Exhibit 10.16
TERM LOAN AND SECURITY AGREEMENT
This TERM LOAN AND SECURITY AGREEMENT (the "Agreement") dated June 14, 2005
by and among SILICON VALLEY BANK, a California-chartered bank, with its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000
("SVB"), as agent (the "Agent"), and the Lenders listed on Schedule 1.1 and
otherwise party hereto, including without limitation, SVB and Gold Hill Venture
Lending 03, L.P. ("Gold Hill") and NETEZZA CORPORATION, a Delaware corporation,
whose address is 000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
("Borrower") provides the terms on which Lenders shall extend credit to Borrower
and Borrower shall repay Lenders. The parties agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed following
GAAP. Calculations and determinations must be made following GAAP. The term
"financial statements" includes the notes and schedules attached hereto. The
terms "including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document. Capitalized terms in this Agreement
shall have the meanings set forth in Article 13. All other terms contained in
this Agreement, unless otherwise indicated, shall have the meaning provided by
the Code, to the extent such terms are defined therein.
2 LOAN AND TERMS OF PAYMENT
2.1 PROMISE TO PAY.
Borrower hereby unconditionally promises to pay Lenders the unpaid
principal amount of all Credit Extensions and interest on the unpaid principal
amount of the Credit Extensions as and when due in accordance with this
Agreement.
2.1.1 TERM LOAN FACILITY.
(a) Availability. Subject to the terms and conditions of this
Agreement, Lenders agree, severally and not jointly, to lend to Borrower from
time to time prior to the Commitment Termination Date, advances (each an
"Advance" and collectively the "Advances") in an aggregate amount not to exceed
the Term Loan, according to each Lender's pro rata share of the Term Loan (based
upon the respective Commitment Percentage of each Lender). Notwithstanding the
foregoing, if Borrower does not request Advances in accordance with the
timetable set forth in the definition of Term Loan, the undrawn amounts shall
not be available for subsequent draw periods. When repaid, the Advances may not
be re-borrowed. Lenders' obligation to lend hereunder shall terminate on the
earlier of (i) the occurrence and continuance of an Event of Default, or (ii)
the Commitment Termination Date. For purposes of this Section, the minimum
amount of each Advance is Five Hundred Thousand Dollars ($500,000.00).
(b) Borrowing Procedure. To obtain an Advance, Borrower must notify
Agent by facsimile or telephone by 12:00 p.m. Pacific time five (5) Business
Days prior to the date the Advance is to be made. If such notification is by
telephone, Borrower must promptly confirm the notification by delivering to
Agent a completed Payment/Advance Form in the form
attached as EXHIBIT B (the Payment Advance Form). On the Funding Date, each
Lender shall credit and/or transfer (as applicable) to Borrower's deposit
account, an amount equal to its Commitment Percentage multiplied by the amount
of the Advance. Each Lender 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. Each Lender may rely on any telephone notice given by a person whom such
Lender reasonably believes is a Responsible Officer or designee. Borrower shall
indemnify each Lender for any loss Lender suffers due to such reliance.
2.2 TERMINATION OF COMMITMENT TO LEND.
Each Lender's obligation to lend the undisbursed portion of the Obligations
may terminate in the discretion of such Lender if a Key Person departs from the
Borrower and a replacement acceptable to Borrower's Board of Directors is not
named within ninety (90) days of such departure.
2.3 INTEREST RATE, PAYMENTS.
(a) Interest Payments. Commencing on the first Payment Date of the
month following the month in which the Funding Date occurs (or commencing on the
Funding Date if the Funding Date is the first calendar day of the month),
Borrower shall make monthly payments of interest at the rate set forth in
Section 2.3(c).
(b) Repayment. Commencing on July 1, 2006, and continuing on the
Payment Date of each month thereafter, for each Advance, Borrower shall make
consecutive equal monthly payments of principal and interest, in advance,
calculated by Agent based upon: (1) the amount of the Advance, (2) the effective
interest rate calculated as set forth in Section 2.3(c), and (3) an amortization
schedule equal to thirty-six (36) months (individually, the "Scheduled Payment",
and collectively, "Scheduled Payments"). All unpaid principal and accrued
interest is due and payable in full on the Maturity Date. Payments received
after 12:00 p.m. Pacific time are considered received at the opening of business
on the next Business Day. An Advance may only be prepaid in accordance with
Sections 2.3(d) and 2.3(e).
(c) Interest Rate. Borrower shall pay interest on each Payment Date on
the unpaid principal amount of each Advance until such Advance bas been paid in
full. Interest shall accrue at the per annum rate of interest equal to the Basic
Rate determined by Agent as of the Funding Date for such Advance. Interest is
computed on the basis of a three hundred sixty (360) day year for the actual
number of days elapsed. Any principal outstanding during the continuance of an
Event of Default shall bear interest at a per annum rate equal to the Basic Rate
plus four percent (4%)(the "Default Rate").
(d) Mandatory Prepayment Upon an Acceleration. If the Advances are
accelerated following the occurrence of an Event of Default or otherwise,
Borrower shall immediately pay to Lenders an amount equal to the sum of: (i) all
outstanding principal plus accrued interest, plus (ii) all other sums, including
the Prepayment Fee, if any, that shall have become due and payable, including
interest at the Default Rate with respect to any past due principal.
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(e) Permitted Prepayment of Loans. Borrower shall have the option to
prepay any Advance advanced by Lenders under this Agreement, provided Borrower
(i) provides written notice to Agent of its election to prepay such Advance at
least one (1) day prior to such prepayment, and (ii) pays, on the date of such
prepayment (A) all outstanding principal plus accrued interest with regard to
such Advance, plus (B) all other sums, including the Prepayment Fee, if any,
that shall have become due and payable, including interest at the Default Rate
with respect to any past due principal with regard to such Advance.
(f) Debit of Accounts. Agent may debit any of Borrower's deposit or
operating accounts including Account Number _________ for principal and interest
payments when due or any amounts Borrower owes Lenders, when due. Agent shall
promptly notify Borrower after it debits Borrower's accounts. These debits shall
not constitute a set-off.
2.4 FEES.
Borrower shall pay to Agent:
(a) Commitment Fee. A fully earned, non-refundable commitment fee of
Twenty Thousand Dollars ($20,000.00) (to be shared between the Lenders pursuant
to their respective Commitment Percentages), due and payable on the Closing
Date;
(b) Prepayment Fee. The Prepayment Fee, as defined herein, if and when
applicable; and
(c) Lenders' Expenses. All Lenders' Expenses (including reasonable
attorneys' fees and expenses not exceeding Twenty-Five Thousand Dollars
($25,000.00), plus expenses, for documentation and negotiation of this
Agreement) incurred through and after the Closing Date, when due.
2.5 ADDITIONAL COSTS. If any law or regulation increases any Lender's costs
or reduces its income for any loan, Borrower shall pay the increase in cost or
reduction in income or additional expense; provided, however, that Borrower
shall not be liable for any amount attributable to any period before 180 days
prior to the date Agent notifies Borrower of such increased costs. Each Lender
agrees that it shall allocate any increased costs among its customers similarly
affected in good faith and in a manner consistent with such Lender's customary
practice.
3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.
The Lenders' obligation to make the initial Credit Extension is subject to
the condition precedent that Agent shall have received, in form and substance
satisfactory to Agent, such documents and completion of such other matters, as
Agent may reasonably deem necessary or appropriate, including, without
limitation, the following:
(a) this Agreement;
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(b) a certificate of the Secretary of Borrower with respect to
articles, by-laws, incumbency and resolutions authorizing the execution and
delivery of this Agreement, the Loan Documents, and all transactions related
thereto, including the Warrant;
(c) a certificate of the Secretary of Guarantor with respect to
articles, bylaws, incumbency and resolutions authorizing the execution and
delivery of the guaranty and security agreement, and all transactions related
thereto;
(d) intentionally deleted;
(e) Perfection Certificates by Borrower and Guarantor;
(f) a legal opinion of Borrower's and Guarantor's counsel (authority
and enforceability);
(g) a guaranty by the Guarantor;
(h) Security Agreement by the Guarantor;
(i) Warrants to Purchase Stock;
(j) Right to Invest Letter;
(k) Account Control Agreement/Investment Account Control Agreements
(SVB and other financial institutions);
(l) VCOC Letter Agreement;
(m) insurance certificate;
(n) payment of the fees and Lenders Expenses then due;
(o) Certificate of Foreign Qualification (if applicable);
(p) Certificate of Good Standing/Legal Existence; and
(q) such other documents, and completion of such other matters, as
Agent may reasonably deem necessary or appropriate.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.
The obligations of Lenders 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 Article 5 shall be true in
all material respects on the date of the Payment/Advance Form and on the
effective date of each Credit Extension (except for statements which speak as of
a specific date) and no Event of Default shall
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have occurred and be continuing, or result from the Credit Extension. Each
Credit Extension is Borrower's representation and warranty on that date that the
representations and warranties in Article 5 remain true in all material respects
(except for statements which speak as of a specific date).
4 CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants Agent, for the
ratable benefit of the Lenders, to secure the payment and performance in full of
all of the Obligations and the performance of each of Borrower's duties under
the Loan Documents, a continuing security interest in, and pledges and assigns
to Agent, for the ratable benefit of the Lenders, and to each Lender, the
Collateral, wherever located, whether now owned or hereafter acquired or
arising, and all proceeds and products thereof. Subject to Section 5.2, Borrower
warrants and represents that the security interest granted herein shall be a
first priority security interest in the Collateral.
Except as noted on the Perfection Certificate as of the date hereof; Borrower is
not a party to, nor is bound by, any material license (other than over the
counter software that is commercially available to the public) or other material
agreement with respect to which Borrower is the licensee that prohibits or
otherwise restricts Borrower from granting a security interest in Borrower's
interest in such license or agreement or any other property. Borrower shall
provide written notice to Agent within ten (10) days of entering or becoming
bound by, any such license or agreement which is reasonably likely to have a
material impact on Borrower's business or financial condition. Borrower shall
take such steps as Agent reasonably requests to obtain the consent of,
authorization by or waiver by, any person whose consent or waiver is necessary
for all such licenses or contract rights to be deemed "Collateral" and for
Lenders to have a security interest in it that might otherwise be restricted or
prohibited by law or by the terms of any such license or agreement, whether now
existing or entered into in the future.
If Borrower shall, at any time, acquire a commercial tort claim in an amount in
excess of Two Hundred Thousand Dollars ($200,000.00), Borrower shall promptly
notify Agent in a writing signed by Borrower of the brief details thereof and,
upon request of Agent, grant to Agent in writing a security interest therein and
in the proceeds thereof, all upon the terms of this Agreement, with such writing
to be in form and substance satisfactory to Agent.
4.2 TERMINATION BY BORROWER.
Borrower may terminate this agreement by sending written notice to Agent
and paying in full all Obligations. If this Agreement is terminated, Lenders'
and Agent's lien and security interest in the Collateral shall continue until
Borrower fully satisfies the Obligations.
4.3 AUTHORIZATION TO FILE FINANCING STATEMENTS.
Borrower hereby authorizes Agent to file UCC financing statements, without
notice to Borrower, with all appropriate jurisdictions, in order to perfect or
protect Agent's and Lenders' interest or rights hereunder, including a notice
that any disposition of the Collateral by either Borrower or any other Person,
shall be deemed to violate the rights of the Lenders under the Code.
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5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Agent and each Lender as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION.
Borrower and each Subsidiary is duly existing and in good standing in its
state of formation 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 would
reasonably be expected to have a material adverse effect on Borrower's business
or operations. In connection with this Agreement, Borrower delivered to Agent
and Lenders a perfection certificate signed by Borrower and entitled "Perfection
Certificate". Borrower represents and warrants to Agent and each Lender that, as
of the date hereof: (a) Borrower's exact legal name is that indicated on the
Perfection Certificate and on the signature page hereof; and (b) Borrower is an
organization of the type, and is organized in the jurisdiction, set forth in the
Perfection Certificate; and (c) the Perfection Certificate accurately sets forth
Borrower's organizational identification number or accurately states that
Borrower has none; and (d) the Perfection Certificate accurately sets forth
Borrower's place of business, or, if more than one, its chief executive office
as well as Borrower's mailing address if different, and (e) all other
information set forth on the Perfection Certificate pertaining to Borrower is
accurate and complete in all material respects. If Borrower does not now have an
organizational identification number, but later obtains one, Borrower shall
forthwith notify Agent of such organizational identification number.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's organizational documents,
nor shall they constitute an event of default under any material agreement by
which Borrower is bound. Borrower is not in default under any agreement to which
or by which it is bound in which the default would reasonably be expected to
have a material adverse effect on Borrower's business or operations.
5.2 COLLATERAL.
Borrower has good title to the Collateral, free of Liens except Permitted
Liens. As of the date hereof, Borrower has no deposit account, other than the
deposit accounts with Lenders and deposit accounts described in the Perfection
Certificate delivered to Agent and Lenders in connection herewith. Except as
disclosed in the Perfection Certificate, except for co-location arrangements and
except for equipment at prospective customer or customer sites, no portion of
the Collateral with a value in excess of Two Hundred Thousand Dollars
($200,000.00) is in the possession of any third party bailee (such as a
warehouse). Except as hereafter disclosed to the Lenders in writing by Borrower,
none of the components of the Collateral with a value in excess of Two Hundred
Thousand Dollars ($200,000.00) in the aggregate shall be maintained at locations
other than as provided in the Perfection Certificate or at co-locations or at
prospective customer or customer sites. In the event that Borrower, after the
date hereof, intends to store or otherwise deliver any portion of the Collateral
with a value in excess of Two Hundred Thousand Dollars ($200,000.00) in the
aggregate to a bailee (other than co-locations and equipment at customer and
prospective customer sites), then Borrower will first receive the written
consent of
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Lenders and such bailee must acknowledge in writing that the bailee is holding
such Collateral for the benefit of Agent and Lenders.
5.3 LITIGATION.
Except as shown in the Perfection Certificate, there are no actions or
proceedings pending or, to the knowledge of Borrower's Responsible Officers,
threatened against Borrower or any Subsidiary which would reasonably be expected
to have a material adverse effect on Borrower's business or operations.
5.4 NO MATERIAL DETERIORATION IN FINANCIAL STATEMENTS.
All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Agent, fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations, subject to year end adjustments and the absence of footnotes. As of
the date hereof, there has not been any material deterioration in Borrower's
consolidated financial condition since the date of the most recent financial
statements submitted to Agent.
5.5 SOLVENCY.
The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; Borrower is not
left with unreasonably small capital after the transactions in this Agreement;
and Borrower is able to pay its debts (including trade debts) as they mature.
5.6 REGULATORY COMPLIANCE.
Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act of 1940. Borrower is not
engaged as one of its important activities in extending credit for margin stock
(under Regulations X, T and U of the Federal Reserve Board of Governors).
Borrower has complied in all material respects with the Federal Fair Labor
Standards Act. Borrower has not violated any laws, ordinances or rules, the
violation of which would reasonably be expected to have a material adverse
effect on Borrower's business or operations. None of Borrower's or any
Subsidiary's properties or assets has been used by Borrower or any Subsidiary
or, to the best of Borrower's knowledge, by previous Persons, in disposing,
producing, storing, treating, or transporting any hazardous substance other than
legally. Borrower and each Subsidiary has timely filed all required tax returns
(or extensions thereof) and paid, or made adequate provision to pay, all
material taxes, except those being contested in good faith with adequate
reserves under GAAP. 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 obtain or make
such consents, declarations, notices or filings would not reasonably be expected
to have a material adverse effect on Borrower's business or operations.
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5.7 SUBSIDIARIES.
As of the date hereof, Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments.
5.8 FULL DISCLOSURE.
No written representation, warranty or other statement of Borrower in any
certificate or instrument delivered to Agent or Lenders in connection with this
Agreement (taken together with all such written certificates and written
instruments given to Agent or any Lender) 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 instruments not misleading, it being recognized
by Agent that the projections and forecasts provided by Borrower in good faith
and based upon reasonable assumptions are not to be viewed as facts and that
actual results during the period or periods covered by such projections and
forecasts may differ from the projected or forecasted results.
6 AFFIRMATIVE COVENANTS
Borrower shall do all of the following:
6.1 GOVERNMENT COMPLIANCE.
Borrower shall maintain its and all Subsidiaries' legal existence and good
standing in their respective jurisdictions of formation and maintain
qualification in each jurisdiction in which the failure to so qualify would
reasonably be expected to have a material adverse effect on Borrower's business
or operations. Borrower shall comply, and have each Subsidiary comply, with all
laws, ordinances and regulations to which it is subject, noncompliance with
which would reasonably be expected to have a material adverse effect on
Borrower's business or operations.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower shall deliver to Agent: (i) as soon as available, but no
later than thirty (30) days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower's consolidated
operations during the period certified by a Responsible Officer and in a form
reasonably acceptable to Agent; (ii) as soon as available, but no later than one
hundred twenty (120) days after the last day of Borrower's fiscal year, audited
consolidated financial statements of Borrower prepared under GAAP, consistently
applied, together with an unqualified opinion on the financial statements from
an independent certified public accounting firm reasonably acceptable to Agent;
(iii) in the event that Borrower's stock becomes publicly held, within five (5)
days of filing, Borrower shall provide to Agent copies of or electronic notice
of links to all statements, reports and notices made available to Borrower's
security holders or to any holders of Subordinated Debt and all reports on Form
10-K, 10-Q and 8-K filed with the Securities and Exchange Commission; (iv) a
prompt report of any legal actions pending or, to Borrower's knowledge,
threatened against Borrower or any Subsidiary that would reasonably be expected
to result in damages or costs to Borrower or any Subsidiary of Two Hundred Fifty
Thousand Dollars ($250,000.00) or more; (v) annual financial projections
commensurate with those provided to Borrower's venture capital investors within
thirty (30)
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days of Borrower's fiscal year end; and (vi) other financial information
reasonably requested by Agent.
(b) Within thirty (30) days after the last day of each month, Borrower
shall deliver to Agent with the monthly financial statements a Compliance
Certificate signed by a Responsible Officer in the form of EXHIBIT C.
6.3 INVENTORY; RETURNS.
Borrower shall keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors shall follow Borrower's customary practices as they exist at the Closing
Date. Borrower must promptly notify Agent of all returns, recoveries, disputes
and claims, that involve more than Three Hundred Fifty Thousand Dollars
($350,000.00) in the aggregate.
6.4 TAXES.
Borrower shall 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 Borrower is contesting in good faith, with adequate
reserves maintained in accordance with GAAP) and will deliver to Agent, on
demand, appropriate certificates attesting to such payments.
6.5 INSURANCE.
Borrower shall keep its business and the Collateral insured for risks and
in amounts, and as Lenders and Agent may reasonably request. Insurance policies
shall be in a form, with companies, and in amounts that are satisfactory to
Lenders and Agent in Lenders' and Agent's reasonable discretion. All property
policies shall have a lender's loss payable endorsement showing each Lender as
an additional loss payee and all liability policies shall show the Lenders and
Agent as an additional insured and all policies shall provide that the insurer
must give Agent on behalf of Lenders at least twenty (20) days notice before
canceling its policy. At Agent's request, Borrower shall deliver certified
copies of policies and evidence of all premium payments. Proceeds payable under
any policy shall, at Agent's option, be payable to Agent on behalf of Lenders on
account of the Obligations. Notwithstanding the foregoing, so long as no Event
of Default has occurred and is continuing, Borrower shall have the option of
applying the proceeds of any casualty policy up to Five Hundred Thousand Dollars
($500,000.00), in the aggregate, toward the replacement or repair of destroyed
or damaged property; provided that (i) any such replaced or repaired property
(a) shall be of equal or like value as the replaced or repaired Collateral and
(b) shall be deemed Collateral in which Lenders have been granted a first
priority security interest and (ii) after the occurrence and during the
continuation of an Event of Default all proceeds payable under such casualty
policy shall, at the option of Agent, be payable to Agent, for the ratable
benefit of the Lenders, on account of the Obligations. If Borrower fails to
obtain insurance as required under Section 6.5 or to pay any amount or furnish
any required proof of payment to third persons and Agent, Agent may make all or
part of such payment or obtain such insurance policies required in Section 6.5,
and take any reasonable action under the policies Agent deems prudent.
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6.6 ACCOUNTS.
(a) In order to permit Agent to monitor Borrower's financial
performance and condition, Borrower shall maintain an operating account with
Agent.
(b) Borrower shall identify to Agent, in writing, any bank or
securities account opened by Borrower with any institution other than Agent. In
addition, for each such account that Borrower or Guarantor at any time opens or
maintains, Borrower shall, at Agent's request and option, pursuant to an
agreement in form and substance reasonably acceptable to the Lenders and Agent,
cause the depository bank or securities intermediary to agree that such account
is the collateral of Agent, and enter into a "control agreement" on behalf of
Lenders pursuant to the terms hereunder. The provisions of the previous sentence
shall not apply to deposit accounts exclusively used for payroll, payroll taxes
and other employee wage and benefit payments to or for the benefit of Borrower's
employees.
6.7 FURTHER ASSURANCES.
Borrower shall execute any further instruments and take further action as
Agent reasonably requests to perfect or continue Agent's and Lenders' security
interest in the Collateral or to effect the purposes of this Agreement.
7 NEGATIVE COVENANTS
Borrower shall not do any of the following without Agent's prior written
consent:
7.1 DISPOSITIONS.
Convey, sell, lease, transfer, assign or otherwise dispose of (collectively
a "Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, including the Intellectual Property, except for
Transfers of (a) Inventory in the ordinary course of business; (b) non-exclusive
licenses and similar arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business; or (c) worn-out, excess, or
obsolete Equipment. Borrower shall not enter into an agreement with any Person
other than the Lenders which restricts the subsequent granting to Agent or
Lenders of a security interest in the Intellectual Property.
7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR LOCATIONS OF COLLATERAL.
Without the consent of Agent which shall not be unreasonably withheld,
conditioned or delayed, engage in or permit any of its Subsidiaries to engage in
any business other than the businesses currently engaged in by Borrower or
reasonably related thereto, or have a material change in its ownership of
greater than fifty percent (50.0%) from that existing on the Closing Date (other
than by the sale of Borrower's equity securities in a public offering or to
venture capital investors so long as Borrower identifies to Agent the venture
capital investors prior to the closing of the investment), or the departure of
any Key Person, who is not replaced within ninety (90) days by an officer
reasonably acceptable to Agent. Borrower shall not, without at least thirty (30)
days prior written notice to Agent: (a) relocate its chief executive office, or
add any new offices or business locations, including warehouses (unless such new
offices or business
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locations contain less than One Hundred Thousand Dollars ($100,000.00) in
Borrower's assets or property except for co-location arrangements and equipment
at customer and prospective customer sites as set forth in Section 5.2), or (b)
change its jurisdiction of organization, or (c) change its organizational
structure or type, or (d) change its legal name, or (e) change any
organizational number (if any) assigned by its jurisdiction of organization.
7.3 MERGERS OR ACQUISITIONS.
Without the consent of Agent which shall not be unreasonably withheld,
conditioned or delayed, 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. 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, including the
Intellectual 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 herein. The Collateral may also be
subject to Permitted Liens.
7.6 DISTRIBUTIONS; INVESTMENTS.
(a) 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; or (b) other than any payable in common stock or
preferred stock, pay any dividends or make any distribution or payment on or
redeem, retire or purchase any capital stock, except for repurchases of stock
from former employees or directors of Borrower under the terms of applicable
repurchase agreements in an aggregate amount not to exceed Two Hundred Fifty
Thousand Dollars ($250,000.00) in the aggregate in any fiscal year, provided
that no Event of Default has occurred, is continuing or would exist after giving
effect to the repurchases.
7.7 TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter into or permit to exist any material
transaction with any Affiliate of Borrower, except for transactions that are in
the ordinary course of Borrower's business, upon fair and reasonable terms that
are no less favorable to Borrower than would be obtained in an arm's length
transaction with a non-affiliated Person.
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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 Agent'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, or 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, in any event if such
failure or violation would reasonably be expected to have a material adverse
effect on Borrower's business or operations or permit any of its Subsidiaries to
do so.
8 EVENTS OF DEFAULT
Any one of the following shall constitute an Event of Default:
8.1 PAYMENT DEFAULT.
Borrower fails to pay any of the Obligations within three (3) days after
their due date. During such three (3) day period the failure to cure the default
shall not constitute an Event of Default (but no Credit Extension shall be made
during such cure period).
8.2 COVENANT DEFAULT.
(a) If Borrower fails to perform any obligation under Sections 6.2 or
6.6, or violates any of the covenants contained in Article 7 of this Agreement,
or
(b) If Borrower fails or neglects to perform, keep, or observe any
other material term, provision, condition, covenant, or agreement contained in
this Agreement, any of the Loan Documents, or in any present or future agreement
between Borrower and Lenders and as to any default under such other material
term, provision, condition, covenant or agreement that can be cured, has failed
to cure the 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 Borrower be cured within such
ten (10) day period, and such default is likely to be cured within a reasonable
time, then Borrower shall have an additional 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). Grace periods provided under this section shall not
apply, among, other things, to any covenants that are required to be satisfied,
completed or tested by a date certain.
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8.3 INTENTIONALLY DELETED.
8.4 ATTACHMENT.
(a) Any material portion of 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; (b) the service of process upon
Borrower seeking to attach, by trustee or similar process, any funds of Borrower
on deposit with the Lenders and/or Agent, or any entity under control of Lenders
and/or Agent (including a subsidiary); (c) Borrower is enjoined, restrained, or
prevented by court order from conducting a material part of its business; (d) a
judgment or other claim becomes a Lien on a material portion of Borrower's
assets; or (e) a notice of lien, levy, or assessment is filed against any of
Borrower's assets by any government agency and not paid within ten (10) days
after Borrower receives notice. These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Credit Extensions shall be
made during the cure period).
8.5 INSOLVENCY.
(a) Borrower is unable to pay its debts (including trade debts) as
they become due or otherwise becomes insolvent; (b) Borrower begins an
Insolvency Proceeding; or (c) an Insolvency Proceeding's begun against Borrower
and not dismissed or stayed within forty-five (45) days (but no Credit
Extensions shall be made before any insolvency Proceeding is dismissed).
8.6 OTHER AGREEMENTS.
If there is a default in any agreement for borrowed money to which Borrower
is a party with a third party or parties resulting in the acceleration of the
maturity of any Indebtedness in an amount in excess of Five Hundred Thousand
Dollars ($500,000.00).
8.7 JUDGMENTS.
If a judgment or judgments for the payment of money in an amount,
individually or in the aggregate, of at least Two Hundred Thousand Dollars
($200,000.00) (in excess of insurance) shall be rendered against Borrower and
shall remain unsatisfied and unstayed for a period of thirty (30) days (provided
that no Credit Extensions will be made prior to the satisfaction or stay of such
judgment).
8.8 MISREPRESENTATIONS.
If 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 Agent and/or
Lenders or to induce Agent and/or Lenders to enter this Agreement or any Loan
Document.
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8.9 SUBORDINATED DEBT.
Any creditor that has signed a subordination agreement with Lenders
breaches any terms of the subordination agreement.
8.10 GUARANTY.
(a) Any guaranty of any Obligations terminates or ceases for any
reason to be in full force; or (b) any Guarantor does not perform any obligation
or covenant under any guaranty of the Obligations; or (c) any material
misrepresentation or material misstatement exists now or later in any warranty
or representation in any guaranty of the Obligations or in any certificate
delivered to Agent in connection with the guaranty; or (d) any circumstance
described in Articles 7 or 8 occurs to any Guarantor, or (e) the death,
liquidation, winding up, termination of existence, or insolvency of any
Guarantor.
8.11 LIEN PRIORITY
There is a material impairment in the priority of Lenders' security
interest in the Collateral.
9 RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES.
During the continuance of an Event of Default, Agent 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 Agent and/or Lenders);
(b) Stop advancing money or extending credit for Borrower's benefit
under this Agreement or under any other agreement between Borrower and Agent
and/or Lenders;
(c) Settle or adjust disputes and claims directly with account debtors
for amounts, on terms and in any order that Agent considers advisable, and
notify any Person owing Borrower money of Agent's, and Lenders' security
interest in such funds and verify and/or collect the amounts owed by such
account debtor. After the occurrence of an Event of Default, any amounts
received by Borrower shall be held in trust by Borrower for Agent, and, if
requested by Agent, Borrower shall immediately deliver such receipts to Agent in
the form received from the account debtor, with proper endorsements for deposit;
(d) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrower shall
assemble the Collateral if Agent requests and make it available as Agent
designates, subject to the rights of third parties. Agent 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,
subject to the rights of third parties.
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Borrower grants Agent for the benefit of Lenders a license to enter and occupy
any of its premises, without charge, to exercise any of Agent's rights or
remedies;
(e) Apply to the Obligations any (i) balances and deposits of Borrower
it holds, or (ii) any amount held by Agent or Lenders owing to or for the credit
or the account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral, subject to the rights of
third parties. Agent is hereby granted a non-exclusive, royalty-free license or
other right to use, without charge, Borrower's labels, Patents, Copyrights, Mask
Works, 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 Agent's exercise of its rights under this
Section, Borrower's rights under all licenses and all franchise agreements inure
to Agent for benefit of Lenders;
(g) Deliver a notice of exclusive control, any entitlement order, or
other directions or instructions pursuant to any control agreement or similar
agreements providing control of any Collateral; and
(h) Exercise all rights and remedies and dispose of the Collateral
according to the Code.
9.2 POWER OF ATTORNEY.
Borrower hereby irrevocably appoints Agent as its lawful attorney-in-fact,
to be effective upon the occurrence and during the continuance of an Event of
Default, to: (a) endorse Borrower's name on any checks or other forms of payment
or security; (b) sign Borrower's name on any invoice or xxxx of lading for any
Account or drafts against account debtors; (c) settle and adjust disputes and
claims about the Accounts directly with account debtors, for amounts and on
terms Agent determines reasonable; (d) make, settle, and adjust all claims under
Borrower's insurance policies; and (e) transfer the Collateral into the name of
Agent for the benefit of Lenders or a third party as the Code permits. Borrower
hereby appoints Agent as its lawful attorney-in-fact to sign 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 until all
Obligations have been satisfied in full and Agent and Lenders are under no
further obligation to make Credit Extensions hereunder. Agent's foregoing
appointment as Borrower's attorney in fact, and all of Agent's rights and
powers, coupled with an interest, are irrevocable until all Obligations have
been fully repaid and performed and Lenders' and Agent's obligation to provide
Credit Extensions terminates.
9.3 LENDERS' EXPENSES
Any amounts paid by Lenders as provided herein shall constitute Lenders'
Expenses and are immediately due and payable, and shall bear interest at the
then applicable rate hereunder and be secured by the Collateral. No payments by
Lenders shall be deemed an agreement to make similar payments in the future or
Agent's and Lenders' waiver of any Event of Default.
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9.4 AGENT'S AND LENDERS' LIABILITY FOR COLLATERAL.
So long as Agent and Lenders comply with reasonable banking practices
regarding the safekeeping of Collateral and Section 9-207 of the Code, Agent and
Lenders shall not be liable or responsible 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. Borrower bears all risk of loss, damage or destruction
of the Collateral.
9.5 REMEDIES CUMULATIVE.
Agent's rights and remedies under this Agreement, the Loan Documents, and
all other agreements are cumulative. Agent has all rights and remedies provided
under the Code, by law, or in equity. Agent's exercise of one right or remedy is
not an election, and Agent's waiver of any Event of Default is not a continuing
waiver. Agent's delay is not a waiver, election, or acquiescence. No waiver
hereunder shall be effective unless signed by Agent and each Lender and then is
only effective for the specific instance and purpose for which it was given.
9.6 DEMAND WAIVER.
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 Agent on which Borrower is
liable.
10 NOTICES
All notices or demands by any party to this Agreement or any related
agreement must be in writing and be personally delivered or sent by an overnight
delivery service, by certified mail, postage prepaid, return receipt requested,
or by facsimile at the addresses listed below. Either Lender, Agent or Borrower
may change its notice address by giving the other party written notice.
If to Borrower: Netezza Corporation
000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Chief Financial Officer
Fax: (000) 000-0000
with a copy to: Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx, Esquire
FAX: (000) 000-0000
If to Agent: Silicon Valley Bank
or SVB: 0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000-0000
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Attn: Mr. Xxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esquire
FAX: (000) 000-0000
If to Gold Hill: Gold Hill Venture Lending 03, LP.
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attn: Mr. Xxxxx Xxxxxxx
Fax: (000) 000-0000
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
Massachusetts law governs the Loan Documents without regard to principles
of conflicts of law. Borrower and Lenders, and Agent each submit to the
exclusive jurisdiction of the State and Federal courts in Massachusetts;
provided, however, that if for any reason Lenders cannot avail themselves of
such courts in the Commonwealth of Massachusetts, Borrower accepts jurisdiction
of the courts and venue in Santa Xxxxx County, California. NOTWITHSTANDING THE
FOREGOING, AGENT SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST
BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH AGENT
DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO
OTHERWISE ENFORCE THE LENDERS' OR AGENT'S RIGHTS AGAINST BORROWER OR ITS
PROPERTY.
BORROWER, AGENT, AND LENDERS EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, 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.
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. Borrower may not assign this Agreement or any rights or
Obligations under it without Agent's prior written consent which may be granted
or withheld in Agent's reasonable discretion. Lenders and Agent have the right,
without the consent of or notice to Borrower, to sell, transfer, assign,
negotiate, or grant participation in all or any part of, or any interest in,
Lenders' obligations, rights and benefits under this Agreement, the Loan
Documents or any
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related agreement, including, without limitation, an assignment to any Affiliate
or any related party.
12.2 INDEMNIFICATION.
Borrower hereby indemnifies, defends and holds Agent and the Lenders and
their respective directors, officers, employees, and agents harmless against:
(a) all obligations, demands, claims, and liabilities asserted by any other
party or Person in connection with the transactions contemplated by the Loan
Documents; and (b) all losses, or Lenders' Expenses incurred, or paid by Lenders
and/or Agent from, following, or consequential to transactions between Lenders
and Borrower (including reasonable attorneys' fees and expenses), except for
losses caused by Lenders' or Agent's gross negligence or willful misconduct.
12.3 ATTORNEYS' FEES, COSTS AND EXPENSES.
In any action or proceeding between Borrower and Agent 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.
12.4 RIGHT OF SET OFF.
Borrower hereby grants to Agent for the ratable benefit of Lenders, and to
each Lender, a lien, security interest and right of set off as security for all
Obligations to Agent and each Lender, hereunder, whether now existing or
hereafter arising upon and against all deposits, credits, collateral and
property, now or hereafter in the possession, custody, safekeeping or control of
Agent or any entity under the control of Agent (including an Agent subsidiary)
or in transit to any of them. At any time after the occurrence and during the
continuance of an Event of Default, without demand or notice, Agent or Lenders,
as appropriate, may set-off the same or any part thereof and apply the same to
any liability or obligation of Borrower even though unmatured and regardless of
the adequacy of any other collateral securing the Obligations. ANY AND ALL
RIGHTS TO REQUIRE AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
12.5 TIME OF ESSENCE.
Time is of the essence for the performance of all Obligations in this
Agreement.
12.6 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other provision in
determining the enforceability of any provision.
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12.7 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing signed by Agent,
Lenders and Borrower. This Agreement and the Loan Documents represent the entire
agreement about this subject matter, and supersede prior negotiations or
agreements. All prior agreements, understandings, representations, warranties,
and negotiations between the parties about the subject matter of this Agreement
and the Loan Documents merge into this Agreement and the Loan Documents.
12.8 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.
12.9 SURVIVAL.
All covenants, representations and warranties made in this Agreement
continue in full force until this Agreement has terminated pursuant to its
terms, and all Obligations have been satisfied. The obligation of Borrower in
Section 12.2 to indemnify each Lender and Agent shall survive until the statute
of limitations with respect to such claim or cause of action shall have run.
12.10 CONFIDENTIALITY.
In handling any confidential information, Lenders and Agent shall exercise
the same degree of care that it exercises for its own proprietary information,
but disclosure of information may be made: (a) to Lenders' and Agent's
subsidiaries or affiliates in connection with their business with Borrower
(provided, however, Lenders and Agent shall use commercially reasonable efforts
in obtaining such subsidiary's or affiliate's agreement to the terms of this
provision); (b) to prospective transferees or purchasers of any interest in the
Credit Extensions (provided, however, Lenders and Agent shall use commercially
reasonable efforts in obtaining such prospective transferee's or purchaser's
agreement to the terms of this provision); (c) as required by law, regulation,
subpoena, or other order; (d) as required in connection with Lenders' and
Agent's examination or audit; and (e) as Agent considers appropriate in
exercising remedies under this Agreement. Confidential information does not
include information that either : (i) is in the public domain or in Lenders'
and/or Agent's possession when disclosed to Lenders and/or Agent, or becomes
part of the public domain after disclosure to Lenders and/or Agent; or (ii) is
disclosed to Lenders and/or Agent by a third party, if Lenders and/or Agent does
not know that the third party is prohibited from disclosing the information.
13 DEFINITIONS
13.1 DEFINITIONS.
In this Agreement:
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"ACCOUNTS" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its 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 Borrower and Borrower's Books relating to any of the
foregoing, as such definition may be amended from time to time according to the
Code.
"ADVANCE" or "ADVANCES" is defined in Section 2.1.1(a).
"AFFILIATE" 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.
"AGENT" means, SVB, not in its individual capacity, but solely in its
capacity as agent on behalf of and for the benefit of the Lenders.
"BASIC RATE" is, as of the Funding Date the per annum rate of interest
(based on a year of 360 days) equal to the sum of (a) the Prime Rate, plus (b)
four percent (4.0%).
"BORROWER'S BOOKS" are all Borrower's books and records including ledgers,
records regarding Borrower's assets or liabilities, the Collateral, business
operations or financial condition and all computer programs or storage or any
equipment containing the information.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on which
Agent is closed.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the Uniform Commercial Code as adopted in Massachusetts as
amended and in effect from time to time.
"COLLATERAL" is any and all properties, rights and assets of Borrower
granted by Borrower to Agent and Lenders, now, or in the future, in which
Borrower obtains an interest, or the power to transfer rights, as described on
Exhibit A.
"COMMITMENT" is the outstanding amount of Obligations based on each
Lender's Commitment Percentage.
"COMMITMENT PERCENTAGE" is set forth in Schedule 1.1, as amended from time
to time.
"COMMITMENT TERMINATION DATE" is the earlier of June 30, 2006 and the
written termination of this Agreement by Borrower.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (a) 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; (b) any
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obligations for undrawn letters of credit for the account of that Person; and
(c) all obligations from any interest rate, currency or 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
any 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, or any other extension of credit by
Lenders for Borrower's benefit.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"FUNDING DATE" is any date on which an Advance is made to or on account of
Borrower.
"GAAP" is generally accepted accounting principles in the United States.
"GUARANTOR" is any present or future guarantor of the Obligations,
including, without limitation, Netezza Security Corporation.
"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" is any proceeding 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 any Copyrights, Copyright rights, Copyright
applications, Copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, now owned or
later acquired; any Patents, Trademarks, service marks and applications
therefor; any trade secret rights, including any rights to unpatented
inventions, now owned or hereafter acquired.
"INVENTORY" is present and future inventory in which Borrower has 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 Borrower, including inventory temporarily out of its custody or
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possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"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.
"KEY PERSON" is the Chief Executive Officer of Borrower.
"LENDER" is any one of the Lenders.
"LENDERS" shall mean the Persons identified on Schedule 1.1 hereto and each
assignee that becomes a party to this Agreement pursuant to Section 12.1.
"LENDERS' EXPENSES" are all expenses and reasonable costs or expenses
(including reasonable attorneys' fees and expenses) of Agent and Lenders for
preparing, negotiating, defending and enforcing the Loan Documents (including
appeals or Insolvency Proceedings).
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any guaranties executed
by any Guarantor, and any other present or future agreement between Borrower
and/or for the benefit of Lenders and Agent in connection with this Agreement,
all as amended, extended or restated.
"MASK WORKS" are all mask works or similar rights available for the
protection of semiconductor chips, now owned or later acquired.
"MATURITY DATE" is June 1, 2009.
"OBLIGATIONS" are liabilities, obligations, covenants, agreements, debts,
principal, interest, Prepayment Fee, Lenders' Expenses, and other amounts
Borrower owes Lenders and/or Agent now or later, in connection with the Loan
Documents, including interest accruing after Insolvency Proceedings begin and
debts, liabilities, or obligations of Borrower assigned to Lenders and/or Agent
(and specifically excluding any obligations arising under or relating to the
Warrant to Purchase Stock and any shares issued thereunder, the Right to Invest
Letter and the VCOC Letter Agreement or any other equity documents).
"PATENTS" are patents, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same.
"PAYMENT DATE" is the first calendar day of each calendar month.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Lenders and Agent under this Agreement
or the Loan Documents;
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(b) Indebtedness existing on the Closing Date and shown on the
Perfection Certificate;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary course of
business;
(e) Indebtedness secured by Permitted Liens;
(f) reimbursement obligations up to One Hundred Fifty Thousand Dollars
($150,000.00) in connection with letters of credit;
(g) Indebtedness of Borrower or Netezza Security Corporation to any
Guarantor or Borrower,
(h) Guarantees by Borrower of obligations of Borrower's Subsidiaries
in an amount not to exceed One Million Dollars ($1,000,000.00) in the aggregate;
(i) without limitation of clause (g) above, Indebtedness of Borrower
to any Subsidiary, and Indebtedness of any Subsidiary to Borrower (so long as
such Indebtedness is not otherwise prohibited hereby) or to any other
Subsidiary, however, such Indebtedness may not exceed Two Million Dollars
($2,000,000.00) (inclusive of amounts in (h) above and inclusive of amounts
provided in Section (c) of Permitted Investment); and
(j) Extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (e) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Perfection Certificate 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., (iii) certificates of deposit
issued maturing no more than 1 year after issue, (iv) any other investments
administered through the Lenders;
(c) without limitation of clause (d) below, Investments by Borrower in
its Subsidiaries and Investments by Netezza Security Corporation in any other
Subsidiary of Borrower, in an amount not to exceed Two Million Dollars
($2,000,000.00) in the aggregate, per fiscal year (inclusive of amounts provided
in Section (i) of Permitted Indebtedness) and Investments by Subsidiaries in
Borrower or to any other Subsidiary of Borrower;
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(d) Investments by Borrower in Netezza Security Corporation, and by
Netezza Security Corporation in Borrower; and
(e) Investments consisting of (i) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the
purchase of equity securities of Borrower or its Subsidiaries pursuant to
employee stock purchase plans or agreements approved by Borrower's Board of
Directors.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Perfection
Certificate or arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Agent's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower
incurred for financing the acquisition of the Equipment securing no more than
One Hundred Thousand Dollars ($100,000.00) in the aggregate amount outstanding,
or (ii) existing on equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the equipment;
(d) Leases or subleases and non-exclusive licenses or sublicenses
granted in the ordinary course of Borrower's business, if the leases, subleases,
licenses and sublicenses do not prohibit granting Agent a security interest;
(e) Mechanic's Liens arising in the ordinary course of business and
which are not delinquent for more than 30 days or are being contested in good
faith by appropriate proceedings;
(f) Liens in favor of other financial institutions arising in
connection with Borrower's deposit accounts or securities accounts held at such
institutions, provided that Agent has a first perfected security interest in the
amounts held in such deposit accounts or securities accounts;
(g) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default;
(h) Security deposits with Borrower's or Borrower's Subsidiary's
landlord;
(i) Deposits or pledges to secure the performance of bids, tenders,
contracts, public or statutory obligations, surety, stay, appeal, indemnity,
performance or other similar bonds or similar obligations arising in the
ordinary course of business;
(j) A first priority, perfected security interest in Accounts and
Inventory securing Indebtedness the principal amount of which at any time
outstanding is up to a maximum
-24-
amount of Ten Million Dollars ($10,000,000.00) in favor of a lender (other than,
or including, the Lenders or Agent), provided that such lender and the Lenders
enter into an intercreditor agreement in form and substance acceptable to the
Lenders;
(k) Cash deposits or similar security up to One Hundred Fifty Thousand
Dollars ($150,000.00) in the aggregate securing Borrower's reimbursement
obligations in connection with letters of credit;
(l) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (k), 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.
"PREPAYMENT FEE" is, for any principal amounts that are paid prior to the
due date therefor, as provided hereunder, a prepayment fee payable by Borrower
to Lenders calculated as follows : (i) four percent (4.0%) of the principal
amount prepaid if such amount is outstanding for less than one year; (ii) three
percent (3.0%) of the principal amount prepaid if such amount is outstanding for
one year or more but less than two years; and (iii) one percent (1.0%) of the
principal amount prepaid if such amount is outstanding for two years or more.
"PRIME RATE" is SVB's most recently announced "prime rate," even if it is
not Lenders' lowest rate.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, President,
Chief Financial Officer and the Controller of Borrower.
"SCHEDULED PAYMENT" is defined in Section 2.3(b).
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to Borrower's
debt to Lenders (pursuant to a subordination agreement entered into between
Agent, Borrower and the subordinated creditor), on terms acceptable to Agent and
Lenders.
"SUBSIDIARY" is 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.
"TERM LOAN" is an Advance or Advances in the principal amount of up to
Eight Million Dollars ($8,000,000.00). Notwithstanding the foregoing, unless
Borrower terminates this Agreement in accordance with the terms of this
Agreement, Borrower must request Advances of at least One Million Five Hundred
Thousand Dollars ($1,500,000.00) in the aggregate during each of the following
draw periods, whereby the failure of Borrower to request such amount during each
of the specified draw periods shall render the unrequested amount unavailable
through the Commitment Termination Date:
-25-
(a) from the Closing Date through June 30, 2005;
(b) from July 1, 2005 through September 30, 2005;
(c) from October 1, 2005 through March 31, 2006;
provided, however, that Borrower's failure to request such Advances shall
not be considered a default or an Event of Default.
"TRADEMARKS" are trademark and service xxxx rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Borrower connected with the trademarks.
-26-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
BORROWER:
NETEZZA CORPORATION
By: /s/ XX Xxxxxxxx Xx.
------------------------------------
Name: XX Xxxxxxxx Xx.
Title: SR VP & CFO
SILICON VALLEY BANK, as Agent and as a
LENDER
By: /s/ Xxxx Xxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxx
Title: VP
GOLD HILL VENTURE LENDING 03, L.P.,
as LENDER
By: GOLD HILL VENTURE LENDING PARTNERS
03, LLC, its General Partner
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
Title: Manager
-27-
SCHEDULE 1.1
LENDERS AND COMMITMENTS
Commitment
Lender Commitment Percentage
------ ------------- ----------
Silicon Valley Bank $1,250,000.00 15.625%
Gold Hill Venture Lending 03, L.P. $6,750,000.00 84.375%
------------- ------
TOTAL $8,000,000.00 100.00%
============= ======
EXHIBIT A
The Collateral consists of all right, title and interest of Borrower in and
to the following:
All goods, equipment, inventory, contract rights or rights to payment of
money, license agreements, franchise agreements, general intangibles (including
payment intangibles), accounts (including health-care receivables), documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, fixtures, letters of credit rights (whether
or not the letter of credit is evidenced by a writing), commercial tort claims,
securities, and all other investment property supporting obligations, and
financial assets, whether now owned or hereafter acquired, wherever located; and
All 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,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.
The Collateral does not include:
Any Copyright rights, Copyright applications, Copyright registrations, Mask
Works, and like protections in each work of authorship and derivative work,
whether published or unpublished, now owned or later acquired; any Patents,
Trademarks, service marks and applications therefor; any trade secret rights,
including any rights to unpatented inventions, now owned or hereafter acquired.
Notwithstanding the foregoing, the Collateral shall include all accounts,
license and royalty fees and other revenues, proceeds, or income arising out of
or relating to any of the foregoing.
EXHIBIT B
LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 12:00 P.S.T.
Fax To: ____________________ Date: ________
LOAN PAYMENT:
Netezza Corporation
From Account # _______________________ To Account # _________________
(Deposit Account #) (Loan Account #)
Principal $______________________ and/or Interest $_____________________________
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 representation and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
telephone transfer request for an advance, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such 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 12:00pm, P.S.T.
Beneficiary Name: ___________________________ Amount of Wire: $________________
Beneficiary Bank: ____________________________ Account Number: _________________
City and State: ________________________________________________________________
Beneficiary Bank Transit(ABA)#: _________________ 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 agreement(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
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK, AS AGENT
FROM: NETEZZA CORPORATION
The undersigned authorized officer of NETEZZA CORPORATION certifies that
under the terms and conditions of the Loan and Security Agreement between
Borrower, Lenders, and Agent (the "Agreement"), (i) Borrower is in complete
compliance for the period ending _________ with all required covenants except as
noted below and (ii) there are no Events of Default, and all representations and
warranties in the Agreement are true and correct in all material respects on
this date. Attached are the required documents supporting the certification. The
Officer certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) consistently applied from one period to the next
except as explained in an accompanying letter or footnotes. The Officer
acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered.
Please indicate compliance status by circling Yes/No under "Complies"
column.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Monthly financial statements with CC Monthly within 30 days Yes No
Annual financial statements (CPA Audited) FYE within 120 days Yes No
10-Q, 10-K and 8-K Within 5 days after filing with SEC Yes No
Annual financial projections FYE within 30 days Yes No
Comments Regarding Exceptions: AGENT USE ONLY
See Attached. Received by:
---------------------------
AUTHORIZED SIGNER
Netezza Corporation
Sincerely, Date:
----------------------------------
Verified:
------------------------------------- -------------------------------
Signature AUTHORIZED SIGNER
------------------------------------- Date:
Title ------------------------
------------------------------------ Compliance Status: Yes No
Date
885416.5
