Document:

EX-10.1

 Exhibit 10.1 
  

 
  

INCREMENTAL ASSUMPTION AND REFINANCING FACILITY AGREEMENT 

dated as of May 14, 2015 

relating to the 
 SECOND AMENDED
AND RESTATED CREDIT AGREEMENT 
 dated as of June 4, 2014, 

among 
 TRANSDIGM INC., 

TRANSDIGM GROUP INCORPORATED, 

THE SUBSIDIARIES OF TRANSDIGM INC. FROM TIME TO TIME PARTY THERETO, 

THE LENDERS PARTY THERETO 
 and

 CREDIT SUISSE AG, 
 as
Administrative Agent and Collateral Agent 
  

 
 CREDIT SUISSE
SECURITIES (USA) LLC 
 and 

CITIGROUP GLOBAL MARKETS INC., 
 as
Joint Lead Arrangers 
 CREDIT SUISSE SECURITIES (USA) LLC, 

CITIGROUP GLOBAL MARKETS INC., 

MORGAN STANLEY SENIOR FUNDING, INC., 

UBS SECURITIES LLC, 
 BARCLAYS BANK
PLC, 
 RBC CAPITAL MARKETS, 

HSBC SECURITIES (USA) INC. 
 and

 CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, 

as Joint Bookrunners 
 and 

PNC CAPITAL MARKETS LLC, 
 as 

Manager 
  

 
  

 INCREMENTAL ASSUMPTION AND REFINANCING FACILITY AGREEMENT dated as of
May 14, 2015 (this “Agreement”), to the SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 4, 2014 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”),
among TRANSDIGM INC., a Delaware corporation (the “Borrower”), TRANSDIGM GROUP INCORPORATED, a Delaware corporation (“Holdings”), each subsidiary of the Borrower from time to time party thereto, the lenders party
thereto (the “Existing Lenders”), and CREDIT SUISSE AG, as administrative agent and collateral agent for the Lenders (in such capacities, the “Agent”). 

A. The Borrower has requested that on the 2015 Effective Date (as defined below) the Persons set forth on Schedule I hereto (the
“Tranche E Term Lenders”) make term loans in an aggregate principal amount of $1,040,000,000 (the “Tranche E Term Loans”) to the Borrower. 

B. The Tranche E Term Lenders are willing to make the Tranche E Term Loans to the Borrower on the 2015 Effective Date on the terms and subject
to the conditions set forth herein and in the Credit Agreement. 
 Accordingly, in consideration of the mutual agreements herein contained
and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows: 

SECTION 1. Defined Terms. Capitalized terms used but not defined herein (including in the recitals hereto) shall have the meanings
given to them in the Credit Agreement. The rules of interpretation set forth in Section 1.03 of the Credit Agreement are hereby incorporated by reference herein, mutatis mutandis. As used herein, the term “2015
Transactions” means, collectively, (a) the execution, delivery and performance by each Loan Party of this Agreement, (b) the Borrowing of the Tranche E Term Loans hereunder and the use of the proceeds thereof in accordance with
the terms of the Credit Agreement and this Agreement, (c) the issuance by the Borrower of its 6.50% senior subordinated notes due 2025 in an initial aggregate principal amount of $450,000,000 and the use of the proceeds thereof, (d) the
repayment in full of the outstanding Tranche B Term Loans, together with all accrued interest thereon (the “Tranche B Refinancing”), (e) the consummation of the acquisition by the Borrower of the certain assets of Pexco LLC
pursuant to the Asset Purchase Agreement, dated as of April 30, 2015, by and among Pexco LLC, All-West Plastics, Incorporated, and the Borrower (the “Acquisition”) and (f) the payment of fees and expenses incurred in
connection with the foregoing (the “Transaction Costs”). 
 SECTION 2. Term Loan Commitments. (a) Each
Tranche E Term Lender hereby agrees, severally and not jointly, on the terms set forth herein and in the Credit Agreement and subject to the conditions set forth herein, to make Tranche E Term Loans to the Borrower on the 2015 Effective Date in an
aggregate principal amount not to 

 
exceed the amount set forth opposite such Tranche E Term Lender’s name on Schedule I hereto. Amounts borrowed under this Section 2(a) and repaid or prepaid may not be reborrowed. 

(b) The Incremental Term Loan Maturity Date for the Tranche E Term Loans shall be May 14, 2022 and, for purposes of
Section 2.08(b) of the Credit Agreement, the Tranche E Term Loans shall amortize as provided in Schedule II hereto. Unless the context shall otherwise require, the Tranche E Term Loans shall constitute “Incremental Term Loans”
and, solely with respect to the Tranche C Term Loans and the Tranche D Term Loans, “Other Term Loans”, and the Tranche E Term Lenders shall constitute “Incremental Term Lenders” and “Lenders”, in each case for all
purposes of the Credit Agreement and the other Loan Documents; provided, however, that $497,589,824.39 aggregate principal of Tranche E Term Loans (such amount being the amount incurred to effect the Tranche B Refinancing)
(the “Refinancing Tranche B Term Loans”) shall be deemed to be Refinancing Term Loans and shall not reduce the Incremental Amount; provided, further, however that the Refinancing Tranche B Term Loans shall have the
same terms as the Tranche E Term Loans. 
 (c) The proceeds of the Tranche E Term Loans shall be used solely (i) to
finance the Acquisition and the Tranche B Refinancing and to pay the Transaction Costs and (ii) for general corporate purposes of the Borrower and its Subsidiaries, including, without limitation, Permitted Acquisitions. 

(d) Unless previously terminated, the commitments of the Tranche E Term Lenders pursuant to Section 2(a) shall terminate
upon the making of the Tranche E Term Loans on the 2015 Effective Date. 
 (e) With respect to the Refinancing Tranche B Term
Loans, the initial Interest Period applicable thereto shall be the Interest Period set forth in the notice of borrowing delivered on the 2015 Effective Date pursuant to Section 4(f) of this Agreement. 

SECTION 3. Amendments to Credit Agreement. (a) Section 1.01 of the Credit Agreement is hereby amended by inserting the
following definitions in proper alphabetical order therein: 
 “2015 Effective Date” has the meaning
assigned to such term in Incremental Assumption Agreement No. 1. 
 “Incremental Assumption Agreement
No. 1” means the Incremental Assumption and Refinancing Facility Agreement dated as of May 14, 2015, relating to this Agreement. 

“Tranche E Term Loan Commitments” means the Term Loan Commitments in an aggregate amount of $1,040,000,000
established pursuant to Incremental Assumption Agreement No. 1. 

 “Tranche E Term Loans” means the Term Loans made by the Lenders
to the Borrower pursuant to Section 2(a) of Incremental Assumption Agreement No. 1. 
 (b) The definition of
“Adjusted LIBO Rate” set forth in Section 1.01 of the Credit Agreement is hereby amended by replacing the words “(other than Other Term Loans)” therein with the words “(other than Other Term Loans to the extent
expressly provided in the related Incremental Term Loan Assumption Agreement)”. 
 (c) The definition of the term
“Applicable Rate” set forth in Section 1.01 of the Credit Agreement is hereby amended by inserting the words “and Tranche E Term Loans,” immediately after the words “Tranche B Term Loans” in clause
(b) thereof. 
 (d) The definition of the term “Class” set forth in Section 1.01 of the Credit Agreement
is hereby amended by (i) inserting the words “Tranche E Term Loans,” immediately after the words “Tranche D Term Loans,” therein and (ii) inserting the words “a Tranche E Commitment,” immediately
after the words “Tranche D Term Loan Commitment,” therein. 
 (e) The definition of the term
“Commitment” in Section 1.01 of the Credit Agreement is hereby amended by inserting the words “, Tranche E Term Loan Commitment” immediately after the words “Tranche D Term Loan Commitment” in clause
(a) thereof. 
 (f) The definition of the term “Term Loans” set forth in Section 1.01 of the Credit
Agreement is hereby amended by (i) deleting the word “and” in the first sentence thereof and substituting a comma therefor and (ii) inserting immediately after the words “Tranche D Term Loans” therein the words the
“Tranche E Term Loans”. 
 (g) Section 2.09(d)(i) of the Credit Agreement is hereby amended and restated in
its entirety as follows: 
 “(i) prior to the date that is six months after the 2015 Effective Date, in the case of
the Tranche E Term Loans or” 
 SECTION 4. Conditions Precedent to Effectiveness. The effectiveness of this
Agreement and the obligations of the Tranche E Term Lenders to make the Tranche E Term Loans shall be subject to the satisfaction or waiver of the following conditions precedent (the date on which such conditions precedent are so satisfied or
waived, the “2015 Effective Date”): 
 (a) the Agent shall have received counterparts of this Agreement
that, when taken together, bear the signatures of (i) the Borrower, Holdings and the Subsidiaries of the Borrower party to the Credit Agreement on the date hereof, (ii) the Agent and (iii) the Tranche E Term Lenders; 

 (b) at the time of and immediately after giving effect to the making of the
Tranche E Term Loans and the application of the proceeds thereof, each of the conditions set forth in Section 4.01(b) and Section 4.01(c) of the Credit Agreement shall be satisfied; provided that, for purposes of the condition
set forth in Section 4.01(b), the words “Second Restatement Date” set forth in Section 3.13(a) of the Credit Agreement shall be deemed to be “2015 Effective Date” in each place they appear therein, the words
“Second Restatement Transactions” in Section 3.13(a) of the Credit Agreement shall be deemed to be “2015 Transactions”, and the parenthetical in Section 3.13(a) of the Credit Agreement shall be disregarded; 

(c) the Consolidated Net Leverage Ratio and the Consolidated Secured Net Debt Ratio, in each case determined as of the 2015
Effective Date after giving effect to the 2015 Transactions, including the making of the Tranche E Term Loans and the application of the proceeds thereof, shall be no greater than 7.25 to 1.00 and 4.25 to 1.00, respectively; 

(d) the Agent shall have received a certificate dated as of the 2015 Effective Date and executed by a Financial Officer of the
Borrower with respect to the conditions set forth in paragraphs (b) and (c) above; 
 (e) the Acquisition shall
have been consummated or shall be consummated substantially concurrently with the making of the Tranche E Term Loans; 

(f) the Agent shall have received a notice of borrowing in accordance with Section 2.03, Section 2.24(a) and 2.26(a)
of the Credit Agreement; 
 (g) the Agent shall have received a solvency certificate in form and substance reasonably
satisfactory to the Agent to the effect that Holdings and its Subsidiaries, on a consolidated basis after giving effect to the 2015 Transactions, are solvent (within the meaning of Section 3.13 of the Credit Agreement); 

(h) the Agent shall have received legal opinions, board resolutions and other closing certificates consistent with those
delivered on the Second Restatement Date; 
 (i) the Agent shall have received, at least one Business Day prior to the 2015
Effective Date, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act, that has been reasonably
requested by the Agent or any Tranche E Term Lender at least three Business Days prior to the 2015 Effective Date; and 

(j) the Agent shall have received all fees and reimbursement of all expenses separately agreed in writing by the Borrower and
the arrangers of the Tranche E Term Loans or required by Section 9.03 of the Credit Agreement or by any other Loan Document to be reimbursed by the Borrower on the 2015 Effective Date in connection with this Agreement and the transactions
contemplated hereby to the extent invoiced at least one Business Day prior to the 2015 Effective Date. 

 The Agent shall notify the Borrower and the Lenders of the 2015 Effective Date, and such notice
shall be conclusive and binding. 
 SECTION 5. Representations and Warranties. To induce the other parties hereto to enter
into this Agreement, Holdings and the Borrower represent and warrant to each of the Lenders (including the Tranche E Term Lenders) and the Agent that (a) this Agreement has been duly authorized, executed and delivered by Holdings, the
Borrower and the Subsidiaries of the Borrower party hereto, and this Agreement constitutes a legal, valid and binding obligation of Holdings, the Borrower and the Subsidiaries of the Borrower party hereto, subject to applicable bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance or other similar laws affecting creditors’ rights generally and to general principles of equity; (b) after giving effect to this Agreement, the representations and warranties
set forth in Article III of the Credit Agreement and in each other Loan Document are true and correct in all material respects on and as of the 2015 Effective Date, except to the extent such representations and warranties expressly relate to an
earlier date, in which case they were true and correct in all material respects on and as of such earlier date; provided that, (i) in each case, such materiality qualifier shall not be applicable to any representation and warranty that
already is qualified or modified by materiality in the text thereof and (ii) for purposes of the representation in Section 3.13(a) of the Credit Agreement, the words “Second Restatement Date” in each place set forth therein shall
be deemed to be “2015 Effective Date”, the words “Second Restatement Transactions” shall be deemed to be “2015 Transactions” and the parenthetical in Section 3.13(a) of the Credit Agreement shall be disregarded and
(c) as of the 2015 Effective Date, after giving effect to this Agreement, no Default or Event of Default has occurred and is continuing or would reasonably be expected to result from the borrowing of the Tranche E Term Loans and the use of
the proceeds thereof. 
 SECTION 6. Certain Post-Effectiveness Collateral Obligations. The Borrower shall deliver to the Agent each
of the documents, and take each of the actions, specified in Schedule III hereto. 
 SECTION 7. Effect of Agreement. Except as
expressly set forth herein, this Agreement shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Lenders or the Agent under the Credit Agreement or any other Loan Document,
and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall
continue in full force and effect. Nothing herein shall be deemed to entitle any Loan Party to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the
Credit Agreement or any other Loan Document in similar or different circumstances. This Agreement shall apply and be effective only with respect to the provisions of the Credit Agreement specifically referred to herein. After the 2015 Effective
Date, any reference to the Credit Agreement in any Loan Document, and the terms “this Agreement”, “herein”, “hereunder”, “hereto”, “hereof” and words of similar import in the Credit Agreement, shall,
unless the context otherwise requires, mean the Credit Agreement as modified hereby. This Agreement shall constitute a “Loan 

 
Document”, an “Incremental Term Loan Assumption Agreement” and a “Refinancing Facility Agreement”, in each case for all purposes of the Credit Agreement and the other
Loan Documents. 
 SECTION 8. Acknowledgement and Consent. Each Loan Party hereby acknowledges that it has read this Agreement and
consents to the terms hereof and further hereby affirms, confirms and agrees that (a) notwithstanding the effectiveness of this Agreement, the obligations of such Loan Party under each of the Loan Documents to which it is a party shall not be
impaired and each of the Loan Documents to which such Loan Party is a party is, and shall continue to be, in full force and effect and is hereby confirmed and ratified in all respects, in each case, as amended hereby; (b) its Guarantee of the
Obligations, and the pledge of and/or grant of a security interest in its assets as Collateral to secure the Obligations, all as and to the extent provided in the Collateral Documents as originally executed, shall continue in full force and effect
in respect of, and to secure, the Obligations (including the Tranche E Term Loans); and (c) all the representations and warranties made by or relating to it contained in the Credit Agreement and the other Loan Documents are true and
correct in all material respects on and as of the 2015 Effective Date, except to the extent such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects on and as of
such earlier date; provided that, in each case, such materiality qualifier shall not be applicable to any representation and warranty that already is qualified or modified by materiality in the text thereof. 

SECTION 9. FATCA Treatment; Tax Forms. (a) For purposes of determining withholding Taxes imposed under FATCA, from and after 2015
Effective Date, the Borrower and the Agent shall treat (and the Lenders hereby authorize the Agent to treat) the Tranche E Term Loans as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation
Section 1.1471-2(b)(2)(i). 
 (b) The Borrower hereby requests each Foreign Lender to promptly submit duly completed and
signed copies of one or more of forms or certificates described in Section 2.16(f)(ii)(A), (B), (C), (D), (E), (F) or (G) of the Credit Agreement and each Foreign Lender agrees that the Borrower’s request is reasonable pursuant
to 2.16(f)(iii)(A)(3) of the Credit Agreement. 
 SECTION 10. Counterparts. This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement by
facsimile or other electronic method of transmission shall be effective as delivery of a manually signed counterpart of this Agreement. 

SECTION 11. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
The provisions of Sections 9.09 and 9.10 of the Credit Agreement shall apply to this Agreement to the same extent as if fully set forth herein. 

 SECTION 12. Headings. Section headings used herein are for convenience of reference only,
are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. 

[Remainder of page intentionally left blank] 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
duly authorized officers, all as of the date first above written. 
  

					
	TRANSDIGM INC.
		
	by		 /s/ Sean Maroney

			Name:		Sean Maroney
			Title:		Treasurer
	
	TRANSDIGM GROUP INCORPORATED
		
	by		 /s/ Sean Maroney

			Name:		Sean Maroney
			Title:		Treasurer

 
	
	 ACME AEROSPACE, INC.
 ADAMS RITE AEROSPACE,
INC.
 AEROCONTROLEX GROUP, INC.
 AEROSONIC LLC

AIRBORNE ACQUISITION, INC.
 AIRBORNE GLOBAL, INC.

AIRBORNE HOLDINGS, INC.
 AIRBORNE SYSTEMS NA INC.

AIRBORNE SYSTEMS NORTH AMERICA INC.
 AIRBORNE SYSTEMS NORTH
AMERICA OF CA INC.
 AIRBORNE SYSTEMS NORTH AMERICA OF NJ INC.

AMSAFE - C SAFE, INC.
 AMSAFE GLOBAL HOLDINGS, INC.

AMSAFE INDUSTRIES, INC.
 AMSAFE, INC.

AP GLOBAL ACQUISITION CORP.
 AP GLOBAL HOLDINGS, INC.

ARKWIN INDUSTRIES, INC.
 AVIATION TECHNOLOGIES, INC.

AVIONIC INSTRUMENTS LLC
 AVIONICS SPECIALTIES, INC.

AVTECHTYEE, INC.
 BRIDPORT HOLDINGS, INC.

BRIDPORT-AIR CARRIER, INC.
 BRUCE AEROSPACE INC.

BRUCE INDUSTRIES, INC.
 CDA INTERCORP LLC

CEF INDUSTRIES, LLC
 CHAMPION AEROSPACE LLC

DUKES AEROSPACE, INC.
 ELECTROMECH TECHNOLOGIES LLC

HARCO LLC
 HARTWELL CORPORATION

MALAYSIAN AEROSPACE SERVICES, INC.
 MARATHONNORCO AEROSPACE,
INC.
 MCKECHNIE AEROSPACE DE, INC.
 MCKECHNIE AEROSPACE
HOLDINGS, INC.
 MCKECHNIE AEROSPACE INVESTMENTS, INC.

MCKECHNIE AEROSPACE US LLC
 SCHNELLER HOLDINGS LLC

SCHNELLER LLC
 SEMCO INSTRUMENTS, INC.

SHIELD RESTRAINT SYSTEMS, INC.

 
					
	 SKURKA AEROSPACE INC.
 TELAIR
INTERNATIONAL LLC
 TELAIR US LLC
 TEXAS ROTRONICS, INC.

TRANSICOIL LLC
 WHIPPANY ACTUATION SYSTEMS, LLC

		
	by		 /s/ Sean Maroney

			Name:		Sean Maroney
			Title:		Treasurer
	
	BRIDPORT ERIE AVIATION, INC.
		
	by		 /s/ Sean Maroney

			Name:		Sean Maroney
			Title:		President

 
					
	CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Tranche E Term Lender and as Agent
		
	by		 /s/ Robert Hetu

			Name:		Robert Hetu
			Title:		Authorized Signatory
		
	by		 /s/ Robert Hetu

			Name:		Robert Hetu
			Title:		Authorized Signatory

 SCHEDULE I 

Tranche E Term Loans 
  

					
	 Tranche E Term Lender
	  	Tranche E Term
Loan Amount	 
	 Credit Suisse AG, Cayman Islands Branch
	  	$	1,040,000,000	  
		  	  
	  
	 
	 TOTAL
		$	1,040,000,000	  
		  	  
	  
	 

 SCHEDULE II 

Tranche E Term Loan Amortization 
  

					
	 DATE
	  	SCHEDULED TRANCHE E
TERM LOAN REPAYMENTS	 
	 June 30, 2015
	  	$	2,475,000	  
	 September 30, 2015
	  	$	2,475,000	  
	 December 31, 2015
	  	$	2,475,000	  
	 March 31, 2016
	  	$	2,475,000	  
	 June 30, 2016
	  	$	2,475,000	  
	 September 30, 2016
	  	$	2,475,000	  
	 December 31, 2016
	  	$	2,475,000	  
	 March 31, 2017
	  	$	2,475,000	  
	 June 30, 2017
	  	$	2,475,000	  
	 September 30, 2017
	  	$	2,475,000	  
	 December 31, 2017
	  	$	2,475,000	  
	 March 31, 2018
	  	$	2,475,000	  
	 June 30, 2018
	  	$	2,475,000	  
	 September 30, 2018
	  	$	2,475,000	  
	 December 31, 2018
	  	$	2,475,000	  
	 March 31, 2019
	  	$	2,475,000	  
	 June 30, 2019
	  	$	2,475,000	  
	 September 30, 2019
	  	$	2,475,000	  
	 December 31, 2019
	  	$	2,475,000	  
	 March 31, 2020
	  	$	2,475,000	  
	 June 30, 2020
	  	$	2,475,000	  
	 September 30, 2020
	  	$	2,475,000	  
	 December 31, 2020
	  	$	2,475,000	  
	 March 31, 2021
	  	$	2,475,000	  
	 June 30, 2021
	  	$	2,475,000	  
	 September 30, 2021
	  	$	2,475,000	  
	 December 31, 2021
	  	$	2,475,000	  
	 March 31, 2022
	  	$	2,475,000	  
	 Tranche E Term Loan Maturity Date
	  	 	Remainder	  

 SCHEDULE III 

Post-2015 Effective Date Obligations 
  

	1.	Within 45 days after the 2015 Effective Date (or such later date that the Agent in its reasonable discretion may permit), the Agent shall have received the deliverables as required by Section 5.11 of the Credit
Agreement with respect to the following entity: 

	 	a.	Pexco Aerospace, Inc. 

  

	2.	Within 90 days after the 2015 Effective Date (or such later date that the Agent in its reasonable discretion may permit), with respect to the below described Mortgaged Properties, the Agent shall have received
(i) an amendment to the applicable Existing Mortgage in form and substance reasonably satisfactory to the Agent, (ii) evidence that a counterpart of such amendment to the Existing Mortgage has been recorded (or delivered to the appropriate
Title Insurance Company subject to arrangements reasonably satisfactory to the Agent for recording promptly thereafter in the place necessary, in the Agent’s reasonable judgment, to create a valid and enforceable first priority Lien in favor of
the Agent for the benefit of itself and the Secured Parties), (iii) a “date-down” endorsement to the existing Title Insurance Policy, which shall amend the description therein of the insured Existing Mortgage to include the amendment
of the Existing Mortgage, and otherwise be in form and substance reasonably satisfactory to the Agent, (iv) a favorable opinion of counsel in the state in which such parcels of real property are located with respect to the enforceability of
said amendment of the Existing Mortgage and such other opinions as Agent shall reasonably request, all in form and substance and from counsel reasonably satisfactory to the Agent and (v) such other information, documentation, and certifications
(including evidence of flood insurance as may be required by applicable law) as may be reasonably required by the Agent, in each case with respect to the following Mortgaged Properties: 

 

	 	a.	5000 Triggs Street, Los Angeles, CA 90022 

  

	 	b.	900 South Richfield Road, Placentia, CA 92870 

  

	 	c.	9810 6th Street, Rancho Cucamonga, CA 91730 

  

	 	d.	450 Goolsby Blvd., Deerfield, FL 33442 

  

	 	e.	320 S. Church Street, Addison, IL 60101-3750 

  

	 	f.	2600 South Custer Ave., Wichita, KS 67217 

  

	 	g.	1414 Randolph Avenue, Avenel, NJ 07001 

  

	 	h.	313 Gillett Street, Painesville, OH 44077 

  

	 	i.	4223 Monticello Blvd., South Euclid, OH 44121 

  

	 	j.	1230 Old Norris Road, Liberty, SC 29657 

  

	 	k.	8301 Imperial Drive, Waco, TX 76712 

  

	 	l.	1043 North 47th Ave., Phoenix, AZ 85043-1817 

  

	 	m.	6019 Powdermill Road, Franklin Twp., Kent, OH 44240-7109 

  

	3.	 Within 90 days after the 2015 Effective Date (or such later date that the Agent in its reasonable discretion may permit), with respect to the property
known as 3405 S. 3rd Ave., Union Gap, WA 98903, the Agent shall have received (i) a Mortgage in form and substance reasonably satisfactory to the Agent granting and creating a lien on such property, (ii) evidence that such Mortgage has
been recorded (or delivered to the appropriate Title Insurance Company subject to arrangements reasonably satisfactory to the Agent for recording promptly thereafter in the place(s) necessary to

 
create a valid and enforceable first priority Lien in favor of the Agent for the benefit of itself and the other Secured Parties), (iii) a Title Insurance Policy naming the Agent as the
insured party and otherwise in an amount and in form and substance reasonably satisfactory to the Agent, together with such endorsements thereto as the Agent shall reasonably require, (iv) a favorable opinion of local counsel in the state where
the property is located with respect to the enforceability of said Mortgage and such other opinions as Agent shall reasonably request, all in form and substance and from counsel reasonably satisfactory to the Agent and (v) such other
information, documentation, certifications (including evidence of flood insurance as may be required by applicable law and a survey) as may be reasonably required by the Agent.Exhibit 10.13

 Exhibit 10.13 

SECOND LOAN MODIFICATION AGREEMENT 

This Second Loan Modification Agreement (“Agreement”) is made as of July 1, 2010, by and among CATHAY BANK (“Bank”),
VERISILICON, INC. (“Company”) and VERISILICON HOLDINGS CO., LTD, formerly known as VERISILICON HOLDINGS (Cayman Islands) Co., Ltd. (“Parent” and together with Company, the “Borrowers” and each a “Borrower”).

 Factual Background 

A. Borrowers executed a Loan and Security Agreement, a Promissory Note and other loan documents dated June 27, 2008 in favor of Bank
evidencing and security a credit facility in the amount of Eight Million and No/100 Dollars ($8,000,000.00) (the “Loan”). 
 B.
The original Revolving Maturity Date, as such term is used in the Loan and Security Agreement, was June 27, 2009. 
 C. Borrowers and
Bank entered into a Loan Extension Agreement With Waivers and Forbearance of Covenant Violations (“First Extension”) as of June 25, 2009 by which the Revolving Maturity Date of the Loan was extended for a period of Five
(5) months to November 27, 2009 and by which Bank waived and agreed to forbear certain violations of the covenants provided for in the Loan and Security Agreement. 

D. Borrowers and Bank entered into a Second Loan Extension Agreement With Forbearance of Covenant Violations (“Second Extension”) as
of December 8, 2009 by which the Revolving Maturity Date of the Loan was extended for a period of Two (2) months to January 29, 2010 and by which Bank agreed to forbear certain violations of the covenants provided for in the Loan and
Security Agreement. 
 E. Borrowers and Bank entered into a Third Loan Extension Agreement With Forbearance of Covenant Violations
(“Third Extension”) as of January 29, 2010 by which the Revolving Maturity Date of the Loan was extended for a period of Two (2) months to April 1, 2010 and by which Bank agreed to forbear certain violations of the covenants
provided for in the Loan and Security Agreement. 
 F. Borrowers and Bank entered into a First Loan Modification Agreement (“First
Amendment”) as of April 1, 2010 by which the Revolving Maturity Date of the Loan was extended for a period of One (1) year to April 1, 2011 certain defined terms we redefined so as to affect the calculation of the Borrowing Base
and other provisions of the Loan were modified. 
 G. The Loan is now being further modified and the Borrowers and Bank have agreed to
various modifications to the Loan. 

  

			
	                    Cathay Bank Loan Modification Agreement	  	VeriSilicon Inc.                    

- 1 - 

 H. This Agreement is contingent on the Borrowers agreeing to the provisions in this Agreement,
the Guarantor of the Loan reaffirming its Guaranty and VeriSilicon Electronics Co., Ltd., a company organized under the laws of the Republic of China, the Debtor under that certain Security Agreement dated June 27, 2008, which grants Bank a
security interest in certain collateral as security for the Loan, acknowledging that the Security Agreement remains effective. 
 I. As used
here, the term “Loan Documents” means the Loan and Security Agreement, the Promissory Note, the Security Agreement, the First, Second and Third Extensions and any other documents executed by Borrowers and other parties in connection with
the Loan, as any or all of them may have been amended to date. This Agreement is a Loan Document. 
 Agreement 

Therefore, Borrowers and Bank agree as follows: 

1. Recitals. The recitals set forth above in the Factual Background are true, accurate and correct. 

2. Reaffirmation of Loan Documents. Borrowers hereby agree to pay the obligations represented by the Promissory Note; acknowledge that
the Collateral described in the Loan and Security Agreement shall remain as security for the Loan; acknowledge that nothing in this Agreement shall affect the priority of the lien of the UCC-1 Financing Statement or like instrument filed with
applicable governmental entities over other liens and encumbrances against the Collateral; and agree to be bound by all of the terms and conditions contained in the Loan and Security Agreement, the Promissory Note and other Loan Documents as they
may be amended by this Agreement. Borrowers acknowledge that they have no claims, offsets or defenses with respect to the payment of sums due under the Promissory Note or any other Loan Document. Further, Borrowers acknowledge and agree that as
expressly provided herein, this Agreement does not constitute a waiver by Bank of any of its rights under the Loan and Security Agreement, the Promissory Note or the other Loan Documents, and the events described herein, do not in any way release
Borrowers from their obligations to comply with the terms, provisions, conditions, covenants, agreements and clauses of the Loan and Security Agreement, the Promissory Note or the other Loan Documents. 

3. Non-Formula Advance. The aggregate outstanding advance amount of $1,500,000 permitted without regard to the Borrowing Base
limitation as provided for in Section 2.1(b)(i) shall apply through April 1, 2011. 
 4. Letter of Credit Sublimit. The
defined term “Letter of Credit Sublimit” in Section 1.1 of the Loan and Security Agreement is amended to read: 
 “Letter
of Credit Sublimit” means a sublimit for Letters of Credit under the Revolving Line not to exceed Two Million Dollars ($2,000,000). 

  

			
	                    Cathay Bank Loan Modification Agreement	  	VeriSilicon Inc.                    

- 2 - 

 5. Financial Statements, Reports, Certificates. The time period within which Borrower
shall deliver audited consolidated financial statements of Parent and its Subsidiaries prepared in accordance with GAAP, consistently applied, to Bank after the end of Parent’s fiscal year, is increased to three hundred (300) days or until
October 31, 2010. 
 6. Conditions Precedent. Before this Agreement becomes effective and Bank becomes obligated under it, all
of the following conditions shall have been satisfied at Borrowers’ sole cost and expenses in a manner acceptable to Bank in the exercise of Bank’s sole judgment: 

(a) Bank shall have received such assurance as Bank may require that the validity and priority of the UCC-1 financing statements have not been
and will not be impaired by this Agreement or the transactions contemplated by it. 
 (b) Borrowers shall have delivered to Bank the
following documents and other items, executed and acknowledged as appropriate, all in form and substance satisfactory to Bank: (i) this Agreement, (ii) the Reaffirmation of Guaranty executed by Guarantor and (iii) the Acknowledgment
of VeriSilicon Electronics Co., Ltd. 
 (c) Bank shall have received reimbursement, in immediately available funds, of all costs and
expenses incurred by Bank in connection with this Agreement, including, without limitation, charges for attorneys’ fees and costs. 

7. Condition Subsequent. After this Agreement becomes effective and any party becomes obligated under it, all of the following
conditions shall continue to be satisfied at Borrowers’ sole cost and expenses in a manner acceptable to Bank in the exercise of Bank’s reasonable judgment or such failure by Borrower to comply with such conditions shall be an Event of
Default under the Loan: 
 (a) Borrowers shall deliver to Bank, as soon as possible after this Agreement becomes effective, the original
signature of any person signing this Agreement and/or the other agreements described in Section 5(b) above whose signature was only available to Bank by facsimile on the date this Agreement became effective. 

8. Borrowers’ Representations and Warranties. Borrowers represent and warrant to Bank as follows: 

(a) Loan Documents. All representations and warranties made and given by Borrowers in the Loan Documents are true, accurate and
correct. 
 (b) No Default. Except for any existing covenant violations, no Event of Default has occurred and is continuing, and no
event has occurred and is continuing which, with notice or the passage of time or both, would be an Event of Default. 
 (c)
Collateral. Borrowers lawfully hold free and clear title to the Collateral. 

  

			
	                    Cathay Bank Loan Modification Agreement	  	VeriSilicon Inc.                    

- 3 - 

 (d) No Violation. Neither Borrower is in violation of, nor do the terms of this Agreement
conflict with, any regulation or ordinance, any order of any court or governmental entity, or any material covenant or agreement affecting either Borrower. There are no claims, actions, proceedings or investigations pending or threatened against
Borrowers except for those previously disclosed by Borrowers to Bank in writing. 
 (e) Financial Information. All financial
information which has been and will be delivered to Bank, including all information relating to the financial condition of Borrowers, does and will fairly and accurately represent the financial condition being reported on. As of the date hereof,
there has been no material adverse change in the financial condition last reported to Bank. 
 9. Miscellaneous Provisions. 

(a) No Waiver; Consents. No alleged waiver by Bank shall be effective unless in writing, and no waiver shall be construed as a
continuing waiver. No waiver shall be implied from any delay or failure by Bank to take action on account of any default of Borrowers. Consent by Bank to any act or omission by Borrowers shall not be construed as consent to any other or subsequent
act or omission. 
 (b) Heirs, Successors and Assigns. The terms of this Agreement shall bind and benefit the heirs, legal
representatives, successors and assigns of the parties; provided, however, that Borrowers may not assign this Agreement without the prior written consent of Bank. Bank shall have the right to transfer the Note to any other persons or entities
without the consent of or notice to Borrowers. Without the consent of or notice to Borrowers, Bank may disclose to any prospective purchaser of any securities issued by Bank, and to any prospective or actual purchaser of any interest in the Note or
any other loans made by Bank to Borrowers, any financial or other information relating to Borrowers, the Loan and Security Agreement, the Promissory Note, the Security Agreement or the Collateral. 

(c) Interpretation. The language of this Agreement shall be construed as a whole according to its fair meaning, and not strictly for or
against any party. The word “include(s)” means “include(s), without limitation,” and the word “including” means “including, but not limited to.” Whenever Borrowers are obligated to pay or reimburse Bank for
any attorneys’ fees, those fees shall include the allocated costs for services of in-house counsel. 
 (d) Counterparts;
Validity. This Agreement and any attached consents or exhibits requiring signatures may be executed in counterparts, and all counterparts shall constitute but one and the same document. If any court of competent jurisdiction determines any
provision of this Agreement or any of the other Loan Documents to be invalid, illegal or unenforceable, that portion shall be deemed severed from the rest, which shall remain in full force and effect as though the invalid, illegal or unenforceable
portion had never been a part of the Loan Documents. This Agreement shall be governed by the laws of the State of California, without regard to the choice of law rules of that State. 

  

			
	                    Cathay Bank Loan Modification Agreement	  	VeriSilicon Inc.                    

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 (e) Incorporation. This Agreement shall form a part of each Loan Document, and all
references to given Loan Documents shall mean that document as hereby modified. 
 (f) No Prejudice; Reservation of Rights. This
Agreement shall not prejudice any rights or remedies of Bank under the Loan Documents. Bank reserves, without limitation, all rights which it has against any indemnitor, guarantor, or endorser of the Promissory Note. 

(g) No Impairment. Except as specifically hereby amended, the Loan Documents shall each remain unaffected by this Agreement and all
such documents shall remain in full force and effect. Nothing in this Agreement shall impair the lien of the UCC-1 financing statements. 

(h) Purpose and Effect of Bank’s Approval. Bank’s approval of any matter in connection with the Loan shall be for the sole
purpose of protecting Bank’s security and rights. No such approval shall result in a waiver of any default of Borrowers except as expressly set forth therein. In no event shall Bank’s approval be a representative of any kind with regard to
the matter being approved. 
 (i) Integration. The Loan Documents, including this Agreement: (a) integrate all the terms and
conditions mentioned in or incidental to the Loan Documents; (b) supersede all oral negotiations and prior and other writings with respect to their subject matter; and (c) are intended by the parties as the final expression of the
agreement with respect to the terms and conditions set forth in those documents and as the complete and exclusive statement of the terms agreed to by the parties. If there is any conflict between the terms, conditions and provisions of this
Agreement and those of any other agreement or instrument, including any of the other Loan Documents, the terms, conditions and provisions of this Agreement shall prevail. 

SIGNATURES APPEAR ON THE NEXT PAGE 

  

			
	                    Cathay Bank Loan Modification Agreement	  	VeriSilicon Inc.                    

- 5 - 

 NOW; THEREFORE, in consideration of the extension of the Revolving Maturity Date and the covenants, agreements,
representations and warranties set forth in this Agreement, the receipt and legal sufficiency of which hereby are acknowledged, Borrowers and Bank have executed this Agreement as of the day and year first above written. 

 

			
	CATHAY BANK
		
	By:		/s/ Jane Ho
	Title:		SVP and High Tech Manager
	
	VERISILICON, INC.
	
	/s/ Ralph J. Harms
	By:		Ralph J. Harms
	Title:		CFO
	
	VERISILICON HOLDINGS CO. LTD.
	
	/s/ Ralph J. Harms
	By:		Ralph J. Harms
	Title:		CFO

  

			
	                    Cathay Bank Loan Modification Agreement		VeriSilicon Inc.                    

- 6 - 

 EXHIBIT D 

COMPLIANCE CERTIFICATE 
  

			
	TO:	  	CATHAY BANK
		
	FROM:	  	VERISILICON, INC. & VERISILICON HOLDINGS (CAYMAN ISLANDS) CO., LTD. (“Borrowers”)

 The undersigned authorized officer of VERISILICON, INC. and VERISILICON HOLDINGS (CAYMAN ISLANDS) CO. LTD.
hereby certify that in accordance with the terms and conditions of the Loan and Security Agreement among Borrowers and Bank (the “Agreement”), (i) Borrower is in compliance for the period ending
             with all required covenants set forth below except as otherwise noted below. Attached herewith are the required documents supporting the above certification. The Officer
further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except (i) as explained in an accompanying letter or footnotes and
(ii) with respect to unaudited financial statements for the absence of footnotes and subject to year end adjustments. 
 Please
indicate compliance status by circling Yes/No under “Complies” column. 
  

									
	 Reporting Covenant
	  	 Required
	  	 	  	 Complies

					
	Monthly financial statements	  	Monthly within 30 days	  		  	Yes	  	No
	Annual (CPA Audited)	  	FYE within 300 days	  		  	Yes	  	No
	A/R & A/P Agings, Borrowing Base Cert., booking and revenue reports	  	Monthly (Semi-monthly) within 30 days	  	Yes	  	No
	Compliance Cert.	  	Quarterly within 30 days	  		  	Yes	  	No
				
	 Financial Covenant
	  	 Required
	  	 Actual
	  	 Complies

					
	Consolidated Minimum Current Ratio	  	0.70:1.00	  		  	Yes	  	No
	Consolidated Maximum Debt to Net Worth Ratio	  	4.00:1.00 (or 4.25:1.00 for Q3 2010)	  		  	Yes	  	No
	Consolidated Minimum Net Worth	  	$8,500,000.00 ($10,000,000 after Q2 2010	  		  	Yes	  	No
	Consolidated Minimum Quarterly Cash	  	$2,000,000.00	  		  	Yes	  	No
	Consolidated Minimum Cash Deposits with Bank	  	$2,500,000.00	  		  	Yes	  	No
	Consolidated Minimum Net Profits	  	$250,000.00	  		  	Yes	  	No

  

			
	                    Cathay Bank Loan Modification Agreement	  	VeriSilicon Inc.                    

- 1 - 

															
	Comments Regarding Exceptions: See Attached.	 		 	BANK USE ONLY
						
		 		 		 		 	Received by:	 	  

	Sincerely,	 		 		 		 	AUTHORIZED SIGNER
				
		 	VERISILICON, INC.	 	Date:	 	  

						
		 	By:	 	/s/ Ralph Harms	 		 	Verified:	 	
		 		 	  
	 		 		 	  

		 		 	SIGNATURE	 		 		 	AUTHORIZED SIGNER
		 	Title:	 	 CFO
	 		 	Date:	 	  

							
		 		 	 7/23/10
	 		 	Compliance Status	 	Yes            	 	No
		 		 	Date	 		 	
				
		 	VERISILICON HOLDINGS (CAYMAN ISLANDS) CO. LTD.	 		 	
					
		 	By:	 	/s/ Ralph Harms	 		 	
		 		 	  
	 		 		 		 		 	
		 		 	SIGNATURE	 		 	  

		 	Title:	 	 CFO
	 		 	  

		 		 	 7/23/10
	 		 	  

		 		 	Date	 		 	

  

			
	                    Cathay Bank Loan Modification Agreement	  	VeriSilicon Inc.                    

- 2 - 

 Cathay Bank 

ACKNOWLEDGMENT OF CONTINUING SECURITY INTEREST 

The Undersigned (hereinafter referred to as “Grantor”) hereby acknowledges and agrees that he/she/it has read and is familiar with, and hereby
consents to, all of the terms and conditions of a Second Loan Modification Agreement between CATHAY BANK (“Bank”), VERISILICON, INC. (“Company”) and VERISILICON HOLDINGS CO., LTD, formerly known as VERISILICON HOLDINGS (Cayman
Islands) Co., Ltd. (“Parent” and together with Company, the “Borrowers” and each a “Borrower”), dated as of July 1, 2010 and all of the agreements and documents referred to therein, and specifically consent to the
financial accommodations extended and to be extended by Bank to Borrower as set forth therein, and in said agreements and documents. Grantor hereby confirms and agrees that all of the terms and provisions of that certain Security Agreement dated
June 27, 2008 (hereinafter referred to as the “Security Agreement”), are hereby ratified and confirmed, and shall continue in full force and effect as granting a security interest in the described collateral for all obligations of
Borrowers to Bank, however evidenced. 
 Although Bank has informed Grantor of the Second Loan Modification Agreement, and Grantor has acknowledged having
read the same and consented to all of the terms and conditions thereof, Grantor understands and agrees that Bank has no duty under any agreement with Borrowers, the Security Agreement or any agreement with the Grantor to so notify the Grantor or to
seek such an acknowledgment and consent, and nothing contained herein is intended to, or shall create such a duty as to any advances or transactions hereafter. 

ARBITRATION. Bank and Grantor agree that all disputes, claims and controversies between them, whether individual, joint, or class in nature,
arising from this Acknowledgement of Continuing Security Interest and the Security Agreement, including without limitation contract and tort disputes, shall be arbitrated pursuant to the rules of the American Arbitration Association
(“AAA”) in accordance with its Commercial Arbitration Rules and Supplemental Procedures for Financial Services Disputes, upon request of either party. No act to take or dispose of any collateral securing this Acknowledgement of Continuing
Security Interest and the Security Agreement shall constitute a waiver of this arbitration agreement or be prohibited by this arbitration agreement. This includes, without limitation, obtaining injunctive relief or a temporary restraining order;
invoking a power of sale under any deed of trust or mortgage; obtaining a writ of attachment or imposition of a receiver; or exercising any rights relating to personal property, including taking or disposing of such property with or without judicial
process pursuant to article 9 of the Uniform Commercial Code. Any disputes, claims, or controversies concerning the lawfulness or reasonableness of any act, or exercise of any right, concerning any collateral securing this Acknowledgement of
Continuing Security Interest and the Security Agreement, including without limitation, any claim to rescind, reform, or otherwise modify any agreement relating to the collateral securing this Acknowledgement of Continuing Security Interest and the
Security Agreement shall also be arbitrated, provided 

  
 1 

VeriSilicon, Inc. 

 Cathay Bank 
  

 
however that no arbitrator shall have the right or the power to enjoin or restrain any act of any party. Bank and Grantor agree that in the event of an action for judicial foreclosure pursuant to
California Code of Civil Procedure Section 726, or any similar provision in any other State, the commencement of such an action will not constitute a waiver of the right to arbitrate and the court shall refer to arbitration as much of such
action, including counterclaims, as lawfully may be referred to arbitration. Judgment upon any award rendered by any arbitrator may be entered in any court having jurisdiction. The arbitrators shall not have power to make an award of $1.0 million or
more against any party to an arbitration unless it is in the form of a statement of decision as described in California Code of Civil Procedure Section 632, and the parties specifically reserve the right, upon a petition to vacate, to have any
such award reviewed and vacated upon the same grounds as would result in reversal on appeal from a judgment after trial by court. Nothing in this Acknowledgement of Continuing Security Interest and the Security Agreement shall preclude any party
from seeking equitable relief from a court of competent jurisdiction. The statute of limitations, estoppel, waiver, laches, and similar doctrines which would otherwise be applicable in an action brought by a party shall be applicable in any
arbitration proceeding, and the commencement of an arbitration proceeding shall be deemed the commencement of an action for these purposes. 
 To the
extent not provided by this agreement, including the Rules incorporated herein, arbitration hereunder shall be governed by California arbitration law. Arbitration shall be conducted in California, in English and, unless otherwise agreed to by the
parties with respect to a particular dispute, shall be heard by a panel of three arbitrators. The arbitrators in any arbitration shall be experienced in the areas of law raised by the subject matter of the dispute. Lists of prospective arbitrators
shall include retired judges. Notwithstanding the AAA rules, (a) any party may strike from a list of prospective arbitrators any individual who is regarded by that party as not appropriate for the dispute; and (b), if the arbitrator appointment
cannot be made from the initial list of prospective arbitrators circulated by the AAA, a second and, if necessary, a third list shall be circulated and exhausted before the AAA is empowered to make the appointment. 

The Federal Arbitration Act shall apply to the construction, interpretation, and enforcement of this arbitration provision 

By these provisions, each party waives the constitutional right to a jury trial to resolve a dispute arising under this agreement. 

 

									
	Dated:	 	 7/23/10
	 		 	“Grantor”
				
		 		 		 	VERISILICON ELECTRONICS CO., LTD.,
					
		 		 		 	By:	 	/s/   Wayne Wei-Ming Dai
		 		 		 		 	  

		 		 		 	Name:	 	
		 		 		 	Title:	 	

  
 2 

VeriSilicon, Inc. 

 Cathay Bank 

REAFFIRMATION OF GUARANTY 
 The
Undersigned (hereinafter referred to as “Guarantor”) hereby acknowledges and agrees that he/she/it has read and is familiar with, and hereby consents to, all of the terms and conditions of a Second Loan Modification Agreement between
CATHAY BANK (“Bank”), VERISILICON, INC. (“Company”) and VERISILICON HOLDINGS CO., LTD, formerly known as VERISILICON HOLDINGS (Cayman Islands) Co., Ltd. (“Parent” and together with Company, the “Borrowers” and
each a “Borrower”), dated as of July 1, 2010 and all of the agreements and documents referred to therein, and specifically consent to the financial accommodations extended and to be extended by Bank to Borrower as set forth therein,
and in said agreements and documents. Guarantor hereby confirms and agrees that all of the terms and provisions of that certain Guaranty dated June 27, 2008 (hereinafter referred to as the “Guaranty”), are hereby ratified and
confirmed, and shall continue in full force and effect as the guaranty of all obligations of Borrowers to Bank, however evidenced. 
 Although Bank has
informed Guarantor of the Second Loan Modification Agreement, and Guarantor has acknowledged having read the same and consented to all of the terms and conditions thereof, Guarantor understands and agrees that Bank has no duty under any agreement
with Borrowers, the Guaranty or any agreement with the Guarantor to so notify the Guarantor or to seek such an acknowledgment and consent, and nothing contained herein is intended to, or shall create such a duty as to any advances or transactions
hereafter. 
 ARBITRATION. Bank and Guarantor agree that all disputes, claims and controversies between them, whether individual, joint, or
class in nature, arising from this Reaffirmation of Guaranty and the Guaranty, including without limitation contract and tort disputes, shall be arbitrated pursuant to the rules of the American Arbitration Association (“AAA”) in accordance
with its Commercial Arbitration Rules and Supplemental Procedures for Financial Services Disputes, upon request of either party. No act to take or dispose of any collateral securing this Reaffirmation of Guaranty and the Guaranty shall constitute a
waiver of this arbitration agreement or be prohibited by this arbitration agreement. This includes, without limitation, obtaining injunctive relief or a temporary restraining order; invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or exercising any rights relating to personal property, including taking or disposing of such property with or without judicial process pursuant to article 9 of the Uniform Commercial Code.
Any disputes, claims, or controversies concerning the lawfulness or reasonableness of any act, or exercise of any right, concerning any collateral securing this Reaffirmation of Guaranty and the Guaranty, including without limitation, any claim to
rescind, reform, or otherwise modify any agreement relating to the collateral securing this Reaffirmation of Guaranty and the Guaranty shall also be arbitrated, provided however that no arbitrator shall have the right or the power to enjoin or
restrain any act of any party. Bank and Guarantor agree that in the event of an action for judicial foreclosure pursuant to California Code of Civil 

  
 1 

VeriSilicon Inc. 

 Cathay Bank 

 

 
Procedure Section 726, or any similar provision in any other State, the commencement of such an action will not constitute a waiver of the right to arbitrate and the court shall refer to
arbitration as much of such action, including counterclaims, as lawfully may be referred to arbitration. Judgment upon any award rendered by any arbitrator may be entered in any court having jurisdiction. The arbitrators shall not have power to make
an award of $1.0 million or more against any party to an arbitration unless it is in the form of a statement of decision as described in California Code of Civil Procedure Section 632, and the parties specifically reserve the right, upon a
petition to vacate, to have any such award reviewed and vacated upon the same grounds as would result in reversal on appeal from a judgment after trial by court. Nothing in this Reaffirmation of Guaranty and the Guaranty shall preclude any party
from seeking equitable relief from a court of competent jurisdiction. The statute of limitations, estoppel, waiver, laches, and similar doctrines which would otherwise be applicable in an action brought by a party shall be applicable in any
arbitration proceeding, and the commencement of an arbitration proceeding shall be deemed the commencement of an action for these purposes. 
 To the
extent not provided by this agreement, including the Rules incorporated herein, arbitration hereunder shall be governed by California arbitration law. Arbitration shall be conducted in California, in English and, unless otherwise agreed to by the
parties with respect to a particular dispute, shall be heard by a panel of three arbitrators. The arbitrators in any arbitration shall be experienced in the areas of law raised by the subject matter of the dispute. Lists of prospective arbitrators
shall include retired judges. Notwithstanding the AAA rules, (a) any party may strike from a list of prospective arbitrators any individual who is regarded by that party as not appropriate for the dispute; and (b), if the arbitrator appointment
cannot be made from the initial list of prospective arbitrators circulated by the AAA, a second and, if necessary, a third list shall be circulated and exhausted before the AAA is empowered to make the appointment. 

The Federal Arbitration Act shall apply to the construction, interpretation, and enforcement of this arbitration provision 

By these provisions, each party waives the constitutional right to a jury trial to resolve a dispute arising under this agreement. 

 

									
	Dated:		 7/23/10
				“Guarantor
				
							VERISILICON ELECTRONICS CO., LTD (TAIWAN)
					
							By:		/s/ Wayne Wei-Ming Dai
		 		 		 		 	  

							Name:		
							Title:		
									
									
									
									
									
									

  
 2 

VeriSilicon Inc.

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