<PAGE> 1
EXHIBIT 10.17
LOAN AND SECURITY AGREEMENT
Agreement No. __________ Dated as of April 7, 2000
by and among
MMC/GATX PARTNERSHIP NO. I
as agent and a lender
SILICON VALLEY BANK
as payment agent and a lender
COMDISCO, INC.
And
OPTICAL MICRO-MACHINES, INC.
9645 Scranton Road, Suite 140
San Diego, CA 92121
as borrower
CREDIT AMOUNT: $10,000,000
Commitment Amount Commitment Percentage
MMC/GATX Partnership No. I $4,000,000 40%
Comdisco, Inc. $4,000,000 40%
Silicon Valley Bank $2,000,000 20%
Repayment Period: 36 months
Treasury Note Maturity: 36 months
Loan Margin: 275 basis points
Final Payment Percentage: 12%
Commitment Termination Date: February 28, 2001
The terms and information set forth on this cover page are a part of the
attached Loan and Security Agreement, dated as of the date first written above
(this "Agreement"), entered into by and among MMC/GATX Partnership No. I
("MMC/GATX"), in its individual capacity, Silicon Valley Bank ("SVB"), in its
individual capacity, Comdisco, Inc., in its individual capacity ("Comdisco"),
(each individually a "Lender" and collectively, "Lenders"), MMC/GATX as agent,
not individually, SVB as payment agent, not individually, and Optical
Micro-Machines, Inc. ("Borrower"). The terms and conditions of this Agreement
agreed to between the parties hereto are as follows:
<PAGE> 2
AGREEMENT
1. Definitions and Construction.
1.1 Definitions. As used in this Agreement, the following terms
shall have the following definitions:
"Affiliate" means any Person that owns or controls directly or
indirectly ten percent or more of the stock of another entity, any Person that
controls or is controlled by or is under common control with such Persons or any
Affiliate of such Persons or each of such Person's officers, directors, joint
venturers or partners.
"Agent" means MMC/GATX, not in its individual capacity, but solely in
its capacity as agent on behalf of and for the benefit of Lenders and any
successor agent.
"Agent's Expenses" means all reasonable costs or expenses (including
reasonable attorneys' fees and expenses) incurred in connection with the
preparation, negotiation, documentation, administration, funding, and
enforcement of the Loan Documents; and Agent's reasonable attorneys' fees and
expenses incurred in amending, enforcing or defending the Loan Documents,
(including fees and expenses of appeal or review, or those incurred in any
insolvency proceeding) whether or not suit is brought.
"Agreement" shall mean this Loan and Security Agreement, as the same may
from time to time be amended or supplemented.
"Basic Rate" means, as of the relevant Funding Date, the per annum rate
of interest (based on a year of twelve 30-day months) equal to the sum of (a)
the U.S. Treasury note yield to maturity for a term equal to the Treasury Note
Maturity as quoted in the Western edition of The Wall Street Journal on the date
the Loan Agreement Supplement is prepared, plus (b) the Loan Margin.
"Borrower" shall have the meaning set forth on the cover page hereof.
"Business Day" means any day that is not a Saturday, Sunday, or other
day on which banking institutions are authorized or required to close in
California.
"Closing Date" means the date that each of the conditions precedent
listed in Section 3.1 has been satisfied or waived in writing by Lenders.
"Code" means the Uniform Commercial Code as adopted and in effect in the
State of California, as amended from time to time.
"Collateral" has the meaning given that term in Section 4.1, including,
without limitation, all Financed Equipment listed in any Loan Agreement
Supplement executed from time to time pursuant to Section 4.2.
"Comdisco" means Comdisco, Inc.
1
<PAGE> 3
"Commitment Fee" has the meaning given that term in Section 2.7.
"Commitment Termination Date" means the date following such term on the
cover page of this Agreement.
"Commitment" or "Commitment Amount" means with respect to each Lender
the amount set forth following such term on the cover page of this Agreement
under the column titled "Commitment Amount" and "Commitments" means all such
amounts collectively.
"Commitment Percentage" means with respect to each Lender, the
percentage set forth on the cover page of this Agreement under the column titled
"Commitment Percentage."
"Credit Amount" means the amount set forth following such term on the
cover page of this Agreement.
"Default" means any event which with the passing of time or the giving
of notice or both would become an Event of Default hereunder.
"Default Rate" means the per annum rate of interest equal to 4% over the
rate at which the Basic Rate and the Final Payment amortize the Loan.
"Disclosure Schedule" shall mean Schedule 1 attached hereto.
"Eligible Equipment" shall mean, to the extent reasonably acceptable to
Lenders, New Equipment consisting of computer equipment, laboratory test and
measurement equipment, office equipment and furnishings.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon (a) the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from Property,
whether or not owned by Borrower, or (b) any other circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all foreign, federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control
Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act and the Emergency Planning and
Community Right-to-Know Act.
2
<PAGE> 4
"Equity Securities" of any Person shall mean (a) all common stock,
preferred stock, participations, shares, partnership interests or other equity
interests in and of such Person (regardless of how designated and whether or not
voting or non-voting) and (b) all warrants, options and other rights to acquire
any of the foregoing.
"Event of Default" has the meaning given to such term in Section 8.
"Event of Loss" has the meaning given to that term in Section 6.10.
"Final Payment" means, with respect to each Loan, a payment (in addition
to and not in substitution for the regular monthly payments of principal and
accrued interest) due on the Maturity Date for such Loan equal to the Loan
Amount for such Loan multiplied by the Final Payment Percentage.
"Final Payment Percentage" means the percentage set forth following such
term on the cover page of this Agreement.
"Financed Equipment" has the meaning given to that term in Exhibit A to
any Loan Agreement Supplement, as amended or supplemented from time to time.
"Funding Date" means any date on which a Loan is made to or on account
of Borrower under this Agreement.
"Governmental Authority" means (a) any federal, state, county, municipal
or foreign government, or political subdivision thereof, (b) any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality or public body, (c) any court or administrative tribunal or (d)
with respect to any Person, any arbitration tribunal or other non-governmental
authority to whose jurisdiction that Person has consented.
"Hazardous Materials" means all those substances which are regulated by,
or which may form the basis of liability under, any Environmental Law, including
all substances identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.
"Interim Payment" means, with respect to each Loan, an amount equal to
the initial Loan Amount multiplied by the percentage equal to the product of (i)
the quotient derived from dividing the initial Loan Factor with respect to such
Loan by 30, and (ii) the number of days from (and including) the Funding Date of
such Loan to (but not including) the first Payment Date with respect to such
Loan.
"Intellectual Property" shall mean all of Borrower's right, title and
interest in and to patents, patent rights (and applications and registrations
therefor), trademarks and service marks (and applications and registrations
therefor), inventions, copyrights, mask works (and applications and
registrations therefor), trade names, trade styles, software and computer
programs, trade secrets, methods, processes, know how, drawings, specifications,
descriptions, and all memoranda, notes, and records with respect to any research
and development, all whether now owned or subsequently acquired or developed by
Borrower and whether in tangible or
3
<PAGE> 5
intangible form or contained on magnetic media readable by machine together with
all such magnetic media.
"Landlord Agreement" means an agreement substantially in the form of
Exhibit E or such other form as Lenders may agree to accept.
"Lenders" shall have the meaning set forth on the cover page hereof.
"Lenders' Expenses" means all reasonable costs or expenses (including
reasonable attorneys' fees and expenses) incurred in connection with the
preparation, negotiation, documentation, administration, funding, and
enforcement of the Loan Documents; and Lenders' reasonable attorney's fees and
expenses incurred in amending, modifying, enforcing or defending the Loan
Documents, including the exercise of any rights or remedies afforded hereunder
or under applicable law, whether or not suit is brought.
"Lien" means any security interest, pledge, bailment, lease, mortgage,
hypothecation, conditional sales and title retention agreement, encumbrance or
other lien with respect to the Property in favor of any Person.
"Loan" means each advance of credit by Lenders to Borrower under this
Agreement in accordance with their Commitment Percentage.
"Loan Agreement Supplement" means a supplement to this Agreement in
substantially the form of Exhibit C.
"Loan Amount" means, with respect to each Loan, as of any date, the
original principal amount of such Loan less prepayments pursuant to Section
6.10.
"Loan Documents" means, collectively, this Agreement, each Loan
Agreement Supplement (including each Loan Terms Schedule), the Warrants, the
Landlord Agreements and all other documents, instruments and agreements entered
into in connection with this Agreement, all as amended or extended from time to
time.
"Loan Factor" means, with respect to each Loan, the amount set forth as
a percentage in the Loan Terms Schedule with respect to such Loan, calculated
using the Basic Rate applicable to such Loan.
"Loan Margin" means the number of basis points set forth following such
term on the cover page of this Agreement.
"Loan Terms Schedule" means, with respect to each Loan, Annex B to the
Loan Agreement Supplement prepared by Lenders in connection with such Loan.
"Maturity Date" means, with respect to each Loan, the last day of the
Repayment Period for such Loan, or if earlier, the date of acceleration of such
Loan by Lenders following an Event of Default.
4
<PAGE> 6
"Minimum Funding Amount" means $50,000.
"MMC/GATX" means MMC/GATX Partnership No. I.
"New Equipment" means Financed Equipment delivered to Borrower by the
manufacturer or vendor not more than ninety (90) days prior to the Funding Date
of the Loan relating to such Financed Equipment.
"Obligations" means all debt, principal, interest, fees, charges,
expenses and attorneys' fees and costs and other amounts owing by Borrower to
Lenders or Agent of any kind and description pursuant to the Loan Documents,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, including the principal, interest and Final
Payment due with respect to the Loans, and further including all Lenders'
Expenses and Agent's Expenses that Borrower is required to pay or reimburse by
the Loan Documents, by law, or otherwise.
"Other Equipment" means, to the extent reasonably acceptable to Lenders,
tenant improvements and buildout costs, software, tooling, equipment specially
manufactured for Borrower and other soft costs.
"Payment Agent" means SVB, not in its individual capacity but solely in
its capacity as payment agent.
"Payment Date" has the meaning given to that term in Section 2.2(a).
"Permitted Liens" means the following:
(a) The Lien created by this Agreement;
(b) Liens existing as of the date of this Agreement which are
listed in the Disclosure Schedule;
(c) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings and as to which full payment is bonded or adequate
reserves are maintained on Borrower's books in accordance with GAAP, provided
the same have no priority over any of Agent's security interests;
(d) Liens of materialmen, mechanics, warehousemen, carriers, or
other similar liens accruing after the date hereof and in the ordinary course of
business or by operation of law or regulation and securing obligations not yet
due;
(e) Easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
affecting real property not constituting a material adverse effect;
(f) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payments of customs duties in connection with the
importation of goods;
5
<PAGE> 7
(g) Liens that are not prior to the Lien of Agent which
constitute rights of set-off of a customary nature or banker's Liens with
respect to amounts on deposit, whether arising by operation of law or by
contract, in connection with arrangement entered in to with banks in the
ordinary course of business; and
(h) Liens to secure payment of worker's compensation, employment
insurance, old age pensions or other social security obligations of Borrower in
the ordinary course of business of Borrower.
"Person" means and includes any individual, any partnership, any
corporation, any business trust, any joint stock company, any limited liability
company, any unincorporated association or any other entity and any domestic or
foreign national, state or local government, any political subdivision thereof,
and any department, agency, authority or bureau of any of the foregoing.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.
"Repayment Period" means the period beginning on the first Payment Date
and continuing for the Repayment Period set forth following such term on the
cover page of this Agreement.
"Scheduled Payments" has the meaning given to such term in Section
2.2(a).
"Stated Cost" means (i) with respect to Eligible Equipment, the original
cost to Borrower of the item of Eligible Equipment excluding any and all
freight, installation, taxes and other soft costs, and (ii) with respect to
Other Equipment, the original cost to Borrower of the item of Other Equipment
excluding any and all freight, installation, and taxes.
"Stipulated Loan Value" means, with respect to each Loan, the percentage
set forth with respect to such Loan in the Loan Terms Schedule for such Loan,
determined as of the Payment Date on which payment of such amount is to be made,
or if such date is not a Payment Date, on the Payment Date immediately
succeeding such date.
"Subsidiary" means any corporation, partnership, limited liability
company or similar organization of which a majority of the outstanding capital
stock entitled to vote for the election of directors or other managing body
(otherwise than as the result of a default) is owned by Borrower directly or
indirectly through Subsidiaries.
"SVB" means Silicon Valley Bank.
"Term" means the period from and after the date hereof until the payment
in full of all amounts and liabilities payable under this Agreement and the
other Loan Documents, including principal and interest on the Loans and the
Final Payment with respect to each Loan.
"Treasury Note Maturity" means the periods of months set forth following
such terms on the cover page of this Agreement.
6
<PAGE> 8
"Warrants means separate warrants in favor of each of the Lenders to
purchase securities of Borrower substantially in the form of Exhibit B.
1.2 Other Interpretive Provisions. References in this Agreement
to "Articles," "Sections," "Exhibits, "Schedules" and "Annexes" are to recitals,
articles, sections, exhibits, schedules and annexes herein and hereto unless
otherwise indicated. References in this Agreement and each of the other Loan
Documents to any document, instrument or agreement shall include (a) all
exhibits, schedules, annexes and other attachments thereto, (b) all documents,
instruments or agreements issued or executed in replacement thereof, and (c)
such document, instrument or agreement, or replacement or predecessor thereto,
as amended, modified and supplemented from time to time and in effect at any
given time. The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement or any other Loan Document shall refer to
this Agreement or such other Loan Document, as the case may be, as a whole and
not to any particular provision of this Agreement or such other Loan Document,
as the case may be. The words "include" and "including" and words or similar
import when used in this Agreement or any other Loan Document shall not be
construed to be limiting or exclusive. Unless otherwise indicated in this
Agreement or any other Loan Document, all accounting terms used in this
Agreement or any other Loan Document shall be construed, and all accounting and
financial computations hereunder or thereunder shall be computed, in accordance
with generally accepted accounting principles as in effect in the United States
of America from time to time.
2. Loans; Repayment.
2.1 Commitment.
(a) The Credit Amount. Subject to the terms and conditions
of this Agreement and relying upon the representations and warranties herein set
forth as and when made or deemed to be made, Lenders agree to lend to Borrower,
severally and not jointly, from time to time prior to the Commitment Termination
Date, the Loans according to each Lender's pro rata share of the Credit Amount
(based upon the respective Commitment of each Lender); provided that the
aggregate principal amount of the Loans shall not exceed the Credit Amount at
such time; provided, further that the aggregate original principal amount of all
Loans relating to Other Equipment shall not at any time exceed ten percent (10%)
of the then aggregate original principal amount of all Loans. Loans may not be
prepaid.
(b) Promissory Note. Each Loan Terms Schedule shall be
considered a promissory note evidencing the amounts due hereunder for all
purposes.
(c) Use of Proceeds. The proceeds of the Loans shall be
used solely for the purchase of Eligible Equipment or Other Equipment or
reimbursement to Borrower of, the Stated Cost of Eligible Equipment or Other
Equipment.
2.2 Scheduled Payments; Payment of Interest; Final Payment; Loan
Fee.
(a) Scheduled Payments. Borrower shall make payments of
principal and interest in advance for each Loan (collectively, "Scheduled
Payments") as set forth in the Loan Terms Schedule, commencing on the date set
forth on the Loan Term Schedule applicable to
7
<PAGE> 9
such Loan and continuing thereafter during the Repayment Period on the first
Business Day of each calendar month (each a "Payment Date"), in an amount equal
to the Loan Factor multiplied by the Loan Amount for such Loans as of such
Payment Date. In any event, all unpaid principal and accrued interest shall be
due and payable in full on the last Payment Date with respect to such Loan.
(b) Interim Payment. Unless the Funding Date for a Loan is
a Payment Date, Borrower shall pay the Interim Payment payable with respect to
such Loan on the Funding Date, as specified in the Loan Term Schedule applicable
to such Loan.
(c) Payment of Interest. Borrower shall pay interest on
each Loan at a per annum rate of interest equal to the Basic Rate specified in
the applicable Loan Agreement Supplement for such Loan. All computations of
interest on Loans shall be based on a year of twelve 30-day months.
Notwithstanding any other provision hereof, the amount of interest payable
hereunder to any Lender, including interest at the Default Rate, if applicable,
shall not in any event exceed the maximum amount permitted by law which a court
of competent jurisdiction shall deem applicable hereto (the "Maximum Rate"). If
the Borrower actually pays any Lender an amount of interest, chargeable on the
total aggregate principal Obligations of Borrower to such Lender under this
Agreement (as said rate is calculated over a period of time from the date of
this Agreement through the end of time that any principal is outstanding), which
amount of interest exceeds interest calculated at the Maximum Rate on said
principal chargeable over said period of time, then with respect to such Lender
such excess interest actually paid by Borrower shall be applied first, to the
payment of principal outstanding on the Loans payable to such Lender; second,
after all principal is repaid, to the payment of such Lender's out of pocket
costs, expenses, and professional fees which are owed by Borrower to such Lender
under this Agreement or the other Loan Documents; and third, after all
principal, costs, expenses, and professional fees owed by Borrower to such
Lender are repaid, the excess (if any) shall be refunded to Borrower, and the
effective rate of interest with respect to such Lender shall be automatically
reduced to the Maximum Rate.
(d) Final Payment. Unless a Loan is prepaid in full, on
the Maturity Date with respect to such Loan, Borrower shall pay, in addition to
any unpaid principal and accrued interest and all other amounts due on such date
with respect to such Loan, an amount equal to the Final Payment with respect to
such Loan.
(e) Termination of Commitment to Lend. Notwithstanding
anything in the Loan Documents, each Lender's obligation to lend the undisbursed
portion of the such Lender's Commitment to Borrower hereunder shall terminate on
the earlier of (i) at each Lender's sole election, the occurrence and
continuance of any Default or Event of Default hereunder, and (ii) the
Commitment Termination Date. Notwithstanding the foregoing, each Lender's
obligation to lend the undisbursed portion of such Lender's Commitment to
Borrower shall terminate if, in such Lender's sole judgment, there has been a
material adverse change in the general affairs, management, results of
operations, condition (financial or otherwise) of Borrower, whether or not
arising from transactions in the ordinary course of business, or there has been
any material adverse deviation by Borrower from the business plan of Borrower
presented to and not disapproved by Lenders, as updated from time to time.
8
<PAGE> 10
2.3 Other Payment Terms.
(a) Place and Manner. Borrower shall make all payments due
to Agent or Lenders in lawful money of the United States. All payments of
principal, interest, fees and other amounts payable by Borrower hereunder shall
be made, in immediately available funds, by debit to any account of Borrower
with Payment Agent not later than 10:00 a.m. California time, on the date on
which such payment is due. Borrower authorizes and directs SVB, as Payment
Agent, to debit the amount of each such payment to any account of Borrower
maintained with Payment Agent, and to disburse to each Lender its respective
share of such payment on each Payment Date or such other date that any payment
is due. Payment Agent shall disburse payments to MMC/GATX and Comdisco as
follows:
<TABLE>
<CAPTION>
<S> <C>
MMC/GATX Payment
----------------
GATX Capital Corporation
Bank Name: Bank of America
Bank Address: Dallas, Texas 75202
Account No.:
ABA Routing No.:
Reference: Optical Micro-Machines Invoice
#
---------------
Comdisco Payment
----------------
Comdisco, Inc.
Bank Name:
Account No.:
Attention:
ABA Routing No.:
Reference:
</TABLE>
Any payment received by Agent, Payment Agent or any Lender for the account of
another Lender shall be paid promptly to such Lender, in like funds, for the
Loan in respect of which such payment is made.
(b) Date. Whenever any payment due hereunder shall fall
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in the
computation of interest or fees, as the case may be.
(c) Default Rate. If either (i) any amounts required to be
paid by Borrower under this Agreement or the other Loan Documents (other than
the Warrants) (including principal, interest, the Final Payment payable with
respect to any Loan, and any fees or other amounts) remain unpaid after such
amounts are due, or (ii) an Event of Default has occurred and is continuing,
Borrower shall pay interest on the aggregate, outstanding balance hereunder from
the date due or from the date of the Event of Default, as applicable, until such
9
<PAGE> 11
past due amounts are paid in full or until all Events of Default are cured, as
applicable, at a per annum rate equal to the Default Rate. All computations of
such interest shall be based on a year of twelve 30-day months.
2.4 Procedure for Making Loans.
(a) Notice. Whenever Borrower desires that Lenders make a
Loan, Borrower shall be responsible for providing Agent with a list of equipment
proposed to be financed with such Loan together with such additional information
with respect to the Loan and the Eligible Equipment and the Other Equipment as
Agent shall reasonably request. Following the receipt by Agent of such
information in form and substance reasonably satisfactory to it, Agent shall
notify Borrower that the condition set forth in Section 3.2(b) has been met and
Borrower may then notify Agent in writing (or by telephone with prompt
confirmation in writing) of the date on which it desires Lenders to make such
Loan. Such notice shall (i) be made at least five (5) Business Days in advance
of the desired Funding Date, (ii) be irrevocable and (iii) request that Agent
prepare a Loan Agreement Supplement (including Loan Terms Schedule) for such
Loan, subject to Borrower's review and approval for mistakes (Borrower's
approval shall be evidenced by Borrower's execution of the Loan Agreement
Supplement). Within two (2) Business Days following receipt of such notice,
Agent shall notify each Lender by telephone or facsimile of the principal amount
(including such Lender's Commitment Percentage thereof) and Funding Date of the
Loan being requested by Borrower, and submit a Loan Agreement Supplement
(including Loan Terms Schedule) and UCC-1 financing statement with respect to
the Equipment for which financing is requested to Borrower for execution and
delivery to Agent. On or before noon California time on third (3rd) Business Day
following receipt of such notice, Borrower shall have duly executed and deliver
to Agent (via facsimile) the Loan Agreement Supplement (including Loan Terms
Schedule) and UCC-1 financing statement with respect to the Equipment for which
financing is requested. Borrower shall deliver the originally-executed Loan
Agreement Supplement (including Loan Terms Schedule) and UCC-1 financing
statement with respect to the Equipment for which financing is requested to
Agent at least one (1) Business Day before the Funding Date of the Loan
requested by Borrower. At least two (2) Business Days before the Funding Date of
the Loan requested by Borrower, Agent shall have delivered to Lenders a copy of
the Loan Agreement Supplement (including Loan Terms Schedule) executed by
Borrower and delivered to Agent via facsimile. Borrower's request for a Loan
shall be deemed to be a representation and warranty by Borrower that no Default
or Event of Default has occurred and is continuing, and that the representations
and warranties set forth in Section 5 are true and correct as of the time of
such notice as if made at such time. Subject to the terms and conditions of this
Agreement, as soon as practicable prior to 11:00 a.m. California Time on the
Funding Date specified in the Loan Terms Schedule, each Lender shall transfer an
amount equal to its Commitment Percentage multiplied by the amount of the Loan
to the account specified in Section 2.4(c) in immediately available funds. Each
Lender's obligation to make its Commitment Percentage of the Loan shall be
expressly subject to the satisfaction of the conditions set forth in Sections
3.1 and 3.2. Upon the request of any Lender, Agent shall deliver to such Lender
a copy of all UCC-1 financing statements filed or to be filed with respect to
any Equipment for which financing has been requested.
(b) Loan Factor and Stipulated Loan Value Calculation.
Prior to each Funding Date, Agent, on behalf of Lenders, shall establish the
Basic Rate, the Loan Factor and
10
<PAGE> 12
Stipulated Loan Value with respect to such Loan. The Loan Factor shall be
calculated in a manner to fully amortize the Loan over the Repayment Period
applicable to such Loan in equal periodic installments of principal and
interest. The Loan Factor and Stipulated Loan Value applicable to each Loan
shall be set forth in the Loan Agreement Supplement to be executed by Borrower
with respect to each Loan and shall be conclusive in the absence of a manifest
error.
(c) Disbursement. Each Lender shall disburse its
Commitment Percentage of such Loan by wire transfer to Borrower at Silicon
Valley Bank, 3003 Tasman Drive, Santa Clara, CA 95054, Account No. ____________,
ABA Routing No. _________, Account Name: Optical Micro-Machines, Inc.,
Notwithstanding anything stated herein to the contrary, no Lender shall have any
obligation to advance funds on behalf of any other Lender.
2.5 Prepayments.
(a) Prepayment Upon an Event of Loss. If any Financed
Equipment is subject to an Event of Loss and Borrower is required to or elects
to prepay the Loan with respect to such Financed Equipment, then such Loan shall
be prepaid to the extent and in the manner provided hereunder.
(b) Mandatory Prepayment Upon an Acceleration. If the
Loans are accelerated following the occurrence of an Event of Default or
otherwise (other than following an Event of Loss), then Borrower shall
immediately pay to Lenders (i) all unpaid Scheduled Payments with respect to
each Loan due prior to the date of prepayment, (ii) the Stipulated Loan Value
with respect to each Loan multiplied by the Loan Amount of such Loan, and (iii)
all other sums, if any, that shall have become due and payable hereunder.
(c) No Other Prepayment. Borrower may not prepay any Loan
except upon the occurrence of an event described in Section 2.5(a) or (b) above
in which event the prepayment shall be made as described in such sections.
2.6 Minimum Funding Amount; Maximum Number of Fundings. Except
with the prior consent of Lenders, in Lenders' sole discretion, (i) there shall
not be more than one funding of a Loan in any one calendar month; and (ii) the
aggregate amount of the requested Loan shall not be less than the Minimum
Funding Amount.
2.7 Commitment Fee; Expenses. Borrower has paid a commitment fee
in the amount of Fifty Thousand Dollars ($50,000) (the "Commitment Fee"). The
Commitment Fee, less an amount to pay Lenders' Expenses and Agent's Expenses in
connection with due diligence and the negotiation and documentation (including
filing and recording fees) of the Loan Documents, will be applied on a pro rata
basis to the final payment due by Borrower due on each Loan.
3. Conditions of Loans.
3.1 Conditions Precedent to Closing. At the time of the execution
and delivery of this Agreement, the Lenders shall have received, in form and
substance reasonably satisfactory to Lenders, all of the following:
11
<PAGE> 13
(a) This Agreement duly executed by Borrower and each of
the Lenders.
(b) The separate Warrants to be issued to each Lender,
each duly executed by Borrower.
(c) The intercreditor agreement, in form and substance
satisfactory to Lenders, and duly executed by each of the Lenders.
(d) A certificate of the secretary or assistant secretary
of Borrower with copies of the following documents attached: (i) the articles of
incorporation and bylaws of Borrower certified by Borrower as being in full
force and effect on the Closing Date, (ii) incumbency and representative
signatures, and (iii) resolutions authorizing the execution and delivery of this
Agreement and each of the other Loan Documents.
(e) A good standing certificate from Borrower's state of
incorporation and the state in which Borrower's principal place of business is
located, together with certificates of the applicable governmental authorities
stating that Borrower is in compliance with the franchise tax laws of each such
state, each dated as of a recent date.
(f) Evidence of the insurance coverage required by Section
6.9 of this Agreement.
(g) All necessary consents of shareholders and other third
parties with respect to the execution, delivery and performance of this
Agreement, the Warrants and the other Loan Documents.
(h) A legal opinion of Borrower's counsel covering the
matters set forth in Exhibit D hereto.
(i) Such other documents, and completion of such other
matters, as Lenders may deem necessary or appropriate.
3.2 Conditions Precedent to all Loans. The obligation of Lenders
to make each Loan, including the initial Loan, is further subject to the
following conditions:
(a) No Default or Event of Default shall have occurred and
be continuing.
(b) Borrower shall have provided to Agent, with respect to
the Eligible Equipment which is requested to be financed with the proceeds of
the Loan to be made on such Funding Date, such invoices, purchase orders, bills
of sale, serial numbers, agreements, canceled checks, and other documents as
Lenders shall reasonably request to evidence the ownership by Borrower of, the
payment in full of the purchase price of such Eligible Equipment, each in form
and substance reasonably satisfactory to Lenders.
(c) Borrower shall have provided to Agent, with respect to
the Other Equipment which is requested to be financed with the proceeds of the
Loan to be made on such Funding Date, such invoices, purchase orders, bills of
sale, agreements, canceled checks, and other documents as Lenders shall
reasonably request to evidence the ownership by Borrower of,
12
<PAGE> 14
the payment in full of the purchase price of such Other Equipment, each in form
and substance reasonably satisfactory to Lenders.
(d) Borrower shall have provided Agent with the location
of each item of Financed Equipment and a Landlord Agreement for each such
location (unless Borrower is the fee owner thereof) from Borrower's lessor,
which has been duly executed by each of the parties thereto.
(e) Borrower, Agent and Lenders shall have executed a Loan
Agreement Supplement, including a Loan Terms Schedule and a list of Financed
Equipment with respect to the proposed Loan.
(f) Agent shall have received such documents, instruments
and agreements, including UCC financing statements or amendments to UCC
financing statements, as Agent shall reasonably request to evidence the
perfection and priority of the security interests granted to Agent, on behalf of
and for the benefit of Lenders, pursuant to Section 4.
(g) Borrower shall have delivered to Agent, on behalf of
Lenders, a release, or estoppel letter, as appropriate, from any Person having
an existing Lien superior to the Lien of Lenders on any item of Eligible
Equipment or Other Equipment which is requested to be financed.
(h) Such other documents, and completion of such other
matters, as Agent may deem necessary or appropriate.
3.3 Covenant to Deliver. Borrower agrees (not as a condition but
as a covenant) to deliver to Agent each item required to be delivered to Agent
and/or Lenders as a condition to each Loan, if such Loan is advanced. Borrower
expressly agrees that the extension of such Loan prior to the receipt by Agent
or Lenders of any such item shall not constitute a waiver by Agent or Lenders of
Borrower's obligation to deliver such item, and any such extension in the
absence of a required item shall be in Lenders' sole discretion.
4. Creation of Security Interest.
4.1 Grant of Security Interest. Borrower grants to Agent on
behalf and for the benefit of Lenders, a valid, first priority, continuing
security interest in all presently existing and hereafter acquired or arising
Collateral in order to secure prompt, full and complete payment of any and all
Obligations and in order to secure prompt, full and complete performance by
Borrower of each of its covenants and duties under each of the Loan Documents.
The "Collateral" shall mean and include all right, title, interest, claims and
demands of Borrower in and to all of the following:
All right, title, interest, claims and demands of Borrower in
and to each and every item of equipment, fixtures or personal property,
whether now owned or hereafter acquired, together with all
substitutions, renewals or replacements of and additions, improvements,
accessions, replacement parts and accumulations to any and all of such
equipment, fixtures or personal property (collectively, the
"Equipment"), together with all
13
<PAGE> 15
proceeds of Equipment, including, without limitation, insurance,
condemnation, requisition or similar payments, and all proceeds from
sales, renewals, releases or other dispositions of Equipment, which
Equipment is financed with or is designated as collateral for the
Obligations on and after the date of this Agreement by specifically
designating such equipment, fixtures and personal property on a UCC
financing statement listing Borrower as "debtor" and Agent or Lenders as
"secured party."
4.2 After-Acquired Property. All Financed Equipment which is
financed through Loans and any and all other Property generally described or
referred to as Collateral or Financed Equipment which is hereafter acquired by
Borrower shall ipso facto, and without any further conveyance, assignment or act
on the part of Borrower or Lenders, become and be subject to the security
interest herein granted as fully and completely as though specifically described
herein. The list of Financed Equipment shall be amended and supplemented on each
Funding Date by a Loan Agreement Supplement to incorporate all Financed
Equipment financed with the Loan advanced on such Funding Date; provided,
however, the failure to so amend and supplement the list of Financed Equipment
shall not affect the grant by Borrower to Lender of the security interest in
such Financed Equipment pursuant to this Section 4. This Agreement and the other
documents in connection herewith may be otherwise supplemented and amended from
time to time, as required by Lender, to reflect additional Collateral to be
subject to the security interest granted pursuant to this Section 4.
4.3 Duration of Security Interest. Agent's security interest in
the Collateral shall continue until the payment in full and the satisfaction of
all Obligations, whereupon such security interest shall terminate; provided,
however, if any item of Financed Equipment is subject to an Event of Loss, then
following the prepayment of the Loan with respect to such item pursuant to
Section 2.5, Agent shall release its security interest in such item of Financed
Equipment. If the Loans relating to the financing of a particular Loan Terms
Schedule have been fully repaid, Agent shall, upon Borrower's written request,
release its security interest in specific items of Equipment listed on that Loan
Terms Schedule to facilitate Borrower's sale of such items of Equipment to third
parties. Agent shall, at Borrower's sole cost and expense, execute such further
documents and take such further actions as may be reasonably necessary to effect
the release contemplated by this Section 4.3, including duly executing and
delivering termination statements for filing in all relevant jurisdictions under
the Code.
4.4 Location and Possession of Collateral. The Collateral is and
shall remain in the possession of Borrower at its location listed on the cover
page hereof. Borrower shall remain in full possession, enjoyment and control of
the Collateral (except only as may be otherwise required by Agent for perfection
of its security interest therein) and so long as no Event of Default has
occurred and is continuing, shall be entitled to manage, operate and use the
same and each part thereof with the rights and franchises appertaining thereto;
provided, however, that the possession, enjoyment, control and use of the
Collateral shall at all times be subject to the observance and performance of
the terms of this Agreement.
4.5 Markings on the Collateral. At Agent's request at any time
during the Term of the Loan (including any extension thereof), Borrower shall
place in a conspicuous location on
14
<PAGE> 16
each item of Financed Equipment a plaque or other marking to be supplied by
Lenders which reads substantially as follows:
MMC/GATX PARTNERSHIP NO. I, as Agent for Lenders, Lienholder.
Such plaque or other marking shall not be removed (or if removed or
damaged such plaque or other marking shall be replaced) until the security
interest in favor of Agent in such item of Collateral is terminated pursuant to
this Agreement.
4.6 Delivery of Additional Documentation Required. Borrower shall
from time to time execute and deliver to Agent on behalf of Lenders, at the
request of Agent, all financing statements and other documents Agent may
reasonably request, in form satisfactory to Agent, to perfect and continue
Agent's perfected security interests in the Collateral and in order to
consummate fully all of the transactions contemplated under the Loan Documents.
4.7 Right to Inspect. Each Lender (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower's usual business hours, to inspect Borrower's books
and records and to make copies thereof and to inspect, test, and appraise the
Collateral in order to verify Borrower's financial condition or the amount,
condition of, or any other matter relating to, the Collateral.
5. Representations and Warranties. Borrower represents, warrants and
covenants as follows:
5.1 Due Organization and Qualification. Borrower is a corporation
duly organized and validly existing and in good standing under the laws of its
state of incorporation and qualified and licensed to do business in, and is in
good standing in, any state in which the conduct of its business or its
ownership of Property requires that it be so qualified or in which the
Collateral is located, except for such states as to which any failure to so
qualify would not have a material adverse effect on Borrower.
5.2 Authority. Borrower has all necessary power and authority to
execute, deliver, and perform in accordance with the terms thereof, the Loan
Documents to which it is a party. Borrower has all requisite power and authority
to own and operate its properties and to carry on its businesses as now
conducted.
5.3 Conflict with Other Instruments, etc. Neither the execution
and delivery of any Loan Document to which Borrower is a party nor the
consummation of the transactions therein contemplated nor compliance with the
terms, conditions and provisions thereof will conflict with or result in a
breach of any of the terms, conditions or provisions of the articles of
incorporation and the by-laws, or other organizational documents of Borrower or
any law or any regulation, order, writ, injunction or decree of any court or
governmental instrumentality or any material agreement or instrument to which
Borrower is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject, or constitute a default thereunder or
result in the creation or imposition of any Lien, other than Permitted Liens.
5.4 Authorization; Enforceability. The execution and delivery of
this Agreement, the granting of the security interest in the Collateral, the
incurring of the Loans, the execution
15
<PAGE> 17
and delivery of the other Loan Documents to which Borrower is a party and the
consummation of the transactions herein and therein contemplated have each been
duly authorized by all necessary action on the part of Borrower. The Loan
Documents have been duly executed and delivered and constitute legal, valid and
binding obligations of Borrower, enforceable in accordance with their respective
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency or other similar laws of general application relating to or affecting
the enforcement of creditors' rights or by general principles of equity.
5.5 No Prior Encumbrances. Borrower has good and marketable title
to the Collateral, free and clear of Liens except for Permitted Liens.
5.6 Name; Location of Chief Executive Office, Principal Place of
Business and Collateral. Borrower has not done business under any name other
than that specified on the signature page hereof. The chief executive office,
principal place of business, and the place where Borrower maintains its records
concerning the Collateral are presently located at the addresses set forth on
the cover page of this Agreement or as disclosed to the Lenders in writing. The
Collateral is presently located at the address set forth on the cover page
hereof, or as set forth in a Loan Agreement Supplement which is approved by
Agent.
5.7 Litigation. There are no actions or proceedings pending by or
against Borrower before any court or administrative agency in which an adverse
decision could reasonably be expected to have a material adverse effect on
Borrower or the aggregate value of the Collateral. Borrower does not have
knowledge of any such pending or threatened actions or proceedings. Borrower
will promptly notify Lenders in writing if any action, proceeding or
governmental investigation involving Borrower is commenced that is reasonably
expected to result in damages or costs to Borrower of Fifty Thousand Dollars
($50,000) or more.
5.8 Financial Statements. All financial statements relating to
Borrower or any Affiliate that have been or may hereafter be delivered by
Borrower to each Lender present fairly in all material respects Borrower's
financial condition as of the date thereof and Borrower's results of operations
for the period then ended, subject, in the case of unaudited statements, to year
end adjustments and footnote disclosures.
5.9 Security Interest. Assuming the proper filing of one or more
financing statement(s) identifying the Collateral with the proper state and/or
local authorities, the security interests in the Collateral granted to Agent
pursuant to this Agreement (i) constitute and will continue to constitute first
priority security interests (except to the extent any Permitted Liens may have a
superior priority to Agent's Lien under this Agreement) and (ii) are and will
continue to be superior and prior to the rights of all other creditors of
Borrower (except to the extent of such Permitted Liens).
5.10 Full Disclosure. No representation, warranty or other
statement made by Borrower in any Loan Document, certificate or written
statement furnished to Lenders or either of them contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained in such certificates or statements not misleading.
There is no fact known to Borrower which materially adversely affects, or which
16
<PAGE> 18
could in the future be reasonably expected to materially adversely affect, its
ability to perform its obligations under this Agreement.
6. Affirmative Covenants. Borrower covenants and agrees that, until the
full and complete payment of the Obligations and the termination of the
Commitments, Borrower shall do all of the following:
6.1 Good Standing. Borrower shall maintain its corporate
existence and its good standing in its jurisdiction of incorporation and
maintain qualification in each jurisdiction in which the failure to so qualify
could reasonably be expected to have a material adverse effect on the financial
condition, operations or business of Borrower. Borrower shall maintain in force
all licenses, approvals and agreements, the loss of which could reasonably be
expected to have a material adverse effect on its financial condition,
operations or business.
6.2 Government Compliance. Borrower shall comply with all
statutes, laws, ordinances and government rules and regulations to which it is
subject, noncompliance with which could reasonably be expected to materially
adversely affect the financial condition, operations or business of Borrower.
6.3 Financial Statements, Reports, Certificates. Borrower shall
deliver to each Lender: (a) as soon as available, but in any event within
forty-five (45) days after the end of each month, a company prepared balance
sheet, income statement and cash flow statement covering Borrower's operations
during such period, certified by a Responsible Officer; (b) as soon as
available, but in any event within one hundred eighty (180) days after the end
of Borrower's fiscal year, audited financial statements of Borrower prepared in
accordance with generally accepted accounting principles, consistently applied,
together with an unqualified opinion on such financial statements of a
nationally recognized or other independent public accounting firm reasonably
acceptable to Agent; (c) as soon as available, but in any event within ninety
(90) days of year-end, unaudited internally prepared draft annual statements
(which may be without footnotes); and (d) such other financial information as
Lender may reasonably request from time to time. From and after such time as
Borrower becomes a publicly reporting company, promptly as they are available
and in any event: (x) at the time of filing of Borrower's Form 10-K with the
Securities and Exchange Commission after the end of each fiscal year of
Borrower, the financial statements of Borrower filed with such Form 10-K; and
(y) at the time of filing of Borrower's Form 10-Q with the Securities and
Exchange Commission after the end of each of the first three fiscal quarters of
Borrower, the financial statements of Borrower filed with such Form 10-Q. In
addition, Borrower shall deliver to each Lender (i) promptly upon becoming
available, copies of all statements, reports and notices sent or made available
generally by Borrower to its security holders; and (ii) such other financial
information as Lenders may reasonably request from time to time.
6.4 Certificates of Compliance. Each time financial statements
are furnished pursuant to Section 6.3 above, there shall be delivered to each
Lender, a certificate signed by a Responsible Officer (each, an "Officer's
Certificate") with respect to such financial reports to the effect that: (i) no
Event of Default or Default has occurred and is continuing hereunder since the
date of this Agreement or, if later, since the date of the prior Officer's
Certificate or, if such an event or condition has occurred and is continuing,
the nature and extent thereof and the action
17
<PAGE> 19
Borrower proposes to take with respect thereto, and (ii) except as disclosed in
clause (i), Borrower is in compliance with the provisions of Sections 6 and 7.
6.5 Notice of Event of Loss. As soon as possible, and in any
event within ten (10) days after Borrower has knowledge thereof, Borrower shall
notify Agent in writing in reasonable detail of any Event of Loss.
6.6 Notice of Defaults. As soon as possible, and in any event
within five (5) days after the discovery of a Default or an Event of Default
provide Agent, with an Officer's Certificate of Borrower setting forth the facts
relating to or giving rise to such Default or Event of Default and the action
which Borrower proposes to take with respect thereto.
6.7 Taxes. Borrower shall make due and timely payment or deposit
of all federal, state, and local taxes, assessments, or contributions required
of it by law or imposed upon any properties belonging to it, including the
Financed Equipment, and will execute and deliver to Agent, on demand,
appropriate certificates attesting to the payment or deposit thereof; and
Borrower will make timely payment or deposit of all tax payments and withholding
taxes required of it by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and federal income
taxes, and will, upon request, furnish Agent with proof satisfactory to Agent
and Lenders indicating that Borrower has made such payments or deposits;
provided that Borrower need not make any payment if the amount or validity of
such payment is contested in good faith by appropriate proceedings and as to
which payment in full is bonded or is adequately reserved against by Borrower.
6.8 Use; Maintenance.
(a) Borrower, at its expense, shall make all necessary
site preparations and cause the Collateral to be operated in accordance with any
applicable manufacturer's manuals or instructions. So long as no Default or
Event of Default has occurred and is continuing, Borrower shall have the right
to quietly possess and use the Collateral as provided herein without
interference by Agent or Lenders.
(b) Borrower, at its expense, shall maintain the
Collateral in good condition, reasonable wear and tear excepted, and will comply
in all material respects with all laws, rules and regulations to which the use
and operation of the Collateral may be or become subject. Such obligation shall
extend to repair and replacement of any partial loss or damage to the Collateral
which does not constitute an Event of Loss, regardless of the cause. If
maintenance is mandated by manufacturer, Borrower shall obtain and keep in
effect, at all times during the Term maintenance service contracts with
suppliers reasonably acceptable to the manufacturer. All parts furnished in
connection with such maintenance or repair shall immediately become part of the
Collateral. All such maintenance, repair and replacement services shall be
immediately paid for and discharged by Borrower with the result that no Lien
will attach to the Collateral.
6.9 Insurance. Borrower shall, obtain and maintain for the Term,
at its own expense:
18
<PAGE> 20
(a) "All risk" insurance against loss or damage to the
Collateral. The coverage limit shall be the greater of the replacement cost of
the Equipment or the Stipulated Loan Value of the Loan Amount applicable to each
Loan. The deductible shall not exceed $25,000. The policy shall name Agent, on
behalf of Lenders, as sole loss payee with respect to the Equipment, shall not
be invalidated by any action of or breach of warranty by Borrower of any
provision thereof and waive subrogation against Agent, on behalf of Lenders.
(b) Commercial general liability insurance (including
contractual liability, products liability and completed operations coverages)
reasonably satisfactory to Lenders. The limit of liability shall be at least
$5,000,000 per occurrence. The policy shall be without deductible, except for
products liability coverage which may have a deductible up to $25,000. The
policy(ies) shall name Agent, on behalf of Lenders, as additional insured in the
full amount of Borrower's liability coverage limits (or the coverage limits of
any successor to Borrower or such successor's parent which is providing
coverage), be primary and without contribution as respects any insurance carried
by Agent or Lenders, and contain cross liability and severability of interest
clauses.
(c) Such other insurance against risks of loss and with
terms as shall be reasonably required by Agent and Lenders.
All policies of insurance shall be placed with financially sound,
commercial insurers reasonably satisfactory to Agent and Lenders. All policies
of insurance shall provide that Agent, on behalf of Lenders, shall be given 30
days notice of cancellation of coverage. This notice provision shall be without
qualification. On or prior to the first Funding Date and prior to each policy
renewal, Borrower shall furnish to Agent, on behalf of Lenders, certificates of
insurance or other evidence satisfactory to Agent that insurance complying with
all of the above requirements is in effect.
6.10 Loss; Damage; Destruction and Seizure.
(a) Borrower shall bear the risk of the Financed Equipment
being lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit
for use, or seized by a governmental authority for any reason whatsoever at any
time until the expiration or termination of the Term.
(b) If during the Term any item of Financed Equipment is
lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit for
use, or seized by a governmental authority for any reason whatsoever for a
period equal to at least the remainder of the Term (an "Event of Loss"), then in
each case Agent, on behalf of Lenders, shall receive from the proceeds of
insurance maintained pursuant to Section 6.9, from any award paid by the seizing
governmental authority or, to the extent not received from the proceeds of
insurance or award or both, from Borrower, on or before the Payment Date next
succeeding such Event of Loss, an amount equal to the sum of: (i) all accrued
and unpaid Scheduled Payments with respect to such Loan due prior to the next
such Payment Date, (ii) a prepayment in an amount equal to the Stipulated Loan
Value with respect to such Loan multiplied by the Stated Cost of each affected
item of Financed Equipment, and (iii) all other sums, if any, that shall have
become due and payable hereunder with respect to such Loan, including interest
at the Default Rate with respect
19
<PAGE> 21
to any past due amounts. On the date of receipt by Agent, on behalf of Lenders,
of the amount specified above with respect to each such item of Financed
Equipment subject to an Event of Loss, this Agreement shall terminate as to such
Financed Equipment. Except as provided in Section 6.10(c), any proceeds of
insurance maintained by Borrower pursuant to Section 6.9 and received by
Borrower shall be paid to Agent, on behalf of Lenders, promptly upon their
receipt by Borrower. If any proceeds of insurance or awards received from
governmental authorities are in excess of the amount owed under this Section
6.10, Agent shall promptly remit to Borrower the amount in excess of the amount
owed to Lenders.
(c) So long as no Event of Default has occurred and is
continuing, any proceeds of insurance maintained pursuant to Section 6.9
received by Lenders or Borrower with respect to an item of Financed Equipment,
the repair of which is practicable, shall, at the election of Borrower, be
applied either to the repair or replacement of such Financed Equipment or, upon
Agent's receipt, on behalf of Lenders, of evidence of the repair or replacement
of the Financed Equipment reasonably satisfactory to Lenders, to the
reimbursement of Borrower for the cost of such repair or replacement. All
replacement parts and equipment acquired by Borrower in replacement of Financed
Equipment pursuant to this Section 6.10(c) shall immediately become part of the
Financed Equipment upon acquisition by Borrower. Borrower shall take such
actions and provide such documentation as may be reasonably requested by Agent,
on behalf of Lenders, to protect and preserve their first priority security
interest and otherwise to avoid any impairment of Agent's and Lenders' rights
under the Loan Documents in connection with such repair or replacement.
6.11 Further Assurances. At any time and from time to time
Borrower shall execute and deliver such further instruments and take such
further action as may reasonably be requested by Lenders to effect the purposes
of this Agreement.
6.12 Operating Accounts. Until payment in full of all Obligations
hereunder, Borrower shall maintain its primary operating accounts with Payment
Agent.
7. Negative Covenants. Borrower covenants and agrees that until the full
and complete payment of the Obligations and termination of the Commitments,
Borrower will not do any of the following:
7.1 Chief Executive Office. During the continuance of this
Agreement, change its chief executive office or principal place of business
without thirty (30) days prior written notice to Lenders.
7.2 Collateral Control. Subject to its rights under Section 4,
(i) terminate, waive or release any material right with respect to any
Collateral, (ii) except upon thirty days' prior written notice to Lenders,
remove any items of Collateral from Borrower's facility located at the address
set forth on the cover page hereof or such other address agreed to in writing by
Lenders, or (iii) affix or attach or permit to be affixed or attached to any
item of Collateral any other item of property owned by Borrower or any other
lender, lessor or financing party which is not readily identifiable or separable
without any damage to such item of Collateral, without each Lender's prior
written consent.
20
<PAGE> 22
7.3 Liens. Create, incur, assume or suffer to exist any Lien of
any kind upon any Collateral, whether now owned or hereafter acquired, except
Permitted Liens.
7.4 Other Dispositions of Collateral. Convey, sell, lease or
otherwise dispose of all or any part of the Collateral to any Person except for
Financed Equipment in which Lenders shall have released their security interest
pursuant to Section 4.3.
7.5 Extraordinary Transactions; Restructure. Dispose of any
Collateral not in the ordinary and usual course of Borrower's business; change
Borrower's name without prior written notice to Agent and Lenders; make or
suffer any material adverse change in Borrower's financial condition or any
material adverse change in Borrower's operations; cause, permit, or suffer any
material change in Borrower's ownership by merger or otherwise (other than a
sale of Borrower's new Equity Securities in a public offering or a private
offering to venture capital or other investors, including but not limited to,
customers and other strategic partners); engage in any business other than the
business currently engaged in by Borrower or reasonably related thereto; or
suspend operation of Borrower's business.
7.6 Distributions. (i) Pay any dividends or make any
distributions on its Equity Securities, except stock splits; (ii) purchase,
redeem, retire or otherwise acquire for value any of its Equity Securities
(other than repurchases pursuant to the terms of employee stock purchase plans,
employee restricted stock agreements or similar arrangements: (A) where Borrower
may repurchase shares previously issued to employee(s) of Borrower pursuant to
Borrower's stock option plans using the proceeds from such issuance, or (B)
otherwise in an aggregate amount not to exceed $250,000); (iii) return any
capital to any holder of its Equity Securities as such; (iv) make any
distribution of assets, Equity Securities, obligations or securities to any
holder of its Equity Securities as such, except for stock splits; or (v) set
apart any sum for any such purpose; provided, however, that Borrower may pay
dividends payable solely in common stock.
7.7 Transactions With Affiliates. Enter into any contractual
obligation with any affiliate or engage in any other transaction with any
affiliate except upon terms at least as favorable to Borrower as an arms-length
transaction with unaffiliated Persons.
7.8 Indebtedness Payments. Repay any notes to officers, directors
or shareholders, prior to all Obligations to Lenders being fully satisfied,
except repayments made solely through the issuance of Borrower's Equity
Securities.
8. Events of Default. Any one or more of the following events shall
constitute an Event of Default by Borrower under this Agreement:
8.1 If Borrower fails to pay when due and payable or when
declared due and payable in accordance with the Loan Documents, any portion of
the Obligations.
8.2 If Borrower fails to perform any obligation under Sections
6.9, 6.10 and 6.12 or violates any of the covenants contained in Section 7 of
this Agreement.
8.3 If Borrower fails or neglects to perform, keep, or observe
any other material term, provision, condition, covenant, or agreement contained
in this Agreement (other than as set
21
<PAGE> 23
forth in Sections 8.1 or 8.2), in any of the other Loan Documents, or in any
other present or future agreement between Borrower and Lenders and as to any
default under such other term, provision, condition, covenant or agreement that
can be cured, has failed to cure such default within fifteen (15) days after the
occurrence of such default.
8.4 If there occurs a material adverse change in Borrower's
business, or if there is a material impairment of the prospect of repayment of
any portion of the Obligations owing to Lenders or a material impairment of the
value or priority of Agent's security interest in the Collateral.
8.5 If any material portion of Borrower's assets is attached,
seized, subjected to a writ or distress warrant, or is levied upon, or comes
into the possession of any trustee, receiver or Person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within thirty (30) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within thirty (30)
days after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contesting by Borrower.
8.6 If there is a payment default in any agreement to which
Borrower is a party resulting in a right by the other party or parties to such
agreement, whether or not exercised, to accelerate the maturity of any
indebtedness in an aggregate principal amount not to exceed Two Hundred Fifty
Thousand Dollars ($250,000) or if there is any default in any agreement which
could reasonably be expected to have a material adverse effect on the financial
condition, operations or business of Borrower or if there is any default in any
other agreement with any Lender (and the applicable cure period has expired).
8.7 If a judgment or judgments for the payment of money in an
amount, individually or in the aggregate, of at least Two Hundred Fifty Thousand
Dollars ($250,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of thirty (30) days.
8.8 If any material misrepresentation or material misstatement
exists now or hereafter in any warranty, representation, statement, or report
made to Lenders or either of them by Borrower or any officer, employee, agent,
or director of Borrower.
8.9 If there shall be a material breach by Borrower of any of the
Warrants.
8.10 If any Loan Document shall in any material respect cease to
be, or Borrower shall assert that any Loan Document is not, a legal, valid and
binding obligation of Borrower enforceable in accordance with its terms.
22
<PAGE> 24
8.11 If a proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in respect of
Borrower in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or for the appointment of a
receiver, liquidator, assignee, custodian, trustee (or similar official) of
Borrower or for any substantial part of its property, or for the winding-up or
liquidation of its affairs, and such proceeding shall remain undismissed or
unstayed and in effect for a period of thirty (30) consecutive days or such
court shall enter a decree or order granting the relief sought in such
proceeding.
8.12 If Borrower shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian (or other similar
official) of Borrower or for any substantial part of its property, or shall make
a general assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any corporate action in
furtherance of any of the foregoing.
9. Agent's and Lenders' Rights and Remedies.
9.1 Rights and Remedies. Upon the occurrence and during the
continuance of any Default or Event of Default, neither Agent nor Lenders shall
have any further obligation to advance money or extend credit to or for the
benefit of Borrower. In addition, upon the occurrence and during the continuance
of an Event of Default, Lenders or Agent on behalf of Lenders, shall have the
rights, options, duties and remedies of a secured party as permitted by law and,
in addition to and without limitation of the foregoing, Lenders may, at the
election of Lenders, without notice of election and without demand, do any one
or more of the following, all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, including the
Stipulated Loan Value of the Loan Amount of each Loan, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
Section 8.11 or 8.12 all Obligations shall become immediately due and payable
without any action by Lenders);
(b) Make such payments and do such acts as Agent or
Lenders consider necessary or reasonable to protect Agent's security interest in
the Collateral. Borrower agrees to assemble the Collateral if Agent, on behalf
of Lenders, so requires, and to make the Collateral available to Agent as Agent
may designate. Borrower authorizes Agent to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Lenders' determination appears to be prior or superior
to their security interest and to pay all expenses incurred in connection
therewith. With respect to any of Borrower's owned premises, Borrower hereby
grants Agent, on behalf of Lenders, a license to enter into possession of such
premises and to occupy the same, without charge, for up to one hundred twenty
(120) days in order to exercise any of Agent's or Lenders' rights or remedies
provided herein, at law, in equity, or otherwise;
23
<PAGE> 25
(c) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Lenders and their agents and any purchasers at or
after foreclosure are hereby granted an irrevocable, perpetual, fully paid,
royalty-free license or other right, solely pursuant to the provisions of this
Section 9.1, to use, without charge, Borrower's intellectual property, including
without limitation, labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any Property of a similar nature, now or at any time hereafter owned or
acquired by Borrower or in which Borrower now or at any time hereafter has any
rights, relating to the ownership, operation, maintenance or repair or the
development or construction of any Collateral, in completing production of,
advertising for sale, and selling any Collateral and in operating, maintaining,
foreclosing or selling any Collateral and, in connection with Lenders' exercise
of their rights under this Section 9.1, Borrower's rights under all licenses and
all franchise agreements shall inure to Lenders' benefit;
(d) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as
Lenders determine are commercially reasonable;
(e) Agent or any Lender may credit bid and purchase at any
public sale; and
(f) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.
9.2 Set Off Right. During the occurrence and continuance of an
Event of Default arising out of Borrower's failure to comply with Section 8.1,
Lenders may set off and apply to the Obligations any and all indebtedness at any
time owing to or for the credit or the account of Borrower.
9.3 Effect of Sale. Any sale, whether under any power of sale
hereby given or by virtue of judicial proceedings, shall operate to divest all
right, title, interest, claim and demand whatsoever, either at law or in equity,
of Borrower in and to the Property sold, and shall be a perpetual bar, both at
law and in equity, against Borrower, its successors and assigns, and against any
and all Persons claiming the Property sold or any part thereof under, by or
through Borrower, its successors or assigns.
9.4 Power of Attorney in Respect of the Collateral. Borrower does
hereby irrevocably appoint Agent on behalf of Lenders (which appointment is
coupled with an interest), the true and lawful attorney in fact of Borrower with
full power of substitution, for it and in its name to file any notices of
security interests, financing statements and continuations and amendments
thereof pursuant to the Uniform Commercial Code or federal law, as may be
necessary to perfect, or to continue the perfection of Agent's security
interests in the Collateral. Borrower does hereby irrevocably appoint Agent on
behalf of Lenders (which appointment is coupled with an interest) on the
occurrence and during the continuance of an Event of Default, the true and
lawful attorney in fact of Borrower with full power of substitution, for it and
in its name: (a) to ask, demand, collect, receive, receipt for, sue for,
compound and give acquittance for any and all rents, issues, profits, avails,
distributions, income, payment draws and other sums
24
<PAGE> 26
in which a security interest is granted under Section 4 with full power to
settle, adjust or compromise any claim thereunder as fully as if Agent were a
Borrower itself, (b) to receive payment of and to endorse the name of Borrower
to any items of Collateral (including checks, drafts and other orders for the
payment of money) that come into Agent's possession or under Agent's control,
(c) to make all demands, consents and waivers, or take any other action with
respect to, the Collateral, (d) in Agent's discretion to file any claim or take
any other action or proceedings, either in their own names or in the name of
Borrower or otherwise, which Agent or Lenders may reasonably deem necessary or
appropriate to protect and preserve the right, title and interest of Agent, on
behalf of Lenders, in and to the Collateral, or (e) to otherwise act with
respect thereto as though Agent, on behalf of Lenders, were the outright owner
of the Collateral.
9.5 Agent's Expenses. If Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Agent may do any or all of the
following: (a) make payment of the same or any part thereof; or (b) obtain and
maintain insurance policies of the type discussed in Section 6.9 of this
Agreement, and take any action with respect to such policies as Agent deems
prudent. Any amounts paid or deposited by Agent shall constitute Agent's
Expenses, shall be due and payable within 30 days after demand, and shall bear
interest at the then applicable rate hereinabove provided, and shall be secured
by the Collateral. Any payments made by Agent shall not constitute an agreement
by Agent to make similar payments in the future or a waiver by Agent or any
Lender of any Event of Default under this Agreement.
9.6 Remedies Cumulative. Agent's and Lenders' rights and remedies
under this Agreement, the Loan Documents, and all other agreements shall be
cumulative. Agent and Lenders shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by Agent or any Lender of one right or remedy shall be deemed an
election, and no waiver by Lenders of any Event of Default on Borrower's part
shall be deemed a continuing waiver. No delay by Agent or any Lender shall
constitute a waiver, election, or acquiescence by it or either of them.
9.7 Application of Collateral Proceeds. The proceeds and/or
avails of the Collateral, or any part thereof, and the proceeds and the avails
of any remedy hereunder (as well as any other amounts of any kind held by Agent,
on behalf of Lenders, at the time of or received by Agent, on behalf of Lenders,
after, the occurrence of an Event of Default hereunder) shall be paid to and
applied as follows:
(a) First, to the payment of reasonable out-of-pocket
costs and expenses, including all amounts expended to preserve the value of the
Collateral, of foreclosure or suit, if any, and of such sale and the exercise of
any other rights or remedies, and of all proper fees, expenses, liability and
advances, including reasonable legal expenses and attorneys' fees, incurred or
made hereunder by Agent or any Lender, including without limitation, Agent's
Expenses and Lenders' Expenses;
(b) Second, to the payment to Lenders of the amount then
owing or unpaid on the Loans for Scheduled Payments, the Stipulated Loan Value
of the Loan Amount, and all other Obligations with respect to all Loans,
provided, however, that if such proceeds shall be insufficient to pay in full
the whole amount so due, owing or unpaid upon the Loans, then to the
25
<PAGE> 27
unpaid interest thereon, then to unpaid principal thereof, then to the
Stipulated Loan Value of the Loan Amount with respect to all Loans, and then to
the payment of other amounts then payable to Lenders under any of the Loan
Documents; and
(c) Third, to the payment of the surplus, if any, to
Borrower, its successors and assigns, or to whomsoever may be lawfully entitled
to receive the same.
9.8 Reinstatement of Rights. If Agent or Lenders shall have
proceeded to enforce any right under this Agreement or any other Loan Document
by foreclosure, sale, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely, then and in every such case (unless otherwise ordered by a court of
competent jurisdiction), Agent and Lenders shall be restored to their former
position and rights hereunder with respect to the Property subject to the
security interest created under this Agreement.
10. Waivers; Indemnification.
10.1 Demand; Protest. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Agent on which Borrower may in any way be liable.
10.2 Agent's Liability for Collateral. So long as Agent complies
with its obligations, if any, under the Code, Lenders shall not in any way or
manner be liable or responsible for: (a) the safekeeping of the Collateral; (b)
any loss or damage thereto occurring or arising in any manner or fashion from
any cause other than Lender's gross negligence or willful misconduct; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person whomsoever. All risk of
loss, damage or destruction of the Collateral shall be borne by Borrower.
10.3 Indemnification and Waiver. Whether or not the transactions
contemplated hereby shall be consummated:
(a) General Indemnity. Borrower shall pay, indemnify, and
hold Agent and each Lender and each of their respective officers, directors,
employees, counsel, partners, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including Agent's Expenses, Lenders'
Expenses and reasonable attorney's fees and the allocated cost of in-house
counsel) of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement and any
other Loan Documents, or the transactions contemplated hereby and thereby, and
with respect to any investigation, litigation or proceeding (including any case,
action or proceeding before any court or other Governmental Authority relating
to bankruptcy, reorganization, insolvency, liquidation, dissolution or relief of
debtors or any appellate proceeding) related to this Agreement or the Loans or
the use of the proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified
26
<PAGE> 28
Liabilities"); provided, that Borrower shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct of such Indemnified Person.
(b) Environmental Indemnity. Borrower hereby agrees to
indemnify, defend and hold harmless each Indemnified Person, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses or disbursements (including
reasonable attorneys' fees and the allocated cost of in-house counsel and
internal environmental audit or review services), which may be incurred by or
asserted against such Indemnified Person in connection with or arising out of
any pending or threatened investigation, litigation or proceeding, or any action
taken by any Person, with respect to any Environmental Claim arising out of or
related to any Property owned, leased or operated by Borrower. No action taken
by legal counsel chosen by any Lender or Agent in defending against any such
investigation, litigation or proceeding or requested remedial, removal or
response action (except for actions which constitute fraud, willful misconduct,
gross negligence or material violations of law) shall vitiate or in any way
impair Borrower's obligation and duty hereunder to indemnify and hold harmless
each Lender and Agent. Lenders and Agent agree to use reasonable efforts to
cooperate with Borrower respecting the defense of any matter indemnified
hereunder, except insofar as and to the extent that their respective interests
may be adverse to Borrower's, in each Lenders' reasonable discretion.
(c) Waivers. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT OR ANYWHERE ELSE, BORROWER AGREES THAT IT SHALL NOT
SEEK FROM AGENT OR LENDERS UNDER ANY THEORY OF LIABILITY (INCLUDING ANY THEORY
IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES.
(d) Survival; Defense. The obligations in this Section
10.3 shall survive payment of all other Obligations pursuant to Section 12.8 of
this Agreement. At the election of any Indemnified Person, Borrower shall defend
such Indemnified Person using legal counsel satisfactory to such Indemnified
Person in such Person's reasonable discretion, at the sole cost and expense of
Borrower. All amounts owing under this Section 10.3 shall be paid within thirty
(30) days after written demand.
11. Notices.
(a) Unless otherwise provided in this Agreement, all
notices or demands by any party relating to this Agreement or any other
agreement entered into in connection herewith shall be in writing and (except
for financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
certified mail, postage prepaid, return receipt requested, or by prepaid
facsimile to Borrower or to Lenders, as the case may be, at their respective
addresses set forth below:
27
<PAGE> 29
If to Borrower: Optical Micro-Machines, Inc.
9645 Scranton Road, Suite 140
San Diego, CA 92121
Attention: Kathryn M. White, Controller
Fax: (858) 457-6852
PH: (858) 320-7111
If to MMC/GATX: MMC/GATX Partnership No. I
c/o Meier Mitchell & Company
4 Orinda Way, Suite 200-B
Orinda, CA 94563
Attention: Contract Administration
Fax: (925) 254-9528
PH: (925) 254-9520
With a copy to:
MMC/GATX Partnership No. I
c/o GATX Capital Corporation
Four Embarcadero Center, Suite 2200
San Francisco, CA 94111
Attention: Contract Administration
FAX: (415) 955-3288
PH: (415) 955-3372
If to SVB: Silicon Valley Bank
3003 Tasman Drive
Santa Clara, CA 95054
Attention: General Counsel
PH: (408) 654-1005
FAX: (408) 496-2419
With a copy to:
Silicon Valley Bank
9645 Scranton Road, Suite 110
San Diego, CA 92121
Attention: Jeff Huhn
Fax: (858) 622-1692
PH: (858) 784-3306
If to Comdisco: Comdisco, Inc.
Legal Department
Attention: General Counsel
6111 North River Road
Rosemont, IL 60018
Fax: (847) 518-5088
28
<PAGE> 30
PH: (847) 698-3000
With copies to: Comdisco, Inc./Comdisco Ventures
6111 North River Road
Rosemont, IL 60018
Fax: (847) 518-5465
with copies to: Murphy Sheneman Julian & Rogers
Attention: Jane K. Springwater, Esq.
101 California Street, 39th Floor
San Francisco, CA 94111
Fax: (415) 421-7879
PH: (415) 398-4700
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
12. General Provisions.
12.1 Successors and Assigns. This Agreement shall bind and inure
to the benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
may be assigned by Borrower without each Lender's prior written consent, which
consent may be granted or withheld in Lenders' sole discretion. Each Lender
shall have the right without the consent of or notice to Borrower to sell,
transfer, negotiate, or grant participation's in all or any part of, or any
interest in such Lender's rights and benefits hereunder. Agent shall have the
right to resign as Agent hereunder without Borrower's consent and pursuant to
the terms of a separate intercreditor agreement entered into between the
Lenders.
12.2 Time of Essence. Time is of the essence for the performance
of all obligations set forth in this Agreement.
12.3 Severability of Provisions. Each provision of this Agreement
shall be several from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
29
<PAGE> 31
12.4 Entire Agreement; Construction; Amendments and Waivers.
(a) This Agreement and each of the other Loan Documents
dated as of the date hereof, taken together, constitute and contain the entire
agreement among Borrower, Agent and Lenders and supersede any and all prior
agreements, negotiations, correspondence, understandings and communications
between the parties, whether written or oral, respecting the subject matter
hereof. Borrower acknowledges that it is not relying on any representation or
agreement made by any Lender or Agent or any employee, attorney or agent
thereof, other than the specific agreements set forth in this Agreement and the
Loan Documents.
(b) This Agreement is the result of negotiations between
and has been reviewed by each of Borrower and Lenders executing this Agreement
as of the date hereof and their respective counsel; accordingly, this Agreement
shall be deemed to be the product of the parties hereto, and no ambiguity shall
be construed in favor of or against Borrower, Agent or Lenders. Borrower, Agent
and Lenders agree that they intend the literal words of this Agreement and the
other Loan Documents and that no parol evidence shall be necessary or
appropriate to establish Borrower's, Agent's or any Lender's actual intentions.
(c) Any and all amendments, modifications, discharges or
waivers of, or consents to any departures from any provision of this Agreement
or of any of the other Loan Documents shall not be effective without the written
consent of each Agent and Lenders. Notwithstanding the foregoing, in all cases,
any material change of maturity dates, any interest rate reduction, or any
release of any Collateral or any guarantor, or any forbearances or waiver of
rights under the Loan Documents shall require the written consent of each
Lender. Any waiver or consent with respect to any provision of the Loan
Documents shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Borrower in any case
shall entitle Borrower to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, waiver or consent effected in
accordance with this Section 12.4 shall be binding upon Agent, each Lender and
on Borrower.
12.5 Reliance by Agent and Lenders. All covenants, agreements,
representations and warranties made herein by Borrower shall be deemed to be
material to and to have been relied upon by Lenders, notwithstanding any
investigation by Lenders.
12.6 No Set-Offs by Borrower. All sums payable by Borrower
pursuant to this Agreement or any of the other Loan Documents shall be payable
without notice or demand and shall be payable in United States Dollars without
set-off or reduction of any manner whatsoever.
12.7 Counterparts. This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same Agreement.
12.8 Survival. All covenants, representations and warranties made
in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Lenders
with respect to the expenses, damages, losses,
30
<PAGE> 32
costs and liabilities described in Section 10.3 shall survive until all
applicable statute of limitations periods with respect to actions that may be
brought against Lenders have run.
13. Relationship of Parties. Borrower, Agent and each Lender
acknowledge, understand and agree that the relationship between the Borrower, on
the one hand, and Agent and Lenders, on the other, is, and at all time shall
remain solely that of a borrower and lenders. Neither Agent nor any Lender shall
under any circumstances be construed to be partners or joint venturers of
Borrower or any of its Affiliates; nor shall Agent or any Lender under any
circumstances be deemed to be in a relationship of confidence or trust or a
fiduciary relationship with Borrower or any of its Affiliates, or to owe any
fiduciary duty to Borrower or any of its Affiliates. Neither Agent nor any
Lender undertakes or assumes any responsibility or duty to Borrower or any of
its Affiliates to select, review, inspect, supervise, pass judgment upon or
otherwise inform Borrower or any of its Affiliates of any matter in connection
with its or their Property, any Collateral held by Agent or the operations of
Borrower or any of its Affiliates. Borrower and each of its Affiliates shall
rely entirely on their own judgment with respect to such matters, and any
review, inspection, supervision, exercise of judgment or supply of information
undertaken or assumed by Agent or any Lender in connection with such matters is
solely for the protection Agent or such Lender and neither Borrower nor any
Affiliate is entitled to rely thereon.
14. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF BORROWER,
AGENT AND LENDERS HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS LOCATED IN THE NORTHERN DISTRICT OF CALIFORNIA. BORROWER, AGENT
AND LENDERS HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF
THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
31
<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
BORROWER:
OPTICAL MICRO-MACHINES, INC.
HUS TIGLI
By: /s/ Hus Tigli
-----------------------
Title: President & CEO
---------------
AGENT:
MMC/GATX PARTNERSHIP NO. I
By: GATX Capital Corporation,
its General Partner
By: Patricia W. Lacher
------------------------------
Title: V.P.
---------------------------
PAYMENT AGENT:
SILICON VALLEY BANK
By: /s/ Signature Illegible
------------------------------
Title: SVP
---------------------------
LENDERS:
MMC/GATX PARTNERSHIP NO. I
By: GATX Capital Corporation,
its General Partner
By: Patricia W. Lacher
------------------------------
Title: V.P.
---------------------------
SILICON VALLEY BANK
By: /s/ Signature Illegible
------------------------------
Title: SVP
---------------------------
32
<PAGE> 34
COMDISCO, INC.
By: /s/ James P. Labe
------------------------------
JAMES P. LABE, PRESIDENT
Title: COMDISCO VENTURES DIVISION
----------------------------
33
<PAGE> 35
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Reserved
Exhibit B Form of Warrant
Exhibit C Form of Loan Agreement Supplement
Exhibit D Form of Legal Opinion
Exhibit E Form of Landlord Agreement
Schedule 1 Disclosure Schedule
<PAGE> 36
EXHIBIT A
---------
RESERVED
<PAGE> 37
EXHIBIT B
---------
WARRANT
<PAGE> 38
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION
OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE
APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THIS WARRANT.
OPTICAL MICRO-MACHINES, INC.
----------------------------
WARRANT TO PURCHASE SHARES
OF SERIES D PREFERRED STOCK
THIS CERTIFIES THAT, for value received, _____________________ and its
assignees are entitled to subscribe for and purchase _______ shares of the fully
paid and nonassessable Series D Preferred Stock (as adjusted pursuant to Section
4 hereof, the "Shares") of OPTICAL MICRO-MACHINES, INC., a Delaware corporation
(the "Company"), at the price of $2.477 per share (such price and such other
price as shall result, from time to time, from the adjustments specified in
Section 4 hereof is herein referred to as the "Warrant Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth. As used
herein, (a) the term "Series Preferred" shall mean the Company's presently
authorized Series D Preferred Stock, and after the automatic conversion of the
Series D Preferred Stock to Common Stock shall mean the Company's Common Stock,
(b) the term "Date of Grant" shall mean April 7, 2000, and (c) the term "Other
Warrants" shall mean any other warrants issued by the Company in connection with
the transaction with respect to which this Warrant was issued, and any warrant
issued upon transfer or partial exercise of or in lieu of this Warrant. The term
"Warrant" as used herein shall be deemed to include Other Warrants unless the
context clearly requires otherwise.
1. Term. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time and from time to time from the Date of Grant
through ten (10) years after the Date of Grant.
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time, at
the election of the holder hereof, by (a) the surrender of this Warrant (with
the notice of exercise substantially in the form attached hereto as Exhibit A-1
duly completed and executed) at the principal office of the Company and by the
payment to the Company, by certified or bank check, or by wire transfer to an
account designated by the Company (a "Wire Transfer") of an amount equal to the
then applicable Warrant Price multiplied by the number of Shares then being
purchased; (b) if in connection with a registered public offering of the
Company's securities, the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit A-2 duly completed and executed) at the
principal office of the Company together with notice of arrangements reasonably
satisfactory to the Company for payment to the Company either
<PAGE> 39
by certified or bank check or by Wire Transfer of an amount equal to the then
applicable Warrant Price per share multiplied by the number of Shares then being
purchased; or (c) exercise of the "net issuance" right provided for in Section
10.2 hereof. The person or persons in whose name(s) any certificate(s)
representing shares of Series Preferred shall be issuable upon exercise of this
Warrant shall be deemed to have become the holder(s) of record of, and shall be
treated for all purposes as the record holder(s) of, the shares represented
thereby (and such shares shall be deemed to have been issued) immediately prior
to the close of business on the date or dates upon which this Warrant is
exercised. In the event of any exercise of the rights represented by this
Warrant, certificates for the shares of stock so purchased shall be promptly
delivered to the holder hereof and in any event within thirty (30) days after
such exercise and, unless this Warrant has been fully exercised or expired, a
new Warrant representing the portion of the Shares, if any, with respect to
which this Warrant shall not then have been exercised shall also be promptly
issued to the holder hereof and in any event within such thirty-day period;
provided, however, at such time as the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, if requested by
the holder of this Warrant, the Company shall cause its transfer agent to
deliver the certificate representing Shares issued upon exercise of this Warrant
to a broker or other person (as directed by the holder exercising this Warrant).
3. Stock Fully Paid; Reservation of Shares. All Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance pursuant to the terms and conditions herein, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Series Preferred
to provide for the exercise of the rights represented by this Warrant and a
sufficient number of shares of its Common Stock to provide for the conversion of
the Series Preferred into Common Stock.
4. Adjustment of Warrant Price and Number of Shares. The number and kind
of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Reclassification or Merger. In case of any reclassification
or change of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), or in
case of any merger of the Company with or into another corporation (other than a
merger with another corporation in which the Company is the acquiring and the
surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation, as the case may be, shall
duly execute and deliver to the holder of this Warrant a new Warrant (in form
and substance reasonably satisfactory to the holder of this Warrant), or the
Company shall make appropriate provision without the issuance of a new Warrant,
so that the holder of this Warrant shall have the right to receive, at a total
purchase price not to exceed that payable upon the exercise of the
-2-
<PAGE> 40
unexercised portion of this Warrant, and in lieu of the shares of Series
Preferred theretofore issuable upon exercise of this Warrant, the kind and
amount of shares of stock, other securities, money and property receivable upon
such reclassification, change, merger or sale by a holder of the number of
shares of Series Preferred then purchasable under this Warrant. Any new Warrant
shall provide for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4. The provisions of
this subparagraph (a) shall similarly apply to successive reclassifications,
changes, mergers and transfers.
(b) Subdivision or Combination of Shares. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its outstanding shares of Series Preferred, the Warrant Price shall be
proportionately decreased and the number of Shares issuable hereunder shall be
proportionately increased in the case of a subdivision and the Warrant Price
shall be proportionately increased and the number of Shares issuable hereunder
shall be proportionately decreased in the case of a combination.
(c) Stock Dividends and Other Distributions. If the Company at
any time while this Warrant is outstanding and unexpired shall (i) pay a
dividend with respect to Series Preferred payable in Series Preferred, then the
Warrant Price shall be adjusted, from and after the date of determination of
shareholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Warrant Price in effect immediately prior to such
date of determination by a fraction (A) the numerator of which shall be the
total number of shares of Series Preferred outstanding immediately prior to such
dividend or distribution, and (B) the denominator of which shall be the total
number of shares of Series Preferred outstanding immediately after such dividend
or distribution; or (ii) make any other distribution with respect to Series
Preferred (except any distribution specifically provided for in Sections 4(a)
and 4(b)), then, in each such case, provision shall be made by the Company such
that the holder of this Warrant shall receive upon exercise of this Warrant a
proportionate share of any such dividend or distribution as though it were the
holder of the Series Preferred (or Common Stock issuable upon conversion
thereof) as of the record date fixed for the determination of the shareholders
of the Company entitled to receive such dividend or distribution.
(d) Adjustment of Number of Shares. Upon each adjustment in the
Warrant Price, the number of Shares of Series Preferred purchasable hereunder
shall be adjusted, to the nearest whole share, to the product obtained by
multiplying the number of Shares purchasable immediately prior to such
adjustment in the Warrant Price by a fraction, the numerator of which shall be
the Warrant Price immediately prior to such adjustment and the denominator of
which shall be the Warrant Price immediately thereafter.
(e) Antidilution Rights. The other antidilution rights applicable
to the Shares of Series Preferred purchasable hereunder are set forth in the
Company's Certificate of Incorporation, as amended through the Date of Grant, a
true and complete copy of which is attached hereto as Exhibit B (the "Charter").
Such antidilution rights shall not be restated, amended, modified or waived in
any manner without the holder's prior written consent if the effect of such
restatement, amendment, modification or waiver on the holder hereof would be
more adverse to the holder hereof
-3-
<PAGE> 41
than, and substantially dissimilar to, its effect on the other holders of the
Company's Series Preferred. The Company shall promptly provide the holder hereof
with any restatement, amendment, modification or waiver of the Charter promptly
after the same has been made.
5. Notice of Adjustments. Whenever the Warrant Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the
Company shall make a certificate signed by its chief financial officer setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Warrant Price and the number of Shares purchasable hereunder after giving effect
to such adjustment, and shall cause copies of such certificate to be mailed
(without regard to Section 13 hereof, by first class mail, postage prepaid) to
the holder of this Warrant. In addition, whenever the conversion price or
conversion ratio of the Series Preferred shall be adjusted, the Company shall
make a certificate signed by its chief financial officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the
conversion price or ratio of the Series Preferred after giving effect to such
adjustment, and shall cause copies of such certificate to be mailed (without
regard to Section 13 hereof, by first class mail, postage prepaid) to the holder
of this Warrant.
6. Fractional Shares. No fractional shares of Series Preferred will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor based on the fair market
value of the Series Preferred on the date of exercise as reasonably determined
in good faith by the Company's Board of Directors.
7. Compliance with Act; Disposition of Warrant or Shares of Series
Preferred.
(a) Compliance with Act. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant, and the shares of Series Preferred
to be issued upon exercise hereof and any Common Stock issued upon conversion
thereof are being acquired for investment and that such holder will not offer,
sell or otherwise dispose of this Warrant, or any shares of Series Preferred to
be issued upon exercise hereof or any Common Stock issued upon conversion
thereof except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the "Act") or any applicable state
securities laws. Upon exercise of this Warrant, unless the Shares being acquired
are registered under the Act and any applicable state securities laws or an
exemption from such registration is available, the holder hereof shall confirm
in writing that the shares of Series Preferred so purchased (and any shares of
Common Stock issued upon conversion thereof) are being acquired for investment
and not with a view toward distribution or resale in violation of the Act and
shall confirm such other matters related thereto as may be reasonably requested
by the Company. All shares of Series Preferred issued upon exercise of this
Warrant and all shares of Common Stock issued upon conversion thereof (unless
registered under the Act and any applicable state securities laws) shall be
stamped or imprinted with a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE
"ACT") OR ANY STATE SECURITIES LAWS. SUCH SHARES
-4-
<PAGE> 42
MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT. COPIES OF THE AGREEMENTS COVERING
THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICE OF THE
CORPORATION."
Said legend shall be removed by the Company, upon the request of a
holder, at such time as the restrictions on the transfer of the applicable
security shall have terminated. In addition, in connection with the issuance of
this Warrant, the holder specifically represents to the Company by acceptance of
this Warrant as follows:
(1) The holder is aware of the Company's business affairs
and financial condition, and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire this
Warrant. The holder is acquiring this Warrant for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof in violation of the Act.
(2) The holder understands that this Warrant has not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the holder's
investment intent as expressed herein.
(3) The holder further understands that this Warrant must
be held indefinitely unless subsequently registered under the Act and qualified
under any applicable state securities laws, or unless exemptions from
registration and qualification are otherwise available. The holder is aware of
the provisions of Rule 144, promulgated under the Act.
(4) The holder is an "accredited investor" as such term is
defined in Rule 501 of Regulation D promulgated under the Act.
(b) Disposition of Warrant or Shares. With respect to any offer,
sale or other disposition of this Warrant or any shares of Series Preferred
acquired pursuant to the exercise of this Warrant prior to registration of such
Warrant or shares, the holder hereof agrees to give written notice to the
Company prior thereto, describing briefly the manner thereof, together with a
written opinion of such holder's counsel, or other evidence, if reasonably
satisfactory to the Company and its counsel, to the effect that such offer, sale
or other disposition may be effected without registration or qualification
(under the Act as then in effect or any federal or state securities law then in
effect) of this Warrant or such shares of Series Preferred or Common Stock and
indicating whether or not under the Act certificates for this Warrant or such
shares of Series Preferred to be sold or otherwise disposed of require any
restrictive legend as to applicable restrictions on transferability in order to
ensure compliance with such law. Upon receiving such written notice and
reasonably satisfactory opinion or other evidence, the Company, as promptly as
practicable but no later than fifteen (15) days after receipt of the written
notice, shall notify such holder that such holder may sell or
-5-
<PAGE> 43
otherwise dispose of this Warrant or such shares of Series Preferred or Common
Stock, all in accordance with the terms of the notice delivered to the Company.
If a determination has been made pursuant to this Section 7(b) that the opinion
of counsel for the holder or other evidence is not reasonably satisfactory to
the Company, the Company shall so notify the holder promptly with details
thereof after such determination has been made. Notwithstanding the foregoing,
this Warrant or such shares of Series Preferred or Common Stock may, as to such
federal laws, be offered, sold or otherwise disposed of in accordance with Rule
144 or 144A under the Act, provided that the Company shall have been furnished
with such information as the Company may reasonably request to provide a
reasonable assurance that the provisions of Rule 144 or 144A have been
satisfied. Each certificate representing this Warrant or the shares of Series
Preferred thus transferred (except a transfer pursuant to Rule 144 or 144A)
shall bear a legend as to the applicable restrictions on transferability in
order to ensure compliance with such laws, unless in the aforesaid opinion of
counsel for the holder, such legend is not required in order to ensure
compliance with such laws. The Company may issue stop transfer instructions to
its transfer agent in connection with such restrictions.
(c) Applicability of Restrictions. Neither any restrictions of
any legend described in this Warrant nor the requirements of Section 7(b) above
shall apply to any transfer of, or grant of a security interest in, this Warrant
(or the Series Preferred or Common Stock obtainable upon exercise thereof) or
any part hereof (i) to a partner of the holder if the holder is a partnership or
to a member of the holder if the holder is a limited liability company, (ii) to
a partnership of which the holder is a partner or to a limited liability company
of which the holder is a member, or (iii) to any affiliate of the holder if the
holder is a corporation; provided, however, in any such transfer, if applicable,
the transferee shall agree in writing to be bound by the terms of this Warrant
as if an original holder hereof.
8. Rights as Shareholders; Information. No holder of this Warrant, as
such, shall be entitled to vote or receive dividends or be deemed the holder of
Series Preferred or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until this Warrant shall have been exercised
and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein. Notwithstanding the foregoing, the Company will
transmit to the holder of this Warrant such information, documents and reports
as are generally distributed to the holders of any Series Preferred of the
Company concurrently with the distribution thereof to the shareholders.
9. Market Stand-Off Agreement. In connection with the closing of the
Company's initial public offering of its Common Stock ("IPO") effected pursuant
to a Registration Statement on Form S-1 (or its successor) filed under the Act,
if requested by the Company and the managing underwriter, the holder of this
Warrant agrees not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any Series Preferred (or other
securities) of the Company held by the holder pursuant to this Warrant without
the prior written consent of the
-6-
<PAGE> 44
Company or such managing underwriter for such period of time (not to exceed the
period beginning seven (7) days prior to the effective date of the registration
statement for the IPO and ending 180 days after the date of the Final Prospectus
relating to such IPO), as may be requested by the Company and the managing
underwriter, provided that all officers, directors, Founders (as defined in the
Rights Agreement) and holders of at least 5% of the outstanding shares
(calculated on an as-converted-to Common Stock basis) of the Company enter into
similar agreements; provided, further, that the holder will not be bound by the
terms of this Section 9 of this Warrant if there is an Acquisition (as defined
in Section 10.1 of this Warrant) prior to an IPO. In addition, if any
shareholder of the Series Preferred of the Company is not bound by, or is
released from, or otherwise not required to abide by the terms of the market
stand-off agreement set forth in section 9 (the "Stand-Off Provision") of
Optical Micro Machines, Inc. Amended and Restated Shareholders Rights Agreement
dated as of November 16, 1999 (the "Rights Agreement"), or if such shareholder
of Series Preferred may sell or otherwise dispose or transfer its shares on a
date earlier than set forth pursuant to the Stand-Off Provision, then the holder
of this Warrant shall be treated similarly. If there is an Acquisition prior to
an IPO, the holder agrees to abide by the market stand-off provisions of this
Section 9 (as if there were no Acquisition) or the market stand off provision
negotiated by the holders of Series Preferred with the acquirer, whichever is
less stringent, if the acquirer requests that the holder be subject to a market
stand off provision. The holder further agrees to execute and deliver to the
managing underwriter for the Company's IPO a separate written agreement in the
form signed by the officers, directors and other shareholders of Series
Preferred to further evidence the provisions of this Section 9. The Company may
impose stop-transfer instructions with respect to the Shares (or securities)
subject to the foregoing restriction until the end of said period.
10. Additional Rights.
10.1 Acquisition Transactions. The Company shall provide the holder of
this Warrant with written notice of the following transactions (an
"Acquisition") (to the extent the Company has notice thereof) not later than ten
(10) days prior to the shareholders' meeting called to approve such transaction,
or ten (10) days prior to the closing of such transaction, whichever is earlier,
and shall also notify the holder in writing of the final approval of such
transaction; the first of such notices shall describe the material terms and
conditions of the impending transaction and the Company shall thereafter give
the holder prompt notice of any material changes: (i) the sale, lease, exchange,
conveyance or other disposition of all or substantially all of the Company's
property or business, or (ii) its merger into or consolidation with any other
corporation (other than a wholly-owned subsidiary of the Company), or any
transaction (including a merger or other reorganization) or series of related
transactions, in which more than 50% of the voting power of the Company is
disposed of.
10.2 Right to Convert Warrant into Stock: Net Issuance.
(a) Right to Convert. In addition to and without limiting the
rights of the holder under the terms of this Warrant, the holder shall have the
right to convert this Warrant or any portion thereof (the "Conversion Right")
into shares of Series Preferred (or Common Stock if the Series Preferred has
been automatically converted into Common Stock) as provided in this Section 10.2
at any time or from time to time during the term of this Warrant. Upon exercise
of the Conversion
-7-
<PAGE> 45
Right with respect to a particular number of shares subject to this Warrant (the
"Converted Warrant Shares"), the Company shall deliver to the holder (without
payment by the holder of any exercise price or any cash or other consideration)
that number of shares of fully paid and nonassessable Series Preferred (or
Common Stock if the Series Preferred has been automatically converted into
Common Stock) as is determined according to the following formula:
X = B - A
-----
Y
Where: X = the number of shares of Series Preferred (or Common
Stock if the Series Preferred has been automatically
converted to Common Stock) that shall be issued to
holder
Y = the fair market value of one share of Series Preferred
(or Common Stock if the Series Preferred has been
automatically converted to Common Stock)
A = the aggregate Warrant Price of the specified number of
Converted Warrant Shares immediately prior to the exercise
of the Conversion Right (i.e., the number of Converted
Warrant Shares multiplied by the Warrant Price)
B = the aggregate fair market value of the specified number
of Converted Warrant Shares (i.e., Y multiplied by the
number of Converted Warrant Shares)
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined). For purposes
of Section 10 of this Warrant, shares issued pursuant to the Conversion Right
shall be treated as if they were issued upon the exercise of this Warrant.
(b) Method of Exercise. The Conversion Right may be exercised by
the holder by the surrender of this Warrant at the principal office of the
Company together with a written statement (which may be in the form of Exhibit
A-1 or Exhibit A-2 hereto) specifying that the holder thereby intends to
exercise the Conversion Right and indicating the number of shares subject to
this Warrant which are being surrendered (referred to in Section 10.2(a) hereof
as the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"), and, at the election of the holder
hereof, may be made contingent upon the closing of the sale of the Company's
Common Stock to the public in a public offering pursuant to a Registration
Statement under the Act (a "Public Offering"). Certificates for the shares
issuable upon exercise of the Conversion Right and, if applicable, a new warrant
evidencing the balance of the shares remaining subject to this Warrant, shall be
issued as of the
-8-
<PAGE> 46
Conversion Date and shall be delivered to the holder within thirty (30) days
following the Conversion Date.
(c) Determination of Fair Market Value. For purposes of this
Section 10.2, "fair market value" of a share of Series Preferred (or Common
Stock if the Series Preferred has been automatically converted into Common
Stock) as of a particular date (the "Determination Date") shall mean:
(i) If the Conversion Right is exercised in connection
with and contingent upon a Public Offering, and if the Company's Registration
Statement relating to such Public Offering ("Registration Statement") has been
declared effective by the Securities and Exchange Commission, then "fair market
value" shall be deemed to be the initial "Price to Public" specified in the
final prospectus with respect to such offering.
(ii) If the Conversion Right is not exercised in
connection with and contingent upon a Public Offering, then as follows:
(A) If traded on a securities exchange, the fair market value of
the Common Stock shall be deemed to be the average of the closing prices of the
Common Stock on such exchange over the 30-day period ending five business days
prior to the Determination Date, and the fair market value of the Series
Preferred shall be deemed to be such fair market value of the Common Stock
multiplied by the number of shares of Common Stock into which each share of
Series Preferred is then convertible;
(B) If traded on the Nasdaq Stock Market or other
over-the-counter system, the fair market value of the Common Stock shall be
deemed to be the average of the closing bid prices of the Common Stock over the
30-day period ending five business days prior to the Determination Date, and the
fair market value of the Series Preferred shall be deemed to be such fair market
value of the Common Stock multiplied by the number of shares of Common Stock
into which each share of Series Preferred is then convertible; and
(C) If there is no public market for the Common Stock, then fair
market value shall be determined in good faith by the board of directors of the
Company.
10.3 Exercise Prior to Expiration. To the extent this Warrant is not
previously exercised as to all of the Shares subject hereto, and if the fair
market value of one share of the Series Preferred is greater than the Warrant
Price then in effect, this Warrant shall be deemed automatically exercised
pursuant to Section 10.2 above (even if not surrendered) immediately before its
expiration. For purposes of such automatic exercise, the fair market value of
one share of the Series Preferred upon such expiration shall be determined
pursuant to Section 10.2(c). To the extent this Warrant or any portion thereof
is deemed automatically exercised pursuant to this Section 10.3, the Company
agrees to promptly notify the holder hereof of the number of Shares, if any, the
holder hereof is to receive by reason of such automatic exercise.
-9-
<PAGE> 47
11. Representations and Warranties. The Company represents and warrants
to the holder of this Warrant as follows:
(a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and non-assessable;
(c) The rights, preferences, privileges and restrictions granted
to or imposed upon the Series Preferred and the holders thereof are as set forth
in the Charter, and on the Date of Grant, each share of the Series Preferred
represented by this Warrant is convertible into one share of Common Stock;
(d) The shares of Common Stock issuable upon conversion of the
Shares have been duly authorized and reserved for issuance by the Company and,
when issued in accordance with the terms of the Charter will be validly issued,
fully paid and nonassessable;
(e) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Charter or by-laws, do
not and will not contravene any law, governmental rule or regulation, judgment
or order applicable to the Company, and do not and will not conflict with or
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument of which the Company is a party or by
which it is bound or require the consent or approval of, the giving of notice
to, the registration or filing with or the taking of any action in respect of or
by, any Federal, state or local government authority or agency or other person,
except for the filing of notices pursuant to federal and state securities laws,
which filings will be effected by the time required thereby; and
(f) There are no actions, suits, audits, investigations or
proceedings pending or, to the knowledge of the Company, threatened against the
Company in any court or before any governmental commission, board or authority
which, if adversely determined, will have a material adverse effect on the
ability of the Company to perform its obligations under this Warrant.
(g) As of the Date of Grant, the number of shares of Common Stock
of the Company outstanding on the date hereof, on a fully diluted basis
(assuming the conversion of all outstanding convertible securities and the
exercise of all outstanding options and warrants), does not exceed 29,300,000
shares.
-10-
<PAGE> 48
12. Modification and Waiver. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
13. Notices. Any notice, request, communication or other document
required or permitted to be given or delivered to the holder hereof or the
Company shall be delivered, or shall be sent by certified or registered mail,
postage prepaid, to each such holder at its address as shown on the books of the
Company or to the Company at the address indicated therefor on the signature
page of this Warrant.
14. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Series Preferred issuable upon the exercise or
conversion of this Warrant shall survive the exercise, conversion and
termination of this Warrant and all of the covenants and agreements of the
Company shall inure to the benefit of the successors and assigns of the holder
hereof.
15. Lost Warrants or Stock Certificates. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
16. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
17. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of California.
18. Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the holder hereof contained
herein shall survive the Date of Grant, the exercise or conversion of this
Warrant (or any part hereof) or the termination or expiration of rights
hereunder. All agreements of the Company and the holder hereof contained herein
shall survive indefinitely until, by their respective terms, they are no longer
operative.
19. Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the holders hereof (in the
case of a breach by the Company), or the Company (in the case of a breach by a
holder), may proceed to protect and enforce their or its rights either by suit
in equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Warrant.
-11-
<PAGE> 49
20. No Impairment of Rights. The Company will not, by amendment of its
Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
holder of this Warrant against impairment.
21. Severability. The invalidity or unenforceability of any provision of
this Warrant in any jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction, or affect any other provision of
this Warrant, which shall remain in full force and effect.
22. Recovery of Litigation Costs. If any legal action or other
proceeding is brought for the enforcement of this Warrant, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Warrant, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
23. Entire Agreement; Modification. This Warrant constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
-12-
<PAGE> 50
The Company has caused this Warrant to be duly executed and delivered as
of the Date of Grant specified above.
OPTICAL MICRO-MACHINES, INC.
By
--------------------------------------
Title
-----------------------------------
Address: 9645 Scranton Road, Suite 140
San Diego, CA 92121
-13-
<PAGE> 51
EXHIBIT A-1
NOTICE OF EXERCISE
To: OPTICAL MICRO-MACHINES, INC. (the "Company")
1. The undersigned hereby:
[ ] elects to purchase_____shares of [Series Preferred Stock] [Common
Stock] of the Company pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price of such shares in full, or
[ ] elects to exercise its net issuance rights pursuant to Section 10.2
of the attached Warrant with respect to_____Shares of [Series Preferred Stock]
[Common Stock].
2. Please issue a certificate or certificates representing _____ shares
in the name of the undersigned or in such other name or names as are specified
below:
------------------------------------
(Name)
------------------------------------
------------------------------------
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares,
all except as in compliance with applicable securities laws.
-----------------------------------
(Signature)
-----------------
(Date)
<PAGE> 52
EXHIBIT A-2
NOTICE OF EXERCISE
To: OPTICAL MICRO-MACHINES, INC. (the "Company")
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement on Form S____, filed_______, 20__, the undersigned hereby:
[ ] elects to purchase______shares of [Series Preferred Stock] [Common
Stock] of the Company pursuant to the terms of the attached Warrant, or
[ ] elects to exercise its net issuance rights pursuant to Section 10.2
of the attached Warrant with respect to______Shares of [Series Preferred Stock]
[Common Stock]:
2. Please deliver to the custodian for the selling shareholders a stock
certificate representing such_______shares.
----------------------------------
(Signature)
------------------
(Date)
<PAGE> 53
EXHIBIT C
---------
FORM OF LOAN AGREEMENT SUPPLEMENT
LOAN AGREEMENT SUPPLEMENT No. []
LOAN AGREEMENT SUPPLEMENT No. [], dated_______, _____("Supplement"), to
the Loan and Security Agreement dated as of April 7, 2000 (the "Loan Agreement")
by and among OPTICAL MICRO-MACHINES, INC., a Delaware corporation ("Borrower"),
MMC/GATX Partnership No. I, Comdisco, Inc., and Silicon Valley Bank
(collectively, "Lenders") and Agent.
Unless otherwise defined herein, capitalized terms have the meanings
given to such terms in the Loan Agreement.
1. To secure the prompt payment by Borrower of the principal of and
interest on, and all other amounts from time to time outstanding under the Loan
Agreement, and the performance and observance by Borrower of all the agreements,
covenants and provisions contained in the Loan Agreement, Borrower does hereby
grant to Agent, on behalf and for the benefit of Lenders, their respective
successors and assigns, a first priority security interest in all of Borrower's
right, title and interest in each item of equipment and other property described
in Annex A hereto, which equipment and other property shall be deemed to be
additional "Financed Equipment." The list of Financed Equipment in Annex A
hereto shall be construed as a supplement to, and deemed part of, the Collateral
listed in Section 4.1 of the Loan Agreement and shall form a part thereof, and
the Loan Agreement is hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
2. Attached as Annex B hereto is the Loan Terms Schedule with respect to
the Loan the proceeds of which will be used to finance the Financed Equipment
listed in Annex A hereto.
3. The Financed Equipment shall be located at the following address:
4. The proceeds of the Loan should be transferred to Borrower's account
as set forth in Section 2.4(c) of the Loan Agreement.
5. Borrower hereby certifies that (a) the foregoing information is true
and correct and authorizes Lenders to endorse in their respective books and
records, the Basic Rate applicable to the Funding Date of the Loan contemplated
in this Loan Agreement Supplement and the principal amount set forth in the Loan
Terms Schedule; (b) the representations and warranties made by Borrower in
Section 5 of the Loan Agreement and in the other Loan Documents are true and
correct on the date hereof and will be true and correct on such Funding Date, in
each case except to the extent they relate to a prior date; (c) Borrower has met
or will by such Funding Date meet all conditions set forth in Section 3 of the
Loan Agreement; (d) Borrower is now, and on such Funding Date will be, in
compliance with the covenants and the requirements contained in Sections 6 and 7
of the Loan Agreement; and (e) no Default or Event of Default has occurred and
is continuing under the Loan Agreement.
<PAGE> 54
6. This Supplement is being delivered in the State of California and
governed by Illinois law.
7. This Supplement may be executed by Borrower, Agent and Lenders in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
[Remainder of page intentionally left blank.]
<PAGE> 55
IN WITNESS WHEREOF, Borrower, Agent and Lenders have caused this
Supplement to be duly executed and delivered as of this day and year first above
written.
BORROWER:
OPTICAL MICRO-MACHINES, INC.
By:
-------------------------------------
Title:
----------------------------------
AGENT:
MMC/GATX PARTNERSHIP NO. I
By: GATX Capital Corporation,
its General Partner
By:
-------------------------------------
Title:
----------------------------------
LENDERS:
MMC/GATX PARTNERSHIP NO. I
By: GATX Capital Corporation,
its General Partner
By:
-------------------------------------
Title:
----------------------------------
SILICON VALLEY BANK
By:
-------------------------------------
Title:
----------------------------------
COMDISCO, INC.
By:
-------------------------------------
Title:
----------------------------------
<PAGE> 56
Annex A - Description of Financed Equipment
Annex B - Loan Terms Schedule
<PAGE> 57
ANNEX A
to
EXHIBIT C
The Financed Equipment being financed with the Loan for which this Loan
Agreement Supplement is being executed is listed below. Upon the funding of such
Loan, this Schedule automatically shall be deemed to be a part of the Collateral
listed in Section 4.1 of the Loan Agreement.
FINANCED EQUIPMENT
See Attached Pages.
<PAGE> 58
ANNEX B
LOAN TERMS SCHEDULE
Loan Funding Date:______, 200_
Original Loan Amount: $_____
Basic Rate________%
Loan Factor:_______%
Original Scheduled Payment Amount*: $____________
Date of First Scheduled Payment: $____________
To MMC/GATX: $_________________
To Comdisco: $_____________________
To SVB: $________________________
Maturity Date: _______________________
Final Payment: An additional amount equal to the Final Payment Percentage
multiplied by the original Loan Amount, shall be paid on the Maturity Date with
respect to such Loan.
Stipulated Loan Value:
<TABLE>
<CAPTION>
<S> <C> <C>
Payment No. Payment Date Stipulated Loan Value**
----------- ------------ ---------------------
</TABLE>
1
2
...
[35]
[36]
*/The amount of each Scheduled Payment will change as the Loan Amount changes.
**/Each Stipulated Loan Value amount assumes payment of all Scheduled Payments
due on or before the indicated Payment Date.
<PAGE> 59
EXHIBIT D
---------
ITEMS TO BE COVERED BY OPINION OF BORROWER'S COUNSEL
The opinions hereafter expressed are subject to the following
qualifications:
(a) We assume the genuineness of all signatures on original documents,
the authenticity and completeness of all documents submitted to us as originals,
the conformity to original documents of all copies submitted to us and the due
execution and delivery of all documents (except as to due execution and delivery
by the Company) where due execution and delivery are a prerequisite to the
effectiveness thereof;
(b) We express no opinion as to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar federal or state laws
affecting the rights of creditors;
(c) We express no opinion as to the effect of rules of law governing
specific performance, injunctive relief or other equitable remedies (regardless
of whether any such remedy is considered in a proceeding at law or in equity).
Based on and subject to the foregoing, we are of the opinion that:
1. Borrower is a corporation, duly organized, validly existing and in
good standing under the laws of the State of [___], and is duly qualified and
authorized to do business in the state of California.
2. Borrower has the full corporate power, authority and legal right, and
has obtained all necessary approvals, consents and given all notices to execute
and deliver the Loan Documents and perform the terms thereof.
3. The Loan Documents have been duly authorized, executed and delivered
by Borrower and constitute valid, legal and binding agreements.
4. To our knowledge, there is no action, suit, audit, investigation,
proceeding or patent claim pending or threatened against Borrower in any court
or before any governmental commission, agency, board or authority which might
have a material adverse effect on the business, condition or operations of
Borrower or the ability of Borrower to perform its obligations under the Loan
Documents.
5. The Shares issuable pursuant to exercise or conversion of the
Warrants have been duly authorized and reserved for issuance by Borrower and,
when issued in accordance with the terms thereof, will be validly issued, fully
paid and nonassessable.
6. The shares of Common Stock issuable upon conversion of the Shares
have been duly authorized and reserved and, when issued in accordance with the
terms of Borrower's [Articles/Certificate] of Incorporation, as amended, will be
validly issued, fully paid and nonassessable.
<PAGE> 60
7. The rights, preferences, privileges and restrictions granted to or
imposed upon Borrower's Series [ ] Preferred Stock and the holders thereof are
as set forth in Borrower's [Articles/Certificate] of Incorporation, as amended
to the Date of Grant, a true and complete copy of which has been delivered to
Lenders.
8. The execution and delivery of the Loan Documents are not, and the
issuance of the Shares upon exercise of the Warrants in accordance with the
terms thereof will not be, inconsistent with Borrower's [Articles/Certificate]
of Incorporation, as amended, or Bylaws, do not and will not contravene any law,
governmental rule or regulation, judgment or order applicable to Borrower, and
do not and will not conflict with or contravene any provision of, or constitute
a default under, any indenture, mortgage, contract or other agreement or
instrument of which Borrower is a party or by which it is bound or require the
consent or approval of, the giving of notice to, the registration or filing with
or the taking of any action in respect of or by, any federal, state or local
government authority or agency or other person, except for the filing of notices
pursuant to federal and state securities laws, which filings will be effected by
the time required thereby.
<PAGE> 61
EXHIBIT E
---------
LANDLORD AGREEMENT
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
MMC/GATX Partnership No. I, as Agent
4 Orinda Way, Suite 200-B
Orinda, CA 94563
CONSENT TO REMOVAL OF PERSONAL PROPERTY
KNOW ALL PERSONS BY THESE PRESENTS:
(a) The undersigned has an interest as [owner/landlord] in the following
described real property (the "Real Property"):
That certain real property in the County of [____________], State of
California, described as:
SEE ATTACHMENT 1 ATTACHED HERETO FOR FULL LEGAL DESCRIPTION, commonly
known as [street address].
(b) Optical Micro-Machines, Inc., a Delaware corporation ("Borrower"),
has entered into or will enter into a Loan and Security Agreement with Silicon
Valley Bank, Comdisco, Inc. and MMC/GATX Partnership No. I (collectively,
"Lenders") dated as of April 7, 2000 (as amended and supplemented from time to
time, the "Loan Agreement").
(c) Lenders, as a condition to entering into the Loan Agreement, require
that the undersigned consent to the removal by Lenders of the equipment and
other assets covered by the Loan Agreement (hereinafter called "Equipment") from
the Real Property, no matter how it is affixed thereto, and to the other matters
set forth below.
NOW, THEREFORE, for good and sufficient consideration, receipt of which
is hereby acknowledged, the undersigned consents to the placing of the Equipment
on the Real Property, and agrees with Lenders as follows:
1. The undersigned waives and releases each and every right which
undersigned now has, under laws of the State of California or by virtue of the
lease for the Real Property now in effect, to levy or distrain upon for rent, in
arrears, in advance or both, or to claim or assert title to the Equipment that
is already on said Real Property, or may hereafter be delivered or installed
thereon.
2. The Equipment shall be considered to be personal property and shall
not be considered part of the Real Property regardless of whether or by what
means it is or may become attached or affixed to the Real Property.
<PAGE> 62
3. The undersigned will permit Lenders, or their agent or
representative, to enter upon the Real Property for the purpose of exercising
any right they may have under the terms of the Loan Agreement or otherwise,
including, without limitation, the right to remove the Equipment; provided,
however, that if Lenders, in removing the Equipment damage any improvements of
the undersigned on the Real Property, Lenders will, at their expense, cause same
to be repaired.
4. This agreement shall be binding upon the heirs, successors and
assigns of the undersigned and shall inure to the benefit of each Lender and its
respective successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed this instrument at
_____________, this _____________ day of _______________, 2000.
--------------------------------------
OWNER/LESSOR
By:
-------------------------------------
Title:
----------------------------------
The foregoing Consent must be acknowledged before a Notary Public.
<PAGE> 63
STATE OF __________________ )
) ss
COUNTY OF _________________ )
On the ___________ day of ____________, 2000 before me, _____________
Notary Public, personally appeared ________________________________________
personally known to me
------------------------
or
------------------------
proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf
of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal
--------------------------------
SIGNATURE OF NOTARY PUBLIC
(S E A L)
<PAGE> 64
SCHEDULE 1
DISCLOSURE SCHEDULE
NONE
