AMENDMENTNO. 2 TO LOANAND SECURITY AGREEMENT AND CONSENT

 

 

 

This Amendment No. 2 to Loan and Security Agreement and Consent (this “Amendment”) is entered into May 7, 2009, by and among MIPS Technologies, Inc., a Delaware corporation (“Borrower”), MIPS Technologies Holding LLC, a Delaware limited liability company (“Guarantor”), and Silicon Valley Bank, (“Bank”).  Capitalized terms used herein without definition shall have the same meanings given them in the Loan Agreement (as defined below).

 

 

A.

Borrower and Bank have entered into that certain Loan and Security Agreement dated as of July 3, 2008, as amended by that certain Amendment No. 1 to Loan and Security Agreement dated December 18, 2008 (as so amended and as may be further amended, restated or modified, the “Loan Agreement”), pursuant to which the Bank has agreed to extend and make available to Borrower certain advances of money.

 

B.

In support of Borrower’s Obligations under the Loan Agreement, (i) Guarantor and Bank have entered into that certain Unconditional Guaranty and Security Agreement dated as of July 3, 2008 (the “Guaranty”), and Guarantor, Borrower, and Bank have entered into that certain Uncertificated Security Control Agreement dated as of July 3, 2008 (the “USCA”).

 

C.

Borrower has informed Bank that Borrower wishes to sell its analog business group, comprised of Guarantor and all of Guarantor’s Subsidiaries (such sale, the “Transaction”), to Synopsys, Inc., a Delaware corporation (the “Buyer”), pursuant to a Membership Interest Purchase Agreement substantially in the form of the document received by Bank via e-mail from Borrower on May 6, 2009, at 12:32 p.m. (the “Transaction Document”).

 

D.	Borrower and Guarantor acknowledge and confirm that Sections 7.1, 7.3, and 7.5 of the Loan Agreement and various sections of the Guaranty and the USCA prohibit Borrower from entering into the Transaction without Bank’s prior written consent.

 

E.	Borrower and Guarantor desire that Bank (i) consent to the Transaction, (ii) terminate the Guaranty and the USCA, and (iii) amend the Loan Agreement to modify a financial covenant and make certain other changes, all upon the terms and conditions more fully set forth herein.

 

F.	Subject to the representations and warranties of Borrower and Guarantor herein and upon the terms and conditions set forth in this Amendment, Bank is willing to consent to the Transaction, to terminate the USCA and the Guaranty, and to amend the Loan Agreement.

 

 

NOW, THEREFORE, in consideration of the foregoing Recitals and intending to be legally bound, the parties hereto agree as follows:

 

1.

Consent to Transaction.  Subject to Section 6, Bank hereby grants its consent (i) to Borrower entering into and consummating the Transaction in accordance with the Transaction Document and (ii) to the transfer of the membership interests of Guarantor to the Buyer in connection with the Transaction, free and clear of any security interest held by Bank under the Loan Documents.  Bank further agrees that the actions described in (i) and (ii) above, in and of themselves, shall not be deemed to be an Event of Default under the Loan Agreement.  The foregoing consent is conditioned on the Transaction closing not later than May 11, 2009.

 

2.	Termination of Guaranty, USCA, and related UCC filings.

 

2.1

Guaranty.  Subject to Section 6, Bank and Guarantor hereby agree that immediately upon the consummation of the Transaction as consented to by Bank, the Guaranty shall be terminated.  Following such termination of the Guaranty, Bank shall file (i) a UCC termination statement with regard to UCC financing statement 82300091 and (ii) a UCC amendment with regard to UCC financing statement 82300034 modifying the definition of Guarantor in such financing statement to be consistent with definition of Guarantor in the Loan Agreement, as amended pursuant to Section 3.3 below.

 

2.2	USCA.  Subject to Section 6 of this Amendment, Bank hereby gives notice pursuant to Section 8(a) of the USCA that immediately upon the consummation of the Transaction as consented to by Bank,  the USCA shall be terminated.

 

 

 

3.	Amendments to Loan Agreement.

 

3.1	Section 6.7(c) (Adjusted Quick Ratio).  Section 6.7(c) of the Loan Agreement is amended in its entirety and replaced by the following:

 

“(c)  Adjusted Quick Ratio.  As of the end of each fiscal quarter, a ratio of (x) the sum of Quick Assets divided by (y) Current Liabilities minus Deferred Revenue, which ratio shall be not less than (a) 0.75 to 1.00, for the quarter ending March 31, 2009, and (b) 1.75 to 1.00 for the quarter ending June 30, 2009, and each quarter ending thereafter.”

 

3.2	Section 10 (Notices).  Borrower’s notice address in Section 10 of the Loan Agreement is modified to read as follows:

 

“If to Borrower:

(before June 1, 2009) MIPS Technologies, Inc. 1225 Charleston Road Mountain View, CA 94043 Attn: General Counsel Fax:   ###-###-#### Email: ***@***

(on or after June 1, 2009) MIPS Technologies, Inc. 955 E. Arques Avenue Sunnyvale, CA 94085-4521 Attn: General Counsel Fax:  ______________ Email:  ***@***”

3.3	Section 13 (Definitions).  The definition of “Guarantor” in Section 13.1 of the Loan Agreement is amended in its entirety by deleting it and replacing it with the following:

 

““Guarantor” is any present or future guarantor of the Obligations.”

 

3.4	Exhibit E to Loan Agreement (Compliance Certificate).  Exhibit E (“Compliance Certificate”) of the Loan Agreement is amended in its entirety by deleting it and replacing it with Exhibit A attached hereto.

 

4.	Borrower’s Representations And Warranties.

 

4.1	Borrower represents and warrants that:

 

(a)

immediately upon giving effect to this Amendment (i) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (ii) no Event of Default has occurred and is continuing;

 

(b)	Borrower has the corporate power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;

 

(c)

the certificate of incorporation, bylaws and other organizational documents of Borrower delivered to Bank in connection with the execution of the Loan Agreement, remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;

 

(d)	the execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized by all necessary corporate action on the part of Borrower;

 

 

 

(e)

this Amendment has been duly executed and delivered by the Borrower and is the binding obligation of Borrower, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights;

 

(f)

as of the date hereof, it has no defenses against the obligations to pay any amounts under the Obligations.  Borrower acknowledges that Bank has acted in good faith and has conducted in a commercially reasonable manner its relationships with Borrower in connection with this Amendment and in connection with the Loan Documents; and

 

(g)	the Transaction, and the executed documents effecting the Transaction, shall not, on an individual basis or together with one or more other executed documents, (i) substantially differ from the Transaction Document or (ii) differ from the reasonable expectation of Bank in light of the Recitals.

 

4.2	Borrower understands and acknowledges that Bank is entering into this Amendment in reliance upon, and in partial consideration for, the representations and warranties in Section 4.1, and agrees that such reliance is reasonable and appropriate.

 

5.

Limitation.  The amendments and the consent set forth in this Amendment shall be limited precisely as written and shall not be deemed (a) to be a waiver or modification of any other term or condition of the Loan Agreement or of any other instrument or agreement referred to therein or to prejudice any right or remedy which Bank may now have or may have in the future under or in connection with the Loan Agreement or any instrument or agreement referred to therein; or (b) to be a consent to any future amendment or modification or waiver to any instrument or agreement the execution and delivery of which is consented to hereby, or to any waiver of any of the provisions thereof.  Except as expressly amended hereby, the Loan Agreement shall continue in full force and effect.  This Amendment is a Loan Document and any breach of this Amendment by Borrower shall be an immediate Event of Default under the Loan Agreement.

 

6.	Effectiveness.  This Amendment shall become effective upon the satisfaction of all the following conditions precedent:

 

6.1	Amendment.  Borrower and Bank shall have duly executed and delivered this Amendment to Bank.

 

6.2	Transaction Document.  Borrower shall have delivered to Bank a true, accurate and complete copy of the executed document effecting the Transaction together with a redline comparison of the foregoing executed document to the Transaction Document.

 

6.3	Bank Expenses.  Borrower shall have paid all Bank Expenses incurred through the date of this Amendment.

 

7.	Counterparts.  This Amendment may be signed in any number of counterparts, and by different parties hereto in separate counterparts, with the same effect as if the signatures to each such counterpart were upon a single instrument.  All counterparts shall be deemed an original of this Amendment.

 

8.

Integration.  This Amendment and any documents executed in connection herewith or pursuant hereto contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, offers and negotiations, oral or written, with respect thereto and no extrinsic evidence whatsoever may be introduced in any judicial or arbitration proceeding, if any, involving this Amendment; except that any financing statements or other agreements or instruments filed by Bank with respect to Borrower shall remain in full force and effect.

 

9.	Governing Law; Venue.  THIS AMENDMENT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.  Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California.

 

[Signature page to Amendment No. 2 to Loan and Security Agreement and Consent]

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first written above.

 

 

 

Borrower:	MIPS Technologies, Inc.
	a Delaware corporation
	By:	/s/   JOHN BOURGOIN
		Printed Name:  John Bourgoin
		Title:  Chief Executive Officer

 

 

Guarantor:	MIPS Technologies Holding LLC
	a Delaware limited liability company
	By:	MIPS Technologies, Inc., its sole member
	By:	/s/   MAURY AUSTIN
		Printed Name:  Maury Austin
		Title:  Chief Financial Officer

Bank:	Silicon Valley Bank
	By:	/s/   NICK TSIAGKAS
		Printed Name:  Nick Tsiagkas
		Title:  Relationship Manager

 

 

 

 

TO:                      SILICON VALLEY BANK                                                                                                Date:  ___________

FROM:               MIPS TECHNOLOGIES, INC.

The undersigned authorized officer of MIPS Technologies, Inc. (“Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement ”), (1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports (or has been granted an extension to file such tax return and reports), and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank.  Attached are the required documents supporting the certification.  The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes.  The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.  Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

The following financial covenant analys[is][es] and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

The following are the exceptions with respect to the certification above:  (if none, state “No exceptions to note.”)

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MIPS Technologies, Inc.     By: Name: Title:

BANK USE ONLY   Received by: _____________________ authorized signer Date:       ________________________   Verified: ________________________ authorized signer Date:       _________________________   Compliance Status:                        Yes     No

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

Dated:                      ____________________

 

 

II.           Calculation of EBITDA  (on a rolling-2 quarter basis)

III.           Fixed Charge Coverage Ratio Covenant (Section 6.7(a) of Loan Agreement)

Required:

Fixed Charge Coverage Ratio as at the last day of any period of two consecutive fiscal quarters ending with any fiscal quarters set forth below to be not less than the ratio set forth below opposite such fiscal quarters:

Fiscal Quarter Ending	Fixed Charge Coverage Ratio
September 30, 2008	1.25:1.00
December 31, 2008	1.25:1.00
March 31, 2009 and thereafter	1.50:1.00

Actual:

A.	EBITDA (from Line II.C above)	$____________
B.	Unfunded capital expenditures	$____________
C.	Line A minus Line B	$____________
D.	Scheduled payments of principal and interest on all Indebtedness (for the same two rolling quarters, but excluding the pay-off or pre-payment of Indebtedness to Jefferies Finance LLC on or before July 3, 2008)	$____________
E.	Fixed Charge Coverage Ratio	_____:1.00

Is line III.E equal to or greater than the required ratios set forth above? (please circle answer)

  No, not in compliance                                                                                                  Yes, in compliance

 

 

Required:

Senior Debt Leverage Ratio of not more than 2.00:1.00 as of the last day of any fiscal quarter

Actual:

A.	All Indebtedness (including Advances and Term Loans)  owed to banks	$____________
B.	Capital lease obligations	$____________
C.	Sum of Line A plus Line B	$____________
D.	EBITDA (line II.C above) annualized	$____________
E.	Senior Debt Leverage Ratio (line C divided by line D)	_____:1.00

Is line IV.E equal to or less than the required ratios set forth above? (please circle answer)

  No, not in compliance                                                                                                  Yes, in compliance

V.           Adjusted Quick Ratio (Section 6.7(c) of Loan Agreement)

Required:

Fiscal Quarter Ending	Adjusted Quick Ratio
March 31, 2009	0.75:1.00
June 30, 2009 and thereafter	1.75:1.00

Actual:

Is line V.G equal to or greater than the number required in the table above? (please circle answer)

  No, not in compliance                                                                                                  Yes, in compliance