Exhibit 10.1
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LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
ANIMAS CORPORATION, AND
ANIMAS DIABETES CARE, LLC
AS BORROWER
AND
SILICON VALLEY BANK,
AS BANK
NOVEMBER 4, 2002
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated as of
November 4, 2002 between SILICON VALLEY BANK ("Bank"), whose address is 0000
Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and having a loan production office
at 5 Radnor Corp. Center, 000 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxxxx,
00000 and ANIMAS CORPORATION, a corporation organized and in good standing in
the State of Delaware ("Company"), whose address is 000 Xxxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxx 00000 and ANIMAS DIABETES CARE, LLC, a limited liability
company organized and in good standing in the State of Delaware with an address
of 000 Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxx 00000 (together with the Company,
each a "Borrower" and collectively, the "Borrowers") provides the terms on which
Bank will lend to Borrowers and Borrowers will repay Bank. The parties agree as
follows:
1. ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document.
2. LOAN AND TERMS OF PAYMENT
2.1 PROMISE TO PAY.
Borrowers jointly and severally promise to pay Bank the unpaid
principal amount of all Credit Extensions and interest on the unpaid principal
amount of the Credit Extensions.
2.1.1 REVOLVING ADVANCES.
(a) Bank will make Advances not exceeding (i) the lesser of (A)
the Committed Revolving Line or (B) the Borrowing Base. Amounts borrowed under
this Section may be repaid and reborrowed during the term of this Agreement. All
Advances shall be evidenced by the Revolving Promissory Note to be executed and
delivered by Borrowers to Bank on the Closing Date and shall be repaid in
accordance with the terms of the Revolving Promissory Note.
(b) To obtain an Advance, Company must notify Bank by facsimile or
telephone by 3:00 p.m. Eastern time on the Business Day the Advance is to be
made. Company must promptly confirm the notification by delivering to Bank the
Payment/Advance Request Form attached as Exhibit B (the "Payment/Advance Form").
Bank will credit Advances to Company's deposit account. Bank may make Advances
under this Agreement based on instructions from a Responsible Officer or his or
her designee or without instructions if the Advances are necessary to meet
Obligations which have become due. Bank may rely on any telephone notice given
by a person whom Bank believes is a Responsible Officer or designee. Borrowers
will indemnify Bank for any loss Bank suffers due to such reliance, except for
losses caused by Bank's gross negligence or willful misconduct.
(c) The Committed Revolving Line terminates on the Revolving
Maturity Date, when all Advances are immediately payable.
(d) Bank's obligation to lend the undisbursed portion of the
Obligations will terminate if, in Bank's sole discretion, there has been a
material adverse change in the general affairs, management, results of
operation, condition (financial or otherwise) or the prospect of repayment of
the Obligations, or there has been any material adverse deviation by any
Borrower from its most recent business plan of such Borrower presented to and
accepted by Bank prior to the execution of this Agreement.
2.1.2 EQUIPMENT ADVANCES.
(a) Through November 5, 2002 (the "Equipment Availability End
Date"), Bank will make advances ("Equipment Advance" and, collectively,
"Equipment Advances") not exceeding the Committed Equipment Line. The Equipment
Advances may only be used to finance or refinance Eligible Equipment purchased
after January 1, 2002, provided that notwithstanding anything set forth herein
or any of the Loan Documents to the contrary, with respect to any such Eligible
Equipment purchased after January 1, 2002 but more than 120 days before the date
of each Equipment Advance the Repayment Period for such Equipment Advance shall
be thirty (30) months and for all Equipment Advances, the amount of such
Equipment Advance may not exceed one hundred percent (100%) of the equipment
invoice, excluding in
the case of Eligible Equipment, taxes, shipping, warranty charges, freight
discounts and installation expense. Other Equipment may constitute up to thirty
five percent (35%) of the aggregate Equipment Advances. Each Equipment Advance
must be for a minimum of Two Hundred Fifty Thousand Dollars ($250,000). The
number of Equipment Advances is limited to four (4). Notwithstanding the
foregoing, Borrower may request to draw down the entire Committed Equipment Lien
on the Closing Date in a single Equipment Advance (the "Single Equipment
Advance") at closing in the amount of the Committed Equipment Line. In the event
the Borrower requests the Single Equipment Advance, Borrower will provide Bank
with invoices for Eligible Equipment satisfactory to Bank in an amount not less
than the Committed Equipment Line on or before November 5, 2002.
(b) Interest accrues from the date of each Equipment Advance at
the rate in Section 2.3 (a) and is payable monthly
(c) To obtain an Equipment Advance, Borrowers must notify Bank
(the notice is irrevocable) by facsimile no later than 3:00 p.m. Eastern time
one (1) Business Day before the day on which the Equipment Advance is to be
made. The notice in the form of Exhibit B (Payment/Advance Form) must be signed
by a Responsible Officer or designee and include a copy of the invoice for the
Eligible Equipment being financed, provided that Eligible Equipment invoices for
the Single Equipment Advance shall be delivered to Bank in accordance with
Section 2.1.2(a) above. All Equipment Advances will be made by internal transfer
to an account of Borrower maintained with Bank.
2.2 OVERADVANCES.
If Borrowers' Obligations under Section 2.1.1 exceed the lesser of
either (i) the Committed Revolving Line or (ii) the Borrowing Base, Borrowers
shall immediately pay Bank the excess.
2.3 INTEREST RATE, PAYMENTS.
(a) Interest Rate. (i) Advances accrue interest on the outstanding
principal balance in accordance with the Revolving Promissory Note; (ii)
Equipment Advances accrue interest on the outstanding principal balance at a
fixed per annum rate equal to one and one half of one percent (1.5%) above Prime
Rate as of the day of the Equipment Advance. After the occurrence and during the
continuance of an Event of Default, Obligations accrue interest at five percent
(5%) above the rate effective immediately before the Event of Default. The
interest rate increases or decreases when the Prime Rate changes. Interest is
computed on a 360 day year for the actual number of days elapsed.
(b) Payments. Interest due on the Committed Revolving Line is
payable in accordance with the Revolving Promissory Note. Equipment Advances are
payable in thirty six (36) equal monthly installments of principal and accrued
interest, beginning on the 1st day of each month after the Equipment Advance and
ending on the last day of the Repayment Period (the "Equipment Maturity Date").
On the last day of the Repayment Period with respect to each Equipment Advance
or upon an Event of Default, Borrowers will pay, in addition to the unpaid
principal and accrued interest and all other amounts due on such date with
respect to such Equipment Advance, an amount equal to the Final Payment, to the
extent that Borrower has not paid all of the Final Payment pursuant to one or
more prepayments permitted under Section 2.3(c) hereof. If the Equipment
Advances are accelerated following the occurrence of an Event of Default, then
Borrowers will immediately pay to Bank (i) all remaining payments (including
principal and accrued and unpaid interest), (ii) the Final Payment and (iii) all
other sums, if any, that shall have become due and payable with respect to any
Equipment Advance. All Equipment Advances shall be evidenced by the Equipment
Term Note to be executed and delivered by Borrowers to Bank on the Closing Date.
Equipment Advances when repaid may not be reborrowed. Bank may debit any of
Borrowers' deposit accounts including Account Number __________________________
for principal and interest payments owing or any amounts Borrowers owe Bank.
Bank will promptly notify Company when it debits Borrowers' accounts and with
respect to any debits other than for principal and interest, will thereafter
provide Borrowers with an invoice or other description of such debit. These
debits are not a set-off. Payments received after 12:00 noon Eastern time are
considered received at the opening of business on the next Business Day. When a
payment is due on a day that is not a Business Day, the payment is due the next
Business Day and additional fees or interest accrue.
(c) Borrower will have the option to prepay Advances and Equipment
Advances, in whole or in part, at any time, without penalty or premium. All such
prepayments shall be accompanied by all
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accrued and unpaid interest on such sums, together with the Final Payment
applicable to the sum being prepaid for any Equipment Advance.
2.4 FEES.
Borrowers will pay:
(a) Facility Fee. A fully earned, nonrefundable fee in the amount
of Twenty Two Thousand Five Hundred Dollars ($22,500) on the Committed Revolving
Line, which fee is due and payable on or before the Closing Date.
(b) Bank Expenses. All Bank Expenses (including reasonable
attorneys' fees and reasonable expenses) incurred through and after the date of
this Agreement, are payable when due.
2.5 JOINT OBLIGATIONS.
Each Person included in the term "Borrower" hereby covenants and agrees
with Bank as follows:
(a) The Obligations include all present and future
indebtedness, duties, obligations, and liabilities, whether now existing or
contemplated or hereafter arising, of any one or more of the Borrowers.
(b) Reference in this Agreement and the other Loan
Documents to the "Borrower" or otherwise with respect to any one or more of the
Persons now or hereafter included in the definition of "Borrower" shall mean
each and every such Person and any one or more of such Persons, jointly and
severally, unless the context requires otherwise.
(c) Each Person included in the term "Borrower" in the
discretion of its respective management is to agree among themselves as to the
allocation of the benefits of each Advance or Equipment Advance.
(d) For administrative convenience, each Person included
in the term "Borrower" hereby irrevocably appoints the Company as the Borrower's
attorney-in-fact, with power of substitution (with the prior written consent of
Bank in the exercise of its sole and absolute discretion), in the name of the
Company or in the name of the Borrower or otherwise to take any and all actions
with respect to this Agreement, the other Loan Documents, the Obligations and/or
the Collateral (including, without limitation, the proceeds thereof) as the
Company may so elect from time to time, including, without limitation, actions
to (i) request Advances or Equipment Advances and direct Bank to disburse or
credit the proceeds of any Advance or Equipment Advance directly to an account
of the Company, any one or more of such Persons or otherwise, which direction
shall evidence the making of such Advance or Equipment Advance and shall
constitute the acknowledgment by each such Person of the receipt of the proceeds
of such Advance or Equipment Advance, (ii) enter into, execute, deliver, amend,
modify, restate, substitute, extend and/or renew this Agreement, any other Loan
Documents, security agreements, mortgages, deposit account agreements,
instruments, certificates, waivers, letter of credit applications, releases,
documents and agreements from time to time, and (iii) endorse any check or other
Item of Payment in the name of such Person or in the name of the Company. The
foregoing appointment is coupled with an interest, cannot be revoked without the
prior written consent of Bank, and may be exercised from time to time through
the Company's duly authorized officer, officers or other Person or Persons
designated by the Company to act from time to time on behalf of the Company.
(e) Each Person included in the term "Borrower" hereby
irrevocably authorizes Bank to make Advances or Equipment Advances to any one or
more all of such Person, pursuant to the provisions of this Agreement upon the
written, oral or telephone request any one or more of the Persons who is from
time to time a Responsible Officer of a Borrower under the provisions of the
most recent certificate of corporate resolutions and/or incumbency of the Person
included in the term "Borrower" on file with Bank and also upon the written,
oral or telephone request of any one of the Persons who is from time to time a
Responsible Officer of the Company under the provisions of the most recent
certificate of corporate resolutions and/or incumbency for the Company on file
with Bank.
(a) (f) Bank assumes no responsibility or liability for any
errors, mistakes, and/or discrepancies in the oral, telephonic, written or other
transmissions of any instructions, orders, requests
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and confirmations between Bank and any one or more of the Persons included in
the term "Borrower" or Bank in connection with the Credit Extension or any other
transaction in connection with the provisions of this Agreement, except for
losses caused by Bank's gross negligence or willful misconduct.
2.6 INTER-COMPANY DEBT, CONTRIBUTION.
Without implying any limitation on the joint and several nature of the
Obligations, Bank agrees that, notwithstanding any other provision of this
Agreement, the Persons included in the term "Borrower" may create reasonable
inter-company indebtedness between or among the Persons included in the term
"Borrower" with respect to the allocation of the benefits and proceeds of the
Advances or Equipment Advances. The Persons included in the term "Borrower"
agree among themselves, and Bank consents to that agreement, that each such
Person shall have rights of contribution from all of the such Persons to the
extent such Person incurs Obligations in excess of the proceeds of the Advances
or Equipment Advances received by, or allocated to purposes for the direct
benefit of, such Person. All such indebtedness and rights shall be, and are
hereby agreed by the Persons included in the term "Borrower" to be, subordinate
in priority and payment to the indefeasible repayment in full in cash of the
Obligations, and, unless Bank agrees in writing otherwise, shall not be
exercised or repaid in whole or in part until all of the Obligations have been
indefeasibly paid in full in cash. Each Person included in the term "Borrower"
agrees that all of such inter-company indebtedness and rights of contribution
are part of the Collateral and secure the Obligations. Each Person included in
the term "Borrower" hereby waives all rights of counter claim, recoupment and
offset between or among themselves arising on account of that indebtedness and
otherwise. No Person included in the term "Borrower" shall evidence the
inter-company indebtedness or rights of contribution by note or other
instrument, and shall not secure such indebtedness or rights of contribution
with any Lien or security.
2.7 BORROWERS ARE INTEGRATED GROUP.
(a) Each Person included in the term "Borrower" hereby represents
and warrants to Bank that each of them will derive benefits, directly and
indirectly, from the Advances and Equipment Advances, both in their separate
capacity and as a member of the integrated group to which each such Person
belongs and because the successful operation of the integrated group is
dependent upon the continued successful performance of the functions of the
integrated group as a whole, because (i) the terms of the consolidated financing
provided under this Agreement are more favorable than would otherwise would be
obtainable by such Persons individually, and (ii) the additional administrative
and other costs and reduced flexibility associated with individual financing
arrangements which would otherwise be required if obtainable would substantially
reduce the value to such Persons of the financing.
(b) Each Person included in the term "Borrower" hereby represents
and warrants that all of the representations and warranties contained in the
Loan Documents are true and correct on and as of the date hereof as if made on
and as of such date, both before and after giving effect to this Agreement, and
that no Event of Default has occurred and is continuing or exists or would occur
or exist after giving effect to this Agreement.
2.8 PRIMARY OBLIGATIONS.
The obligations and liabilities of each Person included in the term
"Borrower", as guarantor under this Section shall be primary, direct and
immediate, shall not be subject to any counterclaim, recoupment, set off,
reduction or defense based upon any claim that such Person may have against any
one or more of the other Persons included in the term "Borrower", Bank and/or
any other guarantor and shall not be conditional or contingent upon pursuit or
enforcement by Bank of any remedies it may have against Persons included in the
term "Borrower" with respect to this Agreement, the Equipment Term Note, the
Revolving Promissory Note or any of the other Loan Documents, whether pursuant
to the terms thereof or by operation of law. Without limiting the generality of
the foregoing, Bank shall not be required to make any demand upon any of the
Persons included in the term "Borrower", or to sell the Collateral or otherwise
pursue, enforce or exhaust its or their remedies against the Persons included in
the term "Borrower" or the Collateral either before, concurrently with or after
pursuing or enforcing its rights and remedies hereunder. Any one or more
successive or concurrent actions or proceedings may be brought against each
Person included in the term "Borrower" under this Section, either in the same
action, if any, brought against any one or more of the Persons included in the
term "Borrower" or in separate actions or proceedings, as often as Bank may deem
expedient or advisable. Without limiting the foregoing, it is
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specifically understood that any modification, limitation or discharge of any of
the liabilities or obligations of any one or more of the Persons included in the
term "Borrower", any other guarantor or any obligor under any of the Loan
Documents, arising out of, or by virtue of, any bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under federal or
state law initiated by or against any one or more of the Persons included in the
term "Borrower", in their respective capacities as borrowers and guarantors
under this Section, or under any of the Loan Documents shall not modify, limit,
lessen, reduce, impair, discharge, or otherwise affect the liability of each
Borrower under this Section in any manner whatsoever, and this Section shall
remain and continue in full force and effect. It is the intent and purpose of
this Section that each Person included in the term "Borrower" shall and does
hereby waive all rights and benefits which might accrue to any other guarantor
by reason of any such proceeding, and the Persons included in the term
"Borrower" agree that they shall be liable for the full amount of the
obligations and liabilities under this Section regardless of, and irrespective
to, any modification, limitation or discharge of the liability of any one or
more of the Persons included in the term "Borrower", any other guarantor or any
obligor under any of the Loan Documents, that may result from any such
proceedings.
3. CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.
Bank's obligation to make the initial Credit Extension is subject to
the condition precedent that it receive the agreements, documents and fees it
requires.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.
Bank's obligations to make each Credit Extension, including the initial
Credit Extension, is subject to the following:
(a) timely receipt of any Payment/Advance Form; and
(b) the representations and warranties in Section 5 must be true
on the date of the Payment/Advance Form and on the effective date of each Credit
Extension and no Event of Default may have occurred and be continuing, or result
from the Credit Extension. Each Credit Extension is Borrowers' representation
and warranty on that date that the representations and warranties of Section 5
remain true.
4. CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST.
Borrowers grant Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrowers' duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank upon the occurrence and during the continuance of any Event of
Default, may place a "hold" on any deposit account of any Borrower maintained
with Bank or any Affiliate of Bank. If this Agreement is terminated, Bank's lien
and security interest in the Collateral will continue until Borrowers fully
satisfy their Obligations.
4.2 AUTHORIZATION TO FILE.
Each Borrower authorizes Bank to file financing statements without
notice to Borrowers, with all appropriate jurisdictions, as Bank deems
appropriate, in order to perfect or protect Bank's interest in the Collateral.
5. REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION.
Each Borrower and each Subsidiary is duly existing and in good standing
in the state of Delaware and qualified and licensed to do business in, and in
good standing in, any state in which the conduct of its business or its
ownership of property requires that it be qualified, except where the failure to
do so could
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not reasonably be expected to cause a Material Adverse Change. Each Borrower's
exact legal name is as set forth on the first page of this Agreement. The
execution, delivery and performance of the Loan Documents have been duly
authorized, and do not conflict with Borrowers' formation documents, nor
constitute an event of default under any material agreement by which any
Borrower is bound. No Borrower is in default under any agreement to which, or by
which it is bound, in which the default could reasonably be expected to cause a
Material Adverse Change.
5.2 COLLATERAL.
Each Borrower has good title to its Collateral, free of Liens except
Permitted Liens. The Accounts are bona fide, existing obligations, and the
service or property has been performed or delivered to the account debtor or its
agent for immediate shipment to and unconditional acceptance by the account
debtor. No Borrower has notice of any actual or imminent Insolvency Proceeding
of any account debtor whose accounts are an Eligible Account in any Borrowing
Base Certificate. All Inventory is in all material respects of good and
marketable quality, free from material defects. Borrowers either own or have
acquired the necessary rights to the Intellectual Property, except for
non-exclusive licenses granted to their customers in the ordinary course of
business. To the best of each Borrower's knowledge, each Patent is valid and
enforceable and no part of the Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Intellectual Property violates the rights of any third party, except to the
extent such claim could not reasonably be expected to cause a Material Adverse
Change.
5.3 LITIGATION.
Except as shown in the Schedule, there are no actions or proceedings
pending or, to the knowledge of any Borrower's Responsible Officers, threatened
by or against any Borrower or any Subsidiary in which a likely adverse decision
could reasonably be expected to cause a Material Adverse Change.
5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.
All consolidated financial statements for each Borrower, and any
Subsidiary, delivered to Bank fairly present in all material respects such
Borrower's consolidated financial condition and such Borrower's consolidated
results of operations. There has not been any material deterioration in any
Borrower's consolidated financial condition since the date of the most recent
consolidated financial statements submitted to Bank.
5.5 SOLVENCY.
The fair salable value of Borrowers' assets (including goodwill minus
disposition costs) exceeds the fair value of their liabilities; and each
Borrower is not left with unreasonably small capital after the transactions in
this Agreement or any of the Loan Documents; and each Borrower is able to pay
its debts (including trade debts) as they mature.
5.6 REGULATORY COMPLIANCE.
No Borrower is an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. No Borrower is engaged as
one of its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors). Each Borrower
has complied in all material respects with the Federal Fair Labor Standards Act.
No Borrower has violated any laws, ordinances or rules, the violation of which
could reasonably be expected to cause a Material Adverse Change. None of any
Borrower's or any Subsidiary's properties or assets has been used by any
Borrower or any Subsidiary or, to the best of any Borrower's knowledge, by
previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally. Each Borrower and each Subsidiary
has timely filed all required tax returns and paid, or made adequate provision
to pay, all material taxes, except those being contested in good faith with
adequate reserves under GAAP. Each Borrower and each Subsidiary has obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all government authorities that are necessary to
continue its business as currently conducted, except where the failure to do so
could not reasonably be expected to cause a Material Adverse Change.
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5.7 SUBSIDIARIES.
No Borrower owns any stock, partnership interest or other equity
securities except for Permitted Investments.
5.8 FULL DISCLOSURE.
No written representation, warranty or other statement of any Borrower
in any certificate or written statement given to Bank (taken together with all
such written certificates and written statements to Bank) contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained in the certificates or statements not misleading. It
being recognized by Bank that the projections and forecasts provided by
Borrowers in good faith and based upon reasonable assumptions are not viewed as
facts and that actual results during the period or periods covered by such
projections and forecasts may differ from the projected and forecasted results.
6. AFFIRMATIVE COVENANTS
Each Borrower will do all of the following for so long as Bank has an
obligation to make any Credit Extension, or there are outstanding Obligations:
6.1 GOVERNMENT COMPLIANCE.
Each Borrower will maintain its and all Subsidiaries' legal existence
and good standing as a Registered Organization in only the State of Delaware and
maintain qualification in each jurisdiction in which the failure to so qualify
would reasonably be expected to cause a material adverse effect on such
Borrower's business or operations. Each Borrower will comply, and have each
Subsidiary comply, with all laws, ordinances and regulations to which it is
subject, noncompliance with which could have a material adverse effect on such
Borrower's business or operations or would reasonably be expected to cause a
Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) The Company will deliver to Bank: (i) as soon as available,
but no later than thirty (30) days after the last day of each month, other than
as of the last day of each month which is also a fiscal quarter end, a company
prepared consolidated balance sheet and income statement covering Borrowers'
consolidated operations during the period certified by a Responsible Officer and
in a form acceptable to Bank; (ii) as soon as available, but no later than forty
five (45) days after the last day of each fiscal quarter, a company prepared
consolidated balance sheet and income statement covering Borrowers' consolidated
operations during the period certified by a Responsible Officer and in a form
acceptable to Bank; (iii) as soon as available, but no later than one hundred
twenty (120) days after the last day of Company's fiscal year, audited
consolidated financial statements prepared under GAAP, consistently applied,
together with an unqualified opinion on the financial statements from an
independent certified public accounting firm reasonably acceptable to Bank; (iv)
a prompt report of any legal actions pending or threatened against any Borrower
or any Subsidiary that could result in damages or costs to any Borrower or any
Subsidiary of $100,000 or more; (v) budgets, sales projections, operating plans
or other financial information Bank reasonably requests; and (iv) prompt notice
of any material change in the composition of the Intellectual Property,
including any subsequent ownership right of any Borrower in or to any Copyright,
Patent or Trademark not shown in any intellectual property security agreement
between Borrower and Bank or knowledge of an event that materially adversely
affects the value of the Intellectual Property.
(b) Within thirty (30) days after the last day of each month,
Company will deliver to Bank a Borrowing Base Certificate signed by a
Responsible Officer in the form of Exhibit C, with aged listings of accounts
receivable.
(c) Within thirty (30) days after the last day of each month,
Company will deliver to Bank a Compliance Certificate signed by a Responsible
Officer in the form of Exhibit D.
(d) Allow Bank to audit Borrowers' Collateral at Borrower's
expense which will be $750 per day per auditor, plus actual expenses incurred.
Such audits will be conducted no more often than every six (6) months unless an
Event of Default has occurred and is continuing.
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6.3 INVENTORY; RETURNS.
Each Borrower will keep all Inventory in good and marketable condition,
free from material defects. Returns and allowances between any Borrower and its
account debtors will follow such Borrower's customary practices in all material
respects as they exist at execution of this Agreement. Borrowers must promptly
notify Bank of all returns, recoveries, disputes and claims, that involve more
than $50,000.
6.4 TAXES.
Each Borrower will make, and cause each Subsidiary to make, timely
payment of all material federal, state, and local taxes or assessments (other
than taxes and assessments which such Borrower is contesting in good faith, with
adequate reserves maintained in accordance with GAAP) and will deliver to Bank,
immediately upon request, appropriate certificates attesting to the payment.
6.5 INSURANCE.
Each Borrower will keep its business and the Collateral insured for
risks and in amounts standard for such Borrower's industry, and as Bank may
reasonably request. Insurance policies will be in a form, with companies, and in
amounts that are satisfactory to Bank in Bank's reasonable discretion. All
property policies will have a lender's loss payable endorsement showing Bank as
an additional loss payee and all liability policies will show the Bank as an
additional insured and provide that the insurer must give Bank at least twenty
(20) days notice before canceling its policy. At Bank's request, each Borrower
will deliver certified copies of policies and evidence of all premium payments.
Proceeds payable under any policy with respect to any of the Collateral, will at
Bank's option, be payable to Bank and applied to the unpaid Obligations.
6.6 PRIMARY ACCOUNTS.
Each Borrower will maintain its primary depository, operating and
investment accounts with Bank, which accounts shall be opened at Bank prior to
the Closing Date.
6.7 FINANCIAL COVENANTS.
Borrowers will maintain as of the last day of each month (unless
otherwise stated below):
(a) QUICK RATIO. A ratio of Quick Assets to Current Liabilities of
at least 1.3 to 1.00.
(b) QUARTERLY REVENUES. Borrowers will maintain:
(i) REVENUES. Total aggregate quarterly revenues of not
less than the following amounts for the quarterly period
ending as of the dates below:
DATE AMOUNT
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December 31, 2002 $ 6,660,000;
March 31, 2003 $ 6,711,000;
June 30, 2003 $ 8,635,000;
September 30, 2003 $ 8,798,000;
December 31, 2003 $11,258,000;
March 31, 2004 $11,211,000;
The Quarterly Revenues covenant for Borrowers' fiscal quarter
ending June 30, 2004 and beyond will be set by Bank in its sole but
reasonable discretion upon receipt of Borrowers' quarterly revenue
projections for such periods.
6.8 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.
Each Borrower will file appropriate applications with the United States
Patent and Trademark Office or the United States Copyright Office in order to
register its Intellectual Property that is material to the conduct of Borrower's
business and additional material Intellectual Property rights developed or
acquired including material revisions or additions with any product before the
sale or licensing of the
8
product to any third party and at all times use commercially reasonable efforts
to effectuate the registration of such Intellectual Property.
Each Borrower will at all times use commercially reasonable efforts to
(i) protect, defend and maintain the validity and enforceability of the
Intellectual Property and promptly advise Bank in writing of material
infringements and (ii) not allow any Intellectual Property material to such
Borrower's business to be abandoned, forfeited or dedicated to the public
without Bank's written consent.
6.9 FURTHER ASSURANCES.
Each Borrower will execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank's security
interest in the Collateral or to effect the purposes of this Agreement.
7. NEGATIVE COVENANTS
No Borrower will do any of the following without Bank's prior written
consent, for so long as Bank has an obligation to make Credit Extensions or
there are any outstanding Obligations:
7.1 DISPOSITIONS.
Convey, sell, lease, transfer or otherwise dispose of (collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, except for Transfers (i) of Inventory in the ordinary
course of business; (ii) of non-exclusive licenses and similar arrangements for
the use of such Borrower or its Subsidiaries' Intellectual Property in the
ordinary course of business and exclusive licenses on Intellectual Property
which a Borrower or a Subsidiary in the exercise of its good faith business
judgment deems to be immaterial to the present or future conduct of its business
or operations; and (iii) of worn-out or obsolete Equipment.
7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.
(a) Engage in or permit any of its Subsidiaries to engage in any
business other than the businesses currently engaged in by such Borrower or any
Subsidiary or reasonably related thereto;
(b) If Xxxxxxxxx Xxxxxxxx ceases to be actively involved in the day to
day management and operations of Borrower;
(c) If Borrower has a change in ownership of greater than twenty five
percent (25%), other than changes in ownership by :
(i) the sale of Borrower's equity securities in a public
offering or to venture capital or institutional investors so long as
such Borrower identifies and advises Bank of the venture capital
investors prior to the closing of the investment;
(ii) transfer from existing corporate shareholders to one or
more Affiliates controlled by such shareholder; and
(iii) gifts, bequests or other transfers for estate planning
purposes to: (aa) spouses, parents, siblings, children, nieces,
nephews, grandchildren of existing shareholders, or (bb) to trusts for
the benefit of one or more of the foregoing, provided that for
transfers pursuant to both (aa) and (bb) direct or indirect control of
such stock remains with the current shareholder).
(d) A Borrower may undertake a corporate restructuring in connection
with the closing of a public offering and Bank agrees that such restructuring
will not violate the restrictions of this Section, provided (a) such Borrower
promptly notifies Bank prior to undertaking such corporate restructuring, (b)
such Borrower provides Bank with copies of all corporate documents associated
with such corporate restructuring, (c) no Event of Default has occurred and is
continuing at such time and (d) after giving effect to such corporate
restructuring each Borrower remains in compliance with each of the Loan
Documents.
(e) No Borrower will change its state of formation, relocate its chief
executive office or add any new offices or business locations without giving
Bank ten (10) days notice of the same.
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7.3 MERGERS OR ACQUISITIONS.
Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except where (i) no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement and (ii) such transaction would not result in a decrease of more than
twenty five percent (25%) of Tangible Net Worth. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.
7.4 INDEBTEDNESS.
Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.
7.5 ENCUMBRANCE.
Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
here, subject to Permitted Liens.
7.6 DISTRIBUTIONS; INVESTMENTS.
Directly or indirectly acquire or own any Person, or make any
Investment in any Person, other than Permitted Investments, or permit any of its
Subsidiaries to do so. After the occurrence and during the continuance of any
Event of Default, Borrower will not without Bank's prior written consent (a) pay
any dividends, (b) make any distribution or payment, (c) redeem, retire or
purchase any capital stock, other than repurchases or other acquisitions of
capital stock or other equity securities of a Borrower or a Subsidiary, as the
case may be, from any director, officer, employee or other Person, pursuant to a
stock repurchase agreement or stock restriction agreement approved by such
Borrower's Board of Directors under which a Borrower has the right or obligation
to repurchase such securities in the event of death, termination of employment
or other similar discontinuation of a business relationship and provided
further, that after giving effect to any such repurchase or other redemption, no
Event of Default will occur.
7.7 TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter into or permit to exist any material
transaction with any Affiliate of any Borrower except for transactions that are
in the ordinary course of such Borrower's business, upon fair and reasonable
terms that are no less favorable to such Borrower than would be obtained in an
arm's length transaction with a nonaffiliated Person.
7.8 SUBORDINATED DEBT.
Make or permit any payment on any Subordinated Debt, except under the
terms of the Subordinated Debt, or amend any provision in any document relating
to the Subordinated Debt without Bank's prior written consent.
7.9 COMPLIANCE.
Become an "investment company" or a company controlled by an
"investment company," under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Credit Extension for that purpose; fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the
Federal Fair Labor Standards Act or violate any other law or regulation, if the
violation could reasonably be expected to have a material adverse effect on
Borrower's business or operations or would reasonably be expected to cause a
Material Adverse Change, or permit any of its Subsidiaries to do so.
8. EVENTS OF DEFAULT
Any one of the following is an Event of Default:
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8.1 PAYMENT DEFAULT.
If Borrowers fail to pay any of the Obligations within three (3) days
after their due date. During the additional period the failure to cure the
default is not an Event of Default (but no Credit Extension will be made during
the cure period);
8.2 COVENANT DEFAULT.
(a) If Borrowers fail to perform any obligation under Section 6 (other
than Section 6.8) or violate any of the covenants contained in Section 7 of this
Agreement,
(b) If Borrowers fail to perform any obligation under Section 6.8 and
such failure is not cured within thirty (30) days after notice of default, or
(c) If Borrowers fail or neglect to perform, keep, or observe any other
material term, provision, condition, covenant, or agreement contained in this
Agreement (other than as set forth in (a) or (b) above), in any of the Loan
Documents, or in any other present or future agreement between Borrowers and
Bank and as to any default under such other term, provision, condition, covenant
or agreement that can be cured, has failed to cure such default within ten (10)
days after the occurrence thereof; provided, however, that if the default cannot
by its nature be cured within the ten (10) day period or cannot after diligent
attempts by Borrowers be cured within such ten (10) day period, and such default
is likely to be cured within a reasonable time, then Borrowers shall have an
additional reasonable period (which shall not in any case exceed thirty (30)
days) to attempt to cure such default, and within such reasonable time period
the failure to have cured such default shall not be deemed an Event of Default
(provided that no Credit Extensions will be made during such cure period);
8.3 MATERIAL ADVERSE CHANGE.
If there (i) occurs a material adverse change in the business,
operations, or condition (financial or otherwise) of any Borrower, or (ii) is a
material impairment of the prospect of repayment of any portion of the
Obligations or (iii) is a material impairment of the value or priority of Bank's
security interests in the Collateral.
8.4 ATTACHMENT.
If any material portion of any Borrower's assets is attached, seized,
levied on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in ten (10) days, or if any Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
such Borrower's assets, or if a notice of lien, levy, or assessment is filed
against any of any Borrower's assets by any government agency and not paid
within ten (10) days after such Borrower receives notice. These are not Events
of Default if stayed or if a bond is posted pending contest by such Borrower
(but no Credit Extensions will be made during the cure period);
8.5 INSOLVENCY.
If any Borrower becomes insolvent or if any Borrower begins an
Insolvency Proceeding or an Insolvency Proceeding is begun against any Borrower
and not dismissed or stayed within 30 days (but no Credit Extensions will be
made before any Insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS.
If there is a default in any agreement between any Borrower and a third
party that gives the third party the right to accelerate any Indebtedness
exceeding $100,000 or that could cause a Material Adverse Change;
8.7 JUDGMENTS.
If a money judgment(s) in the aggregate of at least $50,000 is rendered
against any Borrower and is unsatisfied and unstayed for 10 days (but no Credit
Extensions will be made before the judgment is stayed or satisfied);
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8.8 MISREPRESENTATIONS.
If any Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document; or
8.9 SUBSIDIARIES.
Any circumstance described in Sections 8.3, 8.4, 8.5 or 8.7 occurs to
any Subsidiary of Borrower.
9. BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES.
When an Event of Default occurs and continues Bank may, without notice
or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrowers'
benefit under this Agreement or under any other agreement between Borrowers and
Bank;
(c) Settle or adjust disputes and claims directly with account
debtors for amounts, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrowers will
assemble the Collateral if Bank requires and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Each Borrower grants Bank a license to
enter and occupy any of its premises, without charge, to exercise any of Bank's
rights or remedies;
(e) Apply to the Obligations any (i) balances and deposits of
Borrowers with Bank or its Affiliate it holds, or (ii) any amount held by Bank
owing to or for the credit or the account of Borrowers;
(f) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell the Collateral. Bank is granted a
non-exclusive, royalty-free license or other right to use, without charge, each
Borrower's labels, Patents, Copyrights, rights of use of any name, trade
secrets, trade names, Trademarks, service marks, and advertising matter, or any
similar property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank's
exercise of its rights under this Section, each Borrower's rights under all
licenses and all franchise agreements inure to Bank's benefit;
(g) Exercise all rights and remedies under any control agreement
any Borrower has signed; and
(h) Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY.
Effective only when an Event of Default occurs and continues, each
Borrower irrevocably appoints Bank as its lawful attorney to: (i) endorse such
Borrower's name on any checks or other forms of payment or security; (ii) sign
such Borrower's name on any invoice or xxxx of lading for any Account or drafts
against account debtors, (iii) make, settle, and adjust all claims under such
Borrower's insurance policies; (iv) settle and adjust disputes and claims about
the Accounts directly with account debtors, for amounts and on terms Bank
determines reasonable; and (v) transfer the Collateral into the name of Bank or
a third party as the Code permits. Bank may exercise the power of attorney to
sign each Borrower's name on any documents necessary to perfect or continue the
perfection of any security interest regardless of whether an Event of Default
has occurred. Bank's appointment as each Borrower's attorney in fact, and all of
Bank's rights and powers, coupled with an interest, are irrevocable until all
Obligations have been fully repaid and performed and Bank's obligation to
provide Credit Extensions terminates.
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9.3 ACCOUNTS COLLECTION.
When an Event of Default occurs and continues, Bank may notify any
Person owing any Borrower money of Bank's security interest in the funds and
verify the amount of the Account. Each Borrower must collect all payments in
trust for Bank and, if requested by Bank, immediately deliver the payments to
Bank in the form received from the account debtor, with proper endorsements for
deposit.
9.4 BANK EXPENSES.
If Borrowers fail to pay any amount or furnish any required proof of
payment to third persons, Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.
9.5 BANK'S LIABILITY FOR COLLATERAL.
If Bank complies with reasonable banking practices and the Code, it is
not liable for: (a) the safekeeping of the Collateral; (b) any loss or damage to
the Collateral; (c) any diminution in the value of the Collateral; or (d) any
act or default of any carrier, warehouseman, bailee, or other person. Borrowers
bears all risk of loss, damage or destruction of the Collateral.
9.6 REMEDIES CUMULATIVE.
Bank's rights and remedies under this Agreement, the Loan Documents,
and all other agreements are cumulative. Bank has all rights and remedies
provided under the Code, by law, or in equity. Bank's exercise of one right or
remedy is not an election, and Bank's waiver of any Event of Default is not a
continuing waiver. Bank's delay is not a waiver, election, or acquiescence. No
waiver is effective unless signed by Bank and then is only effective for the
specific instance and purpose for which it was given.
9.7 DEMAND WAIVER.
Each Borrower waives demand, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrowers are
liable.
10. NOTICES
All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service or by certified mail, postage prepaid, return receipt
requested, to the addresses set forth at the beginning of this Agreement. A
party may change its notice address by giving the other party written notice.
11. CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER
Pennsylvania law governs the Loan Documents without regard to
principles of conflicts of law. Borrowers and Bank each submit to the exclusive
jurisdiction of the State and Federal courts in the Commonwealth of Pennsylvania
provided, however, that if for any reason the Bank can not avail itself of the
courts of the Commonwealth of Pennsylvania, the Borrower and Bank each submit to
the jurisdiction of the State and Federal Courts in Santa Xxxxx County,
California.
BORROWERS AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
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12. GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS.
This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrowers may not assign this Agreement or any
rights under it without Bank's prior written consent which may be granted or
withheld in Bank's discretion. Bank has the right, without the consent of or
notice to Borrowers, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank's obligations, rights and benefits
under this Agreement.
12.2 INDEMNIFICATION.
Each Borrower will indemnify, defend and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands, claims,
and liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrowers (including reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE.
Time is of the essence for the performance of all obligations in this
Agreement.
12.4 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other
provision in determining the enforceability of any provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing and signed by
Borrowers and Bank. This Agreement represents the entire agreement about this
subject matter, and supersedes prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Agreement merge into this
Agreement and the Loan Documents.
12.6 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.
12.7 SURVIVAL.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrowers in Section 12.2 to indemnify Bank will survive until all statutes
of limitations for actions that may be brought against Bank have run.
12.8 CONFIDENTIALITY.
In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates
in connection with their business with Borrowers, (ii) to prospective
transferees or purchasers of any interest in the loans (provided, however, Bank
shall use commercially reasonable efforts in obtaining such prospective
transferee or purchasers agreement of the terms of this provision), (iii) as
required by law, regulation, subpoena, or other order, (iv) as required in
connection with Bank's examination or audit and (v) as Bank considers
appropriate exercising remedies under this Agreement. Confidential information
does not include information that either: (a) is in the public domain or in
Bank's possession when disclosed to Bank, or becomes part of the public domain
after disclosure to Bank; or (b) is disclosed to Bank by a third party, if Bank
does not know that the third party is prohibited from disclosing the
information. The parties hereto agree that unless requested in writing by Bank,
the Borrowers will not at any time provide Bank or its auditors or agents with
any information which is required to be kept confidential in accordance with the
applicable requirements under the Health Insurance Portability and
Accountability Act of 1996 (as amended, "HIPPA"). In the event any such
14
information is requested by Bank, Bank will enter into a non-disclosure
agreement with Borrowers in form and content acceptable to Bank and Borrowers
prior to Borrowers disclosure of such information to Bank.
12.9 EFFECTIVE DATE.
Notwithstanding anything set forth in this Agreement or any Loan
Document to the contrary, this Agreement and all other Loan Documents dated as
of the Closing Date shall not be effective until such time as the Bank has
executed this Agreement as signified by the Bank's signature as of the date
indicated on the signature page to this Agreement.
12.10 ATTORNEYS' FEES, COSTS AND EXPENSES.
In any action or proceeding between Borrowers and Bank arising out of
the Loan Documents, the prevailing party will be entitled to recover its
reasonable attorneys' fees and other reasonable costs and expenses incurred, in
addition to any other relief to which it may be entitled.
13. DEFINITIONS
13.1 DEFINITIONS.
In this Agreement:
"ACCOUNTS" has the meaning set forth in the Code and includes all
existing and later arising accounts, contract rights, and other obligations owed
Borrowers in connection with their sale or lease of goods (including licensing
software and other technology) or provision of services, all credit insurance,
guaranties, other security and all merchandise returned or reclaimed by
Borrowers and each Borrower's Books relating to any of the foregoing.
"ADVANCE" or "ADVANCES" is a loan advance (or advances) under the
Committed Revolving Line.
"AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs
and expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"BORROWER'S BOOKS" are all of each Borrower's books and records
including ledgers, records regarding such Borrower's assets or liabilities, the
Collateral, business operations or financial condition and all computer programs
or discs or any equipment containing the information.
"BORROWING BASE" is seventy (70%) of Eligible Accounts as determined by
Bank from Borrowers' most recent Borrowing Base Certificate; provided, however,
that Bank may lower the percentage of the Borrowing Base based on the results of
an audit of Borrowers' Collateral.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which the Bank is closed.
"CLOSING DATE" is the Effective Date.
"CODE" is the Uniform Commercial Code, in effect in the Commonwealth of
Pennsylvania as in effect from time to time.
"COLLATERAL" is the property described on Exhibit A.
"COMMITTED EQUIPMENT LINE" is a Credit Extension of up to One Million
Dollars ($1,000,000).
"COMMITTED REVOLVING LINE" is Advances of up to Three Million Dollars
($3,000,000).
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
15
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"COPYRIGHTS" are all copyright rights, applications or registrations
and like protections in each work or authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.
"CREDIT EXTENSION" is each Advance, Equipment Advance, or any other
extension of credit by Bank for Borrowers' benefit.
"CURRENT LIABILITIES" are the aggregate amount of Borrowers' Total
Liabilities which mature within one (1) year (other than the Indebtedness in
favor of Bank), plus Indebtedness in favor of Bank, less deferred revenues.
"EFFECTIVE DATE" is the date this Agreement is executed by the Bank.
"ELIGIBLE ACCOUNTS" are Accounts in the ordinary course of a Borrower's
business that meet all Borrowers' representations and warranties in Section 5;
but Bank may change eligibility standards by giving Borrowers written notice.
Unless Bank agrees otherwise in writing, Eligible Accounts will not include:
(a) Accounts that the account debtor has not paid within 90 days
of invoice date;
(b) Accounts for an account debtor, 50% or more of whose Accounts
have not been paid within 90 days of invoice date;
(c) Credit balances over 90 days from invoice date;
(d) Accounts for an account debtor, including Affiliates, whose
total obligations to Borrowers exceed 25% of all Accounts, for the amounts that
exceed that percentage, unless the Bank approves in writing;
(e) Accounts for which the account debtor does not have its
principal place of business in the United States;
(f) Accounts for which the account debtor is a federal, state or
local government entity or any department, agency, or instrumentality;
(g) Accounts for which any Borrower owes the account debtor, but
only up to the amount owed (sometimes called "contra" accounts, accounts
payable, customer deposits or credit accounts);
(h) Accounts for demonstration or promotional equipment, or in
which goods are consigned, sales guaranteed, sale or return, sale on approval,
xxxx and hold, or other terms if account debtor's payment may be conditional;
(i) Accounts for which the account debtor is any Borrower's
Affiliate, officer, employee, or agent;
(j) Accounts in which the account debtor disputes liability or
makes any claim and Bank believes there may be a basis for dispute (but only up
to the disputed or claimed amount), or if the Account Debtor is subject to an
Insolvency Proceeding, or becomes insolvent, or goes out of business;
(k) Accounts arising from patient co-pay arrangements to the
extent all such Accounts arising from patient co-pay arrangements exceed 5% of
the Borrowing Base;
(l) Accounts for which Bank reasonably determines collection to be
doubtful.
"ELIGIBLE EQUIPMENT" is new or used general purpose computer equipment,
office equipment, test and laboratory equipment, furnishings or other Equipment,
that comply with all of Borrower's
16
representations and warranties to Bank, which is acceptable to Bank in all
respects and which is subject to a first lien perfected security interest in
favor of Bank.
"EQUIPMENT" has the meaning set forth in the Code and includes is all
present and future machinery, equipment, tenant improvements, furniture,
fixtures, vehicles, tools, parts and attachments in which Borrowers have any
interest.
"EQUIPMENT ADVANCE" is defined in Section 2.1.2.
"EQUIPMENT AVAILABILITY END DATE" is defined in Section 2.1.2.
"EQUIPMENT MATURITY DATE" is defined in Section 2.1.2.
"EQUIPMENT TERM NOTE" means that certain Equipment Term Note of even
date herewith in the principal amount of One Million Dollars ($1,000,000) from
Borrowers in favor of Bank, together with all renewals, amendments,
modifications and substitutions therefor.
"ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.
"FINAL PAYMENT" is a payment (in addition to and not a substitution for
the regular monthly payments of principal plus accrued interest) due on the last
day of each Repayment Period or at the time of any prepayment permitted under
this Agreement, as applicable, for such Equipment Advance equal to the amount of
such Equipment Advance multiplied by the Final Payment Percentage.
"FINAL PAYMENT PERCENTAGE" is, for each Equipment Advance, four percent
(4.0%).
"GAAP" is generally accepted accounting principles.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INTELLECTUAL PROPERTY" is:
(a) Copyrights, Trademarks and Patents including amendments,
renewals, extensions, and all licenses or other rights to use and all license
fees and royalties from the use;
(b) Any trade secrets and any intellectual property rights in
computer software and computer software products owned or licensed by any
Borrower now or later existing, created, acquired or held;
(c) All design rights which may be available to Borrowers now or
later created, acquired or held;
(d) Any claims for damages (past, present or future) for
infringement of any of the rights above, with the right, but not the obligation,
to xxx and collect damages for use or infringement of the intellectual property
rights above; and
(e) All Proceeds and products of the foregoing, including all
insurance, indemnity or warranty payments.
"INVENTORY" has the meaning set forth in the Code and includes present
and future inventory in which Borrowers have any interest, including
merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products intended for sale or lease or to be
furnished under a contract of service, of every kind and description now or
later owned by or in the custody or possession, actual or constructive, of
Borrowers, including inventory temporarily out of its custody or possession or
in transit and including returns on any accounts or other Proceeds from the sale
or disposition of any of the foregoing and any documents of title.
17
"INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"ITEM OF PAYMENT" means any check, draft, cash, money, instrument,
item, and other remittance in payment or on account of payment of the Accounts
or otherwise with respect to any Collateral, including, without limitation, cash
proceeds of any returned, rejected or repossessed goods, the sale or lease of
which gave rise to an Account, and other proceeds of Collateral; and "Items of
Payment" means the collective reference to all of the foregoing.
"JOINT VENTURE INTELLECTUAL PROPERTY" is defined in Exhibit A.
"LETTER-OF-CREDIT RIGHT" means a right to payment or performance under
a letter of credit, whether or not the beneficiary has demanded or is at the
time entitled to demand payment or performance.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, the Revolving
Promissory Note, the Equipment Term Note, any note, or notes or guaranties
executed by Borrowers, and any other present or future agreement between
Borrowers and/or for the benefit of Bank in connection with this Agreement, all
as amended, extended or restated.
"MATERIAL ADVERSE CHANGE" has the meaning set forth in Section 8.3.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrowers owe Bank now or later, including cash management services,
letters of credit and foreign exchange contracts, if any and including interest
accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrowers assigned to Bank.
"OTHER EQUIPMENT" is leasehold improvements, intangible property such
as computer software and software licenses, equipment specifically designed or
manufactured for Borrower, other intangible property, sales tax, freight and
installation expenses, limited use property and other similar property.
"PATENTS" are patents, patent applications and like protections,
including improvements, divisions, continuations, renewals, reissues, extensions
and continuations-in-part of the same.
"PERMITTED INDEBTEDNESS" is:
(a) Borrowers' indebtedness to Bank under this Agreement or any
other Loan Document;
(b) Indebtedness existing on the Closing Date and shown on the
Schedule and renewals and extensions thereof, to the extent that the amount
thereof is not increased or the terms thereof are not modified in any material
manner;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary
course of business; and
(e) Indebtedness secured by Permitted Liens.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Closing
Date; and
(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard & Poor's
Corporation or Xxxxx'x Investors Service, Inc., and (iii) Bank's certificates of
deposit issued maturing no more than 1 year after issue.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Schedule
or arising under this Agreement or other Loan Documents;
18
(b) Liens for taxes, fees, assessments or other government charges
or levies, either not delinquent or being contested in good faith and for which
Borrowers maintain adequate reserves on their Books, if they have no priority
over any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by
Borrowers or their Subsidiaries incurred for financing the acquisition of the
Equipment, or (ii) existing on equipment when acquired, if the Lien is confined
to the property and improvements and the Proceeds of the equipment;
(d) Licenses or sublicenses granted in the ordinary course of
Borrowers' business and any interest or title of a licensor or under any license
or sublicense, if the licenses and sublicenses permit granting Bank a security
interest;
(e) Leases or subleases granted in the ordinary course of
Borrowers' business, including in connection with Borrowers' leased premises or
leased property;
(f) Statutory Liens of landlords, carriers, warehousemen,
mechanics, materialmen and other similar liens imposed by law, which are
incurred in the ordinary course of business for sums not more than thirty (30)
days delinquent or which are being diligently contested in good faith in a
manner which stays enforcement of such Liens, provided that appropriate
provisions shall have been established thereof in accordance with GAAP if they
have no priority over any of Bank's security interests;
(g) Liens (other than any Lien imposed by ERISA or any rule or
regulation promulgated thereunder) incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance or social security laws or similar legislation, or to secure the
performance of tenders, statutory obligations, surety, stay, customs and appeal
bonds, bids, government contracts, leases, trade contracts, performance and
return of money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money) if they have no priority over any of Bank's
security interests;
(h) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PROCEEDS" has the meaning described in the Code as in effect from time
to time.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it
is not Bank's lowest rate.
"QUICK ASSETS" is, on any date, the Borrowers' consolidated,
unrestricted cash, cash equivalents and net billed accounts receivable
determined according to GAAP.
"REGISTERED ORGANIZATION" means an organization organized solely under
the law of a single state or the United States and as to which the state or the
United States must maintain a public record showing the organization to have
been organized.
"REPAYMENT PERIOD" means thirty six (36) months, except with respect to
certain Eligible Equipment described in Section 2.1.2(a) for which the repayment
period means thirty (30) months
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrowers.
"REVOLVING MATURITY DATE" is March 31, 2004.
"REVOLVING PROMISSORY NOTE" means that certain Revolving Promissory
Note of even date herewith in the maximum principal amount of Three Million
Dollars ($3,000,000) from Borrowers in favor of Bank, together with all
renewals, amendments, modifications and substitutions, therefor.
"SCHEDULE" is any attached schedule of exceptions.
"SINGLE EQUIPMENT ADVANCE" is defined in Section 2.1.2.
19
"SUBORDINATED DEBT" is debt incurred by any Borrower subordinated to
Borrowers' indebtedness owed to Bank and which is reflected in a written
agreement in a manner and form acceptable to Bank and approved by Bank in
writing.
"SUBSIDIARY" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.
"SUPPORTING OBLIGATION" means a Letter-of-credit right, secondary
obligation or obligation of a secondary obligor or that supports the payment or
performance of an account, chattel paper, a document, a general intangible, an
instrument or investment property.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrowers and their Subsidiaries minus, (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
Patents, trade and service marks and names, Copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities.
"TOTAL LIABILITIES" is on any day, obligations that should, under GAAP,
be classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.
"TRADEMARKS" are trademark and servicemark rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Borrowers connected with the trademarks.
[Signatures appear on the following page]
20
BORROWER:
ANIMAS CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: V.P. Finance
ANIMAS DIABETES CARE, LLC
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: V.P. Finance
BANK:
SILICON VALLEY BANK
By: /s/ Xxxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxxx X. Xxxxxx
Title: Senior Vice President
Signed by Silicon Valley Bank as of the ______ day of __________, 2002.
21
EXHIBIT A
The Collateral consists of all of Borrowers' right, title and interest
in and to the following:
All goods and equipment as defined in the Uniform Commercial Code now
owned or hereafter acquired, including, without limitation, all machinery,
fixtures, vehicles (including motor vehicles and trailers), and any interest in
any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing, wherever located;
All Inventory as defined in the Uniform Commercial Code and includes,
now owned or hereafter acquired, including, without limitation, all merchandise,
raw materials, parts, supplies, packing and shipping materials, work in process
and finished products including such inventory as is temporarily out of
Borrowers' custody or possession or in transit and including any returns upon
any accounts or other Proceeds, resulting from the sale or disposition of any of
the foregoing and any documents of title representing any of the above;
All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
All Accounts as defined in the Uniform Commercial Code and includes now
existing and hereafter arising accounts, contract rights, royalties, license
rights and all other forms of obligations owing to Borrowers arising out of the
sale or lease of goods, the licensing of technology or the rendering of services
by Borrowers, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Borrowers;
All letter-of-credit rights (whether or not the letter of credit is
evidenced by a writing);
All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, financial assets,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired and Borrower's Books relating to the foregoing;
All copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work thereof,
whether published or unpublished, now owned or hereafter acquired; all trade
secret rights, including all rights to unpatented inventions, know-how,
operating manuals, license rights and agreements and confidential information,
now owned or hereafter acquired; all mask work or similar rights available for
the protection of semiconductor chips, now owned or hereafter acquired; all
claims for damages by way of any past, present and future infringement of any of
the foregoing; and
All Supporting Obligations and all of the Borrower's Books relating to
the foregoing and any and all claims, rights and interests in any of the above
and all substitutions for, additions and accessions to and Proceeds thereof.
Notwithstanding the foregoing, the Collateral shall not be deemed to
include:
(i) any equipment that is leased by any Borrower; and
(ii) any copyrights, copyright applications, copyright registration and
like protection in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; any patents, patent
applications and like protections including without limitation improvements,
divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same, trademarks, servicemarks and applications
therefor, whether registered or not, and the goodwill of the business of
Borrower connected with and symbolized by such trademarks, any trade secret
rights, including any rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; or any claims for damage by way of any past, present and
future infringement of any of the foregoing to the extent the foregoing is owned
by any joint venture between any Borrower and any third party directly related
to Glucose Sensor
or Glucose Monitor technology developed under the National Institute of
Standards and Technology (NIST) Cooperative Agreement, including, without
limitation, any such assets owned by the joint venture created under that
certain Joint Venture Agreement by and between Animas Corporation and Xxxxxxx
Corporation dated July 31, 2001 (collectively, the "Joint Venture Intellectual
Property"), except that the Collateral shall include the Proceeds of all the
Joint Venture Intellectual Property to which any Borrower is entitled that are
Accounts of any Borrowers, or general intangibles consisting of rights to
payment, if a judicial authority (including a U.S. Bankruptcy Court) holds that
a security interest in the underlying Joint Venture Intellectual Property is
necessary to have a security interest in such accounts and general intangibles
of any Borrower that are Proceeds of the Joint Venture Intellectual Property to
which any Borrower is entitled, then the Collateral shall automatically, and
effective as of the Closing Date, include the Joint Venture Intellectual
Property to the extent necessary to permit perfection of Bank's security
interest in such accounts and general intangibles of any Borrower that are
Proceeds of the Joint Venture Intellectual Property to which any Borrower is
entitled.
Borrowers and Bank are parties to that certain Negative Pledge
Agreement, whereby Borrowers, in connection with Bank's loan or loans to
Borrowers, have agreed, among other things, not to sell, transfer, assign,
mortgage, pledge, lease grant a security interest in, or encumber any of its
Joint Venture Intellectual Property or enter into any agreement, document,
instrument or other arrangement (except with or in favor of the Bank) with any
Person which directly or indirectly prohibits or has the effect of prohibiting
Borrowers from selling, transferring, assigning, mortgaging, pledging, leasing,
granting a security interest in, or encumbering any of its Joint Venture
Intellectual Property, without Bank's prior written consent.
EXHIBIT B
LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 E.S.T.
FAX TO: 000-000-0000 DATE:_______________
[ ] Loan Payment: _______________ Client Name (Borrower)
From Account #________________________ To Account #_____________________
(Deposit Account #) (Loan Account #)
Principal $________________ and/or Interest $_____________________________
All Borrower's representations and warranties in the Loan and Security
Agreement are true, correct and complete in all material respects to on the
date of the telephone transfer request for and advance, but those
representations and warranties expressly referring to another date shall be
true, correct and complete in all material respects as of the date:
AUTHORIZED SIGNATURE:_________________________Phone Number:________________
[ ] LOAN ADVANCE:
COMPLETE OUTGOING WIRE REQUEST SECTION BELOW IF ALL OR A PORTION OF THE
FUNDS FROM THIS LOAN ADVANCE ARE FOR AN OUTGOING WIRE.
From Account #________________________ To Account #______________________
(Loan Account #) (Deposit Account #)
Amount of Advance $___________________
All Borrower's representations and warranties in the Loan and Security
Agreement are true, correct and complete in all material respects to on the
date of the telephone transfer request for and advance, but those
representations and warranties expressly referring to another date shall be
true, correct and complete in all material respects as of the date:
AUTHORIZED SIGNATURE: _________________________Phone Number:_______________
OUTGOING WIRE REQUEST
COMPLETE ONLY IF ALL OR A PORTION OF FUNDS FROM THE LOAN ADVANCE ABOVE ARE
TO BE WIRED.
Deadline for same day processing is 12:00 p.m., E.S.T.
Beneficiary Name:____________________ Amount of Wire: $_________________
Beneficiary Bank:____________________ Account Number:___________________
City and State:______________________________
Beneficiary Bank Beneficiary Bank Code
Transit (ABA) #: __ __ __ __ __ __ (Swift, Sort, Chip, etc.):______
(FOR INTERNATIONAL WIRE ONLY)
Intermediary Bank:___________________ Transit (ABA) #:_________________
For Further Credit to:____________________________________________________
Special Instruction:______________________________________________________
By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer
service(s), which agreements(s) were previously received and executed by me
(us).
Authorized Signature:______________ 2nd Signature (If Required):_________
Print Name/Title:__________________ Print Name/Title:______________________
Telephone # _______________________ Telephone # ___________________________
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: Animas Corporation Bank: Silicon Valley Bank
Animas Diabetes Care, LLC 0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Commitment Amount: $3,000,000
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of $__________
2. Additions (please explain on reverse) $__________
3. TOTAL ACCOUNTS RECEIVABLE $__________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $__________
5. Balance of 50% over 90 day accounts $__________
6. Credit balances over 90 days $__________
7. Concentration Limits (25%) $__________
8. Foreign Accounts $__________
9. Governmental Accounts $__________
10. Contra Accounts $__________
11. Promotion or Demo Accounts $__________
12. Intercompany/Employee Accounts $__________
13. Patient Co-Pays in excess of 5% of Borrowing Base $__________
14. Other (please explain on reverse) $__________
15. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $__________
16. Eligible Accounts (#3 minus #14) $__________
17. LOAN VALUE OF ACCOUNTS (70% of #15) $__________
BALANCES
18. Maximum Loan Amount $ 3,000,000
19. Total Funds Available [Lesser of #18 or #17] $__________
20. Present balance owing on Line of Credit $__________
21. RESERVE POSITION (#19 minus #20) $__________
The undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the
undersigned and Silicon Valley Bank.
COMMENTS: BANK USE ONLY
Rec'd By:____________
By:___________________________________ Auth. Signer
Authorized Signer Date:_______________
Verified:____________
Auth. Signer
Date:______________
___________________
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
FROM: Animas Corporation
Animas Diabetes Care, LLC
The undersigned authorized officer of Animas Corporation ("Company")
certifies that under the terms and conditions of the Loan and Security Agreement
between Borrowers and Bank (the "Agreement"), (i) Borrowers are in complete
compliance for the period ending _______________ with all required covenants
except as noted below and (ii) all representations and warranties in the
Agreement are true and correct in all material respects on this date. Attached
are the required documents supporting the certification. The Officer certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) consistently applied from one period to the next except as
explained in an accompanying letter or footnotes. The Officer acknowledges that
no borrowings may be requested at any time or date of determination that
Borrowers are not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------------------- ----------------------- ----------
Monthly financial statements Monthly within 30 days Yes No
Monthly Compliance Certificates Monthly within 30 days Yes No
Quarterly financial statements Quarterly within 45 days Yes No
Annual (Audited) FYE within 120 days Yes No
A/R Agings Monthly within 30 days Yes No
A/R Audit Initial and Semi-Annual Yes No
Borrowing Base Certificate Monthly within 30 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------------------ ----------- ----------- ----------
Maintain on a Monthly Basis:
Minimum Quick Ratio 1.3 :1.00 _____:1.00 Yes No
Maintain on a Quarterly Basis:
Minimum Quarterly Revenues:
December 31, 2002 $ 6,660,000 $__________ Yes No
March 31, 2003 $ 6,711,000 $__________ Yes No
June 30, 2003 $ 8,635,000 $__________ Yes No
September 30, 2003 $ 8,798,000 $__________ Yes No
December 31, 2003 $11,258,000 $__________ Yes No
March 31, 2004 $11,211,000 $__________ Yes No
The Quarterly Revenues covenant for Borrowers' fiscal quarter June 30, 2004 and
beyond will be set by Bank in its sole discretion upon receipt of Borrowers'
quarterly revenue projections for such periods.
Have there been updates to Borrower's intellectual property, if appropriate?
Yes / No
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY
Received by:_____________________
Sincerely, AUTHORIZED SIGNER
____________________ Date:____________________________
Verified:________________________
______________________________________ AUTHORIZED SIGNER
SIGNATURE
Date:____________________________
______________________________________
TITLE Compliance Status: Yes No
______________________________________
DATE
Schedule to Loan and Security Agreement
The exact correct corporate name of Borrowers are (attach a copy of the
formation documents, e.g., articles, partnership agreement): Animas Corporation
and Animas Diabetes Care LLC
Borrowers' State of formation: Delaware (both)
Borrowers have operated under only the following other names (if none, so
state): None
All other address at which the Borrowers do business are as follows (attach
additional sheets if necessary and include all warehouse addresses): None
Borrowers have deposit accounts and/or investment accounts located only at the
following institutions:
List Acct. Numbers: Checking Corporation US Bank 153505727807
Checking - LLC US Bank 153591145930
Money Market - US Bank Corp. 153505733532
Investment - US Bank Xxxxx Xxxxxxx 1171-6064
Note all of these will be closed and money transferred over upon receipt of
checks from Silicon Valley Bank
Liens existing on the Closing Date and disclosed to and accepted by Bank in
writing:
See attached - Capital Lease Obligations.
Investments existing on the Closing Date and disclosed to and accepted by Bank
in writing:
Animas Corporation owns all of the equity interests of Animas Diabetes Care LLC.
SUBORDINATED DEBT:
Indebtedness on the Closing Date and disclosed to and consented to by Bank in
writing:
See attached - Capital Lease Obligations.
The following is a list of the Borrowers' copyrights (including copyrights of
software) which are registered with the United States Copyright Office. (Please
include name of the copyright and registration number and attach a copy of the
registration):
None
The following is a list of all software which the Borrowers sell, distribute or
licenses to others, which is not registered with the United States Copyright
Office. (Please include versions which are not registered):
None
The following is a list of all of the Borrowers' patents which are registered
with the United States Patent Office. (Please include name of the patent and
registration number and attach a copy of the registration):
See attached - Patent Report
The following is a list of all of the Borrowers' patents which are pending with
the United States Patent Office. (Please include name of the patent and a copy
of the application):
See attached - Patent Report
The following is a list of all of the Borrowers' registered trademarks. (Please
include name of the trademark and a copy of the registration):
See attached - Trademark Report
Borrowers are not subject to litigation which would have a material adverse
effect on the Borrowers' financial condition, except the following (attach
additional comments, if needed):
None noted
Tax ID Number 00-0000000 (Animas Corporation); 00-0000000 (Animas Diabetes Care
LLC).
Organizational Number, if any: 2641579 (Animas Corporation); 3103712 (Animas
Diabetes Care LLC).
LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 E.S.T.
FAX TO: 000-000-0000 DATE:______________
[ ] LOAN PAYMENT: _______________ CLIENT NAME (BORROWER)
From Account #________________________ To Account #___________________
(Deposit Account #) (Loan Account #)
Principal $________________________and/or Interest $_______________________
All Borrower's representations and warranties in the Loan and Security
Agreement are true, correct and complete in all material respects to on the
date of the telephone transfer request for and advance, but those
representations and warranties expressly referring to another date shall be
true, correct and complete in all material respects as of the date:
AUTHORIZED SIGNATURE:___________________________Phone Number:______________
[ ] LOAN ADVANCE:
COMPLETE OUTGOING WIRE REQUEST SECTION BELOW IF ALL OR A PORTION OF THE
FUNDS FROM THIS LOAN ADVANCE ARE FOR AN OUTGOING WIRE.
From Account #__________________________ To Account #_____________________
(Loan Account #) (Deposit Account #)
Amount of Advance $_____________________
All Borrower's representations and warranties in the Loan and Security
Agreement are true, correct and complete in all material respects to on the
date of the telephone transfer request for and advance, but those
representations and warranties expressly referring to another date shall be
true, correct and complete in all material respects as of the date:
AUTHORIZED SIGNATURE:____________________________Phone Number:_____________
OUTGOING WIRE REQUEST
COMPLETE ONLY IF ALL OR A PORTION OF FUNDS FROM THE LOAN ADVANCE ABOVE ARE TO BE
WIRED.
Deadline for same day processing is 12:00 p.m., E.S.T.
Beneficiary Name: Xxxxxxxx Xxxxxxx LLP Amount of Wire: $______________
Beneficiary Bank: Wachovia Bank, National Account Number: 2052700305792
Association
City and State: Atlanta, GA
Beneficiary Bank Transit (ABA) #: 000000000 Beneficiary Bank Code (Swift, Sort,
Chip, etc.):_________________
(FOR INTERNATIONAL WIRE ONLY)
Intermediary Bank:________________________ Transit (ABA) #:________________
For Further Credit to:_________________________________________________________
Special Instruction:___________________________________________________________
By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).
Authorized Signature:___________________ 2nd Signature (If Required):__________
Print Name/Title:_______________________ Print Name/Title:_____________________
Telephone #_____________________________ Telephone #___________________________
