FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
EXHIBIT
10.1
FIRST
AMENDMENT
TO
THIS
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”)
is
entered into this __ day of August, 2007, by and between SILICON VALLEY BANK
(“Bank”),
AIRSPAN NETWORKS, INC., a corporation formed under the laws of the State of
Washington (“US
Borrower”),
and
AIRSPAN COMMUNICATIONS LIMITED,
a
company registered under the laws of England and Wales under company number
03501881 (“UK
Borrower”;
US
Borrower and UK Borrower hereinafter referred to individually and collectively,
jointly and severally, as “Borrower”).
Recitals
A. Bank
and
Borrower have entered into that certain Loan and Security Agreement dated as
of
August 1, 2006 (as the same may from time to time be further amended, modified,
supplemented or restated, the “Loan
Agreement”).
B. Bank
has
extended credit to Borrower for the purposes permitted in the Loan
Agreement.
C. Borrower
has requested that Bank amend the Loan Agreement to (i) increase the amount
available to be borrowed under the Revolving Line, (ii) extend the maturity
date, (iii) adjust the performance pricing with respect to the Revolving Line,
and (iv) make certain other revisions to the Loan Agreement as more fully
set forth herein.
D. Bank
has
agreed to so amend certain provisions of the Loan Agreement, but only to the
extent, in accordance with the terms, subject to the conditions and in reliance
upon the representations and warranties set forth below.
Agreement
Now,
Therefore,
in
consideration of the foregoing recitals and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:
1 Definitions.
Capitalized terms used but not defined in this Amendment, including its preamble
and recitals, shall have the meanings given to them in the Loan
Agreement.
2 Amendments
to Loan Agreement.
2.1 Section
2.3 (Payment of Interest on the Credit Extensions).
Section 2.3(a) of the Loan Agreement is hereby amended in its entirety and
replaced with the following:
(a) Interest
Rate;
Advances.
Subject
to Section 2.3(b), the amounts outstanding under the Revolving Line (which,
for
purposes of clarification, do not include the FX Reserve or any undrawn Letters
of Credit or Letter of Credit Reserves) shall accrue interest at a per annum
rate equal to the Prime Rate plus the following percentages: (i) zero percentage
points (0.00%) at all times the Borrower is a Net Daily Depositor; (ii) one
half
of one percentage point (0.50%) at all times that Borrower is a Net Depositor
and either (A) Borrower’s Adjusted Quick Ratio is equal to or greater than
1.50:1.00 or (B) Borrower’s EBITDA, net of unfunded capital expenditures, was
greater than Seven Hundred Fifty Thousand Dollars ($750,000) for the two most
recently ended consecutive fiscal quarters; (iii) one percentage point (1.00%)
at all other times that Borrower is a Net Depositor; and (iv) one and three
quarters of one percentage point (1.75%) at all times that Borrower is a Net
Borrower. Changes in the applicable interest rate as a result of changes in
Borrower’s status as a Net Borrower, Net Depositor or Net Daily Depositor or as
a result of changes in Borrower’s Adjusted Quick Ratio shall not become
effective until the first (1st)
day of
the month following such change. Any change in the applicable interest rate
as a
result of Borrower achieving the minimum EBITDA for two (2) consecutive calendar
quarters in accordance with Section 2.3(a)(ii) shall become effective on the
first (1st)
day of
the month following such second (2nd)
calendar quarter. Any change in the applicable interest rate as a result of
Borrower’s failure to maintain the minimum EBITDA set forth in Section
2.3(a)(ii) shall become effective on the first (1st)
day of
the month following the month in which such failure occurred.
1
2.2 Section
2.3 (Payment of Interest on the Credit Extensions).
Section
2.3(f) of the Loan Agreement is hereby amended in its entirety and replaced
with
the following:
(f) Payment;
Interest Computation; Float Charge.
Interest is payable monthly on the last calendar day of each month. In computing
interest on the Obligations, all Payments received after 3:00 p.m. Eastern
time
on any day shall be deemed received on the next Business Day. In addition,
while
Borrower is a Net Borrower, Bank shall be entitled to charge Borrower a “float”
charge in an amount equal to two (2) Business Days interest, at the interest
rate applicable to the Advances, on all payments received by Bank. Said float
charge is not included in interest for purposes of computing Minimum Monthly
Interest (if any) under this Agreement. The float charge for each month shall
be
payable on the last day of the month. Bank shall not, however, be required
to
credit Borrower's account for the amount of any item of payment which is
unsatisfactory to Bank in its good faith business judgment, and Bank may charge
Borrower's Designated Deposit Account for the amount of any item of payment
which is returned to Bank unpaid.
2.3 Section
2.4 (Fees).
Section 2.4(d) of the Loan Agreement is hereby amended in its entirety and
replaced with the following:
(d) Minimum
Monthly Interest.
From
and after the Supplemental Closing Date through the Revolving Line Maturity
Date, in the event the aggregate amount of interest earned by Bank in any month
(exclusive of any collateral monitoring fees, termination fees, or any other
fees and charges hereunder) is less than the Minimum Monthly Interest, Borrower
shall pay Bank an amount, payable on the last day of such month, equal to the
Minimum Monthly Interest minus the aggregate amount of all interest earned
by
Bank (exclusive of any collateral monitoring fees, termination fees, or any
other fees and charges hereunder) in such month.
2.4 Section
2.4 (Fees).
Section
2.4(g) of the Loan Agreement is hereby added in its entirety immediately after
Section 2.4(f) of the Loan Agreement as follows:
(g) Supplemental
Commitment Fee.
In
addition to the commitment fee set forth in Section 2.4(a), a fully earned,
non-refundable supplemental commitment fee (the “Supplemental
Commitment Fee”)
of
Fifty-Six Thousand Six Hundred Sixty-Six Dollars ($56,666), which Supplemental
Commitment Fee shall be paid as follows: the first payment of Ten Thousand
Dollars ($10,000) shall be due and payable to Bank on the Supplemental
Closing Date,
followed by five (5) quarterly installments due in the following amounts and
on
the following dates:
|
Due
Date
|
Amount
Due
|
|
November
1, 2007
|
$10,000
|
|
February
1, 2008
|
$10,000
|
|
May
1, 2008
|
$10,000
|
|
August
1, 2008
|
$10,000
|
|
November
1, 2008
|
$6,666
|
Notwithstanding
the foregoing, upon the termination of this Agreement, whether by acceleration
of the obligations following an Event of Default by the Borrower under Section
4.1 below, or on the Revolving Line Maturity Date, the remaining balance of
the
Supplemental Commitment Fee shall be due in full.
2.5 Section
6.2 (Financial Statements, Reports, Certificates).
Section 6.2(c), (d) and (e) of the Loan Agreement are hereby amended in their
entirety and replaced with the following:
(c) within
thirty (30) days after the end of each month, deliver to Bank (A) monthly
accounts receivable agings, aged by invoice date, (B) monthly accounts payable
agings, aged by invoice date, and (C) monthly reconciliations of accounts
receivable agings (aged by invoice date), including DBD receivable aging and
extended term reporting, and general ledger;
2
(d) as
soon
as available, and in any event within thirty (30) days after the end of each
month (other than January), monthly unaudited financial statements on a
consolidated and consolidating basis;
(e) within
thirty (30) days after the end of each month (other than January) a monthly
Compliance Certificate signed by a Responsible Officer, certifying that as
of
the end of such month, 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 in this Agreement and such other
information as Bank shall reasonably request, including, without limitation,
a
statement that at the end of such month there were no held checks;
2.6 Section
6.6 (Access
to
Collateral; Books and Records).
Section 6.6 of the Loan Agreement is hereby amended in its entirety and replaced
with the following:
Section
6.6 Access
to Collateral; Books and Records.
So long
as an Event of Default has not occurred and is continuing, Bank, or its agents,
shall have the right to inspect the Collateral and the right to audit and copy
Borrower’s Books at reasonable times not more than four (4) times per fiscal
year, on three (3) Business Days’ notice (provided that no such advance notice
shall be required after the occurrence and during the continuance of an Event
of
Default); provided, however, that after
the
closing of a Subsequent Financing in which Borrower receives, in the aggregate,
at least Twenty Million Dollars ($20,000,000) of net proceeds (excluding any
bridge debt financing except to the extent actually converted to equity in
Borrower) and
so long
as no Event of Default has occurred and is continuing, then Bank, or its agents,
shall have the right to inspect the Collateral and the right to audit and copy
Borrower’s Books only two (2) times per year (rather than four (4)), at
reasonable times on five (5) Business Days’ notice (provided that no such
advance notice shall be required after the occurrence and during the continuance
of an Event of Default). The foregoing inspections and audits shall be at
Borrower’s expense, and the charge therefor shall be $750 per person per day
(or, during the continuance of an Event of Default, such higher amount as shall
represent Bank’s then-current standard charge for the same), plus reasonable
out-of-pocket expenses. In the event Borrower and Bank schedule an audit more
than ten (10) days in advance, and Borrower cancels or seeks to reschedules
the
audit with less than ten (10) days written notice to Bank, then (without
limiting any of Bank’s rights or remedies), Borrower shall pay Bank a fee of
$1,000 plus any out-of-pocket expenses incurred by Bank to compensate Bank
for
the anticipated costs and expenses of the cancellation or rescheduling. Borrower
hereby acknowledges that the first such audit will be conducted within sixty
(60) days after the execution of this Agreement
2.7 Section
6.8 (Operating Accounts).
Section
6.8(a) of the Loan Agreement is hereby amended in its entirety and replaced
with
the following:
(a) (i)
Maintain all of its primary depository and investment accounts in the United
States with Bank or Bank’s Affiliates and (ii) maintain at all times
unrestricted cash and Investments of not less than seventy-five percent (75%)
of
the aggregate consolidated unrestricted cash and Investments of Borrower and
its
Subsidiaries. In addition to the foregoing, if Borrower becomes a Net Borrower
at any time, then Borrower must maintain its primary depository and investment
accounts in the United Kingdom with Barclays, Royal Bank of Scotland or such
other institution as Bank agrees to in writing.
2.8 Section
6.9 (Financial Covenants). Section
6.9 of the Loan Agreement is hereby amended in its entirety and replaced with
the following:
6.9 Financial
Covenants.
Borrower
shall maintain at all times, to be tested as of the last day of each quarter,
unless otherwise noted, on a consolidated basis with respect to US Borrower
and
UK Borrower:
(a) Tangible
Net Worth.
A
Tangible Net Worth of at least Twenty Eight Million Dollars ($28,000,000)
effective for the quarter ending June 30, 2007 and as of the last day of each
fiscal quarter thereafter, plus an amount equal to the sum of (i) fifty percent
(50%) of quarterly Net Income after June 30, 2007 (but not to be decreased
by
fifty percent (50%) of quarterly consolidated net loss, if any), (ii) fifty
percent (50%) of the proceeds received by Borrower from the sale of US
Borrower’s capital stock after June 30, 2007 and (iii) fifty percent (50%) of
the principal amount of Subordinated Debt incurred by Borrower after June 30,
2007.
3
(b) Minimum
Adjusted Quick Ratio.
An
Adjusted Quick Ratio of at least 1.00 to 1.00 as of last day of each
month.
2.9 Section
6.13 (Foreign
Exchange Business). Section 6.13 of the Loan Agreement is hereby added in its
entirety immediately after Section 6.12 of the Loan Agreement as
follows:
Section
6.13 Foreign
Exchange Business.
Borrower shall allow Bank to bid on all of Borrower’s foreign exchange
contracts.
2.10 Section
9.1 (Bank’s Rights and Remedies).
Section
9.1 of the Loan Agreement is hereby amended by adding immediately after Section
9.1(k) of the Loan Agreement the following:
NOTWITHSTANDING
ANYTHING SET FORTH HEREIN TO THE CONTRARY, DURING ANY NEGATIVE PLEDGE PERIOD,
BANK WILL NOT ENFORCE ITS RIGHTS AND REMEDIES WITH RESPECT TO THE INTELLECTUAL
PROPERTY COLLATERAL EXCEPT TO THE EXTENT OF ANY ACCOUNTS, LICENSE AND ROYALTY
FEES AND OTHER REVENUES, PROCEEDS, OR INCOME ARISING OUT OF OR RELATING TO
ANY
OF THE INTELLECTUAL PROPERTY COLLATERAL.
2.11 Section
13 (Definitions).
(a) The
following terms and their respective definitions set forth in Section 13.1
are hereby amended in their entirety and replaced with the following:
“Funded
Debt”
is
all
obligations and liabilities of Borrower to Bank, including, without limitation,
any Advances and drawn but unreimbursed Letters of Credit.
“Net
Depositor”
means
Borrower as of the end of any calendar month in which the sum of all of
Borrower’s unrestricted cash and investments is greater than or equal to
Borrower’s Funded Debt for such calendar month; provided that a Net Depositor
shall cease to be a Net Depositor on the day it becomes a Net
Borrower.
“Quick
Assets”
is, on any date, (i) Borrower’s unrestricted cash and Cash Equivalents, plus
(iii) Borrower’s Accounts.
“Revolving
Line”
is an Advance or Advances in an aggregate amount of up to Twenty Million Dollars
($20,000,000) outstanding at any time.
“Revolving
Line Maturity Date” is
December 31, 2008.
Subparts
(b), (c) and (f) of the definition of Eligible Accounts are hereby amended
in
their entirety and replaced with the following:
(b)
Accounts
(other than Accounts owing from Nortel, Ericsson and Fujitsu while Borrower
is a
Net Depositor and other than Accounts owing from DBD) that the Account Debtor
has not paid within ninety (90) days of invoice date, including Accounts owing
from Nortel, Ericsson and Fujitsu while Borrower is a Net Borrower;
(c)
Accounts
owing from (i) Nortel, Ericsson and Fujitsu while Borrower is a Net Depositor
that such Account Debtor has not paid within one hundred twenty (120) days
of
invoice date; and (ii) DBD that DBD has not paid within ninety (90) days of
the
due date;
(f)
Accounts
owing from (i) an Account Debtor (other than DBD), including its Affiliates,
whose total obligations to Borrower exceed twenty-five (25%) of all Accounts
(except for Accounts owing from Nortel, Ericsson and Fujitsu at all times that
Borrower is a Net Depositor, for which such percentage is fifty percent (50%))
for the amounts that exceed that percentage, unless Bank approves otherwise
in
writing; and (ii) DBD in excess of Five Million Dollars ($5,000,000), unless
Bank approves otherwise in writing.
4
(b) The
first
full sentence of the definition of Net Borrower is hereby amended in its
entirety and replaced with the following:
“Net
Borrower”
means
Borrower as of the end of any calendar month in which the sum all of Borrower’s
unrestricted cash and investments is less than Borrower’s Funded Debt for such
calendar month; provided that a Net Borrower shall cease to be a Net Borrower
on
the first (1st)
day of
the month following any month in which such Net Borrower fails to maintain
the
requirements set forth above.
The
following terms and their respective definitions are hereby added in
alphabetical order to Section 13.1 of the Loan Agreement:
“DBD”
means
DBD Deutsche Breitband Dienste GmbH, and any entity that is an Affiliate of
DBD
Deutsche Breitband Dienste GmbH.
“Fujitsu”
means
Fujitsu Limited, and any entity that is an Affiliate of Fujitsu
Limited.
“Intellectual
Property Collateral”
is
all
of Borrower’s Intellectual Property including without limitation, such
Intellectual Property as more particularly defined, described and set forth
in
the IP Agreements and on the exhibits attached thereto.
“Minimum
Monthly Interest”
means
at any point of determination an amount equal to the applicable interest rate
as
set forth in Section 2.3(a) of this Agreement multiplied by the lesser of (i)
the maximum available Borrowing Base, or (ii) Seven Million Five Hundred
Thousand Dollars ($7,500,000).
“Negative
Pledge Period”
means
any period of time (i) after the closing of a Subsequent Financing in which
Borrower receives, in the aggregate, at least Twenty Million Dollars
($20,000,000) of net proceeds (excluding any bridge debt financing except to
the
extent actually converted to equity in Borrower) and (ii) that Borrower is
a Net
Depositor. Any Negative Pledge period commencing pursuant to the foregoing
shall
terminate at any point that Borrower becomes a Net Borrower and shall not
commence again until Borrower again maintains the requirements for Net Depositor
under this Agreement for a minimum of two (2) consecutive fiscal
quarters.
“Net
Daily Depositor”
means
Borrower as of the end of each Business Day in which (a) the sum of such
Borrower’s unrestricted cash and investments maintained with Bank and Bank’s
Affiliates in the United States for such Business Day (provided that Bank has
a
fixed charge over the account in which such cash is held) is greater than (b)
the daily average Obligations as of such Business Day.
“Subsequent
Financing”
means
the next round of private equity financing closing after June 6,
2007.
“Supplemental
Closing Date”
means
August __, 2007
5
Each
reference to “Quick Ratio” in the Loan Agreement is hereby deleted in its
entirety and replaced with the term “Adjusted Quick Ratio”.
Each
reference to “Tekes” in the Loan Agreement is hereby deleted in its
entirety.
Each
reference to “Unused Revolving Line Facility Fee” in the Loan Agreement is
hereby deleted in its entirety.
2.12 Compliance
Certificate.
The
Compliance Certificate attached to the Loan Agreement as Exhibit E is replaced
in its entirety with the Compliance Certificate attached hereto as Exhibit
E.
From and after the date hereof, all references in the Loan Agreement to the
Compliance Certificate shall mean the Compliance Certificate in Exhibit E
attached hereto.
3 Limitation
of Amendments.
3.1 The
amendments set forth in Section 2, above, are effective for the purposes
set forth herein and shall be limited precisely as written and shall not be
deemed to (a) be a consent to any amendment, waiver or modification of any
other term or condition of any Loan Document, or (b) otherwise prejudice
any right or remedy which Bank may now have or may have in the future under
or
in connection with any Loan Document.
3.2 This
Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants
and
agreements set forth in the Loan Documents, except as herein amended, are hereby
ratified and confirmed and shall remain in full force and effect.
4 Representations
and Warranties.
To
induce Bank to enter into this Amendment, each Borrower hereby represents and
warrants to Bank as follows:
4.1 Immediately
after giving effect to this Amendment (a) the representations and
warranties contained in the Loan Documents are true, accurate and complete
in
all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they
are
true and correct as of such date), and (b) no Event of Default has occurred
and is continuing;
4.2 Each
Borrower has the power and authority to execute and deliver this Amendment
and
to perform its obligations under the Loan Agreement, as amended by this
Amendment;
4.3 The
organizational documents of each Borrower delivered to Bank on the Effective
Date remain true, accurate and complete and have not been amended, supplemented
or restated and are and continue to be in full force and effect;
4.4 The
execution and delivery by each Borrower of this Amendment and the performance
by
each Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, have been duly authorized;
4.5 The
execution and delivery by each Borrower of this Amendment and the performance
by
each Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not and will not contravene (a) any law or regulation binding
on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or
other governmental or public body or authority, or subdivision thereof, binding
on Borrower, or (d) the organizational documents of Borrower;
4.6 The
execution and delivery by each Borrower of this Amendment and the performance
by
each Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not require any order, consent, approval, license, authorization
or validation of, or filing, recording or registration with, or exemption by
any
governmental or public body or authority, or subdivision thereof, binding on
Borrower, except as already has been obtained or made; and
4.7 This
Amendment has been duly executed and delivered by each Borrower and is the
binding obligation of each Borrower, enforceable against each Borrower in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors’ rights.
6
5 Counterparts.
This
Amendment may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.
6 Effectiveness.
This
Amendment shall be deemed effective upon (a) the due execution and delivery
to
Bank of this Amendment by Borrower, and (b) the due execution and delivery
to Bank of Bank’s Invoice by Borrower, authorizing Bank to debit Borrower’s
account for (i) the $10,000 portion of the Supplemental Commitment Fee due
on
the date hereof, (ii) a $10,000 amendment fee due on the date hereof in
connection with this Amendment and (iii) Bank’s
legal fees and expenses in connection with the negotiation and preparation
of
this Amendment in the amount of $9,750.
[Signature
page follows.]
7
In
Witness Whereof, the
parties hereto have caused this Amendment to be duly executed and delivered
as
of the date first written above.
| BANK | ||
|
SILICON
VALLEY BANK
|
||
| By: |
/s/
XXXXXXX XXXXXXX
|
|
|
Name:
Xxxxxxx Xxxxxxx
|
||
|
Title:
VP
|
||
| US BORROWER | ||
|
AIRSPAN
NETWORKS, INC.
|
||
| By: |
/s/
XXXXXX XXXXXX
|
|
|
Name:
Xxxxxx Xxxxxx
|
||
|
Title:
VP Finance & Controller
|
||
| UK BORROWER | ||
|
AIRSPAN
NETWORKS, INC.
|
||
| By: |
/s/
XXXXX XXXXX
|
|
|
Name:
Xxxxx Xxxxx
|
||
|
Title:
Director
|
||
8
