EXHIBIT 10.11
Commitment Letter Comerica Bank
COMERICA
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Comerica Bank-California HIGH TECHNOLOGY BANKING DIVISION
55 Almaden Boulevard, 2nd Floor
San Jose, CA 95113
March 15, 1999
John Trewin
Chief Financial Officer
California Micro Devices Corp.
215 Topaz Street
Milpitas, Ca 95035
Dear John,
Comerica Bank - California ("Bank") is please to commit to California Micro
Devices Corp. ("Borrower") the following credit facility:
FACILITY #1
TYPE/AMOUNT: $3,000,000 revolving secured accounts receivable line of
credit including a within line facility for letters of
credit up to $500,000.
PURPOSE: For short term operating needs and for letters of credit.
ADVANCE: 75% of eligible receivables. Ineligible accounts are
contra, foreign not covered by a letter of credit or credit
insurance acceptable to the Bank, affiliate, employee,
government, consignment, C.O.D., over 90 day accounts, all
accounts from companies which have more than 25% if its
accounts over 90 days past due as well as account
concentrations in excess of 20% of the total. If borrowings
exceed $500,000 then the facility converts to a D.O.F.
(Daily Dominion of Funds reporting) until Borrower reports
two consecutive increasing quarters of operating profits
and NPAT of at least $100,000 per quarter.
PRICING: Prime rate plus .50%.
$25,000 up-front fee.
REPAYMENT: Interest is to be paid monthly. Principal is limited to the
borrowing Base and is due at maturity.
EXPIRATION: 6/30/2000 (15 months). Documentary and Standby Letters of
Credit are not to expire after the line expiration. If the
line of credit is not renewed then the letters of credit
outstanding are to be cash secured.
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SECURITY: Perfected first security interest in all of borrower's
assets (unencumbered fixed assets) and other intangibles.
Borrower is to not have a second lien on its assets.
Borrower is not to pledge its intellectual property or
grant a non-pledge of its intellectual property to another
party.
OTHER CONDITIONS:
This credit facility will be subject to a satisfactory pre-loan audit and be
governed by a loan agreement that will include but will not be limited to the
following:
1) Borrower is to maintain the following financial covenants at all times:
a) Minimum monthly quick ratio of 1.25 (excludes restricted
cash).
b) Maximum total liabilities to tangible net worth of 1.0
c) Minimum tangible net worth of $15,000,000 increasing by 75% of
quarterly profits and by 100% of any new equity and/or
subordinated debt raised and return of restricted cash. (TNW
excludes restricted cash)
d) Borrower is to achieve quarterly profitability beginning with
the quarter ending 12- 31-99. Thereafter, Borrower may have
one loss quarter per fiscal year with a maximum loss of
$250,000 with no two consecutive quarterly losses.
2) Borrower to provide Bank with:
a) Monthly financial statements within twenty (20) days of month
end if borrowing.
b) Annual unqualified CPA audited financial statements with
ninety (90) days of FYE.
c) Monthly borrowing base certificate, accounts receivable, and
payable agings within 15 days of month end if borrowing.
d) Quarterly borrowing base certificate, accounts receivable, and
payable agings within 15 days of quarter end if not borrowing.
If borrowing, borrowing base certificate is to be no more than
thirty days old.
e) Budgets, sell through reports, projections or other financial
exhibits which Bank may reasonably request.
f) Satisfactory disclosure of status of legal actions against
Borrower.
3) Without Bank's prior written approval, Borrower will not:
a) Pledge assets other than to the Bank except for purchase money
(lease) transactions.
b) Enter into any other direct borrowings, lend money or enter
into guarantees.
c) Enter into any merger or acquisition.
d) Repurchase stock, declare or pay cash dividends.
e) Make capital expenditures or lease equipment (purchase money
transactions) in excess of $1,500,000 per year.
4) Bank will have the right to audit the Borrower's financial records.
Audit costs are for the account of the Borrower and are on a
semi-annual schedule. Audit costs are not to exceed $750 per audit.
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5) Borrower is to provide evidence of full risk insurance covering all
assets pledged to the Bank and loss payable endorsement naming lender
as loss payee.
6) There shall be a cross default provision between this credit and any
existing or future credit arrangements.
7) Borrower's demonstration to the satisfaction of the Bank that Borrower
has taken and is taking all necessary and appropriate steps to ensure
that Borrower, its businesses, and its material customers, suppliers
and vendors are year 2000 Compliant in a timely manner.
"Year 2000 Compliant".
8) Reasonable out of pocket costs, legal and filing fees are for the
account of the Borrower.
9) Borrower is to maintain its primary depository accounts with the Bank.
If the above commitment is acceptable please sign, date and return this
commitment letter along with the commitment fees by March 25, 1999 at which time
this commitment expires. We are pleased To offer this credit facility and to
assist California Micro Devices in its growth plans.
Sincerely,
/s/ Alan Jepsen
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Alan Jepsen
Vice President and Assistant Manager
Comerica Bank - California
High Technology Division
Agreed to and accepted by:
/s/John Trewin
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John Trewin
Chief Financial Officer
California Micro Devices Corp.