(f) be subject to any contingencies (including Accounts arising from sales on consignment, guaranteed sale or other terms pursuant to which payment by the U.S. Account Debtor may be conditional);
(g) be owing from a U.S. Account Debtor with whom Borrower has any dispute (whether or not relating to the particular Account),
(i) be owing from a U.S. Account Debtor which is subject to any insolvency or bankruptcy proceeding, or whose financial condition is not acceptable to Bank, or which, fails or goes out of a material portion of its business;
(j) be owing from the United States or any department, agency or instrumentality thereof (unless there has been compliance, to Bank’s satisfaction, with the Federal Assignment of Claims Act of 1940, as amended); and
(k) owing from a U.S. Account Debtor to whom Borrower is or may be liable for goods purchased from such U.S. Account Debtor or otherwise (but, in such case, the Account will be deemed ineligible only to the extent of any amounts owed by Borrower to such U.S. Account Debtor).
Bank may, from time to time, revise the Minimum Domestic Eligibility Requirements.
“GAAP” is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.
“General Intangibles” is all “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation, all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or unpublished, any patents, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, any trade secret rights, including any rights to unpatented inventions, payment intangibles, royalties, contract rights, goodwill, franchise agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims, income and other tax refunds, security and other deposits, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.
“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, and (d) Contingent Obligations.
“Insolvency Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.
“Interest Expense” means for any fiscal period, interest expense (whether cash or non-cash) determined in accordance with GAAP for the relevant period ending on such date, including, in any event, interest expense with respect to any Credit Extension and other Indebtedness of Borrower and its Subsidiaries, including, without limitation or duplication, all commissions, discounts, or related amortization and other fees and charges with respect to letters of credit and bankers’ acceptance financing and the net costs associated with interest rate swap, cap, and similar arrangements, and the interest portion of any deferred payment obligation (including leases of all types).
“Inventory” is all “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above.
“Investment” is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan, advance or capital contribution to any Person.
“IP Agreement” is that certain Intellectual Property Security Agreement executed and delivered by Borrower to Bank dated as of even date herewith.
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“Letter of Credit” means a standby letter of credit issued by Bank or another institution based upon an application, guarantee, indemnity or similar agreement on the part of Bank as set forth in Section 2.1.2.
“Letter of Credit Application” is defined in Section 2.1.2(a).
“Letter of Credit Reserve” has the meaning set forth in Section 2.1.2(d).
“Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.
“Liquidity Ratio” means (x) the sum of (a) non-restricted Cash Equivalents held at Bank, plus (b) Eligible Domestic Accounts, plus (c) Eligible EXIM Accounts (as defined in the EXIM Loan Agreement), divided by (y) Borrower’s outstanding Credit Extensions.
“Loan Documents” means, collectively, this Agreement, the Perfection Certificate, the IP Agreement, the EXIM Loan Agreement, and all other present and future documents, instruments and agreements between Bank and Borrower and between Bank and any Guarantor, relating to this Agreement, and all amendments and modifications thereto and replacements therefor.
“Material Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower; or (c) a material impairment of the prospect of repayment of any portion of the Obligations.
“Minimum Domestic Eligibility Requirements” is defined in the defined term “Eligible Domestic Accounts.”
“Net Income” means, as calculated on a consolidated basis for Borrower and its Subsidiaries for any period as at any date of determination, the net profit (or loss), after provision for taxes, of Borrower and its Subsidiaries for such period taken as a single accounting period.
“Non-U.S. Account Debtor” means any Account Debtor that is not a U.S. Account Debtor.
“Obligations” are Borrower’s obligation to pay when due any debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later, whether under this Agreement, the Loan Documents, or otherwise, including, without limitation, all obligations relating to letters of credit, cash management services, and foreign exchange contracts, if any, and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and the performance of Borrower’s duties under the Loan Documents.
“Operating Documents” are, for any Person, such Person’s formation documents, as certified with the Secretary of State of such Person’s state of formation on a date that is no earlier than 30 days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.
“Other Equipment” is leasehold improvements, intangible property such as computer software and software licenses, equipment specifically designed or manufactured for Borrower, other intangible property, limited use property and other similar property and soft costs approved by Bank, including taxes, shipping, warranty charges, freight discounts and installation expenses.
26
“Payment” means all checks, wire transfers and other items of payment received by Bank (including proceeds of Accounts and payment of the Obligations in full) for credit to Borrower’s outstanding Credit Extensions or, if the balance of the Credit Extensions has been reduced to zero, for credit to its Deposit Accounts.
“Payment/Advance Form” is that certain form attached hereto as Exhibit B.
“Perfection Certificate” is defined in Section 5.1.
“Permitted Distributions” means:
(a) purchases of capital stock from former employees, consultants and directors pursuant to repurchase agreements or other similar agreements in an aggregate amount not to exceed $500,000.00 in any fiscal year provided that at the time of such purchase no Default or Event of Default has occurred and is continuing;
(b) distributions or dividends consisting solely of Borrower’s capital stock and dividends on Borrower’s preferred stock not to exceed $200,000 per fiscal year;
(c) purchases for value of any rights distributed in connection with any stockholder rights plan;
(d) purchases of capital stock or options to acquire such capital stock with the proceeds received from a substantially concurrent issuance of capital stock or convertible securities;
(e) purchases of capital stock pledged as collateral for loans to employees;
(f) purchases of capital stock in connection with the exercise of stock options or stock appreciation rights by way of cashless exercise or in connection with the satisfaction of withholding tax obligations;
(g) purchases of fractional shares of capital stock arising out of stock dividends, splits or combinations or business combinations; and
(h) the settlement or performance of such Person’s obligations under any equity derivative transaction, option contract or similar transaction or combination of transactions.
“Permitted Indebtedness” is:
(a) Borrower’s Indebtedness to Bank under this Agreement or any other Loan Document;
(b) any Indebtedness existing on the Effective Date and shown on the Perfection Certificate;
(c) Subordinated Debt;
(d) unsecured Indebtedness to trade creditors incurred in the ordinary course of business and to lessors under operating leases for equipment or facilities to be used in the ordinary course of business;
(e) guaranties of Permitted Indebtedness, and up to 620,000 Euros of Indebtedness of Tempress Systems, Inc.;
(f) Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;
27
(g) Indebtedness consisting of interest rate, currency, or commodity swap agreements, interest rate cap or collar agreements or arrangements designated to protect a Person against fluctuations in interest rates, currency exchange rates, or commodity prices;
(h) Indebtedness between Borrower and any of its Subsidiaries or among any of Borrower’s Subsidiaries;
(i) Indebtedness with respect to documentary letters of credit;
(j) capitalized leases and purchase money Indebtedness not to exceed $500,000.00 in the aggregate in any fiscal year secured by Permitted Liens;
(k) Indebtedness of entities acquired in any permitted merger or acquisition transaction; and
(l) refinanced Permitted Indebtedness, provided that the amount of such Indebtedness is not increased except by an amount equal to a reasonable premium or other reasonable amount paid in connection with such refinancing and by an amount equal to any existing, but unutilized, commitment thereunder.
“Permitted Investments” are:
(a) Investments existing on the Effective Date;
(b) (i) marketable direct obligations issued or unconditionally guaranteed by the United States or its agencies or any State maturing within 1 year from its acquisition, (ii) commercial paper maturing no more than 2 years after its creation and having the highest rating from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc., and (iii) Bank’s certificates of deposit maturing no more than 2 years after issue;
(c) Investments approved by the Borrower’s Board of Directors or otherwise pursuant to a Board-approved investment policy;
(d) Investments in or to Borrower or any of its Subsidiaries;
(e) Investments consisting of Collateral Accounts in the name of Borrower or any Subsidiary so long as Bank has a first priority, perfected security interest in such Collateral Accounts;
(f) Investments consisting of extensions of credit to Borrower’s or its Subsidiaries’ customers in the nature of accounts receivable, prepaid royalties or notes receivable arising from the sale or lease of goods, provision of services or licensing activities of Borrower;
(g) Investments received in satisfaction or partial satisfaction of obligations owed by financially troubled obligors;
(h) Investments acquired in exchange for any other Investments in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization;
(i) Investments acquired as a result of a foreclosure with respect to any secured Investment;
(j) Investments consisting of interest rate, currency, or commodity swap agreements, interest rate cap or collar agreements or arrangements designated to protect a Person against fluctuations in interest rates, currency exchange rates, or commodity prices;
(k) Investments consisting of loans and advances to employees in an aggregate amount not to exceed $25,000.00; and
28
(l) Investments consisting of loans, advances or capital contributions to any Subsidiary which is not a Borrower, not to exceed $500,000 per year on a net basis (i.e., the total Investment amount to any Subsidiary may exceed $500,000, provided that such Subsidiary invests in or advances back to Borrower a sufficient amount such that the $500,000 limit is not exceeded), so long as no Event of Default exists or would result therefrom.
“Permitted Liens” are:
(a) (i) Liens securing Permitted Indebtedness described under clause (b) of the definition of “Permitted Indebtedness” or (ii) Liens arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which Borrower maintains adequate reserves on its Books, if they have no priority over any of Bank’s Liens;
(c) Liens (including with respect to capital leases) (i) on property (including accessions, additions, parts, replacements, fixtures, improvements and attachments thereto, and the proceeds thereof) acquired or held by Borrower or its Subsidiaries incurred for financing such property (including accessions, additions, parts, replacements, fixtures, improvements and attachments thereto, and the proceeds thereof), or (ii) existing on property (and accessions, additions, parts, replacements, fixtures, improvements and attachments thereto, and the proceeds thereof) when acquired, if the Lien is confined to such property (including accessions, additions, parts, replacements, fixtures, improvements and attachments thereto, and the proceeds thereof);
(d) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness it secures may not increase;
(e) leases or subleases of real property granted in the ordinary course of business, and leases, subleases, non-exclusive licenses or sublicenses of property (other than real property or intellectual property) granted in the ordinary course of Borrower’s business, if the leases, subleases, licenses and sublicenses do not prohibit granting Bank a security interest;
(f) non-exclusive license of intellectual property granted to third parties in the ordinary course of business;
(g) leases or subleases granted in the ordinary course of Borrower’s business, including in connection with Borrower’s leased premises or leased property;
(h) Liens in favor of custom and revenue authorities arising as a matter of law to secure the payment of custom duties in connection with the importation of goods;
(i) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Sections 8.5 or 8.8;
(j) Liens in favor of other financial institutions arising in connection with Borrower’s deposit or securities accounts held at such institutions;
(k) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceeding if adequate reserves with respect thereto are maintained on the books of the applicable Person;
29
(l) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and compliance with other social security requirements applicable to Borrower;
(m) deposits to secure the performance of bids, trade contracts (other than for borrowed money), contracts for the purchase of property, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case, incurred in the ordinary course of business and not representing an obligation for borrowed money; and
(n) Liens on the assets of a European Subsidiary that is not a Borrower under this Agreement.
“Person” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.
“Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest rate.
“Registered Organization” is any “registered organization” as defined in the Code with such additions to such term as may hereafter be made
“Related Account Debtor” means, with respect to any Person, any Affiliate, relative, partner, shareholder, director, officer, of employee of such Person.
“Reserves” means, as of any date of determination, such amounts as Bank may from time to time establish and revise which reduce the amount of the Advances, Letters of Credit and other financial accommodations which would otherwise be available to Borrower under the lending formula(s) provided herein: (a) for accrued interest; (b) to reflect events, conditions, contingencies or risks which, as determined by Bank, do or may adversely affect (i) the Collateral or any other property which is security for the Obligations or its value (including without limitation any increase in delinquencies of Accounts), (ii) the assets, business or prospects of Borrower, or (iii) the security interests and other rights of Bank in the Collateral (including the enforceability, perfection and priority thereof); (c) to reflect Bank’s good faith belief that any collateral report or financial information furnished by or on behalf of Borrower to Bank is or may have been incomplete, inaccurate or misleading in any material respect; or (d) in respect of any state of facts which Bank determines, in Bank’s good faith business judgment, is reasonably likely to constitute an Event of Default or Default.
“Responsible Officer” is any of the Chief Executive Officer, President, Chief Financial Officer and Controller of Borrower.
“Revolving Line” is an Advance or Advances in an aggregate amount of up to $2,000,000 outstanding at any time.
“Revolving Line Maturity Date” is the earliest of (a) _____________, 2008 (insert date which is 2 years from closing date) or (b) the occurrence of an Event of Default.
“Securities Account” is any “securities account” as defined in the Code with such additions to such term as may hereafter be made.
30
“Subordinated Debt” is (a) Indebtedness incurred by Borrower subordinated to Borrower’s Indebtedness owed to Bank and which is reflected in a written agreement in a manner and form reasonably acceptable to Bank and approved by Bank in writing, and (b) to the extent the terms of subordination do not change adversely to Bank, refinancings, refundings, renewals, amendments or extensions of any of the foregoing.
“Subsidiary” means, with respect to any Person, any Person of which more than 50% of the voting stock or other equity interests is owned or controlled, directly or indirectly, by such Person or one or more Affiliates of such Person.
“Tangible Net Worth” is, on any date, the consolidated total assets of Borrower and its Subsidiaries minus (a) any amounts attributable to (i) goodwill, (ii) intangible items including unamortized debt discount and expense, patents, trade and service marks and names, copyrights and research and development expenses except prepaid expenses, (iii) notes, accounts receivable and other obligations owing to Borrower from its officers or other Affiliates, and (iv) reserves not already deducted from assets, minus (b) Total Liabilities, measured monthly on a consolidated basis. At the end of the last month of each of Borrower’s fiscal quarters, Tangible Net Worth shall be measured based upon Borrower’s consolidated balance sheet. At the end of the interim months, Tangible Net Worth shall be calculated by adding to the consolidated Tangible Net Worth, as of the beginning of the quarter, the profits of Borrower and its Subsidiaries, the amortization of intangible assets, any Subordinated Debt, and any write-off of intangible assets, and deducting losses of Borrower and its Subsidiaries, any dividends paid, and the amount paid for any intangibles during the period.
“Total Liabilities” is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness, and current portion of Subordinated Debt permitted by Bank to be paid by Borrower, but excluding all other Subordinated Debt.
“Transaction Report” is that certain report of transactions and schedule of collections in the form attached hereto as Exhibit E.
“Transfer” is defined in Section 7.1.
“Unused Revolving Line Facility Fee” is defined in Section 2.6(d).
“U.S. Account Debtor” means any Account Debtor that is a Registered Organization or other person organized under the laws of the United States of America, a state thereof, or the District of Columbia.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the Effective Date.
BORROWER:
AMTECH SYSTEMS, INC., an Arizona corporation
By | | |
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Name: | Robert T. Hass | |
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Title: | Vice President-Finance | |
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BRUCE TECHNOLOGIES, INC., a Massachusetts corporation
By | | |
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Name: | Robert T. Hass | |
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Title: | Vice President-Finance | |
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P.R. HOFFMAN MACHINE PRODUCTS INC., an Arizona corporation
By | | |
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Name: | Robert T. Hass | |
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Title: | Vice President-Finance | |
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BANK:
SILICON VALLEY BANK
By | | |
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Name: | | |
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Title: | | |
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Effective Date: | | |
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[Sginature page to Loan and Security Agreement (Domestic)]
EXHIBIT A
The Collateral consists of all of Borrower’s right, title and interest in and to the following personal property:
All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles, commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and
All Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.
Notwithstanding the foregoing, the common stock of Tempress Systems, Inc. and the successors of Tempress Systems, Inc. shall be excluded from the definition of Collateral.
Exhibit A
1
EXHIBIT B
LOAN PAYMENT/ADVANCE REQUEST FORM
LOAN PAYMENT/ADVANCE REQUEST FORM | |
DEADLINE FOR SAME DAY PROCESSING IS 12:00 P.S.T. | |
Fax To: | Date: ___________________ |
o | LOAN PAYMENT: | |
| | |
AMTECH SYSTEMS, INC. (Borrower) |
| | |
| From Account # ___________________________________ | To Account # ___________________________________ |
| (Deposit Account #) | (Loan Account #) |
| | |
| Principal $______________________________________ and/or Interest $_______________________________________ |
| | |
| All Borrower’s representation and warranties in the Loan and Security Agreement are true, correct and complete in all material respects up to and including the date of the transfer request for a loan payment, but those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of that date: |
| |
| Authorized Signature: ________________________________ Phone Number: _________________________________ |
| | |
o | LOAN ADVANCE: | |
| Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an outgoing wire. |
| | |
| From Account # ___________________________________ | To Account # ___________________________________ |
| (Loan Account #) | (Deposit Account #) |
| | |
| Amount of Advance $_______________________________ | |
| | |
| All Borrower’s representation and warranties in the Loan and Security Agreement are true, correct and complete in all material respects up to and including the date of the transfer request for an advance, but those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of that date: |
| | |
| Authorized Signature: ________________________________ Phone Number: _________________________________ |
| | |
| OUTGOING WIRE REQUEST | |
| Complete only if all or a portion of funds from the loan advance above are to be wired. |
| Deadline for same day processing is 12:00pm, P.S.T. | |
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| Beneficiary Name: ________________________________ | Amount of Wire: $________________________________ |
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| Beneficiary Bank: ________________________________ | Account Number: ________________________________ |
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| City and State: ___________________________________ | |
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| Beneficiary Bank Transit (ABA) #: __ __ __ __ __ __ __ __ __ Beneficiary Bank Code (Swift, Sort, Chip, etc.): |
| (For International Wire Only) |
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| Intermediary Bank: ________________________________ | Transit (ABA) #: _________________________________ |
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| For Further Credit to: ___________________________________________________________________________________ |
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| Special Instruction: ____________________________________________________________________________________ |
Exhibit B
1
By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and conditions set forth in the agreements(s) covering funds transfer service(s), which agreements(s) were previously received and executed by me (us).
Authorized Signature: ________________________________ | | 2nd Signature (If Required): ________________________ |
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Print Name/Title: ____________________________________ | | Print Name/Title: ________________________________ |
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Telephone # dv | | Telephone # _________________________________________ |
Exhibit B
3
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: | Amtech Systems, Inc.; Bruce Technologies, Inc.; P.R. Hoffman Machine Products Inc. | Bank: | Silicon Valley Bank |
Commitment Amount: $2,000,000. | | |
ACCOUNTS RECEIVABLE | | |
1. | Accounts Receivable Book Value as of | $ | __________ |
2. | Additions (please explain on reverse) | $ | __________ |
3. | TOTAL ACCOUNTS RECEIVABLE | $ | __________ |
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication) | | |
4. | Amounts over 90 days due | $ | __________ |
5. | Balance of 50% over 90 day accounts | $ | __________ |
6. | Credit balances over 90 days | $ | __________ |
7. | 35%Concentration Limits | $ | __________ |
8. | Foreign Accounts | $ | __________ |
9. | Federal Governmental Accounts | $ | __________ |
10. | Contra Accounts | $ | __________ |
11. | Promotion or Demo Accounts | $ | __________ |
12. | Intercompany/Employee Accounts | $ | __________ |
13. | Other (please explain on reverse) | $ | __________ |
14. | TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS | $ | __________ |
15. | Eligible Accounts (#3 minus #4) | $ | __________ |
16. | LOAN VALUE OF ACCOUNTS (80% of #15) | $ | __________ |
| | | |
INVENTORY | | |
17. | Inventory Value as of | $ | __________ |
18. | TOTAL INVENTORY | $ | __________ |
INVENTORY DEDUCTIONS (without duplication) | | |
19. | Raw Materials over 180 days | $ | __________ |
20. | Work In Process | $ | __________ |
21. | Other (please explain on reverse) | $ | __________ |
22. | TOTAL INVENTORY DEDUCTIONS | $ | __________ |
23. | Eligible Inventory (#18 minus #22) | $ | __________ |
24. | LOAN VALUE OF ACCOUNTS (50% of #15, no greater than $500,000) | $ | __________ |
| | | |
BALANCES | | |
25. | Maximum Loan Amount | $ | __________ |
26. | Total Funds Available [Lesser of #25 or #16 plus #24] | $ | __________ |
27. | Present balance owing on Line of Credit | $ | __________ |
28. | Outstanding under Sublimits (LC and Cash Management) | $ | __________ |
29 | RESERVE POSITION (#25 minus #27 and #28) | $ | __________ |
Exihibit C
1
The undersigned represents and warrants that this is true, complete and correct, and that the information in this Borrowing Base Certificate complies with the representations and warranties in the Loan and Security Agreement between the undersigned and Silicon Valley Bank.
COMMENTS: | | BANKS USE ONLY |
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| | Rec’d By: | | |
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| | | Auth.Signer |
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Amtech Systems, Inc. | | Date: | | |
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By: | | | Verified: | | |
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| Authorized Signer | | | Auth.Signer |
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| | | | Date: | | |
Bruce Technologies, Inc. | | |
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By: | | | | | | |
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| Authorized Signer | | | | |
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P.R. Hoffman Machine Products Inc. | | | | |
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By: | | | | | | |
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| Authorized Signer | | | | |
Exihibit C
2
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: | SILICON VALLEY BANK | Date: | |
FROM: | AMTECH SYSTEMS, INC., an Arizona corporation; | |
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| BRUCE TECHNOLOGIES, INC., a Massachusetts corporation; and | | |
| P.R. HOFFMAN MACHINE PRODUCTS INC., an Arizona corporation | | |
The undersigned authorized officers of AMTECH SYSTEMS, INC., an Arizona corporation, BRUCE TECHNOLOGIES, INC., a Massachusetts corporation, and P.R. HOFFMAN MACHINE PRODUCTS INC., an Arizona corporation (collectively referred to herein as the “Borrower” and individually as a “Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank. Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.
Please indicate compliance status by circling Yes/No under “Complies” column.
Reporting Covenant | | Required | | Complies |
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Borrowing Base Certificate | | Monthly within 30 days if any Credit Extension is outstanding and when Borrower’s Liquidity Ratio > 1.50 | | Yes No N/A |
Transaction Report | | Weekly when Borrower’s Liquidity Ratio < 1.50 | | Yes No N/A |
Monthly financial statements with | | | | |
Compliance Certificate | | Monthly within 30 days | | Yes No N/A |
Monthly A/R & A/P aging reports and inventory reports | | Monthly within 20 days when Borrower’s Liquidity Ratio < 1.50 or Monthly within 30 days when Borrower’s Liquidity Ratio > 1.50 | | Yes No N/A |
Annual financial projections | | Within 15 days after the end of each fiscal year | | Yes No N/A |
10Q, 10K and 8K reports + Compliance Certificate | | Within 5 days after filing with SEC | | Yes No N/A |
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The following Intellectual Property was registered after the Effective Date (if no registrations, state “None”) |
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Financial Covenant | | Required | | Actual | | Complies | |
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Maintain on a Monthly Basis: | | | | | | | | | | |
Minimum Tangible Net Worth | | $ | 10,000,000 | | $ | _______ | | | Yes No | |
Exhibit D
1
The following financial covenant analysis and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.
The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”) ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________________________________________________________________________________________________________________________________________
AMTECH SYSTEMS, INC., an Arizona corporation | BANK USE ONLY |
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By: | | | | Received by: | | |
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| | | | | | AUTHORIZED SIGNER |
Name: | | | | | | |
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Title: | | | | | | AUTHORIZED SIGNER |
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BRUCE TECHNOLOGIES, INC., a Massachusetts corporation | Verified: | | |
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By: | | | | | | |
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Name: | | | | |
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Title: | | | | Compliance Status: Yes No |
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P.R. HOFFMAN MACHINE PRODUCTS INC., an Arizona corporation | | | |
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By: | | | | | | |
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Name: | | | | | | |
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Title: | | | | | | |
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Exhibit D
2
Schedule 1 to Compliance Certificate
Financial Covenants of Borrower
Dated: | ___________________ | | |
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I. | Tangible Net Worth (Section 6.9) | | |
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Required: | $10,000,000 | | |
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Actual: | | | |
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A. | Aggregate value of total assets of Borrower and its Subsidiaries | $ | __________ |
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B. | Aggregate value of goodwill of Borrower and its Subsidiaries | $ | __________ |
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C. | Aggregate value of intangible assets of Borrower and its Subsidiaries | $ | __________ |
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D. | Aggregate value of notes, accounts receivables and other obligations owing to Borrower from its officers or other Affiliates | | |
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E. | Aggregate value of any reserves not already deducted from assets | $ | __________ |
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F. | Aggregate value of liabilities of Borrower and its Subsidiaries (including all Indebtedness) and current portion of Subordinated Debt permitted by Bank to be paid by Borrower (but no other Subordinated Debt) | | |
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G. | Tangible Net Worth (line A minus line B minus line C minus line D minus line E minus line F) | $ | __________ |
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Is line G equal to or greater than $10,000,000? | | |
| _____ | No, not in compliance | _____ | Yes, in compliance |
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FOR INTERIM MONTHS, USE THE FOLLOWING: | | |
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Actual: | | | |
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A. | Consolidated Tangible Net Worth as of the beginning of the quarter | $ | __________ |
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B. | Profits of Borrower and its Subsidiaries during the period | $ | __________ |
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C. | Amortization of intangible assets of Borrower and its Subsidiaries during the period | $ | __________ |
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D. | Any Subordinated Debt | $ | __________ |
Schedule 1 to Exhibit D
1
E. | Any write-off of intangible assets during the period | $ | __________ |
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F. | Losses of Borrower and its Subsidiaries during the period | $ | __________ |
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G. | Any dividends paid during the period | $ | __________ |
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H. | Amount paid for any intangible assets during the period | $ | __________ |
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I. | Tangible Net Worth (line A plus line B plus line C plus line D plus line E minus line F minus line G minus line H) | $ | __________ |
Is line I equal to or greater than $10,000,000? | | |
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| _____ | No, not in compliance | _____ | Yes, in compliance |
Schedule 1 to Exhibit D
2
EXHIBIT E
TRANSACTION REPORT
Silicon Valley Bank | | | | | | | | | | | AMTECH SYSTEMS INC. | | | |
Commercial Finance Division | | | | | | | | | | | Report No: | | | 1 | | | | |
3003 Tasman Drive, Santa Clara, CA 95054 | | | | | | | | Date | | | 01/00/00 | | | | |
TRANSACTION REPORT AND LOAN REQUEST |
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| | DOMESTIC | | EXIM | | Consolidated | |
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| | ACCOUNTS RECEIVABLE COLLATERAL | | | | | | | | | | |
1 | Beginning Accounts Receivable Balance Per Previous Report (Line 7) | | $ | — | | $ | — | | $ | — | |
2 | Add: Sales for Period (Schedule A) | | $ | — | | $ | — | | $ | — | |
3 | Add: Misc. Customers | | $ | — | | $ | — | | $ | — | |
4 | Less: Credit Memos (Schedule A) | | $ | — | | $ | — | | $ | — | |
5 | Less: Cash Receipts Applied To Accounts Receivable (Direct-Schedule B) | | $ | — | | $ | — | | $ | — | |
| Less: Cash - Lockbox | | $ | — | | $ | — | | $ | — | |
| Less: Cash - Other (DDA, etc.) | | $ | — | | $ | — | | $ | — | |
5a | | | Total Cash (Applied to Accounts Receivable) | | | | | | | | $ | — | | $ | — | | $ | — | |
6 | Adjustments: Dr. - Increase Cr. (Decrease) | | $ | — | | $ | — | | $ | — | |
7 | Ending Accounts Receivable Balance (Sum Lines 1-4a,5a,6) | | $ | — | | $ | — | | $ | — | |
8 | Deduct: Ineligible Accounts Receivable Per Aging Dated: | | 8/31/2005 | | $ | — | | $ | — | | $ | — | |
Exhibit E
1
9 | Total Eligible Accounts Receivable | | $ | — | | $ | — | | $ | — | |
| INVENTORY COLLATERAL | | | | | | | | | | | |
10 | Inventory total | | $ | — | | $ | — | | $ | — | |
11 | Deduct: Ineligible inventory | | $ | — | | $ | — | | $ | — | |
12 | Total Eligible Inventory | | $ | — | | $ | — | | $ | — | |
| COMPUTATION OF BORROWING AVAILABILITY | | DOM | | | EXIM | | | | | | | | | | |
13 | Availability from Receivables | | 80 | % | | 90 | % | $ | — | | $ | — | | $ | — | |
14 | Availability from Inventory each capped @ | $ | 500,000.00 | | | 50 | % | | 50 | % | $ | — | | $ | — | | $ | — | |
| Inventory advances cannot exceed (% of total outstandings) | | | | | 30 | % | | 80 | % | $ | — | | $ | — | | $ | — | |
15 | Total availability before reserves & loan balance (Up to line limit) | | $ | — | | $ | — | | $ | — | |
16 | Less Reserves: | | Letter of Credit Reserve | | | | | | | | $ | — | | $ | — | | $ | — | |
| | | | | Cash Management Reserve | | | | | | | | $ | — | | $ | — | | $ | — | |
17 | | | | | | Total of Reserves capped @ | | $ | 500,000.00 | | | | | | | | $ | — | | $ | — | | $ | — | |
18 | NET BORROWING AVAILABILITY: Before Loans | | | | $ | 2,000,000 | | $ | 1,000,000 | | $ | — | | $ | — | | $ | — | |
| COMPUTATION OF LOAN | | | | | | | | | | |
19 | Beginning Loan Balance (Line 29 of Previous Report) | | $ | — | | $ | — | | $ | — | |
Exhibit E
2
20 | Add: Monthly Interest Charge | | | | | | | | | | |
21 | Add: Returned Checks (NSF, Endorsement, etc.) | | | | | | | | | | |
22 | Add: Other: Principal Payments, Fees & Charges etc. | | | | | | | | | | |
23 | Less: Cash Applied To Loan - Accounts Receivable (Direct) from Schedule B | | $ | — | | $ | — | | $ | — | |
24 | Less: Cash - Lockbox | | $ | — | | $ | — | | $ | — | |
25 | Less: Cash - Other (DDA, etc.) | | $ | — | | $ | — | | $ | — | |
26 | Ending Loan Balance - Before Loan Request (Sum Lines 13-15 all items) | | $ | — | | $ | — | | $ | — | |
27 | UNUSED BORROWING AVAILABILITY BEFORE LOAN REQUEST | | $ | — | | $ | — | | $ | — | |
| New Loan Request: The undersigned hereby requests a loan advance in the amount shown adjacent hereto. Please deposit/wire loan proceeds to my Checking A/C No. | | | SEE NOTE | | | | | | | | | | |
28 | AT SILICON VALLEY BANK | | OFFICE: | | | | | | Advance = | | $ | — | | $ | — | | $ | — | |
29 | NEW LOAN BALANCE - AFTER LOAN ADVANCE | | $ | — | | $ | — | | $ | — | |
30 | REMAINING UNUSED BORROWING AVAILABILITY - After Loan Request | | $ | — | | $ | — | | $ | — | |
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The above described Collateral is subject to a security interest in favor of SILICON VALLEY BANK pursuant to the terms and conditions of a Loan and Security Agreement’s, as executed by and between SILICON VALLEY BANK and the undersigned. $________________________ has been deposited/wired to your account pursuant to the request set forth above. |
BORROWER | | SILICON VALLEY BANK |
AMTECH SYSTEMS INC. | | SVB | |
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Auth Signer: | | | Signature | |
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| Title | | | Title | |
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| Date | | | DATE | |
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Exhibit E
3
EXHIBIT F
INTENTIONALLY OMITTED
Exhibit F
1
EXHIBIT G
PERFECTION CERTIFICATE
[To be provided manually from lending officer.]
1
