Exhibit 7(d)
SILICON VALLEY BANK
LOAN AND SECURITY AGREEMENT
BORROWER: FORWARD VENTURES III, L.P.
ADDRESS: 00000 XXXXXXXXX XXXX, XXXXX 000
XXX XXXXX, XX 00000
DATE: DECEMBER 19, 1996
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK ("Silicon"), whose address is 0000 Xxxxxx Xxxxx, Xxxxx
Xxxxx, Xxxxxxxxxx 00000 and the borrower named above (the "Borrower"), whose
chief executive office is located at the above address ("Borrower's Address").
1. LOANS.
1.1 LOANS. Silicon, in its reasonable discretion, will make loans to the
Borrower (the "Loans") in amounts determined by Silicon in its reasonable
discretion up to the amount (the "Credit Limit") shown on the Schedule to this
Agreement (the "Schedule"), provided no Event of Default and no event which,
with notice or passage of time or both, would constitute an Event of Default has
occurred. The Borrower is responsible for monitoring the total amount of Loans
and other Obligations outstanding from time to time, and Borrower shall not
permit the same, at any time, to exceed the Credit Limit. If at any time the
total of all outstanding Loans and all other Obligations exceeds the Credit
Limit, the Borrower shall immediately pay the amount of the excess to Silicon,
without notice or demand.
1.2 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule hereto. Interest shall be payable
monthly, on the due date shown on the monthly billing from Silicon to the
Borrower. Silicon may, in its discretion, charge interest to Borrower's deposit
accounts maintained with Silicon.
1.3 FEES. The Borrower shall pay to Silicon a loan origination fee in the
amount shown on the Schedule hereto concurrently herewith. This fee is in
addition to all interest and other sums payable to Silicon and is not
refundable.
1.4 LETTERS OF CREDIT. [Not Applicable]
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 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
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Silicon, or charge them to Borrower's Loan account, in which event they will
bear interest at the same rate applicable to the Loans. Silicon may also, in
its discretion, charge any monetary Obligations to Borrower's deposit accounts
maintained with Silicon. Silicon will notify the Borrower of any such charges
to Borrower's deposit accounts. Such charges shall not be deemed to be a setoff
for any purpose.
2.2 COLLATERAL. As security for all Obligations, the Borrower hereby
grants Silicon a continuing security interests in all of the Borrower's interest
in the types of property described below, whether now owned or hereafter
acquired, and wherever located (collectively, the "Collateral"): (a) All
accounts, contract rights, chattel paper, letters of credit, documents,
securities, money, and instruments, and all other obligations now or in the
future owing to the Borrower;(b) All inventory, goods, merchandise, materials,
raw materials, work in process, finished goods, farm products, advertising,
packaging and shipping materials, supplies, and all other tangible personal
property which is held for sale or lease or furnished under contracts of service
or consumed in the Borrower's business, and all warehouse receipts and other
documents; and (c) All equipment, including without limitation all machinery,
fixtures, trade fixtures, vehicles, furnishings, furniture, materials, tools,
machine tools, office equipment, computers and peripheral devices, appliances,
apparatus, parts, dies, and jigs;(d) All general intangibles including, but not
limited to, deposit accounts, goodwill, names, trade names, trademarks and the
goodwill of the business symbolized thereby, trade secrets, drawings,
blueprints, customer lists, patents, patent applications, copyrights, security
deposits, loan commitment fees, federal, state and local tax refunds and claims,
all rights in all litigation presently or hereafter pending for any cause or
claim (whether in contract, tort or otherwise), and all judgments now or
hereafter arising therefrom, all claims of Borrower against Silicon, all rights
to purchase or sell real or personal property, all rights as a licensor or
licensee of any kind, all royalties, licenses, processes, telephone numbers,
proprietary information, purchase orders, and all insurance policies and claims
(including without limitation credit, liability, property and other insurance),
and all other rights, privileges and franchises of every kind;(e) All books and
records, whether stored on computers or otherwise maintained; and (f) All
substitutions, additions and accessions to any of the foregoing, and all
products, proceeds and insurance proceeds of the foregoing, and all guaranties
of and security for the foregoing; and all books and records relating to any of
the foregoing. Silicon's security interest in any present or future technology
(including patents, trade secrets and other technology) shall be subject to any
licenses or rights now or in the future granted by the Borrower to any third
parties in the ordinary course of Borrower's business; provided that if the
Borrower proposes to sell, license or grant any other rights with respect to any
technology in a transaction that, in substance, conveys a major part of the
economic value of that technology, Silicon shall first be requested to release
its security interest in the same, and Silicon may withhold such release in its
discretion.*
* THE COLLATERAL SHALL ALSO INCLUDE, WITHOUT LIMITATION, THE RIGHTS OF THE
BORROWER TO RECEIVE AND REQUIRE CAPITAL CONTRIBUTIONS FROM ITS PARTNERS, AND
SUCH ACTUAL CAPITAL CONTRIBUTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING,
INCLUDING, WITHOUT LIMITATION, RIGHTS TO CAPITAL CONTRIBUTIONS FROM IT PARTNERS
ALREADY ACCRUED BUT NOT RECEIVED UNDER THE LIMITED PARTNERSHIP AGREEMENT OF
BORROWER DATED AUGUST 30, 1996, AS AMENDED, MODIFIED OR SUPPLEMENTED FROM TIME
TO TIME (COLLECTIVELY, THE "CAPITAL CONTRIBUTIONS").
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:
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3.1 EXISTENCE AND AUTHORITY. The Borrower is and will continue to be,
duly authorized, validly existing and in good standing under the laws of the
jurisdiction of its organization. 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
Borrower's partnership agreement, any agreement relating to the Borrower's
acquisition of the Shares (as defined in the Schedule hereto) or any other
agreement or instrument which is binding upon the Borrower. Borrower has no
subsidiaries except as set forth on the Schedule.
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 reasonable discretion, which consent shall
not be unreasonably withheld; and (v) security interests being terminated
substantially concurrently with this Agreement. Silicon will have the right
to require, as a condition to this consent under subparagraph (iv) above,
that the holder of the additional security interest or lien sign an
intercreditor agreement on Silicon's then standard form, acknowledge that the
security interest is subordinate to the security interest in favor of
Silicon, and agree not to take any action to enforce its subordinate security
interest so long as any Obligations remain outstanding, and that the Borrower
agree that any uncured default in any obligation secured by the subordinate
security interest shall also constitute an Event of Default under this
Agreement. Silicon now has, and will continue to have, a perfected and
enforceable security interest in all of the Collateral, subject only to the
Permitted Liens, and the Borrower will at all times defend Silicon and the
Collateral against all claims of others. None of the Collateral now is or
will be affixed to any real property in such a manner, or with such intent,
as to become a fixture.
3.5 MAINTENANCE OF COLLATERAL. The Borrower will maintain the Collateral
in good working condition, and the Borrower will not use the Collateral for any
unlawful purpose. the Borrower will immediately advise Silicon in writing of
any material loss or damage to the Collateral.
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3.6 BOOKS AND RECORDS. The Borrower has maintained and will maintain at
the Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.
3.7 FINANCIAL CONDITION AND STATEMENTS. All financial statements now or
in the future delivered to Silicon have been, and will be, prepared in
conformity with generally accepted accounting principles and now and in the
future will completely and accurately reflect the financial condition of the
Borrower, at the times and for the periods therein stated. Since the last date
covered by any such statement, there has been no material adverse change in the
financial condition or business of the Borrower. The Borrower is now and will
continue to be solvent. The Borrower will provide Silicon: (i) within 45 days
after the end of each quarter, a quarterly financial statement prepared by the
Borrower; and (ii) within 120 days following the end of the Borrower's fiscal
year, complete annual financial statements, certified by independent certified
public accountants acceptable to Silicon and accompanied by the unqualified
report thereon by said independent certified public accountants.
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. The Borrower has
timely filed, and will timely file, all tax returns and reports required by
foreign, federal, state and local law, and the Borrower has timely paid, and
will timely pay, all foreign, federal, state and local taxes, assessments,
deposits and contributions now or in the future owed by the Borrower. The
Borrower may, however, defer payment of any contested taxes, provided that the
Borrower (i) in good faith contests the Borrower's obligation to pay the taxes
by appropriate proceedings promptly and diligently instituted and conducted,
(ii) notifies Silicon in writing of the commencement of, and any material
development in, the proceedings, and (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a lien upon any of the
Collateral. The Borrower is unaware of any claims or adjustments proposed for
any of the Borrower's prior tax years which could result in additional taxes
becoming due and payable by the Borrower. The Borrower has paid, and shall
continue to pay all amounts necessary to fund all present and future pension,
profit sharing and deferred compensation plans in accordance with their terms,
and the Borrower has not and will not withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any such plan which could result in any liability of the
Borrower, including, without limitation, any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.
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 the best of the
Borrower's knowledge) threatened by or against or affecting the Borrower in any
court or before any governmental agency (or any basis therefor known to the
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of the Borrower,
or in any material impairment in the ability of the Borrower to carry on its
business in substantially the same manner as it is now being conducted. The
Borrower will promptly inform Silicon in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or against
the Borrower involving amounts in excess of $100,000.
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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 REPORTS. The Borrower shall provide Silicon with such written reports
with respect to the Borrower (including without limitation budgets, sales
projections, operating plans and other financial documentation), as Silicon
shall from time to time reasonably specify.
4.4 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 semi-annual accounts
receivable audits by Silicon, its agents, or third parties retained by Silicon,
and Silicon may debit Borrower's deposit accounts with Silicon for the cost of
such semi-annual accounts receivable audits (in which event Silicon shall send
notification thereof to the Borrower). Notwithstanding the foregoing, after the
occurrence of an Event of Default all audits shall be at the Borrower's expense.
4.5 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 the Borrower's
Tangible Net Worth (as defined in the Schedule) as of the end of the month
prior to the effective date of the acquisition; (iii) enter into any other
transaction outside the ordinary course of business (except as permitted by
the other provisions of this Section); (iv) sell or transfer any Collateral,
except for the sale of finished inventory in the ordinary course of 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 other than in accordance with the ordinary course of
Borrower's business, consistent with past practices; (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
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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.
4.6 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or in any manner
relating to the Borrower, the Borrower shall, without expense to Silicon, make
available the Borrower and its officers, employees and agents and the Borrower's
books and records to the extent that Silicon may deem them reasonably necessary
in order to prosecute or defend any such suit or proceeding.
4.7 VERIFICATION. Silicon may, from time to time, following prior
notification to Borrower, verify directly with the respective account debtors
the validity, amount and other matters relating to the Borrower's accounts, by
means of mail, telephone or otherwise, either in the name of the Borrower or
Silicon or such other name as Silicon may reasonably choose, provided that no
prior notification to Borrower shall be required following an Event of Default.
4.8 EXECUTE ADDITIONAL DOCUMENTATION. The Borrower agrees, at its
expense, on request by Silicon, to execute all documents in form satisfactory to
Silicon, as Silicon, may deem reasonably necessary or useful in order to perfect
and maintain Silicon's perfected security interest in the Collateral, and in
order to fully consummate all of the transactions contemplated by this
Agreement.
5. TERM.
5.1 MATURITY DATE. This Agreement shall continue in effect until the
maturity date set forth on the Schedule hereto (the "Maturity Date").
5.2 EARLY TERMINATION. This Agreement may be terminated, without penalty,
prior to the Maturity Date as follows: (i) by the Borrower, effective three
business days after written notice of termination is given to Silicon; or
(ii) by Silicon at any time after the occurrence of an Event of Default, without
notice, effective immediately.
5.3 PAYMENT OF OBLIGATIONS. On the Maturity date or on any earlier
effective date of termination, the Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether or
not all or any part of such Obligations are otherwise then due and payable.
Without limiting the generality of the foregoing, if on the Maturity date, or on
any earlier effective date of termination, there are any outstanding letters of
credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an amount
equal to the face amount of all such letters of credit plus all interest, fees
and cost due or to become due in connection therewith, to secure all of the
Obligations relating to said letters of credit, pursuant to Silicon's then
standard form cash pledge agreement. 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;
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provided that, without limiting the fact that Loans are subject to the
reasonable discretion of Silicon, Silicon may, in its sole discretion, refuse to
make any further Loans after termination. No termination shall in any way
affect or impair any right or remedy of Silicon, nor shall any such termination
relieve the Borrower of any Obligation to Silicon, until all of the Obligations
have been paid and performed in full. Upon payment and performance in full of
all the Obligations, Silicon shall promptly deliver to the Borrower termination
statements, requests for reconveyance 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-money Obligation which by its nature cannot be
cured; or (e) the Borrower shall fail to pay or perform any other non-monetary
Obligation which failure is not cured within 5 business days after the date due;
or (f) Any levy, assessment, attachment, seizure, lien or encumbrance is made on
all or any part of the Collateral which is not cured within 10 days after the
occurrence of the same; or (g) Dissolution, termination of existence, insolvency
or business failure of the Borrower; or appointment of a receiver, trustee or
custodian, for all or any part of the property of, assignment for the benefit of
creditors by, or the commencement of any proceeding by the Borrower under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect; or (h) the commencement of any proceeding against the Borrower
or any guarantor of any of the Obligations under any reorganization, bankruptcy
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect, which is not cured
by the dismissal thereof within 30 days after the date commenced; (i) revocation
or termination of or limitation or denial of liability upon any guaranty of the
Obligations or any attempt to do any of the foregoing; or commencement of
proceedings by any guarantor of any of the Obligations under any bankruptcy or
insolvency law; or (j) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all of
the Obligations, or any attempt to do any of the foregoing; or commencement of
proceedings by or against any such third party under any bankruptcy or
insolvency law; or (k) the Borrower makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations other
than as permitted in the applicable subordination agreement or if any person who
has subordinated such indebtedness or obligations terminates or in any way
limits his subordination agreement; or (l) there shall be a change in the record
or beneficial ownership of an aggregate of more than 20% of the outstanding
partnership interests of the Borrower, in one or more transactions, compared to
the ownership thereof in effect on the date hereof, without the prior written
consent of Silicon; or (m) a material adverse change occurs in the business,
operations, or financial or other condition of the Borrower, or a material
impairment occurs in the prospect of payment of the Obligations, or there is a
material impairment of the value or priority of Silicon's security interest in
the Collateral; or (n) the Borrower shall generally not pay its debts as they
become due; or the Borrower shall conceal, remove or transfer any part of its
property,
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with intent to hinder, delay or defraud its creditors, or make or suffer any
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law. Silicon may cease making any Loan
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 without notice or demand of any
kind (all of which are hereby expressly waived by the Borrower), may do any one
or more of the following: (a) Cease making Loans and cease extending letters of
credit or other credit facilities to or for the benefit of the Borrower under
this Agreement or any other document or agreement; (b) Accelerate and declare
all or any part of the Obligations to be immediately due, payable, and
performable, notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any Obligation; (c) Take possession of any
or all of the Collateral wherever it may be found, and for that purpose the
Borrower hereby authorizes Silicon without judicial process to enter onto any of
the Borrower's promises without interference to search for, take possession of,
keep, store, or remove any of the Collateral, and remain on the premises or
cause a Custodian to remain on the premises in exclusive control thereof without
charge for so long as Silicon deems it reasonably necessary in order to complete
the enforcement of its rights under this Agreement or any other agreement;
provided, however, that should Silicon seek to take possession of any or all of
the Collateral by Court process, the Borrower hereby irrevocably waives: (i) any
bond and any surety or security relating thereto required by any statute, court
rule or otherwise as an incident to such possession; (ii) any demand for
possession prior to the commencement of any suit or action to recover possession
thereof; and (iii) any requirement that Silicon retain possession of and not
dispose of any such Collateral until after trial or final judgment; (d) Require
the Borrower to assemble any or all of the Collateral and make it available to
Silicon at places designated by Silicon which are reasonably convenient to
Silicon and the Borrower, and to remove the Collateral to such locations as
Silicon may deem advisable; (e) Require Borrower to deliver to Silicon, in kind,
all checks and other payments received with respect to all accounts and general
intangibles, together with any necessary endorsements, within one day after the
date received by the Borrower; (f) Complete the processing, manufacturing or
repair of any Collateral prior to a disposition thereof and, for such purpose
and for the purpose of removal, Silicon shall have the right to use the
Borrower's premises, vehicles, hoists, lifts, cranes, equipment and all other
property without charge; (g) Sell, lease or otherwise dispose of any of the
Collateral in its condition at the time Silicon obtains possession of it or
after further manufacturing, processing or repair, at any one or more public
and/or private sales, in lots or in bulk, for cash, exchange or other property,
or on credit, and to adjourn any such sale from time to time without notice
other than oral announcement at the time scheduled for sale. Silicon shall have
the right to conduct such disposition on the Borrower's premises without charge,
for such time or times as Silicon deems reasonable, or on Silicon's premises, or
elsewhere and the Collateral need not be located at the place of disposition.
Silicon may directly or through any affiliated company purchase or lease any
Collateral at any such public disposition, and if permissible under applicable
law, at any private disposition. Any sale or other disposition of Collateral
shall not relieve the Borrower of any liability the Borrower may have if any
Collateral is defective as to title or physical condition or otherwise at the
time of sale; (h) Demand payment of, and collect any accounts and general
intangibles comprising Collateral and, in connection therewith, the Borrower
irrevocably authorizes Silicon to endorse or sign the Borrower's name on all
collections, receipts, instruments and other documents, to take possession of
and open mail addressed to the Borrower and remove therefrom payments made with
respect to any item of the Collateral or proceeds thereof, and, in Silicon's
sole discretion, to grant extensions of time to pay, compromise claims and
settle accounts and the like for less than face value; (i) Offset against any
sums in any of Borrower's general, special or other
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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 five 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 a.m. and 6:00 p.m.; (v) Payment of the purchase price
in cash or by cashier's check or wire transfer is required; (vi) With respect to
any sale of any of the Collateral, Silicon may (but is not obligated to) direct
any prospective purchaser to ascertain directly from the Borrower any and all
information concerning the same. Silicon may employ other methods of noticing
and selling the Collateral, in its discretion, if they are commercially
reasonable.
6.4 POWER OF ATTORNEY. Upon the occurrence of any Event of Default,
without limiting Silicon's other rights and remedies, the Borrower grants to
Silicon an irrevocable power of attorney coupled with an interest, authorizing
and permitting Silicon (acting through any of its employees, attorneys or
agents) at any time, at its option, but without obligation, with or without
notice to the Borrower, and at the Borrower's expense, to do any or all of the
following, in the Borrower's name or otherwise (a) Execute on behalf of the
Borrower any documents that Silicon may, in its sole and absolute discretion,
deem advisable in order to perfect and maintain Silicon's security interest in
the Collateral, or in order to exercise a right of the Borrower or Silicon, or
in order to fully consummate all the transactions contemplated under this
Agreement, and all other present and future agreements; (b) Execute on behalf of
the Borrower any document exercising, transferring or assigning any option to
purchase, sell or otherwise dispose of or to lease (as lessor or lessee) any
real or personal property which is part of Silicon's Collateral or in which
Silicon has an interest; (c) Execute on behalf of the Borrower, any invoices
relating to any account, any draft against any account debtor and any notice to
any account debtor, any proof of claim in bankruptcy, any Notice of Lien, claim
of mechanic's, materialman's or other lien, or assignment or satisfaction of
mechanic's, materialman's or other lien: (d) Take control in any manner of any
cash or non-cash items of payment or proceeds of Collateral; endorse the name of
the Borrower upon any instruments, or documents, evidence of payment or
Collateral that may come into Silicon's possession; (e) Endorse all checks and
other forms of remittances received by Silicon; (f) Pay, contest or settle any
lien, charge, encumbrance, security interest and adverse claim in or to any of
the Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (g) Grant extensions of time to pay, compromise
claims and settle accounts and general intangibles for less than face value and
execute all releases and other documents in connection therewith; (h) Pay any
sums required on account of the Borrower's taxes or to secure the release of any
liens therefore 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
PAGE 23 OF 35 PAGES
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 therefore.
6.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth
in this Agreement Silicon shall have all the other rights and remedies accorded
a secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between Silicon and the Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by
Silicon of one or more of its rights Or remedies shall not be deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Silicon to exercise any
rights or remedies shall not operate as a waiver thereof, but all rights and
remedies shall continue in full force and effect until all of the Obligations
have been fully paid and performed.
7. GENERAL PROVISIONS.
7.1 CREDITING PAYMENTS. Payments shall not be applied to the Obligations
until received by Silicon in immediately available federal funds, and any wire
transfer or other payment so received after 12:00 noon Pacific time shall be
deemed to have been received by Silicon as of the opening of business on the
next business day.
7.2 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by regular first-class mail or
certified mail return receipt requested, addressed to Silicon or the Borrower at
the addresses shown in the heading to this Agreement, or at any other address
designated in writing by one party to the other party. All notices shall be
deemed to have been given upon delivery in the case of notices personally
delivered to the Borrower or to Silicon, or at the expiration of two business
days following the deposit thereof in the United States Mail, with postage
prepaid.
PAGE 24 OF 35 PAGES
7.3 SEVERABLE. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
7.4 INTEGRATION. Agreement and such other written agreements, documents
and instruments as may be executed in connection herewith are the final, entire
and complete Agreement between the Borrower and Silicon and supersede all prior
and contemporaneous negotiations and oral representations and agreements, all of
which are merged and integrated in this Agreement. THERE ARE NO ORAL
UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES WHICH ARE NOT
SET FORTH IN THIS AGREEMENT OR IN OTHER WRITTEN AGREEMENTS SIGNED BY THE PARTIES
IN CONNECTION HEREWITH.
7.5 WAIVERS. The failure of Silicon at any time or times to require the
Borrower to strictly comply with any of the provisions of this Agreement or any
other present or future agreement between the Borrower and Silicon shall not
waive or diminish any right of Silicon later to demand and receive strict
compliance therewith. Any waiver of any default shall not waive or affect any
other default, whether poor or subsequent thereto. None of the provisions of
this Agreement or any other agreement now or in the future executed by the
Borrower and delivered to Silicon shall be deemed to have been waived by any act
or knowledge of Silicon or its agents or employees, but only by a specific
written waiver signed by an officer of Silicon and delivered to the Borrower.
The Borrower waives demand, protest, notice of protest and notice of default or
dishonor, notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, instrument, account, general
intangible, document or guaranty at any time held by Silicon on which the
Borrower is or may in any way be liable, and notice of any action taken by
Silicon, unless expressly required by this Agreement.
7.6 AMENDMENTS. 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 (whether or
not a lawsuit is filed), including, but not limited to, any reasonable
attorneys' fees and costs Silicon incurs in order to do the following: prepare
and negotiate this Agreement and the documents relating to this Agreement;
obtain legal advice in connection with this Agreement; enforce, or seek to
enforce, any of its rights; prosecute actions against, or defend actions by,
account debtors; commence, intervene in, or defend any action or proceeding;
initiate any complaint to be relieved of the automatic stay in bankruptcy; file
or prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; examine, audit, copy, and inspect any of 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, SMALL & XXXXXX, BUT BORROWER ACKNOWLEDGES AND AGREES THAT LEVY,
SMALL & XXXXXX IS REPRESENTING ONLY SILICON AND NOT BORROWER IN CONNECTION WITH
THIS AGREEMENT. If either Silicon or the Borrower files any lawsuit against the
other predicated on a breach of this Agreement, the prevailing party in such
action shall be entitled to recover its reasonable
PAGE 25 OF 35 PAGES
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 Borrowers Obligations, shall be due on demand, and shall bear interest at
a rate equal to the highest interest rate applicable to any of 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
alignment 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 READINGS; CONSTITUTION. 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 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and
transactions hereunder and all rights and obligations of Silicon and the
Borrower shall be governed by, and in accordance with, the laws of the State of
California. Any undefined term used in this Agreement that is defined in the
California Uniform Commercial Code shall have the meaning assigned to that term
in the California Uniform Commercial Code. As a material part of the
consideration to Silicon to enter into this Agreement, the Borrower (i) agrees
that all actions and proceedings relating directly or indirectly hereto shall,
at Silicon's option, be litigated in courts located within California, and that
the exclusive, venue therefor shall be San Diego County, (ii) consents to the
jurisdiction and venue of any such court and consents to service of process in
any such action or proceeding by personal delivery or any other method permitted
by law; and (iii) waives any and all rights the Borrower may have to object to
the jurisdiction of any such court, or to transfer or change the venue of any
such action or proceeding.
7.13 MUTUAL WAIVER OF JURY TRIAL. THE BORROWER AND SILICON EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING
OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND THE BORROWER, OR ANY CONDUCT, ACTS
OR OMISSIONS OF SILICON OR THE BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR THE
BORROWER. THIS WAIVER OF THE RIGHT TO JURY TRIAL APPLIES TO ALL CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, COMMON LAW CLAIMS, STATUTORY CLAIMS
AND ALL OTHER CLAIMS AND CAUSES OF ACTION OF EVERY KIND. EACH PARTY RECOGNIZES
AND AGREES THAT THE FOREGOING JURY TRIAL WAIVER CONSTITUTES
PAGE 26 OF 35 PAGES
A MATERIAL INDUCEMENT TO THE OTHER PARTY TO ENTER INTO THIS AGREEMENT. EACH
PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS JURY TRIAL WAIVER WITH
ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING ITS CONSULTATION WITH ITS LEGAL COUNSEL.
Borrower:
FORWARD VENTURES III, L.P., a
Delaware limited partnership
By: Forward III Associates, LLC,
its general partner
By /s/ Xxxxxxxx X. Xxxxxxx
--------------------------------
Managing Member
By /s/ Xxxx Xxxxxxx
--------------------------------
Managing Member
Silicon:
SILICON VALLEY BANK
By /s/ X. Xxxx
--------------------------------
Senior Vice President
PAGE 27 OF 35 PAGES
SILICON VALLEY BANK
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: FORWARD VENTURES III, L.P.
ADDRESS: 00000 XXXXXXXXX XXXX, XXXXX 000
XXX XXXXX,, XXXXXXXXXX 00000
DATE: DECEMBER 19, 1996
THIS SCHEDULE is an integral part of the Loan and Security Agreement
between Silicon Valley Bank ("Silicon") and the above-named borrower
("Borrower") of even date.
CREDIT LIMIT
(Section 1.1): A single Loan in an amount not to exceed. $1,000,000,
which Loan will be made to the Borrower concurrently
herewith; such Loan is not a revolving Loan and
therefore repayments relating thereto shall not entitle
Borrower to reborrow any amounts so repaid.
INTEREST RATE
(Section 1.2): A rate equal to the "Prime Rate" in effect from time to
time per anum. 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): $5,000. (Any Commitment Fee previously paid by the
Borrower in connection with this loan shall be credited
against this Fee.)
MATURITY DATE
(Section 5. 1): The earlier of OCTOBER 15, 1997 or the Capital
Contribution Date (as defined below)
The term "Capital Contribution Date" means, on and
after September 1, 1997 only, the earlier of (A) five
(5) days after the Borrower has collected all amounts
owing to it pursuant to required capital contributions
under Section 3.2 and Section 3.4 of the Limited
Partnership Agreement of Borrower dated August 30, 1996
(the "Borrower Partnership Agreement") or (B) twenty
(20) days after Borrower has provided notice to its
partners instituting the first capital contribution
PAGE 28 OF 35 PAGES
under Section 3.2 and Section 3.4 of the Borrower
Partnership Agreement.
SUBSIDIARIES OF BORROWER
(Section 3. 1): NONE
PRIOR NAMES OF BORROWER
(Section 3.2) NONE
PRESENT TRADE NAMES OF BORROWER
(Section 3.2): NONE
PRIOR TRADE NAMES OF BORROWER
(Section 3.2): NONE
OTHER LOCATIONS AND ADDRESSES
(Section 3.3): NONE
MATERIAL ADVERSE LITIGATION
(Section 3. 1 0): NONE
NEGATIVE COVENANTS-EXCEPTIONS
(Section 4.6): NONE
FINANCIAL COVENANTS
(Section 4. 1): NONE
DEFINITIONS: "Tangible net worth" means the excess of total assets
over total liabilities, determined in accordance with
generally accepted accounting principles, excluding
however all assets which would be classified as
intangible assets under generally accepted accounting
principles, including without limitation goodwill,
licenses, patents, trademarks, trade names, copyrights,
capitalized software and organizational costs, licenses
and franchises.
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 a banking relationship with Silicon.
2. PLEDGE AGREEMENT. Borrower shall execute and
deliver a pledge agreement to Silicon, in Silicon's
standard form (the "Pledge Agreement"), relating to
233,663 shares of common stock of Triangle
Pharmaceuticals, Inc. (the "Shares") that Borrower will
acquire upon the dissolution of the Forward Ventures
Vanguard Fund, a California general partnership by
virtue of Borrower's interest therein. Borrower hereby
authorizes Silicon to maintain possession of the Pledge
Agreement pending receipt of the Shares, Upon receipt
of the Shares, Borrower and Silicon agree that
PAGE 29 OF 35 PAGES
the Pledge Agreement shall be deemed immediately
effective at such time, without any further action or
notice whatsoever by Borrower. At any time after the
date hereof, Borrower hereby agrees to take such
additional actions, and to execute such additional
documentation, in order to effectuate the purposes of
the Pledge Agreement, including, without limitation,
blank stock powers relating to the Shares.
3. AGREEMENT REGARDING DISSOLUTION AND DELIVERY OF
SHARES. Borrower shall cause Forward Ventures Vanguard
Fund, a California general partnership, to execute and
deliver to Silicon a letter agreement regarding: (A)
such partnership's agreement to dissolve on or before
December 20, 1996; and (B) in connection therewith, to
effect a distribution of such partnership's property to
its partners in a forthwith manner, PROVIDED that such
letter agreement shall also provide that Forward
Ventures Vanguard Fund, a California general
partnership, will forward the Shares directly to
Silicon in order to maintain possession thereof in
accordance with the Pledge Agreement.
4. CAPITAL CONTRIBUTIONS; CERTIFICATE. Borrower
agrees to institute and collect Capital Contributions
under the Partnership Agreement, on and after September
1, 1997, in such amounts in order to repay the
Obligations in full. In connection with the
institution of any and all capital contributions under
the Partnership Agreement, Borrower shall forward a
written certification thereof to Silicon within 10 days
of the institution thereof.
5. AGREEMENT REGARDING INVESTMENTS. Borrower hereby
agrees that it will not fund any additional investments
on and after September 1, 1997 unless and until the
Obligations are repaid in full.
6. FEDERAL RESERVE FORM U. Borrower shall complete
Federal Reserve Form U prior to the making of the Loan
hereunder.
7. AGREEMENT BY SILICON REGARDING CAPITAL
CONTRIBUTIONS. Silicon hereby acknowledges and agrees
that it will not exercise any rights or remedies with
respect to the Capital Contributions before September
1, 1997, PROVIDED that the foregoing agreement shall
not affect the grant of the security interest by the
Borrower therein.
8. ADDITIONAL REPRESENTATION BY BORROWER. Borrower
hereby represents and warrants to Silicon that each of
the Borrower's partners has given no notice to
Borrower, and Borrower has no knowledge whatsoever, of
any dispute with Borrower or the
PAGE 30 OF 35 PAGES
occurrence of any other event or circumstance that
would affect the duty of any of the partners to satisfy
the partners' obligations relating to a capital
contribution call by the Borrower; and no partner of
Borrower has asserted any right of offset against any
capital contribution call.
9. LEGAL OPINION. A legal opinion of counsel to
Borrower shall be delivered to Silicon prior to the
making of the Loan hereunder, which shall be in form
and substance satisfactory to Silicon in its
discretion.
BORROWER:
FORWARD VENTURES III, L.P., A DELAWARE
LIMITED PARTNERSHIP
BY: FORWARD III ASSOCIATES, LLC, ITS GENERAL
PARTNER
By /s/ Xxxxxxxx X. Xxxxxxx
-----------------------------------
Managing Member
By /s/ Xxxx Xxxxxxx
-----------------------------------
Managing Member
SILICON:
SILICON VALLEY BANK
By /s/ X. Xxxx
-----------------------------------
Senior Vice President
PAGE 31 OF 35 PAGES
