Exhibit 10.16
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of May 4, 2004, by and
between Therma-Wave, Inc., a Delaware corporation (the "Borrower") and Silicon
Valley Bank ("Bank").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may
be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among
other documents, a Loan and Security Agreement, dated June 13, 2003, as may be
amended from time to time (the "Loan Agreement"). The Loan Agreement provides
for, among other things, a Committed Revolving Line in the original principal
amount of Fifteen Million Dollars ($15,000,000). Defined terms used but not
otherwise defined herein shall have the same meanings as in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."
2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured by the
Collateral as described in the Loan Agreement.
Hereinafter, the above-described security document, together with all other
documents securing repayment of the Indebtedness shall be referred to as the
"Security Documents". Hereinafter, the Security Documents, together with all
other documents evidencing or securing the Indebtedness shall be referred to as
the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Loan Agreement.
1. Sub-section (i) of Section 6.7 entitled "Quick Ratio
(Adjusted)" is amended to read as follows:
"(i) QUICK RATIO (ADJUSTED). As of the last day of each month,
a ratio of Quick Assets to Current Liabilities minus current
portions of Deferred Revenue of at least 1.25 to 1.00. For the
purposes of calculation of this ratio for the last day of each
month which is also the last day of a fiscal quarter, Quick
Assets shall not include cash in the amount of any funded debt
which constitutes Obligations on the date of calculation, and
Current Liabilities shall not include liabilities in the
amount of any funded debt which constitutes Obligations on the
date of calculation."
2. Sub-section (ii) of Section 6.7 entitled "Profitability" is
amended to read as follows:
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"(ii) PROFITABILITY. Borrower will have a net profit/loss
(exclusive of non-cash charges related to (1) expensing,
re-pricing, and variable accounting for stock options, and (2)
the write-down of up to an additional $2,000,000 of intangible
assets through the period ending on June 13, 2004) in an
amount no more negative than: (a) <$6,000,000> for the fiscal
quarter ending on June 30, 2004; (b) <$5,000,000> for the
fiscal quarter ending on September 30, 2004; (c) <$3,000,000>
for the fiscal quarter ending on December 31, 2004; and (d)
<$1,000,000> for every fiscal quarter ending on and after
March 31, 2005."
3. The definition of "Revolving Maturity Date" set forth in
Section 13.1 is amended to read as follows:
"'Revolving Maturity Date' is June 11, 2005."
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.
5. WAIVERS.
(a) Bank hereby waives the following (collectively, the "Waived
Defaults"): (i) solely with respect with the month ending August 31, 2003,
the Event of Default under Section 8.2 arising out of Borrower's violation
of Sections 6.7(i), (ii) solely with respect with the fiscal quarter
ending September 30, 2003, the Event of Default under Section 8.2 arising
out of Borrower's violation of Sections 6.7(ii), and (iii) for the period
commencing on the Closing Date and ending on the date hereof, the Event of
Default under Section 8.2 arising out of Borrower's violation of Sections
6.6.
(b) The waiver in this Section 5 shall become effective only in
accordance with Section 9 hereof and then only in this specific instance
and for the specific purposes set forth herein. Such waiver does not allow
for any other or further departure from the terms and conditions of the
Loan Agreement, as amended hereby, or any of the other Existing Loan
Documents, which terms and conditions shall remain in full force and
effect.
6. PAYMENT OF LOAN MODIFICATION EXPENSES. Borrower shall pay Bank its
reasonable out-of-pocket expenses incurred for preparation of this Loan
Modification Agreement.
7. NO DEFENSES OF BORROWER. Borrower agrees that, as of the date hereof,
it has no defenses against the obligations to pay any amounts under the
Indebtedness.
8. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Indebtedness, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank's agreement to modifications to the existing Indebtedness pursuant to this
Loan Modification Agreement in no way shall obligate Bank to
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make any future modifications to the Indebtedness. Nothing in this Loan
Modification Agreement shall constitute a satisfaction of the Indebtedness. It
is the intention of Bank and Borrower to retain as liable parties all makers and
endorsers of Existing Loan Documents, unless the party is expressly released by
Bank in writing. No maker, endorser, or guarantor will be released by virtue of
this Loan Modification Agreement. The terms of this paragraph apply not only to
this Loan Modification Agreement, but also to all subsequent loan modification
agreements.
9. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon receipt by Bank of a fully executed copy of this Loan
Modification Agreement, together with payment of its out-of-pocket expenses
incurred for preparation of this Loan Modification Agreement.
This Loan Modification Agreement is executed as of the date first written above.
BORROWER: BANK:
THERMA-WAVE, INC. SILICON VALLEY BANK
By: /s/ L. Xxx Xxxxxxxx By: /s/ Xxxxx Xxxxx
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Name: L. Xxx Xxxxxxxx Name: Xxxxx Xxxxx
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Title: V.P. CFO & Secretary Title: Vice President
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