LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of April 15, 1998,
by and between InVision Technologies, Inc. ("Borrower") whose address is 0000
Xxxxxxx Xxxxxxxxx, Xxxxxx, XX 00000 and Silicon Valley Bank ("Bank") whose
address is 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, XX 00000.
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which
may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to,
among other documents, a Loan and Security Agreement, dated February 20,
1997, as may be amended from time to time, (the "Domestic Loan Agreement").
The Domestic Loan Agreement provided for, among other things, a Committed
Line in the original principal amount of Four Million Five Hundred Thousand
Dollars ($4,500,000) (the "Revolving Facility") and a Committed Equipment
Line in the original principal amount of One Million Two Hundred Fifty
Thousand Dollars ($1,250,000) (the "Equipment Facility #1"). Additionally,
Borrower is indebted to Bank pursuant to, among other documents, an
Export-Import Bank Loan and Security Agreement, dated February 20, 1997, as
may be amended from time to time, (the "Exim Loan Agreement"). The Exim Loan
Agreement provided for, among other things, an Exim Committed Line in the
original principal amount of Four Million Five Hundred Thousand Dollars
($4,500,000) (the "Exim Facility"). The Exim Facility is also governed by
the terms of the Borrower Agreement being executed concurrently herewith.
Hereinafter, the Domestic Loan Agreement and the Exim Loan Agreement shall be
collectively referred to as the "Loan Agreements". Defined terms used but
not otherwise defined herein shall have the same meanings as in the
respective Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to
as the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness
is secured by the Collateral as described in the respective Loan Agreements
and an Intellectual Property Security Agreement, dated February 20, 1997 (the
"IP Agreement"). In addition, repayment of the Exim Facility is guaranteed
by the Export-Import Bank of the United States ("Guarantor") pursuant to a
Master Guarantee Agreement (the "Guaranty"). Notwithstanding the foregoing,
pursuant to this Loan Modification Agreement, Bank shall release its security
interest under the IP Agreement in consideration of Borrower executing a
Negative Pledge Agreement stating it shall not pledge its intellectual
property to any party without written permission by Bank.
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security
Documents, together with all other documents evidencing or securing the
Indebtedness shall be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. MODIFICATION(S) TO DOMESTIC LOAN AGREEMENT.
1. The following term set forth in Section 1.1 entitled
"Definitions" is hereby amended to read as follows:
"Revolving Maturity Date" means April 20, 1999.
2. Item "(a)" in Section 2.1 entitled "Advances" is hereby amended
in its entirety to read as follows:
(a) Subject to and upon the terms and conditions of this
Agreement, Bank agrees to make Advances to Borrower in an
aggregate amount not to exceed the lesser of (i)
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the Committed Line minus the face amount of all outstanding
letters of credit (including drawn but unreimbursed letters of
credit) minus the Foreign Exchange Reserve (defined in
Section 2.1.3) or (ii) the Borrowing Base minus the face amount
of all outstanding letters of credit (including drawn but
unreimbursed letters of credit) minus the Foreign Exchange
Reserve. For purposes of this Agreement, "Borrowing Base" shall
mean an amount equal to eighty percent (80%) of Eligible
Accounts. Subject to the terms and conditions of this Agreement,
amounts borrowed pursuant to this Section 2.1 may be repaid and
reborrowed at any time prior to the Revolving Maturity Date.
Notwithstanding the foregoing, provided (A) Borrower is in
compliance with the Liquidity covenant as described in Section
6.14 of the Loan Agreement, and (B) the combined Advances under
the Committed Line and the Exim Committed Line are less than
$5,000,000, then Bank agrees to make Advances to Borrower in an
aggregate amount not to exceed item "(i)" as stated above in this
paragraph.
3. Item "(a)" in Section 2.1.1 entitled "Letters of Credit" is
hereby amended in its entirety to read as follows:
(a) Subject to the terms and conditions of this Agreement, Bank
agrees to issue or cause to be issued letters of credit for the
account of Borrower in an aggregate face amount not to exceed (i)
the lesser of the Committed Line or the Borrowing Base minus (ii)
the then outstanding principal balance of the Advances provided
that the face amount of outstanding letters of credit (including
drawn but unreimbursed letters of credit) shall not in any case
exceed Three Million Dollars ($3,000,000). Each such letter of
credit shall have an expiry date no later than the Revolving
Maturity Date. All such letters of credit shall be, in form and
substance, acceptable to Bank in its sole discretion and shall be
subject to the terms and conditions of Bank's form of application
and letter of credit agreement. All amounts actually paid by
Bank in respect of a letter of credit shall, when paid,
constitute an Advance under this Agreement.
4. The following Section is hereby incorporated into the Domestic
Loan Agreement:
SECTION 2.1.5 EQUIPMENT ADVANCES #2.
(a) Through April 15, 1999 Bank will make advances ("Equipment
Advance #2" and, collectively, "Equipment Advances #2") not
exceeding Five Hundred Thousand Dollars ($500,000). To evidence
the Equipment Advance #2 or the Equipment Advances #2, Borrower
shall deliver to Bank, at the time of each Equipment Advance #2
request, an invoice for the equipment to be purchased. The
Equipment Advances #2 may only be used to finance Equipment
and may not exceed 100% of the equipment invoice excluding
taxes, shipping, warranty charges, freight discounts and
installation expense. Software may constitute up to 25% of the
aggregate Equipment Advances #2.
(b) Interest accrues from the date of each Equipment Advance #2
at the rate in Section 2.1.5(d), and shall be payable monthly
for each month through October 15, 1998 (the "First Term Out
Date #2"). Any Equipment Advances #2 that are outstanding on
the First Term Out Date #2 that financed personal computer,
laptops or network equipment will be payable in thirty six (36)
equal monthly installments of principal plus all accrued
interest, beginning on September 15, 1998, and continuing on the
15th of each month thereafter through October 15,
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2001. All other Equipment Advances #2 that are outstanding on
the First Term Out Date #2 will be payable in forty eight (48)
equal monthly installments of principal plus all accrued
interest, beginning on September 15, 1998 and continuing on the
15th of each month thereafter through October 15, 2002.
(c) Interest shall accrue from the date of each Equipment
Advance #2 not amortized pursuant to Section 2.1.5(b) at the
rate specified in Section 2.1.5(d), and shall be payable
monthly for each month through April 15, 1999 (the "Second
Term Out Date #2"). Any Equipment Advances #2 that are
outstanding on the Second Term out Date #2 that financed
personal computers, laptops or network equipment, and that
have not been amortized pursuant to Section 2.1.5(b) will be
payable in thirty six (36) equal installments of principal
plus all accrued interest, beginning May 15, 1999 and
continuing on the 15th of each month thereafter through April
15, 2002. All other Equipment Advances that are outstanding
on the Second Term Out Date #2 that have not been amortized
pursuant to Section 2.1.5(b) will be payable in forty eight
(48) equal monthly installments of principal plus all accrued
interest, beginning on May 15, 1999 and continuing on the 15th
of each month thereafter through April 15, 2003. Equipment
Advances #2, once repaid, may not be reborrowed.
(d) Except as set forth in Section 2.3(b), any Equipment
Advances #2 shall bear interest at a floating per annum rate
equal to one quarter of one (0.250) percentage point above the
Prime Rate; provided that Borrower shall have the option
effective on the First Term Out Date #2 and the Second Term
Out Date #2, respectively, to select a fixed rate of interest
as to the amortizing Equipment Advances #2 to be repaid over
the following 36 months and the following 48 months. In each
case, such fixed rate shall be equal to three hundred fifty
(350) basis points above the yield of 36 month Treasury Notes
or 48 month Treasury Note, corresponding to the period of
amortization applicable to each Equipment Advance #2, in all
cases as reported in the Western Edition of The Wall Street
Journal on the date that is one (1) Business Day before the
effective date of the election. Borrower shall give written
notice to Bank to its interest rate election one (1) Business
Day prior to the effective date of such election. If Bank
does not timely receive such notice, then the applicable rate
shall be a floating rate equal to one quarter of one (0.250)
percentage point above the Prime Rate. Borrower may prepay
all or any portion of any Equipment Advances #2 without
penalty or premium, provided that any prepayment of an
Equipment Advance #2 bearing a fixed rate of interest within
the first 18 months of amortization shall be accompanied by a
prepayment fee equal to one quarter of one percent (0.250%) of
the amount of the prepayment.
(e) To obtain an Equipment Advance #2, Borrower must notify
Bank (the notice is irrevocable) by facsimile no later than
3:00 p.m. Pacific time one (1) Business Day before the day on
which the Equipment Advance #2 is to be made. The notice in
the form of Exhibit B (Payment/Advance Form) must be signed by
a Responsible Officer or designee and include a copy of the
invoice for the Equipment being financed.
5. Section 2.2 entitled "Overadvances" is hereby amended in
its entirety to read as follows:
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If, at any time or for any reason, the amount of Obligations
owed by Borrower to Bank pursuant to Sections 2.1, 2.1.1,
2.1.2 and 2.1.3 of this Agreement is greater than the lesser
of (i) the Committed Line or (ii) the Borrowing Base, Borrower
shall immediately pay to Bank, in cash, the amount of such
excess.
6. Item "(a)" under Section 2.3 entitled "Interest Rates,
Payments, and Calculations" is hereby amended in its entirety
to read as follows:
Except as set forth in Section 2.3(b), any Advances shall
accrue interest on the outstanding principal balance at a per
annum rate, at Borrower's election, of either (i) the Prime
Rate or (b) two hundred seventy five (275) basis points above
the LIBOR Rate as further detailed in the LIBOR Supplement to
Agreement attached hereto and made a part hereof.
7. The second paragraph under Section 6.3 entitled "Financial
Statement, Reports, Certificates" is hereby amended to read as
follows:
Within twenty (20) days after the last day of each month in
which (i) an Advance is outstanding (and as a condition to
Borrower requesting an Advance) AND (ii) either (A) Borrower
is not in compliance with the Liquidity covenant as described
in Section 6.14 or (B) the aggregate Advances under the
Committed Line and the Exim Committed Line exceed $5,000,000,
Borrower shall deliver to Bank a Borrowing Base Certificate
signed by a Responsible Officer, together with inventory
reports and aged listings of accounts receivable and accounts
payable.
8. The fourth paragraph under Section 6.3 entitled "Financial
Statement, Reports, Certificates" is hereby amended to read as
follows:
Bank shall have a right from time to time hereafter to audit
Borrower's Accounts at Borrower's expense, provided that such
audits will be conducted no more often than once each fiscal
year unless an Event of Default has occurred and is continuing.
9. The Section 6.14 entitled "Debt Service Coverage" is hereby
replaced in its entirety with the following:
6.14 LIQUIDITY. Borrower shall maintain cash plus short term
investments plus 50% of Accounts greater than two times
Advances under the Committed Line, including outstanding
letters of credit (including drawn but unreimbursed letters of
credit). Borrower's compliance of this covenant shall dictate
which borrowing formula shall be implemented in monitoring
Advances under the Revolving Facility as further detailed in
Section 2.1(a). Borrower's failure to comply with this
specific covenant shall not be deemed an Event of Default.
10. The following term is hereby incorporated into Section 1.1
entitled "Definitions":
"LIBOR" means the London Interbank Overseas Rate as described
in the LIBOR Supplement to Agreement attached hereto.
B. MODIFICATION(S) TO EXIM LOAN AGREEMENT.
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1. The following term set forth in Section 1.1 entitled
"Definitions" is hereby amended to read as follows:
"Maturity Date" means April 20, 1999.
2. The first paragraph under Section 2.1 entitled "Revolving
Advances" is hereby amended to read as follows:
Subject to the terms and conditions of this Exim Agreement,
Bank agrees to make Advances to Borrower in an amount not to
exceed the lowest of (i) the Exim Committed Line minus the
face amount of the any issued and outstanding letters of
credit (including drawn but unreimbursed letters of credit)
minus the Foreign Exchange Reserve, or (ii) the Borrowing Base
minus the face amount of any issued and outstanding letters of
credit (including drawn but unreimbursed letters of credit)
minus the Foreign Exchange Reserve. For purposes of this Exim
Agreement "Borrowing Base" shall mean an amount equal to (i)
ninety percent (90%) of the Exim Eligible Foreign Accounts and
(ii) seventy percent (70%) of Eligible Foreign Inventory,
minus the amount of any advance payments or deposits made by
Borrower's account debtors.
3. The following Section is hereby incorporated into the Exim
Loan Agreement:
2.1.3 FOREIGN EXCHANGE CONTRACT; FOREIGN EXCHANGE SETTLEMENTS.
Subject to the terms of this Agreement, as amended from time
to time, Borrower may utilize up to $4,500,000 for spot and
future foreign exchange contracts (the "Exchange Contracts").
Borrower shall not request an Exchange Contract at any time it
is not in compliance with any of the terms of this Agreement.
All Exchange Contracts must provide for delivery of settlement
on or before the Maturity Date. The limit available at any
time shall be reduced by the following amounts (the "Foreign
Exchange Reserve") on each day (the "Determination Date"):
(i) on all outstanding Exchange Contracts on which delivery is
to be effected or settlement allowed more than two business
days from the Determination Date, 10% of the gross amount of
the Exchange Contracts; plus (ii) on all outstanding Exchange
Contracts on which delivery is to be effected or settlement
allowed within two business days after the Determination Date,
100% of the gross amount of the Exchange Contracts. In lieu
of the Foreign Exchange Reserve for 100% of the gross amount
of any Exchange Contract, the Borrower may request that Bank
debit Borrower's bank account with Bank for such amount,
provided Borrower has immediately available funds in such
amounts in its bank account.
Bank may, in its discretion, terminate the Exchange Contracts
at any time (a) that an Event of Default occurs or (b) that
there is not sufficient availability under the Exim Committed
Line and Borrower does not have available funds in its bank
account to satisfy the Foreign Exchange Reserve. If Bank
terminates the Exchange Contracts, and without limitation of
the FX Indemnity Provisions (as referred to below), Borrower
agrees to reimburse Bank for any and all fees, costs and
expenses relating thereto or arising in connection therewith.
Borrower shall not permit the total gross amount of all
Exchange Contracts on which delivery is to be effected and
settlement allowed in any two business day period to be more
than $3,000,000 nor shall Borrower permit the total gross
amount of all
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Exchange Contracts to which Borrower is a party,
outstanding at any one time, to exceed $4,500,000.
Borrower shall execute all standard form applications and
agreements of Bank in connection with the Exchange Contracts,
and without limiting any of the terms of such applications and
agreements, Borrower will pay all standard fees and charges of
Bank in connection with the Exchange Contracts.
Without limiting any of the other terms of this Agreement or
any such standard form applications and agreement of Bank,
Borrower agrees to indemnify Bank and hold it harmless, from
and against any and all claims, debts, liabilities, demands,
obligations, actions, costs and expenses (including, without
limitation, attorneys' fees of counsel of Bank's choice), of
every nature and description which it may sustain or incur,
based upon, arising out of, or in any way relating to any of
the Exchange Contracts or any transactions relating thereto or
contemplated thereby (collectively referred to as the "FX
Indemnity Provisions").
4. Item "(a)" entitled "Interest Rate" under Section 2.3 entitled
"Interest Rates, Payments, and Calculations" is hereby
amended, effective as of this date, in its entirety to read as
follows:
Except as provided in Section 2.3(b), any Advances under this
Exim Agreement shall bear interest at a rate equal to the
Prime Rate.
C. MODIFICATION(S) TO LOAN AGREEMENTS.
1. Section 6.10 entitled "Tangible Net Worth" is hereby amended
in its entirety to read as follows:
Borrower shall maintain, as of the last day of each fiscal
quarter, a Tangible Net Worth of not less than Thirty Million
Dollars ($30,000,000) plus seventy-five percent of the net
proceeds from the sale of Borrower's equity securities after
March 31, 1998.
2. Section 6.11 entitled "Profitability" is hereby amended in its
entirety to read as follows:
Borrower shall be profitable for each fiscal quarter and at
fiscal year end, except Borrower may suffer a loss not to
exceed $600,000 for one fiscal quarter in any fiscal year.
D. RELEASE OF IP AGREEMENT.
1. As an accommodation to Borrower and for good and valuable
consideration, including Bank's agreement to release its
security interest in all of Borrower's Intellectual Property,
Bank, with this Loan Modification Agreement, has agreed to
release its security interest in Borrower's Intellectual
Property Collateral granted under the IP Agreement and to
cancel the IP Agreement. In consideration of such release of
security interest and cancellation of the IP Agreement,
Borrower shall execute a negative pledge agreement covering
all of Borrower's Intellectual Property (the "Negative
Pledge"). Such Negative Pledge Agreement shall include
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[Loan Modification Agreement]
Borrower's agreement it shall not to encumber any of its
Intellectual Property assets without the prior written consent
of Bank.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby
amended wherever necessary to reflect the changes described above.
5. PAYMENT OF FEE. Borrower shall pay Bank the Export-Import
Bank fees in the amount of Sixty Seven Thousand Five Hundred Dollars
($67,500) (the "Exim Fee") plus a Domestic Loan Fee in the amount of Eleven
Thousand Two Hundred Fifty Dollars ($11,250) (the "Domestic Loan Fee") plus
an Equipment Loan Fee in the amount of Two Thousand Five Hundred Dollars
($2,500) (the "Equipment Loan Fee") plus all out-of-pocket expenses.
6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and
pledgor signing below) agrees that, as of the date hereof, it has no defenses
against the obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor
signing below) understands and agrees that in modifying the existing
Indebtedness, Bank is relying upon Borrower's representations, warranties,
and agreements, as set forth in the Existing Loan Documents. Except as
expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank's agreement to modifications to the existing Indebtedness pursuant to
this Loan Modification Agreement in no way shall obligate Bank to make any
future modifications to the Indebtedness. Nothing in this Loan Modification
Agreement shall constitute a satisfaction of the Indebtedness. It is the
intention of Bank and Borrower to retain as liable parties all makers and
endorsers of Existing Loan Documents, unless the party is expressly released
by Bank in writing. No maker, endorser, or guarantor will be released by
virtue of this Loan Modification Agreement. The terms of this paragraph apply
not only to this Loan Modification Agreement, but also to all subsequent loan
modification agreements.
8. CONDITIONS. The effectiveness of this Loan Modification
Agreement is conditioned upon Borrower's payment of the Exim Fee, the
Domestic Loan Fee and the Equipment Loan Fee along with an executed copy of
the Negative Pledge.
This Loan Modification Agreement is executed as of the date
first written above.
BORROWER: BANK:
INVISION TECHNOLOGIES, INC. SILICON VALLEY BANK
By: /s/ Xxxxxx X. XxXxxxx By: /s/ D. Xxxxxx Xxxxxxx
---------------------------- ----------------------------
Name: Xxxxxx X. XxXxxxx Name: D. Xxxxxx Xxxxxxx
-------------------------- --------------------------
Title: Chief Financial Officer Title: Vice President
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