other disposition permitted by the foregoing proviso, the Liens on the assets
sold or disposed (but not in proceeds) will cease immediately without any action
by Bank.
11. If more than one Debtor executes this Agreement, the obligations
hereunder are joint and several. All words used herein in the singular shall be
deemed to have been used in the plural when the context and construction so
require. Any married person who signs this Agreement expressly agrees that
recourse may be had against his/her separate property for all of his/her
obligations to Bank.
12. This Agreement shall be for the benefit of and bind Bank, its
successors and assigns and each of the undersigned, their respective heirs,
executors, administrators and successors in interest. Upon transfer by Bank of
any part of the obligations secured hereby, Bank shall be fully discharged from
any liability with respect to Collateral transferred therewith.
13. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but, if any provision of this Agreement shall be prohibited or invalid under
applicable law, such provisions shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of such or the
remaining provisions of this Agreement.
14. The grant of a security interest in proceeds does not imply the right
of Debtor to sell or dispose of any Collateral without the express consent in
writing by Bank other than inventory or other Collateral in the ordinary course
of business as presently conducted.
ULTRA CLEAN TECHNOLOGY SYSTEMS AND SERVICE, INC.
By: ______________________________________________
Xxxxx Xxxxxxx, Chief Financial Officer
Page 3
