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THERMATRIX INC.
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
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TABLE OF CONTENTS
Page
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1. DEFINITIONS AND CONSTRUCTION..................................... 1
1.1 Definitions............................................... 1
1.2 Accounting Terms.......................................... 6
2. LOAN AND TERMS OF PAYMENT........................................ 7
2.1 Acquisition Facility...................................... 7
2.2 Revolving Advances........................................ 7
2.3 Overadvances.............................................. 9
2.4 Interest Rates, Payments, and Calculations................ 9
2.5 Crediting Payments........................................ 9
2.6 Fees...................................................... 10
2.7 Additional Costs.......................................... 10
2.8 Term...................................................... 11
3. CONDITIONS OF LOANS.............................................. 11
3.1 Conditions Precedent to Initial Advance................... 11
3.2 Conditions Precedent to all Advances...................... 11
4. CREATION OF SECURITY INTEREST.................................... 11
4.1 Grant of Security Interest................................ 11
4.2 Delivery of Additional Documentation Required............. 12
4.3 Right to Inspect.......................................... 12
5. REPRESENTATIONS AND WARRANTIES................................... 12
5.1 Due Organization and Qualification........................ 12
5.2 Due Authorization; No Conflict............................ 12
5.3 No Prior Encumbrances..................................... 12
5.4 Bona Fide Eligible Accounts............................... 12
5.5 Merchantable Inventory.................................... 12
5.6 Name; Location of Chief Executive Office.................. 12
5.7 Litigation................................................ 12
5.8 No Material Adverse Change in Financial Statements........ 12
5.9 Solvency.................................................. 13
5.10 Regulatory Compliance..................................... 13
5.11 Environmental Condition................................... 13
5.12 Taxes..................................................... 13
5.13 Subsidiaries.............................................. 13
5.14 Government Consents....................................... 13
5.15 Full Disclosure........................................... 13
6. AFFIRMATIVE COVENANTS............................................ 13
6.1 Good Standing............................................. 14
6.2 Government Compliance..................................... 14
6.3 Financial Statements, Reports, Certificates............... 14
6.4 Inventory; Returns........................................ 14
6.5 Taxes..................................................... 14
6.6 Insurance................................................. 15
6.7 Principal Depository...................................... 15
6.8 Quick Ratio............................................... 15
6.9 Debt-Net Worth Ratio...................................... 15
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..............................................................
6.10 Tangible Net Worth........................................ 15
6.11 Profitability............................................. 15
6.12 Minimum Liquidity/Debt Service Coverage................... 15
6.13 Registration of Intellectual Property Rights.............. 16
6.14 Further Assurances........................................ 16
7. NEGATIVE COVENANTS............................................... 16
7.1 Dispositions............................................... 16
7.2 Change in Business......................................... 16
7.3 Mergers or Acquisitions.................................... 16
7.4 Indebtedness............................................... 16
7.5 Advances to Employees or Shareholders...................... 16
7.6 Encumbrances............................................... 17
7.7 Distributions.............................................. 17
7.8 Investments................................................ 17
7.9 Transactions with Affiliates............................... 17
7.10 Subordinated Debt.......................................... 17
7.11 Inventory.................................................. 17
7.12 Compliance................................................. 17
8. EVENTS OF DEFAULT................................................ 17
8.1 Payment Default............................................ 17
8.2 Covenant Default........................................... 17
8.3 Material Adverse Change.................................... 18
8.4 Attachment................................................. 18
8.5 Insolvency................................................. 18
8.6 Other Agreements........................................... 18
8.7 Subordinated Debt.......................................... 18
8.8 Judgments.................................................. 18
8.9 Misrepresentations......................................... 18
9. BANK'S RIGHTS AND REMEDIES....................................... 18
9.1 Rights and Remedies......................................... 18
9.2 Power of Attorney........................................... 19
9.3 Accounts Collection......................................... 20
9.4 Bank Expenses............................................... 20
9.5 Bank's Liability for Collateral............................. 20
9.6 Remedies Cumulative......................................... 20
9.7 Demand; Protest............................................. 20
10. NOTICES.......................................................... 20
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER....................... 21
12. GENERAL PROVISIONS............................................... 21
12.1 Successors and Assigns..................................... 21
12.2 Indemnification............................................ 21
12.3 Time of Essence............................................ 22
12.4 Severability of Provisions................................. 22
12.5 Amendments in Writing, Integration......................... 22
12.6 Counterparts............................................... 22
12.7 Survival................................................... 22
12.8 Confidentiality............................................ 22
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This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered into as
of February 25, 1997, by and between VENTURE LENDING, a division of Cupertino
National Bank & Trust ("Bank") and THERMATRIX INC. ("Borrower").
RECITALS
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Borrower and Bank are parties to a Loan and Security Agreement dated as
of December 15, 1995, as amended by Amendment No. 1 to Loan and Security
Agreement dated August 13, 1996 and Amendment No. 2 to Loan and Security
Agreement dated December 5, 1996. Borrower wishes to continue to obtain credit
from time to time from Bank, and Bank desires to continue to extend credit to
Borrower. This Agreement sets forth the terms on which Bank will advance credit
to Borrower, and Borrower will repay the amounts owing to Bank.
AGREEMENT
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The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
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1.1 Definitions. As used in this Agreement, the following terms
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shall have the following definitions:
"Accounts" means all presently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
Borrower, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
"Acquisition Facility" means the facility under which Borrower
may request Advances pursuant to Section 2.1.
"Advance" or "Advances" means a cash advance under the
Acquisition Facility or the Revolving Facility.
"Affiliate" means, with respect to any Person, any Person that
owns or controls directly or indirectly such Person, any Person that controls or
is controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, and partners.
"Bank Expenses" means all: reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
the preparation, negotiation, administration, and enforcement of the Loan
Documents; and Bank's reasonable attorneys' fees and expenses incurred in
amending, enforcing or defending the Loan Documents, whether or not suit is
brought.
"Borrower's Books" means all of Borrower's books and records
including: ledgers; records concerning Borrower's assets or liabilities, the
Collateral, business operations or financial condition; and all computer
programs, or tape files, and the equipment, containing such information.
"Borrowing Base" has the meaning set forth in Section 2.2
hereof.
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"Business Day" means any day that is not a Saturday, Sunday, or
other day on which banks in the State of California are authorized or required
to close.
"Closing Date" means the date of this Agreement.
"Code" means the California Uniform Commercial Code.
"Collateral" means the property described on Exhibit A attached
hereto.
"Committed Line" means Four Million Dollars ($4,000,000).
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term "Contingent Obligation" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.
"Current Liabilities" means, as of any applicable date, all
amounts that should, in accordance with GAAP, be included as current liabilities
on the consolidated balance sheet of Borrower and its Subsidiaries, as at such
date, plus, to the extent not already included therein, all outstanding Advances
made under this Agreement, including all Indebtedness that is payable upon
demand or within one year from the date of determination thereof unless such
Indebtedness is renewable or extendible at the option of Borrower or any
Subsidiary to a date more than one year from the date of determination, but
excluding Subordinated Debt and deferred income.
"Daily Balance" means the amount of the Obligations owed at the
end of a given day.
"Eligible Accounts" means those Accounts that arise in the
ordinary course of Borrower's business that comply with all of Borrower's
representations and warranties to Bank set forth in Section 5.4; provided that
standards of eligibility may be fixed and revised from time to time by Bank in
Bank's reasonable judgment and upon notification thereof to Borrower in
accordance with the provisions hereof. Unless otherwise agreed to by Bank,
Eligible Accounts shall not include the following:
(a) Accounts that the account debtor has failed to pay within
ninety (90) days of invoice date ;
(b) Accounts with respect to an account debtor, fifty percent
(50%) of whose Accounts the account debtor has failed to pay within ninety (90)
days of invoice date;
(c) Accounts with respect to which the account debtor is an
officer, employee, or agent of Borrower;
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(d) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, xxxx and hold,
or other terms by reason of which the payment by the account debtor may be
conditional;
(e) Accounts with respect to which the account debtor is an
Affiliate of Borrower;
(f) Accounts with respect to which the account debtor does not
have its principal place of business in the United States, except for Eligible
Foreign Accounts;
(g) Accounts with respect to which the account debtor is the
United States or any department, agency, or instrumentality of the United
States, other than Government Accounts;
(h) Accounts with respect to which Borrower is liable to the
account debtor for goods sold or services rendered by the account debtor to
Borrower, but only to the extent of any amounts owing to the account debtor
against amounts owed to Borrower;
(i) Accounts with respect to an account debtor, including
Subsidiaries and Affiliates, whose total obligations to Borrower exceed thirty
percent (30%) of all Accounts, to the extent such obligations exceed the
aforementioned percentage, except for Accounts with respect to Fortune 500
companies to which the applicable percentage shall be fifty percent (50%) and as
approved in writing by Bank;
(j) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Bank believes, in
its sole discretion, that there may be a basis for dispute (but only to the
extent of the amount subject to such dispute or claim), or is subject to any
Insolvency Proce xxxxx, or becomes insolvent, or goes out of business;
(k) Accounts with respect to which the account debtor is a
distributor, unless pre-approved by Bank in writing; and
(l) Accounts the collection of which Bank reasonably determines
to be doubtful.
"Eligible Foreign Accounts" means Accounts with respect to which
the account debtor does not have its principal place of business in the United
States and that Bank approves on a case-by-case basis, and that are not excluded
by any of clauses (a) through (I) under the defined term, "Eligible Accounts."
"Equipment" means all present and future machinery, equipment,
tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments
in which Borrower has any interest.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"Foreign Exchange Reserve" has the meaning set forth in Section
2.2.2 hereof.
"Fortune 500 Company" means those corporations listed in Fortune
Magazine as its "Fortune 500," including the Subsidiaries or Affiliates of such
corporations.
"GAAP'" means generally accepted accounting principles as in
effect from time to time.
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"Government Accounts" means Accounts with respect to which the
account debtor is the United States or any department, agency or instrumentality
of the United States that Bank approves on a case-by-case basis and that are not
excluded by any of clauses (a) through (e) or (h) through (1) under the defined
term, "Eligible Accounts."
"Indebtedness" means (a) all indebtedness for borrowed money or
the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.
"Insolvency Proceeding" means any proceeding commenced by or
against any person or entity under any provision of the United States Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
"Inventory" means all 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 td be furnished under a contract of service, of
every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and Borrower's Books relating
to any of the foregoing.
"lnvestment" means any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.
"Lien" means any mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.
"Loan Documents" means, collectively, this Agreement, any note
or notes executed by Borrower, and any other agreement entered into between
Borrower and Bank in connection with this Agreement, all as amended or extended
from time to time.
"Material Adverse Effect" means a material adverse effect on (i)
the business operations or condition (financial or otherwise) of Borrower and
its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents.
"Maturity Date" means the first anniversary of the date hereof,
except that the Maturity Date shall be the second anniversary of the effective
date of an extension of the term of the Acquisition Facility under Section
2.1.1.
"Negotiable Collateral" means all of Borrower's present and
future letters of credit of which it is a beneficiary, notes, drafts,
instruments, securities, documents of title, and chattel paper, and Borrower's
Books relating to any of the foregoing.
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"Obligations" means all debt, principal, interest, Bank Expenses
and other amounts owed to Bank by Borrower pursuant to this Agreement or any
other agreement, whether absolute or contingent, due or to become due, now
existing or hereafter arising, including any interest that accrues after the
commencement of an insolvency Proceeding and including any debt, liability, or
obligation owing from Borrower to others that Bank may have obtained by
assignment or otherwise.
"Periodic Payments means all installments or similar recurring
payments that Borrower may now or hereafter become obligated to pay to Bank
pursuant to the terms and provisions of any instrument, or agreement now or
hereafter in existence between Borrower and Bank.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Bank arising under
this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed in
the Schedule;
(c) Subordinated Debt;
(d) Indebtedness in an aggregate principal amount of up to One
Hundred Thousand Dollars ($100,000) for the purpose of leasing or acquiring
new equipment;
(e) Indebtedness to trade creditors incurred in the ordinary
course of business.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in the
Schedule; and
(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency or any State
thereof maturing within one (1) year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having the highest rating obtainable from
either Standard & Poor's Corporation or Xxxxx'x Investors Service, Inc.,
(iii) certificates of deposit maturing no more than one (1) year from the
date of investment therein issued by Bank, and (iv) Investments made in
accordance with Borrower's investment policies, as approved from time to
time by Borrower's Board of Directors.
"Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and disclosed in the
Schedule or arising under this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over any of Bank's
security interests;
(c) Liens (i) upon or in any equipment acquired or held by
Borrower or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time of
its acquisition, provided that the Lien is confined solely to the property so
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acquired and improvements thereon, and the proceeds of such equipment;
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(d) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (c) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase.
"Person" means any individual, sole proprietorship,
partnership,. limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or governmental agency.
"Prime Rate" means the variable rate of interest, per annum,
most recently published by The Wall Street Journal as the "prime rate," whether
or not such rate is the lowest rate available from Bank.
"Quick Assets" means, at any date as of which the amount thereof
shall be determined, the consolidated cash, cash-equivalents, accounts
receivable and investments, with maturities not to exceed 90 days, of Borrower
determined in accordance with GAAP.
"Responsible Officer" means each of the Chief Executive Officer,
the Chief Financial Officer and the Controller of Borrower.
"Revolving Facility" means the facility under which Borrower may
request Bank to issue cash advances, as specified in Section 2.2 hereof.
"Revolving Maturity Date" means the day before the first
anniversary of the Closing Date.
"Schedule" means the schedule of exceptions attached hereto, if
any. "Subordinated Debt" means any debt incurred by Borrower that is
subordinated to the debt owing by Borrower to Bank on terms acceptable to Bank
(and identified as being such by Borrower and Bank).
"Subsidiary" means any corporation or partnership in which (i)
any general partnership interest or (ii) more than 50% of the stock of which by
the terms thereof ordinary voting power to elect the Board of Directors,
managers or trustees of the entity shall, at the time as of which any
determination is being made, be owned by Borrower, either directly or through an
Affiliate.
"Tangible Net Worth" means at any date as of which the amount
thereof shall be determined, the consolidated total assets of Borrower and its
Subsidiaries minus without duplication, (i) the sum of any amounts attributable
to (a) goodwill, (b) intangible items such as unamortized debt discount and
expense, patents, trade and service marks and names, copyrights and research and
development expenses except prepaid expenses, and (c) all reserves not already
deducted from assets, and (ii) Total Liabilities.
"Total Liabilities" means at any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
GAAP be classified as liabilities on the consolidated balance sheet of Borrower,
including in any event all Indebtedness, but specifically excluding Subordinated
Debt and deferred income.
1.2 Accounting Terms. All accounting terms not specifically defined
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herein shall be construed in accordance with GAAP and all calculations made
hereunder shall be made in
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accordance with GAAP. When used herein, the terms "financial statements" shall
include the notes and schedules thereto.
2. LOAN AND TERMS OF PAYMENT
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2.1 Acquisition Facility. Subject to the terms and conditions of
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this Agreement, Bank will make one or more Advances from time to time to
Borrower in an amount not to exceed an aggregate of Two Million Five Hundred
Thousand Dollars ($2,500,000). Borrower may request Advances hereunder in an
aggregate amount not to exceed One Million Dollars ($1,000,000) through the
Revolving Maturity Date, provided Borrower provides Bank with evidence
satisfactory to Bank that, after completing the acquisition for which the
Advance or Advances were requested, Borrower will be in compliance with Sections
6.8, 6.9, 6.10, 6.11 and 6.12. Borrower may request additional Advances
hereunder in an aggregate amount in excess of One Million Dollars ($1,000,000),
upon Bank's approval of the terms of the Acquisition or Acquisitions for which
the Advance or Advances were requested. Each Advance shall be in an amount not
less than Two Hundred Fifty Thousand Dollars ($250,000). Interest shall accrue
from the date of each Advance at the rate specified in Section 2.4(a), and shall
be payable monthly on the fifth day of each month after the date of an Advance
through the Revolving Maturity Date, at which time the principal amount of the
Advances made under this Section 2.1 and all accrued but unpaid interest shall
be due and payable unless the term of -the repayment of the Acquisition Facility
is extended pursuant to Section 2.1.1. When Borrower desires to obtain an
Advance hereunder, Borrower shall notify Bank (which notice shall be
irrevocable) by facsimile transmission received no later than 3:00 p.m.
California time three (3) Business Days before the day on which the Advance is
to be made. Such notice shall be in substantially the form of Exhibit B. The
notice shall be signed by a Responsible Officer. Borrower's obligations under
the Acquisition Facility shall be evidenced by this Agreement and by a
promissory note in substantially the form of Exhibit C-1 attached hereto.
2.1.1 Acquisition Extension Option. Borrower may request at any
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time prior to the Revolving Maturity Date that the repayment term of the
Acquisition Facility be extended to the Maturity Date, provided that an Event of
Default has not occurred prior to such request and Borrower is in compliance
with all of Sections 6.8, 6.9, 6.10 and 6.11 as of such date. The principal
amount outstanding on the date of the extension shall be payable in twenty four
(24) equal monthly installments of principal, plus accrued interest, on the
fifth day of each month, beginning the month following the date that the
repayment term is extended, and continuing through the Maturity Date. The entire
principal balance and all accrued but unpaid interest shall be due and payable
on the Maturity Date.
2.2 Revolving Advances. Subject to and upon the terms and
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conditions of this Agreement, Bank agrees to make Advances to Borrower in an
aggregate amount not to exceed the lesser of (i) 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 or (ii) the
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Borrowing Base, minus the face amount of all outstanding Letters of Credit
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(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 (I) eighty percent (80%) of Eligible Accounts plus (ii) fifty percent
(50%) of Eligible Foreign Accounts plus (iii) fifty percent (50%) of Government
Accounts. Subject to the terms and conditions of this Agreement, amounts
borrowed pursuant to this Section 2.2 may be repaid and reborrowed at any time
prior to the Revolving Maturity Date.
Whenever Borrower desires an Advance, Borrower will notify Bank by
facsimile transmission or telephone no later than 3:00 p.m. California time, on
the Business Day that the Advance is to be made. Each such notification shall be
promptly confirmed by a Payment/Advance Form in substantially the form of
Exhibit B hereto. Bank is authorized to make Advances under this Agreement,
---------
based upon instructions received from a Responsible Officer, or without
instructions if in Bank's discretion such Advances are necessary to meet
Obligations which have become due and
7
remain unpaid. Bank xxxxx be entitled to rely on any telephonic notice given by
a person who Bank reasonably believes to be a Responsible Officer, and Borrower
shall indemnify and hold Bank harmless for any damages or loss suffered by Bank
as a result of such reliance. Bank will credit the amount of Advances made under
this Section 2.2 to Borrower's deposit account.
Borrower's obligations under the Revolving Facility shall be evidenced
by this Agreement and by a promissory note in substantially the form of Exhibit
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C-2 hereto. The Revolving Facility shall terminate on the Revolving Maturity
---
Date, at which time all Advances under this Section 2.2 and other amounts due
under this Agreement shall be immediately due and payable.
2.2.1 Letters of Credit.
-----------------
(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 the lesser of the
Committed Line or the Borrowing Base minus in each case the then outstanding
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principal balance of the Advances made under this Section 2.2.1 and minus the
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Foreign Exchange Reserve; provided that the face amount of outstanding Letters
of Credit (including drawn but unreimbursed Letters of Credit) shall not in any
case exceed Two Million Dollars ($2,000,000). Each such letter of credit shall
have an expiry date no later than the Revolving Maturity Date; provided that
such letter of credit may have an expiry date up to sixty (60) days after the
Revolving Maturity Date for so long as Borrower secures all reimbursement and
other obligations owing to Bank with cash or cash-equivalents on terms
acceptable to Bank. 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.
(b) The obligation of Borrower to immediately reimburse
Bank for drawings made under Letters of Credit shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement and such Letters of Credit, under all circumstances whatsoever.
Borrower shall indemnify, defend and hold Bank harmless from any loss, cost,
expense or liability, including, without limitation, reasonable attorneys' fees,
arising out of or in connection with any letters of credit.
(c) Borrower may request that Bank issue a letter of
credit payable in a currency other than United States Dollars. If a demand for
payment is made under any such letter of credit, Bank shall treat such demand as
an advance to Borrower of the equivalent of the amount thereof (plus cable
charges) in United States currency at the then prevailing rate of exchange in
San Francisco, California, for sales of that other currency for cable transfer
to the country of which it is the currency. Upon the issuance of any letter of
credit payable in a currency other than United States Dollars, Bank shall create
a reserve under the Committed Line for letters of credit against fluctuations in
currency exchange rates, in an amount equal to twenty percent (20%) of the face
amount of such letter of credit. The amount of such reserve may be amended by
Bank from time to time to account for fluctuations in the exchange rate. The
availability of funds under the Committed Line shall be reduced by the amount of
such reserve for so long as such letter of credit remains outstanding.
2.2.2 Foreign Exchange Contract; Foreign Exchange Settlements.
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(a) Borrower may utilize up to One Million Dollars
($1,000,000) under the Committed Line for foreign exchange contracts (the
"Exchange Contracts"), pursuant to which Bank shall sell to 9r purchase from
Borrower foreign currency on a spot or future basis. All Exchange Contracts must
provide for delivery or settlement on or before the Revolving Maturity Date;
provided that settlement or delivery may occur up to sixty (60) days after the
Revolving Maturity
8
Date for so long as Borrower secures all obligations owing to Bank with cash or
cash-equivalents on terms reasonably acceptable to Bank. 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, Borrower may request that Bank treat such amount as an
Advance under the Committed Line.
(b) Bank may, in its discretion, terminate the Exchange
Contracts at any time (a) that an Event of Default occurs or (b) that there is
no sufficient availability under the 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 any applicable
indemnities, Borrower agrees to reimburse Bank for any and all fees, costs and
expenses relating thereto or arising in connection therewith.
(c) 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.
2.3 Overadvances. If the amount of Obligations owed by
------------
Borrower to Bank pursuant to Section 2.2 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.
2.4 Interest Rates, Payments, and Calculations.
------------------------------------------
(a) Interest Rate. Except as set forth in Section
-------------
2.4(b), any Advances under Section 2.1 shall bear interest, on the average Daily
Balance, at a rate equal to one (1.0) percentage point above the Prime Rate, and
any Advances under Section 2.2 shall bear interest at a rate equal to one-half
of one (0.5) percentage point above the Prime Rate.
(b) Default Rate. All Obligations shall bear interest,
------------
from and after the occurrence of an Event of Default, at a rate equal to five
(5) percentage points above the interest rate applicable immediately prior to
the occurrence of the Event of Default.
(c) Payments. Interest on Advances under this Agreement
--------
hereunder shall be due and payable on the fifteenth calendar day of each month
during the term hereof. Bank shall, at its option, charge such interest, all
Bank Expenses, and all Periodic Payments against any of Borrower's deposit
accounts or against the Committed Line, in which case those amounts shall
thereafter accrue interest at the rate then applicable hereunder. Any interest
not paid when due shall be compounded by becoming a part of the Obligations, and
such interest shall thereafter accrue interest at the rate then applicable
hereunder.
(d) Computation. In the event the Prime Rate is changed
-----------
from time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased effective as of 12:01 a.m. on the day the Prime Rate is
changed, by an amount equal to such change in the Prime Rate. All interest
chargeable under the Loan Documents shall be computed on the basis of a three
hundred sixty (360) day year for the actual number of days elapsed.
2.5 Crediting Payments. Prior to the occurrence of an Event
of Default, Bank shall credit a wire transfer of funds, check or other item of
payment to such deposit account or Obligation
9
as Borrower specifies. Unless otherwise agreed in writing by 'Bank, after the
occurrence of an Event of Default, the receipt by Bank of any wire transfer of
funds, check, or other item of payment shall be immediately applied to
conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary contained herein, any wire
transfer or payment received by Bank after 12:00 noon California time shall be
deemed to have been received by Bank as of the opening of business on the
immediately following Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.
2.6 Fees. Borrower shall pay to Bank the following:
----
(a) Facility Fee; Extension Fee. A Facility Fee equal to
---------------------------
Sixteen Thousand Two Hundred Fifty Dollars ($16,250), which fee shall be
payable, fully earned and nonrefundable as of the date hereof. Borrower shall
also pay Bank a fee of Twelve Thousand Five Hundred Dollars ($12,500) as a
condition to requesting an Advance under Section 2.1.
(b) Financial Examination and Appraisal Fees. Bank's customary
----------------------------------------
fees and 'out-of-pocket expenses for Bank's audits of Borrower's Accounts, and
for each appraisal of Collateral and financial analysis and examination of
Borrower performed from time to time by Bank or its agents;
(c) Bank Expenses. Upon the date hereof, all Bank Expenses
-------------
incurred through the Closing Date, including reasonable attorneys' fees and
expenses, which fees shall not exceed Five Thousand 'Dollars ($5,000), and,
after the date hereof, all Bank Expenses, including reasonable attorneys' 'fees
and expenses, as and when they become due.
2.7 Additional Costs. In case any change in any law, regulation,
----------------
treaty or official directive or the interpretation or application thereof by any
court or any governmental authority charged with the administration thereof or
the compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law), in each case
after the date of this Agreement:
(a) subjects Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by Borrower or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of Bank imposed by the United States of America or any
political subdivision thereof);
(b) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against assets held
by, or deposits in or for the account of, 6r loans by, Bank; or
(c) imposes upon Bank any other condition with respect to its
performance under this Agreement,
and the result of any of the foregoing is to increase the cost to Bank, reduce
the income receivable by Bank or impose any expense upon Bank with respect to
any loans, Bank shall notify Borrower thereof. Borrower agrees to pay to Bank
the amount of such increase in cost, reduction in income or additional expense
as and when such cost, reduction or expense is incurred or determined, upon
presentation by Bank of a statement of the amount and setting forth Bank's
calculation thereof, all in reasonable detail, which statement shall be deemed
true and correct absent manifest error.
10
2.8 Term. This Agreement shall become effective on the Closing Date
----
and, subject to Section 12.7, shall continue in full force and effect for a
term ending on the Maturity Date. Notwithstanding the foregoing, Bank shall have
the right to terminate its obligation to make Advances under this Agreement
immediately and without notice upon the occurrence and during the continuance of
an Event of Default. Notwithstanding termination, Bank's Lien on the Collateral
shall remain in effect for so long as any Obligations are outstanding.
3. CONDITIONS OF LOANS
-------------------
3.1 Conditions Precedent to Initial Advance. The obligation
---------------------------------------
of Bank to make the initial Advance is subject to the condition precedent that
Bank shall have received, in form and substance satisfactory to Bank, the
following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower with
respect to incumbency and resolutions authorizing the execution and delivery of
this Agreement;
(c) a collateral assignment and patent mortgage;
(d) an audit of Borrower's Accounts (condition only as
to an Advance under Section 2.2);
(e) insurance certificate;
(f) payment of the fees and Bank Expenses then due
specified in Section 2.6 hereof; and
(g) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.
3.2 Conditions Precedent to all Advances. The obligation of Bank to
------------------------------------
make each Advance, including the initial Advance, is further subject to the
following conditions:
(a) timely receipt by Bank of the Payment/Advance Form as
provided in Section 2.1; and
(b) the representations and warranties contained in Section 5
shall be true and correct in all material respects on and as of the date of such
Payment/Advance Form and on the effective date of each Advance as though made at
and as of each such date, and no Event of Default shall have occurred and be
continuing, or would result from such Advance. The making of each Advance shall
be deemed to be a representation and warranty by Borrower on the date of such
Advance as to the accuracy of the facts referred to in this Section 3.2(b).
4. CREATION OF SECURITY INTEREST
-----------------------------
4.1 Grant of Security Interest. Borrower grants and pledges
--------------------------
to Bank a continuing security interest in all presently existing and hereafter
acquired or arising Collateral in order to secure prompt repayment of any and
all Obligations and in order to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents. Except as set forth in the
Schedule, such security interest constitutes a valid, first priority security
interest in the presently existing Collateral, and will constitute a valid,
first priority security interest in Collateral acquired after the date hereof.
11
4.2 Delivery of Additional Documentation Required. Borrower
---------------------------------------------
shall from time to time execute and deliver to Bank, at the request of Bank, all
Negotiable Collateral, all financing statements and other documents that Bank
may reasonably request, in form satisfactory to Bank, to perfect and continue
perfected Bank's security interests in the Collateral and in order to fully
consummate all of the transactions contemplated under the Loan Documents.
4.3 Right to Inspect. Bank (through any of its officers,
----------------
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower's usual business hours, to inspect Borrower's Books
and to make copies thereof and to check, test, and appraise the Collateral in
order to verify Borrower's financial condition or the amount, condition of, or
any other matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Borrower and each
----------------------------------
Subsidiary is a corporation duly existing and in good standing under the laws of
its state of incorporation and qualified and licensed to do business in, and is
in good standing in, any state in which the conduct of its business or its
ownership of property requires that it be so qualified.
5.2 Due Authorization; No Conflict. The execution, delivery,
------------------------------
and performance of the Loan Documents are within Borrower's powers, have been
duly authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Articles of Incorporation or Bylaws, nor will
they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound. Borrower is not in default
under any agreement to which it is a party or by which it is bound, which
default could have a Material Adverse Effect.
5.3 No Prior Encumbrances. Borrower has good and
---------------------
indefeasible title to the Collateral, free and clear of Liens, except for
Permitted Liens.
5.4 Bona Fide Eligible Accounts. The Eligible Accounts are
---------------------------
bona fide existing obligations. The property giving rise to such Eligible
Accounts has been delivered to the account debtor or to the account debtor's
agent for immediate shipment to and unconditional acceptance by the account
debtor. Borrower has not received notice of actual or imminent Insolvency.
Proceeding of any account debtor that is included in any Borrowing Base
Certificate as an Eligible Account.
5.5 Merchantable Inventory. All Inventory is in all material
----------------------
respects of good and marketable quality, free from all material defects.
5.6 Name; Location of Chief Executive Office. Except as
----------------------------------------
disclosed in the Schedule, Borrower has not done business under any name other
than that specified on the signature page hereof. The chief executive office of
Borrower is located at the address indicated in Section 10 hereof.
5.7 Litigation. Except as set forth in the Schedule, there
----------
are no actions or proceedings pending by or against Borrower or any Subsidiary
before any court or administrative agency in which an adverse decision could
have a Material Adverse Effect or a material adverse effect on Borrower's
interest or Bank's security interest in the Collateral. Borrower does not have
knowledge of any such pending or threatened actions or proceedings.
5.8 No Material Adverse Change in Financial Statements. All
--------------------------------------------------
consolidated financial statements related to Borrower and any Subsidiary that
have been delivered by Borrower to Bank fairly present in all material respects
Borrower's consolidated financial condition as of the date thereof and
Borrower's consolidated results of operations for the period then ended. There
has not
12
been a material adverse change in the consolidated financial condition of
Borrower since the date of the most recent of such financial statements
submitted to Bank.
5.9 Solvency. Borrower is solvent and able to pay its debts
--------
(including trade debts) as they mature.
5.10 Regulatory Compliance. Borrower and each Subsidiary has
---------------------
met the minimum funding requirements of ERISA with respect to any employee
benefit plans subject to ERISA. No event has occurred resulting from Borrower's
failure to comply with ERISA that is reasonably likely to result in Borrower's
incurring any liability that could have a Material Adverse Effect. Borrower is
not an "investment company or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940. Borrower is not
engaged principally, or as one of the important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations G, T and U of the Board of Governors of the Federal
Reserve System). Borrower has complied with all the provisions of the Federal
Fair Labor Standards Act. Borrower has not violated any statutes, laws,
ordinances or rules applicable to it, violation of which could have a Material
Adverse Effect.
5.11 Environmental Condition. None of Borrower's or any
-----------------------
Subsidiary's properties or assets has ever been used by Borrower or any
Subsidiary or, to the best of Borrower's knowledge, by previous owners or
operators, in the disposal of, or to produce, store, handle, treat, release, or
transport, any hazardous waste or hazardous substance other than in accordance
with applicable law; to the best of Borrower's knowledge, none of Borrower's
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for closure pursuant to any
environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste
or hazardous substances into the environment.
5.12 Taxes. Borrower and each Subsidiary has filed or caused
-----
to be filed all tax returns required to be filed, and has paid, or has made
adequate provision for the payment of, all taxes reflected therein.
5.13 Subsidiaries. Borrower does not own any stock,
------------
partnership interest or other equity securities of any Person, except for
Permitted Investments.
5.14 Government Consents. Borrower and each Subsidiary has
-------------------
obtained all consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all governmental authorities that are
necessary for the continued operation of Borrower's business as currently
conducted.
5.15 Full Disclosure. No representation, warranty or other
---------------
statement made by Borrower in any certificate or written statement furnished to
Bank contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained in such
certificates or statements not misleading.
6. AFFIRMATIVE COVENANTS
---------------------
Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Bank may have any commitment to make
an Advance hereunder, Borrower shall do all of the following:
13
6.1 Good Standing. Borrower shall maintain its and each of
-------------
its Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could have a Material Adverse Effect. Borrower shall
maintain, and shall cause each of its Subsidiaries to maintain, to the extent
consistent with prudent management of Borrower's business, in force all
licenses, approvals and agreements, the loss of which could have a Material
Adverse Effect.
6.2 Government Compliance. Borrower shall meet, and shall
---------------------
cause each Subsidiary to meet, the minimum funding requirements of ERISA with
respect to any employee benefit plans subject to ERISA. Borrower shall comply,
and shall cause each Subsidiary to comply, with all statutes, laws, ordinances
and government rules and regulations to which it is subject, noncompliance with
which could have a Material Adverse Effect or a material adverse effect on the
Collateral or the priority of Bank's Lien on the Collateral.
6.3 Financial Statements, Reports, Certificates. Borrower
-------------------------------------------
shall deliver to Bank: (a) as soon as available, but in any event within forty
five (45) days after the end of each fiscal quarter, a company prepared
consolidated balance sheet and income statement covering Borrower's consolidated
operations during such period, certified by a Responsible Officer; (b) as soon
as available, but in any event within ninety (90) days after the end of
Borrower's fiscal year, audited consolidated financial statements of Borrower
prepared in accordance with GAAP, consistently applied, together with an
unqualified opinion on such financial statements of an independent certified
public accounting firm reasonably acceptable to Bank; (c) within five (5) days
upon becoming available, copies of all statements, reports and notices sent or
made available generally by Borrower to its security holders or to any holders
of Subordinated Debt and all reports on Form 10-K and 10-Q filed with the
Securities and Exchange Commission; (d) promptly upon receipt of notice thereof,
a report of any legal actions pending or threatened against Borrower or any
Subsidiary that could result in damages or costs to Borrower or any Subsidiary
of Two Hundred Thousand Dollars ($200,000) or more; and (e) such budgets, sales
projections, operating plans or other financial information as Bank may
reasonably request from time to time.
Prior to any extension of credit under any of Sections 2.2, 2.2.1 or
2.2.2, within thirty (30) days after the last day of each month, and so long as
any such extension is outstanding, Borrower shall deliver to Bank a Borrowing
Base Certificate signed by a Responsible Officer in substantially the form of
Exhibit D hereto, together with aged listings of accounts receivable and
---------
accounts payable.
Borrower shall deliver to Bank a Compliance Certificate signed by a
Responsible Officer in substantially the form of Exhibit E hereto within thirty
---------
(30) days of the last day of each fiscal quarter.
Prior to any extension of credit under any of Sections 2.2, 2.2.1 or
2.2.2, and so long as any such extension is outstanding, 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 every six (6)
months unless an Event of Default has occurred and is continuing.
6.4 Inventory; Returns. Borrower shall keep all Inventory in
------------------
good and marketable condition, free from all material defects. Returns and
allowances, if any, as between Borrower and its account debtors shall be on the
same basis and in accordance with the usual customary practices of Borrower, as
they exist at the time of the execution and delivery of this Agreement. Borrower
shall promptly notify Bank of all returns and recoveries and of all disputes and
claims, where the return, recovery, dispute or claim involves more than Fifty
Thousand Dollars ($50,000).
6.5 Taxes. Borrower shall make, and shall cause each
-----
Subsidiary to make, due and timely payment or deposit of all material federal,
state, and local taxes, assessments, or contributions required of it by law, and
will execute and deliver to Bank, on demand, appropriate certificates attesting
to the payment or deposit thereof; and Borrower will make, and will cause each
Subsidiary to
14
make, timely payment or deposit of all material tax payments and withholding
taxes required of it by applicable laws, including, but not limited to, those
laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and
federal income taxes, and will, upon request, furnish Bank with proof
satisfactory to Bank indicating that Borrower or a Subsidiary has made such
payments or deposits; provided that Borrower or a Subsidiary need not make any
payment if the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP)
by Borrower.
6.6 Insurance.
---------
(a) Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain insurance
relating to Borrower's ownership and use of the Collateral in amounts and of a
type that are customary to businesses similar to Borrower's.
(b) All such policies of insurance shall be in such
form, with such companies, and in such amounts as reasonably satisfactory to
Bank. All such policies of property insurance shall contain a lender's loss
payable endorsement, in a form satisfactory to Bank, showing Bank as an
additional loss payee thereof and all liability insurance policies shall show
the Bank as an additional insured, and shall specify that the insurer must give
at least twenty (20) days notice to Bank before canceling its policy for any
reason. Upon Bank's request, Borrower shall deliver to Bank certified copies of
such policies of insurance and evidence of the payments of all premiums
therefor. All proceeds payable under any such policy shall, at the option of
Bank, be payable to Bank to be applied on account of the Obligations.
6.7 Principal Depository. Borrower shall maintain its
--------------------
principal depository and operating accounts with Bank.
6.8 Quick Ratio. Borrower shall maintain, as of the last day
-----------
of each fiscal quarter, a ratio of Quick Assets to Current Liabilities of at
least 1.0 to 1.0, provided this Section shall not apply after the Revolving
Maturity Date.
6.9 Debt-Net Worth Ratio. Borrower shall maintain, as of the
--------------------
last day of each fiscal quarter, a ratio of Total Liabilities to Tangible Net
Worth of not more than 1.5 to 1.0.
6.10 Tangible Net Worth. Borrower shall maintain, as of the
------------------
last day of each fiscal quarter, a Tangible Net Worth of not less than Thirteen
Million Dollars ($13,000,000).
6.11 Profitability. Borrower shall not suffer a loss in
-------------
excess of $1,500,000 for the fiscal quarter ending December 31, 1996, a loss in
excess of $1,250,000 for the fiscal quarter ending March 31, 1997, a loss in
excess of $750,000 for the fiscal quarter ending June 30, 1997, or a loss in
excess of $350,000 for the fiscal quarter ending September 30, 1997. Borrower
shall be profitable for each fiscal quarter thereafter.
6.12 Minimum Liquidity/Debt Service Coverage. Subject to the
---------------------------------------
remainder of this Section, Borrower shall maintain, as of the last day of each
fiscal quarter, a ratio of (a) the sum of cash and cash equivalents to (b)
outstanding Acquisition Advances, of at least 1.5 to 1.0. Notwithstanding the
foregoing, from and after the time Borrower achieves a Debt Service Coverage of
at least 1.25 to 1.0, and for so long as Borrower maintains as of the last day
of each fiscal quarter thereafter a Debt Service Coverage of at least 1.25 to
1.0, Borrower shall not be subject to the Minimum Liquidity set forth above.
Debt Service Coverage means a ratio of (a) the sum of (i) earnings after tax
plus
----
15
(ii) depreciation for the quarter then ending to (b) the sum of (i) current
portion of long term debt and capitalized leases plus (ii) interest for the
----
upcoming quarter.
6.13 Registration of Intellectual Property Rights. Borrower
--------------------------------------------
shall register or cause to be registered (to the extent not already registered)
with the United States Patent and Trademark Office or the United States
Copyright Office, as applicable, those intellectual property rights listed on
Exhibits A, B and C to the Collateral Assignment, Patent Mortgage and Security
Agreement delivered to Bank by Borrower in connection with this Agreement within
thirty (30) days of the date of this Agreement. Borrower shall register or cause
to be registered with the United States Patent and Trademark Office or the
United States Copyright Office, as applicable, those additional intellectual
property rights developed or acquired by Borrower from time to time in
connection with any product prior to the sale or licensing of such product to
any third party, including without limitation revisions or additions to the
intellectual property rights listed on such Exhibits A, B and C. Borrower shall
execute and deliver such additional instruments and documents from time to time
as Bank shall reasonably request to perfect Bank's security interest in such
additional intellectual property rights.
6.14 Further Assurances. At any time and from time to time
------------------
Borrower shall execute and deliver such further instruments and take such
further action as may reasonably be requested by Bank to effect the purposes of
this Agreement.
7. NEGATIVE COVENANTS
------------------
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until payment in full of the outstanding
Obligations or for so long as Bank may have any commitment to make any Advances,
Borrower will not do any of the following without the prior written consent of
Bank which Bank may grant or withhold in its sole discretion:
7.1 Dispositions. Convey, sell, lease, transfer or otherwise
------------
dispose of (collectively, a 'Transfer"), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, other than: (i) Transfers
of Inventory in the ordinary course of business; (ii) Transfers of non-exclusive
licenses and similar arrangements for the use of the property of Borrower or its
Subsidiaries; or (iii) Transfers of worn-out or obsolete Equipment.
7.2 Change in Business. Engage in any business, or permit
------------------
any of its Subsidiaries to engage in any business, other than the businesses
currently engaged in by Borrower and any business substantially similar or
related thereto (or incidental thereto), or suffer a material change in
Borrower's ownership. Borrower will not, without thirty (30) days prior written
notification to Bank, relocate its chief executive office.
7.3 Mergers or Acquisitions. Merge or consolidate, or permit
-----------------------
any of its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person.
7.4 Indebtedness. Create, incur, assume or be or remain
------------
liable with respect to any Indebtedness, or permit any Subsidiary so to do,
other than Permitted Indebtedness.
7.5 Advances to Employees or Shareholders. Advance by way of
-------------------------------------
payment, credit or other manner, any unearned funds to employees or shareholders
of Borrower except that Borrower may make advances to its employees or
shareholders as long as the aggregate amount of all such advances does not
exceed Fifty Thousand Dollars ($50,000).
16
7.6 Encumbrances. Create, incur, assume or suffer to exist
------------
any Lien with respect to any of its property, or assign or otherwise convey any
right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries so to do, except for Permitted Liens.
7.7 Distributions. Pay any dividends or make any other
-------------
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock.
7.8 Investments. Directly or indirectly acquire or own, or
-----------
make any Investment in or to any Person, or permit any of its Subsidiaries so to
do, other than Permitted Investments.
7.9 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 nonaffiliated
Person.
7.10 Subordinated Debt. Make any payment in respect of any
-----------------
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Bank's prior written consent.
7.11 Inventory. Store the Inventory with a bailee,
---------
warehouseman, or similar party unless Bank has received a pledge of the
warehouse receipt covering such Inventory. Except for Inventory sold in the
ordinary course of business and except for such other locations as Bank may
approve in writing, Borrower shall keep the Inventory only at the location set
forth in Section 10 hereof and such other locations of which Borrower gives Bank
prior written notice and as to which Borrower signs and files a financing
statement where needed to perfect Bank's security interest.
7.12 Compliance. Become an "investment company" controlled by
----------
an "investment company," within the meaning of the Investment Company Act of
1940, or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose. Fail
to meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur, fail to comply with the
Federal Fair Labor Standards Act or violate any law or regulation, which
violation could have a Material Adverse Effect or a material adverse effect on
the Collateral or the priority of Bank's Lien on the Collateral, or permit any
of its Subsidiaries to do any of the foregoing.
8. EVENTS OF DEFAULT
-----------------
Any one or more of the following events shall constitute an
Event of Default by Borrower under this Agreement:
8.1 Pavement Default. If Borrower fails to pay the principal
----------------
of, or any interest on, any Advances when due and payable; or fails to pay any
portion of any other Obligations not constituting such principal or interest,
including without limitation Bank Expenses, within thirty (30) days of receipt
by Borrower of an invoice for such other Obligations;
8.2 Covenant Default. If Borrower fails to perform any
----------------
obligation under Article 6 or violates any of the covenants contained in Article
7 of this Agreement, or fails or neglects to perform, keep, or observe any other
material term, provision, condition, covenant, or agreement contained in this
Agreement, in any of the Loan Documents, or in any other present or future
agreement between Borrower and Bank and as to any default under such other term,
provision, condition, covenant or agreement that can be cured, has failed to
cure such default within ten (10)
17
days after Borrower receives notice thereof or any officer of Borrower becomes
aware thereof (provided that no Advances will be required to be made during such
cure period);
8.3 Material Adverse Change. If there occurs a material
-----------------------
adverse change in Borrower's business or financial condition, or if there is a
material impairment of the prospect of repayment of any portion of the
Obligations or a material impairment of the value or priority of Bank's security
interests in the Collateral;
8.4 Attachment. If any material portion of Borrower's assets
----------
is attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the possession of any trustee, receiver or person acting in a
similar capacity and such attachment, seizure, writ or distress warrant or levy
has not been removed, discharged or rescinded within ten (10) days, or if
Borrower is enjoined, restrained, or in any way prevented by court order from
continuing to conduct all or any material part of its business affairs, or if a
judgment or other claim becomes a lien or encumbrance upon any material portion
of Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Advances will be required to be made during such cure period);
8.5 Insolvency. If Borrower becomes insolvent, or if an
----------
Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding
is commenced against Borrower and is not dismissed or stayed within ten (10)
days (provided that no Advances will be made prior to the dismissal of such
Insolvency Proceeding);
8.6 Other Agreements. If there is a default in any agreement
----------------
to which Borrower is a party with a third party or parties resulting in a right
by such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of Two Hundred Fifty
Thousand Dollars ($250,000) or that could have a Material Adverse Effect;
8.7 Subordinated Debt. If Borrower makes any payment on
-----------------
account of Subordinated Debt, except to the extent such payment is allowed under
any subordination agreement entered into with Bank;
8.8 Judgments. If a judgment or judgments for the payment of
---------
money in an amount, individually or in the aggregate, of at least Two Hundred
Fifty Thousand Dollars ($250,000) shall be rendered against Borrower and shall
remain unsatisfied and unstayed for a period of ten (10) days (provided that no
Advances will be made prior to the satisfaction or stay of such judgment); or
8.9 Misrepresentations. If any material misrepresentation or
------------------
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Bank by any Responsible
Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document.
9. BANK'S RIGHTS AND REMEDIES
--------------------------
9.1 Rights and Remedies. Upon the occurrence and during the
-------------------
continuance of an Event of Default, Bank may, at its election, without notice of
its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the
18
occurrence of an Event of Default described in Section 8.5 all Obligations shall
become immediately due and payable without any action by Bank);
(b) Cease advancing money or extending credit to or for
the benefit of Borrower under this Agreement or under any other agreement
between Borrower and Bank;
(c) Demand that Borrower (i) deposit cash with Bank in
an amount equal to the amount of any Letters of Credit remaining undrawn, as
collateral security for the repayment of any future drawings under such Letters
of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii)
pay in advance all Letters of Credit fees scheduled to be paid or payable over
the remaining term of the Letters of Credit;
(d) Settle or adjust disputes and claims directly with
account debtors for amounts, upon terms and in whatever order that Bank
reasonably considers advisable;
(e) Without notice to or demand upon Borrower, make
such payments and do such acts as Bank considers necessary or reasonable to
protect its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Bank so requires, and to make the Collateral available to Bank as
Bank may designate. Borrower authorizes Bank to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Bank's determination appears to be prior or superior to
its security interest and to pay all expenses incurred in connection therewith.
With respect to any of Borrower's owned premises, Borrower hereby grants Bank a
license to enter into possession of such premises and to occupy the same,
without charge, for up to one hundred twenty (120) days in order to exercise any
of Bank's rights or remedies provided herein, at law, in equity, or otherwise;
(f) Without notice to Borrower set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by Bank, or
(ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Bank;
(g) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Bank is hereby granted a license or other right,
solely pursuant to the provisions of this Section 9.1, to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section 9.1, Borrower's
rights under all licenses and all franchise agreements shall inure to Bank's
benefit;
(h) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as Bank
determines is commercially reasonable, and apply any proceeds to the Obligations
in whatever manner or order Bank deems appropriate;
(i) Bank may credit bid and purchase at any public
sale; and
(j) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.
9.2 Power of Attorney. Borrower hereby irrevocably appoints
-----------------
Bank (and any of Bank's designated officers, or employees) as Borrower's true
and lawful attorney to: (a) send requests for verification of Accounts or notify
account debtors of Bank's security interest in the Accounts; (b) endorse
Borrower's name on any checks or other forms of payment or security that may
come into
19
Bank's possession; (c) sign Borrower's name on any invoice or xxxx of lading
relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) make, settle, and adjust all claims under and decisions with
respect to Borrower's policies of insurance; and (e) settle and adjust disputes
and claims respecting the accounts directly with account debtors, for amounts
and upon terms which Bank determines to be reasonable; provided Bank may
exercise such power of attorney to sign the name of Borrower on any of the
documents described in Section 4.2 regardless of whether an Event of Default has
occurred. The appointment of Bank as Borrower's attorney in fact, and each and
every one of Bank's rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully repaid and performed
and Bank's obligation to provide advances hereunder is terminated.
9.3 Accounts Collection. At any time from the date of this
-------------------
Agreement, Bank may notify any Person owing funds to Borrower of Bank's security
interest in such funds and verify the amount of such Account. Borrower shall
collect all amounts owing to Borrower for Bank, receive in trust all payments as
Bank's trustee, and immediately deliver such payments to Bank in their original
form as received from the account debtor, with proper endorsements for deposit.
9.4 Bank Expenses. If Borrower fails to pay any amounts or
-------------
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Bank may do any or all of the
following: (a) make payment of the same or any part thereof; (b) set up such
reserves under the Revolving Facility as Bank deems necessary to protect Bank
from the exposure created by such failure; or (c) obtain and maintain insurance
policies of the type discussed in Section 6.6 of this Agreement, and take any
action with respect to such policies as Bank deems prudent. Any amounts so paid
or deposited by Bank shall constitute Bank Expenses, shall be immediately due
and payable, and shall bear interest at the then applicable rate hereinabove
provided, and shall be secured by the Collateral. Any payments made by Bank
shall not constitute an agreement by Bank to make similar payments in the future
or a waiver by Bank of any Event of Default under this Agreement.
9.5 Bank's Liability for Collateral. Bank shall not in any
-------------------------------
way or manner be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage thereto occurring or arising in any manner or
fashion from any cause; (c) any diminution in the value thereof; or (d) any act
or default of any carrier, warehouseman, bailee, forwarding agency, or other
person whomsoever. All risk of loss, damage or destruction of the Collateral
shall be borne by Borrower.
9.6 Remedies Cumulative. Bank's rights and remedies under
-------------------
this Agreement, the Loan Documents, and all other agreements shall be
cumulative. Bank shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Bank
of one right or remedy shall be deemed an election, and no waiver by Bank of any
Event of Default on Borrower's part shall be deemed a continuing waiver. No
delay by Bank shall constitute a waiver, election, or acquiescence by it. No
waiver by Bank shall be effective unless made in a written document signed on
behalf of Bank and then shall be effective only in the specific instance and for
the specific purpose for which it was given.
9.7 Demand; Protest. Borrower waives demand, protest, notice
---------------
of protest, 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 at any time held by Bank on which Borrower may in any way be liable.
10. NOTICES
-------
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by
20
first-class mail, postage prepaid) shall be personally delivered or sent by a
recognized overnight delivery service, certified mail, postage prepaid, return
receipt requested, or by telefacsimile to Borrower or to Bank, as the case may
be, at its addresses set forth below:
If to Borrower: Thermatrix Inc.
000 Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxxxx
FAX: (000) 000-0000
If to Bank: Venture Lending
Three Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxx Xxxxxxxx
FAX: (000) 000-0000
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
------------------------------------------
This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of California, without regard to principles
of conflicts of law. Each of Borrower and Bank hereby submits to the exclusive
jurisdiction of the state and Federal courts located in the County of Santa
Xxxxx, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
12. GENERAL PROVISIONS
------------------
12.1 Successors and Assigns. This Agreement shall bind and
----------------------
inure to the benefit of the respective successors and permitted assigns of each
of the parties; provided, however, that neither this Agreement nor any rights
-----------------
hereunder may be assigned by Borrower without Bank's prior written consent,
which consent may be granted or withheld in Bank's sole discretion. Bank shall
have the right without the consent of or notice to Borrower to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights and benefits hereunder.
12.2 Indemnification. Borrower shall defend, indemnify and
---------------
hold harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands,. claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank
as a result of or in any way arising out of, following, or consequential to
transactions between Bank and Borrower whether under this Agreement, or
otherwise (including without limitation reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
21
12.3 Time of Essence. Time is of the essence for the
---------------
performance of all obligations set forth in this Agreement.
12.4 Severability of Provisions. Each provision of this
--------------------------
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
12.5 Amendments in Writing Integration. This Agreement amends
---------------------------------
and restates the terms of a Loan and Security Agreement existing on the Closing
Date between Borrower and Bank. The security interest granted under the terms of
that agreement continues to secure the Obligations, as defined herein, and the
financing statement and Collateral Assignment Patent Mortgage and Security
Agreement filed in connection with such agreement continue to perfect such
security interest. This Agreement cannot be amended or terminated orally. All
prior agreements, understandings, representations, warranties, and negotiations
between the parties hereto with respect to the subject matter of this Agreement,
if any, are merged into this Agreement and the Loan Documents.
12.6 Counterparts. This Agreement may be executed in any
------------
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement.
12.7 Survival. All covenants, representations and warranties
--------
made in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described
in Section 12.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Bank have run.
12.8 Confidentiality. In handling any confidential
---------------
information Bank shall exercise the same degree of care that it exercises with
respect to its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this Agreement except that disclosure of such information may be
made (i) to the subsidiaries or affiliates of Bank in connection with their
present or prospective business relations with Borrower, (ii) to prospective
transferees or purchasers of any interest in the Loans, provided that they have
entered into a comparable confidentiality agreement in favor of Borrower and
have delivered a copy to Borrower, (iii) as required by law, regulations, rule
or order, subpoena, judicial order or similar order, (iv) as may be required in
connection with the examination, audit or similar investigation of Bank and (v)
as Bank may determine in connection with the enforcement of any remedies
hereunder. Confidential information hereunder shall not include information that
either: (a) is in the public domain or in the knowledge or possession of Bank
when disclosed to Bank, or becomes part of the public domain after disclosure to
Bank through no fault of Bank; or (b) is disclosed to Bank by a third party,
provided Bank does not have actual knowledge that such third party is prohibited
from disclosing such information.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
THERMATRIX INC.
/s/ Xxxxxx X. Xxxxxxxxxx
By: ___________________________________
CFO
Title: ________________________________
VENTURE LENDING, a division of
CUPERTINO NATIONAL BANK & TRUST
/s/ Xxx Xxxxxxxx
By: ___________________________________
VP
Title: ________________________________
23
EXHIBIT A
---------
The Collateral shall consist of all right, title and interest of
Borrower in and to the following:
(a) All goods and equipment now owned or hereafter acquired,
including, without limitation, all machinery, fixtures, vehicles (including
motor vehicles and trailers), and any interest in any of the foregoing, and
all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products
including such inventory as is temporarily out of Borrower's custody or
possession or in transit and including any returns upon any accounts or
other proceeds, including insurance proceeds, resulting from the sale or
disposition of any of the foregoing and any documents of title representing
any of the above, and Borrower's Books relating to any of the foregoing;
(c) All contract rights and general intangibles now owned or
hereafter acquired, including, without limitation, goodwill, trademarks,
servicemarks, trade styles, trade names, patents, patent applications,
leases, license agreements, franchise agreements, blueprints, drawings,
purchase orders, customer lists, route lists, infringements, claims,
computer programs, computer discs, computer tapes, literature, reports,
catalogs, design rights, income tax refunds, payments of insurance and
rights to payment of any kind;
(d) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing
to Borrower arising out of the sale or lease of goods, the licensing of
technology or the rendering of services by Borrower, whether or not earned
by performance, and any and all credit insurance, guaranties, and other
security therefor, as well as all merchandise returned to or reclaimed by
Borrower and Borrower's Books relating to any of the foregoing;
(e) All documents, cash, deposit accounts, securities, letters
of credit, certificates of deposit, instruments and chattel paper now owned
or hereafter acquired and Borrower's Books relating to the foregoing;
(f) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and
derivative work thereof, whether published or unpublished, now owned or
hereafter acquired; all trade secret rights, including all rights to
unpatented inventions, know-how, operating manuals, license rights and
agreements and confidential information, now owned or hereafter acquired;
all mask work or similar rights available for the protection of
semiconductor chips, now owned or hereafter acquired; all claims for
damages by way of any past, present and future infringement of any of the
foregoing; and
(g) Any and all claims, rights and interests in any of the
above and all substitutions for, additions and accessions to and proceeds
thereof.
24
EXHIBIT A
---------
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING 1S 3:00 P.M., P.S.T.
TO: VENTURE LENDING DATE: _____________________________
FAX#: (415) &43-6969 TIME: _____________________________
FROM: _________________________________________________________________________
CLIENT NAME (BORROWER)
REQUESTED BY: _________________________________________________________________
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE: _________________________________________________________
PHONE NUMBER: _________________________________________________________________
FROM ACCOUNT # _______________ TO ACCOUNT # ________________________________
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
-------------------------- ---------------------
PRINCIPAL INCREASE (ADVANCE) $________________________________________
PRINCIPAL PAYMENT (ONLY) $________________________________________
INTEREST PAYMENT (ONLY) $________________________________________
PRINCIPAL AND INTEREST (PAYMENT) $________________________________________
OTHER INSTRUCTIONS: ___________________________________________________________
_______________________________________________________________________________
All representations and warranties of Borrower stated in the Loan
Agreement are true, correct and complete in all material respects as of the date
of the telephone request for and Advance confirmed by this Borrowing
Certificate; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date.
BANK USE ONLY
TELEPHONE REQUEST:
-----------------
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
_________________________________ _________________________________________
Authorized Requester Phone #
_________________________________ _________________________________________
Received By (Bank) Phone #
______________________________________
Authorized Signature (Bank)
25
EXHIBIT C-1
-----------
Acquisition Note
----------------
$2,500,000
Palo Alto, California
February 25, 1997
FOR VALUE RECEIVED, the undersigned, Thermatrix Inc. (the "Borrower"),
promises to pay to the order of Venture Lending, a division of Cupertino
National Bank & Trust ("Bank"), at such place as the holder hereof may
designate, in lawful money of the United States of America, the sum of Two
Million Five Hundred Thousand Dollars ($2,500,000), or such other amount as is
equal to the aggregate amount of the Advances under the Acquisition Facility
made by Bank to Borrower, plus interest at a rate equal to One (1.0) percentage
point above the Prime Rate, as such Prime Rate may change from time to time.
Borrower shall pay Bank interest on the fifteenth day of each month. Borrower
shall pay Bank the entire remaining unpaid principal amount and all accrued
interest on the Revolving Maturity Date; provided that if Borrower elects to
extend the repayment term of the Acquisition Facility, Borrower shall make
twenty-four (24) equal monthly payments of principal in accordance with the Loan
Agreement. In the absence of a specific determination by Bank with respect
thereto, all payments shall be applied in the following order: (a) then due and
payable fees and expenses; (b) then due and payable interest payments and
mandatory prepayments; and (c) then due and payable principal payments and
optional prepayments.
Bank is hereby authorized by Borrower to endorse on Bank's books and
records each Advance made by Bank under this Note and the amount of each payment
or prepayment of principal of each such Advance received by Bank; it being
understood, however, that failure to make any such endorsement (or any errors in
notation) shall not affect the obligations of Borrower with respect to Advances
made hereunder, and payments of principal by Borrower shall be credited to
Borrower notwithstanding the failure to make a notation (or any errors in
notation) thereof on such books and records.
Borrower promises to pay Bank all costs and expenses of collection of
this Note and to pay all reasonable attorneys' fees incurred in such collection
or in any suit or action to collect this Note or in any appeal thereof. Borrower
waives presentment, demand, protest, notice of protest, notice of dishonor,
notice of nonpayment, and any and all other notices and demands in connection
with the delivery, acceptance, performance, default or enforcement of this Note,
as well as any applicable statute of limitations. No delay by Bank in exercising
any power or right hereunder shall operate as a waiver of any power or right.
Time is of the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan and Security Agreement of even
date herewith, which shall govern the rights and obligations of Borrower with
respect to all obligations hereunder.
This Note shall be deemed to be made under, and shall be construed in
accordance with and governed by, the laws of the State of California, excluding
conflicts of laws principles. Borrower submits to the exclusive jurisdiction of
the state and federal courts located in the County of Santa Xxxxx, State of
California. BORROWER HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS.
THERMATRIX INC.
By: _____________________________________________
Title: ___________________________________________
26
EXHIBIT C-2
-----------
Revolving Promissory Note
-------------------------
$4,000,000
Palo Alto, California
February 25, 1997
FOR VALUE RECEIVED, the undersigned, Thermatrix Inc. (the "Borrower"),
promises to pay to the order of Venture Lending, a division of Cupertino
National Bank & Trust ("Bank")1 at such place as the holder hereof may
designate, in lawful money of the United States of America, the aggregate unpaid
principal amount of all advances ("Advances") made by Bank to Borrower under the
Loan Agreement (as defined below), provided such Advances shall not exceed Four
Million Dollars ($4,000,000). Borrower shall also pay interest on the aggregate
unpaid principal amount of such Advances at a rate equal to the Prime Rate plus
one half of one (0.5) percentage point, all in accordance with the terms of the
Loan and Security Agreement between Borrower and Bank of even date herewith, as
amended from time to time (the "Loan Agreement") on the fifteenth day of each
month. The entire principal amount and all accrued interest shall be due and
payable on the Revolving Maturity Date.
Bank is hereby authorized by Borrower to endorse on Bank's books and
records each Advance made by Bank under this Note and the amount of each payment
or prepayment of principal of each such Advance received by Bank; it being
understood, however, that failure to make any such endorsement (or any errors in
notation) shall not affect the obligations of Borrower with respect to Advances
made hereunder, and payments of principal by Borrower shall be credited to
Borrower notwithstanding the failure to make a notation (or any errors in
notation) thereof on such books and records.
Borrower promises to pay Bank all costs and expenses of collection of
this Note and to pay all reasonable attorneys' fees incurred in such collection
or in any suit or action to collect this Note or in any appeal thereof. Borrower
waives presentment, demand, protest, notice of protest, notice of dishonor,
notice of nonpayment, and any and all other notices and demands in connection
with the delivery, acceptance, performance, default or enforcement of this Note.
No delay by Bank in exercising any power or right hereunder shall operate as a
waiver of any power or right Time is of the essence as to all obligations
hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern
the rights and obligations of Borrower with respect to all obligations
hereunder.
BORROWER HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, INCLUDING CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY
CLAIMS. This Note shall be deemed to be made under, and shall be construed in
accordance with and governed by, the laws of the State of California, excluding
conflicts of laws principles.
THERMATRIX INC.
By: _______________________________________
Title:______________________________________
27
EXHIBIT D
BORROWING BASE CERTIFICATE
-------------------------------------------------------------------------------
Commitment Amount: $4,000,000
-------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of $______________
2. Additions (please explain on reverse) $______________
3. TOTAL ACCOUNTS RECEIVABLE $______________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $______________
5. Balance of 50% over 90 day accounts $______________
6. Concentration Limits $______________
7. Foreign Accounts $______________
8. Governmental Accounts $______________
9. Contra Accounts $______________
10. Promotion or Demo Accounts $______________
11. Intercompany/Employee Accounts $______________
12. Other (please explain on reverse) $______________
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $______________
14. Eligible Accounts (#3 minus #13) $______________
15. LOAN VALUE OF ACCOUNTS (80% of #14) $______________
ELIGIBLE FOREIGN AND GOVERNMENT ACCOUNTS
16. Value as of ______________ $______________
17. LOAN VALUE (50% of #16) $______________
BALANCES
18. Maximum Loan Amount $4,000.000
19. Total Funds Available [Lesser of #18 or (#15 plus #17)] $______________
20. Present balance owing on Line of Credit $______________
21. Outstanding under Sublimits (Letters of Credit and Foreign Exchange) $______________
22. RESERVE POSITION (#19 minus #20 and #21) $______________
The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Venture Lending.
COMMENTS: BANK USE ONLY
---- --- ----
Rec'd By: ____________
Auth. Signer
Thermatrix Inc.
Date: ________________
By: _________________________________________ Verified: ____________
Authorized Signer Auth. Signer
Date: ________________
_____________________
28
EXHIBIT E
COMPLIANCE CERTIFICATE
TO: Venture Lending
FROM: Thermatrix Inc.
The undersigned authorized officer of Thermatrix Inc. hereby certifies
that in accordance with the terms and conditions of the Loan and Security
Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is in
complete compliance for the period ending _________ with all required covenants
except as noted below and (ii) all representations and warranties of Borrower
stated in the Agreement are true and correct in all material respects as of the
date hereof. Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Quarterly financial statements Quarterly within 45 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
Borrowing Base, A/R & A/P Agings Monthly within 30 days Yes No
AIR Audit Initial and Semi-Annual Yes No
10-Q, 10-K . Within 5 days of filing Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Quarterly Basis
Minimum Quick Ratio 1.0:1.0/1/ ______:1.00 Yes No
Minimum Tangible Net Worth $13,000,000 $_________ Yes No
Maximum Debt/Tangible Net Worth 1.5:1.0 ______:1.0 Yes No
Quarterly Profitability See Agreement $_____ Yes No
Liquidity 1.5:1.0 ______:1.0 Yes No
Debt Service Coverage l.25:1.0/2/ ______:1.0 Yes No
/1/Does not apply after Revolving Maturity Date
/2/Replaces Liquidity covenant -- see Agreement
COMMENTS REGARDING EXCEPTIONS: See Attached BANK USE ONLY
Sincerely, Received By: __________________
AUTHORIZED
_________________________________________ SIGNER
SIGNATURE
Date: ________________________
_________________________________________
TITLE Verified: _____________________
AUTHORIZED
_________________________________________ SIGNER
DATE
Date: ________________________
Compliance Status: Yes No
29
COLLATERAL ASSIGNMENT, PATENT MORTGAGE
--------------------------------------
AND SECURITY AGREEMENT
----------------------
This Collateral Assignment, Patent Mortgage and Security Agreement is
made as of February 25, 1997, by and between THERMATRIX INC.; a California
corporation ("Assignor"), and VENTURE LENDING, a division of Cupertino National
Bank & Trust, ("Assignee").
RECITALS
--------
A. Assignee has agreed to lend to Assignor certain funds (the "Loan"),
and Assignor desires to borrow such funds from Assignee pursuant to the terms of
an Amended Restated Loan and Security Agreement of even date herewith (the "Loan
Agreement").
B. In order to induce Assignee to make the Loan, Assignor has agreed
to assign certain intangible property to Assignee for purposes of securing the
obligations of Assignor to Assignee.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Assignment Patent Mortgage and Grant of Security Interest. As
---------------------------------------------------------
collateral security for the prompt and complete payment and performance of all
of Assignor's present or future indebtedness, obligations and liabilities to
Assignee, Assignor hereby assigns, transfers, conveys and grants a security
interest and mortgage to Assignee, as security, in and to Assignor's entire
right, title and interest in, to and under the following (all of which shall
collectively be called the "Collateral"):
(a) Any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held, including without limitation those set forth on Exhibit A
---------
attached hereto (collectively, the "Copyrights");
(b) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
(c) Any and all design rights which may be available to Assignor
now or hereafter existing, created, acquired or held;
(d) All patents, patent applications and like protections
including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including without
limitation the patents and patent applications set forth on Exhibit B attached
---------
hereto (collectively, the "Patents");
(e) Any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Assignor connected with
and symbolized by such trademarks, including without limitation those set forth
on Exhibit C attached hereto (collectively, the "Trademarks");
---------
(f) Any and all claims for damages by way of past, present and
future infringement of any of the rights included above, with the right, but not
the obligation, to xxx for and collect such damages for said use or infringement
of the intellectual property rights identified above;
1
(g) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights; and
(h) All amendments, renewals and extensions of any of the
Copyrights, Trademarks or Patents; and
(i) All proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.
THE INTEREST IN THE COLLATERAL BEING ASSIGNED HEREUNDER SHALL NOT BE
CONSTRUED AS A CURRENT ASSIGNMENT, BUT AS A CONTINGENT ASSIGNMENT TO SECURE
ASSIGNOR'S OBLIGATIONS TO ASSIGNEE UNDER THE LOAN AGREEMENT.
2. Authorization and Request. Assignor authorizes and requests that
-------------------------
the Register of Copyrights and the Commissioner of Patents and Trademarks record
this conditional assignment.
3. Covenants and Warranties. Assignor represents, warrants, covenants
------------------------
and agrees as follows:
(a) Assignor is now the sole owner of the Collateral, except for
non-exclusive licenses granted by Assignor to its customers in the ordinary
course of business;
(b) Performance of this Assignment does not conflict with or
result in a breach of any agreement to which Assignor is party or by which
Assignor is bound, except to the extent that certain intellectual property
agreements prohibit the assignment of the rights thereunder to a third party
without the licensor's or other party's consent and this Assignment constitutes
an assignment;
(c) During the term 6f this Assignment, Assignor will not transfer
or otherwise encumber any interest in the Collateral, except for non-exclusive
licenses granted by Assignor in the ordinary course of business or as set forth
in this Assignment;
(d) To its knowledge, each of the Patents is valid and
enforceable, and no part of the Collateral has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Collateral violates the rights of any third party;
(e) Assignor shall promptly advise Assignee of any material change
in the composition of the Collateral, including but not limited to any
subsequent ownership right of the Assignor in. or to any Trademark, Patent or
Copyright not specified in this Assignment;
(f) Assignor shall (i) protect, defend and maintain the validity
and enforceability of the Trademarks, Patents and Copyrights, (ii) use its best
efforts to detect infringements of the Trademarks, Patents and Copyrights and
promptly advise Assignee in writing of material infringements detected and (iii)
not allow any Trademarks, Patents or Copyrights to be abandoned, forfeited or
dedicated to the public without the written consent of Assignee, which shall not
be unreasonably withheld, unless Assignor determines that reasonable business
practices suggest that abandonment is appropriate.
(g) Assignor shall promptly register the most recent version of
any of Assignor's Copyrights, if not so already registered, and shall, from time
to time, execute and file such other instruments, and take such further actions
as Assignee may reasonably request from time to time to perfect or continue the
perfection of Assignee's interest in the Collateral;
2
(h) This Assignment creates, and in the case of after acquired
Collateral, this Assignment will create at the time Assignor first has rights in
such alter acquired Collateral, in favor of Assignee a valid and perfected first
priority security interest in the Collateral in the United States securing the
payment and performance of the obligations evidenced by the Note upon making the
filings referred to in clause (i) below;
(i) To its knowledge, except for, and upon, the filing with the
United States Patent and Trademark office with respect to the Patents and
Trademarks and the Register of Copyrights with respect to the Copyrights
necessary to perfect the security interests and assignment created hereunder,
and except as has been already made or obtained, no authorization, approval or
other action by, and no notice to or filing with, any US. governmental authority
or US. regulatory body is required either (i) for the grant by Assignor of the
security interest granted hereby or for the execution, delivery or performance
of this Assignment by Assignor in the US. or (ii) for the perfection in the
United States or the exercise by Assignee of its rights and remedies hereunder;
(j) All information heretofore, herein or hereafter supplied to
Assignee by or on behalf of Assignor with respect to the Collateral is accurate
and complete in all material respects.
(k) Assignor shall not enter into any agreement that would
materially impair or conflict with Assignor's obligations hereunder without
Assignee's prior written consent, which consent shall not be unreasonably
withheld. Assignor shall not permit the inclusion in any material contract to
which it becomes a party of any provisions that could or might in any way
prevent the creation of a security interest in Assignor's rights and interests
in any property included within the definition of the Collateral acquired under
such contracts, except that certain contracts may contain anti-assignment
provisions that could in effect prohibit the creation of a security interest in
such contracts.
(1) Upon any executive officer of Assignor obtaining actual
knowledge thereof, Assignor will promptly notify Assignee in writing of any
event that materially adversely affects the value of any Collateral, the ability
of Assignor to dispose of any Collateral or the rights and remedies of Assignee
in relation thereto, including the levy of any legal process against any of the
Collateral.
4. Assignee's Rights. Assignee shall have the right, but not the
-----------------
obligation, to take, at Assignor's sole expense, any actions that Assignor is
required under this Assignment to take but which Assignor fails to take, after
fifteen (15) days' notice to Assignor. Assignor shall reimburse and indemnify
Assignee for all reasonable costs and reasonable expenses incurred in the
reasonable exercise of its rights under this section 4.
5. Inspection Rights. Assignor hereby grants to Assignee and its
-----------------
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Assignor, any of Assignor's plants
and facilities that manufacture, install or store products (or that have done so
during the prior six-month period) that are sold utilizing any of the
Collateral, and to inspect the products and quality control records relating
thereto upon reasonable written notice to Assignor and as often as may be
reasonably requested.
6. Further Assurances: Attorney in Fact.
------------------------------------
(a) On a continuing basis, Assignor will, subject to any prior
licenses, encumbrances and restrictions and prospective licenses, make, execute,
acknowledge and deliver, and file and record in the proper filing and recording
places in the United States, all such instruments, including appropriate
financing and continuation statements and collateral agreements and filings with
the United States Patent and Trademark Office and the Register of Copyrights,
and take all such action as may reasonably be deemed necessary or advisable, or
as requested by Assignee, to perfect Assignee's security interest in all
Copyrights, Patents and Trademarks and otherwise to carry out the
3
intent and purposes of this Collateral Assignment, or for assuring and
confirming to Assignee the grant or perfection of a security interest in all
Collateral.
(b) Assignor hereby irrevocably appoints Assignee as Assignor's
attorney-in-fact, with full authority in the place and stead of Assignor and in
the name of Assignor, from time to time in Assignee's discretion, to take any
action and to execute any instrument which Assignee may deem necessary or
advisable to accomplish the purposes of this Collateral Assignment, including:
(i) To modify, in its sole discretion, this Collateral
Assignment without first obtaining Assignor's approval of or signature to such
modification by amending Exhibit A, Exhibit B and Exhibit C, thereof, as
appropriate, to include reference to any right, title or interest in any
Copyrights, Patents or Trademarks acquired by Assignor after the execution
hereof or to delete any reference to any right, title or interest in any
Copyrights, Patents or Trademarks in which Assignor no longer has or claims any
right, title or interest; and
(ii) To file, in its sole discretion, one or more financing
or continuation statements and amendments thereto, relative to any of the
Collateral without the signature of Assignor where permitted by law.
7. Events of Default. The occurrence of any of the following shall
-----------------
constitute an Event of Default under the Assignment:
(a) An Event of Default occurs under the Loan Agreement; or
(b) Assignor breaches any warranty or agreement made by Assignor
in this Assignment and, as to any breach that is capable of cure, Assignor fails
to cure such breach within five (5) days of the occurrence of such breach.
8. Remedies. Upon the occurrence and continuance of an Event of
--------
Default, Assignee shall have the right to exercise all the remedies of a secured
party under the California Uniform Commercial Code, including without limitation
the right to require Assignor to assemble the Collateral and any tangible
property in which Assignee has a security interest and to make it available to
Assignee at a place designated by Assignee. Assignee shall have a nonexclusive,
royalty free license to use the Copyrights, Patents and Trademarks to the extent
reasonably necessary to permit Assignee to. exercise its rights and remedies
upon the occurrence of an Event of Default. Assignor will pay any expenses
(including reasonable attorneys' fees) incurred by Assignee in connection with
the exercise of any of Assignee's rights hereunder, including without limitation
any expense incurred in disposing of the Collateral. All of Assignee's rights
and remedies with respect to the Collateral shall be cumulative.
9. Indemnity. Assignor agrees to defend, indemnity and hold harmless
---------
Assignee and its officers, employees, and agents against: (a) all obligations,
demands, claims, and liabilities claimed or asserted by any other party in
connection with the transactions contemplated by this Agreement, and (b) all
losses or expenses in any way suffered, incurred, or paid by Assignee as a
result of or in any way arising out of, following or consequential to
transactions between Assignee and Assignor, whether under this Assignment or
otherwise (including without limitation reasonable attorneys' fees and
reasonable expenses), except for losses arising from or out of Assignee's gross
negligence or willful misconduct.
10. Reassignment. At such time as Assignor shall completely satisfy all
------------
of the obligations secured hereunder, Assignee shall execute and deliver to
Assignor all deeds, assignments and other instruments as may be necessary or
proper to revest in Assignor full title to the property assigned hereunder,
subject to any disposition thereof which may have been made by Assignee pursuant
hereto.
4
11. Course of Dealing. No course of dealing, nor any failure to
-----------------
exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.
12. Attorneys' Fees. If any action relating to this Assignment is
---------------
brought by either party hereto against the other party, the prevailing party
shall be entitled to recover reasonable attorneys' fees, costs and
disbursements.
13. Amendments. This Assignment may be amended only by a written
----------
instrument signed by both parties hereto.
14. Counterparts. This Assignment may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.
15. California Law and Jurisdiction; Jury Waiver. This Assignment shall
--------------------------------------------
be governed by the laws of the State of California, without regard for choice of
law provisions. Assignor and Assignee consent to the exclusive jurisdiction of
any state or federal court located in Santa Xxxxx County, California. ASSIGNOR
AND ASSIGNEE EACH WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE LOAN AGREEMENT, THIS
ASSIGNMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment on
the day and year first above written.
Address of Assignor: ASSIGNOR:
000 Xxxxx Xxxxx, Xxxxx 000 THERMATRIX INC.
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxxxx By: ____________________________________
Title: _________________________________
Address of Assignee: ASSIGNEE:
Three Palo Alto Square, Suite 150 VENTURE LENDING, a division of Cupertino
Xxxx Xxxx, XX 00000 National Bank & Trust
Attn: Xxx Xxxxxxxx By: ____________________________________
Title: _________________________________
5
INTELLECTUAL PROPERTY SCHEDULE
REGISTERED COPYRIGHTS
---------------------
The Company has no record of registered copyrights or mask works as of
this date. The Company reserves the right to update this schedule to include
registered copyrights or mask works at a later date as if they were included
herein as of the Closing Date.
REGISTERED TRADEMARKS
---------------------
a. "Thermatrix"
THER-1
United States Application Serial No. 74/300,986
Filed August 3, 1992
Issued on October 17, 1995
Registration No. 1,928,477
b. "Thermatrix"
THER-241
EPO
Filed April 1, 1996
Application No. 00000
x. "Xxxxxxxxxx"
XXXX-000
Xxxxx
d. "Thermatrix"
THER-243
Taiwan
e. "Thermatrix"
THER-244
South Korea
f. "Technology Beyond Compliance"
THER-240
United States Application Serial No. 75/067,648
Filed March 5, 1996
Issued on January 21, 1997
Registration No. 2,032,226
1
c. "PADRE"
THER-261
Issued August 17, 1993
Expires August 17, 2003
Registration No. 1,788,045
TRADEMARK APPLICATIONS
----------------------
a. "TMX"
THER-276
United States Application Serial No. 75/164,887
Filed September 12, 1996
Intent to use trademark application
b. "ADMATRIX"
THER-281
United States Application Serial No. 75/215,791
Filed December 19, 1996
Intent to use trademark application
ISSUED PATENTS
--------------
A. Hazardous Waste Reactor System
1. THER-8 (formerly IPT-3)
United States Patent No. 4,688,495
Issued August 25, 1987
Inventor: Xxxxxxxx
Filed July 31, 1985
Expires July 31, 2005
2. THER-9 (formerly IPT-4)
France Patent No. 8611118
Issued August 10, 1990
Expires July 31, 2006
Filed July 31, 1986
3. THER-10 (formerly IPT-5)
Germany Patent No. 3625 782
Grant published for opposition July 23, 1992
Fully valid effective October 23, 1992
2
Expires July 30, 2006
Filed July 30, 1986
4. THER-l 1 (formerly IPT-6)
United Kingdom Patent No. 2182426
Application published May 13, 1987
Grant Published July 26, 1989
Expires July 30, 2006
Filed July 30, 1986
Application No. 8618549
B. Thermal Decomposition Processor and System
1. THER-13 (formerly IPT-8)
United States patent No. 4,823,711
Issued April 25, 1989
Inventors: Xxxxxxxxxxx and Xxxxxx
Expires August 21, 2007
Filed August 21, 1987
Application No. 088,094
2. THER-15 (formerly IPT-10)
Canada Patent No. 1,330,251
Issued June 21, 1994
Expires June 21, 2001
Patent Application No. 597,512
Filed April 21, 1989
3. THER-16 (formerly IPT-11)
Taiwan Patent No. 40507
Granted November 14, 1990
Published August 1, 1990
Expires July 31,2005
Filed April 24, 1989
Application No. 78103054
3
C. Method and Apparatus for Controlled Reaction in a Reaction Matrix
THER-17 (formerly IPT-12)
United States Patent No. 5,165,884
Issued November 24, 1992
Inventors: Xxxxxx, Xxxxxxx and Xxxxx
Expires July 5,2011
Filed July 5, 1991
Application No. 07/726,060
D. Method and Apparatus for Recuperative Heating of Reactants in a Reaction
Matrix
THER-002
United States Patent No. 5,320,518
Issued June 14, 1994
Inventors: Xxxxxxx, Xxxxxx and Xxxxx
Expires July 5,2011
Filed September 15, 1992
Application No. 945,218
E. Method and Apparatus for Controlled Reaction in a Reaction Matrix
THER-037
Mexico Patent No. 177902
Issued May 5, 1995
Inventors: Martin, Stilger, Xxxxx
Filed July 3, 1992
Application No. 923946
F. Method and Apparatus for Control of Fugitive VOC Emissions
THER-116
United States Patent No. 5,533,890
Issued July 9, 1996
Expires: July 9, 2013
Inventors: Holst, Martin, Xxxxxxx, Xxx
Filed December 17, 1992
Application No. 992,405
4
G. Method and Afterburner Apparatus for Control of Highly Variable Flows
THER-117
United States Patent No. 5,601,790
Issued February 11, 1997
Expires: February 11,2014
Inventors: Hoist, Martin, Stilger, Xxx
Filed July 16, 1993
Application No. 08/092,980
H. Method and Afterburner Apparatus for Destruction of Volatile Organic
Compound Flows of Varying Concentration
THER-239 (Based on THER-113)
Taiwan Patent Application No. 84112869
Issued January 20, 1997
Inventors: Xxxxx, Xxxxxx
X. System for Increasing Efficiency of Vapor Phased Pollutant Removal With On-
Site Regeneration and Pollutant Recovery
THER-258
Assigned to Thermatrix from Purus Inc. April 18, 1996
US Patent No. 5,281,257
Issued January 25, 1994
Expires: December 11, 2012
Inventor: Xxxxxx
PATENT APPLICATIONS
-------------------
A. Improved Hazardous Waste System
THER-12 (formerly IPT-7)
Japan Application No. 62-115729/1987
Filed May 12, 1987 (as a non-convention case stemming from United States
Patent No. 4,688,495, filed July 31, 1985 and Application No. 681,255,
filed December 13, 1984, now abandoned with additional material added)
Published November 18, 1988
Request for examination made May 11, 1994, with amended claims
5
B. Method and Apparatus for Controlled Reaction in a Reaction Matrix
1. THER-20 (formerly IPT- 15)
Australia Application No. 19,398/92
Filed July 3, 1992
Based on IPT-12 and IPT-13 (THER-17 and 18) combined
2. THER-21 (formerly IPT-16)
Canada Application No. 2,072,907-4
Filed July 2, 1992
Examination Request due by July 5, 1999
Laid open to public January 6, 1993
Based on IPT-12 and IPT-13 (THER-17 and 18) combined
3. THER-22 (and THER-23 through THER-35) (formerly IPT-17 through IPT-30)
European Patent Office Application No. 92305990.1
Filed June 29, 1992
Designating Austria, Belgium, Denmark, France, Germany, Greece, Italy,
Luxembourg, Netherlands, Spain, Sweden, Switzerland and the United Kingdom
Based on IPT-12 and IPT-13 (THER-17 and 18) combined
Substantive exam requested March 7, 1994
Allowed October, 1996
4. THER-36 (formerly IPT-31)
Israel Application No. 102395
Filed July 2, 1992
Based on IPT-12 and IPT-13 (THER-17 and 18) combined
5. THER-38 (formerly IPT-33)
PCT Application No. U592/05585
Filed July 2, 1992
Based on IPT-12 and IPT-13 (THER-17 and 18) combined
Designating Brazil, Finland, Hungary, Japan, Norway and South Korea
National Phase entered (See below)
6. THER-39 (formerly IPT-34)
Brazil Application No. P19206249-0
Filed January 5, 1994
6
7. THER-40 (formerly IPT-35)
Finland Application No. 940026
Filed January 4, 1994
8. THER-41 (formerly IPT-36)
Hungary Application No. P9400021
Filed January 4, 1994
9. THER-42 (formerly IPT-37)
Japan Application No. 502330/93
Filed January 5, 1994
Examination requested April 4, 1994
Published July 28, 1994
10. THER-43 (formerly IPT-39)
South Korea Application No. 94-700028
Filed January 5, 1994
11. THER-44 (formerly IPT-38)
Norway Application No. P940024
Filed January 4, 1994
C. Method and Apparatus for Control of Fugitive VOC Emissions
1. THER-51
Israel Application No. 107991
Filed December 10, 1993
Based on THER-5
Allowed: August, 1996
2. THER-52
Mexico Application No. 938116
Filed December 16, 1993
Based on THER-5
7
3. THER-53 (and THER-54 through THER-78)
PCT Application No. US93/11837
Filed December 6, 1993
Based on THER-5
Designating Australia, Brazil, Canada, EPO (THER-57 & 00-00), Xxxxxxx,
Xxxxxxx, Xxxxx, Xxxxx Xxxxx and Norway
Exam requested July 17, 1994, and amended claims
Entered National Phase in EPO Countries only (THER 57-73) in June, 1995
D. Method and Afterburner Apparatus for Control of Highly Variable Flows
1. THER-206
United States Application No.
08/468,872
Filed June 6, 1995
Inventors: Stilger, Martin, Xxxxx and Xxx
Divisional of THER-1 17
Allowed: December, 1996
2. XXXX-00
Xxxxxx Xxxxxxxxxxx Xx. 000000
Filed July 18, 1994
Based on THER-46
3. THER-85
Xxxxxx Xxxxxxxxxxx Xx. 000000
Filed July 18, 1994
Based on THER-46
4. THER-86 (and THER-87 through THER-1 11)
PCT Application No. U594107936
Filed July 15, 1994
Based on THER-46
Designating Australia, Brazil, Canada, EPO (all countries THER-90 &
91-106), Finland, Hungary, Japan, South Korea, and Norway
National Phases entered for all designated countries in January, 1996
(See below)
5. THER-87
Australia Application No. 73,342/94
Filed July 15, 1994
National Phase entered February 2, 1996
8
6. THER-88
Brazil Application No. P1 9407068-7
Filed July 15, 1994
National Phase entered January 15, 1996
7. THER-89
Canada Serial No. 2,167,310
Filed July 15, 1994
Registration No. 1,449,358
Filed April 11, 1996
8. THER-90 (and 91-106)
European Patent Office
Serial No. 94923491.8
Filed July 15, 1994
Designating Austria, Belgium, Switzerland and Liechtenstein, Germany, Denmark,
Spain, France, United Kingdom, Greece, Ireland, Italy, Luxembourg, Monaco,
Netherlands, Portugal and Sweden
National Phase entered January 8, 1996
9. XXXX-000
Xxxxxxx Xxxxxx Xx. 000000
Filed July 15, 1994
National Phase entered January 15, 1996
10. THER-108
Hungary Application No. P9600082
Filed July 15, 1994
National Phase entered January 16, 1996
11. THER-109
Japan Application No. 504730/95
Filed July 15, 1994
National Phase entered February 7, 1996
12. XXXX-000
Xxxxx Xxxxx Application No. 96-700236
Filed July 15, 1994
National Phase entered January 16, 1996
9
13. THER-111
Norway Application No. P960180
Filed July 15, 1994
National Phase entered January 15, 1996
E. Method and Apparatus for Destruction of Volatile Organic Compound
Flows of Varying Concentration
1A THER-113
United States Application No. 08/347,870
Filed December 1, 1994
Inventors: Xxxxx and Xxxxxx
Allowed: September, 1996
lB. THER-208
United States Application No. 08/527,545
Filed September 13, 1995
Inventors: Xxxxx and Xxxxxx
Divisional of THER-1 13
Allowed: November, 1996
2. THER-210
PCT Application No. PCT/U595/15430
Filed November 29, 1995
Based on THER- 113 designation all countries.
Must go to National phases by June 1, 1997.
3. XXXX-000
Xxxxxx Xxxxxxxxxxx Xx. 000000
Filed November 26, 1995
Based on THER-1 13
F. Thermal Oxidizers with Improved Preheating Means and Process for Operating
Same
1. XXXX-000
Xxxxxx Xxxxxx Xxxxxxxxxxx Xx. 000000,000
Filed June 6, 1996
Inventors: Martin, Stilger, Xxxxx
10
G. Destruction of Diesel Soot
1. THER-249
Application in progress
Inventors: Hoist, Xxxxxx, Xxxxxxx
H. System for Treatment of Chemical Wastes and Methods for
Treating Xxxxxxxx Xxxxxx
0. XXXX-000
Xxxxxx Xxxxxx Application No. 08/729,850
Filed October 15, 1996
Inventors: Martin, Stilger, Heywood, King
I. Methods for Destroying Colliery Methane and Systems for Practicing Same
1. THER-251
United States Application No. 08/641,636
Filed May 1, 1996
Inventor: Xxxxxx
X. Simplification and Improvement of the Pulp and Paper Kraft Recovery
System Utilizing a Flameless Thermal Reactor/Oxidizer
1. THER-253
United States Application No.
Provisional Filed June 6, 1996
Inventor: Xxxxx
X. Non-planar Reaction
1. THER-255
Application in progress
Inventors: Xxxxxx, Hoist, Xxxxxxx
L. Synthesis of Hydrogen Cyanide
1. THER-275
Application in progress
Inventors: Xxxxxx, Young
11
M. Systems for the Treatment of Commingled Wastes
and Methods for Treating Commingled Wastes
1. THER-279
United States Application No. 08/631,708
Filed April 10, 1996
Inventors: Heywood, Hoist, Xxxxxx, Xxxxxxxxx
N. Landfill Gas Destruction
1. THER-283
Application in progress
Inventors: Hoist, Xxxxxx, Xxxxxxx
12
SCHEDULE OF EXCEPTIONS
4.1 Borrower has granted an exclusive right and license to engineer, apply,
assemble, sell, lease or lease to others the use of; sublicense, erect, install,
service, maintain, and use the patented technology and know-how on a worldwide
basis for Spent Ion Exchange Resins used to remove radioactive materials from
waste water and other effluents from nuclear power plants, nuclear defense
industry plants, and other industrial sources. This exclusive license has been
granted to Formatrix, L.L.C. which is 40% owned by the Borrower.
7.11 Inventory is presently located at the Borrower's facility in Knoxville,
Tennessee.
Collateral Assignment 3 (a) -- See 4.1 above.
