Exhibit 10.8
Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT dated as of January 17, 2023 (the “Agreement”), is executed by and among AMTECH SYSTEMS, INC., an Arizona corporation (the “Parent Borrower”), BRUCE TECHNOLOGIES, INC., a Massachusetts corporation, BTU INTERNATIONAL, INC., a Delaware corporation, INTERSURFACE DYNAMICS, INC., a Connecticut corporation, P.R. HOFFMAN MACHINE PRODUCTS, INC., an Arizona corporation, ENTREPIX, INC., an Arizona corporation, and ADVANCED COMPOUND MATERIALS, INC., a Delaware corporation, (“ACM”, by Joinder Agreement dated December 5, 2023) (collectively and on a joint and several basis with the Parent Borrower, the “Borrower”), each of which has its chief executive office located at 131 S. Clark Drive, Tempe, Arizona 85288, and UMB BANK, N.A., national banking association (the “Lender”), whose address is 2777 East Camelback Rd., Ste. 350, Phoenix, Arizona 85016.
R E C I T A L S:
NOW THEREFORE, in consideration of the premises, and the mutual covenants and agreements set forth herein, the Borrower agrees to borrow from the Lender, and the Lender agrees to lend to the Borrower, subject to and upon the following terms and conditions:
A G R E E M E N T S:
“Accounts” has the meaning given it under the UCC.
“Account Debtor” shall mean any Person who is or may become obligated on or under or on account of any Account.
“Acquisition” shall mean the acquisition of the Shares (as defined in the Stock Purchase Agreement).
“Affiliate” of any Person shall mean (a) any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person, (b) any officer or director of such Person, and (c) with respect to the Lender, any entity administered or managed by the Lender, or an Affiliate or investment advisor thereof and which is engaged in making, purchasing, holding or otherwise investing in commercial loans. A Person shall be deemed to be “controlled by” any other Person if such Person possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such Person whether by contract, ownership of voting securities, membership interests or otherwise.
“Applicable Margin” shall mean one and one-half of one percent (1.50%) per annum.
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“Bank Product Agreements” shall mean those certain agreements entered into from time to time by the Borrower or any Subsidiary with the Lender or any Affiliate of the Lender concerning Bank Products.
“Bank Product Obligations” shall mean all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by the Borrower or any Subsidiary to the Lender or any Affiliate of the Lender pursuant to or evidenced by the Bank Product Agreements and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising.
“Bank Products” shall mean any service or facility extended to the Borrower or any Subsidiary by the Lender or any Affiliate of the Lender, including: (a) credit cards, (b) credit card and other payment processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions, (f) deposit accounts or other cash management, including controlled disbursement, accounts or services, or (g) Hedging Agreements.
“Bankruptcy Code” shall mean the United States Bankruptcy Code, as now existing or hereafter amended.
“Borrowing Base” means, at any time, the sum of:
(a) eighty percent (80%) of the sum of Borrower’s Eligible Accounts and Eligible Foreign Accounts; plus
(b) the lesser of (i) thirty percent (30%) of the lower of cost or market value of Borrower’s Eligible Inventory, or (ii) Seven Million and No/100 Dollars ($7,000,000).
“Borrowing Base Certificate” means a certificate, in form and substance acceptable to Lender, setting forth the Borrowing Base and the component calculations thereof.
“Business Day” shall mean any day other than a Saturday, Sunday or a legal holiday on which banks are authorized or required to be closed for the conduct of commercial banking business in Phoenix, Arizona.
“Capital Expenditures” shall mean all expenditures (including Capitalized Lease Obligations) which, in accordance with GAAP, would be required to be capitalized and shown on the consolidated balance sheet of the Parent Borrower, but excluding expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (i) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (ii) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.
“Capital Lease” shall mean, as to any Person, a lease of any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, by such Person, as lessee, that is, or should be, in accordance with Financial Accounting Standards Board Statement No. 13, as amended from time to time, or, if such statement is not then in effect, such statement of GAAP as may be applicable, recorded as a “capital lease” on the financial statements of such Person prepared in accordance with GAAP.
“Capital Securities” shall mean, with respect to any Person, all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person’s capital, whether now outstanding or issued or acquired after the date hereof, including common shares, preferred shares, membership interests in a limited liability company, limited or general partnership interests in a partnership or any other equivalent of such ownership interest.
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“Capitalized Lease Obligations” shall mean, as to any Person, all rental obligations of such Person, as lessee under a Capital Lease which are or will be required to be capitalized on the books of such Person.
“Closing Date” shall mean January 17, 2023.
“Code” shall mean the U.S. Internal Revenue Code of 1986, as amended.
“Collateral” shall have the meaning set forth in Section 6.1 hereof.
“Collateral Access Agreement” shall mean an agreement in form and substance reasonably satisfactory to the Lender pursuant to which a mortgagee or lessor of real property on which Collateral is stored or otherwise located, or a warehouseman, processor or other bailee of Inventory or other property owned by the Borrower or any Subsidiary, acknowledges the Liens of the Lender and waives any Liens held by such Person on such property, and, in the case of any such agreement with a mortgagee or lessor, permits the Lender reasonable access to and use of such real property following the occurrence and during the continuance of an Event of Default to assemble, complete and sell any collateral stored or otherwise located thereon.
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
“Contingent Liability” and “Contingent Liabilities” shall mean, respectively, each obligation and liability of the Borrower and all such obligations and liabilities of the Borrower incurred pursuant to any agreement, undertaking or arrangement by which the Borrower: (a) guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, dividend, obligation or other liability of any other Person in any manner (other than by endorsement of instruments in the course of collection), including without limitation, any indebtedness, dividend or other obligation which may be issued or incurred at some future time; (b) guarantees the payment of dividends or other distributions upon the shares or ownership interest of any other Person; (c) undertakes or agrees (whether contingently or otherwise): (i) to purchase, repurchase, or otherwise acquire any indebtedness, obligation or liability of any other Person or any property or assets constituting security therefor, (ii) to advance or provide funds for the payment or discharge of any indebtedness, obligation or liability of any other Person (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, working capital or other financial condition of any other Person, or (iii) to make payment to any other Person other than for value received; (d) agrees to lease property or to purchase securities, property or services from such other Person with the purpose or intent of assuring the owner of such indebtedness or obligation of the ability of such other Person to make payment of the indebtedness or obligation; (e) to induce the issuance of, or in connection with the issuance of, any letter of credit for the benefit of such other Person; or (f) undertakes or agrees otherwise to assure a creditor against loss. The amount of any Contingent Liability shall (subject to any limitation set forth herein) be deemed to be the outstanding principal amount (or maximum permitted principal amount, if larger) of the indebtedness, obligation or other liability guaranteed or supported thereby.
“Debt” shall mean, as to any Person, without duplication, (a) all indebtedness of such Person for (i) all borrowed money of such Person (including principal, interest, fees and charges), whether or not evidenced by bonds, debentures, notes or similar instruments and (ii) all obligations to pay the deferred purchase price of property or services; (b) all obligations, contingent or otherwise, with respect to the maximum face amount of all letters of credit (whether or not drawn), bankers’ acceptances and similar
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obligations issued for the account of such Person (including the Letters of Credit), and all unpaid drawings in respect of such letters of credit, bankers’ acceptances and similar obligations; (c) all indebtedness secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person (provided, however, if such Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the fair market value of the property subject to such Lien at the time of determination); (d) the aggregate amount of all Capitalized Lease Obligations of such Person; (e) all Contingent Liabilities of such Person, whether or not reflected on its balance sheet; (f) all Bank Product Obligations of such Person; and (g) all monetary obligations of such Person under (i) a so-called synthetic, off-balance sheet or tax retention lease, or (ii) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment). Notwithstanding the foregoing, Debt shall not include trade payables and accrued expenses incurred by such Person in accordance with customary practices and in the ordinary course of business of such Person.
“Default Rate” shall mean the applicable per annum rate of interest on each Loan plus up to an additional two percent (2.0%) per annum or so much thereof as Lender desires to implement from time to time.
“Depreciation” shall mean the total amounts added to depreciation, amortization, obsolescence, valuation and other proper reserves, as reflected on the Parent Borrower’s financial statements and determined in accordance with GAAP.
“EBITDA” shall mean, for any period, (a) the sum for such period of: (i) Net Income, plus (ii) Interest Charges, plus (iii) federal and state income taxes, plus (iv) Depreciation, plus (v) Transaction Expenses, plus (vi) the amount of restructuring costs and reserves, including, without limitation, in connection with acquisitions and closing and/or consolidation of facilities, plus (vii) extraordinary, nonrecurring items, whether or not classified as such under GAAP (including, without limitation, fees and expenses incurred in connection with the sale of the Arizona Office Building), plus (viii) any losses from disposed or discontinued operations, plus (ix) non-recurring expenses for severance, integration costs (including information technology integration costs), relocation costs, facilities’ opening costs and other business optimization expenses, recruiting costs and fees, signing fees, expenses, costs and bonuses, retention or completion bonuses, contract termination costs, transition costs, systems establishment costs, costs related to closure/consolidation of office and facilities, or any consulting fees incurred in connection with any of the foregoing in connection with the Acquisition or any other acquisition permitted by the Loan Documents), provided, that such expenditures are reasonably identifiable, factually supportable and, to the extent requested by Lender, are accompanied by a detailed itemization thereof, plus (x) non-cash compensation expense (including deferred non-cash compensation expense), or other non-cash expenses or charges, arising from the sale or issuance of Capital Securities, the granting of stock options, and the granting of stock appreciation rights and similar arrangements (including any repricing, amendment, modification, substitution, or change of any such Capital Securities, stock option, stock appreciation rights, or similar arrangements) minus the amount of any such expenses or charges when paid in cash to the extent not deducted in the computation of net income (or loss), plus (xi) all other non-cash charges approved by Lender in its sole discretion, calculated on a consolidated basis in accordance with GAAP consistently applied; provided that the aggregate amount added back to EBITDA pursuant to clauses (vii) through (xi) above shall not exceed $500,000.00 in the aggregate in any fiscal year without the prior written consent of the Lender.
“EDITDAR” shall mean, the EBITDA of Borrower plus operating lease expenses, calculated on a consolidated basis in accordance with GAAP consistently applied.
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“Eligible Account” means all Accounts owing to Borrower which are acceptable to Lender for lending purposes, net of any discounts, credits or allowances, but excluding any Account having the following characteristics:
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“Eligible Foreign Account” means all Accounts owing to Borrower that meet all required criteria for an Eligible Account except that the account debtor for any such account, either (a) maintains its chief executive office in Canada or any European nation, or (b) is organized under the laws of Canada or any European nation; and provided that such Accounts are either: (y) fully supported by a letter of credit acceptable and delivered to Lender, the original of which is in possession of and is directly drawable by Lender, or (z) is fully insured pursuant to a credit insurance policy approved in advance in writing by Lender.
“Eligible Inventory” means Inventory of Borrower which is acceptable to Lender for lending purposes. Without limiting Lender’s discretion, Lender shall, in general, consider Inventory to be Eligible Inventory if it meets, and so long as it continues to meet, the following requirements:
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“Employee Plan” includes any employee pension benefit plan (as defined in Section 3(2) of ERISA) maintained or administered by the Borrower or to which the Borrower is a party or may reasonably be expected to have any liability or by which the Borrower is bound.
“Environmental Laws” shall mean all applicable federal, state or local laws, statutes, rules, regulations, ordinances and codes, together with all administrative or judicial orders, consent agreements, licenses, authorizations and permits of any governmental authority, in each case relating to any matter arising out of or relating to public health and safety, or pollution or protection of the environment or workplace, as each relate to the exposure to Hazardous Substances, including any of the foregoing relating to the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, discharge, emission, release, control or cleanup of any Hazardous Substance.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
“Event of Default” shall mean any of the events or conditions which are set forth in Section 11 hereof.
“Excluded Account” shall mean a deposit account, securities account or commodity account (i) which is used for the sole purpose of making payroll and withholding tax payments related thereto and other employee wage and benefit payments and accrued and unpaid employee compensation payments (including salaries, wages, benefits and expense reimbursements, 401(k) and other retirement plans and employee benefits, including rabbi trusts for deferred compensation and health care benefits), (ii) which is used solely for paying taxes, including sales taxes, (iii) which is used as an escrow account or as a fiduciary or trust account or is otherwise held exclusively for the benefit of an unaffiliated third party (including any account solely holding amounts representing fines, violations, fees and similar amounts paid by third parties and owed to municipalities), (iv) which is a zero balance deposit account, securities account or commodity account or (v) which is not otherwise subject to the provisions of this definition and together with any other deposit accounts, securities accounts or commodity accounts that are excluded pursuant to this clause (v), have an average daily balance for any fiscal month of less than $350,000.00 in the aggregate.
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“Excluded Collateral” shall have the meaning set forth in Section 6.1 hereof.
“Excluded Subsidiary” means any direct or indirect Subsidiary of a Borrower that is (a) a “controlled foreign corporation” as defined in Section 957 of the Code, (b) a Subsidiary owned by such a “controlled foreign corporation” or (c) a Subsidiary organized under the laws of United States, any state thereof, or the District of Columbia, substantially all of the assets of which consist of (or are treated as consisting of for U.S. federal income tax purposes) the Capital Securities of (or Capital Securities and debt of) Subsidiaries described in clauses (a) and (b).
“Excluded Swap Obligation” means, with respect to any Borrower, any Swap Obligation if, and to the extent that, all or a portion of the guaranty of such Borrower of, or the grant by such Borrower of a security interest to secure, such Swap Obligation (or a guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Borrower’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guaranty of such Borrower or the grant of such security interests becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guaranty or security interests is or becomes illegal.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to the Lender or required to be withheld or deducted from a payment to the Lender, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of the Lender being organized under the laws of, or having its principal office or its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) U.S. federal withholding Taxes imposed on amounts payable to or for the account of the Lender with respect to an applicable interest in a Loan or commitment pursuant to a law in effect on the date on which (i) the Lender acquires such interest in the Loan or commitment (other than an assignment request pursuant to Section 2.5(g)) or (ii) the Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.5(a), amounts with respect to such Taxes were payable either to the Lender’s assignor immediately before the Lender became a party hereto or to the Lender immediately before it changed its lending office, (c) Taxes attributable to the Lender’s failure to comply with Section 2.5(e), and (d) any U.S. federal withholding Taxes imposed under FATCA.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among governmental authorities and implementing such Sections of the Code.
“Foreign Lender” means any Lender that is not a U.S. Person.
“Forbearance Agreement” means that certain Forbearance & Modification Agreement dated December 5, 2023 by and among Borrower and Lender.
“GAAP” shall mean generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession),
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which are applicable to the circumstances as of the date of determination, provided, however, that interim financial statements or reports shall be deemed in compliance with GAAP despite the absence of footnotes and fiscal year-end adjustments as required by GAAP.
“Goods” shall have the meaning given it under the UCC.
“Hazardous Substances” shall mean (a) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, dielectric fluid containing levels of polychlorinated biphenyls, radon gas and mold; (b) any chemicals, materials, pollutant or substances defined as or included in the definition of “hazardous substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous substances”, “restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, the exposure to, or release of which is prohibited, limited or regulated by any governmental authority or any Environmental Law.
“Hedging Agreement” means any interest rate protection agreement, foreign currency exchange agreement, currency options, spot contracts, collar transactions, commodity price protection agreement, rate swap transactions, basis swaps, forward rate transactions, or other interest rate, currency exchange rate, or commodity price hedging arrangement, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), designed to provide protection against fluctuations in interest rates, currency exchange rates, or commodity prices, whether or not any such transaction is governed by or subject to any master agreement.
“Indemnified Party” and “Indemnified Parties” shall mean, respectively, each of the Lenders and any parent corporation, Affiliate or Subsidiary of the Lender, and each of their respective officers, directors, employees, attorneys and agents, and all of such parties and entities.
“Intellectual Property” shall mean the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, patents, service marks and trademarks, and all registrations and applications for registration therefor and all licensees thereof, trade names, domain names, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.
“Interest Charges” shall mean, for any period, the sum of: (a) all interest, charges and related expenses payable with respect to that fiscal period to a lender in connection with borrowed money or the deferred purchase price of assets that are treated as interest in accordance with GAAP, plus (b) the portion of Capitalized Lease Obligations with respect to that fiscal period that should be treated as interest in accordance with GAAP, plus (c) all charges paid or payable (without duplication) during that period with respect to any Hedging Agreements entered into for the purpose of hedging interest rate risk.
“Inventory” has the meaning given it under the UCC.
“Joinder Agreement” shall mean that certain Joinder Agreement by and among the Borrowers and Lender dated December 5, 2023, wherein ACM joined as a joint and several Borrower under the Loan Documents for all purposes.
“Letter of Credit” and “Letters of Credit” shall mean, respectively, a letter of credit and all such letters of credit issued by the Lender upon the execution and delivery by the Borrower and the acceptance by the Lender of a Letter of Credit Agreement.
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“Letter of Credit Agreement” shall mean, at any time, with respect to the issuance of Letters of Credit, the Letter of Credit Agreement in the form being used by the Lender at such time.
“Letter of Credit Obligations” shall mean, at any time, an amount equal to the aggregate of the original face amounts of all Letters of Credit minus the sum of (i) the amount of any reductions in the original face amount of any Letter of Credit which did not result from a draw thereunder, (ii) the amount of any payments made by the Lender with respect to any draws made under a Letter of Credit for which the Borrower has reimbursed the Lender, (iii) the amount of any payments made by the Lender with respect to any draws made under a Letter of Credit which have been converted to a Revolving Loan as set forth in Section 2.4, and (iv) the portion of any issued but expired Letter of Credit which has not been drawn by the beneficiary thereunder. For purposes of determining the outstanding Letter of Credit Obligations at any time, the Lender’s acceptance of a draft drawn on the Lender pursuant to a Letter of Credit shall constitute a draw on the applicable Letter of Credit at the time of such acceptance. In no event shall the aggregate amount of Letter of Credit Obligations at any time exceed One Million Dollars ($1,000,000).
“Liabilities” shall mean at all times all liabilities of the Borrower that would be shown as such on a consolidated balance sheet of the Parent Borrower prepared in accordance with GAAP.
“Lien” shall mean, with respect to any Person, any interest granted by such Person in any real or personal property, asset or other right owned or being purchased or acquired by such Person (including, without limitation, an interest in respect of a Capital Lease) which secures payment or performance of any obligation and shall include any mortgage, lien, encumbrance, title retention lien, charge or other security interest of any kind, whether arising by contract, as a matter of law, by judicial process or otherwise.
“Loan Documents” shall mean each of the agreements, documents, instruments and certificates set forth in Section 3.1 hereof, and any and all such other instruments, documents, certificates and agreements from time to time executed and delivered by the Borrower, or any of its Subsidiaries for the benefit of the Lender pursuant to any of the foregoing, and all amendments, restatements, supplements and other modifications thereto.
“Loans” shall mean, collectively, all Revolving Loans and Term Loan made by the Lender to the Borrower and all Letter of Credit Obligations issued by the Lender for the benefit of the Borrower or any of its Subsidiaries, under and pursuant to this Agreement.
“Material Adverse Effect” shall mean (a) a material adverse change in, or a material adverse effect upon, the assets, business, properties, financial condition or results of operations of the Parent Borrower taken as a whole, (b) a material impairment of the ability of the Borrower to perform any of the Obligations under any of the Loan Documents, or (c) a material adverse effect on (i) any substantial portion of the Collateral, (ii) the legality, validity, binding effect or enforceability against the Borrower of any of the Loan Documents, (iii) the perfection or priority of any Lien granted to the Lender under any Loan Document, or (iv) the rights or remedies of the Lender under any Loan Document.
“Net Income” shall mean, with respect to the Parent Borrower for any period, the consolidated net income (or loss) of the Parent Borrower for such period as determined in accordance with GAAP, excluding any extraordinary gains and any gains from discontinued operations.
“Non-Excluded Taxes” shall mean Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document.
“Note” and “Notes” shall mean, respectively, each of and collectively, the Revolving Note and Term Note.
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“Obligations” shall mean the Loans, as evidenced by any Note, all interest accrued thereon (including interest which would be payable as post-petition in connection with any bankruptcy or similar proceeding, whether or not permitted as a claim thereunder), any fees due the Lender hereunder, any expenses incurred by the Lender hereunder and any and all other liabilities and obligations of the Borrower to the Lender under this Agreement and any other Loan Document, including any reimbursement obligations of the Borrower in respect of Letters of Credit and surety bonds, and all other Bank Product Obligations of the Borrower owed to the Lender or an Affiliate of the Lender, all in each case howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, together with any and all renewals or extensions thereof.
“Organizational Certificates” means, with respect to any Person that is a corporation, limited partnership or limited liability company, a certificate of the appropriate official(s) of the jurisdiction of organization of such Person and each jurisdiction of foreign qualification in which such Person is required to maintain foreign qualification to lawfully transact business in such jurisdiction (other than any jurisdiction where the failure to be so qualified would not reasonably likely to have a Material Adverse Effect on the Borrower), certifying as to (i) the subsistence in good standing of, (ii) the authority to transact business by and (iii) the payment of taxes by, such Person in such jurisdiction(s).
“Organizational Documents” means (i) with respect to any Person that is a corporation, the articles of incorporation and bylaws of such corporation, (ii) with respect to any Person that is a limited partnership, the articles of formation and partnership agreement of such limited partnership, (iii) with respect to any Person that is a limited liability company, the articles of organization or certificate of formation and operating agreement or limited liability company agreement of such limited liability company, (iv) with respect to any Person that is a trust, the trust agreement governing such trust, and (iv) with respect to any Person that is a general partnership, the partnership agreement of such general partnership.
“Organizational Identification Number” means, with respect to Borrower, the organizational identification number assigned to Borrower by the applicable governmental unit or agency of the jurisdiction of organization of the Borrower.
“Other Connection Taxes” means, with respect to the Lender, Taxes imposed as a result of a present or former connection between the Lender and the jurisdiction imposing such Tax (other than connections arising from the Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” shall mean any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from the execution, delivery, enforcement or registration of, or otherwise with respect to, this Agreement or any of the other Loan Documents, except any such Taxes that are Other Connection Taxes.
“Permitted Liens” shall mean (a) Liens for Taxes, assessments or other governmental charges not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which the Borrower maintains adequate reserves in accordance with GAAP; (b) Liens arising in the ordinary course of business (such as (i) Liens of carriers, warehousemen, mechanics and materialmen and other similar Liens imposed by law, and (ii) Liens in the form of deposits or pledges incurred in connection with worker’s compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA) or in connection with surety bonds, bids, performance bonds and similar obligations); (c) Liens described on Schedule 9.2 as of the Closing Date; (d) attachments, appeal bonds, judgments and other similar Liens to the extent such underlying judgments
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or awards do not constitute an Event of Default under Section 11.8 hereof; (e) easements, rights of way, restrictions (including zoning and other land use restrictions), covenants, licenses, encroachments, protrusions and other similar charges or encumbrances and minor defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of the Borrower; (f) Liens granted to the Lender hereunder and under the other Loan Documents and any Hedging Agreements; (g) leases, subleases, licenses or sublicenses (including licenses or sublicenses of intellectual property) granted to other Persons not materially interfering with the conduct of the business of the Borrower; (h) Liens arising from precautionary Uniform Commercial Code or other similar financing statement filings regarding operating leases or consignments entered into in the ordinary course of business; (i) statutory and common law landlords’ liens under leases to which the Borrower or any is a party; (j) deposits made in the ordinary course of business to secure liability to insurance carriers; (k) Liens (i) of a collection bank arising under Section 4-210 of the UCC (or similar provisions of other applicable laws) on items in the course of collection, (ii) attaching to commodity trading accounts or other commodities brokerage accounts incurred in the ordinary course of business and (iii) in favor of a banking or other financial institution arising as a matter of law or under customary general terms and conditions encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking industry; (l) Liens that may arise on inventory or equipment of the Borrower in the ordinary course of business as a result of such inventory or equipment being located on premises owned by Persons other than the Borrower; (m) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business; (n) Liens on specific items of inventory or other goods (and proceeds thereof) of any Person securing such Person’s obligations in respect of bankers’ acceptances or letters of credit issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods, and pledges or deposits in the ordinary course of business; and (o) Liens upon assets of the Borrower securing Debt permitted by Section 9.1(f); provided that such Liens do not encumber any asset of the Borrower other than the assets acquired with such Debt and after-acquired property that is affixed or incorporated into such assets and proceeds and products thereof; provided that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender on customary terms.
“Person” shall mean any natural person, partnership, limited liability company, corporation, trust, joint venture, joint stock company, association, unincorporated organization, government or agency or political subdivision thereof, or other entity, whether acting in an individual, fiduciary or other capacity.
“Prime Rate” shall mean the floating per annum rate of interest which at any time, and from time to time, shall be most recently announced by the Lender as its Prime Rate, which is not intended to be the Lender’s lowest or most favorable rate of interest at any one time. The effective date of any change in the Prime Rate shall for purposes hereof be the date the Prime Rate is changed by the Lender. The Lender shall not be obligated to give notice of any change in the Prime Rate.
“Receivables Employment Agreement” shall mean an agreement between Parent Borrower and the former chairman and chief executive officer of Parent Borrower that provides for, among other things, payment of incentive compensation tied to the collection of a customer receivable that was previously written off.
“Regulatory Change” shall mean the introduction of, or any change in any applicable law, treaty, rule, regulation or guideline or in the interpretation or administration thereof by any governmental authority or any central bank or other fiscal, monetary or other authority having jurisdiction over the Lender or its lending office.
[****]=[CONFIDENTIAL PORTION HAS BEEN OMMITTED BECAUSE (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF DISCLOSED.
12
“Related Parties” shall mean, with respect to any Person, such Peron’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.
“Revolving Interest Rate” shall mean a floating per annum rate of interest equal to the Prime Rate, adjusting daily, plus the Applicable Margin.
“Revolving Loan” and “Revolving Loans” shall mean, respectively, each direct advance and the aggregate of all such direct advances made by the Lender to the Borrower under and pursuant to this Agreement, as set forth in Section 2.1 of this Agreement.
“Revolving Loan Availability” shall mean, at any time, the amount, if any, by which the lesser of the Borrowing Base and the Revolving Loan Commitment exceeds the sum of (a) the outstanding principal balance of the Revolving Loans plus (b) the Letter of Credit Obligations.
“Revolving Loan Commitment” shall mean Fourteen Million and 00/100 Dollars ($14,000,000.00).
“Revolving Loan Maturity Date” shall mean January 17, 2025, unless extended by the Lender pursuant to any modification, extension or renewal note executed by the Borrower and accepted by the Lender in its sole and absolute discretion in substitution for the Revolving Note.
“Revolving Note” shall mean an amended and restated revolving note in the form prepared by and acceptable to the Lender, dated as of the Forbearance Effective Date (as such term is defined in the Forbearance Agreement), in the amount of the Revolving Loan Commitment and maturing on the Revolving Loan Maturity Date, duly executed by the Borrower and payable to the order of the Lender, together with any and all renewal, extension, modification or replacement notes executed by the Borrower and delivered to the Lender and given in substitution therefor.
“SEC” shall mean the Securities and Exchange Commission or any successor thereto.
“Senior Debt” shall mean all Debt of the Borrower owing to Lender.
“Specific Default” shall have the meaning assigned to it in the Forbearance Agreement.
“Stock Purchase Agreement” shall mean that certain Stock Purchase Agreement, dated on or about the date hereof, by and among Amtech Systems, Inc., Entrepix, Inc., the stockholders of Entrepix, Inc., and Timothy P. Tobin.
“Subordinated Debt” shall mean that portion of the Debt of the Borrower which is subordinated to the Obligations in a manner reasonably satisfactory to the Lender, including, but not limited to, right and time of payment of principal and interest.
“Subsidiary” and “Subsidiaries” shall mean, respectively, with respect to any Person, each and all such corporations, partnerships, limited partnerships, limited liability companies, limited liability partnerships, joint ventures or other entities of which or in which such Person owns, directly or indirectly, such number of outstanding Capital Securities as have more than fifty percent (50.00%) of the ordinary voting power for the election of directors or other managers of such corporation, partnership, limited liability company or other entity. Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of the Parent Borrower.
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13
“Swap Obligation” means, with respect to the Borrower, any obligation to pay or perform under any agreement, contract, or transaction, that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.
“Taxes” shall mean any and all present and future taxes, duties, levies, imposts, deductions, assessments, charges or withholdings imposed by a government authority, including interest and penalties and other additions to taxes, with respect to the foregoing.
“Term Interest Rate” shall mean a floating per annum rate of interest equal to the Prime Rate, adjusting daily, plus the Applicable Margin.
“Term Loan” shall mean the direct advance made by the Lender to the Borrower in the form of Term Loan under and pursuant to this Agreement, as set forth in Section 2.2 of this Agreement.
“Term Loan Commitment” shall mean Four Million Four Hundred Twenty-Three Thousand Two Hundred and 00/100 Dollars ($4,423,200.00).
“Term Loan Maturity Date” shall mean January 17, 2029, unless extended by the Lender pursuant to any modification, extension or renewal.
“Term Note” shall mean an amended and restated term note in the form prepared by and acceptable to the Lender, dated as of the Forbearance Effective Date, in the amount of the Term Loan Commitment and maturing on the Term Loan Maturity Date, duly executed by the Borrower and payable to the order of the Lender, together with any and all renewal, extension, modification or replacement notes executed by the Borrower and delivered to the Lender and given in substitution therefor.
“Transaction Expenses” shall mean any fees or expenses incurred or paid by the Parent Borrower or any of its Subsidiaries in connection with the Transactions, this Agreement and the other Loan Documents and the transactions contemplated hereby and thereby, including any amortization thereof in any period.
“Transactions” shall mean, collectively, the negotiation and execution of the Loan Documents, funding of any Loans, the consummation of the Acquisition and the payment of the Transaction Expenses.
“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.
“UCC” shall mean the Uniform Commercial Code in effect in the state of Arizona from time to time.
“Unmatured Event of Default” shall mean any event which, with the giving of notice, the passage of time or both, would constitute an Event of Default.
“Voidable Transfer” shall have the meaning set forth in Section 13.21 hereof.
“Wholly-Owned Subsidiary” shall mean any Subsidiary of which or in which the Borrower owns, directly or indirectly, one hundred percent (100%) of the Capital Securities of such Subsidiary.
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14
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15
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18
W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate, IRS Form W-9, or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such
[****]=[CONFIDENTIAL PORTION HAS BEEN OMMITTED BECAUSE (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF DISCLOSED.
19
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower in writing of its legal inability to do so.
[****]=[CONFIDENTIAL PORTION HAS BEEN OMMITTED BECAUSE (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF DISCLOSED.
20
Notwithstanding any other provision of this Agreement, the Lender shall not be required to disburse, make or continue all or any portion of the Loans, if any of the following conditions shall have occurred.
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21
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22
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23
Notwithstanding the foregoing, no security interest is or will be granted pursuant hereto in any right, title or interest of the in, to or under (all of which property, along with the products and proceeds therefrom, are individually and collectively referred to as the “Excluded Collateral”):
[****]=[CONFIDENTIAL PORTION HAS BEEN OMMITTED BECAUSE (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF DISCLOSED.
24
provided, however, that Excluded Collateral shall not include any Proceeds, substitutions or replacements of any Excluded Collateral referred to in any of clauses (a) through (i) above (unless such Proceeds, substitutions or replacements would constitute Excluded Collateral referred to in any of clauses (a) through (l) above). Notwithstanding anything to the contrary contained herein or in any other Loan Document, (i) the Borrower shall not be required to perfect a security interest in Fixtures, (ii) the Borrower shall not be required to take any action with respect to the creation or perfection of a security interest or Liens under foreign law with respect to any Collateral and (iii) the Borrower shall not be required to comply with the Federal Assignment of Claims Act (or any state or municipal equivalent).
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25
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27
To induce the Lender to make the Loans, the Borrower makes the following representations and warranties to the Lender, each of which shall survive the execution and delivery of this Agreement:
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28
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31
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In the event the Borrower either fails to provide the Lender with evidence of the insurance coverage required by this Section or at any time hereafter shall fail to obtain or maintain any of the policies of insurance required above, or to pay any premium in whole or in part relating thereto, then the Lender, without waiving or releasing any obligation or default by the Borrower hereunder, may at any time (but shall be under no obligation to so act), obtain and maintain such policies of insurance and pay such premiums and take any other action with respect thereto, which the Lender reasonably deems advisable. This insurance coverage (a) may, but need not, protect the Borrower’s interests in such property, including, but not limited to, the Collateral, and (b) may not pay any claim made by, or against, the Borrower in connection with such property, including, but not limited to, the Collateral. The Borrower may later cancel any such insurance purchased by the Lender, but only after providing the Lender with evidence that the Borrower has obtained the insurance coverage required by this Section. If the Lender purchases insurance for the Collateral, the Borrower will be responsible for the costs of that insurance, including interest and any other charges that may be imposed with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to the principal amount of the Loans owing hereunder. The costs of the insurance may be more than the cost of the insurance the Borrower may be able to obtain on its own.
[****]=[CONFIDENTIAL PORTION HAS BEEN OMMITTED BECAUSE (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF DISCLOSED.
33
Notwithstanding the foregoing, the obligations referred to in clauses (a) and (b) above may be satisfied with respect to financial information of the Parent Borrower by furnishing the Parent Borrower’s Form 10-K or 10-Q, as applicable, filed with the SEC (and the public filing of such report with the SEC shall constitute delivery under this Section 8.8)
[****]=[CONFIDENTIAL PORTION HAS BEEN OMMITTED BECAUSE (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF DISCLOSED.
34
No change with respect to such accounting principles shall be made by the Borrower without giving prior notification to the Lender. The Borrower represents and warrants to the Lender that the financial statements delivered to the Lender at or prior to the execution and delivery of this Agreement and to be delivered at all times thereafter accurately reflect and will accurately reflect the financial condition of the Borrower.
30-60, 60-90 and over 90 day basis), (b) a report detailing accounts receivable and accounts receivable aging (on a 0-30, 30-60, 60-90 and over 90 day basis) including all account debtor name and contact information and invoice level detail, (c) a detailed work-in-process report and (d) a detailed inventory report, each such report to be as of the end of the preceding calendar month.
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35
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36
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37
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38
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39
The Borrower, without notice or demand of any kind (except as specified below), shall be in default under this Agreement upon the occurrence of any of the following events (each an “Event of Default”).
[****]=[CONFIDENTIAL PORTION HAS BEEN OMMITTED BECAUSE (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF DISCLOSED.
40
Upon the occurrence and during the continuance of an Event of Default, the Lender shall have all rights, powers and remedies set forth in the Loan Documents as a secured party under the UCC or as otherwise provided at law or in equity. Without limiting the generality of the foregoing, the Lender may, at its option upon the occurrence of an Event of Default, declare its commitments to the Borrower to be terminated and all Obligations to be immediately due and payable, provided, however, that upon the occurrence of an Event of Default under Section 11.7, all commitments of the Lender to the Borrower shall immediately terminate and all Obligations shall be automatically due and payable, all without demand, notice or further action of any kind required on the part of the Lender. The Borrower hereby waives any and all presentment, demand, notice of dishonor, protest, and all other notices and demands in connection with the enforcement of Lender’s rights under the Loan Documents, and hereby consents to, and waives notice of release, with or without consideration, of any Borrower or of any Collateral, notwithstanding
[****]=[CONFIDENTIAL PORTION HAS BEEN OMMITTED BECAUSE (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF DISCLOSED.
41
anything contained herein or in the Loan Documents to the contrary. In addition to the foregoing, upon the occurrence and during the continuance of an Event of Default:
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42
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43
The Borrower hereby ratifies and confirms whatever the Lender may do upon the occurrence and during the continuance of an Event of Default with respect to the Collateral and agrees that the Lender shall not be liable for any error of judgment or mistakes of fact or law with respect to actions taken in connection with the Collateral upon the occurrence and during the continuance of an Event of Default.
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44
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45
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46
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47
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.5 (subject to the requirements and limitations therein (it being understood that the documentation required under Section 2.5(e) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 13.7; provided that such Participant (A) agrees to be subject to the provisions of Section 2.5(g) as if it were an assignee under Section 13.7; and (B) shall not be entitled to receive any greater payment under Section 2.5, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a change in law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.
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48
[****]=[CONFIDENTIAL PORTION HAS BEEN OMMITTED BECAUSE (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF DISCLOSED.
49
If to the Borrower:
c/o Amtech Systems, Inc.
131 S. Clark Drive
Tempe, Arizona 85288
Attention: Lisa D. Gibbs, CFO
With a copy to:
DLA Piper LLP (US)
2525 E. Camelback Road, Suite 1000
Phoenix, Arizona 85016
Attention: Gregory R. Hall
Email: greg.hall@us.dlapiper.com
If to the Lender:
UMB Bank, N.A.
2777 E. Camelback Road, Suite 350
Phoenix, Arizona 85016
Attention: Sarah George
or, as to each party, at such other address as shall be designated by such party in a written notice to each other party complying as to delivery with the terms of this subsection. All notices addressed as above shall be deemed to have been properly given (i) if served in person, upon acceptance or refusal of delivery; (ii) if mailed by certified or registered mail, return receipt requested, postage prepaid, on the third (3rd) Business Day following the day such notice is deposited in any post office station or letter box; or (iii) if sent by recognized overnight courier, on the first Business (1st) Day following the day such notice is delivered to such carrier. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.
[****]=[CONFIDENTIAL PORTION HAS BEEN OMMITTED BECAUSE (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF DISCLOSED.
50
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51
[SIGNATURE PAGES TO FOLLOW]
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52
IN WITNESS WHEREOF, the Borrower and the Lender have executed this Loan and Security Agreement as of the date first above written.
BORROWER:
AMTECH SYSTEMS, INC., BRUCE TECHNOLOGIES, INC.,
an Arizona corporation a Massachusetts corporation
By: /s/ Lisa D. Gibbs By: /s/ Lisa D. Gibbs
Name: Lisa D. Gibbs Name: Lisa D. Gibbs
Title: Chief Financial Officer Title: Chief Financial Officer
BTU INTERNATIONAL, INC., INTERSURFACE DYNAMICS, INC.,
a Delaware corporation a Connecticut corporation
By: /s/ Lisa D. Gibbs By: /s/ Lisa D. Gibbs
Name: Lisa D. Gibbs Name: Lisa D. Gibbs
Title: Chief Financial Officer Title: Chief Financial Officer
P.R. HOFFMAN MACHINE PRODUCTS, INC., EXTREPIX, INC.,
an Arizona corporation an Arizona corporation
By: /s/ Lisa D. Gibbs By: /s/ Lisa D. Gibbs
Name: Lisa D. Gibbs Name: Lisa D. Gibbs
Title: Chief Financial Officer Title: Chief Financial Officer
Signature Page to Loan and Security Agreement
UMB Bank, n.a./Amtech Systems, Inc.
[****]=[CONFIDENTIAL PORTION HAS BEEN OMMITTED BECAUSE (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF DISCLOSED.
Agreed and accepted:
UMB BANK, N.A.,
a national banking association
By: /s/ Sarah George
Name: Sarah George
Title: Commercial Client Manager
Signature Page to Loan and Security Agreement
UMB Bank, n.a./Amtech Systems, Inc.
[****]=[CONFIDENTIAL PORTION HAS BEEN OMMITTED BECAUSE (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF DISCLOSED.