AMENDMENT NO. 4 TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Exhibit
10.29
THIS AMENDMENT NO. 4 to Second Amended and Restated Loan and Security Agreement (this
“Amendment”) is entered as of the
12th day of March, 2008, by and between Silicon Valley Bank
(“Bank”) and Harmonic, Inc., a Delaware corporation (“Borrower”) whose address is 000 Xxxxxx Xxx,
Xxxxxxxxx, Xxxxxxxxxx 00000.
Recitals
A. Bank and Borrower have entered into that certain Second Amended and Restated Loan and
Security Agreement dated as of December 17, 2004, as amended by that certain First Amendment to
Second Amended and Restated Loan and Security Agreement dated December 16, 2005, that certain
Amendment No. 2 to Second Amended and Restated Loan and Security Agreement dated December 15, 2006
and as amended by that certain Amendment No. 3 to Second Amended and Restated Loan and Security
Agreement dated March 15, 2007 (as may be further amended, modified, supplemented or restated, the
“Loan Agreement”).
B. Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.
C. Borrower has requested that Bank amend the Loan Agreement to (i) extend the maturity date,
(ii) decrease the amount available to be borrowed under the Committed Revolving Line and (iii) make
certain other revisions to the Loan Agreement as more fully set forth herein.
D. Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the
extent, in accordance with the terms, subject to the conditions and in reliance upon the
representations and warranties set forth below.
Agreement
Now, Therefore, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to
be legally bound, the parties hereto agree as follows:
1. Definitions. Capitalized terms used but not defined in this Amendment shall have
the meanings given to them in the Loan Agreement.
2. Amendments to Loan Agreement.
2.1 Collateral. The Loan Agreement is hereby amended (i) by deleting Section 4.1 in
its entirety and replacing it with the words “4.1 [Reserved]”, (ii) by deleting Exhibit A and
replacing it with the words “Exhibit A [Reserved]” and (iii) by making conforming changes
throughout the Loan Agreement to remove any references to ‘Collateral’ wherever they appear
therein, except that the obligation to cash collateralize Letters of Credit under Sections 2.1.2 or
9.1 of the Loan Agreement shall remain in effect.
2.2 Section 2.1.1 (Advances). Section 2.1.1(a) is amended in its entirety and
replaced by the following:
(a) Bank will make Advances not exceeding the Committed Revolving Line minus (i) the amount of
all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) plus an
amount equal to the Letter of Credit Reserve, minus (ii) the FX Reserve, minus (iii) any amounts
used for Cash Management Services, and minus (iv) the outstanding principal balance of any
Advances.
2.3 Section 2.1.2 (Letters of Credit). Section 2.1.2(a) is amended and restated in
its entirety and replaced with the following:
(a) Bank will issue or have issued standby Letters of Credit for Borrower’s account in an
aggregate amount not to exceed [(x)] $10,000,000 [minus (y) the FX Reserve minus (z) any amounts
used for Cash Management Services] (each, a “Letter of Credit”). Each Letter of Credit will have
an expiry date of no later than 180 days after the Maturity Date, but Borrower’s reimbursement
obligation will be secured by cash in an amount equal to 105% of the face amount of all such
Letters of Credit plus all interest, fees, and costs due or to become due in connection therewith
on terms acceptable to Bank at any time after the Maturity Date if such Maturity Date is not
extended by Bank or if an Event of Default occurs and continues. Borrower agrees to execute any
further documentation in connection with the Letters of Credit as Bank may reasonably request.
2.4 Foreign Exchange Sublimit. A new Section 2.1.2 is added as follows:
2.1.2 Foreign Exchange Sublimit. As part of the Committed Revolving Line, Borrower may enter
into foreign exchange contracts with Bank under which Borrower commits to purchase from or sell to
Bank a specific amount of Foreign Currency (each, a “FX Forward Contract”) on a specified date (the
“Settlement Date”). FX Forward Contracts shall have a Settlement Date of at least [one (1)] FX
Business Day after the contract date and shall be subject to a reserve of ten percent (10%) of each
outstanding FX Forward Contract in a maximum aggregate amount equal to [One Million Dollars
($1,000,000)] (the “FX Reserve”). The aggregate amount of FX Forward Contracts at any one time may
not exceed ten (10) times the amount of the FX Reserve. The amount otherwise available for Credit
Extensions under the Committed Revolving Line shall be reduced by an amount equal to ten percent
(10%) of each outstanding FX Forward Contract (the “FX Reduction Amount”). Any amounts needed to
fully reimburse Bank will be treated as Advances under the Committed Revolving Line and will accrue
interest at the interest rate applicable to Advances.
2.5 Cash Management Services Sublimit. A new Section 2.1.3 is added as follows:
2.1.3 Cash Management Services Sublimit. Borrower may use up to [Ten Million Dollars
($10,000,000)] of the Committed Revolving Line for Bank’s cash management services which may
include merchant services, direct deposit of payroll, business credit card, and check cashing
services identified in Bank’s various cash management services agreements (collectively, the “Cash
Management Services”). Any amounts Bank pays on behalf of Borrower for any Cash Management
Services will be treated as Advances under the Committed Revolving Line and will accrue interest at
the interest rate applicable to Advances.
2.6 Section 2.3 (Overadvances). Section 2.3 is amended and restated in its entirety
and replaced with the following:
2.3 Overadvances. If, at any time, the sum of (a) the outstanding principal amount of any
Advances (including any amounts used for Cash Management Services), plus (b) the face amount of any
outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve), plus (c) the FX Reduction Amount exceeds the Committed Revolving Line, Borrower
shall immediately pay to Bank in cash such excess.
2.7 Section 2.5 (Fees). Section 2.5(a) is amended and restated in its entirety and
replaced with the following:
(a) Committed Revolving Line Fee. If, at any time, Borrower fails to maintain
a minimum aggregate amount of $30,000,000 of unrestricted funds on deposit for 10
consecutive Business Days with SVB Asset Management and/or SVB Securities, Borrower shall
pay an additional $20,000 fee for the Committed Revolving Line.
2.8 Section 6.7 (Financial Covenant). Section 6.7 is amended and restated in its
entirety and replaced with the following:
At all times, Borrower shall have unrestricted cash and cash equivalents (net of Credit
Extensions) of not less than $40,000,000.
2.9 Section 9.1 (Rights and Remedies). New Sections 9.1(h) and 9.1(i) are added as
follows:
(h) demand that Borrower (i) deposits cash with Bank in an amount equal to the aggregate
amount of any Letters of Credit remaining undrawn, as collateral security for the repayment of any
future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such
amounts, and (ii) pay in advance all
Letter of Credit fees scheduled to be paid or payable over the remaining term of any Letters of
Credit;
(i) terminate any FX Forward Contracts.
2.10 Section 13 (Definitions). The following terms and their definition set forth
in Section 13.1 are amended in their entirety and replaced with the following:
“Business Day” is any day other than a Saturday, Sunday or other day on which banking
institutions in the State of California are authorized or required by law or other
governmental action to close, except that if any determination of a “Business Day” shall
relate to an FX Forward Contract, then the term “Business Day” shall mean a day on which
dealings are carried on in the country of settlement of the foreign (i.e., non-Dollar)
currency.
“Committed Revolving Line” is an Advance or Advances in an aggregate amount of up to
$10,000,000.
“Credit Extension” is any Advance, Equipment Advance, Letter of Credit, the Existing
Equipment Debt, FX Forward Contract, amount utilized for Cash Management Services or any
other extension of credit by Bank for Borrower’s benefit.
“Maturity Date” is March 4, 2009.
2.11 Section 13 (Definitions). The following terms and their definitions are added
to Section 13.1 in their alphabetically appropriate position:
“Cash Management Services” is defined in Section 2.1.3.
“Foreign Currency” means lawful money of a country other than the United States.
“FX Business Day” is any day when (a) Bank’s Foreign Exchange Department is conducting
its normal business and (b) the Foreign Currency being purchased or sold by Borrower is
available to Bank from the entity from which Bank shall buy or sell such Foreign Currency.
“FX Forward Contract” is defined in Section 2.1.2.
“FX Reduction Amount” is defined in Section 2.1.2.
“FX Reserve” is defined in Section 2.1.2.
“Settlement Date” is defined in Section 2.1.2.
2.12 Exhibit C. Exhibit C to the Loan Agreement is replaced in its entirety by
Exhibit A hereto.
3. Limitation of Amendments.
3.1 The amendments set forth in Section 2, above, are effective for the purposes set
forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent
to any amendment, waiver or modification of any other term or condition of any Loan Document, or
(b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under
or in connection with any Loan Document.
3.2 This Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants and agreements set
forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall
remain in full force and effect.
4. Representations and Warranties. To induce Bank to enter into this Amendment,
Borrower hereby represents and warrants to Bank as follows:
4.1 Immediately after giving effect to this Amendment (a) the representations and
warranties contained in the Loan Documents are true, accurate and complete in all material respects
as of the date hereof (except to the extent such representations and warranties relate to an
earlier date, in which case they are true and correct as of such date), and (b) no Event of Default
has occurred and is continuing;
4.2 Borrower has the power and authority to execute and deliver this Amendment and
to perform its obligations under the Loan Agreement, as amended by this Amendment;
4.3 The organizational documents of Borrower delivered to Bank on December 17, 2004
remain true, accurate and complete and have not been amended, supplemented or restated and are and
continue to be in full force and effect;
4.4 The execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly
authorized;
4.5 The execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will
not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual
restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or
other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d)
the organizational documents of Borrower;
4.6 The execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require
any order, consent, approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by any governmental or public body or authority, or subdivision
thereof, binding on either Borrower, except as already has been obtained or made; and
4.7 This Amendment has been duly executed and delivered by Borrower and is the
binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation,
moratorium or other similar laws of general application and equitable principles relating to or
affecting creditors’ rights.
5. Counterparts. This Amendment may be executed in any number of counterparts and
all of such counterparts taken together shall be deemed to constitute one and the same instrument.
6. Effectiveness. This Amendment shall be deemed effective as of March 5, 2008 upon
(a) the due execution and delivery to Bank of this Amendment by each party hereto and (b)
Borrower’s payment to
Bank of all Bank Expenses (including all reasonable attorneys’ fees and reasonable expenses)
incurred through the date of this Amendment.
[Signature page follows.]
In Witness Whereof, the parties hereto have caused this Amendment to be duly executed
and delivered as of the date first written above.
| BANK | BORROWER | |||||
| Silicon Valley Bank | Harmonic, Inc. | |||||
By:
|
/s/ Xxxx Xxxxxxxx | By: | /s/Xxxxxxx X. Xxxxxxxx | |||
Name:
|
Xxxx Xxxxxxxx | Name: | Xxxxxxx X. Xxxxxxxx | |||
Title:
|
Relationship Manager | Title: | President & CEO | |||
EXHIBIT
A
COMPLIANCE CERTIFICATE
COMPLIANCE CERTIFICATE
| TO: | SILICON VALLEY BANK 0000 Xxxxxx Xxxxx Xxxxx Xxxxx, XX 00000 |
|
| FROM: |
The undersigned authorized officer of Harmonic Inc. (“Borrower”) certifies that under
the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the
“Agreement”), (i) Borrower is in complete compliance for the period ending with all
required covenants, except as noted below, and (ii) all representations and warranties in the
Agreement are true and correct in all material respects on this date. Attached are the required
documents supporting the certification. The undersigned officer certifies that such documents were
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
undersigned officer acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is delivered.
Please indicate compliance status by circling Yes/No under “Complies” column.
Reporting
Covenant |
Required |
Complies |
||
Quarterly financial statements + CC |
Quarterly within 45 days | Yes No | ||
Annual financial statements (Audited) |
FYE within 120 days | Yes No |
Financial
Covenant |
Required |
Actual |
Complies |
|||||
Maintain at all times: |
||||||||
Unrestricted cash and
cash equivalents |
$40,000,000 | Yes No | ||||||
BANK USE ONLY
| Received by: | |
| Date: | |
| Verified: | |
| Date: | |
Compliance Status:
|
Yes No |
