1
EXHIBIT 10.5
SILICON VALLEY BANK
LOAN AND SECURITY AGREEMENT
BORROWER: VISION SOLUTIONS, INC.
ADDRESS: 0000 XXXXXXXXX XXXXX, XXXXX 0000 XXXXXX, XXXXXXXXXX 00000
DATE: DECEMBER 10, 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, in its reasonable discretion, will make loans to
the Borrower (the "Loans") in amounts determined by Silicon in its reasonable
discretion up to the amount (the "Credit Limit") shown on the Schedule to this
Agreement (the "Schedule"), provided no Event of Default and no event which,
with notice or passage of time or both, would constitute an Event of Default
has occurred. The Borrower is responsible for monitoring the total amount of
Loans and other Obligations outstanding from time to time, and Borrower shall
not permit the same, at any time, to exceed the Credit Limit. If at any time
the total of all outstanding Loans and all other Obligations exceeds the Credit
Limit, the Borrower shall immediately pay the amount of the excess to Silicon,
without notice or demand.
1.2 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule hereto. Interest shall be payable
monthly, on the due date shown on the monthly billing from Silicon to the
Borrower. Silicon may, in its discretion, charge interest to Borrower's
deposit accounts maintained with Silicon.
1.3 FEES. The Borrower shall pay to Silicon a loan origination fee in
the amount shown on the Schedule hereto concurrently herewith. This fee is in
addition to all interest and other sums payable to Silicon and is not
refundable.
1.4 LETTERS OF CREDIT. Silicon, in its reasonable discretion, will,
from time to time during the term of this Agreement, on the request of the
Borrower, issue letters of credit for the account of the Borrower ("Letters of
Credit"), in an aggregate amount at any one time outstanding not to exceed the
Letter of Credit Sublimit shown on the Schedule, provided that, on the date
the Letters of Credit are to be issued, Borrower has available to it Loans in
an amount equal to or greater than the face amount of the Letters of Credit to
be issued. Letters of Credit shall be in form and substance acceptable to
Silicon in its sole discretion, shall be payable in United States dollars and
shall have an expiry date no later than the Maturity Date. Prior to the
issuance of any Letters of Credit, Borrower shall execute and deliver to
Silicon applications for letters of credit, and letter of credit agreements on
Silicon's standard forms, and such other documentation as Silicon shall specify
(the "Letter of Credit Documentation"). Fees for Letters of Credit shall be as
provided in the Letter of Credit Documentation. Borrower shall indemnify,
defend and hold Silicon harmless from any loss, cost, expense or liability,
including without limitation reasonable attorneys fees, arising out of or
relating to Letters of Credit. The Credit Limit and the Loans available to
Borrower under this Agreement shall be reduced by the face amount of Letters of
Credit from time to time outstanding.
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 thereon
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 whether created pursuant to this
Agreement or any other present or future agreement or otherwise. Silicon may,
in its discretion, require that Borrower pay monetary Obligations in cash to
Silicon, or charge them to Borrower's Loan account, in which event they will
bear interest at the same rate applicable to the Loans. Silicon may also, in
its discretion, charge any monetary Obligations to Borrower's deposit accounts
maintained with Silicon. Silicon will notify the Borrower
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SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
of any such charges to Borrower's deposit accounts. Such charges shall not be
deemed to be a setoff for any purpose.
2.2 COLLATERAL. As security for all Obligations, the Borrower hereby
grants Silicon a continuing security interest in 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; and (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,
trade secrets, drawings, blueprints, customer lists, patents, patent
applications, copyrights, 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 claims of
Borrower against Silicon, 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; and (f) 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 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 a major part of the
economic value of that technology, Silicon shall first be requested to release
its security interest in the same, and Silicon may withhold such release in its
* discretion**.
* REASONABLE
* PROVIDED THAT LICENSES BY BORROWER OF ANY SUCH TECHNOLOGY IN THE
ORDINARY COURSE OF BORROWER'S BUSINESS SHALL NOT BE SUBJECT TO ANY SUCH REQUEST
PROCEDURE OR OTHERWISE REQUIRE THE CONSENT OF SILICON
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 will continue to be true,
and that the Borrower will comply with all of the following covenants:
3.1 CORPORATE EXISTENCE AND AUTHORITY. The Borrower, if a corporation,
is and will continue to be, duly authorized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The Borrower
is and will 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 contemplated hereby 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 * agreement or instrument which
is binding upon the Borrower **. Borrower has no subsidiaries except as set
forth on the Schedule.
* MATERIAL
** OR ANY AGREEMENT THE VIOLATION OF WHICH MAY HAVE A MATERIAL ADVERSE
EFFECT ON 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 the Schedule
hereto are all prior names of the Borrower and all of 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 will 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 Borrower's chief executive office. In
addition, the Borrower has places of business and Collateral is located only at
the locations set forth on the Schedule to this Agreement. The Borrower will
give Silicon at least 15 days prior written notice before changing its chief
executive office or locating the Collateral at any other location *.
* OTHER THAN FOR THE MOVEMENT OF ANY IMMATERIAL ITEMS OF EQUIPMENT TO A
DIFFERENT LOCATION
3.4 TITLE TO COLLATERAL, PERMITTED LIENS. The Borrower is now, and
will at all times in the future be, the sole owner of all the Collateral,
except for items of equipment which are leased by the Borrower. The Collateral
now is and will remain free and clear of any and all liens, charges, security
interests, encumbrances and adverse claims, except for the following
("Permitted Liens"): (i) purchase money security interests in specific items of
equipment; (ii) leases
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SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
of specific items of equipment; (iii) liens for taxes not yet payable; (iv)
additional security interests and liens consented to in writing by Silicon in
its reasonable discretion, which consent shall not be unreasonably withheld;
and (v) security interests being terminated substantially concurrently with
this Agreement. Silicon will have the right to require, as a condition to its
consent under subparagraph (iv) above, that the holder of the additional
security interest or lien sign an intercreditor agreement on Silicon's then
standard form, acknowledge that the security interest is subordinate to the
security interest in favor of Silicon, and agree not to take any action to
enforce its subordinate security interest so long as any Obligations remain
outstanding, and that the Borrower agree that any uncured default in any
obligation secured by the subordinate security interest shall also constitute
an Event of Default under this Agreement. * Silicon now has, and will continue
to have, a perfected and enforceable security interest in all of the
Collateral, subject only to the Permitted Liens, and the Borrower will at all
times defend Silicon and the Collateral against all claims of others. None of
the Collateral now is or will be affixed to any real property in such a manner,
or with such intent, as to become a fixture.
* OTHER THAN AS SPECIFIED IN THE COLLATERAL AGREEMENT, PATENT MORTGAGE
AND SECURITY AGREEMENT OF EVEN DATE HEREWITH BETWEEN SILICON AND BORROWER (THE
"COLLATERAL AGREEMENT"),
3.5 MAINTENANCE OF COLLATERAL. The Borrower will maintain the
Collateral in good working condition *, and the Borrower will not use the
Collateral for any unlawful purpose. The Borrower will immediately advise
Silicon in writing of any material loss or damage to the Collateral.
* , REASONABLE WEAR AND TEAR EXCEPTED
3.6 BOOKS AND RECORDS. The Borrower has maintained and will 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 will be, prepared in
conformity with generally accepted accounting principles and now and in the
future will completely and accurately 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 will
continue to be solvent. The Borrower will provide Silicon: (i) within 30 days
after the end of each month, a monthly financial statement prepared by the
Borrower, and a Compliance Certificate in such form as Silicon shall reasonably
specify, signed by the Chief Financial Officer of the Borrower, certifying that
as of the end of such month the Borrower was in full compliance with all of the
terms and conditions of this Agreement, and setting forth calculations showing
compliance with the financial covenants set forth on the Schedule and such other
information as Silicon shall reasonably request; and (ii) within 90 days
following the end of the Borrower's fiscal year, complete annual financial
statements, certified by independent certified public accountants acceptable to
Silicon and accompanied by the unqualified report thereon by said independent
certified public accountants.
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. The Borrower has
timely filed, and will timely file, all tax returns and reports required by
foreign, federal, state and local law, and the Borrower has timely paid, and
will timely pay, all 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 (i) in good faith contests the Borrower's obligation to pay the taxes
by appropriate proceedings promptly and diligently instituted and conducted,
(ii) notifies Silicon in writing of the commencement of, and any material
development in, the proceedings, and (iii) 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,
and the Borrower has not and will 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.
* MATERIAL
3.9 COMPLIANCE WITH LAW. The Borrower has complied, and will 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 the Borrower's 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 will 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.
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Silicon Valley Bank Loan and Security Agreement
3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes.
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 to this
Agreement.
4.2 OVERADVANCE; PROCEEDS OF ACCOUNTS. If for any reason the total of
all outstanding Loans and all other Obligations exceeds the Credit Limit,
without limiting Silicon's other remedies, and whether or not Silicon declares
an Event of Default, Borrower shall remit to Silicon all checks and other
proceeds of Borrower's accounts and general intangibles, in the same form as
received by Borrower, within one day after Borrower's receipt of the same, to be
applied to the Obligations in such order as Silicon shall determine in its
discretion.
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 *. 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 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 will 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 Borrowers' expense. The Borrower shall promptly deliver to Silicon copies
of all reports made to insurance companies.
* ARE CUSTOMARY IN THE BORROWER'S INDUSTRY
4.4 REPORTS. The Borrower shall provide Silicon with such written reports
* with respect to the Borrower (including without limitation budgets, sales
projections, operating plans and other financial documentation), as Silicon
shall from time to time reasonably specify **.
* THAT BORROWER HAS OTHERWISE PREPARED IN THE CONDUCT OF ITS BUSINESS
** OTHER THAN FOR SUCH REPORTS AND OTHER INFORMATION AS ARE SET FORTH IN
THIS AGREEMENT AS AMENDED FROM TIME TO TIME
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 and records and Borrower's books and records relating to the
Collateral. 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 foregoing
audits shall be at Silicon's expense, exempt that the Borrower shall reimburse
Silicon for its reasonable out of pocket costs for semi-annual accounts
receivable audits by Silicon, its agents, or third parties retained by Silicon
*, and Silicon may debit Borrower's deposit accounts with Silicon for the cost
of such semi-annual accounts receivable audits (in which event Silicon shall
send notification thereof to the Borrower). Notwithstanding the foregoing,
after the occurrence of an Event of Default all audits shall be at the
Borrower's expense.
* IN AN ANNUAL AMOUNT NOT TO EXCEED $3,000
4.6 NEGATIVE COVENANTS. Except as may be permitted in the Schedule
hereto, the Borrower shall not, without Silicon's prior written consent, do any
of the following: (i) 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 acquired in the merger do not exceed 25% of 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;
(ii) acquire any assets outside the ordinary course of business for an
aggregate purchase price exceeding 25% of 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; (iii) enter into any other transaction outside the ordinary
course of business (except as permitted by the other provisions of this
Section)+; (iv) sell or transfer any Collateral, except for the sale of
finished inventory in the ordinary course of tho Borrower's business, and
except for the sale of obsolete or unneeded equipment in the ordinary course of
business; (v) make any loans of any money or any other assets *; (vi) incur any
debts, outside the ordinary course of business, which would have a material,
adverse effect on the Borrower or an the prospect of repayment of the
Obligations; (vii) guarantee or otherwise become liable with respect to the
obligations of another party or entity; (viii) pay or declare any dividends on
the Borrower's stock (except for dividends payable solely in stock of the
Borrower) **; (ix) redeem, retire, purchase or otherwise acquire, directly or
indirectly, any of the Borrower's stock ***; (x) make any change in the
Borrower's capital structure which has a material adverse effect on the
Borrower or on the prospect of repayment of the Obligations; or (xi) 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.
+, RELATING TO WHICH THE CONSENT OF SILICON SHALL NOT BE UNREASONABLY
WITHHELD
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Silicon Valley Bank Loan and Security Agreement
* provided that Borrower may make such loans if the aggregate amount
thereof does not exceed 25% of Borrower's Tangible Net Worth (as defined in the
Schedule) as of the end of each month
** provided that Borrower may effect such dividends if the aggregate
amount thereof does not exceed 25% of Borrower's Tangible Net Worth (as defined
in the Schedule) as of the end of each month
*** provided that Borrower may effect such transactions if the
aggregate amount of stock acquired in connection therewith does not exceed 25%
of Borrower's Tangible Net Worth (as defined in the Schedule) as of the end of
each month
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, 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. Silicon may, from time to time, following prior
notification to "Borrower, 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, provided that no
prior notification to ** Borrower shall be required following an Event of
Default. * and consent of ** or consent by
4.9 Execute Additional Documentation. The Borrower agrees, at its
expense, on request by Silicon, to execute 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.
5. TERM.
5.1 Maturity Date. This Agreement shall continue in effect until the
maturity date set forth on the Schedule hereto (the "Maturity Date").
5.2 Early Termination. This Agreement may be terminated, without
penalty, prior to the Maturity Date as follows: (i) by the Borrower, effective
three business days after written notice of termination is given to Silicon; or
(ii) by Silicon at any time after the occurrence of an Event of Default,
without notice, effective immediately.
5.3 Payment of Obligations. On the Maturity Date 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.
Without limiting the generality of the foregoing, if on the Maturity Date, or
on any earlier effective date of termination, there are any outstanding letters
of credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an amount
equal to the face amount of all such letters of credit plus all interest, fees
and cost due or to become due in connection therewith, to secure all of the
Obligations relating to said letters of credit, pursuant to Silicon's then
standard form cash pledge agreement. * Subject to the preceding sentence,
notwithstanding any termination of the 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, without limiting the fact that
Loans are subject to the reasonable discretion of Silicon, 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.
* Subject to the preceding sentence, notwithstanding
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, employees or agents, now or
in the future, shall be untrue or misleading in any material respect; or (b)
the Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation; or (c) the total Loans and other Obligations
outstanding at any time exceed the Credit Limit; or (d) 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 (e) the Borrower shall fail to pay or perform any other
non-monetary Obligation, which failure is not cured within 5 * business days
after the date due; or (f) Any levy, assessment attachment, seizure, lien or
encumbrance is made on all or any part of the Collateral which is not cured
within 10 ** days after the occurrence of the same; or (g) 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 (h) the
commencement of any proceeding against the Borrower or any guarantor of any
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Silicon Valley Bank Loan and Security Agreement
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 30 *** days after the date commenced; (i) revocation
or termination of, or limitation or denial of liability upon, any guaranty of
the Obligations or any attempt to do any of the foregoing; or commencement of
proceedings by any guarantor of any of the Obligations under any bankruptcy or
insolvency law; or (j) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all
of the Obligations, or any attempt to do any of the foregoing; or commencement
of proceedings by or against any such third party under any bankruptcy or
insolvency law; or (k) the Borrower makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations other
than as 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 (l) there shall be a change in the
record or beneficial ownership of an aggregate of more than ***** of the
outstanding shares of stock of the Borrower, in one or more transactions,
compared to the ownership of outstanding shares of stock of the Borrower in
effect on the date hereof, without the prior written consent of Silicon ******;
or (m) a material adverse change occurs in the business, operations, or
financial or other condition of the Borrower, or a material impairment occurs
in the prospect of payment of the Obligations, or there is a material
impairment of the value or priority of Silicon's security interest in the
Collateral; or (n) 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 property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law. Silicon may cease making any
Loans hereunder during any of the above cure periods, and thereafter if an
Event of Default has occurred.
* 10
** 20
*** 45
**** material
***** 25%
****** which will not be unreasonably withheld, and other than in connection
with a public offering of the stock of the Borrower
6.2 Remedies. Upon the occurrence of any Event of Default, and at any
time thereafter, * Silicon, at its option, and without notice or demand of any
kind (all of which are hereby expressly waived by the Borrower), may do any one
or more of the following: (a) Cease making Loans and cease extending letters of
credit or other credit facilities to or for the benefit of 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 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 endorsements, 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 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
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7
Silicon Valley Bank Loan and Security Agreement
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 of Borrower's
general, special or other deposit accounts 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 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 **
percent per annum.
*, EXCEPT AS SET FORTH IN THE COLLATERAL AGREEMENT
** FOUR
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 will
conclusively be deemed to be commercially reasonable: (i) Notice of the sale is
given to the Borrower at least seven days prior to the sale, and, in the case
of a public sale, notice of the sale is published at least seven days before
the sale in a newspaper of general circulation in the county where the sale is
to be conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m.; (v) Payment of the purchase price
in cash or by cashier's check or wire transfer is required; (vi) 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. Upon the occurrence of any Event of Default,
without limiting Silicon's other rights and remedies, the Borrower grants to
Silicon an irrevocable power of attorney coupled with an interest, authorizing
and permitting Silicon (acting through any of its employees, attorneys or
agents) at any time, at its option, but without obligation, with or without
notice to the Borrower, and at the Borrower's expense, to do any or all of the
following, in the Borrower's name or otherwise: (a) Execute on behalf of the
Borrower any documents that Silicon may, in its sole and absolute
discretion, deem advisable in order to perfect and maintain Silicon's security
interest in the Collateral, or in order to exercise a right of the Borrower or
Silicon, or in order to fully consummate all the transactions contemplated
under this Agreement, and all other present and future agreements; (b) Execute
on behalf of the Borrower any document exercising, transferring or assigning
any option to purchase, sell or otherwise dispose of or to lease (as lessor or
lessee) any real or personal property which is part of Silicon's Collateral or
in which Silicon has an interest; (c) Execute on behalf of the Borrower, any
invoices relating to any account, any draft against any account debtor and any
notice to any account debtor, any proof of claim in bankruptcy, any Notice of
Lien, claim of mechanic's, materialman's or other lien, or assignment or
satisfaction of mechanic's, materialman's or other lien; (d) Take control in
any manner of any cash or non-cash items of payment or proceeds of Collateral;
endorse the name of the Borrower upon any instruments, or documents, evidence
of payment or Collateral that may come into Silicon's possession; (e) Endorse
all checks and other forms of remittances received by Silicon; (f) Pay, contest
or settle any lien, charge, encumbrance, security interest and adverse claim in
or to any of the Collateral, or any judgment based thereon, or otherwise take
any action to terminate or discharge the same; (g) Grant extensions of time to
pay, compromise claims and settle accounts and general intangibles for less
than face value and execute all releases and other documents in connection
therewith; (h) Pay any sums required on account of the Borrower's taxes or to
secure the release of any liens therefor, or both; (i) Settle and adjust, and
give releases of, any insurance claim that relates to any of the Collateral and
obtain payment therefor; (j) Instruct any third party having custody or control
of any books or records belonging to, or relating to, the Borrower to give
Silicon the same rights of access and other rights with respect thereto as
Silicon has under this Agreement; and (k) Take any action or pay any sum
required of the Borrower pursuant to this Agreement and any other present or
future agreements. Silicon shall exercise the foregoing powers in a
commercially reasonable manner. Any and all reasonable sums paid and any and
all reasonable costs, expenses, liabilities, obligations and attorneys' fees
incurred by Silicon with respect to the foregoing shall be added to and become
part of the Obligations, shall be payable on demand, and shall bear interest at
a rate equal to the highest interest rate applicable to any of the Obligations.
In no event shall Silicon's rights under the foregoing power of attorney or any
of Silicon's other rights under this Agreement be deemed to indicate that
Silicon is in control of the business, management or properties of the
Borrower.
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 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.
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8
Silicon Valley Bank Loan and Security Agreement
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 California Uniform Commercial Code 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 Crediting Payments. Payments shall not be applied to the
Obligations until received by Silicon in immediately available federal funds,
and any wire transfer or other payment so received after 12:00 noon Pacific
time shall be deemed to have been received by Silicon as of the opening of
business on the next business day.
7.2 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. 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.
7.3 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.
7.4 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.
There are no oral understandings, representations or agreements between the
parties which are not set forth in this Agreement or in other written
agreements signed by the parties in connection herewith.
7.5 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.
7.6 Strike-out [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.] End Strike-out
7.7 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.
7.8 Time of Essence. Time is of the essence in the performance by the
Borrower of each and every obligation under this Agreement.
7.9 Attorneys Fees and Costs. The Borrower shall reimburse Silicon for
all reasonable attorneys' fees 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 rights; prosecute actions against, or defend actions by,
account debtors; commence, intervene in, or defend any action or proceeding;
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 all Collateral or
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9
Silicon Valley Bank Loan and Security Agreement
any of the Borrower's books and records; 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. In satisfying Borrower's obligation hereunder to reimburse Silicon
for attorneys fees, Borrower may, for convenience, issue checks directly to
Silicon's attorneys, Levy, Small & Xxxxxx, but Borrower acknowledges and
agrees that Levy, Small & Xxxxxx is representing only Silicon and not
Borrower in connection with this Agreement. If either Silicon or the Borrower
files 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 attorneys' 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. All attorneys' fees and costs to which
Silicon may be entitled pursuant to this Paragraph 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.
7.10 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.
7.11 JOINT AND SEVERAL LIABILITY. If the Borrower consists of more than
one person, their liability shall be joint and several, and the compromise of
any claim with, or the release of, any Borrower shall not constitute a
compromise with, or a release of, any other Borrower.
7.12 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph 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 paragraph, 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.
7.13 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 in accordance with, the laws of the State of
California. Any undefined term used in this Agreement that is defined in the
California Uniform Commercial Code shall have the meaning assigned to that term
in the California 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
be litigated in courts located within California, and that the exclusive venue
therefor shall be Orange County; (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.
7.14 MUTUAL WAIVER OF JURY TRIAL. THE BORROWER AND SILICON EACH HEREBY
WAIVE 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 OTHER PRESENT
OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN SILICON AND THE BORROWER, 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 SILICON OR THE BORROWER. THIS WAIVER OF THE RIGHT TO JURY
TRIAL APPLIES TO ALL CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS,
COMMON LAW CLAIMS, STATUTORY CLAIMS AND ALL OTHER CLAIMS AND CAUSES OF ACTION
OF EVERY KIND. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING JURY TRIAL
WAIVER CONSTITUTES A MATERIAL INDUCEMENT TO THE OTHER PARTY TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS JURY
TRIAL WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING ITS CONSULTATION WITH ITS LEGAL COUNSEL.
Borrower:
VISION SOLUTIONS, INC.
By [SIGNATURE]
-----------------------------
President or Vice President
By [SIGNATURE]
-----------------------------
Secretary or Ass't Secretary
Silicon:
SILICON VALLEY BANK
By
-----------------------------
Title
---------------------------
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10
[LOGO] SILICON VALLEY BANK
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: VISION SOLUTIONS, INC.
ADDRESS: 0000 XXXXXXXXX XXXXX, XXXXX 0000
XXXXXX, XXXXXXXXXX 00000
DATE: DECEMBER 10, 1996
THIS SCHEDULE is an integral part of the Loan and Security Agreement
between Silicon Valley Bank ("Silicon") and the above-named borrower
("Borrower") of even date.
CREDIT LIMIT
(Section 1.1): PRIOR TO THE CONVERSION (AS DEFINED BELOW), IF ANY:
An amount not to exceed the lesser of (I) $1,500,000 or
(II) an amount (the "Accounts Loans") up to 80% of the Net
Amount of Borrower's accounts, which Silicon in its
discretion deems eligible for borrowing.
"Net Amount" of an account means the gross amount of the
account, minus all applicable sales, use, excise and other
similar taxes and minus all discounts, credits and
allowances of any nature granted or claimed.
AFTER THE CONVERSION, IF ANY:
(I) An amount (the "Accounts Loans") not to exceed the
lesser of (a) $1,500,000 less the principal amount of the
Term Loan, if any, outstanding from time to time, or (b) up
to 80% of the Net Amount of Borrower's accounts, which
Silicon in its discretion deems eligible for borrowing.
"Net Amount" of an account means the gross amount of the
account, minus all applicable sales, use, excise and other
similar taxes and minus all discounts, credits and
allowances of any nature granted or claimed.
PLUS
----
(II) The amount of the Term Loan (as defined below)
outstanding from time to time, provided that the Term Loan
is not a revolving credit facility and repayment of amounts
relating to the Term Loan do not entitle the Borrower to
reborrow any such amounts under the Term Loan.
Without limiting the fact that the determination of which
accounts are eligible for borrowing is a matter of
Silicon's discretion, the following will not be deemed
eligible for borrowing: (a) accounts outstanding for more
than 90 days from the invoice date; (b) accounts subject to
any
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11
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
contingencies, or arising from a consignment, guaranteed
sale, xxxx and hold, sale on approval or other transaction
in which payment by the account debtor is conditional; (c)
accounts owing from the United States or any department,
agency or instrumentality of the United States or any
state, city or municipality; (d) accounts owing from an
account debtor whose chief executive office or principal
place of business is outside the United States (unless the
account is pre-approved by Silicon in its discretion, or
backed by a letter of credit satisfactory to Silicon, or
FCIA insured satisfactory to Silicon, or the account arises
from goods shipped or services rendered to a branch or
office of the account debtor in the United States) *; (e)
accounts owing from one account debtor to the extent they
exceed 25% of the total eligible accounts outstanding; (f)
accounts owing from an affiliate of Borrower; and (g)
accounts owing from an account debtor to whom Borrower is
or may be liable for goods purchased from, or services
received from, such account debtor or otherwise (to the
extent of the amount owing to such account debtor). In
addition, if more than 50% of the accounts owing from an
account debtor are outstanding more than 90 days from the
invoice date or are otherwise not eligible for borrowing,
then all accounts owing from that account debtor will be
deemed ineligible for borrowing.
*PROVIDED THAT FOREIGN DEBTORS THAT ARE FOREIGN OFFICES OF
IBM ARE NOT CONSIDERED INELIGIBLE BY VIRTUE OF SUCH FOREIGN
LOCATION
CONVERSION;
TERM LOAN If, and only if, within 12 months of the date hereof, (A)
Borrower satisfies the Debt Service Ratio (defined below in
the Section entitled "Financial Covenants") or the
Liquidity Ratio (defined below in the Section entitled
"Financial Covenants") as compliance therewith is more
completely set forth in the Section entitled "Financial
Covenants" below, and (B) no Event of Default, and no event
which with notice or passage of time would constitute an
Event of Default, has occurred, then Borrower may, at
Borrower's election, convert an amount of the Accounts
Loans represented by the Eligible Equipment Loan Amount (as
defined below) to a term loan (such term loan is the "Term
Loan" and such conversion is referred to herein as the
"Conversion").
If Borrower elects the Term Loan option as set forth above,
Borrower shall repay the Term Loan in Thirty-Six (36) equal
monthly payments of principal, commencing on the last day
of the month in which the Conversion occurs and continuing
on the last day of each succeeding month until the earlier
of (a) the expiration of 36 months, or (b) the date this
Agreement terminates by its terms or is terminated, as
provided in Section 5 of this Agreement. On the final
payment date, the entire remaining principal balance of the
Term Loan, all accrued and unpaid interest thereon and all
Obligations relating thereto shall be paid in full.
Interest on the Term Loan shall be payable monthly as
provided in Section 1.2 of this Agreement.
The term "Eligible Equipment Loan Amount" means 100% of the
invoice amounts of equipment purchases by Borrower which
are satisfactory to Silicon in its reasonable discretion,
provided that only 25% of the invoice amount of software
purchases, reasonably satisfactory to Silicon, shall be
eligible to considered part of the Eligible Equipment Loan
Amount. At the time that such purchases are
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12
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
being made, Borrower shall present the related invoices to
Silicon for approval by Silicon if Borrower proposes that
such purchases are to be included in the amount of the Term
Loan.
INTEREST RATE
(Section 1.2): A rate equal to the "Prime Rate" in effect from time to
time, plus .75% per annum. Interest shall be calculated on
the basis of a 360-day year for the actual number of days
elapsed. "Prime Rate" means the rate announced from time to
time by Silicon as its "prime rate;" it is a base rate upon
which other rates charged by Silicon are based, and it is
not necessarily the best rate available at Silicon. The
interest rate applicable to the Obligations shall change on
each date there is a change in the Prime Rate.
LOAN ORIGINATION FEE
(Section 1.3): $7,500. (Any Commitment Fee previously paid by the Borrower
in connection with this loan shall be credited against this
Fee.) The amount payable by Borrower in connection with the
initial accounts receivable audit of Borrower only shall be
deemed to be included in this fee.
LETTER OF CREDIT
SUBLIMIT
(Section 1.4): $250,000
MATURITY DATE
(Section 5.1):
DECEMBER 9, 1997, provided that the Term Loan shall have a
Maturity Date as is set forth above.
SUBSIDIARIES OF BORROWER
(Section 3.1): NONE
PRIOR NAMES OF BORROWER
(Section 3.2): MIDRANGE INFORMATION SYSTEMS AND MIDRANGE INFORMATION
SYSTEMS, INC.
PRESENT TRADE NAMES
OF BORROWER
(Section 3.2): NONE
PRIOR TRADE NAMES
OF BORROWER
(Section 3.2): NONE
OTHER LOCATIONS AND
ADDRESSES
(Section 3.3): 00 XXXXXXXXX XXXX, XXXXX 000, XXXXXX, XX 00000
MATERIAL ADVERSE LITIGATION
(Section 3.10): NONE
NEGATIVE COVENANTS-
EXCEPTIONS
(Section 4.6): Without Silicon's prior written consent, Borrower may do
the following, provided that, after giving effect thereto,
no Event of Default has occurred and no event has occurred
which, with notice or passage of time or both, would
constitute an Event of Default, and provided that the
following are done in compliance with all applicable laws,
rules and regulations: (i) repurchase shares of Borrower's
stock pursuant to any employee stock purchase or benefit
plan, provided that the total amount paid by Borrower for
such stock does not exceed the amount therefor set forth in
Section 4.6 of the Loan Agreement.
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13
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
(Section 4.1): Borrower shall comply with all of the following covenants.
Compliance shall be determined as of the end of each month,
except as otherwise specifically provided below:
QUICK ASSET RATIO: Borrower shall maintain a ratio of "Quick Assets" to
current liabilities of not less than 1.50 to 1.
TANGIBLE NET WORTH: Borrower shall maintain a tangible net worth of not less
than $2,000,000.
DEBT TO TANGIBLE
NET WORTH RATIO: Borrower shall maintain a ratio of total liabilities to
tangible net worth of not more than 1.50 to 1.
PROFITABILITY Borrower shall not incur cumulative losses (after taxes) on
a fiscal year to date basis for the 1996 fiscal year in
excess of $750,000 at any time; and Borrower shall not
incur cumulative losses (after taxes) on a fiscal year to
date basis for the 1997 fiscal year in excess of $500,000
at any time. For purposed hereof, losses above shall also
include any period to period increases in the product
development/intangible account as reflected on the
Borrower's balance sheet. Further, for purposes hereof,
capitalized software shall be considered an expense of
Borrower.
DEBT SERVICE RATIO/
LIQUIDITY RATIO Borrower shall either maintain the Debt Service Ratio as
set forth below or the Liquidity Ratio as set forth below
at all times that the Term Loan is outstanding:
Debt Service Ratio: Borrower shall maintain a quarterly
Debt Service Ratio (as referred to below) relating to the
then immediately preceding four fiscal quarters of not less
than 1.50 to 1, which Borrower shall maintain for at least
two consecutive fiscal quarters.
Liquidity Coverage Ratio: Borrower shall maintain a
Liquidity Coverage Ratio of 2.0 to 1 on a monthly basis.
DEFINITIONS: "Current assets," and "current liabilities" shall have the
meanings ascribed to them in accordance with generally
accepted accounting principles.
"Tangible net worth" means the excess of total assets over
total liabilities, determined in accordance with generally
accepted accounting principles, excluding however all
assets which would be classified as intangible assets under
generally accepted accounting principles, including without
limitation goodwill, licenses, patents, trademarks, trade
names, copyrights, capitalized software and organizational
costs, licenses and franchises.
"Quick Assets" means cash on hand or on deposit in banks,
readily marketable securities issued by the United States,
readily marketable commercial paper rated "A-1" by Standard
& Poor's Corporation (or a similar rating by a similar
rating organization), certificates of deposit and banker's
acceptances, and accounts receivable (net of allowance for
doubtful accounts).
"Liquidity Quick Assets" means cash on hand or on deposit
in banks, readily marketable securities issued by the
United States, readily
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14
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
marketable commercial paper rated "A-1" by Standard &
Poor's Corporation (or a similar rating by a similar rating
organization), certificates of deposit and banker's
acceptances, plus the amount of the Borrower's accounts
eligible for borrowing pursuant to the terms and conditions
of this Agreement minus the aggregate amount of the Loans
and Letters of Credit outstanding.
"Debt Service Ratio" means the ratio of (a) net income of
Borrower before interest, taxes, depreciation and other
non-cash amortization expenses and other non-cash expenses
of the Borrower, determined in accordance with generally
accepted accounting principles, consistently applied, to
(b) the amount of Borrower's obligations relating to
payment of interest and current maturities of principal on
Borrower's outstanding long term indebtedness, determined
in accordance with generally accepted accounting
principles, consistently applied.
DEFERRED REVENUES: For purposes of the above quick asset ratio, deferred
revenues shall not be counted as current liabilities. For
purposes of the above debt to tangible net worth ratio,
deferred revenues shall not be counted in determining total
liabilities but shall be counted in determining tangible
net worth for purposes of such ratio. For all other
purposes deferred revenues shall be counted as liabilities
in accordance with generally accepted accounting
principles.
SUBORDINATED DEBT: "Liabilities" for purposes of the foregoing covenants do
not include indebtedness which is subordinated to the
indebtedness to Silicon under a subordination agreement in
form specified by Silicon or by language in the instrument
evidencing the indebtedness which is acceptable to Silicon.
OTHER COVENANTS
(Section 4.1): Borrower shall at all times comply with all of the
following additional covenants:
1. BANKING RELATIONSHIP. Borrower shall at all times
maintain its primary banking relationship with Silicon.
2. MONTHLY BORROWING BASE CERTIFICATE AND LISTING. Within
30 days after the end of each month, Borrower shall provide
Silicon with a Borrowing Base Certificate in such form as
Silicon shall specify, and an aged listing of Borrower's
accounts receivable.
3. INDEBTEDNESS. Without limiting any of the foregoing
terms or provisions of this Agreement, Borrower shall not
in the future incur indebtedness for borrowed money, except
for (i) indebtedness to Silicon, and (ii) indebtedness
incurred in the future for the purchase price of or lease
of equipment in an aggregate amount not exceeding $500,000
at any time outstanding.
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15
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
4. PATENT APPLICATIONS. Borrower shall make all appropriate
filings with the United States Patent and Trademark Office
with respect to the software products set forth on the
Borrower's representations and warranties form within 90
days of the date hereof.
BORROWER:
VISION SOLUTIONS, INC.
BY /s/ ????????
---------------------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ ????????
---------------------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY
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TITLE
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