AMENDMENT NO. 1
TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT (the "AMENDMENT"), is
entered into this 28th day of March, 2003, by and between INSIGHTFUL
CORPORATION, a Delaware corporation ("BORROWER"), and SILICON VALLEY BANK,
("BANK"). Capitalized terms used herein without definition shall have the same
meanings given them in the Loan Agreement (as defined below).
RECITALS
A. Borrower and Bank have entered into that certain Loan and Security
Agreement dated as of March 29, 2002 (the "LOAN AGREEMENT"), pursuant to which
the Bank has agreed to extend and make available to Borrower certain advances of
money.
B. Borrower desires that Bank (1) make additional Equipment Advances,
(2) reduce the Unfunded Capital Expenditures to be maintained by Borrower, and
(3) extend the Revolving Maturity Date, upon the terms and conditions more fully
set forth herein.
C. Subject to the representations and warranties of Borrowers herein
and upon the terms and conditions set forth in this Amendment, Bank has agreed
to make such additional advances and is willing to so amend the Loan Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals and intending to
be legally bound, the parties hereto agree as follows:
1. AMENDMENTS TO LOAN AGREEMENT.
1.1 SECTION 2.1.4 (EQUIPMENT ADVANCES). SECTIONS 2.1.4(A) and (B)
of the Loan Agreement are amended by replacing the text thereof with the
following:
(A) At any time from the date hereof through the Tranche A
Availability End Date, Tranche C Availability End Date, or Tranche D
Availability End Date, as applicable, Bank agrees to make advances to
Borrower in three tranches, Tranche A Equipment Advances, Tranche C
Equipment Advances, and Tranche D Equipment Advances (each an "EQUIPMENT
ADVANCE" and collectively, the "EQUIPMENT ADVANCES"). Borrower may request
a Tranche A Equipment Advance at any time from the Closing Date through and
until the earlier to occur of (a) the Tranche A Availability End Date and
(b) the termination of Bank's obligation to advance money pursuant to
Section 9.1(b). Borrower may request a Tranche C Equipment Advance at any
time from the Effective Date through and until the earlier to occur of (a)
the Tranche C Availability End Date and (b) the termination of Bank's
obligation to advance money pursuant to Section 9.1(b). Borrower may
request a Tranche D Equipment Advance at any time from the Tranche C
Availability End Date through and until the earlier to occur of (a) the
Tranche D Availability End Date and (b) the termination of Bank's
obligation to advance money pursuant to Section 9.1(b) (the "TRANCHE D
AVAILABILITY PERIOD"). The aggregate outstanding amount of Tranche C
Equipment Advances and Tranche D Equipment Advances shall not at any time
exceed the Committed Equipment Line. The Equipment Advances may only be
used to finance or refinance Eligible Equipment purchased on or after 90
days before the date of each Equipment Advance and may not exceed 100% of
the corresponding invoice. Notwithstanding the foregoing, Borrower may use
up to 25% of each Equipment Advance to finance transferable software
licenses, leasehold improvements and soft costs relating to Eligible
Equipment (including sales tax, shipping, warranty charges, freight and
installation expenses).
(b) Interest accrues from the date of each Equipment Advance at the
rate specified in Section 2.3(a) and is payable monthly through the Tranche
A Equipment Maturity Date (with respect to Tranche A Equipment Advances) or
the Equipment Maturity Date (with respect to Tranche C Equipment Advances
and Tranche D Equipment Advances).
(i) TRANCHE A EQUIPMENT ADVANCES. Any Tranche A Equipment
Advances that are outstanding on the Tranche A Availability End Date shall
be due and payable in 42 equal monthly installments of principal plus
interest, beginning on the first day of the month immediately following the
Tranche A Availability End Date, and continuing on the first day of each
month thereafter through the Tranche A Equipment Maturity Date, at which
time all amounts due in connection with Tranche A Equipment Advances shall
be immediately due and payable.
(ii) TRANCHE C EQUIPMENT ADVANCES. Any Tranche C Equipment
Advances that are outstanding on the Tranche C Availability End Date shall
be due and payable in 42 equal monthly installments of principal plus
interest, beginning on the first day of the month immediately following the
Tranche C Availability End Date, and continuing on the first day of each
month thereafter through the Equipment Maturity Date, at which time all
amounts due in connection with Tranche C Equipment Advances shall be
immediately due and payable.
(iii) TRANCHE D EQUIPMENT ADVANCES. Any Tranche D Equipment
Advances that are outstanding on the Tranche D Availability End Date shall
be due and payable in 36 equal monthly installments of principal plus
interest, beginning on the first day of the month immediately following the
Tranche D Availability End Date, and continuing on the first day of each
month thereafter through the Equipment Maturity Date, at which time all
amounts due in connection with Tranche D Equipment Advances shall be
immediately due and payable.
1.2 SECTION 6.7 (FINANCIAL COVENANTS). SECTION 6.7(B) of the
Loan Agreement is amended by replacing the text thereof with the following:
(b) MAXIMUM UNFUNDED CAPITAL EXPENDITURES. Borrower's Unfunded
Capital Expenditures shall not exceed $1,500,000 in any calendar year.
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1.3 SECTION 13 (AMENDED DEFINITIONS). The following terms and
their respective definitions set forth in SECTION 13.1 of the Loan Agreement are
amended in their entirety and replaced with the following:
(a) "COMMITTED EQUIPMENT LINE" is a Credit Extension of up to
$750,000.
(b) "EQUIPMENT MATURITY DATE" is March 27, 2007.
(c) "REVOLVING MATURITY DATE" is March 27, 2004.
(d) "TRANCHE A EQUIPMENT ADVANCE" or "TRANCHE A EQUIPMENT ADVANCES"
is a loan advance (or advances) under the Tranche A Committed Equipment
Line in an amount not to exceed the amount available under the Tranche A
Committed Equipment Line.
1.4 SECTION 13 (DELETED DEFINITIONS). SECTION 13.1 of the Loan
Agreement is amended by deleting the following terms and their respective
definitions in their entirety from such Section:
(a) "TRANCHE B EQUIPMENT ADVANCE" or "TRANCHE B EQUIPMENT ADVANCES"
(b) "TRANCHE B AVAILABILITY END DATE"
1.5 SECTION 13 (ADDITIONAL DEFINITIONS) SECTIO 13.1 of the Loan
Agreement is amended by inserting the following terms and their respective
definitions in the proper alphabetical order of such Section:
(a) "EFFECTIVE DATE" is March 28, 2003.
(b) "TRANCHE A COMMITTED EQUIPMENT LINE" is a Credit Extension of up
to $450,000.
(c) "TRANCHE A EQUIPMENT MATURITY DATE" is March 28, 2006.
(d) TRANCHE C AVAILABILITY END DATE" means September 27, 2003.
(e) "TRANCHE C EQUIPMENT ADVANCE" or "TRANCHE C EQUIPMENT ADVANCES"
is a loan advance (or advances) under the Committed Equipment Line in an
amount not to exceed the amount available under the Committed Equipment
Line.
(f) "TRANCHE D AVAILABILITY END DATE" means March 27, 2004.
(g) "TRANCHE D EQUIPMENT ADVANCE" or "TRANCHE D EQUIPMENT ADVANCES"
is a loan advance (or advances) under the Committed Equipment Line drawn
during the Tranche D Availability Period in an amount not to exceed the
lesser of (a) the amount available under the Committed Equipment Line and
(b) $375,000.
1.6 EXHIBIT D, "COMPLIANCE CERTIFICATE" of the Loan Agreement is
hereby amended by deleting it in its entirety and replacing it with Exhibit
-------
A attached hereto.
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2. BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower represents
and warrants that:
(a) immediately upon giving effect to this Amendment (i) the
representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (ii) no Event of
Default has occurred and is continuing;
(b) Borrower has the corporate power and authority to execute and
deliver this Amendment and to perform its obligations under the Loan Agreement,
as amended by this Amendment;
(c) the certificate of incorporation, bylaws and other organizational
documents of Borrower delivered to Bank on the Closing Date remain true,
accurate and complete and have not been amended, supplemented or restated and
are and continue to be in full force and effect;
(d) the execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, have been duly authorized by all necessary corporate action
on the part of Borrower; and
(e) this Amendment has been duly executed and delivered by the
Borrower and is the binding obligation of Borrower, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors' rights.
3. LIMITATION. The amendments set forth in this Amendment shall be
limited precisely as written and shall not be deemed (a) to be a waiver or
modification of any other term or condition of the Loan Agreement or of any
other instrument or agreement referred to therein or to prejudice any right or
remedy which Bank may now have or may have in the future under or in connection
with the Loan Agreement or any instrument or agreement referred to therein; or
(b) to be a consent to any future amendment or modification or waiver to any
instrument or agreement the execution and delivery of which is consented to
hereby, or to any waiver of any of the provisions thereof. Except as expressly
amended hereby, the Loan Agreement shall continue in full force and effect.
4. EFFECTIVENESS. This Amendment shall become effective upon the
satisfaction of all the following conditions precedent:
4.1 AMENDMENT. Borrower and Bank shall have duly executed and
delivered this Amendment to Bank.
4.2 PAYMENT OF COMMITTED REVOLVING LINE COMMITMENT FEE. Borrower
shall have paid to Bank a fully-earned, non-refundable fee in the amount of
$8,750 on or before the Effective Date with respect to the Committed Revolving
Line.
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4.3 PAYMENT OF COMMITTED EQUIPMENT LINE COMMITMENT FEE. Borrower
shall have paid to Bank a fully-earned, non-refundable fee in the amount of
$1,875 on or before the Effective Date with respect to the Committed Equipment
Line.
4.4 PAYMENT OF BANK EXPENSES. Borrower shall have paid all Bank
Expenses (including all reasonable attorneys' fees and reasonable expenses)
incurred through the date of this Amendment.
5. COUNTERPARTS. This Amendment may be signed in any number of
counterparts, and by different parties hereto in separate counterparts, with the
same effect as if the signatures to each such counterpart were upon a single
instrument. All counterparts shall be deemed an original of this Amendment.
6. INTEGRATION. This Amendment and any documents executed in
connection herewith or pursuant hereto contain the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
agreements, understandings, offers and negotiations, oral or written, with
respect thereto and no extrinsic evidence whatsoever may be introduced in any
judicial or arbitration proceeding, if any, involving this Amendment; except
that any financing statements or other agreements or instruments filed by Bank
with respect to Borrowers shall remain in full force and effect.
7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above.
BORROWER: INSIGHTFUL CORPORATION, a Delaware
corporation
By:_____________________________________________
Printed Name:___________________________________
Title:__________________________________________
BANK: SILICON VALLEY BANK
By:_____________________________________________
Printed Name:___________________________________
Title:__________________________________________
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Exhibit A
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EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
000 XXXX XXXXXX, XXXXX 0000
XXXXXXX, XX 00000
FROM: INSIGHTFUL CORPORATION
The undersigned authorized officer of INSIGHTFUL CORPORATION ("Borrower")
certifies that under the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the "Agreement"), (i) Borrower is in complete
compliance for the period ending _______________ with all required covenants
except as noted below and (ii) all representations and warranties in the
Agreement are true and correct in all material respects on this date. Attached
are the required documents supporting the certification. The Officer certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) consistently applied from one period to the next except as
explained in an accompanying letter or footnotes. The Officer acknowledges that
no borrowings may be requested at any time or date of determination that
Borrower is not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
---------------------------------- --------------------------------- --------
Monthly financial statements + CC Monthly within 20 days Yes No
Annual (Audited) FYE within 90 days Yes No
Forms 10-K and 10-Q and
shareholder notices 10 days after delivery to SEC or
shareholders Yes No
A/R & A/P Agings Monthly within 20 days Yes No
Borrowing Base Certificate Monthly within 20 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------------------ -------------- ------------- --------
MAINTAIN ON A QUARTERLY BASIS:
Net Loss Not to exceed
$ 1,000,000 $____________ Yes No
MAINTAIN ON A YEARLY BASIS:
Unfunded Capital Expenditures Not to exceed
$ 1,500,000 $____________ Yes No
Have there been updates to Borrower's intellectual property, if appropriate?
Yes / No
COMMENTS REGARDING EXCEPTIONS: See Attached. -----------------------------
BANK USE ONLY
Sincerely, Received by:_________________
AUTHORIZED SIGNER
Date:________________________
INSIGHTFUL CORPORATION
Verified:____________________
________________________________________ AUTHORIZED SIGNER
Signature
Date:________________________
________________________________________
Title Compliance Status: Yes No
-----------------------------
________________________________________
Date
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