exv10w1



 





EXHIBIT 10.1




LOAN MODIFICATION AGREEMENT



This Loan Modification Agreement is entered into as of May 8, 2004, by and
between SILICON VALLEY BANK (“Bank”), whose address is 3003 Tasman Drive, Santa
Clara, California 95054 with a loan production office at 4410 Arapahoe Avenue,
Suite 200, Boulder, CO 80303 and ADVANCED ENERGY INDUSTRIES, INC. (“Borrower”),
whose address is 1625 Sharp Point Drive, Fort Collins, CO 80525.



1. DESCRIPTION OF EXISTING AGREEMENT. Among other Obligations, which may be
owing by Borrower to Bank, Borrower is or may become indebted to Bank pursuant
to, among other documents, a Loan and Security Agreement dated May 10, 2002, as
it may be amended from time to time (the “Loan Agreement”). The Loan Agreement
provides for, among other things, a Committed Revolving Line in the original
principal amount of Twenty-Five Million and No/100 Dollars ($25,000,000.00).
Defined terms used but not otherwise defined herein shall have the same
meanings as set forth in the Loan Agreement.



Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the “Obligations.”



2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement.



Hereinafter, the above-described security documents, together with all other
documents securing repayment of the Obligations shall be referred to as the
“Security Documents”. Hereinafter, the Security Documents, together with all
other documents evidencing or securing the Obligations shall be referred to as
the “Existing Loan Documents”.



3. DESCRIPTION OF CHANGE IN TERMS. Bank hereby agrees to modify the Loan
Agreement as follows:





	 	1.	 	Subsection (a) of Section 2.1.1 entitled
“Revolving Advances” is hereby amended to read as follows:






(a) Bank will make Advances not exceeding (i) the lesser of
(A) the Committed Revolving Line or (B) the Borrowing Base,
if applicable, minus (ii) the amount of all outstanding
Letters of Credit (including drawn but unreimbursed Letters
of Credit), and minus (iii) the FX Reserve and all amounts
for services utilized under the Cash Management Services
Sublimit. Amounts borrowed under this Section may be repaid
and reborrowed during the term of this Agreement.
Notwithstanding the foregoing, the Borrowing Base shall not
be applied at any time that the aggregate amount of Credit
Extensions outstanding, or that would be outstanding
immediately following a requested Advance, are equal to or
less than $15,000,000.




	 	2.	 	Subsection (b) of Section 6.2 entitled
“Financial Statements, Reports, Certificates” is hereby
amended to read as follows:






(b) Within 30 days after the last day of each month if
during such month the aggregate amount of all Credit
Extensions outstanding at any time during such month exceed
$15,000,000, Borrower will deliver to Bank a Borrowing Base
Certificate signed by a Responsible Officer in the form of
Exhibit C, with aged listings of accounts receivable and
accounts payable.




	 	3.	 	Subsection (d) of Section 6.2 entitled
“Financial Statements, Reports, Certificates” is hereby
amended to read as follows:














 












(d) At any time that the aggregate amount of outstanding
Credit Extensions, exclusive of interest thereon, exceeds
$15,000,000 and remains outstanding for 30 consecutive days,
Borrower will allow Bank to conduct an initial audit and
thereafter annual audits of Borrower’s Collateral at
Borrower’s expense. Such audits will be conducted no more
often than once every year after the initial audit, unless an
Event of Default has occurred and is continuing.




	 	4.	 	Section 7.1 entitled “Dispositions” is hereby
amended as follows:






Convey, sell, lease, transfer or otherwise dispose of
(collectively a “Transfer”), or permit any of its
Subsidiaries to Transfer, all or any part of its business or
property, except for Transfers (i) of Inventory in the
ordinary course of business; (ii) of non-exclusive licenses
and similar arrangements for the use of the property of
Borrower or its Subsidiaries in the ordinary course of
business; (iii) of worn-out, damaged, or obsolete Equipment;
(iv) which constitute liquidation of Investments as
permitted in Section 7.6(i); or (v) of other assets which do
not exceed in the aggregate $5,000,000 in net book value in
any one year.




	 	5.	 	Section 13.1 entitled “Definitions” is hereby
amended as follows:






(i) to change the definition of “Borrowing Base” to read:




“Borrowing Base” is (i) 80% of Eligible Accounts plus (ii)
the lesser of 25% of the value of Borrower’s Eligible
Inventory (valued at the lower of cost or wholesale fair
market value) or $5,000,000, as determined by Bank from
Borrower’s most recent Borrowing Base Certificate.




(ii) to change subpart (g) of the definition of “Permitted
Indebtedness” to read:




(g) Indebtedness of AE-Japan up to an aggregate
principal amount of $15,000,000.




and (iii) to change the definition of
“Revolving Maturity Date” to read:




“Revolving Maturity Date” is May 7, 2005.




	 	6.	 	Exhibit D attached hereto shall be substituted
for that attached to the Loan Agreement.




4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.



5. PAYMENT OF LOAN FEE AND EXPENSES. Borrower shall pay to Bank a fee in the
amount of Two Thousand Five Hundred and No/100 Dollars ($2,500.00) (the “Loan
Fee”) plus all of Bank’s reasonable out-of-pocket expenses in connection with
this Loan Modification Agreement.



6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of the date hereof, it has no defenses against the
obligations to pay any amounts under the Obligations.



7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Obligations, Bank
is relying upon Borrower’s representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified




2









 







pursuant to this Loan Modification Agreement, the terms of the Existing Loan
Documents remain unchanged and in full force and effect. Bank’s agreement to
modifications to the existing Obligations pursuant to this Loan Modification
Agreement in no way shall obligate Bank to make any future modifications to the
Obligations. Nothing in this Loan Modification Agreement shall constitute a
satisfaction of the Obligations. It is the intention of Bank and Borrower to
retain as liable parties all makers and endorsers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. Unless expressly
released herein, no maker, endorser, or guarantor will be released by virtue of
this Loan Modification Agreement. The terms of this paragraph apply not only
to this Loan Modification Agreement, but also to all subsequent loan
modification agreements.



8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon receipt by Bank of the Loan Fee and a fully executed
counterpart hereof.




     This Loan Modification Agreement is executed as of the date first written
above.



	 	 	 
	BORROWER:

	 	BANK:
	 	 	 
	ADVANCED ENERGY INDUSTRIES, INC.

	 	SILICON VALLEY BANK
	 	 	 
	By:        /s/
Michael El-Hillow

	 	By:        /s/
Frank Amoroso
	
 

	 	

	Name:   Michael
El-Hillow

	 	Name:   Frank
Amoroso
	
	 	

	Title:     Executive
V.P. and CFO

	 	Title:     VP
	
	 	








3









 






EXHIBIT D

COMPLIANCE CERTIFICATE




	 	 	 
	TO:

	 	SILICON VALLEY BANK

3003 Tasman Drive

Santa Clara, CA 95054
	
	 	 
	FROM:

	 	ADVANCED ENERGY INDUSTRIES, INC.







     The undersigned authorized officer of Advanced Energy Industries, Inc.
(“Borrower”) certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower is
in complete compliance for the period ending
     with all required
covenants except as noted below and (ii) all representations and warranties in
the Agreement are true and correct in all material respects on this date.
Attached are the required documents supporting the certification. The Officer
certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) consistently applied from one period to the next
except as explained in an accompanying letter or footnotes. The Officer
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.



     Please indicate compliance status by circling Yes/No under “Complies” column.



	 	 	 	 	 	 	 
	Reporting Covenant
	 	Required
	 	Complies

	Annual (Audited)

	 	FYE within 90 days
	 	Yes
	 	No
	10-Q, 10-K and 8-Ks

	 	Within 5 days after filing with SEC
	 	Yes
	 	No
	A/R & A/P Agings

	 	Monthly within 30 days*
	 	Yes
	 	No
	Borrowing Base Certificate

	 	Monthly within 30 days*
	 	Yes
	 	No
	Collateral Audit

	 	Initial and Annual**
	 	Yes
	 	No







	 	 	 	 	 	 	 	 	 
	Financial Covenant
	 	Required
	 	Actual
	 	Complies

	Maintain on a Quarterly Basis:
	 	 	 	 	 	 	 	 
	Minimum Quick Ratio

	 	2.00:1.0
	 	   :1.00

	 	Yes
	 	No
	Minimum Tangible Net Worth + SD +

	 	$220,000,000 plus
	 	$   

	 	Yes
	 	No
	CNs

	 	50% of quarterly profit	 	 	 	 	 	 






*Only after outstandings exceed $15,000,000
**After outstandings exceed $15,000,000 for 30 days




	 	 	 
	Comments Regarding Exceptions: See Attached.
	 	 
	Sincerely,
	 	 
	 
	 	 
	Advanced Energy Industries, Inc.
	 	 
	 
	 	 
	

	 	 
	SIGNATURE
	 	 
	 
	

	 	 
	TITLE
	 	 
	 
	

	 	 
	DATE
	 	 







	 
	BANK USE ONLY

	 

	Received by:

	


	AUTHORIZED SIGNER

	 
	Date:

	


	 
	Verified:

	


	AUTHORIZED SIGNER

	 
	Date:

	


	 

	Compliance Status: Yes No








D-1









 




[LOGO]


SILICON VALLEY BANK




PRO FORMA INVOICE FOR LOAN CHARGES




	 	 	 
	BORROWER:

	 	Advanced Energy Industries, Inc.
	LOAN OFFICER:

	 	Frank Amoroso
	DATE:

	 	May 12, 2004







	 	 	 	 	 
	Documentation Fee
	 	 	1,000.00	 
	UCC Costs
	 	 	250.00	 
	Loan Fee
	 	 	2,500.00	 
	TOTAL FEE DUE
	 	$	3,750.00	 
	 	 	 	
 	 







Please indicate the method of payment:





o A check for the total amount is attached.




o
Debit DDA # ______________ for the total amount.




o Loan proceeds



	 	 	 
	

	Borrower

	 	(Date)
	 
	 	 
	

	Silicon Valley Bank

	 	(Date)
	Account Officer’s Signature