Exhibit 10.1
SECOND MODIFICATION TO
LOAN AND SECURITY AGREEMENT
     This Second Modification to Loan and Security Agreement (the “Second
Modification”) is entered into as of July 31, 2006 by and between Therma-Wave,
Inc., a California corporation (“Borrower”) and Silicon Valley Bank, a
California-chartered bank (“Bank”).
1.     DESCRIPTION OF EXISTING INDEBTEDNESS. Among other indebtedness which may
be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to that
certain Amended and Restated Loan and Security Agreement dated as of June 10,
2005 (as may be amended from time to time, the “Loan Agreement”). The Loan
Agreement provides for, among other things, loans in the principal amount of up
to Fifteen Million Dollars ($15,000,000.00). Capitalized terms used herein but
not otherwise defined herein shall have the respective meanings accorded to them
in the Loan Agreement; provided, that all indebtedness owing by Borrower to Bank
under the Loan Agreement shall be referred to herein as the “Indebtedness.”
2.     DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured by
the Collateral as described in the Loan Agreement and herein. Hereinafter, all
documents securing repayment of the Indebtedness, together with all other
documents evidencing or securing the Indebtedness, shall be referred to as the
“Existing Loan Documents.”
3.     DESCRIPTION OF CHANGES TO THE TERMS OF THE EXISTING LOAN DOCUMENTS.
          3.1     Maturity Date for the Domestic Credit Line and EXIM Credit
Line. Section 4 of Schedule 1 of the Loan Agreement is hereby amended to read in
full as follows:

             
 
  “4.   MATURITY DATE (Section 6.1):    June 11, 2008.”

          3.2     Tangible Net Worth. Section 5.2 of Schedule 1 of the Loan
Agreement is hereby amended to read in full as follows:

                  "5.2   Minimum Tangible Net Worth:
 
           
 
          Borrower shall maintain a Tangible Net Worth (1) at the end of each
quarter end of not less than $17,500,000 and (2) at the end of each month which
is not a quarter end of not less than $16,000,000, plus (i) 50% of all
consideration received after the date hereof for equity securities and
subordinated debt of the Borrower, plus (ii) 25% of the Borrower’s net income in
each fiscal quarter ending after the date hereof. Increases in the Minimum
Tangible Net Worth covenant based on consideration received for equity
securities and subordinated debt of the Borrower shall be effective as of the
end of the month in which such consideration is received, and shall continue
effective thereafter. Increases in the Minimum Tangible Net Worth covenant based
on net income shall be effective on the last day of the fiscal

 

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          quarter in which said net income is realized, and shall continue
effective thereafter. In no event shall the Minimum Tangible Net Worth covenant
be decreased.”

          3.3      Minimum Liquidity. Section 5.4 of Schedule 1 of the Loan
Agreement is hereby added to read in full as follows:
5.4 Minimum Liquidity Ratio. Borrower shall maintain a Minimum Liquidity Ratio
of at least 2.0 to 1.0 at all times, tested as of the last day of each month.
Minimum Liquidity Ratio is calculated as (i) unrestricted cash and cash
equivalents held at the Bank plus availability under the Domestic Credit Line
and EXIM Credit Line divided by (ii) the outstanding amount of the Term Loan.
     4.     CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described in Section 3 hereof.
     5.     NO DEFENSES OF BORROWER. Borrower agrees that, as of the date
hereof, it has no defenses against the obligations to pay any amounts of the
Indebtedness.
     6.     CONTINUING VALIDITY. Borrower understands and agrees that, in
modifying the Existing Loan Documents, Bank is relying upon Borrower’s
representations, warranties and agreements, all as set forth in the Existing
Loan Documents. Except as expressly modified pursuant to this Second
Modification, the terms of the Existing Loan Documents remain unchanged and in
full force and effect, and hereafter the Existing Loan Documents shall include
the terms of this Second Modification as if set forth therein in full. Bank’s
agreement to modifications to the Existing Loan Documents pursuant to this
Second Modification shall in no way obligate Bank to make any future
modifications to the Existing Loan Documents. Nothing in this Second
Modification shall constitute a satisfaction of the Indebtedness or any portion
thereof. It is the intention of Bank and Borrower to retain Borrower as the
liable party under the Existing Loan Documents, and Borrower is not released by
virtue of this Second Modification. The terms of this paragraph apply not only
to this Second Modification, but also to all subsequent loan modification
agreements.
     7.     CONDITION PRECEDENT TO EFFECTIVENESS. Before this Second
Modification, (and Bank’s and Borrower’s respective rights and obligations
hereunder) shall be effective, Borrower shall have paid to Bank all Bank
Expenses incurred by Bank in connection with its entering into this Second
Modification.
[Signature Page Follows]

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IN WITNESS WHEREOF, each of the parties hereto has caused its duly authorized
representative to execute and deliver this Second Modification as of the date
first set forth above.

              BORROWER:   BANK: THERMA-WAVE, INC.,   SILICON VALLEY BANK, a
Delaware corporation   a California-chartered bank
 
           
By:
  /s/ Joseph J. Passarello   By:   /s/ Mark Harris
 
           
Name:
  Joseph J. Passarello   Name:   Mark Harris
 
           
Title:
  Senior Vice President and Chief Financial Officer   Title:   Relationship
Manager
 
           

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