SILICON VALLEY BANK
LOAN AND SECURITY AGREEMENT
BORROWER: Rogue Wave Software, Inc.
ADDRESS: 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
DATE: October 16, 1996
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK ("Silicon"), whose address is 0000 Xxxxxx Xxxxx, Xxxxx
Xxxxx, Xxxxxxxxxx 00000 and the borrower named above (the "Borrower"), whose
chief executive office is located at the above address ("Borrower's Address").
1. LOANS.
1.1 LOANS. Silicon will make one or more loans to the Borrower (the
"Loans") up to the amounts (the "Credit Limits") shown on the Schedule to this
Agreement (the "Schedule") as the Credit Limit for such loans. The terms of the
Loans are stated in this Agreement and in the Schedule. The terms of the
Schedule are incorporated into this Agreement. The Borrower is responsible for
monitoring the total amount of Loans and other Obligations outstanding from time
to time, and the Borrower shall not permit the amount of any Loan to exceed at
any time the applicable Credit Limit for such Loan. The Borrower shall not
permit the total amount of Loans and all other obligations to exceed at any time
the aggregate Credit Limit for the Loans. If at any time the total of all
outstanding Loans and all other Obligations exceeds the aggregate Credit Limit,
the Borrower shall immediately pay the amount of the excess to Silicon, without
notice or demand. Borrower may prepay the Loans in whole or in part at any time
without premium or penalty.
1.2 INTEREST; DEBIT TO DEPOSIT ACCOUNTS. All Loans and all other monetary
Obligations shall bear interest at the applicable rates shown on the Schedule.
Interest shall be payable monthly, on the due date shown on the monthly billing
from Silicon to the Borrower. The Borrower shall regularly deposit all funds
received from its business activities in accounts maintained by the Borrower at
Silicon. The Borrower hereby requests and authorizes Silicon to debit any of
the Borrower's accounts, including without limitation account no. ___________,
for payments of interest and principal due on the Loans and all other
obligations owing by the Borrower to Silicon. Silicon shall promptly notify
the Borrower of all debits which Silicon
Page 1 - LOAN AND SECURITY AGREEMENT
makes against the Borrower's accounts. Any such debit against the Borrower's
accounts shall in no way be deemed a setoff by Silicon.
1.3 FEES. The Borrower shall pay to Silicon at closing a commitment fee
and other fees in the amounts shown on the Schedule. These fees are in addition
to all interest and other sums payable to Silicon and are not refundable.
1.4 ADDITIONAL COSTS. In case of 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) which:
(a) subjects Silicon to any tax with respect to payments of principal
or interest or any other amounts payable hereunder by the Borrower or otherwise
with respect to the transactions contemplated hereby (except for taxes on the
overall net income of Silicon 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, or loans by, Silicon; or
(c) imposes upon Silicon any other condition with respect to its
performance under this Agreement,
and the result of any of the foregoing is to hereafter increase the cost to
Silicon, reduce the income receivable by Silicon or impose any expense upon
Silicon with respect to any loans, Silicon shall notify the Borrower thereof.
Borrower agrees to pay to Silicon 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 Silicon of a statement of the
amount and setting forth Silicon's calculation thereof, all in reasonable
detail, which statement shall be deemed true and correct absent manifest error.
Notwithstanding anything to the contrary contained in this SECTION 1.4, Borrower
shall not be obligated to indemnify or reimburse Silicon for any reduction in
Silicon's rate of return on its capital as a consequence of Silicon's
obligations hereunder which arose or was incurred during or is otherwise
attributable to any period of time more than 180 days prior to the date on which
Silicon shall have delivered its written statement for indemnification or
reimbursement for such reduction.
2. GRANT OF SECURITY INTEREST.
2.1 OBLIGATIONS. The term "Obligations" as used in this Agreement means
the following: the obligation to pay all Loans and all interest on the Loans
when due, and to pay and perform when due all other present and future
indebtedness, liabilities, obligations, guarantees, covenants, agreements,
warranties and representations of the Borrower to Silicon, whether joint or
several, monetary or non-monetary, and which are created pursuant to this
Agreement. Silicon may, in its discretion, charge monetary Obligations to the
Borrower's Loan account, in which event they shall bear interest at the rates
applicable to the Loan to which
Page 2 - LOAN AND SECURITY AGREEMENT
such amounts are charged, or, with reasonable notice to Borrower, require
that Borrower pay monetary Obligations in cash.
2.2 COLLATERAL. As security for all Obligations, the Borrower hereby
grants Silicon a continuing security interest in all of the Borrower's
assets, including but not limited to all of the Borrower's interest in the
types of property described below, whether now owned or hereafter acquired,
and wherever located (collectively, the "Collateral"): (a) all accounts,
contract rights, chattel paper, letters of credit, documents, securities,
money, and instruments, and all other obligations now or in the future owing
to the Borrower; (b) all inventory, goods, merchandise, materials, raw
materials, work in process, finished goods, farm products, advertising,
packaging and shipping materials, supplies, and all other tangible personal
property which is held for sale or lease or furnished under contracts of
service or consumed in the Borrower's business, and all warehouse receipts
and other documents; (c) all equipment, including without limitation all
machinery, fixtures, trade fixtures, vehicles, furnishings, furniture,
materials, tools, machine tools, office equipment, computers and peripheral
devices, appliances, apparatus, parts, dies, and jigs; (d) all general
intangibles including, but not limited to, deposit accounts, goodwill, names,
trade names, trademarks and the goodwill of the business symbolized thereby,
trademark applications, trade secrets, drawings, blueprints, customer lists,
patents, patent applications, copyrights, copyright applications, security
deposits, loan commitment fees, federal, state and local tax refunds and
claims, all rights in all litigation presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
now or hereafter arising therefrom, all rights to purchase or sell real or
personal property, all rights as a licensor or licensee of any kind, all
royalties, licenses, processes, telephone numbers, proprietary information,
purchase orders, and all insurance policies and claims (including without
limitation credit, liability, property and other insurance), and all other
rights, privileges and franchises of every kind; (e) all books and records,
whether stored on computers or otherwise maintained; (f) all of the
Borrower's cash; and (g) all substitutions, additions and accessions to any
of the foregoing, and all products, proceeds and insurance proceeds of the
foregoing, and all guaranties of and security for the foregoing; and all
books and records relating to any of the foregoing. Silicon's security
interest in any present or future technology (including patents, trade
secrets, and other technology) shall be subject to any licenses or rights now
or in the future granted by the Borrower to any third parties in the ordinary
course of the Borrower's business; provided that if the Borrower proposes to
sell, license or grant any other rights with respect to any technology in a
transaction that, in substance, conveys substantially all of the economic
value of that technology, Silicon shall first be requested to release its
security interest, and Silicon may withhold such release in its reasonable
discretion. The Borrower shall not, either directly or through any agent,
employee, licensee or designee, (a) file an application for the registration
of any patent, trademark, or copyright with the U.S. Patent and Trademark
Office, the U.S. Copyright Office, or any similar office or agency in any
other country, state, or any political subdivision (the "Offices"), or (b)
file any assignment of any patent, trademark, or copyright which the Borrower
may acquire from a third party with any one of the Offices unless the
Borrower shall, on or prior to the date of such filing, notify Silicon of
such filing, and, upon request of Silicon, execute and deliver any and all
assignments, agreements, instruments, documents and papers as Silicon may
request to evidence Silicon's interest in such patents, trademarks, or
copyrights, as the case may be, including the goodwill and general
intangibles of the Borrower relating thereto or represented thereby. If an
Event of Default has occurred and is
Page 3 - LOAN AND SECURITY AGREEMENT
continuing, the Borrower authorizes Silicon to amend any applicable notice of
security interest or assignment executed pursuant to SECTION 4.9 of this
Agreement without first obtaining the Borrower's approval of or signature to
such amendment and to record such assignment with one or more of the Offices,
with prompt subsequent notice to the Borrower.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
The Borrower represents and warrants to Silicon as follows, and the
Borrower covenants that the following representations shall continue to be true,
and that the Borrower shall comply with all of the following covenants:
3.1 CORPORATE EXISTENCE AND AUTHORITY. The Borrower is and shall
continue to be duly authorized, validly existing and in good standing under the
laws of the state of its incorporation, as identified on the copy of the
Borrower's Articles of Incorporation delivered to Silicon. The Borrower is and
shall continue to be qualified and licensed to do business in all jurisdictions
in which any failure to do so would have a material adverse effect on the
Borrower. The execution, delivery and performance by the Borrower of this
Agreement, and all other documents executed by the Borrower in connection with
the Loans have been duly and validly authorized, are enforceable against the
Borrower in accordance with their terms, and do not violate any law or any
provision of, and are not grounds for acceleration under, any material agreement
or instrument that is binding upon the Borrower.
3.2 NAME, TRADE NAMES AND STYLES. The name of the Borrower set forth in
the heading to this Agreement is its correct name. Listed on an Exhibit to the
Schedule are all prior names of the Borrower and all of the Borrower's present
and prior trade names. The Borrower shall give Silicon 15 days' prior written
notice before changing its name or doing business under any other name. The
Borrower has complied, and shall in the future comply, with all laws relating to
the conduct of business under a fictitious business name.
3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in
the heading to this Agreement is the chief executive office for the Borrower.
In addition, the Borrower has places of business only at, and Collateral of the
Borrower is located only at, the locations set forth on the Schedule or as
specified by the Borrower in writing from time to time. The Borrower shall give
Silicon at least 15 days' prior written notice before changing its chief
executive office or moving Collateral (other than inventory sold in the ordinary
course of business) to any location other than a location listed on the
Schedule.
3.4 TITLE TO COLLATERAL; PERMITTED LIENS. The Borrower is now, and shall
at all times in the future be, the sole owner of all the Collateral, except for
items of equipment that are leased by the Borrower. The Collateral now is and
shall remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for the following ("Permitted Liens"):
(a) purchase money security interests in specific items of equipment and liens
existing on the equipment at the time of its acquisition, other than equipment
financed by the Loans; (b) leases of specific items of equipment; (c) liens for
taxes fees, assessments or other governmental charges or levies, that are either
(i) being contested in good faith by appropriate proceedings (provided that any
such liens do not have priority over any of Silicon's
Page 4 - LOAN AND SECURITY AGREEMENT
security interests) or (ii) not delinquent; (d) additional security interests
and liens consented to in writing by Silicon in its sole discretion; (e)
security interests being terminated substantially concurrently with this
Agreement; (f) any liens existing as of the date hereof and disclosed in the
Schedule or arising under this Agreement or the Loan Documents; (g) liens
securing capital lease obligations limited to the assets subject to such
capital leases; (h) liens arising from judgments, decrees or attachments to
the extent and only so long as such judgment, decree or attachment has not
caused or resulted in an Event of Default; (i) liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of customs
duties in connection with the importation of goods; (j) liens arising solely
by virtue of any statutory or common law provision relating to banker's
liens, rights of setoff or similar rights and remedies as to deposit accounts
or other funds maintained with a creditor depository institution; and (k)
liens incurred in connection with the extension, renewal or refinancing of
the indebtedness secured in liens of the type described in clauses (a)
through (j) 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. Silicon shall have the right to require, as a condition
to its consent under subparagraph (d) above, that the holder of the
additional security interest or lien sign an intercreditor agreement on terms
satisfactory to Silicon in its sole discretion, acknowledge that the holder's
security interest is subordinate to Silicon's security interest. Silicon now
has, and shall continue to have, a first priority, perfected and enforceable
security interest in all of the Collateral. The Collateral shall not be
subject to any other liens or security interests of any type except for the
Permitted Liens. The Borrower shall at all times defend Silicon and the
Collateral against all claims of others. None of the Collateral now is or
shall be affixed to any real property in such a manner, or with such intent,
as to become a fixture.
3.5 MAINTENANCE OF COLLATERAL. The Borrower shall maintain the Collateral
in the condition received, less reasonable wear and tear. The Borrower shall
not use the Collateral for any unlawful purpose. The Borrower shall immediately
advise Silicon in writing of any material loss or damage to the Collateral.
3.6 BOOKS AND RECORDS. The Borrower has maintained and shall maintain at
the Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.
3.7 FINANCIAL CONDITION AND STATEMENTS. All financial statements now or
in the future delivered to Silicon have been, and shall be, prepared in
conformity with generally accepted accounting principles and now and in the
future shall fairly reflect the financial condition of the Borrower, at the
times and for the periods therein stated. Since the last date covered by any
such statement, there has been no material adverse change in the financial
condition or business of the Borrower. The Borrower is now and shall continue
to be solvent.
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. The Borrower has
timely filed, and shall timely file, all tax returns and reports required by
foreign, federal, state and local law. The Borrower has timely paid, and shall
timely pay, all material foreign, federal, state and local taxes, assessments,
deposits and contributions now or in the future owed by the Borrower. The
Borrower may, however, defer payment of any contested taxes, provided that the
Borrower
Page 5 - LOAN AND SECURITY AGREEMENT
(a) in good faith contests the Borrower's obligation to pay the taxes by
appropriate proceedings promptly and diligently instituted and conducted, (b)
notifies Silicon in writing of the commencement of, and any material
development in, the proceedings, and (c) posts bonds or takes any other steps
required to keep the contested taxes from becoming a lien upon any of the
Collateral. The Borrower is unaware of any claims or adjustments proposed
for any of the Borrower's prior tax years which could result in additional
taxes becoming due and payable by the Borrower. The Borrower has paid, and
shall continue to pay all amounts necessary to fund all present and future
pension, profit sharing and deferred compensation plans in accordance with
their terms. The Borrower has not and shall not withdraw from participation
in, permit partial or complete termination of, or permit the occurrence of
any other event with respect to, any such plan which could result in any
liability of the Borrower, including, without limitation, any liability to
the Pension Benefit Guaranty Corporation or its successors or any other
governmental agency.
3.9 COMPLIANCE WITH LAW. The Borrower has complied, and shall comply, in
all material respects, with all provisions of all foreign, federal, state and
local laws and regulations relating to the Borrower, including, but not limited
to, those relating to ownership of real or personal property, conduct and
licensing of the Borrower's business, and environmental matters.
3.10 LITIGATION. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of the
Borrower's knowledge) threatened by or against or affecting the Borrower in any
court or before any governmental agency (or any basis therefor known to the
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of the Borrower,
or in any material impairment in the ability of the Borrower to carry on its
business in substantially the same manner as it is now being conducted. The
Borrower shall promptly inform Silicon in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or against
the Borrower involving amounts in excess of $100,000.
3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes.
3.12 NO PATENTS OR TRADEMARKS. The Borrower does not own, and the Borrower
does not have pending any application for the registration of, any patent or
trademark with the U.S. Patent and Trademark Office or any similar office or
agency of any state, of the United States of America or of any foreign
jurisdiction except as disclosed in the Schedule.
3.13 HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous
substance," "disposal," "release," and "threatened release," as used in this
Agreement, shall have the same meanings as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended,
42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("XXXX"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 49 U.S.C. Section 6901, et seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant to
any of the foregoing. The Borrower represents and warrants that: (a) the
Borrower has no knowledge of (i) any use, generation, manufacture, storage,
treatment,
Page 6 - LOAN AND SECURITY AGREEMENT
disposal, release, or threatened release of any hazardous waste or substance by
any prior owners or occupants of any of the real properties owned or operated by
the Borrower, or (ii) any actual or threatened litigation or claims of any kind
by any person relating to such matters; (b) neither the Borrower nor any
subtenant, contractor, agent or other user authorized by Borrower of any of the
real properties shall use, generate, manufacture, store, treat, dispose of, or
release any hazardous waste or substance on, under, or about any of the real
properties owned or operated by the Borrower except in compliance with all
applicable federal, state, and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances described
above. The Borrower authorizes Silicon and its agents, upon 24 hours prior
notice (which need not be in writing), to enter upon the real properties to make
such inspections and tests as Silicon may deem appropriate to determine
compliance of the real properties owned or operated by the Borrower with this
Section of the Agreement. Any inspections or tests made by Silicon shall be for
Silicon's purposes only and shall not be construed to create any responsibility
or liability on the part of Silicon to the Borrower or to any other person. The
Borrower hereby (a) releases and waives any future claims against Silicon for
indemnity or contribution in the event the Borrower becomes liable for cleanup
or other costs under any such laws, and (b) agrees to indemnify and hold
harmless Silicon against any and all claims, losses, liabilities, damages,
penalties, and expenses which Silicon may directly or indirectly sustain or
suffer resulting from a breach of this Section of the Agreement or as a
consequence of any use, generation, manufacture, storage, disposal, release or
threatened release occurring prior to the Borrower's ownership or interest in
the real properties, whether or not the same was or should have been known to
the Borrower. The provisions of this Section of the Agreement, including the
obligation to indemnify, shall survive the payment of the obligations and the
termination or expiration of this Agreement and shall not be affected by
Silicon's acquisition of any interest in any of the real properties, whether by
foreclosure or otherwise.
4. ADDITIONAL DUTIES OF THE BORROWER.
4.1 FINANCIAL AND OTHER COVENANTS. The Borrower shall at all times comply
with the financial and other covenants set forth in the Schedule.
4.2 OVERADVANCE; PROCEEDS OF ACCOUNTS. If for any reason the total of all
outstanding Loans and all other Obligations exceeds the total Credit Limit, as
stated in the Schedule, without limiting Silicon's other remedies, and whether
or not Silicon declares an Event of Default, the Borrower shall remit to Silicon
all checks and other proceeds of the Borrower's accounts and general
intangibles, in the same form as received by the Borrower, within one day after
the Borrower's receipt of the same, to be applied to the Obligations in such
order as Silicon shall determine in its discretion until such overadvance has
been paid.
4.3 INSURANCE. The Borrower shall at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Silicon, in such form and amounts as are
customary in the Borrower's business. All such insurance policies shall name
Silicon as an additional loss payee, and shall contain a lenders loss payee
endorsement in form reasonably acceptable to Silicon. Upon receipt of the
proceeds of any such insurance, Silicon shall apply such proceeds in reduction
of the Obligations as Silicon shall determine in its sole and absolute
discretion, except that, provided no Event of
Page 7 - LOAN AND SECURITY AGREEMENT
Default has occurred, Silicon shall release to the Borrower insurance
proceeds with respect to equipment totaling less than $100,000, which shall
be utilized by the Borrower for the replacement of the equipment with respect
to which the insurance proceeds were paid. Silicon may require reasonable
assurance that the insurance proceeds so released shall be so used. If the
Borrower fails to provide or pay for any insurance, Silicon may, but is not
obligated to, obtain the same at the Borrower's expense. The Borrower shall
promptly deliver to Silicon copies of all reports made to insurance
companies. Statutory notice regarding insurance:
WARNING
Unless you provide us with evidence of the insurance coverage as required
by our contract or loan agreement, we may purchase insurance at your expense to
protect our interest. This insurance may, but need not, also protect your
interest. If the collateral becomes damaged, the coverage we purchase may not
pay any claim you make or any claim made against you. You may later cancel this
coverage by providing evidence that you have obtained property coverage
elsewhere.
You are responsible for the cost of any insurance purchased by us. The
cost of this insurance may be added to your contract or loan balance. If the
cost is added to your contract or loan balance, the interest rate on the
underlying contract or loan will apply to this added amount. The effective date
of coverage may be the date your prior coverage lapsed or the date you failed to
provide proof of coverage.
This coverage we purchase may be considerably more expensive than insurance
you can obtain on your own and may not satisfy any need for property damage
coverage or any mandatory liability insurance requirements imposed by applicable
law.
4.4 REPORT. The Borrower shall provide Silicon with such written reports
with respect to the Borrower as Silicon shall from time to time reasonably
specify, including but not limited to the financial reports required as stated
in the Schedule.
4.5 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At all reasonable times, and
upon one business day notice, Silicon, or its agents, shall have the right to
inspect the Collateral, and the right to audit and copy the Borrower's
accounting books, records, ledgers, journals, or registers and the Borrower's
books and records relating to the Collateral at Silicon's expense, provided that
no prior notice is required upon the occurrence and continuation of an Event of
Default. Silicon shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but Silicon shall have the
right to disclose any such information to its auditors, regulatory agencies and
attorneys, and pursuant to any subpoena or other legal process. The Borrower
shall reimburse Silicon for Silicon's actual costs for conducting two such
audits per year. Silicon may debit the Borrower's deposit accounts with Silicon
for the cost of such audits, in which event Silicon shall send notification
thereof to the Borrower.
4.6 NEGATIVE COVENANTS. Except as may be expressly permitted in the
Schedule, the Borrower shall not, without Silicon's prior written consent, do
any of the following:
(a) merge or consolidate with another corporation, except that the
Borrower may merge or consolidate with another corporation if the
Borrower is the surviving corporation in the merger and the
aggregate value of the assets
Page 8 - LOAN AND SECURITY AGREEMENT
acquired in the merger does not exceed 25% of the Borrower's
Tangible Net Worth (as defined in the Schedule) as of the end
of the month prior to the effective date of the merger, and
the assets of the corporation acquired in the merger are not
subject to any liens or encumbrances, except Permitted Liens;
(b) acquire any assets, including stock of any other entity, outside
the ordinary course of business for an aggregate purchase price
(whether paid in cash, in stock of the Borrower or other
consideration) exceeding 25% of the Borrower's Tangible Net Worth
(as defined in the Schedule) as of the end of the month prior to
the effective date of the acquisition;
(c) enter into any other transaction outside the ordinary course of
business (except as permitted by the other provisions of this
Section);
(d) sell or transfer any Collateral, except for the sale of finished
inventory in the ordinary course of the Borrower's business;
provided, that notwithstanding the foregoing, the Borrower may
abandon any Collateral if Borrower determines that reasonable
business practices suggest that abandonment is appropriate;
(e) make any loans of any money or any other assets ("Investments")
to shareholders, employees or any other person except in the
ordinary course of business, other than:
(1) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or
services in the ordinary course of business;
(2) Investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in
the ordinary course of business;
(3) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers or
suppliers and in settlement of delinquent obligations of, and
other disputes with, customers or suppliers arising in the
ordinary course of business;
(4) Investments consisting of (i) compensation of employees,
officers and directors of Borrower so long as the Board of
Directors of Borrower determines that such compensation is in the
best interests of Borrower, (ii) travel advances, employee
relocation loans and other employee loans and advances in the
ordinary course of business, (iii) loans to employees officers or
directors relating to the purchase of equity securities of
Borrower pursuant to employee stock purchase plans approved by
Borrower's Board of Directors, (iv) other loans to officers and
employees
Page 9 - LOAN AND SECURITY AGREEMENT
approved by the Board of Directors in an amount not in excess
of $100,000;
(5) other Investments aggregating not in excess of $100,000 at
any time;
(6) (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., and
(iii) certificate of deposit maturing no more than one (1) year
from the date of investment therein issued by Silicon;
(f) incur any debts that are outside the ordinary course of business
or that would have a material, adverse effect on the Borrower or
on the prospect of repayment of the Obligations;
(g) guarantee or otherwise become liable with respect to the
obligations of another party or entity;
(h) pay or declare any dividends on the stock of the Borrower (except
for dividends payable solely in stock of the Borrower);
(i) redeem, retire, purchase or otherwise acquire, directly or
indirectly, any of the stock of the Borrower; provided, that the
Borrower may redeem or repurchase its securities in an amount in
any fiscal year not exceeding $100,000 in connection with any
agreement between the Borrower and any officer, director or
employee of the Borrower entered into in the ordinary course of
business wherein the Borrower is obligated or entitled to
repurchase from such officer, director or employee shares of
equity securities of the Borrower upon such person's termination
of employment or services or other event.
(j) make any change in the Borrower's capital structure which has a
material adverse effect on that Borrower or on the prospect of
repayment of the Obligations; or
(k) dissolve or elect to dissolve. Transactions permitted by the
foregoing provisions of this Section are only permitted if no
Event of Default and no event which (with notice or passage of
time or both) would constitute an Event of Default would occur as
a result of such transaction.
4.7 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or in any manner
relating to the Borrower, the Borrower shall, without expense to Silicon, make
available the Borrower and its officers,
Page 10 - LOAN AND SECURITY AGREEMENT
employees and agents and the Borrower's books and records to the extent that
Silicon may deem them reasonably necessary in order to prosecute or defend
any such suit or proceeding.
4.8 VERIFICATION. If an Event of Default has occurred and is continuing,
Silicon may, from time to time, verify directly with the respective account
debtors the validity, amount and other matters relating to the Borrower's
accounts, by means of mail, telephone or otherwise, either in the name of the
Borrower or Silicon or such other name as Silicon may reasonably choose.
Silicon shall not be required to obtain the Borrower's consent prior to any such
verification of accounts if an Event of Default has occurred. Borrower shall
not unreasonably withhold its consent to such verification of accounts by
Silicon in a fictitious name if requested by Silicon, even if no Event of
Default is pending at the time.
4.9 EXECUTE ADDITIONAL DOCUMENTATION. The Borrower agrees, at its
expense, on request by Silicon, to execute from time to time all documents in
form satisfactory to Silicon, as Silicon may deem reasonably necessary or useful
in order to perfect and maintain Silicon's perfected security interest in the
Collateral, and in order to fully consummate all of the transactions
contemplated by this Agreement.
4.10 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS. The 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 an exhibit
to the Collateral Assignment, Patent Mortgage and Security Agreement delivered
to Silicon by the 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 exhibit to the Collateral Assignment, Patent Mortgage and
Security Agreement. Borrower shall execute and deliver such additional
instruments and documents from time to time as Silicon shall reasonably request
to perfect Silicon's security interest in such additional intellectual property
rights.
5. TERM.
5.1 MATURITY DATE. This Agreement shall continue in effect until the
payment in full of the Obligations, provided, however, that the Borrower shall
repay in full each Loan described on the Schedule, with all accrued but unpaid
interest on that Loan, on or before the Maturity Date stated on the Schedule for
such Loan.
5.2 EARLY TERMINATION. Subject to SECTION 5.3, this Agreement may be
terminated, without penalty, prior to the Maturity Date as follows: (a) by the
Borrower, effective three business days after written notice of termination is
given to Silicon; or (b) by Silicon at any time after the occurrence and during
the continuance of an Event of Default, with prompt subsequent notice, effective
immediately.
Page 11 - LOAN AND SECURITY AGREEMENT
5.3 PAYMENT OF OBLIGATIONS. On the due dates stated in the Schedule, or
on any earlier effective date of termination, the Borrower shall pay and perform
in full all Obligations, whether evidenced by installment notes or otherwise,
and whether or not all or any part of such Obligations are otherwise then due
and payable. Notwithstanding any termination of this Agreement, all of
Silicon's security interests in all of the Collateral and all of the terms and
provisions of this Agreement shall continue in full force and effect until all
Obligations have been paid and performed in full; provided that Silicon may, in
its sole discretion, refuse to make any further Loans after termination. No
termination shall in any way affect or impair any right or remedy of Silicon,
nor shall any such termination relieve the Borrower of any Obligation to
Silicon, until all of the Obligations have been paid and performed in full.
Upon payment and performance in full of all the Obligations, Silicon shall
promptly deliver to the Borrower termination statements, requests for
reconveyances and such other documents as may be required to fully terminate any
of Silicon's security interests.
6. EVENTS OF DEFAULT AND REMEDIES.
6.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and the Borrower
shall give Silicon immediate written notice thereof: (a)any warranty,
representation, statement, report or certificate made or delivered to Silicon by
the Borrower or any of the Borrower's officers or employees, now or in the
future, shall be untrue or misleading in any material respect when made; or (b)
the Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation (including but not limited to any amount necessary for
the balance of the Loan not to exceed the applicable Credit Limit); or (c) the
Borrower shall fail to comply with any of the financial covenants set forth in
the Schedule or shall fail to perform any other non-monetary Obligation which by
its nature cannot be cured; or (d) the Borrower shall fail to pay or perform any
other non-monetary Obligation, under this Agreement or any other agreement or
document relating to the Loans; or (e) any levy, assessment, attachment,
seizure, lien or encumbrance is made on all or any material part of the
Collateral; or (f) dissolution, termination of existence, insolvency or business
failure of the Borrower, or appointment of a receiver, trustee or custodian for
all or any part of the property of, assignment for the benefit of creditors by,
or the commencement of any proceeding by the Borrower under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect;
or (g) the commencement of any proceeding against the Borrower or any guarantor
of any of the Obligations under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect, which is not cured by the
dismissal thereof within 60 days after the date commenced; or (h) revocation or
termination of, or limitation of liability upon, any guaranty of the
Obligations; or (i) commencement of proceedings by any guarantor of any of the
Obligations under any bankruptcy or insolvency law; or (j) the Borrower makes
any payment on account of any indebtedness or obligation which has been
subordinated to the Obligations, unless such payment is permitted in the
applicable subordination agreement, or if any person who has subordinated such
indebtedness or obligations terminates or in any way limits his subordination
agreement; or (k) the Borrower shall generally not pay its debts as they become
due; or the Borrower shall conceal, remove or transfer any part of its property,
with intent to hinder, delay or defraud its creditors, or make or suffer any
transfer of any of its
Page 12 - LOAN AND SECURITY AGREEMENT
property which may be fraudulent under any bankruptcy, fraudulent conveyance
or similar law; or (l) either the Borrower or any other party thereto shall
breach any subordination agreement executed in connection with the Loans; or
(m) the current shareholders of the Borrower shall cease to own more than 50%
of the outstanding common stock of the Borrower. If any of the foregoing
defaults, other than a failure to pay money and breach of an financial
covenant set forth in the Schedule, is curable, it may be cured (and no Event
of Default shall have occurred) if the Borrower cures the default within
thirty days (or within sixty days in the case of clause (g) of this SECTION
6.1). Silicon may cease making any Loans hereunder during the above cure
periods, and thereafter if an Event of Default has occurred and is continuing.
6.2 REMEDIES. Upon the occurrence and during the continuance of any
Event of Default and the expiration of any applicable cure period under
SECTION 6.1, Silicon, at its option, with prompt subsequent notice, may do
any one or more of the following: (a) cease making Loans or otherwise
extending credit to the Borrower under this Agreement or any other document
or agreement; (b) accelerate and declare all or any part of the Obligations
to be immediately due, payable, and performable, notwithstanding any deferred
or installment payments allowed by any instrument evidencing or relating to
any Obligation; (c) take possession of any or all of the Collateral wherever
it may be found, and for that purpose the Borrower hereby authorizes Silicon
without judicial process to enter onto any of the Borrower's premises without
interference to search for, take possession of, keep, store, or remove any of
the Collateral, and remain on the premises or cause a custodian to remain on
the premises in exclusive control thereof without charge for so long as
Silicon deems it reasonably necessary in order to complete the enforcement of
its rights under this Agreement or any other agreement; provided, however,
that should Silicon seek to take possession of any or all of the Collateral
by Court process, the Borrower hereby irrevocably waives: (i) any bond and
any surety or security relating thereto required by any statute, court rule
or otherwise as an incident to such possession; (ii) any demand for
possession prior to the commencement of any suit or action to recover
possession thereof; and (iii)any requirement that Silicon retain possession
of and not dispose of any such Collateral until after trial or final
judgment; (d) require the Borrower to assemble any or all of the Collateral
and make it available to Silicon at places designated by Silicon which are
reasonably convenient to Silicon and the Borrower, and to remove the
Collateral to such locations as Silicon may deem advisable;(e) require the
Borrower to deliver to Silicon, in kind, all checks and other payments
received with respect to all accounts and general intangibles, together with
any necessary indorsements, within one day after the date received by the
Borrower; (f) complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Silicon shall have the right to use the Borrower's
premises, vehicles, hoists, lifts, cranes, equipment and all other property
without charge; (g) sell, lease or otherwise dispose of any of the Collateral
in its condition at the time Silicon obtains possession of it or after
further manufacturing, processing or repair, at any one or more public and/or
private sales, in lots or in bulk, for cash, exchange or other property, or
on credit, and to adjourn any such sale from time to time without notice
other than oral announcement at the time scheduled for sale; Silicon shall
have the right to conduct such disposition on the Borrower's premises without
charge, for such time or times as Silicon deems reasonable, or on Silicon's
premises, or elsewhere and the Collateral need not be located at the place of
disposition; Silicon may directly or through any affiliated company purchase
or lease any Collateral at any such public disposition, and if permissible
under
Page 13 - LOAN AND SECURITY AGREEMENT
applicable law, at any private disposition; any sale or other disposition of
Collateral shall not relieve the Borrower of any liability the Borrower may
have if any Collateral is defective as to title or physical condition or
otherwise at the time of sale; (h) demand payment of, and collect any
accounts and general intangibles comprising Collateral and, in connection
therewith, the Borrower irrevocably authorizes Silicon to endorse or sign the
Borrower's name on all collections, receipts, instruments and other
documents, to take possession of and open mail addressed to the Borrower and
remove therefrom payments made with respect to any item of the Collateral or
proceeds thereof, and, in Silicon's sole discretion, to grant extensions of
time to pay, compromise claims and settle accounts and the like for less than
face value; (i) offset against any sums in any general, special or other
deposit accounts maintained by the Borrower with Silicon; and (j) demand and
receive possession of any of the Borrower's federal and state income tax
returns and the books and records utilized in the preparation thereof or
referring thereto. All reasonable fees of professionals (including
reasonable attorneys' fees), expenses, costs, liabilities and obligations
incurred by Silicon with respect to the foregoing shall be added to and
become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of
the Obligations. Without limiting any of Silicon's rights and remedies, from
and after the occurrence of any Event of Default, the interest rate
applicable to the Obligations shall be increased by an additional two percent
per annum above the rate otherwise applicable.
6.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. The Borrower and
Silicon agree that a Sale or other disposition (collectively, "Sale") of any
Collateral which complies with the following standards shall conclusively be
deemed to be commercially reasonable: (a) notice of the Sale is given to the
Borrower at least 10 days prior to the Sale, and, in the case of a public Sale,
notice of the Sale is published at least 10 days before the Sale in a newspaper
of general circulation in the county where the Sale is to be conducted;
(b) notice of the Sale describes the Collateral in general, non-specific terms;
(c) the Sale is conducted at a place designated by Silicon, with or without the
Collateral being present; (d) the Sale commences at any time between 8:00 a.m.
and 6:00 p.m; (e) payment of the purchase price in cash or by cashier's check or
wire transfer is required; (f) with respect to any Sale of any of the
Collateral, Silicon may (but is not obligated to) direct any prospective
purchaser to ascertain directly from the Borrower any and all information
concerning the same. Silicon may employ other methods of noticing and selling
the Collateral, in its discretion, if they are commercially reasonable.
6.4 POWER OF ATTORNEY. Effective only upon the occurrence and during the
continuance of an Event of Default, the Borrower hereby irrevocably appoints
Silicon (and any of Silicon's designated officers, or employees) as the
Borrower's true and lawful attorney to: (a) send requests for verification of
accounts or notify account debtors of Silicon's security interest in the
accounts; (b) endorse the Borrower's name on any checks or other forms of
payment or security that may come into Silicon's possession; (c) sign the
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 the 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 Silicon determines to be
Page 14 - LOAN AND SECURITY AGREEMENT
reasonable; provided Silicon may exercise such power of attorney to sign the
name of the Borrower on any of the documents described in SECTION 4.9 regardless
of whether an Event of Default has occurred. The appointment of Silicon as the
Borrower's attorney in fact, and each and every one of Silicon's rights and
powers, being coupled with an interest, is irrevocable until all of the
Obligations have been fully repaid and performed and Silicon's obligation to
provide advances hereunder is terminated.
6.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any
sale of the Collateral shall be applied by Silicon first to the costs, expenses,
liabilities, obligations and reasonable attorneys' fees incurred by Silicon in
the exercise of its rights under this Agreement, second to the interest due upon
any of the Obligations, and third to the principal of the Obligations, in such
order as Silicon shall determine in its sole discretion. Any surplus shall be
paid to the Borrower or other persons legally entitled thereto; the Borrower
shall remain liable to Silicon for any deficiency. If Silicon, in its sole
discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale or other disposition of
Collateral, Silicon shall have the option, exercisable at any time, in its sole
discretion, of either reducing the Obligations by the principal amount of
purchase price or deferring the reduction of the Obligations until the actual
receipt by Silicon of the cash therefor.
6.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth
in this Agreement, Silicon shall have all the other rights and remedies accorded
a secured party under the Uniform Commercial Code of Oregon and each state in
which any Collateral is located, and under all other applicable laws, and under
any other instrument or agreement now or in the future entered into between
Silicon and the Borrower, and all of such rights and remedies are cumulative and
none is exclusive. Exercise or partial exercise by Silicon of one or more of
its rights or remedies shall not be deemed an election, nor bar Silicon from
subsequent exercise or partial exercise of any other rights or remedies. The
failure or delay of Silicon to exercise any rights or remedies shall not operate
as a waiver thereof, but all rights and remedies shall continue in full force
and effect until all of the Obligations have been fully paid and performed.
7. GENERAL PROVISIONS.
7.1 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by regular first-class mail, or
certified mail return receipt requested, addressed to Silicon or the Borrower at
the addresses shown in the heading to this Agreement, or at any other address
designated in writing by one party to the other party. In addition, Borrower
shall send a copy of any notice to Silicon to the following address: 00000 X.X.
Xxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000-0000, Attn: Art Xxxxxxxx. All notices
shall be deemed to have been given upon delivery in the case of notices
personally delivered to the Borrower or to Silicon, or at the expiration of two
business days following the deposit thereof in the United States mail, with
postage prepaid.
7.2 SEVERABILITY. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
Page 15 - LOAN AND SECURITY AGREEMENT
7.3 INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between the Borrower and Silicon and
supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this Agreement. ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW. UNDER
OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY SILICON AFTER
OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY SILICON TO
BE ENFORCEABLE.
7.4 WAIVERS. The failure of Silicon at any time or times to require the
Borrower to strictly comply with any of the provisions of this Agreement or any
other present or future agreement between the Borrower and Silicon shall not
waive or diminish any right of Silicon later to demand and receive strict
compliance therewith. Any waiver of any default shall not waive or affect any
other default, whether prior or subsequent thereto. None of the provisions of
this Agreement or any other agreement now or in the future executed by the
Borrower and delivered to Silicon shall be deemed to have been waived by any act
or knowledge of Silicon or its agents or employees, but only by a specific
written waiver signed by an officer of Silicon and delivered to the Borrower.
The Borrower waives demand, protest, notice of protest and notice of default or
dishonor, notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, instrument, account, general
intangible, document or guaranty at any time held by Silicon on which the
Borrower is or may in any way be liable, and notice of any action taken by
Silicon, unless expressly required by this Agreement.
7.5 NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor any of its
directors, officers, employees, agents, attorneys or any other person affiliated
with or representing Silicon shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by the
Borrower or any other party through the ordinary negligence of Silicon, or any
of its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Silicon.
7.6 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by the Borrower and a duly
authorized officer of Silicon.
7.7 TIME OF ESSENCE. Time is of the essence in the performance by the
Borrower of each and every obligation under this Agreement.
7.8 ATTORNEYS' FEES AND COSTS. The Borrower shall reimburse Silicon for
all reasonable attorneys' fees and fees of other professionals, and all filing,
recording, search, title insurance, appraisal, audit, and other reasonable costs
incurred by Silicon, pursuant to, or in connection with, or relating to this
Agreement (whether or not a lawsuit is filed), including, but not limited to,
any reasonable attorneys' fees and costs Silicon incurs in order to do the
following: prepare and negotiate this Agreement and the documents relating to
this Agreement; obtain legal advice in connection with this Agreement; enforce,
or seek to enforce, any of its
Page 16 - LOAN AND SECURITY AGREEMENT
rights; prosecute actions against, or defend actions by, account debtors;
commence, intervene in, or defend any action or proceeding (including any
appeal or review); initiate any complaint to be relieved of the automatic
stay in bankruptcy; file or prosecute any probate claim, bankruptcy claim,
third-party claim, or other claim; examine, audit, copy, and inspect any of
the Collateral or any of the Borrower's books and records; or protect, obtain
possession of, lease, dispose of, or otherwise enforce Silicon's security
interest in, the Collateral and otherwise represent Silicon in any litigation
relating to the Borrower. If either Silicon or the Borrower file any lawsuit
against the other predicated on a breach of this Agreement, the prevailing
party in such action shall be entitled to recover its reasonable costs and
professionals' fees, including (but not limited to) reasonable attorneys'
fees and costs incurred in the enforcement of, execution upon or defense of
any order, decree, award or judgment, and in any appeal or review by an
appellate court. All fees and costs to which Silicon may be entitled
pursuant to this Section shall immediately become part of the Borrower's
Obligations, shall be due on demand, and shall bear interest at a rate equal
to the highest interest rate applicable to any of the Obligations.
7.9 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of the parties hereto; provided,
however, that the Borrower may not assign or transfer any of its rights under
this Agreement without the prior written consent of Silicon, and any prohibited
assignment shall be void. No consent by Silicon to any assignment shall release
the Borrower from its liability for the Obligations. The Borrower agrees and
consents to Silicon's sale or transfer, whether now or later, of one or more
participation interests in the Loans to one or more purchasers, whether related
or unrelated to Silicon. Silicon may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Silicon may have about the Borrower or about any other
matter relating to the Loans, provided that the recipient is not a competitor of
Borrower and agrees to maintain the confidentiality thereof, and the Borrower
hereby waives any rights to privacy it may have with respect to such matters.
The Borrower additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such participation
interests. The Borrower also agrees that the purchasers of any such
participation interests shall be considered as the absolute owners of such
interests in the Loans and shall have all the rights granted under the
participation agreement or agreements governing the sale of such participation
interests.
7.10 SECTION HEADINGS; CONSTRUCTION. Section headings are only used in
this Agreement for convenience. The Borrower acknowledges that the headings may
not describe completely the subject matter of the applicable section, and the
headings shall not be used in any manner to construe, limit, define or interpret
any term or provision of this Agreement. This Agreement has been fully reviewed
and negotiated between the parties and no uncertainty or ambiguity in any term
or provision of this Agreement shall be construed strictly against Silicon or
the Borrower under any rule of construction or otherwise.
7.11 MUTUAL WAIVER OF JURY TRIAL. The Borrower and Silicon each hereby
waives the right to trial by jury in any action or proceeding based upon,
arising out of, or in any way relating to, this agreement or any conduct, acts
or omissions of Silicon or the Borrower or any of their directors, officers,
employees, agents, attorneys or any other persons affiliated with
Page 17 - LOAN AND SECURITY AGREEMENT
Silicon or the Borrower, in all of the foregoing cases, whether sounding in
contract or tort or otherwise.
7.12 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and
transactions hereunder and all rights and obligations of Silicon and the
Borrower shall be governed by, and construed in accordance with, the laws of
the State of Oregon. Any undefined term used in this Agreement that is
defined in the Oregon Uniform Commercial Code shall have the meaning assigned
to that term in the Oregon Uniform Commercial Code. As a material part of
the consideration to Silicon to enter into this Agreement, the Borrower (i)
agrees that all actions and proceedings relating directly or indirectly
hereto shall at Silicon's option, be litigated in courts located within
Oregon, and that the exclusive venue therefor shall be, at Silicon's option,
Washington County or Multnomah County, Oregon; (ii) consents to the
jurisdiction and venue of any such court and consents to service of process
in any such action or proceeding by personal delivery or any other method
permitted by law; and (iii) waives any and all rights the Borrower may have
to object to the jurisdiction of any such court, or to transfer or change the
venue of any such action or proceeding.
BORROWER:
ROGUE WAVE SOFTWARE, INC.
By:
----------------------------------------
Title: CFO
-------------------------------------
SILICON:
SILICON VALLEY BANK
By:
----------------------------------------
Title: Vice President
-------------------------------------
Page 18 - LOAN AND SECURITY AGREEMENT
SCHEDULE TO LOAN AND SECURITY AGREEMENT
Borrower: ROGUE WAVE SOFTWARE, INC.
SECURED EQUIPMENT TERM LOAN
CREDIT LIMIT: An amount not to exceed the lesser of (i) $1,000,000 at any
one time outstanding; or (ii) the amount of the "Equipment
Borrowing Base", as defined below. For purposes of this
Schedule, the "Equipment Borrowing Base" shall mean 60% of
the net book value of equipment purchased by Borrower on or
before March 31, 1996, plus 90% of the invoice value of
equipment purchased by Borrower after March 31, 1996.
Silicon shall have no obligation to advance against taxes,
freight charges, installation charges or other similar
amounts relating to Borrower's equipment, whether or not
such amounts are identified on the invoices submitted to
Silicon. Equipment to be included in the Equipment
Borrowing Base must be new equipment, at the time of
purchase by Borrower, owned by Borrower, in good working
order, must not be subject to any liens in favor of any
person or entity other than Silicon other than Permitted
Liens, and must be subject to a first priority, perfected
security interest in favor of Silicon. Silicon shall have
no obligation to make advances against non-standard
equipment, such as tooling and custom equipment. Silicon's
advances against software relating to Borrower's equipment
shall not exceed 25% of the outstanding balance of the
Secured Equipment Term Loan at any one time. Silicon shall
have no obligation to make advances on this Secured
Equipment Term Loan after March 31, 1997. Silicon shall
make advances under this Secured Equipment Term Loan from
time to time, based on invoices and other documentation as
shall be requested by Silicon to support such advances. The
Borrower's indebtedness to Silicon with respect to this
Secured Equipment Term Loan shall be evidenced by this
Schedule and the Loan Agreement, not by a separate
promissory note unless required by Silicon.
Borrower shall submit to Silicon such invoices, advance
requests and other information, in form acceptable to
Silicon, as Silicon shall reasonably require from time to
time.
Once the maximum amount of the principal has been advanced
under this Secured Equipment Term Loan, Borrower is no longer
entitled to further advances on this Loan. Borrower shall
not have the right to reborrow any amount on this Secured
Equipment Term Loan that has been repaid by Borrower.
Advances may be requested in writing by Borrower or an
Page 19 - LOAN AND SECURITY AGREEMENT
authorized person. Silicon may, but need not, require that
all oral requests be confirmed in writing. The unpaid
principal balance owing on this Secured Equipment Term Loan
at any time may be evidenced by Silicon's internal records,
including daily computer print-outs (which Silicon shall
provide to Borrower periodically).
PURPOSE: Borrowers shall use the proceeds of this Secured Equipment
Term Loan to finance the purchase of new equipment.
INTEREST RATE: The interest rate applicable to the Secured Equipment Term
Loan shall be a rate equal to the "Prime Rate" (as defined
above) in effect from time to time. Interest calculations
shall be made on the basis of a 360-day year and the actual
number of days elapsed. The interest rate applicable to the
Obligations shall change on each date there is a change in
the Prime Rate.
AMORTIZATION: Borrower shall pay Silicon monthly payments of interest only
on the last day each month commencing with October 31, 1996.
In addition, Borrower shall pay Silicon on the last day of
each month, commencing with March 31, 1997, the amount
necessary to repay fully the amount of the Secured Equipment
Term Loan in 42 equal month payments.
MATURITY DATE: August 30, 2000, at which time all unpaid principal and
accrued but unpaid interest, fees and other charges shall be
due and payable.
COMMITMENT
FEE: $2,000, payable at closing. This fee is fully earned at
closing and is non-refundable. (Any Commitment Fee
previously paid by the Borrower in connection with this loan
shall be credited against this Fee.)
PRIOR NAMES OF
BORROWER: See attached Exhibit A
TRADE NAMES OF
BORROWER: See attached Exhibit A
TRADEMARKS OF
BORROWER: See attached Exhibit A
OTHER LOCATIONS
AND ADDRESSES: See attached Exhibit A
MATERIAL ADVERSE
LITIGATION: See attached Exhibit A
Page 20 - LOAN AND SECURITY AGREEMENT
FINANCIAL
COVENANTS: The Borrower shall at all times comply with all of the
following covenants, all of which shall be determined and
measured on a quarterly basis (for Borrower's domestic
operations only) in accordance with generally accepted
accounting principles, on a consolidated basis with any
subsidiary of Borrower, except as otherwise stated below:
TANGIBLE NET
WORTH: Borrower shall at all times maintain a Tangible Net Worth
of not less than $4,500,000.
LIQUIDITY: Borrower shall at all times maintain a minimum Term
Liquidity Coverage of at least 2.0:1.0.
DEFINITIONS: "Tangible Net Worth" means stockholders' equity plus debt,
if any, that has been subordinated to the Loans in a written
subordination agreement on terms satisfactory to Silicon,
and accrued interest thereon, less goodwill, patents,
capitalized software costs, deferred organizational costs,
tradenames, trademarks, and all other assets which would be
classified as intangible assets under generally accepted
accounting principles.
"Term liquidity coverage" means (a) cash + cash equivalents
(readily marketable securities issued by the United States,
readily marketable commercial paper rated "A-I" by Standard &
Poors Corporation or a similar rating by a similar rating
organization, certificates of deposit and banker's
acceptances) + 50% of Borrower's accounts receivable divided
by (b) the outstanding Secured Equipment Term Loan balance.
OTHER COVENANTS: Borrower shall at all times comply with all of the following
additional covenants:
FINANCIAL STATEMENTS AND REPORTS. The Borrower shall provide
Silicon: (a) within 30 days after the end of each month, a
monthly financial statement (consisting of a income statement
and a balance sheet) prepared by the Borrower in accordance
with generally accepted accounting principles; (b) within 30
days after the end of each quarter, a Compliance Certificate
in such form as Silicon shall reasonably specify, signed by
the Chief Financial Officer of the Borrower, setting forth
calculations showing compliance (at the end of each such
calendar quarter) with the financial covenants set forth on
the Schedule, and certifying that throughout such quarter the
Borrower was in full compliance with all other terms and
conditions of this Agreement and the Schedule, and providing
such other information as Silicon shall reasonably request;
and (c) within 90 days following the end of the Borrower's
fiscal year, complete annual CPA-audited financial
statements, such audit being conducted by independent
certified public accountants
Page 21 - LOAN AND SECURITY AGREEMENT
reasonably acceptable to Silicon, together with an
unqualified opinion of such accountants.
CONDITIONS TO
CLOSING: Before requesting any such advance, the Borrower shall
satisfy each of the following conditions:
1. LOAN DOCUMENTS:
Silicon shall have received this Agreement, the Schedule, a
Collateral Assignment, Patent Mortgage and Security
Agreement, executed by the Borrower, and such other loan
documents as Silicon shall require, each duly executed and
delivered by the parties thereto.
2. DOCUMENTS RELATING
TO AUTHORITY, ETC.:
Silicon shall have received each of the following in form and
substance satisfactory to it:
(a) Certified Copies of the Articles of Incorporation and
Bylaws of the Borrower;
(b) A Certificate of Good Standing issued by the Secretary
of State of the Borrower's state of incorporation and such
other states as Silicon may reasonably request with respect
to the Borrower;
(c) A certified copy of a Resolution adopted by the Board of
Directors of the Borrower authorizing the execution, delivery
and performance of this Agreement, and any other documents or
certificates to be executed by the Borrower in connection
with this transaction; and
(d) Incumbency Certificates describing the office and
identifying the specimen signatures of the individuals
signing all such loan documents on behalf of the Borrower.
3. PERFECTION AND
PRIORITY OF SECURITY:
Silicon shall have received evidence satisfactory to it that
its security interest in the Collateral has been duly
perfected and that such security interest is prior to all
other liens, charges, security interests, encumbrances and
adverse claims in or to the Collateral other than Permitted
Liens, which evidence shall include, without limitation, a
certificate (to be requested directly by Silicon) from the
appropriate state
Page 22 - LOAN AND SECURITY AGREEMENT
agencies showing the due filing and first priority of the
UCC Financing Statements to be signed by the Borrower
covering the Collateral, and evidence of the due filing of
the Collateral Assignment, Patent Mortgage and Security
Agreement with the appropriate governmental agencies or
other security documents required by Silicon.
4. INSURANCE: Silicon shall have received evidence satisfactory to it that
all insurance required by this Agreement is in full force
and effect, with loss payee designations and additional
insured designations as required by this Agreement.
5. OTHER INFORMATION:
Silicon shall have received such other statements, opinions,
certificates, documents and information with respect to
matters contemplated by this Agreement as it may reasonably
request, all of which must be acceptable to Silicon.
Silicon shall have conducted an examination of the Borrower's
books, records, ledgers, journals, and registers, as Silicon
may deem necessary, and shall be satisfied with the results
of such examination in its sole discretion.
Silicon and the Borrower agree that the terms of this Schedule supplement
the Loan and Security Agreement between Silicon and the Borrower and agree to be
bound by the terms of this Schedule.
BORROWER:
ROGUE WAVE SOFTWARE, INC.
By:
-----------------------------------------
Title: CFO
--------------------------------------
SILICON:
SILICON VALLEY BANK
By:
-----------------------------------------
Title: Vice President
--------------------------------------
Page 23 - LOAN AND SECURITY AGREEMENT
