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EXHIBIT 10.12
[SILICON VALLEY BANK LETTERHEAD]
LOAN AND SECURITY AGREEMENT
BORROWER: KOFAX IMAGE PRODUCTS
ADDRESS: 0 XXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
DATE: FEBRUARY 28, 1992
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK ("Silicon"), whose address is 0000 Xxxxxxxx Xxxxx, Xxxxx
Xxxxx, Xxxxxxxxxx 00000-0000 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 loans to the Borrower (the "Loans") in amounts
determined by Silicon pursuant to the terms hereof, up to the amount (the
"Credit Limit") shown on the Schedule to this Agreement (the "Schedule"). 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.
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.
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.
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, and all other obligations now or in the future owing to
the Borrower; (b) All inventory, materials used or consumed in Borrower's
business, raw materials, work in process, finished goods, packaging and
shipping materials, 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 (c) All equipment acquired through Loans and all
equipment acquired through any other financing provided to Borrower, which
other financing has been refinanced by Loans (such equipment includes, 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);
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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.
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.
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.
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 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 sole 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 to give written notice of any default to
Silicon at least 60 days prior to taking any action to enforce its subordinate
security interest, 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.
3.5 MAINTENANCE OF COLLATERAL. The Borrower will maintain the Collateral in
good working condition, reasonable wear and tear excepted, 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.
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 in all material respects 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 throughout 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 120 days following the end of the Borrower's fiscal year, complete
annual financial statements, certified by independent certified public
accountants reasonably acceptable to Silicon.
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
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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 material 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 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 $500,000.
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 Silicon
may reasonably require. All such insurance policies shall name Silicon as an
additional loss payee to the extent of Silicon's interest therein, and shall
contain a lenders loss payee endorsement in form reasonably acceptable to
Silicon. Upon receipt of the proceeds of any such insurance relating to any of
the Collateral, 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 totalling less than
$1,000,000, 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 Borrower's expense. The Borrower
shall promptly deliver to Silicon copies of all reports made to insurance
companies.
4.4 REPORTS. The Borrower shall provide Silicon with such written reports with
respect to the Borrower, as Silicon shall from time to time reasonably specify.
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, except that the Borrower shall reimburse Silicon for its reasonable out
of pocket costs for an annual accounts receivable audit within 60 days of
the first advance that Silicon makes to Borrower relating to Borrower's
accounts: such audit shall be conducted by third parties retained by Silicon,
and Silicon may debit Borrower's deposit accounts with Silicon for the cost of
such accounts receivable audit (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.
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
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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 inventory in the ordinary course of the 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 on 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.
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
reasonably 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, and reasonable approval by, 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.
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, and after
written notice thereof to the Borrower, which termination shall be effective
upon the date of the deposit of such notice in the United States mail, postage
prepaid, if so deposited in the United States mail, upon the date of delivery,
in the case of notices personally delivered, or upon the date of deposit with
the express mail courier service, if such notice is sent via express mail
service.
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. 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, 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 30 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 30 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 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
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thereof within 60 days after the date commenced; (i) revocation or
termination of, or limitation of liability upon, any guaranty of the
Obligations; or commencement of proceedings by any guarantor of any of the
Obligations under any bankruptcy or insolvency law; or (j) the Borrower makes
any prohibited payment on account of any indebtedness or obligation which has
been subordinated to the Obligations 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 material amount 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.
6.2 REMEDIES. Upon the occurrence of any Event of Default, and at any time
thereafter, Silicon, at its option, and after written notice thereof to the
Borrower, which shall be deemed effective upon the date of the deposit of such
notice in the United States mail, postage prepaid, if so deposited in the United
States mail, upon the date of delivery, in the case of personally delivered, or
upon the date of deposit of such notice with the express mail courier service,
if such notice is sent via express mail service, 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 Borrower to deliver to Silicon, in kind,
all checks and other payments received with respect to all accounts, 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 reasonably 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 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 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 four percent per annum.
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 am. 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
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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 reasonable 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 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. 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 NOTICES. All notices to be given under this Agreement shall be in writing
and shall be given either personally or by express or overnight courier mail
service, 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. Unless
otherwise set forth herein, all notices shall be deemed to have been given upon
delivery in the case of notices personally delivered to the Borrower or to
Silicon, at the expiration of one business day following the deposit thereof
with the express mail courier, 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.
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. There are no oral
understandings, representations or agreements between the parties which are not
set forth in this
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SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
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Agreement or in other written agreements signed by the parties in connection
herewith.
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 or applicable law.
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, except as a result of the gross negligence or
willful misconduct 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 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 and the documents relating
to this Agreement (whether or not a lawsuit is filed but other than for costs
and fees incurred to prepare and negotiate this Agreement), including, but not
limited to, any reasonable attorneys' fees and costs Silicon incurs in order to
do the following: 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 the Collateral
or 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 & Norminton, but Borrower acknowledges and agrees that
Levy & Norminton 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.
7.9 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.
7.10 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.
7.11 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.
7.12 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 AMENDMENT OR SUPPLEMENT 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 SILICON OR THE BORROWER, IN ALL OF THE FOREGOING CASES,
WHETHER SOUNDING IN CONTRACT OR TORT 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
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SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
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 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.
BORROWER:
KOFAX IMAGE PRODUCTS
BY [SIG]
---------------------------------------
PRESIDENT OR VICE PRESIDENT
BY [SIG]
---------------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY [SIG]
---------------------------------------
TITLE AVP
------------------------------------
22,
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9
[SILICON VALLEY BANK LETTERHEAD]
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: KOFAX IMAGE PRODUCTS
ADDRESS: 0 XXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
DATE: FEBRUARY 28, 1992
CREDIT LIMIT
(Section 1.1): An amount not to exceed the lesser of: (i) $2,000,000 at any one
time outstanding; or (ii) 80% of the Net Amount of Borrower's
accounts, which are 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.
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: accounts outstanding for more than 90 days from the
invoice date, accounts subject to any contingencies, accounts
owing from an account debtor outside the United States (unless
pre-approved by Silicon, which approval shall not be
unreasonably withheld, or backed by a letter of credit
satisfactory to Silicon, or FCIA insured satisfactory to
Silicon), accounts owing from one account debtor to the extent
they exceed 25% of the total eligible accounts outstanding,
accounts owing from an affiliate of Borrower, and accounts owing
from an account debtor to whom Borrower is or may be liable for
goods purchased from such account debtor or otherwise. 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 accounts, then all accounts owing
from that account debtor will be deemed ineligible for
borrowing.
TERM LOANS (Section 1.1 A):
1.1A.1 TERM LOANS. In addition to the Loans provided for in
Section 1.1 above, provided no Event of Default has occurred,
Silicon will make term loans from time to time to the Borrower,
upon Borrower's request, (individually a "Term Loan" and
collectively the "Term Loans") in amounts up to the lesser of
the Term Loan Availability (as referred to below) or 100% of the
invoice price of the Equipment (as referred to below), plus
freight and taxes. The proceeds of the Term Loans shall be used
by the Borrower to purchase new equipment reasonably acceptable
to Silicon and evidenced by documentation reasonably acceptable
to Silicon (the "Equipment"). Additionally, the Borrower may
obtain a one-time Term Loan to satisfy all of its obligations to
Mitsui Manufacturers Bank ("Mitsui"),
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SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
up to a maximum amount of $400,000, regarding its equipment
credit line with Mitsui (the "Mitsui Loan"), provided, however,
that Mitsui delivers to Silicon all documentation that Silicon
deems reasonably necessary or advisable, including, without
limitation, UCC-2 termination statements, to terminate Mitsui's
security interest in all Collateral and to evidence the payment
in full the Mitsui Loan.
Term Loans may be borrowed by the Borrower at any time prior to
February 15, 1993, and shall be disbursed by making payment to
Borrower for group purchases of Equipment having an aggregate
purchase price of $25,000 or more, or otherwise by making
payment directly to the supplier of the Equipment, or, in the
case of the Mitsui Loan, to Mitsui. A Term Loan shall constitute
a "Loan" for all purposes of the Loan Agreement, except that the
Term Loan shall bear interest at the rate set forth in Section
1.1 A.2, and the Term Loan shall not be subject to the Credit
Limit referred to in Section 1.1 above.
The term "Term Loan Availability" as used in this Agreement
means $700,000 minus the sum of the original principal amounts
of all Term Loans Silicon has made to Borrower.
The term "Obligations" as used in this Agreement shall include
without limitation the obligation to repay the Term Loans and
all interest thereon.
1.1A.2 INTEREST RATE AND REPAYMENT. Each Term Loan shall bear
interest at one of the following three alternative rates in
conjunction with a corresponding repayment period as set forth
herein, both as designated by Borrower by written notice to
Silicon at the time the Loan is disbursed. If the Borrower does
not designate an applicable interest rate and repayment period,
Silicon may do so by written notice to the Borrower. Regardless
of the repayment periods specified, all Term Loans with all
accrued and unpaid interest thereon shall be immediately due and
payable, upon written notice thereof to the Borrower in
accordance with the notice provisions set forth in Sections 5.2
and 6.2 of this Agreement,upon the occurrence of any Event of
Default. The one-time Term Loan relating to the Borrower's
obligations to Mitsui under the Mitsui Loan shall bear interest
in accordance with Option A below and shall be repaid with a 36
month term in accordance with subsection (ii)(a) hereof.
(i) Interest.
Option A: A rate equal to the "Prime Rate" in effect from
time to time, plus 1% per annum, 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 Term Loan based on the
Prime Rate shall change on each date there is a change in
the Prime Rate.
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SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
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Option B: A rate equal to 10.5% per annum, fixed for the
term of the Term Loan and calculated on the basis of a 360-
day year for the actual number of days elapsed.
Option C: A rate equal to 11% per annum, fixed for the term
of the Term Loan and calculated on the basis of a 360-day
year for the actual number of days elapsed.
(ii) Repayment. Each Term Loan shall be repayable as follows:
(a) If interest pursuant to Option A above is selected, the
Term Loan shall be repayable in one of the two following
options: in equal monthly principal installments, with each
principal installment being in an amount equal to the
original principal amount of the Term Loan divided by 36 or
48, commencing 30 days after the date the Term Loan is
disbursed and continuing on the same day of each succeeding
month until the third anniversary (if 36 is selected as the
denominator above) or fourth anniversary (if 48 is selected
as the denominator above), of the date the Term Loan is
disbursed, on which date the entire unpaid principal balance
of the Term Loan and all accrued interest thereon shall be
due and payable; in addition to such principal payments,
accrued interest shall be payable monthly on the same date
principal payments are due.
(b) If interest pursuant to Option B above is selected, the
Term Loan shall be repayable in equal monthly installments
of principal and interest, utilizing an amortization period
of 36 months, commencing 30 days after the date the Term
Loan is disbursed and continuing on the same day of each
succeeding month until the third anniversary of the date the
Term Loan is disbursed, on which date the entire unpaid
principal balance of the Term Loan and all accrued interest
thereon shall be due and payable.
(c) If interest pursuant to Option C above is selected, the
Term Loan shall be repayable in equal monthly installments
of principal and interest, utilizing an amortization period
of 48 months, commencing 30 days after the date the Term
Loan is disbursed and continuing on the same day of each
succeeding month until the fourth anniversary of the date
the Term Loan is disbursed, on which date the entire unpaid
principal balance of the Term Loan and all accrued interest
thereon shall be due and payable.
1.1A.3 COLLATERAL. The Term Loans shall be secured by the
Equipment and by all other Collateral. Borrower represents and
warrants that Silicon shall have a first priority perfected
security interest in the Equipment.
INTEREST RATE (Section 1.2):
A rate equal to the "Prime Rate" in effect from time to time,
plus .50% per annum, provided, however, that the interest
charged relating to the Term Loans shall be in accordance with
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SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
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Section 1.1A above. 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):
$6,667. (Any Commitment Fee previously paid by the Borrower in
connection with this loan shall be credited against this Fee.)
MATURITY DATE
(Section 5.1):
February 15, 1993 relating to the advances made and obligations
incurred pursuant to the Section 1.1 Credit Limit; the Maturity
Date shall be considered to be the final scheduled repayment
date for the Term Loans, determined in accordance with Section
1.1 A.2.
PRIOR NAMES OF BORROWER
(Section 3.2):
NONE
TRADE NAMES OF BORROWER
(Section 3.2):
KOFAX
OTHER LOCATIONS AND ADDRESSES
(Section 3.3):
00 XXXXXXXXXX XXXXXX, XXXXX 000, XXXXXXXXXX, XX 00000;
000 XXXXXXX XXXXXXX, XXXXX 000, XXXXXXX, 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 $200,000 in any fiscal
year or (ii) make loans to, or enter into loan guaranties on
behalf of, employees in an aggregate amount not exceeding
$200,000 at any one time outstanding.
FINANCIAL COVENANTS
(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:
WORKING CAPITAL:
Borrower shall maintain an excess of current assets over current
liabilities of not less than $2,500,000.
QUICK ASSET RATIO:
Borrower shall maintain a ratio of "Quick Assets" to current
liabilities of not less than 1.0 to 1.
TANGIBLE NET WORTH:
Borrower shall maintain a tangible net worth of not less than
$3,000,000.
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SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
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DEBT TO TANGIBLE
NET WORTH RATIO:
Borrower shall maintain a ratio of total liabilities to tangible
net worth of not more than 1.0 to 1.
PROFITABILITY:
Borrower shall not incur a loss (after taxes) for any fiscal
quarter in excess of $500,000.
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, 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-l" 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).
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 reasonably
specified by Silicon or by language in the instrument evidencing
the indebtedness which is reasonably 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 while any
Obligations remain outstanding.
2. MONTHLY BORROWING BASE CERTIFICATE AND LISTING. Within 20
days after the end of each month while any Obligations remain
outstanding, Borrower shall provide Silicon with a Borrowing
Base Certificate in such form as Silicon shall reasonably
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 $700,000 at any time outstanding;
such indebtedness refers to obligations owing to parties other
than Silicon.
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SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
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4. OTHER INFORMATION REQUIREMENTS. The Borrower shall promptly
provide to Silicon such budgets, sales projections, operating
plans and other financial documentation relating to the Borrower
that Silicon reasonably requires.
5. INITIAL AUDIT. The audit referred to in Section 4.5 of this
Agreement shall be completed within 60 days of the first advance
relating to the Borrower's accounts receivable made to Borrower
pursuant to Section 1.1.
BORROWER:
KOFAX IMAGE PRODUCTS
BY [SIG]
--------------------------------------
PRESIDENT OR VICE PRESIDENT
BY [SIG]
--------------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY [SIG]
--------------------------------------
TITLE AVP
--------------------------------------
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15
[SILICON VALLEY BANK LETTERHEAD]
AMENDMENT TO LOAN AGREEMENT
BORROWER: KOFAX IMAGE PRODUCTS
ADDRESS: 0 XXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
DATE: MARCH 9, 1993
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON
VALLEY BANK ("Silicon") and the borrower named above (the "Borrower"). The
Parties agree to amend the Loan and Security Agreement between them, dated
February 28, 1992 (the "Loan Agreement"), as follows, effective on the date
hereof. (Capitalized terms used but not defined in this Amendment, shall
have the meanings set forth in the Loan Agreement.)
1. MODIFICATION OF CREDIT LIMIT. The section of the Schedule to Loan
Agreement entitled "Credit Limit (Section 1.1)" is hereby deleted and
replaced with the following:
"CREDIT LIMIT
(Section 1.1): An amount not to exceed the lesser of: (i) $2,000,000 at any one
time outstanding; or (ii) 80% of the Net Amount of Borrower's
accounts, which are 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.
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: accounts outstanding for more than 90 days from the
invoice date, accounts subject to any contingencies, accounts
owing from an account debtor outside the United States (unless
pre-approved by Silicon which approval shall not be unreasonably
withheld, or backed by a letter of credit satisfactory to
Silicon, or FCIA insured satisfactory to Silicon), accounts
owing from one account debtor to the extent they exceed 25% of
the total eligible accounts outstanding, accounts owing from an
affiliate of Borrower, and accounts owing from an account debtor
to whom Borrower is or may be liable for goods purchased from
such account debtor or otherwise. 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 accounts, then all accounts owing from that account
debtor will be deemed ineligible for borrowing.
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SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
--------------------------------------------------------------------------------
Silicon, in its reasonable discretion, will from time to time
during the term of this Agreement 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
$100,000, upon the request of the Borrower and upon execution
and delivery by the Borrower of Applications for Letters of
Credit and such other documentation as Silicon shall specify
(the "Letter of Credit Documentation"). Fees for the Letters of
Credit shall be as provided in the Letter of Credit
Documentation.
The Credit Limit set forth above and the Loans available under
this Agreement at any time shall be reduced by the face amount
of Letters of Credit from time to time outstanding.
TERM LOANS (Section 1.1A):
1.1A.1 TERM LOANS. In addition to the Loans provided for in
Section 1.1 above, provided no Event of Default has occurred,
Silicon will make term loans from time to time to the Borrower,
upon Borrower's request, (individually a "Term Loan" and
collectively the "Term Loans") in amounts up to the lesser of
the Term Loan Availability (as referred to below) or 100% of the
invoice price of the Equipment (as referred to below), plus
freight and taxes. The proceeds of the Term Loans shall be used
by the Borrower to purchase new equipment reasonably acceptable
to Silicon and evidenced by documentation reasonably acceptable
to Silicon (the "Equipment").
Term Loans may be borrowed by the Borrower at any time prior to
March 9, 1994, and shall be disbursed by making payment to
Borrower for group purchases of Equipment having an aggregate
purchase price of $25,000 or more, or otherwise by making
payment directly to the supplier of the Equipment. A Term Loan
shall constitute a "Loan" for all purposes of the Loan
Agreement, except that the Term Loan shall bear interest at the
rate set forth in Section 1.1A.2, and the Term Loan shall not be
subject to the Credit Limit referred to in Section 1.1 above.
Silicon has previously made a term loan Borrower to satisfy
Borrower's prior obligations to Mitsui Manufacturers Bank (the
"Mitsui Loan"), the principal balance of which, as of February
28, 1993, is $195,151.83 and which shall be repaid to Silicon in
equal monthly installments of principal until March 9, 1995, on
which date the unpaid principal and accrued interest thereon
shall be paid in full. Interest shall be payable in accordance
with Option A below. The phrase "Term Loans" shall include,
without limitation, the Mitsui Loan.
The term "Term Loan Availability" as used in this Agreement
means $400,000 minus the sum of the original principal
-2-
17
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
--------------------------------------------------------------------------------
amounts of all Term Loans Silicon has made to Borrower, other
than the Mitsui Loan.
The term "Obligations" as used in this Agreement shall include
without limitation the obligation to repay the Term Loans,
including, without limitation, the Mitsui Loan, and all interest
thereon.
1.1A.2 INTEREST RATE AND REPAYMENT. Each Term Loan shall bear
interest at one of the following two alternative rates, as
designated by Borrower by written notice to Silicon at the time
the Term Loan is disbursed. If the Borrower does not designate
an applicable interest rate, Silicon may do so by written notice
to the Borrower. All Term Loans with all accrued and unpaid
interest thereon shall be immediately due and payable, upon
written notice thereof to the Borrower in accordance with the
notice provisions set forth in Sections 5.2 and 6.2 of this
Agreement, upon the occurrence of any Event of Default. The
Mitsui Loan shall bear interest in accordance with Option A
below and shall be repaid as set forth above.
(i) Interest. Interest shall be payable monthly on all
outstanding Term Loans, including, without limitation, at all
times prior to any Start Amortization Date (as referred to
below) based on the following interest rate options:
Option A: A rate equal to the "Prime Rate" in effect from
time to time, plus 1% per annum, 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 Term Loan based on the Prime Rate
shall change on each date there is a change in the Prime
Rate.
Option B: A rate equal to 9% per annum, fixed for the term
of the Term Loan and calculated on the basis of a 360-day
year for the actual number of days elapsed.
(ii) Repayment. Term Loans shall be repayable as follows: On the
date (the "Start Amortization Date") when the aggregate
outstanding principal amount of Term Loans, other than those
Term Loans already comprising Amortizing Term Loans (as referred
to below) and the Mitsui Loan, reaches or exceeds $100,000, the
Borrower shall repay each of such Term Loans (referred to as
"Amortizing Term Loans") as follows in accordance with the
interest option originally specified by the Borrower:
(a) If interest pursuant to Option A above has been
selected, then such Term Loan shall be repayable as
-3-
18
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
-------------------------------------------------------------------------------
follows: in equal monthly principal installments, with each
principal installment being in an amount equal to the
original principal amount of the Term Loan divided by 36,
commencing 30 days after the respective Start Amortization
Date, and continuing on the same day of each succeeding
month until the third anniversary of such Start Amortization
Date, on which date the entire unpaid principal balance of
such Term Loan and all accrued interest thereon shall be due
and payable; in addition to such principal payments, accrued
interest shall be payable monthly on the same date principal
payments are due; or
b) If interest pursuant to Option B above has been selected,
then such Term Loan shall be repayable as follows: in equal
monthly installments of principal and interest, utilizing an
amortization period of 36 months, commencing 30 days after
the respective Start Amortization Date and continuing on the
same day of each succeeding month until the third
anniversary of such Start Amortization Date, on which date
the entire unpaid principal balance of such Term Loan and
all accrued interest thereon shall be due and payable;
provided, however, that the date that is the earlier to occur
of (a) March 9, 1994 and (b) the date when there remains no
further Term Loan Availability, shall also constitute a Start
Amortization Date and the outstanding Term Loans, other than
those Term Loans already comprising Amortizing Term Loans and
the Mitsui Loan, shall be repaid as set forth above.
1.1A.3 COLLATERAL. The Term Loans shall be secured by the
Equipment and by all other Collateral. Borrower represents and
warrants that Silicon shall have a first priority perfected
security interest in the Equipment."
2. REVISED MATURITY DATE. The Maturity Date as set forth in the
section in the Schedule to Loan Agreement entitled "Maturity Date (Section 5.1)"
is hereby deleted and replaced with the following:
"MATURITY DATE
(Section 5.1):
October 5, 1994, relating to the advances made and obligations
incurred pursuant to the Section 1.1 Credit Limit; the Maturity
Date shall be considered to be the final scheduled repayment
date for the Term Loans, determined in accordance with Section
1.1A.2."
-4-
19
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
-------------------------------------------------------------------------------
3. REVISED FINANCIAL COVENANTS. The section of the Schedule to Loan
Agreement entitled "Financial Covenants (Section 4.1)" is hereby deleted and
replaced with the following:
"FINANCIAL COVENANTS
(Section 4.1): Borrower shall comply with all of the following covenants.
Compliance shall be determined as of as of the end of each
month, except as otherwise specifically provided below:
WORKING CAPITAL: Borrower shall maintain an excess of current assets over
current liabilities of not less than $3,000,000.
QUICK ASSET RATIO: Borrower shall maintain a ratio of "Quick Assets" to
current liabilities of not less than 1.25 to 1.
TANGIBLE NET Borrower shall maintain a tangible net worth of not less
WORTH: than $4,000,000.
DEBT TO TANGIBLE Borrower shall maintain a ratio of total liabilities to
NET WORTH RATIO: tangible net worth of not more than 1.0 to 1.
PROFITABILITY Borrower shall not incur a loss (after taxes) for any
fiscal quarter in excess of $500,000, provided that
Borrower shall not incur any loss (after taxes) for the
fiscal years of 1993 and 1994.
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, 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).
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."
4. FACILITY FEE. The Borrower shall pay Silicon concurrently herewith
a facility fee of $6,667. Said facility fee shall be in addition to all interest
and other sums payable to Silicon, and shall not be refundable.
5. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written documents and agreements between Silicon and the Borrower set
forth in full all of the
-5-
20
SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
--------------------------------------------------------------------------------
representations and agreements of the parties with respect to the subject matter
hereof and supersede all prior discussions, representations, agreements and
understandings between the parties with respect to the subject hereof. Except as
herein expressly amended, all of the terms and provisions of the Loan Agreement,
and all other documents and agreements between Silicon and the Borrower shall
continue in full force and effect and the same are hereby ratified and
confirmed.
BORROWER: SILICON:
KOFAX IMAGE PRODUCTS SILICON VALLEY BANK
BY [SIG] BY [SIG]
------------------------ --------------------------
PRESIDENT OR VICE PRESIDENT TITLE VICE PRESIDENT
------------------------
BY [SIG]
------------------------
SECRETARY OR ASS'T SECRETARY
-6-
21
[SILICON VALLEY BANK LETTERHEAD]
AMENDMENT TO LOAN AND SECURITY
AGREEMENT
BORROWER: KOFAX IMAGE PRODUCTS
ADDRESS: 0 XXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
DATE: OCTOBER 10, 1994
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON
VALLEY BANK ("Silicon") and the borrower named above (the "Borrower"). The
Parties agree to amend the Loan and Security Agreement between them, dated
February 28, 1992, as amended by that certain Amendment to Loan Agreement dated
May 9, 1993 (as amended, the "Loan Agreement"), as follows, effective on the
date hereof. (Capitalized terms used but not defined in this Amendment, shall
have the meanings set forth in the Loan Agreement.)
1. AMENDED SCHEDULE. The Schedule to Loan and Security Agreement is
amended effective as of the date hereof, to read as set forth on the Amended
Schedule to Loan and Security Agreement attached hereto.
2. REVISED REPORTING OF FINANCIAL STATEMENTS AND COMPLIANCE
CERTIFICATES AND SUBMISSION OF LETTER FROM CERTIFIED PUBLIC ACCOUNTANTS. Section
3.7 of the Loan Agreement is hereby deleted in its entirety and replaced with
the following:
"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 in
all material respects 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 fiscal quarter, a
quarterly 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 throughout such quarter 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 120 days following
the end of the Borrower's fiscal year, complete annual financial
statements, certified by independent certified public accountants
reasonably acceptable to Silicon together with a letter and/or report
to management of the Borrower from such certified public accountant."
-1-
22
SILICON VALLEY BANK AMENDMENT TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
3. REVISED TIME PERIOD FOR COMPLETION OF ACCOUNTS RECEIVABLE AUDIT.
Section 4.5 of the Loan Agreement is hereby deleted in its entirety and replaced
with the following:
"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, except
that while any Obligations remain outstanding, the Borrower shall
reimburse Silicon for its reasonable out of pocket costs for annual
accounts receivable audits, the first such audit to be completed
within 90 days of the first advance that Silicon makes to Borrower
relating to Borrower's accounts; such audit shall be conducted by
third parties retained by Silicon, and Silicon may debit Borrower's
deposit accounts with Silicon for the cost of such accounts
receivable audit (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."
4. FACILITY FEE. The Borrower shall pay Silicon concurrently herewith
a facility fee in the amount of $6,667, which shall be in addition to all
interest and all other fees payable to Silicon and shall be non-refundable.
5. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct as of the date hereof.
6. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written documents and agreements between Silicon and the Borrower set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect
to the subject hereof. Except as herein expressly amended, all of the terms and
provisions of the Loan Agreement, and all other documents and agreements between
Silicon and the Borrower shall continue in full force and effect and the same
are hereby ratified and confirmed.
BORROWER: SILICON:
KOFAX IMAGE PRODUCTS SILICON VALLEY BANK
BY [SIG] BY [SIG]
--------------------------- -------------------------------
PRESIDENT OR VICE PRESIDENT TITLE VP
----------------------------
BY [SIG]
---------------------------
SECRETARY OR ASS'T SECRETARY
-2-
23
[SILICON VALLEY BANK LETTERHEAD]
AMENDED SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: KOFAX IMAGE PRODUCTS
ADDRESS: 0 XXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
DATE: OCTOBER 10, 1994
CREDIT LIMIT
(Section 1.1): An amount not to exceed the lesser of: (i) $2,000,000 at any
one time outstanding; or (ii) 80% of the Net Amount of
Borrower's accounts, which are 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.
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: accounts outstanding for more than 90 days from
the invoice date, accounts subject to any contingencies,
accounts owing from an account debtor outside the United
States (unless pre-approved by Silicon, which approval shall
not be unreasonably withheld, or backed by a letter of
credit satisfactory to Silicon, or FCIA insured satisfactory
to Silicon), accounts owing from one account debtor to the
extent they exceed 25% of the total eligible accounts
outstanding, accounts owing from an affiliate of Borrower,
and accounts owing from an account debtor to whom Borrower
is or may be liable for goods purchased from such account
debtor or otherwise. 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 accounts, then all accounts owing from that account
debtor will be deemed ineligible for borrowing.
Silicon, in its reasonable discretion, will from time to
time during the term of this Agreement 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 $100,000, upon the request of the Borrower and
upon execution and delivery by the Borrower of Applications
for Letters of Credit and such other documentation as
Silicon shall specify (the "Letter of Credit
Documentation"). Fees for the Letters of Credit shall be as
provided in the Letter of Credit Documentation.
The Credit Limit set forth above and the Loans available
under this Agreement at any time shall be reduced by the
face amount of Letters of Credit from time to time
outstanding.
-1-
24
SILICON VALLEY BANK AMENDED SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
TERM LOANS (Section 1.1A):
1.1A.1 TERM LOANS. In addition to the Loans provided for in
Section 1.1 above, provided no Event of Default has
occurred, Silicon will make term loans from time to time to
the Borrower, upon Borrower's request, (individually a "Term
Loan" and collectively the "Term Loans") in amounts up to
the lesser of the Term Loan Availability (as referred to
below) or 100% of the invoice price of the Equipment (as
referred to below), plus freight and taxes. The proceeds of
the Term Loans shall be used by the Borrower to purchase new
equipment reasonably acceptable to Silicon and evidenced by
documentation reasonably acceptable to Silicon (the
"Equipment").
Term Loans may be borrowed by the Borrower at any time prior
to March 9, 1994, and shall be disbursed by making payment
to Borrower for group purchases of Equipment having an
aggregate purchase price of $25,000 or more, or otherwise by
making payment directly to the supplier of the Equipment. A
Term Loan shall constitute a "Loan" for all purposes of the
Loan Agreement, except that the Term Loan shall bear
interest at the rate set forth in Section 1.1A.2, and the
Term Loan shall not be subject to the Credit Limit referred
to in Section 1.1 above.
Silicon has previously made a term loan Borrower to satisfy
Borrower's prior obligations to Mitsui Manufacturers Bank
(the "Mitsui Loan"), the principal balance of which, as of
February 28, 1993, is $195,151.83 and which shall be repaid
to Silicon in equal monthly installments of principal until
March 9, 1995, on which date the unpaid principal and
accrued interest thereon shall be paid in full. Interest
shall be payable in accordance with Option A below. The
phrase "Term Loans" shall include, without limitation, the
Mitsui Loan.
The term "Term Loan Availability" as used in this Agreement
means $400,000 minus the sum of the original principal
amounts of all Term Loans Silicon has made to Borrower,
other than the Mitsui Loan.
The term "Obligations" as used in this Agreement shall
include without limitation the obligation to repay the Term
Loans, including, without limitation, the Mitsui Loan, and
all interest thereon.
1.1A.2 INTEREST RATE AND REPAYMENT. Each Term Loan shall
bear interest at one of the following two alternative rates,
as designated by Borrower by written notice to Silicon at
the time the Term Loan is disbursed. If the Borrower does
not designate an applicable interest rate, Silicon may do so
by written notice to the Borrower. All Term Loans with all
accrued and unpaid interest thereon shall be immediately due
and payable, upon written notice thereof to the Borrower in
accordance with the notice provisions set forth in Sections
5.2 and 6.2 of this Agreement, upon the occurrence of any
Event of Default. The Mitsui Loan shall bear interest in
accordance with Option A below and shall be repaid as set
forth above.
(i) Interest. Interest shall be payable monthly on all
outstanding Term Loans, including, without limitation, at
all times prior to any Start Amortization Date (as referred
to below) based on the following interest rate options:
-2-
25
Option A: A rate equal to the "Prime Rate" in effect from
time to time, plus 1% per annum, 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 Term Loan based on the Prime Rate
shall change on each date there is a change in the Prime
Rate.
Option B: A rate equal to 9% per annum, fixed for the term
of the Term Loan and calculated on the basis of a 360-day
year for the actual number of days elapsed.
(ii) Repayment. Term Loans shall be repayable as follows: On the
date (the "Start Amortization Date") when the aggregate
outstanding principal amount of Term Loans, other than those
Term Loans already comprising Amortizing Term Loans (as referred
to below) and the Mitsui Loan, reaches or exceeds $100,000, the
Borrower shall repay each of such Term Loans (referred to as
"Amortizing Term Loans") as follows in accordance with the
interest option originally specified by the Borrower:
(a) If interest pursuant to Option A above has been
selected, then such Term Loan shall be repayable as follows:
in equal monthly principal installments, with each principal
installment being in an amount equal to the original
principal amount of the Term Loan divided by 36, commencing
30 days after the respective Start Amortization Date, and
continuing on the same day of each succeeding month until
the third anniversary of such Start Amortization Date, on
which date the entire unpaid principal balance of such Term
Loan and all accrued interest thereon shall be due and
payable; in addition to such principal payments, accrued
interest shall be payable monthly on the same date principal
payments are due; or
(b) If interest pursuant to Option B above has been
selected, then such Term Loan shall be repayable as follows:
in equal monthly installments of principal and interest,
utilizing an amortization period of 36 months, commencing 30
days after the respective Start Amortization Date and
continuing on the same day of each succeeding month until
the third anniversary of such Start Amortization Date, on
which date the entire unpaid principal balance of such Term
Loan and all accrued interest thereon shall be due and
payable;
provided, however, that the date that is the earlier to occur of
(a) March 9, 1994 and (b) the date when there remains no further
Term Loan Availability, shall also constitute a Start
Amortization Date and the outstanding Term Loans, other than
those Term Loans already comprising Amortizing Term Loans and
the Mitsui Loan, shall be repaid as set forth above.
1.1A.3 COLLATERAL. The Term Loans shall be secured by the
Equipment and by all other Collateral. Borrower represents and
-3-
26
warrants that Silicon shall have a first priority perfected
security interest in the Equipment.
INTEREST RATE
(Section 1.2): A rate equal to the "Prime Rate" in effect from time to time,
plus .50% per annum, provided, however, that the interest
charged relating to the Term Loans shall be in accordance with
Section 1.1A above. 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): As per Amendment to Loan and Security Agreement of even date.
MATURITY DATE
(Section 5. 1): October 5, 1995, relating to the advances made and obligations
incurred pursuant to the Section 1.1 Credit Limit.
PRIOR NAMES OF BORROWER
(Section 3.2): None
TRADE NAMES OF BORROWER
(Section 3.2): KOFAX
OTHER LOCATIONS AND ADDRESSES
(Section 3.3): 0000 XXXX XXXXX XXXXXX, XXXXX 0, XXXXXXXXXX, XX 00000; 000
XXXXXXX XXXXXXX, XXXXX 000, XXXXXXX, XX 00000; 0000 XXXXXXX
XXXXX, XXXXX 000, XXXXXXXX, XX 00000; XXX XXXXXXXXXX 00, 0000
XXXXXXXX, XXXXXXX
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 $200,000 in any fiscal
year or (ii) make loans to, or enter into loan guaranties on
behalf of, employees in an aggregate amount not exceeding
$200,000 at any one time outstanding.
FINANCIAL COVENANTS
(Section 4. 1): Borrower shall comply with all of the following covenants.
Compliance shall be determined as of the end of each quarter,
except as otherwise specifically provided below:
QUICK ASSET RATIO:
Borrower shall maintain a ratio of "Quick Assets" to current
liabilities of not less than 1.25 to 1.
-4-
27
TANGIBLE NET WORTH:
Borrower shall maintain a tangible net worth of not less than
$4,000,000.
DEBT TO TANGIBLE
NET WORTH RATIO:
Borrower shall maintain a ratio of total liabilities to tangible
net worth of not more than 1.0 to 1.
PROFITABILITY Borrower shall not incur a loss (after taxes) for any fiscal
quarter; except that Borrower may incur a loss (after taxes) for
a single fiscal quarter not to exceed $500,000. Borrower shall
not incur a loss (after taxes) for the fiscal year 1995.
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, 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).
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 while any
Obligations remain outstanding.
2. MONTHLY BORROWING BASE CERTIFICATE AND LISTING. Within 20
days after the end of each month while any Obligations remain
outstanding, Borrower shall provide Silicon with a Borrowing
Base Certificate in such form as Silicon shall reasonably
specify, and an aged listing of Borrower's accounts receivable.
At all other times, within 20 days after the end of each fiscal
quarter, Borrower shall provide Silicon with a Borrowing Base
Certificate in such form as Silicon shall reasonably 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
-5-
28
$700,000 at any time outstanding; such indebtedness refers to
obligations owing to parties other than Silicon.
4. OTHER INFORMATION REQUIREMENTS. The Borrower shall promptly
provide to Silicon such budgets, sales projections, operating
plans and other financial documentation relating to the Borrower
that Silicon reasonably requires.
5. INITIAL AUDIT. The audit referred to in Section 4.5 of this
Agreement shall be completed within 90 days of the first advance
relating to the Borrower's accounts receivable made to Borrower
pursuant to Section 1.1.
Borrower:
KOFAX IMAGE PRODUCTS
By [SIG]
-----------------------------------------------
President or Vice President
By [SIG]
-----------------------------------------------
Secretary or Ass't Secretary
Silicon:
SILICON VALLEY BANK
By [SIG]
-----------------------------------------------
Title VP
--------------------------------------------
-6-
29
[SILICON VALLEY BANK LETTERHEAD
CERTIFIED RESOLUTION
BORROWER: KOFAX IMAGE PRODUCTS, A
CORPORATION ORGANIZED UNDER THE
LAWS OF THE STATE OF CALIFORNIA
ADDRESS: 0 XXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
DATE: OCTOBER 10, 1994
I, the undersigned, Secretary or Assistant Secretary of the
above-named borrower, a corporation organized under the laws of the state set
forth above, do hereby certify that the following is a full, true and correct
copy of resolutions duly and regularly adopted by the Board of Directors of said
corporation as required by law, and by the by-laws of said corporation, and that
said resolutions are still in full force and effect and have not been in any way
modified, repealed, rescinded, amended or revoked.
RESOLVED, that this corporation borrow from Silicon Valley Bank
("Silicon"), from time to time, such sum or sums of money as, in the
judgment of the officer or officers hereinafter authorized hereby, this
corporation may require, provided, however, that such sum or sums shall
not exceed $2,700,000.
RESOLVED FURTHER, that each of the President, the Chief Financial
Officer and the Secretary of this corporation be, and each of such
officers hereby is, authorized, directed and empowered, in the name of
this corporation, to execute and deliver to Silicon, and Silicon is
requested to accept, the loan agreements, security agreements, notes,
financing statements, and other documents and instruments providing for
such loans and evidencing and/or securing such loans, with interest
thereon, and said authorized officers are authorized from time to time
to execute renewals, extensions and/or amendments of said loan
agreements, security agreements, and other documents and instruments.
RESOLVED FURTHER, that said authorized officers be and they are hereby
authorized, directed and empowered, as security for any and all
indebtedness of this corporation to Silicon, whether arising pursuant to
this resolution or otherwise, to grant, transfer, pledge, mortgage,
assign, or otherwise hypothecate to Silicon, or deed in trust for its
benefit, any property of any and every kind, belonging to this
corporation, including, but not limited to, any and all real property,
accounts, inventory, equipment, general intangibles, instruments,
documents, chattel paper, notes, money, deposit accounts, furniture,
fixtures, goods, and other property of every kind, and to execute and
deliver to Silicon any and all grants, transfers, trust receipts, loan
or credit agreements, pledge agreements, mortgages, deeds of trust,
financing statements, security agreements and other hypothecation
agreements, which said instruments and the note or notes and other
instruments referred to in the preceding paragraph may contain such
provisions, covenants, recitals and agreements as Silicon may require
and said authorized officers may approve, and the execution thereof by
said authorized officers shall be conclusive evidence of such approval.
The undersigned further hereby certifies that the following persons are
the duly elected and acting officers of the corporation named above as borrower
and that the following are their actual signatures:
30
NAMES OFFICE(S) ACTUAL SIGNATURES
----- --------- -----------------
XXXXX X. SILVER President and CEO x [SIG]
----------------------- ---------------------- -------------------------
XXXX X. XXXXX Vice President x [SIG]
----------------------- ---------------------- -------------------------
XXXXXX X. XXXXXX Vice President, CEO x [SIG]
----------------------- ---------------------- -------------------------
and Secretary
XXXXXXX XXXXXX Vice President-Sales x [SIG]
----------------------- ---------------------- -------------------------
XXXXXX XXXXX Vice President-Operatios x [SIG]
----------------------- ---------------------- -------------------------
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary or
Assistant Secretary on the date set forth above.
[SIG]
-----------------------------------------
Secretary or Assistant Secretary
-2-
31
[SILICON VALLEY BANK LETTERHEAD]
PRO FORMA INVOICE FOR LOAN CHARGES
BORROWER: KOFAX IMAGE PRODUCTS
ADDRESS: 0 XXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
DATE: OCTOBER 7,1994
Charges: Bank Legal
Loan Facility Fee $6,667.00
Legal Fee $675.00
Legal Costs (courier, duplicating, etc.) $50.00
--------- -------
Total $6,667.00 $725.00
Previously Paid
Balance Due $6,667.00 $725.00
--------- -------
Please Issue Checks Payable as Follows:
Silicon Valley Bank $6,667.00
Levy, Small & Xxxxxx, Attorneys $725.00
Please send BOTH checks to Silicon Valley Bank
Acknowledged:
Kofax Image Products
By: [SIG]
-------------------------------
Title: Vice President & CEO
----------------------------
Note: The amounts shown in this Pro Forma Invoice are estimates only, and do not
include services after the date hereof. At the time of funding the amounts shown
on this Invoice will be updated.
32
[LOGO] SILICON VALLEY BANK
AMENDMENT TO LOAN AND SECURITY AGREEMENT
BORROWER. KOFAX IMAGE PRODUCTS
ADDRESS: 0 XXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
DATE: OCTOBER 5, 1995
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON VALLEY
BANK ("Silicon") and the borrower named above (the "Borrower"). The Parties
agree to amend the Loan and Security Agreement between them, dated February 28,
1992, as amended by that certain Amendment to Loan Agreement dated May 9, 1993,
and as amended by that certain Amendment to Loan Agreement dated October 10,
1995 (as amended, the "Loan Agreement"), as follows, effective on the date
hereof. (Capitalized terms used but not defined in this Amendment, shall have
the meanings set forth in the Loan Agreement.)
1. Amended Schedule. The Schedule to Loan and Security Agreement is
amended effective as of the date hereof, to read as set forth on the Amended
Schedule to Loan and Security Agreement attached hereto.
2. Modification to Section 2.2. Section 2.2 of the Loan Agreement is
hereby replaced in its entirety with the following Section 2.2 and a new Section
2.2A is hereby added that is to follow after Section 2.2:
"2.2 Grant of Security Interest in Collateral. The Borrower grants
Silicon a continuing security interest in all of the Borrower's
interest in the Collateral (as defined below in Section 2.2A) as
security for all Obligations. The provisions of this section 2.2 shall
be considered fully effective until the IPO Consummation (as defined
below), and upon the occurrence of IPO Consummation the provisions of
this section 2.2 shall be deemed to be of no force and effect. As used
herein the term "IPO Consummation" means the consummation of an
underwritten initial public offering of the Borrower's common stock
from which the Borrower receives net proceeds in a minimum amount of
$9,000,000, which transaction is otherwise satisfactory to Silicon, and
relating to which Borrower has provided to Silicon documentation and
other information satisfactory to Silicon evidencing the consummation
thereof.
2.2A Collateral. This section 2.2A shall be considered to be effective
at all times during the effectiveness of this Loan Agreement regardless
of the status of the IPO Consummation. The term "Collateral" as used
herein shall mean all of the Borrower's interest in the types of
property described below, whether now owned or hereafter acquired, and
wherever located: (a) All accounts, contract rights, chattel paper,
letters
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SILICON VALLEY BANK AMENDMENT TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
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."
3. REVISED SECTION 3.7. Section 3.7 of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
"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 in all material
respects 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 fiscal quarter, a quarterly 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 throughout such
quarter 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 120 days following the end of the Borrower's fiscal year,
complete annual financial statements, certified by independent
certified public
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34
SILICON VALLEY BANK AMENDMENT TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
accountants reasonably acceptable to Silicon together with a letter
and/or report to management of the Borrower from such certified public
accountant.*
* UPON THE IPO CONSUMMATION, THE BORROWER PROVIDE TO SILICON THE
FOLLOWING FINANCIAL REPORTS TO REPLACE THE REPORTING REQUIREMENTS SET
FORTH ABOVE: (I) WITHIN 5 DAYS AFTER THE EARLIER OF THE DATE THE REPORT
10-Q IS RILED OR IS REQUIRED TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION WITH RESPECT TO BORROWER, SUCH 10-Q REPORT, A
QUARTERLY FINANCIAL STATEMENT PREPARED BY BORROWER, AND A COMPLIANCE
CERTIFICATE IN SUCH FORM AS SILICON SHALL REASONABLY SPECIFY, SIGNED BY
THE CHIEF FINANCIAL OFFICER OF THE BORROWER, CERTIFYING THAT THROUGHOUT
SUCH QUARTER 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 (THE
"COMPLIANCE CERTIFICATE"); (III) WITHIN 5 DAYS AFTER THE EARLIER OF THE
DATE THE REPORT 10-K IS FILED OR IS REQUIRED TO BE RILED WITH THE
SECURITIES EXCHANGE COMMISSION WITH RESPECT TO BORROWER, SUCH 10-K
REPORT, COMPLETE ANNUAL FINANCIAL STATEMENTS, CERTIFIED BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS ACCEPTABLE TO SILICON, AND A COMPLIANCE
CERTIFICATE FOR THE QUARTER THEN ENDED."
4. REVISED TIME PERIOD FOR COMPLETION OF ACCOUNTS RECEIVABLE AUDIT.
Section 4.5 of the Loan Agreement is hereby deleted in its entirety and replaced
with the following:
"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, except that while any Obligations remain
outstanding prior to the IPO Consummation, the Borrower shall reimburse
Silicon for its reasonable out of pocket costs for annual accounts
receivable audits, the first such audit to be completed within 90 days
of the first advance that Silicon makes to Borrower relating to
Borrower's accounts; such audit shall be conducted by third parties
retained by Silicon, and Silicon may debit Borrower's deposit accounts
with Silicon for the cost of such accounts receivable audit (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."
5. FACILITY FEE. The Borrower shall pay Silicon concurrently herewith a
facility FEE in the amount of $6,667, which shall be in addition to all interest
and all other fees payable TO Silicon and shall be non-refundable.
6. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct as of the date hereof.
7. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written documents and agreements between Silicon and the Borrower set
forth in full all of the
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SILICON VALLEY BANK AMENDMENT TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
representations and agreements of the parties with respect to the subject matter
hereof and supersede all prior discussions, representations, agreements and
understandings between the parties with respect to the subject hereof. Except as
herein expressly amended, all of the terms and provisions of the Loan Agreement,
and all other documents and agreements between Silicon and the Borrower shall
continue in full force and effect and the same are hereby ratified and
confirmed.
BORROWER: SILICON:
KOFAXIMAGE PRODUCTS SILICON VALLEY BANK
BY [SIG] BY
---------------------------------- -----------------------------
PRESIDENT OR VICE PRESIDENT TITLE
--------------------------
BY [SIG]
---------------------------------
SECRETARY OR ASS'T SERETARY
-4-
36
[LOGO] SILICON VALLEY BANK
AMENDED SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER. KOFAX IMAGE PRODUCTS
ADDRESS: 0 XXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
DATE: OCTOBER 5, 1995
CREDIT LIMIT
(Section 1.1): A. Prior to IPO Consummation: IPO Default. The following
shall apply prior to the IPO Consummation: An amount not
to exceed the lesser of: (i) $2,000,000 at any one time
outstanding; or (ii) 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.
B After IPO Consummation. The following shall apply
after the IPO Consummation: An amount not to exceed
$2,000,000 at any one time outstanding.
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: accounts outstanding for more
than 90 days from the invoice date, accounts subject to
any contingencies, accounts owing from an account debtor
outside the United States (unless pre-approved by
Silicon, which approval shall not be unreasonably
withheld, or backed by a letter of credit satisfactory
to Silicon, or FCIA insured satisfactory to Silicon),
accounts owing from one account debtor to the extent
they exceed 25% of the total eligible accounts
outstanding, accounts owing from an affiliate of
Borrower, and accounts owing from an account debtor to
whom Borrower is or may be liable for goods purchased
from such account debtor or otherwise. 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 accounts,
then all accounts owing from that account debtor will be
deemed ineligible for borrowing.
LETTERS OF CREDIT Silicon, in its reasonable discretion, will from time to
time during the term of this Agreement 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 $100,000, upon the request of
the Borrower and upon execution and delivery by the
Borrower of Applications for Letters of Credit and such
other documentation as Silicon shall specify (the
"Letter of Credit Documentation"). Fees for
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37
SILICON VALLEY BANK AMENDED SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
the Letters of Credit shall be as provided in the Letter
of Credit Documentation.
CREDIT CARD SUBLIMIT Up to $50,000 of the Credit Limit (the "Credit Card
Sublimit") may be used by the Borrower in connection
with Silicon's issuance of corporate credit cards (the
"Credit Cards") for OFFICERS of the Borrower as the
Borrower designates from time to time, with the
aggregate credit limit for all such Credit Cards not to
exceed $50,000 at any time. All Credit Cards and
underlying agreements relating thereto shall be in form
and substance satisfactory to Silicon in its sole
discretion.
The Credit Limit set forth above and the Loans available
under this Agreement at any time shall be reduced by the
face amount of Letters of Credit from time to time
outstanding and the amount of the Credit Card Sublimit
set forth above.
INTEREST RATE
(Section 1.2): A rate equal to the "Prime Rate" in effect from time to
time, plus .50% per annum; provided, however, that upon
the IPO Consummation, the interest rate shall be a rate
equal to the "Prime Rate" in effect from time to time.
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): As per Amendment to Loan and Security Agreement of even
date.
MATURITY DATE
(Section 5.1): OCTOBER 5, 1996.
PRIOR NAMES OF BORROWER
(Section 3.2): NONE
TRADE NAMES OF BORROWER
(Section 3.2): KOFAX
OTHER LOCATIONS AND ADDRESSES
(Section 3.3): 00 XXXXXXX XXXXXX, XXXXXXXXX, XX 00000
000 XXXXXXX XXXXXXX, XXXXX 000, XXXXXXX, XX 00000;
0000 XXXXXXX XXXXX, XXXXX 000, XXXXXXXX, XX 00000;
XXX XXXXXXXXXX 00, 0000 XXXXXXXX, XXXXXXX
00 XXXXXXXXXXX XX., XXXXXX X00 0XX XXXXXX XXXXXXX
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
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38
SILICON VALLEY BANK AMENDED SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
pursuant to any employee stock purchase or benefit plan,
provided that the total amount paid by Borrower for such
stock does not exceed $200,000 in any fiscal year or
(ii) make loans to, or enter into loan guaranties on
behalf of, employees in an aggregate amount not
exceeding $200,000 at any one time outstanding; provided
that, in addition to the foregoing, make loans to
employees in connection with computer purchases
("Employee Computer Loans") provided that the Employee
Computer Loans shall not exceed $300,000 in the
aggregate at any one time outstanding.
FINANCIAL COVENANTS
(Section 4.1): Borrower shall comply with all of the following
covenants. Compliance shall be determined as of the end
of each quarter, except as otherwise specifically
provided below:
QUICK ASSET RATIO: Borrower shall maintain a ratio of "Quick Assets" to
current liabilities of not less than 1.25 to 1, provided
that on and after the IPO Consummation, Borrower shall
maintain a ratio of "Quick Assets" to current
liabilities of not less than 2.0 to 1.
TANGIBLE NET WORTH: Borrower shall maintain a tangible net worth of not less
than $4,000,000, provided that on and after the IPO
Consummation, Borrower shall maintain a tangible net
worth of not less than $10,600,000 plus 80% of the
amount of the net proceeds received by the Borrower upon
the IPO Consummation relating thereto.
DEBT TO TANGIBLE
NET WORTH RATIO: Borrower shall maintain a ratio of total liabilities to
tangible net worth of not more than 1.0 to 1, provided
that on and after the IPO Consummation, Borrower shall
maintain a ratio of total liabilities to tangible net
worth of not more than .50 to 1.
PROFITABILITY: Borrower shall not incur a loss (after taxes) for any
fiscal quarter; except that Borrower may incur a loss
(after taxes) for a single fiscal quarter during the
term hereof not to exceed $500,000. Borrower shall not
incur a loss (after taxes) for the 1996 fiscal year.
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,
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).
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
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SILICON VALLEY BANK AMENDED SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
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
while any Obligations remain outstanding.
2. MONTHLY BORROWING BASE CERTIFICATE AND LISTING.
Within 20 days after the end of each month while any
Obligations remain outstanding, Borrower shall provide
Silicon with a Borrowing Base Certificate (the
"Borrowing Certificate") in such form as Silicon shall
reasonably specify, and an aged listing of Borrower's
accounts receivable and accounts payable (collectively,
the "Listing"). At all other times, within 20 days after
the end of each fiscal quarter, Borrower shall provide
Silicon with a Borrowing Base Certificate in such form
as Silicon shall reasonably specify, and an aged listing
of Borrower's accounts receivable and accounts payable.
After the IPO Consummation, and notwithstanding the
foregoing, Borrower shall not be obligated to provide
Silicon with the Borrowing Certificate or the Listing.
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 $700,000 at any time outstanding; such
indebtedness refers to obligations owing to parties
other than Silicon.
4. OTHER INFORMATION REQUIREMENTS. The Borrower shall
promptly provide to Silicon such budgets, sales
projections, operating plans and other financial
documentation relating to the Borrower that Silicon
reasonably requires.
5. INITIAL AUDIT. The audit referred to in Section 4.5
of this Agreement shall be completed within 90 days of
the first Loan relating to the Borrower's accounts
receivable made to Borrower pursuant to Section 1.1.
6. NEGATIVE PLEDGE. Except as otherwise permitted
hereunder, Borrower shall not hereafter grant a security
interest in any of its present or future Collateral.
7. ANNUAL THIRTY-DAY CLEAN-UP PERIOD. Effective upon the
IPO Consummation, Borrower agrees that during the period
of October 6, 1995 to October 5, 1996, there shall be a
period of at least 30 days when no Loans are
outstanding.
8. MATERIAL ADVERSE CHANGE EVENT OF DEFAULT. In addition
to and without limitation of the Events of Defaults
under this Agreement, any
4-
40
SILICON VALLEY BANK AMENDED SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
material adverse change in the business, assets or condition
(financial or otherwise) of Borrower from the date hereof shall
constitute an Event of Default hereunder.
BORROWER:
KOFAX IMAGE PRODUCTS
BY [SIG]
------------------------------
PRESIDENT OR VICE PRESIDENT
BY [SIG]
------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY [SIG]
------------------------------
TITLE VICE PRESIDENT
----------------------------
-5-
41
[LOGO] SILICON VALLEY BANK
AMENDMENT TO LOAN AND SECURITY
AGREEMENT
BORROWER: KOFAX IMAGE PRODUCTS
ADDRESS: 0 XXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
DATE: JANUARY 20, 1996
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON
VALLEY BANK ("Silicon") and the borrower named above (the "Borrower"). The
Parties agree to amend the Loan and Security Agreement between them, dated
February 28, 1992, as amended by that certain Amendment to Loan Agreement dated
March 9, 1993, as amended by that certain Amendment to Loan Agreement dated
October 10, 1994, and as amended by that certain Amendment to Loan Agreement
dated October 5, 1995 (as amended, the "Loan Agreement"), as follows, effective
on the date hereof. (Capitalized terms used but not defined in this Amendment,
shall have the meanings set forth in the Loan Agreement.)
1. AMENDED SCHEDULE. The Schedule to Loan and Security Agreement is
amended effective as of the date hereof, to read as set forth on the Amended
Schedule to Loan and Security Agreement attached hereto.
2. MODIFICATION TO SECTION 2.2. Section 2.2 of the Loan Agreement is
hereby replaced in its entirety with the following Section 2.2 and a new
Section 2.2A is hereby added that is to follow after Section 2.2:
"2.2 GRANT of SECURITY INTEREST IN COLLATERAL. The Borrower grants
Silicon a continuing security interest in all of the Borrower's
interest in the Collateral (as defined below in Section 2.2A) as
security for all Obligations (collectively referred to as the
"Grant"). The Grant shall be considered fully effective until the
occurrence of both (A) the IPO Consummation (as defined below) and
(B) the repayment in full of the Term Loan (as defined in the
Schedule to Loan Agreement) in immediately funds (collectively, the
occurrence of both (A) and (B) are referred to as the "Unsecured
Conditions"). Upon the satisfaction of and compliance with the
Unsecured Conditions, the Grant shall be deemed to be of no force
and effect.
As used herein the term IPO Consummation" means the consummation of
an underwritten initial public offering of the Borrower's common
stock from which the Borrower receives net proceeds in a minimum
amount of $9,000,000, which transaction is otherwise satisfactory to
Silicon, and relating to which Borrower has provided to Silicon
documentation and other information satisfactory to Silicon
evidencing the consummation thereof.
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SILICON VALLEY BANK AMENDMENT TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
2.2A COLLATERAL. This section 2.2A shall be considered to be
effective at all times during the effectiveness of this Loan
Agreement regardless of the status of the satisfaction of the
Unsecured Conditions. The term "Collateral" as used herein shall
mean all of the Borrower's interest in the types of property
described below, whether now owned or hereafter acquired, and
wherever located: (a) All accounts, contract rights, chattel paper,
and all other obligations now or in the future owing to the
Borrower; (b) All inventory, materials used or consumed in
Borrower's business, raw materials, work in process, finished goods,
packaging and shipping materials, 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 (c)
All equipment acquired through Loans and all equipment acquired
through any other financing provided to Borrower, which other
financing has been refinanced by Loans (such equipment includes,
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); 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.
3. REINCORPORATION. Borrower has informed Silicon that it desires to
change the state of its incorporation from California to Delaware by effecting a
merger (the "Merger") of Borrower with and into Kofax Image Products, Inc., a
Delaware corporation ("Kofax-Delaware"), a wholly-owned subsidiary of Borrower.
Silicon consents to the Merger, provided that Kofax-Delaware enter into an
assumption agreement and execute such additional documents and take such
additional actions as Silicon determines are reasonably necessary or desirable
to protect its rights and interests under the Loan Agreement.
4. FACILITY FEE. The Borrower shall pay Silicon concurrently
herewith a facility fee in the amount of $9,000, which shall be in addition to
all interest and all other fees payable to Silicon and shall be non-refundable.
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SILICON VALLEY BANK AMENDMENT TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
5. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct as of the date hereof.
6. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written documents and agreements between Silicon and the Borrower set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect
to the subject hereof. Except as herein expressly amended, all of the terms and
provisions of the Loan Agreement, and all other documents and agreements between
Silicon and the Borrower shall continue in full force and effect and the same
are hereby ratified and confirmed.
BORROWER: SILICON:
KOFAXIMAGE PRODUCTS SILICON VALLEY BANK
BY [SIG] BY [SIG]
---------------------------------- ------------------------------
PRESIDENT OR VICE PRESIDENT TITLE VICE PRESIDENT
---------------------------
By [SIG]
---------------------------------
SECRETARY OR ASS'T SECRETARY
-3-
44
[LOGO] Silicon Valley Bank
AMENDED SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: KOFAX IMAGE PRODUCTS
ADDRESS: 0 XXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
DATE: JANUARY 20, 1996
CREDIT LIMIT
(Section 1.1): A. BEFORE THE IPO CONSUMMATION. The following shall
apply at all times prior to the IPO Consummation:
An amount not to exceed the lesser of: (i) $2,000,000 at
any one time outstanding; or (ii) 80% of the Net Amount
of Borrower's accounts, which Silicon in its discretion
deems eligible for borrowing;
PLUS the amount of the Term Loan Facility (as defined
below).
"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.
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: accounts outstanding for more
than 90 days from the invoice date, accounts subject to
any contingencies, accounts owing from an account debtor
outside the United States (unless pre-approved by
Silicon, which approval shall not be unreasonably
withheld, or backed by a letter of credit satisfactory
to Silicon, or FCIA insured satisfactory to Silicon),
accounts owing from one account debtor to the extent
they exceed 25% of the total eligible accounts
outstanding, accounts owing from an affiliate of
Borrower, and accounts owing from an account debtor to
whom Borrower is or may be liable for goods purchased
from such account debtor or otherwise. 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 accounts,
then all accounts owing from that account debtor will be
deemed ineligible for borrowing.
B. AFTER THE IPO CONSUMMATION. The following shall apply
at all times on and after the IPO Consummation:
An amount not to exceed $2,000,000 at any one time
outstanding;
PLUS the amount of the Term Loan Facility (as defined
below).
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SILICON VALLEY BANK AMENDED SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
LETTERS OF CREDIT: Silicon, in its reasonable discretion, will from time to
time during the term of this Agreement 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 $100,000, upon the request of
the Borrower and upon execution and delivery by the
Borrower of Applications for Letters of Credit and such
other documentation as Silicon shall specify (the
"Letter of Credit Documentation"). Fees for the Letters
of Credit shall be as provided in the Letter of Credit
Documentation.
CREDIT CARD SUBLIMIT: Up to $100,000 of the Credit Limit (the "Credit Card
Sublimit") may be used by the Borrower in connection
with Silicon's issuance of corporate credit cards (the
"Credit Cards") for officers of the Borrower as the
Borrower designates from time to time, with the
aggregate credit limit for all such Credit Cards not to
exceed $100,000 at any time. All Credit Cards and
underlying agreements relating thereto shall be in form
and substance satisfactory to Silicon in its sole
discretion.
The Credit Limit set forth above and the Loans available
under this Agreement at any time shall be reduced by the
face amount of Letters of Credit from time to time
outstanding and the amount of the Credit Card Sublimit
set forth above.
TERM LOAN FACILITY: An amount up to $1,800,000 (the "Term Loan Facility") to
be utilized by the Borrower on or before July 5, 1996
(the "Amortization Date") to assist Borrower's purchase
of certain assets of LaserData, Inc. (referred to as the
"Purchase"), provided that (i) the agreements and
documentation relating to the Purchase are acceptable to
Silicon, (ii) the assets purchased relating to the
Purchase are free of liens and encumbrances (other than
the lien of Silicon), (iii) Silicon will have a
perfected, first priority security interest in such
assets, (iv) the Purchase is consummated in a manner
satisfactory to Silicon and (v) the Purchase is
otherwise acceptable to Silicon in its discretion;
provided, further that the amount of an advance under
the Term Loan Facility (a "Term Loan") shall not be less
than $50,000.
The amount available under the Term Loan Facility shall
be permanently reduced by the original principal amount
of each Term Loan at the time that such Term Loan is
made. The date that a Term Loan is made is referred to
as the "Term Loan Date."
Interest shall be payable monthly on the aggregate
outstanding principal amount of the Term Loans
commencing February 5, 1996, and interest payments shall
continue on the same day of each month thereafter until
the Term Loans and related Obligations have been repaid
in full, subject to the required complete repayment of
the Term Loans and related Obligations as set forth in
the next sentence. Borrower shall repay to Silicon the
outstanding aggregate amount of Term Loans in 36 equal
monthly payments of principal, commencing one month
after the Amortization Date and continuing on the same
day of each month thereafter until July 5, 1999, on
which date the entire unpaid aggregate principal balance
of the Term Loans, all accrued and unpaid interest
thereon and all related Obligations shall be due and
payable.
-2-
46
SILICON VALLEY BANK AMENDED SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
The Term Loans shall bear interest at the rate set forth
below in Section 1.2 hereof. The Term Loans together
with all accrued and unpaid interest thereon shall be
immediately due and payable upon written notice thereof
to the Borrower in accordance with the notice provisions
set forth in Sections 5.2 and 6.2 of this Agreement upon
the occurrence of any Event of Default and is otherwise
due and payable as set forth under the terms and
conditions of this Agreement.
Each Term Loan shall constitute a "Loan" for all
purposes of the Loan Agreement. The term "Obligations"
as used in this Agreement shall include without
limitation the obligation to repay the Term Loans, and
all interest thereon. The Term Loans shall be secured by
all Collateral.
INTEREST RATE
(Section 1.2): Other than with respect to the Term Loans, the interest
rate shall be equal to the "Prime Rate" in effect from
time to time, plus .50% per annum; provided, however,
that upon the IPO Consummation, the interest rate shall
be a rate equal to the "Prime Rate" in effect from time
to time.
With respect to the Term Loans, the interest rate shall
be equal to the "Prime Rate" in effect from time to
time, plus 1.00% 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): As per Amendment to Loan and Security Agreement of even
date.
MATURITY DATE
(Section 5.1): OCTOBER 5, 1996, other than with respect to the Term
Loan Facility. The Term Loan Facility shall be due and
payable in accordance with the provisions set forth in
Section 1. 1 above.
PRIOR NAMES OF BORROWER
(Section 3.2): NONE
TRADE NAMES OF BORROWER
(Section 3.2): KOFAX
OTHER LOCATIONS AND ADDRESSES
(Section 3.3): 0000 XXXX XXXXX XXXXXX, XXXXX 0, XXXXXXXXXX, XX 00000;
000 XXXXXXX XXXXXXX, XXXXX 000, XXXXXXX, XX 00000;
0000 XXXXXXX XXXXX, XXXXX 000, XXXXXXXX, XX 00000;
XXX XXXXXXXXXX 00, 0000 XXXXXXXX, XXXXXXX;
000 XXXXXX XXXX, XXXXXXXXX, XX 00000;
0000 XXXXXXXXX XXXX., XXXXX 000, XXXXXXXX, XX (SALES
OFFICE ONLY)
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
-3-
47
SILICON VALLEY BANK AMENDED SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
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 $200,000 in any fiscal year; (ii)
make loans to, or enter into loan guaranties on behalf
of, employees in an aggregate amount not exceeding
$200,000 at any one time outstanding; and (iii) make
loans to employees in connection with computer purchases
("Employee Computer Loans") provided that the Employee
Computer Loans shall not exceed $300,000 in the
aggregate at any one time outstanding.
FINANCIAL COVENANTS
(Section 4.1): Borrower shall comply with all of the following
covenants, Compliance shall be determined as of the end
of each quarter, except as otherwise specifically
provided below:
QUICK ASSET RATIO: Borrower shall maintain a ratio of "Quick Assets" to
current liabilities of not less than 1.25 to 1, provided
that on and after the IPO Consummation, Borrower shall
maintain a ratio of "Quick Assets" to current
liabilities of not less than 2.0 to 1.
TANGIBLE NET WORTH: Borrower shall maintain a tangible net worth of not less
than $4,000,000, provided that on and after the IPO
Consummation, Borrower shall maintain a tangible net
worth of not less than $6,000,000 plus 80% of the amount
of the net proceeds received by the Borrower upon the
IPO Consummation relating thereto.
DEBT TO TANGIBLE
NET WORTH RATIO: Borrower shall maintain a ratio of total liabilities to
tangible net worth of not more than 1.0 to 1, provided
that on and after the IPO Consummation, Borrower shall
maintain a ratio of total liabilities to tangible net
worth of not more than .50 to 1.
PROFITABILITY: Borrower shall not incur a loss (after taxes) for any
fiscal quarter; except that Borrower may incur a loss
(after taxes) for a single fiscal quarter during the
term hereof not to exceed $500,000, and Borrower shall
not incur a loss (after taxes) for the 1996 fiscal year;
PROVIDED that if the Purchase has been consummated the
following profitability covenant shall apply: Borrower
shall not incur a loss (after taxes) for any fiscal
quarter, except that (i) Borrower may incur a loss
(after taxes) for the single fiscal quarter during the
term hereof in which the Purchase has been consummated,
which loss may not exceed $4,000,000 and (ii) in
addition to the foregoing, Borrower may incur a loss
(after taxes) for a fiscal quarter during the term
hereof not to exceed $500,000; further, Borrower shall
not incur a loss (after taxes) for the 1996 fiscal year
in excess of $1,800,000.
DEBT SERVICE RATIO: Borrower shall maintain a Debt Service Ratio (as
referred to below) as of the end of each quarter of not
less than 1.75 to 1, excluding, however, the one-time
charges associated with the Purchase.
DEFINITIONS: "Current assets," and "current liabilities" shall have
the meanings ascribed to them in accordance with
generally accepted accounting principles.
-4-
48
SILICON VALLEY BANK AMENDED SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
"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,
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).
"Debt Service Ratio" means, for any period, the ratio of
(a) net income of Borrower (relating to the period of
the then immediately preceding 12 months) 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.
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
while any Obligations remain outstanding.
2. MONTHLY BORROWING BASE CERTIFICATE AND LISTING.
Within 20 days after the end of each month while any
Obligations remain outstanding, Borrower shall provide
Silicon with a Borrowing Base Certificate (the
"Borrowing Certificate") in such form as Silicon shall
reasonably specify, and an aged listing of Borrower's
accounts receivable and accounts payable (collectively,
the "Listing"). At all other times, within 20 days after
the end of each fiscal quarter, Borrower shall provide
Silicon with a Borrowing Base Certificate in such form
as Silicon shall reasonably specify, and an aged listing
of Borrower's accounts receivable and accounts payable.
After the IPO Consummation, and notwithstanding the
foregoing, Borrower shall not be obligated to provide
Silicon with the Borrowing Certificate or the Listing.
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
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SILICON VALLEY BANK AMENDED SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
$700,000 at any time outstanding; such indebtedness
refers to obligations owing to parties other than
Silicon.
4. OTHER INFORMATION REQUIREMENTS. The Borrower shall
promptly provide to Silicon such budgets, sales
projections, operating plans and other financial
documentation relating to the Borrower that Silicon
reasonably requires.
5. INITIAL AUDIT. The audit referred to in Section 4.5
of this Agreement shall be completed within 90 days of
the first Loan relating to the Borrower's accounts
receivable made to Borrower pursuant to Section 1.1.
6. NEGATIVE PLEDGE. Except as otherwise permitted
hereunder, including, without limitation, security
interests granted in connection with the purchase, or
lease of equipment as set forth in paragraph 3(ii)
hereof, Borrower shall not hereafter grant a security
interest in any of its present or future Collateral.
7. ANNUAL THIRTY-DAY CLEAN-UP PERIOD. Effective upon the
IPO Consummation, Borrower agrees that during the period
of October 6, 1995 to October 5, 1996, there shall be a
period of at least 30 days when no Loans (other than the
Term Loans) are outstanding.
8. MATERIAL ADVERSE CHANGE EVENT OF DEFAULT. In addition
to and without limitation of the Events of Defaults
under this Agreement, any material adverse change in the
business, assets or condition (financial or otherwise)
of Borrower from the date hereof shall constitute an
Event of Default hereunder.
BORROWER:
KOFAX IMAGE PRODUCTS
By [SIG]
---------------------------------
PRESIDENT OR VICE PRESIDENT
BY [SIG]
---------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY
---------------------------------
TITLE VICE PRESIDENT
-----------------------------
-6-
50
[LOGO] SILICON VALLEY BANK
AMENDMENT TO LOAN AND SECURITY
AGREEMENT
BORROWER. KOFAX IMAGE PRODUCTS, INC.
ADDRESS: 0 XXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
DATE: OCTOBER 31, 1996
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON
VALLEY BANK ("Silicon") and the borrower named above (the "Borrower"). The
Parties agree to amend the Loan and Security Agreement between them, dated
February 28, 1992, as amended by that certain Amendment to Loan Agreement dated
March 9, 1993, as amended by that certain Amendment to Loan Agreement dated
October 10, 1994, as amended by that certain Amendment to Loan Agreement dated
October 5, 1995, as amended by that certain Amendment to Loan Agreement dated
January 20, 1996 (as amended, the "Loan Agreement"), as follows, effective on
the date hereof. (Capitalized terms used but not defined in this Amendment,
shall have the meanings set forth in the Loan Agreement.)
1. Amended Schedule. The Schedule to Loan and Security Agreement is
amended effective as of the date hereof, to read as set forth on the Amended
Schedule to Loan and Security Agreement attached hereto.
2. Modification to Section 2.2. Section 2.2 of the Loan Agreement is
hereby replaced in its entirety with the following Section 2.2:
2.2 Collateral. The term "Collateral" as used herein shall mean all
of the Borrower's interest in the types of property described below,
whether now owned or hereafter acquired, and wherever located: (a)
All accounts, contract rights, chattel paper, and all other
obligations now or in the future owing to the Borrower; (b) All
inventory, materials used or consumed in Borrower's business, raw
materials, work in process, finished goods, packaging and shipping
materials, 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 (c) All equipment acquired
through Loans and all equipment acquired through any other financing
provided to Borrower, which other financing has been refinanced by
Loans (such equipment includes, 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);
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SILICON VALLEY BANK AMENDMENT TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
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. The
inclusion of the definition of Collateral does not mean or imply
that such items of property constitute security for the
Obligations."
3. FACILITY FEE. The Borrower shall pay Silicon concurrently
herewith a facility fee in the amount of $5,000, which shall be in addition to
all interest and all other fees payable to Silicon and shall be non-refundable.
4. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct as of the date hereof.
5. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written documents and agreements between Silicon and the Borrower set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect
to the subject hereof. Except as herein expressly amended, all of the terms and
provisions of the Loan Agreement, and all other documents and agreements between
Silicon and the Borrower shall continue in full force and effect and the same
are hereby ratified and confirmed.
BORROWER: SILICON:
KOFAXIMAGE PRODUCTS, INC. SILICON VALLEY BANK
BY [SIG] BY /S/ XXXXXX XXXXX
----------------------------- -----------------------------
PRESIDENT OR VICE PRESIDENT TITLE ASSISTANT VICE PRESIDENT
---------------------------
BY [SIG]
------------------------------
SECRETARY OR ASS'T SECRETARY
-2-
52
[LOGO] Silicon Valley Bank
AMENDED SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER. KOFAX IMAGE PRODUCTS, INC.
ADDRESS: 0 XXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
DATE: OCTOBER 31, 1996
CREDIT LIMIT
(Section 1.1): An amount not to exceed $2,000,000 at any one time
outstanding; PLUS the amount of the Term Loan Facility
(as defined below).
"IPO Consummation" means the consummation of an
underwritten initial public offering of the Borrower's
common stock, which transaction is satisfactory to
Silicon, and relating to which Borrower has provided to
Silicon documentation and other information satisfactory
to Silicon evidencing the consummation thereof.
LETTERS OF CREDIT Silicon, in its reasonable discretion, will from time to
time during the term of this Agreement 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 $100,000, upon the request of
the Borrower and upon execution and delivery by the
Borrower of Applications for Letters of Credit and such
other documentation as Silicon shall specify (the
"Letter of Credit Documentation"). Fees for the Letters
of Credit shall be as provided in the Letter of Credit
Documentation.
The Loans available under this Agreement at any time
shall be reduced by the face amount of Letters of Credit
from time to time outstanding.
TERM LOAN FACILITY An amount up to $1,800,000 (the "Term Loan Facility") to
be utilized by the Borrower on or before July 5, 1996
(the "Amortization Date") to assist Borrower's purchase
of certain assets of LaserData, Inc. (referred to as the
"Purchase"), provided that (i) the agreements and
documentation relating to the Purchase are acceptable to
Silicon, (ii) the assets purchased relating to the
Purchase are free of liens and encumbrances (other than
the lien of Silicon), (iii) Silicon will have a
perfected, first priority security interest in such
assets, (iv) the Purchase is consummated in a manner
satisfactory to Silicon and (v) the Purchase is
otherwise acceptable to Silicon in its discretion;
-1-
53
SILICON VALLEY BANK AMENDED SCHEDULE TO LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------
provided, further, that the amount of an advance under
the Term Loan Facility (a "Term Loan") shall not be less
than $50,000.
The amount available under the Term Loan Facility shall
be permanently reduced by the original principal amount
of each Term Loan at the time that such Term Loan is
made. The date that a Term Loan is made is referred to
as the "Term Loan Date."
Interest shall be payable monthly on the aggregate
outstanding principal amount of the Term Loans
commencing February 5, 1996, and interest payments shall
continue on the same day of each month thereafter until
the Term Loans and related Obligations have been repaid
in full, subject to the required complete repayment of
the Term Loans and related Obligations as set forth in
the next sentence. Borrower shall repay to Silicon the
outstanding aggregate amount of Term Loans in 36 equal
monthly payments of principal, commencing one month
after the Amortization Date and continuing on the same
day of each month thereafter until July 5, 1999, on
which date the entire unpaid aggregate principal balance
of the Term Loans, all accrued and unpaid interest
thereon and all related Obligations shall be due and
payable.
The Term Loans shall bear interest at the rate set forth
below in Section 1.2 hereof. The Term Loans together
with all accrued and unpaid interest thereon shall be
immediately due and payable upon written notice thereof
to the Borrower in accordance with the notice provisions
set forth in Sections 5.2 and 6.2 of this Agreement upon
the occurrence of any Event of Default and is otherwise
due and payable as set forth under the terms and
conditions of this Agreement.
Each Term Loan shall constitute a "Loan" for all
purposes of the Loan Agreement. The term "Obligations"
as used in this Agreement shall include without
limitation the obligation to repay the Term Loans, and
all interest thereon. The Term Loans shall be secured by
all Collateral.
INTEREST RATE
(Section 1.2): Other than with respect to the Term Loans, the interest
rate shall be equal to the "Prime Rate" in effect from
time to time.
With respect to the Term Loans, the interest rate shall
be equal to the "Prime Rate" in effect from time to
time, plus 1.00% 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): As per Amendment to Loan and Security Agreement of even
date.
MATURITY DATE
(Section 5.1): OCTOBER 5, 1997, other than with respect to the Term
Loan Facility. The Term Loan Facility shall be due and
payable in accordance with the provisions set forth in
Section 1.1 above.
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SILICON VALLEY BANK AMENDED SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
PRIOR NAMES OF BORROWER
(Section 3.2): NONE
TRADE NAMES OF BORROWER
(Section 3.2): KOFAX
OTHER LOCATIONS AND ADDRESSES
(Section 3.3): 00 XXXXXXX XXXXXX, XXXXXXXXX, XX 00000;
000 XXXXXXX XXXXXXX, XXXXX 000, XXXXXXX, XX 00000;
0000 XXXXXXX XXXXX, XXXXX 000, XXXXXXXX, XX 00000;
XXX XXXXXXXXXX 00,0000 XXXXXXXX, XXXXXXX;
000 XXXXXX XXXX, XXXXXXXXX, XX 00000;
XXXXXXXXXX 0, 0000 XXXXXX, XXXXXXXX, XXXXXXX;
0 XXXXXXXXX XXXXXX XXXX, XXXXXX, XX00 0XX, XXXXXX
XXXXXXX
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
$200,000 in any fiscal year; (ii) make loans to, or
enter into loan guaranties on behalf of, employees in an
aggregate amount not exceeding $200,000 at any one time
outstanding; and (iii) make loans to employees in
connection with computer purchases ("Employee Computer
Loans") provided that the Employee Computer Loans shall
not exceed $300,000 in the aggregate at any one time
outstanding.
FINANCIAL COVENANTS
(Section 4.1): Borrower shall comply with all of the following
covenants. Compliance shall be determined as of the end
of each quarter, except as otherwise specifically
provided below:
QUICK ASSET RATIO: Borrower shall maintain a ratio of "Quick Assets" to
current liabilities of not less than 1.75 to 1, provided
that on and after the IPO Consummation, Borrower shall
maintain a ratio of "Quick Assets" to current
liabilities of not less than 2.0 to 1.
TANGIBLE NET WORTH: Borrower shall maintain a tangible net worth of not less
than $8,000,000, provided that on and after the IPO
Consummation, Borrower shall maintain a tangible net
worth of not less than $8,000,000 plus 80% of the amount
of the net proceeds received by the Borrower upon the
IPO Consummation relating thereto.
DEBT TO TANGIBLE
NET WORTH RATIO: Borrower shall maintain a ratio of total liabilities to
tangible net worth of not more than 1.0 to 1, provided
that on and after the IPO Consummation, Borrower shall
maintain a ratio of total liabilities to tangible net
worth of not more than .50 to 1.
PROFITABILITY: Borrower shall not incur a loss (after taxes) for any
fiscal quarter.
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SILICON VALLEY BANK AMENDED SCHEDULE TO LOAN AND SECURITY AGREEMENT
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DEBT SERVICE RATIO: Borrower shall maintain a Debt Service Ratio (as
referred to below) as of the end of each quarter of not
less than 1.75 to 1.
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,
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).
"Debt Service Ratio" means, for any period, the ratio of
(a) net income of Borrower (relating to the period of
the then immediately preceding 12 months) 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.
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
while any Obligations remain outstanding.
2. [RESERVED]
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 $700,000 at any time outstanding; such
indebtedness refers to obligations owing to parties
other than Silicon.
4. OTHER INFORMATION REQUIREMENTS. The Borrower shall
promptly provide to Silicon such budgets, sales
projections, operating plans and other financial
documentation relating to the Borrower that Silicon
reasonably requires.
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5. [RESERVED]
6. NEGATIVE PLEDGE. Except as otherwise permitted
hereunder, including, without limitation, security
interests granted in connection with the purchase or
lease of equipment as set forth in paragraph 3(ii)
hereof, Borrower shall not hereafter grant a security
interest in any of its present or future Collateral.
7. ANNUAL THIRTY-DAY CLEAN-UP PERIOD. Borrower agrees
that during the period of October 6, 1996 to October 5,
1997, there shall be a period of at least 30 days when
no Loans (other than the Term Loans) are outstanding.
8. MATERIAL ADVERSE CHANGE EVENT OF DEFAULT. In addition
to and without limitation of the Events of Defaults
under this Agreement, any material adverse change in the
business, assets or condition (financial or otherwise)
of Borrower from the date hereof shall constitute an
Event of Default hereunder.
BORROWER:
KOFAXIMAGE PRODUCTS, INC.
BY
-------------------------------------
PRESIDENT OR VICE PRESIDENT
BY
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SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY /S/ XXXXXX XXXXX
-------------------------------------
TITLE ASSISTANT VICE PRESIDENT
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