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FORBEARANCE AGREEMENT
AGREEMENT dated as of April 22, 1994 by and among LTX CORPORATION and
LTX (Foreign Sales Corporation) B.V., a Massachusetts corporation (the
"Borrowers") and SILICON VALLEY BANK, a California-chartered bank (the
"Bank").
PRELIMINARY STATEMENT
1. The Bank issued and the Borrowers accepted and agreed to a
Commitment Letter dated August 16, 1993 as amended by a First Amendment to
Commitment Letter dated as of December 31, 1993 (the "Commitment Letter")
pursuant to which the Bank agreed to make available to the Borrowers a working
capital line of credit in a principal amount up to $5,000,000. Unless otherwise
defined herein, capitalized terms used herein shall have the same respective
meanings as set forth in the Commitment Letter.
2. The Borrowers and the Bank acknowledge and agree that Events of
Default have occurred and currently exist under the Commitment Letter because
the Borrowers are in breach of financial covenants with respect to minimum
quick ratio, minimum profitability, maximum leverage and minimum capital base
as set forth in Paragraphs 21, 22, 23 and 24 respectively, of Schedule II to
the Commitment Letter (the "Existing Defaults"). As a result of, inter alia,
the Existing Defaults, the Bank is entitled to enforce its remedies under the
Commitment Letter and is not required to make any further advances under the
Commitment Letter.
NOW THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Conditions of Effectiveness.
This Amendment shall be deemed effective as of April 22, (the
"Effective Date") provided that the Bank shall have received on or before April
29, 1994 (a) the counterparts of this Agreement executed by the Borrowers, (b)
the payment of a restructuring fee of $15,000, and (c) the following documents
in form and substance satisfactory to the Bank in its sole discretion,
provided, however, this Agreement shall in no event become effective until
signed by an officer of the Bank in California:
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(a) a letter amendment to the Purchase Agreements in the form of
Exhibit A hereto (the Amendment to Purchase Agreements") duly
executed by LTX Corporation; and
(b) the items required to be furnished to the Bank in accordance
with the Amendment to Purchase Agreements.
In addition, the Borrowers agree to furnish to the Bank on or before April 29,
1994 a certificate of the Clerk of the corporation as to votes of the Board of
Directors authorizing this Agreement and the Amendment to Purchase Agreements
and the transactions contemplated hereby and thereby.
Section 2. Confirmation of Representations.
The Borrower hereby confirms that its representations set forth in the
Loan Documents (including without limitation those set forth in Schedule I to
the Commitment Letter as qualified by Exhibit A thereto) are true and correct
as of the date hereof.
Section 3. Release and Discharge of Bank.
In consideration for the Bank's entering into this Amendment, the
Borrowers do hereby release and forever discharge the Bank and its affiliates,
officers, directors, agents, attorneys, employees, successors and assigns, of
and from all manner of actions, causes of action, suits, judgments, claims and
demands, whatsoever, in law or in equity, which have arisen from the beginning
of time up to the Effective Date; whether arising in connection with the
transactions contemplated hereby or by the Commitment Letter, or otherwise.
The Borrowers acknowledge that immediately prior to the Effective Date they
have no right of set-off, counterclaim or defense with respect to any
Indebtedness under the Commitment Letter.
Section 4. Agreement to Forbear.
Subject to the terms and conditions hereof, and effective only upon the
Effective Date, the Bank agrees to forebear from enforcing any of its rights
and remedies under the Commitment Letter or any of the other Loan Documents
solely as a result of the Existing Defaults for the period from the Effective
Date to and including May 15, 1994, provided, however, the Bank may at any time
and with or without notice to the Borrower terminate the foregoing agreement
to forebear if, in the reasonable judgment of the Bank, there occurs any other
Event of Default (other than an Existing Default) or there exists any
condition which has a Material Adverse Effect.
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Section 5. Effect on the Commitment Letter and
the other Loan Documents
A. The Commitment Letter and the Note shall remain in full force and
effect and are hereby ratified and confirmed. Each of the other Loan Documents
is in full force and effect and is hereby ratified and confirmed.
B. This Agreement (i) does not constitute a waiver or modification of
any term, condition or covenant of the Commitment Letter, the Note, any other
Loan Documents, the Purchase Agreements or any of the instruments or documents
referred to by the foregoing documents, other than as expressly set forth
herein, and (ii) shall not prejudice any rights which the Bank may now or
hereafter have under or in connection with the Commitment Letter, the Note, the
other Loan Documents, the Purchase Agreements or any of the instruments or
documents referred to therein.
Section 6. Cost and Expenses.
The Borrowers agree to pay on demand all costs and expenses of the Bank
in connection with the preparation, reproduction, execution and delivery of
this Agreement and the other instruments and documents to be delivered
hereunder (including without limitation the Note), including the reasonable
fees and reasonable out-of-pocket expenses of Sullivan & Worcester, special
counsel for the Bank with respect thereto.
Section 7. Governing Law.
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND WILL, UPON ACCEPTANCE,
CONSTITUTE AN AGREEMENT UNDER SEAL BETWEEN THE PARTIES.
Section 8. Counterparts; Integration.
This Amendment may be signed in one or more counterparts each of which
taken together shall constitute one and the same instrument. This Amendment
constitutes the entire agreement of the parties as to the subject matter
hereof and except as otherwise expressly provided herein, supersedes any and
all prior agreements and understandings, oral and written, of the parties.
Section 9. Waiver of Jury Trial.
EXCEPT TO THE EXTENT PROHIBITED BY LAW WHICH CANNOT BE WAIVED, THE
BORROWER HEREBY WAIVES TRIAL BY JURY IN CONNECTION WITH ANY ACTION OR
PROCEEDING OF NATURE WHATSOEVER ARISING UNDER, OUT OF OR IN CONNECTION WITH
THIS AMENDMENT, THE COMMITMENT LETTER OR ANY OF THE OTHER LOAN DOCUMENTS OR
ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY, WHETHER ARISING UNDER STATUTE
(INCLUDING ANY FEDERAL OR STATE CONSTITUTION) OR UNDER THE LAW OF CONTRACT,
TORT OR OTHERWISE AND INCLUDING, WITHOUT
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LIMITATION ANY CHALLENGE TO THE LEGALITY, VALIDITY, BINDING EFFECT OR
ENFORCEABILITY OF THIS PARAGRAPH OR THIS RESTATED COMMITMENT LETTER OR ANY OF
THE OTHER LOAN DOCUMENTS.
IN WITNESS WHEREOF the parties hereto have caused this Amendment to be
executed under seal by their respective officers thereunto duly authorized as
of the date first above written.
ATTEST: LTX CORPORATION
HELEN L. DORGAN JOHN J. ARCARI
By: ____________________________ By: ______________________________
Name: Helen L. Dorgan Name: John J. Arcari
Title: Corporate Secretary Title: Chief Financial Officer
[CORPORATE SEAL]
LTX (FOREIGN SALES)
CORPORATION
ATTEST:
HELEN L. DORGAN ROGER W. BLETHEN
By: ____________________________ By: ____________________________
Name: Roger W. Blethen
Title: Director
SILICON VALLEY EAST, a
Division of Silicon Valley Bank
By: ____________________________
Name: Kenneth P. Wilcox
Title: Senior Vice President
SILICON VALLEY BANK
By: ____________________________
Name:
Title:
(signed in Santa Clara, California)
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EXHIBIT:
A - Amendment to Purchase Agreement
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EXHIBIT A
April 22, 1994
Via Fax and
Federal Express
LTX Corporation
LTX Park at University Avenue
Westwood, MA 02090
Attn: John J. Arcari
Chief Financial Officer
Gentlemen:
Reference is made to Purchase Agreement dated as of January 14, 1994
and to the Purchase Agreement dated as of January 28, 1994 (the "Purchase
Agreements") between LTX Corporation (the "Company") and Silicon Valley Bank
(the "Bank"). Capitalized terms used in this letter, unless otherwise defined
in this letter, shall have the respective meanings assigned to them in the
Purchase Agreements.
The purpose of this letter is to restate your payment obligations to
the Bank as set forth in the last sentence of Section 5.1 of each of the
Purchase Agreements under the Purchase Agreements as follows:
1. The Company shall pay to the Bank by wire transfer of immediately
available funds any monies previously collected by the Company
with respect to the Obligations (the "Collected Funds") upon
the sooner to occur of: (a) the date upon which the Company closes
the contemplated issuance of subordinated notes; or (b) the date
upon which the Company factors with the Bank eligible domestic
receivables sufficient in amount to pay all or a portion of the
Collected Funds, provided, however, in no event shall the
Collected Funds be repaid in full later than May 7, 1994.
2. In addition to the foregoing, the Company shall pay to the Bank
interest on any such Collected Funds at a per annum rate equal
the Silicon Valley
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Bank Prime Rate plus 5% during the period from and including March
23, 1994 to but excluding the date upon which the Bank receives
such Collected Funds from the Company, such interest to be payable
contemporaneously with the payment of the Collected Funds to which
such interest relates. The Company agrees to promptly notify the
Bank as to the date of its receipt of any Collected Funds.
This letter shall be deemed effective as of the date hereof, provided
that the Bank shall have received two copies of this letter duly executed by
you on or before April 25, 1994 and' provided further that the Company
satisfies the following conditions on or before April 26, 1994:
The Company shall provide the Bank with evidence satisfactory to it
that the Company has (i) directed its depositories, State Street Bank
and Trust Company, Bank of America and Shawmut Bank, N.A. to forward
all items received by such banks to accounts designated by the Bank
for collection and (ii) directed all account debtors to make all
payments to a lockbox account designated by the Bank.
The Company further confirms that the obligations of the Company to the
Bank under the Purchase Agreements (including without limitation, the
obligation to pay the "Collected Funds") constitute "Secured Obligations"
under that certain Security Agreement by and between the Company and the Bank
dated as of August 16, 1993.
Except as expressly set forth above, the Purchase Agreements shall
remain in full force and effect and are hereby ratified and confirmed. The
amendments set forth above (a) do not constitute a waiver or, other than as
expressly set forth above, a modification of any term, condition or covenant
of the Purchase Agreements and (b) shall not prejudice any rights or remedies
which the Bank may now or hereafter have under or in connection with the
Purchase Agreements. Nothing herein shall obligate the Bank to extend any
further credit to the Company.
You agree to pay on demand all costs and expenses of the Bank in
connection with the preparation, reproduction, execution and delivery of this
letter amendment and the other instruments and documents to be delivered
hereunder, including the reasonable fees and out-of-pocket expenses of
Sullivan & Worcester, special counsel for the Bank with respect thereto.
This letter amendment may be signed in one or more counterparts each of
which taken together shall constitute one and the same instruments.
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THIS LETTER AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
Please signify your agreement to the foregoing by causing this
agreement to be executed by your duly executed officer where indicated below.
Very truly yours,
SILICON VALLEY EAST, a Division of
Silicon Valley Bank
By:_____________________________
Name: Kenneth P. Wilcox
Title: Senior Vice President
SILICON VALLEY BANK
By:_____________________________
Name:
Title:
(signed in Santa Clara,
California)
Accepted and Agreed to:
LTX CORPORATION
By:____________________________
Name:
Title: