EXHIBIT 10.37
[SILICON VALLEY BANK LOGO]
SILICON VALLEY BANK
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xx. 00000
(000) 000-0000 - Fax (000) 000-0000
ACCOUNTS RECEIVABLE PURCHASE AGREEMENT
This Accounts Receivable Purchase Agreement (the "Agreement") is made
as of the Effective Date by and between Silicon Valley Bank ("Buyer") having a
place of business at the address specified above and SUPERCONDUCTOR TECHNOLOGIES
INC., a DELAWARE corporation, ("Seller") having its principal place of business
and chief executive office at 000 Xxxx Xxxxx, Xxxxx Xxxxxxx, XX 00000-0000 and
with a FAX number of (000) 000-0000.
1. DEFINITIONS. When used herein, the following terms shall have the
following meanings.
"Account Balance" shall mean, on any given day, the gross amount of all
Purchased Receivables unpaid on that day.
"Account Debtor" shall have the meaning set forth in the California
Uniform Commercial Code and shall include any person liable on any Purchased
Receivable, including without limitation, any guarantor of the Purchased
Receivable and any issuer of a letter of credit or banker's acceptance.
"Adjustments" shall mean all discounts, allowances, returns, disputes,
counterclaims, offsets, defenses, rights of recoupment, rights of return,
warranty claims, or short payments, asserted by or on behalf of any Account
Debtor with respect to any Purchased Receivable.
"Advance" shall have the meaning set forth in Section 2.2 hereof.
"Collateral" shall have the meaning set forth in Section 8 hereof.
"Collateral Handling Fee" shall have the meaning set forth in Section
3.3 hereof.
"Collections" shall mean all good funds received by Buyer from or on
behalf of an Account Debtor with respect to Purchased Receivables.
"Compliance Certificate" shall mean a certificate, in a form provided
by Buyer to Seller, which contains the certification of the chief financial
officer of Seller that, among other things, the representations and warranties
set forth in this Agreement are true and correct as of the date such certificate
is delivered.
"Effective Date" is the date Buyer executes this Agreement.
"Event of Default" shall have the meaning set forth in Section 9
hereof.
"Facility Fee" shall have the meaning set forth in Section 3.6 hereof.
"Finance Charges" shall have the meaning set forth in Section 3.2
hereof.
"Invoice Transmittal" shall mean a writing signed by an authorized
representative of Seller which accurately identifies the receivables which
Buyer, at its election, may purchase, and includes for each such receivable the
correct amount owed by the Account Debtor, the name and address of the Account
Debtor, the invoice number, the invoice date and the account code.
"Obligations" shall mean all advances, financial accommodations,
liabilities, obligations, covenants and duties owing, arising, due or payable by
Seller to Buyer of any kind or nature, present or future, arising under or in
connection with this Agreement or under any other document, instrument or
agreement, whether or not evidenced by any note, guarantee or other instrument,
whether arising on account or by overdraft, whether direct or indirect
(including those acquired by assignment) absolute or contingent, primary or
secondary, due or to become due, now owing or hereafter arising, and however
acquired; including, without limitation, all Advances, Finance Charges,
Collateral Handling Fees, interest, Repurchase Amounts, fees, expenses,
professional fees and attorneys' fees and any other sums chargeable to Seller
hereunder or otherwise.
"Purchased Receivables" shall mean all those accounts, receivables,
chattel paper, instruments, contract rights, documents, general intangibles,
letters of credit, drafts, bankers acceptances, and rights to payment, and all
proceeds thereof (all of the foregoing being referred to as "receivables"),
arising out of
the invoices and other agreements identified on or delivered with any Invoice
Transmittal delivered by Seller to Buyer which Buyer elects to purchase and for
which Buyer makes an Advance.
"Prime Rate" shall mean the Buyer's most recently announced "prime
rate," even if it is not Buyer's lowest rate
"Refund" shall have the meaning set forth in Section 3.5 hereof.
"Reserve" shall have the meaning set forth in Section 2.4 hereof.
"Repurchase Amount" shall have the meaning set forth in Section 4.2
hereof.
"Reconciliation Date" shall mean the last calendar day of each
Reconciliation Period.
"Reconciliation Period" shall mean each calendar month of every year.
2. PURCHASE AND SALE OF RECEIVABLES.
2.1. OFFER TO SELL RECEIVABLES. During the term hereof, and
provided that there does not then exist any Event of Default or any event that
with notice, lapse of time or otherwise would constitute an Event of Default,
Seller may request that Buyer purchase receivables and Buyer may, in its sole
discretion, elect to purchase receivables. Seller shall deliver to Buyer an
Invoice Transmittal with respect to any receivable for which a request for
purchase is made. An authorized representative of Seller shall sign each Invoice
Transmittal delivered to Buyer. Buyer shall be entitled to rely on all the
information provided by Seller to Buyer on or with the Invoice Transmittal and
to rely on the signature on any Invoice Transmittal as an authorized signature
of Seller.
2.2. ACCEPTANCE OF RECEIVABLES. Buyer shall have no obligation to
purchase any receivable listed on an Invoice Transmittal. Buyer may exercise its
sole discretion in approving the credit of each Account Debtor before buying any
receivable. Upon acceptance by Buyer of all or any of the receivables described
on any Invoice Transmittal, Buyer shall pay to Seller 80(%) percent of the face
amount of each receivable Buyer desires to purchase, net of deferred revenue and
offsets related to each specific Account Debtor. Such payment shall be the
"Advance" with respect to such receivable. Buyer may, from time to time, in its
sole discretion, change the percentage of the Advance. Upon Buyer's acceptance
of the receivable and payment to Seller of the Advance, the receivable shall
become a "Purchased Receivable." It shall be a condition to each Advance that
(i) all of the representations and warranties set forth in Section 6 of this
Agreement be true and correct on and as of the date of the related Invoice
Transmittal and on and as of the date of such Advance as though made at and as
of each such date, and (ii) no Event of Default or any event or condition that
with notice, lapse of time or otherwise would constitute an Event of Default
shall have occurred and be continuing, or would result from such Advance.
Notwithstanding the foregoing, in no event shall the aggregate amount of all
Purchased Receivables outstanding at any time exceed FIVE MILLION DOLLARS
($5,000,000.00).
2.3. EFFECTIVENESS OF SALE TO BUYER. Effective upon Buyer's payment
of an Advance, and for and in consideration therefor and in consideration of the
covenants of this Agreement, Seller hereby absolutely sells, transfers and
assigns to Buyer, all of Seller's right, title and interest in and to each
Purchased Receivable and all monies due or which may become due on or with
respect to such Purchased Receivable. Buyer shall be the absolute owner of each
Purchased Receivable. Buyer shall have, with respect to any goods related to the
Purchased Receivable, all the rights and remedies of an unpaid seller under the
California Uniform Commercial Code and other applicable law, including the
rights of replevin, claim and delivery, reclamation and stoppage in transit.
2.4. ESTABLISHMENT OF A RESERVE. Upon the purchase by Buyer of each
Purchased Receivable, Buyer shall establish a reserve. The reserve shall be the
amount by which the face amount of the Purchased Receivable exceeds the Advance
on that Purchased Receivable (the "Reserve"); provided, the Reserve with respect
to all Purchased Receivables outstanding at any one time shall be an amount not
less than 20(%) percent of the Account Balance at that time and may be set at a
higher percentage at Buyer's sole discretion. The reserve shall be a book
balance maintained on the records of Buyer and shall not be a segregated fund.
3. COLLECTIONS, CHARGES AND REMITTANCES.
3.1. COLLECTIONS. In computing Finance Charges on the Obligations,
all checks and other items of payment received by Buyer (including proceeds of
Purchased Receivables and payment of Obligations in full) shall be deemed
applied by Buyer on account of the Obligations three (3) Business Days after
receipt by Buyer of immediately available funds. If Seller is in default under
this Agreement, Buyer shall apply all Collections to Seller's Obligations
hereunder in such order and manner as Buyer may determine. If an item of
collection is not honored or Buyer does not receive good funds for any reason,
the amount shall be included in the Account Balance as if the Collections had
not been received and Finance Charges under Section 3.2 shall accrue thereon.
3.2. FINANCE CHARGES. On each Reconciliation Date Seller shall pay
to Buyer a finance charge in an amount equal to 2.50 percentage points above the
Prime Rate per annum (BUT NO LESS THAN 6.75%) multiplied by the gross average
daily Account Balance outstanding during the applicable Reconciliation Period
(the "Finance Charges").
3.3. COLLATERAL HANDLING FEE. On each Reconciliation Date, Seller
will pay to Buyer a collateral handling fee, equal to .50% per month of the
average daily Account Balance outstanding during the applicable Reconciliation
Period. Buyer shall deduct the Collateral Handling Fee from the Reserve as set
forth in Section 3.5 below. Notwithstanding the foregoing, on each
Reconciliation Date, Seller shall pay to Buyer a minimum $750.00 Finance Charge.
Buyer shall deduct the accrued Finance Charges from the Reserve as set forth in
Section 3.5 below.
3.4. ACCOUNTING. Buyer shall prepare and send to Seller after the
close of business for each Reconciliation Period, an accounting of the
transactions for that Reconciliation Period, including the amount of all
Purchased Receivables, all Collections, Adjustments, Finance Charges, and the
Collateral Handling Fee. The accounting shall be deemed correct and conclusive
unless Seller makes written objection to Buyer within thirty (30) days after the
Buyer mails the accounting to Seller.
3.5. REFUND TO SELLER. Provided that there does not then exist an
Event of Default or any event or condition that with notice, lapse of time or
otherwise would constitute an Event of Default, Buyer shall refund to Seller by
check after the Reconciliation Date, the amount, if any, which Buyer owes to
Seller at the end of the Reconciliation Period according to the accounting
prepared by Buyer for that Reconciliation Period (the "Refund"). The Refund
shall be an amount equal to:
(A) (1) The Reserve as of the beginning of that
Reconciliation Period, PLUS
(2) the Reserve created for each Purchased
Receivable purchased during that Reconciliation Period, MINUS
(B) The total for that Reconciliation Period of:
(1) the Collateral Handling Fee;
(2) Finance Charges;
(3) Adjustments;
(4) Repurchase Amounts, to the extent Buyer has
agreed to accept payment thereof by deduction from the Refund;
(5) the Reserve for the Account Balance as of the
first day of the following Reconciliation Period in the minimum percentage set
forth in Section 2.4 hereof; and
(6) all amounts due, including professional fees and
expenses, as set forth in Section 12 for which oral or written demand has been
made by Buyer to Seller during that Reconciliation Period to the extent Buyer
has agreed to accept payment thereof by deduction from the Refund.
In the event the formula set forth in this Section 3.5 results in an amount due
to Buyer from Seller, Seller shall make such payment in the same manner as set
forth in Section 4.3 hereof for repurchases. If the formula set forth in this
Section 3.5 results in an amount due to Seller from Buyer, Buyer shall make such
payment by check, subject to Buyer's rights under Section 4.3 and Buyer's rights
of offset and recoupment.
3.6. FACILITY FEE. A fully earned, non-refundable facility fee of
$25,000.00 shall be due upon execution of this Agreement of which $5,000 has
been received by Buyer.
3.7. DUE DILIGENCE FEE. A fully earned, non-refundable due
diligence fee of $5,000.00 is due immediately (the "Due Diligence Fee")
(previously received by Buyer).
4. RECOURSE AND REPURCHASE OBLIGATIONS.
4.1. RECOURSE. Buyer's acquisition of Purchased Receivables from
Seller shall be with full recourse against Seller. In the event the Obligations
exceed the amount of Purchased Receivables and Collateral, Seller shall be
liable for any deficiency.
4.2. SELLER'S AGREEMENT TO REPURCHASE. Seller agrees to pay to
Buyer on demand, the full face amount, or any unpaid portion, of any Purchased
Receivable:
(A) which remains unpaid ninety (90) calendar days after the
invoice date; or
(B) which is owed by any Account Debtor who has filed, or has
had filed against it, any bankruptcy case, assignment for the
benefit of creditors, receivership, or insolvency proceeding
or who has become insolvent (as defined in the United States
Bankruptcy Code) or who is generally not paying its debts as
such debts become due; or
(C) with respect to which there has been any breach of
warranty or representation set forth in Section 6 hereof or
any breach of any covenant contained in this Agreement; or
(D) with respect to which the Account Debtor asserts any
discount, allowance, return, dispute, counterclaim, offset,
defense, right of recoupment, right of return, warranty claim,
or short payment;
together with all reasonable attorneys' and professional fees and expenses and
all court costs incurred by Buyer in collecting such Purchased Receivable and/or
enforcing its rights under, or collecting amounts owed by Seller in connection
with, this Agreement (collectively, the "Repurchase Amount").
4.3. SELLER'S PAYMENT OF THE REPURCHASE AMOUNT OR OTHER AMOUNTS DUE
BUYER. When any Repurchase Amount or other amount owing to Buyer becomes due,
Buyer shall inform Seller of the manner of payment which may be any one or more
of the following in Buyer's sole discretion: (a) in cash immediately upon demand
therefor; (b) by delivery of substitute invoices and an Invoice Transmittal
acceptable to Buyer which shall thereupon become Purchased Receivables; (c) by
adjustment to the Reserve pursuant to Section 3.5 hereof; (d) by deduction from
or offset against the Refund that would otherwise be due and payable to Seller;
(e) by deduction from or offset against the amount that otherwise would be
forwarded to Seller in respect of any further Advances that may be made by
Buyer; or (f) by any combination of the foregoing as Buyer may from time to time
choose.
4.4. SELLER'S AGREEMENT TO REPURCHASE ALL PURCHASED RECEIVABLES.
Upon and after the occurrence of an Event of Default, Seller shall, upon Buyer's
demand (or, in the case of an Event of Default under Section 9(B), immediately
without notice or demand from Buyer) repurchase all the Purchased Receivables
then outstanding, or such portion thereof as Buyer may demand. Such demand may,
at Buyer's option, include and Seller shall pay to Buyer immediately upon
demand, cash in an amount equal to the Advance with respect to each Purchased
Receivable then outstanding together with all accrued Finance Charges,
Adjustments, Collateral Handling Fees, attorney's and professional fees, court
costs and expenses as provided for herein, and any other Obligations. Upon
receipt of payment in full of the Obligations, Buyer shall immediately instruct
Account Debtors to pay Seller directly, and return to Seller any Refund due to
Seller. For the purpose of calculating any Refund due under this Section only,
the Reconciliation Date shall be deemed to be the date Buyer receives payment in
good funds of all the Obligations as provided in this Section 4.4.
5. POWER OF ATTORNEY. Seller does hereby irrevocably appoint Buyer and its
successors and assigns as Seller's true and lawful attorney in fact, and hereby
authorizes Buyer, regardless of whether there has been an Event of Default, (a)
to sell, assign, transfer, pledge, compromise, or discharge the whole or any
part of the Purchased Receivables; (b) to demand, collect, receive, xxx, and
give releases to any Account Debtor for the monies due or which may become due
upon or with respect to the Purchased Receivables and to compromise, prosecute,
or defend any action, claim, case or proceeding relating to the Purchased
Receivables, including the filing of a claim or the voting of such claims in any
bankruptcy case, all in Buyer's name or Seller's name, as Buyer may choose; (c)
to prepare, file and sign Seller's name on any
notice, claim, assignment, demand, draft, or notice of or satisfaction of lien
or mechanics' lien or similar document with respect to Purchased Receivables;
(d) to notify all Account Debtors with respect to the Purchased Receivables to
pay Buyer directly; (e) to receive, open, and dispose of all mail addressed to
Seller for the purpose of collecting the Purchased Receivables; (f) to endorse
Seller's name on any checks or other forms of payment on the Purchased
Receivables; (g) to execute on behalf of Seller any and all instruments,
documents, financing statements and the like to perfect Buyer's interests in the
Purchased Receivables and Collateral; and (h) to do all acts and things
necessary or expedient, in furtherance of any such purposes. If Buyer receives a
check or item which is payment for both a Purchased Receivable and another
receivable, the funds shall first be applied to the Purchased Receivable and, so
long as there does not exist an Event of Default or an event that with notice,
lapse of time or otherwise would constitute an Event of Default, the excess
shall be remitted to Seller. Upon the occurrence and continuation of an Event of
Default, all of the power of attorney rights granted by Seller to Buyer
hereunder shall be applicable with respect to all Purchased Receivables and all
Collateral.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
6.1. RECEIVABLES' WARRANTIES, REPRESENTATIONS AND COVENANTS. To
induce Buyer to buy receivables and to renders its services to Seller, and with
full knowledge that the truth and accuracy of the following are being relied
upon by the Buyer in determining whether to accept receivables as Purchased
Receivables, Seller represents, warrants, covenants and agrees, with respect to
each Invoice Transmittal delivered to Buyer and each receivable described
therein, that:
(A) Seller is the absolute owner of each receivable set forth
in the Invoice Transmittal and has full legal right to sell,
transfer and assign such receivables;
(B) The correct amount of each receivable is as set forth in
the Invoice Transmittal and is not in dispute;
(C) The payment of each receivable is not contingent upon the
fulfillment of any obligation or contract, past or future and
any and all obligations required of the Seller have been
fulfilled as of the date of the Invoice Transmittal;
(D) Each receivable set forth on the Invoice Transmittal is
based on an actual sale and delivery of goods and/or services
actually rendered, is presently due and owing to Seller, is
not past due or in default, has not been previously sold,
assigned, transferred, or pledged, and is free of any and all
liens, security interests and encumbrances other than liens,
security interests or encumbrances in favor of Buyer or any
other division or affiliate of Silicon Valley Bank;
(E) There are no defenses, offsets, or counterclaims against
any of the receivables, and no agreement has been made under
which the Account Debtor may claim any deduction or discount,
except as otherwise stated in the Invoice Transmittal;
(F) Each Purchased Receivable shall be the property of the
Buyer and shall be collected by Buyer, but if for any reason
it should be paid to Seller, Seller shall promptly notify
Buyer of such payment, shall hold any checks, drafts, or
monies so received in trust for the benefit of Buyer, and
shall promptly transfer and deliver the same to the Buyer;
(G) Buyer shall have the right of endorsement, and also the
right to require endorsement by Seller, on all payments
received in connection with each Purchased Receivable and any
proceeds of Collateral;
(H) Seller, and to Seller's best knowledge, each Account
Debtor set forth in the Invoice Transmittal, are and shall
remain solvent as that term is defined in the United States
Bankruptcy Code and the California Uniform Commercial Code,
and no such Account Debtor has filed or had filed against it a
voluntary or involuntary petition for relief under the United
States Bankruptcy Code;
(I) Each Account Debtor named on the Invoice Transmittal will
not object to the payment for, or the quality or the quantity
of the subject matter of, the receivable and is liable for the
amount set forth on the Invoice Transmittal;
(J) Each Account Debtor shall promptly be notified, after
acceptance by Buyer, that the Purchased Receivable has been
transferred to and is payable to Buyer, and Seller shall not
take or permit any action to countermand such notification;
and
(K) All receivables forwarded to and accepted by Buyer after
the date hereof, and thereby becoming Purchased Receivables,
shall comply with each and every one of the foregoing
representations, warranties, covenants and agreements referred
to above in this Section 6.1.
6.2. ADDITIONAL WARRANTIES, REPRESENTATIONS AND COVENANTS. In
addition to the foregoing warranties, representations and covenants, to induce
Buyer to buy receivables and to render its services to Seller, Seller hereby
represents, warrants, covenants and agrees that:
(A) Seller will not assign, transfer, sell, or grant, or
permit any lien or security interest in any Purchased
Receivables or Collateral to or in favor of any other party,
without Buyer's prior written consent;
(B) The Seller's name, form of organization, chief executive
office, and the place where the records concerning all
Purchased Receivables and Collateral are kept is set forth at
the beginning of this Agreement, Collateral is located only at
the location set forth in the beginning of this Agreement, or,
if located at any additional location, as set forth on a
schedule attached to this Agreement, and Seller will give
Buyer at least thirty (30) days prior written notice if such
name, organization, chief executive office or other locations
of Collateral or records concerning Purchased Receivables or
Collateral is changed or added and shall execute any documents
necessary to perfect Buyer's interest in the Purchased
Receivables and the Collateral;
(C) Seller shall (i) pay all of its normal gross payroll for
employees, and all federal and state taxes, as and when due,
including without limitation all payroll and withholding taxes
and state sales taxes; (ii) deliver at any time and from time
to time at Buyer's request, evidence satisfactory to Buyer
that all such amounts have been paid to the proper taxing
authorities; and (iii) if requested by Buyer, pay its payroll
and related taxes through a bank or an independent payroll
service acceptable to Buyer;
(D) Seller has not, as of the xxxx Xxxxxx delivers to Buyer an
Invoice Transmittal, or as of the xxxx Xxxxxx accepts any
Advance from Buyer, filed a voluntary petition for relief
under the United States Bankruptcy Code or had filed against
it an involuntary petition for relief;
(E) If Seller owns, holds or has any interest in, any
copyrights (whether registered, or unregistered), patents or
trademarks, and licenses of any of the foregoing, such
interest has been disclosed to Buyer and is specifically
listed and identified on a schedule to this Agreement, and
Seller shall immediately notify Buyer if Seller hereafter
obtains any interest in any additional copyrights, patents,
trademarks or licenses that are significant in value or are
material to the conduct of its business;
(F) Seller shall provide Buyer with, (i) as soon as available,
but no later than 30 days following each Reconciliation
Period, a deferred revenue report, an aged listing of accounts
receivable and accounts payable, an company prepared balance
sheet and income statement, prepared under GAAP, consistently
applied, covering Seller's operations during the period; (ii)
within 5 days of filing, copies of all statements, reports and
notices made available to Seller's security holders or to any
holders of Subordinated Debt and all reports on Form 10-Q with
the Securities and Exchange Commission; (iii) a prompt report
of any legal actions pending or threatened against Seller that
could result in damages or costs to Seller, except to the
extent previously disclosed in Seller's SEC filing summarizing
ongoing patent litigation; (iv) budgets, sales projections,
operating plans or other financial information Buyer
reasonably requests; and (v) prompt notice of any material
change in the composition of the Intellectual Property,
including any subsequent ownership right of Seller in or to
any Copyright, Patent or Trademark not shown in any
intellectual property security agreement between Seller and
Buyer or knowledge of an event that materially adversely
affects the value of the Intellectual Property;
(G) Seller shall provide Buyer within 50 days after the last
day of each quarter a compliance certificate;
(H) On request by Buyer, Seller will promptly furnish any
information Buyer may reasonably request to determine
financial condition of Seller, including, but not limited to
all of Seller's Obligations, and the condition of any of
Seller's receivables which may include but are not limited to
Purchased Receivables; and
(I) Seller will maintain its primary deposit and investments
accounts with or through Buyer.
7. ADJUSTMENTS. In the event of a breach of any of the representations,
warranties, or covenants set forth in Section 6.1, or in the event any
Adjustment or dispute is asserted by any Account Debtor, Seller shall promptly
advise Buyer and shall, subject to the Buyer's approval, resolve such disputes
and advise Buyer of any adjustments. Unless the disputed Purchased Receivable is
repurchased by Seller and the full Repurchase Amount is paid, Buyer shall remain
the absolute owner of any Purchased Receivable which is subject to Adjustment or
repurchase under Section 4.2 hereof, and any rejected, returned, or recovered
personal property, with the right to take possession thereof at any time. If
such possession is not taken by Buyer, Seller is to resell it for Buyer's
account at Seller's expense with the proceeds made payable to Buyer. While
Seller retains possession of said returned goods, Seller shall segregate said
goods and xxxx them "property of Silicon Valley Bank."
8. SECURITY INTEREST. To secure the prompt payment and performance to
Buyer of all of the Obligations, Seller hereby grants to Buyer a continuing lien
upon and security interest in all of Seller's now existing or hereafter arising
rights and interest in the following, whether now owned or existing or hereafter
created, acquired, or arising, and wherever located (collectively, the
"Collateral"):
(A) All accounts, receivables, contract rights, chattel paper,
instruments, documents, letters of credit, bankers
acceptances, drafts, checks, cash, securities, and general
intangibles (including, without limitation, all claims, causes
of action, deposit accounts, guaranties, rights in and claims
under insurance policies (including rights to premium
refunds), rights to tax refunds, copyrights, patents,
trademarks, rights in and under license agreements, and all
other intellectual property);
(B) All inventory, including Seller's rights to any returned
or rejected goods, with respect to which Buyer shall have all
the rights of any unpaid seller, including the rights of
replevin, claim and delivery, reclamation, and stoppage in
transit;
(C) All monies, refunds and other amounts due Seller,
including, without limitation, amounts due Seller under this
Agreement (including Seller's right of offset and recoupment);
(D) All equipment, machinery, furniture, furnishings,
fixtures, tools, supplies and motor vehicles;
(E) All farm products, crops, timber, minerals and the like
(including oil and gas);
(F) All accessions to, substitutions for, and replacements of,
all of the foregoing;
(G) All books and records pertaining to all of the foregoing;
and
(H) All proceeds of the foregoing, whether due to voluntary or
involuntary disposition, including insurance proceeds.
Seller is not authorized to sell, assign, transfer or otherwise
convey any Collateral without Buyer's prior written consent, except for the sale
of finished inventory in the Seller's usual course of business. Seller agrees to
sign UCC financing statements, in a form acceptable to Buyer, and any other
instruments and documents requested by Buyer to evidence, perfect, or protect
the interests of Buyer in the Collateral. Seller agrees to deliver to Buyer the
originals of all instruments, chattel paper and documents evidencing or related
to Purchased Receivables and Collateral.
9. DEFAULT. The occurrence of any one or more of the following shall
constitute an Event of Default hereunder.
(A) Seller fails to pay any amount owed to Buyer as and when
due;
(B) There shall be commenced by or against Seller any
voluntary or involuntary case under the United States
Bankruptcy Code, or any assignment for the benefit of
creditors, or appointment of a receiver or custodian for any
of its assets;
(C) Seller shall become insolvent in that its debts are
greater than the fair value of its assets, or Seller is
generally not paying its debts as they become due or is left
with unreasonably small capital;
(D) Any involuntary lien, garnishment, attachment or the like
is issued against or attaches to the Purchased Receivables or
any Collateral;
(E) Seller shall breach any covenant, agreement, warranty, or
representation shall constitute an immediate default
hereunder;
(F) Seller is not in compliance with, or otherwise is in
default under, any term of any document, instrument or
agreement evidencing a debt, obligation or liability of any
kind or character of Seller, now or hereafter existing, in
favor of Buyer or any division or affiliate of Silicon Valley
Bank, regardless of whether such debt, obligation or liability
is direct or indirect, primary or
secondary, joint, several or joint and several, or fixed or
contingent, together with any and all renewals and extensions
of such debts, obligations and liabilities, or any part
thereof;
(G) An event of default shall occur under any guaranty
executed by any guarantor of the Obligations of Seller to
Buyer under this Agreement, or any material provision of any
such guaranty shall for any reason cease to be valid or
enforceable or any such guaranty shall be repudiated or
terminated, including by operation of law;
(H) A default or event of default shall occur under any
agreement between Seller and any creditor of Seller that has
entered into a subordination agreement with Buyer;
(I) Any creditor that has entered into a subordination
agreement with Buyer shall breach any of the terms of or not
comply with such subordination agreement; or
(J) (i) There is a material adverse change in the business,
operations, or condition (financial or otherwise) of the
Seller, or (ii) there is a material impairment of the prospect
of repayment of any portion of the Obligations or (iii) there
is a material impairment of the value or priority of Buyer's
security interests in the Collateral.
10. REMEDIES UPON DEFAULT. Upon the occurrence of an Event of Default, (1)
without implying any obligation to buy receivables, Buyer may cease buying
receivables or extending any financial accommodations to Seller; (2) all or a
portion of the Obligations shall be, at the option of and upon demand by Buyer,
or with respect to an Event of Default described in Section 9(B), automatically
and without notice or demand, due and payable in full; and (3) Buyer shall have
and may exercise all the rights and remedies under this Agreement and under
applicable law, including the rights and remedies of a secured party under the
California Uniform Commercial Code, all the power of attorney rights described
in Section 5 with respect to all Collateral, and the right to collect, dispose
of, sell, lease, use, and realize upon all Purchased Receivables and all
Collateral in any commercial reasonable manner. Seller and Buyer agree that any
notice of sale required to be given to Seller shall be deemed to be reasonable
if given five (5) days prior to the date on or after which the sale may be held.
In the event that the Obligations are accelerated hereunder, Seller shall
repurchase all of the Purchased Receivables as set forth in Section 4.4.
11. ACCRUAL OF INTEREST. If any amount owed by Seller hereunder is not paid
when due, including, without limitation, amounts due under Section 3.5,
Repurchase Amounts, amounts due under Section 12, and any other Obligations,
such amounts shall bear interest at a per annum rate equal to the per annum rate
of the Finance Charges until the earlier of (i) payment in good funds or (ii)
entry of a final judgment thereof, at which time the principal amount of any
money judgment remaining unsatisfied shall accrue interest at the highest rate
allowed by applicable law.
12. FEES, COSTS AND EXPENSES; INDEMNIFICATION. The Seller will pay to Buyer
immediately upon demand all fees, costs and expenses (including fees of
attorneys and professionals and their costs and expenses) that Buyer incurs or
may from time to time impose in connection with any of the following: (a)
preparing, negotiating, administering, and enforcing this Agreement or any other
agreement executed in connection herewith, including any amendments, waivers or
consents in connection with any of the foregoing, (b) any litigation or dispute
(whether instituted by Buyer, Seller or any other person) in any way relating to
the Purchased Receivables, the Collateral, this Agreement or any other agreement
executed in connection herewith or therewith, (c) enforcing any rights against
Seller or any guarantor, or any Account Debtor, (d) protecting or enforcing its
interest in the Purchased Receivables or the Collateral, (e) collecting the
Purchased Receivables and the Obligations, and (f) the representation of Buyer
in connection with any bankruptcy case or insolvency proceeding involving
Seller, any Purchased Receivable, the Collateral, any Account Debtor, or any
guarantor. Seller shall indemnify and hold Buyer harmless from and against any
and all claims, actions, damages, costs, expenses, and liabilities of any nature
whatsoever arising in connection with any of the foregoing.
13. SEVERABILITY, WAIVER, AND CHOICE OF LAW. In the event that any
provision of this Agreement is deemed invalid by reason of law, this Agreement
will be construed as not containing such provision and the remainder of the
Agreement shall remain in full force and effect. Buyer retains all of its
rights, even if it makes an Advance after an Event of Default. If Buyer waives
an Event of Default, it may enforce a later Event of Default. Any consent or
waiver under, or amendment of, this Agreement must be in writing.
Nothing contained herein, or any action taken or not taken by Buyer at any time,
shall be construed at any time to be indicative of any obligation or willingness
on the part of Buyer to amend this Agreement or to grant to Seller any waivers
or consents. This Agreement has been transmitted by Seller to Buyer at Buyer's
office in the State of California and has been executed and accepted by Buyer in
the State of California. This Agreement shall be governed by and interpreted in
accordance with the internal laws of the State of California.
14. ACCOUNT COLLECTION SERVICES. Certain Account Debtors may require or
prefer that all of Seller's receivables be paid to the same address and/or
party, or Seller and Buyer may agree that all receivables with respect to
certain Account Debtors be paid to one party. In such event Buyer and Seller may
agree that Buyer shall collect all receivables whether owned by Seller or Buyer
and (provided that there does not then exist an Event of Default or event that
with notice, lapse or time or otherwise would constitute an Event of Default,
and subject to Buyer's rights in the Collateral) Buyer agrees to remit to Seller
the amount of the receivables collections it receives with respect to
receivables other than Purchased Receivables. It is understood and agreed by
Seller that this Section does not impose any affirmative duty on Buyer to do any
act other than to turn over such amounts. All such receivables and collections
are Collateral and in the event of Seller's default hereunder, Buyer shall have
no duty to remit collections of Collateral and may apply such collections to the
obligations hereunder and Buyer shall have the rights of a secured party under
the California Uniform Commercial Code.
15. NOTICES. All notices shall be given to Buyer and Seller at the
addresses or faxes set forth on the first page of this Agreement and shall be
deemed to have been delivered and received: (a) if mailed, three (3) calendar
days after deposited in the United States mail, first class, postage pre-paid,
(b) one (1) calendar day after deposit with an overnight mail or messenger
service; or (c) on the same date of confirmed transmission if sent by hand
delivery, telecopy, telefax or telex.
16. JURY TRIAL. SELLER AND BUYER EACH HEREBY (a) WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL ON ANY CLAIM OR ACTION ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT, ANY RELATED AGREEMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY; (b) RECOGNIZE AND AGREE THAT THE FOREGOING
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT;
AND (c) REPRESENT AND WARRANT THAT IT HAS REVIEWED THIS WAIVER, HAS DETERMINED
FOR ITSELF THE NECESSITY TO REVIEW THE SAME WITH ITS LEGAL COUNSEL, AND
KNOWINGLY AND VOLUNTARILY WAIVES ALL RIGHTS TO A JURY TRIAL.
17. TERM AND TERMINATION. The term of this Agreement shall be through March
17, 2004 unless terminated in writing by Buyer or Seller. Seller and Buyer shall
each have the right to terminate this Agreement at any time. Notwithstanding the
foregoing, any termination of this Agreement shall not affect Buyer's security
interest in the Collateral and Buyer's ownership of the Purchased Receivables,
and this Agreement shall continue to be effective, and Buyer's rights and
remedies hereunder shall survive such termination, until all transactions
entered into and Obligations incurred hereunder or in connection herewith have
been completed and satisfied in full.
18. TITLES AND SECTION HEADINGS. The titles and section headings used
herein are for convenience only and shall not be used in interpreting this
Agreement.
19. OTHER AGREEMENTS. The terms and provisions of this Agreement shall not
adversely affect the rights of Buyer or any other division or affiliate of
Silicon Valley Bank under any other document, instrument or agreement. The terms
of such other documents, instruments and agreements shall remain in full force
and effect notwithstanding the execution of this Agreement. In the event of a
conflict between any provision of this Agreement and any provision of any other
document, instrument or agreement between Seller on the one hand, and Buyer or
any other division or affiliate of Silicon Valley Bank on the other hand, Buyer
shall determine in its sole discretion which provision shall apply. Seller
acknowledges specifically that any security agreements, liens and/or security
interests currently securing payment of any obligations of Seller owing to Buyer
or any other division or affiliate of Silicon Valley Bank also secure Seller's
obligations under this Agreement, and are valid and subsisting and are not
adversely affected by
execution of this Agreement. Seller further acknowledges that (a) any collateral
under other outstanding security agreements or other documents between Seller
and Buyer or any other division or affiliate of Silicon Valley Bank secures the
obligations of Seller under this Agreement and (b) a default by Seller under
this Agreement constitutes a default under other outstanding agreements between
Seller and Buyer or any other division or affiliate of Silicon Valley Bank.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement on
the day and year above written.
SELLER: SUPERCONDUCTOR TECHNOLOGIES INC.
By _______________________________________
Title ____________________________________
BUYER: SILICON VALLEY BANK
By_______________________________________
Title ___________________________________
Effective Date:__________________________
EXHIBIT "A"
TO FINANCING STATEMENT AND SECURITY AGREEMENT
This FINANCING STATEMENT and SECURITY AGREEMENT covers the following types or
items of property (in addition to, and without limiting the types of property
set forth on page 1 hereof):
A) All accounts, receivables, contract rights, chattel paper, instruments,
documents, letters of credit, bankers acceptances, drafts, checks,
cash, securities, deposit accounts, and general intangibles (including,
without limitation, all claims, causes of action, guaranties, rights in
and claims under insurance policies (including rights to premium
refunds), rights to tax refunds, copyrights, patents, trademarks,
rights in and under license agreements, and all other intellectual
property);
B) All inventory, including Seller's rights to any returned or rejected
goods, with respect to which Buyer shall have all the rights of any
unpaid seller, including the rights of replevin, claim and delivery,
reclamation, and stoppage in transit;
C) All monies, refunds and other amounts due Seller, including, without
limitation, amounts due Seller under this Agreement (including Seller's
right of offset and recoupment);
D) All equipment, machinery, furniture, furnishings, fixtures, tools,
supplies and motor vehicles;
E) All farm products, crops, timber, minerals and the like (including oil
and gas);
F) All accessions to, substitutions for, and replacements of, all of the
foregoing;
G) All books and records pertaining to all of the foregoing; and
H) All proceeds of the foregoing, whether due to voluntary or involuntary
disposition, including insurance proceeds.
INITIALS _____________________
[SILICON VALLEY BANK LOGO]
SILICON VALLEY BANK
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
(000) 000-0000 - Fax (000) 000-0000
CERTIFICATION OF OFFICERS
The undersigned, being all the officers of SUPERCONDUCTOR TECHNOLOGIES
INC., a Delaware corporation (the "Corporation"), hereby certify to Silicon
Valley Bank ("SVB") that:
1. The correct name of the Corporation is SUPERCONDUCTOR
TECHNOLOGIES INC., as set forth in the Articles of Incorporation.
2. The Corporation was incorporated on May 11, 1987, under the
laws of the State of Delaware, and is in good standing under such laws.
3. The Corporation's place of business and chief executive office
being the place at which the Corporation maintains its books and records
pertaining to accounts, accounts receivables, contract rights, chattel paper,
general intangibles, instruments, documents, inventory, and equipment, is
located at:
000 XXXX XXXXX
XXXXX XXXXXXX, XX 00000-0000
4. The Corporation has other places of business at the following
addressees:
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
5. There is no provision in the Certificate of Incorporation,
Articles of Incorporation, or Bylaws of the Corporation, or in the laws of the
State of its incorporation, requiring any vote or consent of shareholders to
authorize the sale of receivables or the grant of a security interest in any
assets of the Corporation. Such power is vested exclusively in the Corporation's
Board of Directors.
6. The officers of the Corporation, and their respective titles
and signatures are as follows:
PRESIDENT:
___________________________________________________________________________
(Signature)
VICE PRESIDENT:
___________________________________________________________________________
(Signature)
SECRETARY:
___________________________________________________________________________
(Signature)
TREASURER:
___________________________________________________________________________
(Signature)
OTHER OFFICER:
TITLE:
___________________________________________________________________________
(Signature)
7. Except as indicated in this paragraph 7, each of the officers
listed in paragraph 6 has signatory powers with respect to all the Corporation's
transactions with SVB. Explanation of exceptions:
8. The undersigned shall give SVB prompt written notice of any
change or amendment with respect to any of the foregoing. Until such written
notice is received by SVB, SVB shall be entitled to rely upon the foregoing in
all respects.
IN WITNESS WHEREOF, the undersigned have executed this Certification of
Officers on 03/13/03.
PRESIDENT: ______________________________________________________________
VICE PRESIDENT: ______________________________________________________________
SECRETARY: ______________________________________________________________
TREASURER: ______________________________________________________________
[SILICON VALLEY BANK LOGO]
SILICON VALLEY BANK
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
(000) 000-0000 - Fax (000) 000-0000
SECRETARY'S CERTIFICATE OF RESOLUTION
The undersigned, as Secretary of SUPERCONDUCTOR TECHNOLOGIES INC., a
Delaware corporation (the "Corporation"), hereby certifies to Silicon Valley
Bank that at a meeting duly convened at which a quorum was present the following
resolutions were adopted by the Finance Committee of the Board of Directors of
the Corporation and that such resolutions have not been modified, amended, or
rescinded in any respect and are in full force and effect as of today's date.
RESOLVED, that this corporation be and hereby is authorized to sell
this corporation's accounts receivable to Silicon Valley Bank, and to grant
Silicon Valley Bank a security interest in this corporation's assets, including,
without limitation, accounts, accounts receivable, contract rights, chattel
paper, general intangibles, instruments, documents, letters of credit, drafts,
inventory and equipment, presently owned or hereafter acquired and proceeds and
products of the foregoing (the " Collateral," as defined in the Accounts
Receivable Purchase Agreement).
RESOLVED, that this corporation be and hereby is authorized and
directed to execute and deliver certain agreements in connection with the sale
of receivables, and granting of security interests in the Collateral to Silicon
Valley Bank including, without limitations, a Accounts Receivable Purchase
Agreement and UCC-1 financing statement.
RESOLVED, that the following named officers of this corporation
("Authorized Officers") be, and any of them hereby are, authorized, empowered,
and directed to execute and deliver to Silicon Valley Bank on behalf of this
corporation all such further agreements and instruments as may be deemed
necessary or advisable in order to fully effectuate the purposes and intent of
the foregoing resolutions.
Print Names of Authorized Officers: Title:
___________________________________________ ______________________________
___________________________________________ ______________________________
___________________________________________ ______________________________
___________________________________________ ______________________________
___________________________________________ ______________________________
___________________________________________ ______________________________
RESOLVED, that the Secretary or Assistant Secretary of this
corporation be, and hereby is authorized, empowered and directed to certify to
the passage of the foregoing resolutions under the seal of this corporation.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this
Thirteenth day of March 2002.
____________________________________________________
Signature
Secretary of SUPERCONDUCTOR TECHNOLOGIES INC.
[SILICON VALLEY BANK LOGO]
CONSENT AND RELEASE
Silicon Valley Bank sincerely appreciates your business and would like to
publicize your Company recently joining our "family". In order to do so, kindly
complete the following and return to us.
SUPERCONDUCTOR TECHNOLOGIES INC. ("Client") consents to and releases Silicon
Valley Bank ("Bank") from any liability in its use of (check all that apply):
Company Name ___________
Individual Name ___________
Quotation ___________
Photograph ___________
Client Reference ___________
Type of Credit Facility ___________
Amount of Credit Facility ___________
in Bank's written and oral presentations, advertising and promotional materials
and Internet Web site.
Client Name:
SUPERCONDUCTOR TECHNOLOGIES INC.
_________________________
Signature
_________________________
Name and Title
_________________________
Date
