Standby Facility Agreement
January 27, 2000
Xxxxxxxx.xxx
0000 X. Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Gentlemen:
Reference is made to the Loan and Security between you ("Borrower") and
us ("Silicon") dated January 27, 2000 (the "Loan Agreement'). (This letter
agreement, the Loan Agreement, and all other written documents and agreements
between us are referred to herein collectively as the "Loan Documents".
Capitalized terms used but not defined in this agreement, shall have the
meanings set forth in the Loan Agreement.)
You have advised us that you do not anticipate borrowing under the Loan
Agreement, for a period of time, and you have requested that certain of the
provisions of the Loan Agreement not apply during this period.
Accordingly, this will confirm our agreement that, from and after the
date hereof (the "Standby Period") no Loans will be made under the Loan
Agreement. During the Standby Period, provided no Event of Default has occurred
and is continuing, you will not be required to provide us with daily reporting
of transactions, daily schedules and assignments of Receivables or schedules of
collections (as called for by Section 4.3 of the Loan Agreement), and you will
not be required to deliver to us the proceeds of Receivables (as called for by
Sections 4.4 of the Loan Agreement).
You may, at your option, terminate the Standby Period, so that you can
thereafter request Loans under the Loan Agreement, by giving us written notice
at least 30 days before the Standby Period is to terminate, together with such
information relating to the Receivables and other Collateral as we shall
specify.
Upon termination of the Standby Period, you will, then and thereafter,
provide us with the daily reporting of transactions and daily schedules and
assignments of Receivables and schedules of collections, as called for by
Section 4.3 of the Loan Agreement, and deliver all proceeds of Receivables to
us, as called for by Sections 4.4 of the Loan Agreement.
This letter agreement, the Loan Agreement, and the other Loan Documents
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, oral
representations, oral agreements and oral 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 Loan Documents
shall continue in full force and effect and the same are hereby ratified and
confirmed.
If foregoing correctly sets forth our agreement, please sign the
enclosed copy of this Agreement and return it to us.
Sincerely yours,
Silicon Valley Bank
By: /s/ Xxxxxxxxxxx Xxxx
Title: Senior Vice President
Accepted and agreed:
Borrower:
Xxxxxxxx.xxx
By: /s/ Xxxxxx X. Xxxxxx
President or Vice President
SILICON VALLEY BANK
LOAN AND SECURITY AGREEMENT
BORROWER: XXXXXXXX.XXX
ADDRESS: 0000 X. XXXXXX XXXXX
XXXX XXXX, XXXXXXXXXX 00000
DATE: JANUARY 27, 2000
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date
between SILICON VALLEY BANK, COMMERCIAL FINANCE DIVISION ("Silicon"),
whose address is 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and
the borrower(s) names above (jointly and severally, the "Borrower"),
whose chief executive office is located at the above address
("Borrower's Address"). The Schedule of this Agreement (the "Schedule")
shall for all purposes be deemed to be apart of this Agreement, and the
same is an integral part of this Agreement. (Definitions of certain
terms used in this Agreement are set forth in Section 8 below).
1. LOANS
1.1 LOANS. Silicon will make loans to Borrower (the "Loans"), in amounts
determined by Silicon in its * up to the amounts (the "Credit Limit") shown
on the Schedule, provided no Default or Event of Default has occurred and is
continuing, and subject to deduction of any Reserves for accrued interest and
such other Reserves as Silicon deems proper from time to time.
*GOOD FAITH BUSINESS JUDGMENT
1.2 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth to
the contrary in this Agreement. Interest shall be payable monthly, on the last
day of the month. Interest may, in Silicon's discretion, be charged to
Borrower's loan account, and the same shall thereafter bear interest at the same
rate as the other Loans. Silicon may, in its discretion, charge interest to
Borrower's Deposit Accounts maintained with Silicon.
1.3 OVERADVANCES. If at any time or for any reason the total of all
outstanding Loans and all other Obligations exceeds the Credit Limit (an
"Overadvance"), Borrower shall immediately pay the amount of the excess to
Silicon, without notice or demand*. Without limiting Borrower's obligation to
repay to Silicon on demand the amount of any Overadvance, Borrower agrees to pay
Silicon interest on the outstanding amount of any Overadvance, on demand, at a
rate equal to the interest rate which would otherwise be applicable to the
Overadvance, plus an additional 2% per annum.
*PROVIDED THAT IF THE OVERADVANCE RESULTS FROM A CHANGE BY SILICON IN THE
ADVANCE RATE WITH RESPECT TO ELIGIBLE RECEIVABLES, THEN SUCH OVERADVANCE SHALL
BE DUE FROM THE BORROWER TO SILICON ON DEMAND.
1.4 FEES. Borrower shall pay Silicon the fee(s) shown on the Schedule,
which are in addition to all interest and other sums payable to Silicon and are
not refundable.
1.5 LETTERS OF CREDIT. At the request of Borrower, Silicon may, in its *
issue or arrange for the issuance of letters of credit for the account of
Borrower, in each case in form and substance satisfactory to Silicon in its
sole discretion (collectively, "Letters of Credit"). The aggregate face
amount of all outstanding Letters of Credit from time to time shall not
exceed the amount shown on the Schedule (the " Letter of Credit Sublimit"),
and shall be reserved against Loans which would otherwise be available
hereunder. Borrower shall pay all bank charges (including charges of Silicon)
for the issuance of Letters of Credit, together with such additional fee as
Silicon's letter of credit department shall charge in connection with the
issuance of the Letters of Credit. Any payment by Silicon under or in
connection with a Letter of Credit shall constitute a Loan hereunder on the
date such payment is made. Each Letter of Credit shall have an expiry date no
later than thirty days prior to the Maturity Date. Borrower hereby agrees to
indemnify, save, and hold Silicon harmless from any loss,
cost, expense, or liability, including payments made by Silicon, expenses, and
reasonable attorneys' fees incurred by Silicon arising out of or in connection
with any Letters of Credit**. Borrower agrees to be bound by the regulations and
interpretations of the issuer of any Letters of Credit guarantied by Silicon and
opened for Borrower's account or by Silicon's interpretations of any Letter of
Credit issued by Silicon for Borrower's account, and Borrower understands and
agrees that Silicon shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following Borrower's instructions or those
contained in the Letters of Credit or any modifications, amendments, or
supplements thereto. Borrower understands that Letters of Credit may require
Silicon to indemnify the issuing bank for certain costs or liabilities arising
out of claims by Borrower against such issuing bank. Borrower hereby agrees to
indemnify and hold Silicon harmless with respect to any loss, cost, expense, or
liability incurred by Silicon under any Letter of Credit as a result of
Silicon's indemnification of any such issuing bank. The provisions of this Loan
Agreement, as it pertains to Letters of Credit, and any other present or future
documents or agreements between Borrower and Silicon relating to Letters of
Credit are cumulative.
*GOOD FAITH BUSINESS JUDGMENT
**EXCEPT FOR ANY SUCH LOSS, COST, EXPENSE OR LIABILITY DIRECTLY CAUSED BY
SILICON'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
2. SECURITY INTEREST.
2.1 SECURITY INTEREST. TO secure the payment and performance of all of the
Obligations when due, Borrower hereby grants to Silicon a security interest in
all of Borrower's interest in the following, whether now owned or hereafter
acquired, and wherever located: All Inventory, Equipment, Receivables, and
General Intangibles, including, without limitation, all of Borrower's Deposit
Accounts, and all money, and all property now or at any time in the future in
Silicon's possession (including claims and credit balances), and all proceeds
(including proceeds of any insurance policies, proceeds of proceeds and claims
against third parties), all products and all books and records related to any of
the foregoing (all of the foregoing, together with all other property in which
Silicon may now or in the future be granted a lien or security interest, is
referred to herein, collectively, as the "Collateral").
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
In order to induce Silicon to enter into this Agreement and to make Loans,
Borrower represents and warrants to Silicon as follows, and Borrower covenants
that the following representations will continue to be true, and that Borrower
will at all times comply with all of the following covenants:
3.1 CORPORATE EXISTENCE AND AUTHORITY Borrower, if a corporation, is and
will continue to be, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. 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 Borrower. The
execution, delivery and performance by Borrower of this Agreement, and all other
documents contemplated hereby (i) have been duly and validly authorized, (ii)
are enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights generally), and (iii) do not violate Borrower's articles or certificate
of incorporation, or Borrower's by-laws, or any law or any material agreement or
instrument which is binding upon Borrower or its property, and (iv) do not
constitute grounds for acceleration of any material indebtedness or obligation
under any material agreement or instrument which is binding upon Borrower or its
property.
3.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give Silicon 30 days' prior written notice before changing its
name or doing business under any other name. Borrower has complied, and will in
the future comply, with all laws relating to the conduct of business under a
fictitious business name*.
*EXCEPT WHERE THE FAILURE TO SO COMPLY COULD NOT REASONABLY BE EXPECTED TO HAVE
A MATERIAL ADVERSE EFFECT
3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in the
heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth on the Schedule. Borrower will give Silicon at least 30 days prior
written notice before opening any additional place of business, changing its
chief executive office, or moving any of the Collateral to a location other than
Borrower's Address or one of the locations set forth on the Schedule.
3.4 TITLE TO COLLATERAL, PERMITTED LIENS. 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 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 Permitted Liens. Silicon now has, and will
continue to have, a first-priority perfected and enforceable security interest
in all of the Collateral, subject only to the Permitted Liens, and 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. Borrower is not and will
not become a lessee under any real property lease pursuant to which the lessor
may obtain any rights in any of the Collateral and no such lease now prohibits,
restrains, impairs or will prohibit, restrain or impair Borrower's right to
remove any
Collateral from the leased premises. Whenever any Collateral is located upon
premises in which any third party has an interest (whether. as owner,
mortgagee, beneficiary under a deed of trust, lien or otherwise), Borrower
shall, whenever requested by Silicon, use its best efforts to cause such
third party to execute and deliver to Silicon, in form acceptable to Silicon,
such waivers and subordinations as Silicon shall specify, so as to ensure
that Silicon's rights in the Collateral are, and will continue to be,
superior to the rights of any such third party. Borrower will keep in full
force and effect, and will comply * with the terms of, any lease of real
property where any of the Collateral now or in the future may be located.
*IN ALL MATERIAL RESPECTS
3.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the Collateral in
good working condition, and Borrower will not use the Collateral for any
unlawful purpose. Borrower will immediately advise Silicon in writing of any
material loss or damage to the Collateral.
3.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.
3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. 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 * the financial condition of Borrower, at the times and for the
periods therein stated. Between the last date covered by any such statement
provided to Silicon and the date hereof, there has been no material adverse
change in the financial condition or business of Borrower. Borrower is now and
will continue to be solvent.
*FAIRLY PRESENT
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely
filed, and will timely file, all tax returns and reports required by foreign,
federal, state and local law, and 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 Borrower. Borrower may, however,
defer payment of any contested taxes, provided that Borrower (i) in good faith
contests 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. Borrower is
unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional taxes becoming due and payable by
Borrower. 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 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 Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.
Borrower shall, at all times, utilize the services of an outside payroll service
providing for the automatic deposit of all payroll taxes payable by Borrower.
3.9 COMPLIANCE WITH LAW. 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 Borrower, including, but not limited to, those
relating to Borrower's ownership of real or personal property, the conduct and
licensing of Borrower's business, and all 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 Borrower's
knowledge) threatened by or against or affecting Borrower in any court or before
any governmental agency (or any basis therefor known to Borrower) which *
result, either separately or in the aggregate, in ** Borrower will promptly
inform Silicon in writing of any claim, proceeding, litigation or investigation
in the future threatened or instituted by or against Borrower involving any
single claim of $50,000 or more, or involving $ 100,000 or more in the
aggregate.
*COULD REASONABLY BE EXPECTED TO
**A MATERIAL ADVERSE EFFECT
3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes. Borrower is not purchasing or carrying any "margin
stock" (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan will be used to purchase
or carry any "margin stock" or to extend credit to others for the purpose of
purchasing or carrying any "margin stock."
4. RECEIVABLES.
4.1 REPRESENTATIONS RELATING TO RECEIVABLES. Borrower represents and
warrants to Silicon as follows: Each Receivable with respect to which Loans are
requested by Borrower shall, on the date each Loan is requested and made, (i)
represent an undisputed bona fide existing unconditional obligation of the
Account Debtor created by the sale, delivery, and acceptance
of goods or the rendition of services in the ordinary course of Borrower's
business, and (ii) meet the Minimum Eligibility Requirements set forth in
Section 8 below.
4.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE. Borrower
represents and warrants to Silicon as follows: All statements made and all
unpaid balances appearing in all invoices, instruments and other documents
evidencing the Receivables are and shall be true and correct and all such
invoices, instruments and other documents and all of Borrower's books and
records are and shall be genuine and in all respects what they purport to be,
and all signatories and endorsers have the capacity to contract. All sales
and other transactions underlying or giving rise to each Receivable shall *
with all applicable laws and governmental rules and regulations. All
signatures and endorsements on all documents, instruments, and agreements
relating to all Receivables are and shall be genuine, and all such documents,
instruments and agreements are and shall be legally enforceable in accordance
with their terms**".
*IN ALL MATERIAL RESPECTS
**EXCEPT AS ENFORCEABILITY MAY BE LIMITED BY EQUITABLE PRINCIPLES OR BY
BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR LAWS RELATING TO
CREDITORS' RIGHTS GENERALLY
4.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES. Borrower shall
deliver to Silicon transaction reports and loan requests, schedules and
assignments of all Receivables, and schedules of collections, all on
Silicon's standard forms; provided, however, that Borrower's failure to
execute and deliver the same shall not affect or limit Silicon's security
interest and other rights in all of Borrower's Receivables, nor shall
Silicon's failure to advance or lend against a specific Receivable affect or
limit Silicon's security interest and other rights therein. Loan requests
received after 12:00 Noon will not be considered by Silicon until the next
Business Day. Together with each such schedule and assignment, or later if
requested by Silicon, Borrower shall furnish Silicon with copies (or, at
Silicon's request, originals) of all contracts, orders, invoices, and other
similar documents, and all original shipping instructions, delivery receipts,
bills of lading, and other evidence of delivery, for any goods the sale or
disposition of which gave rise to such Receivables, and Borrower warrants the
genuineness of all of the foregoing. Borrower shall also furnish to Silicon
an aged accounts receivable trial balance in such form and at such intervals
as Silicon shall request. In addition, * Borrower shall deliver to Silicon
the originals of all instruments, chattel paper, security agreements,
guarantees and other documents and property evidencing or securing any
Receivables, ** receipt thereof and in the same form as received, with all
necessary endorsements, all of which shall be with recourse. Borrower shall
also provide Silicon with copies of all credit memos within two days after
the date issued.
*ON REQUEST BY SILICON
**WITHIN ONE BUSINESS DAY AFTER
4.4 COLLECTION OF RECEIVABLES. Borrower shall have the right to collect all
Receivables, unless and until a Default or an Event of Default has occurred*.
Borrower shall hold all payments on, and proceeds of, Receivables in trust for
Silicon, and Borrower shall immediately deliver all such payments and proceeds
to Silicon in their original form, duly endorsed in blank, to be applied to the
Obligations in such order as Silicon shall determine. Silicon may, in its
discretion, require that all proceeds of Collateral be deposited by Borrower
into a lockbox account, or such other "blocked account" as Silicon may specify,
pursuant to a blocked account agreement in such form as Silicon may specify.
Silicon or its designee may, at any time, notify Account Debtors that the
Receivables have been assigned to Silicon.
*AND IS CONTINUING
4.5 REMITTANCE OF PROCEEDS. All proceeds arising from the disposition of
any Collateral shall be delivered, in kind, by Borrower to Silicon in the
original form in which received by Borrower not later than the following
Business Day after receipt by Borrower, to be applied to the Obligations in such
order as Silicon shall determine; provided that, if no Default or Event of
Default has occurred*, Borrower shall not be obligated to remit to Silicon the
proceeds of the sale of worn out or obsolete equipment disposed of by Borrower
in good faith in an arm's length transaction for an aggregate purchase price of
$25,000 or less (for all such transactions in any fiscal year). Borrower agrees
that it will not commingle proceeds of Collateral with any of Borrower's other
funds or property, but will hold such proceeds separate and apart from such
other funds and property and in an express trust for Silicon. Nothing in this
Section limits tile restrictions on disposition of Collateral set forth
elsewhere in this Agreement.
*AND IS CONTINUING
4.6 DISPUTES. Borrower shall notify Silicon promptly of all disputes or
claims relating to Receivables. Borrower shall not forgive (completely or
partially), compromise or settle any Receivable for less than payment in full,
or agree to do any of the foregoing, except that Borrower may do so, provided
that: (i) Borrower does so in good faith, in a commercially reasonable manner,
in the ordinary course of business, and in arm's length transactions, which are
reported to Silicon on the regular reports provided to Silicon; (ii) no Default
or Event of Default has occurred and is continuing; and (iii) taking into
account all such discounts settlements and forgiveness, the total outstanding
Loans will not exceed the Credit Limit. Silicon may, at any time after the
occurrence * of an Event of Default, settle or adjust disputes or claims
directly with Account Debtors for amounts and upon terms which Silicon considers
advisable in its reasonable credit judgment and, in all cases, Silicon shall
credit Borrower's Loan account with only the net amounts received by Silicon in
payment of any Receivables.
*AND DURING THE CONTINUANCE
4.7 RETURNS. Provided no Event of Default has occurred and is continuing,
if any Account Debtor returns any Inventory to Borrower in the ordinary course
of its business, Borrower shall promptly determine the reason for such return
and promptly issue a credit memorandum to the Account Debtor in the appropriate
amount (sending a copy to Silicon). In the event any attempted return occurs
after the occurrence * of any Event of Default, Borrower shall (i) hold the
returned Inventory in trust for Silicon, (ii) segregate all returned Inventory
from all of Borrower's other property, (iii) conspicuously label the returned
Inventory as Silicon's property, and (iv) immediately notify Silicon of the
return of any Inventory, specifying the reason for such return, the location and
condition of the returned Inventory, and on Silicon's request deliver such
returned Inventory to Silicon.
*AND DURING THE CONTINUANCE
4.8 VERIFICATION Silicon may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Receivables, by means of mail, telephone or otherwise, either in the name of
Borrower or Silicon or such other name as Silicon may choose.
4.9 NO LIABILITY. Silicon shall not under any circumstances be responsible
or liable for any shortage or discrepancy in, damage to, or loss or destruction
of, any goods, the sale or other disposition of which gives rise to a
Receivable, or for any error, act, omission, or delay of any kind occurring in
the settlement, failure to settle, collection or failure to collect any
Receivable, or for settling any Receivable in good faith for less than the full
amount thereof, nor shall Silicon be deemed to be responsible for any of
Borrower's obligations under any contract or agreement giving rise to a
Receivable. Nothing herein shall, however, relieve Silicon from liability for
its own gross negligence or willful misconduct.
5. ADDITIONAL DUTIES OF THE BORROWER.
5.1 FINANCIAL AND OTHER COVENANTS. Borrower shall at all times comply with
the financial and other covenants set forth in the Schedule.
5.2 INSURANCE. 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 *, and
Borrower shall provide evidence of such insurance to Silicon, so that Silicon is
satisfied that such insurance is, at all times, in full force and effect. All
such insurance policies shall name Silicon as an additional loss payee, and
shall contain a lenders loss payee endorsement in form reasonably acceptable to
Silicon. Upon receipt of the proceeds of any such insurance, Silicon shall apply
such proceeds in reduction of the Obligations as Silicon shall determine in its
sole discretion, except that, provided no Default or Event of Default has
occurred and is continuing, Silicon shall release to Borrower insurance proceeds
with respect to Equipment totaling less than $100,000, which shall be utilized
by Borrower I 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 Borrower fails to provide or
pay for any insurance, Silicon may, but is not obligated to, obtain the same at
Borrower's expense. Borrower shall promptly deliver to Silicon copies of all
reports made to insurance companies.
* ARE CUSTOMARY IN BORROWER'S INDUSTRY IN BORROWER'S LOCATION
5.3 REPORTS. Borrower, at its expense, shall provide Silicon with the
written reports set forth in the Schedule, and such other written reports with
respect to Borrower (including budgets, sales projections, operating plans and
other financial documentation), as Silicon shall from time to time reasonably
specify.
5.4 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on
one Business Day's notice, Silicon, or its agents, shall have the right to
inspect the Collateral, and the right to audit and copy Borrower's books and
records. 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
inspections and audits shall be at Borrower's expense and the charge therefor
shall be $600 per person per day (or such higher amount as shall represent
Silicon's then current standard charge for the same), plus reasonable out of
pocket expenses. Borrower will not enter into any agreement with any accounting
firm, service bureau or third party to store Borrower's books or records at any
location other than Borrower's Address, without first obtaining Silicon's
written consent, which may be conditioned upon such accounting firm, service
bureau or other third party agreeing to give Silicon the same rights with
respect to access to books and records and related rights as Silicon has under
this Loan Agreement. Borrower waives the benefit of any accountant-client
privilege or other evidentiary privilege precluding or limiting the disclosure,
divulgence or delivery of any of its books and records (except that Borrower
does not waive any attorney-client privilege).
5.5 NEGATIVE COVENANTS. Except as may be permitted in the Schedule,
Borrower shall not, without Silicon's prior written consent*, do any of the
following: (i) merge or consolidate with another corporation or entity**; (ii)
acquire any assets, except in the ordinary course of business (iii) enter into
any other transaction outside the ordinary course of business; (iv) sell or
transfer any Collateral, except for the sale of finished Inventory in the
ordinary course of Borrower's
business, and except for the sale of obsolete or unneeded Equipment in the
ordinary course of business***; (v) store any Inventory or other Collateral with
any warehouseman or other third party; (vi) sell any Inventory on a
sale-or-return, guaranteed sale, consignment, or other contingent basis;. (vii)
make any loans of any money or other assets**; (viii) incur any debts, outside
the ordinary course of business, which would have a material, adverse effect on
Borrower or on the prospect of repayment of the Obligations; (ix) guarantee or
other-wise become liable with respect to the obligations of another party or
entity; (x) pay or declare any dividends on Borrower's stock (except for
dividends payable solely in stock of Borrower); (xi) redeem, retire, purchase or
otherwise acquire, directly or indirectly, any of Borrower's stock****; (xii)
make any change in Borrower's capital structure which would have a material
adverse effect on Borrower or on the prospect of repayment of the Obligations;
or (xiii); or (xiv) dissolve or elect to dissolve. Transactions permitted by the
foregoing provisions of this Section are only permitted if no Default or Event
of Default would occur as a result of such transaction.
*(WHICH SHALL BE A MATTER OF ITS GOOD-FAITH BUSINESS JUDGMENT)
**EXCEPT FOR MERGERS OF ANY OF BORROWER'S FUTURE SUBSIDIARIES INTO BORROWER
***AND EXCEPT FOR NON-EXCLUSIVE LICENSING OF INTELLECTUAL PROPERTY IN THE
ORDINARY COURSE OF BUSINESS, AND EXCEPT FOR THE LEASING OF BORROWER'S INVENTORY
IN THE ORDINARY COURSE OF BUSINESS AND THE SALE BY BORROWER OF ITS INTEREST AS
LESSOR IN SUCH LEASES IN THE ORDINARY COURSE OF BUSINESS
****EXCEPT THAT BORROWER MAY REDEEM OR REPURCHASE ITS SECURITIES IN AN
AGGREGATE AMOUNT NOT EXCEEDING $100,000 IN ANY FISCAL YEAR FROM AN OFFICER,
DIRECTOR OR EMPLOYEE, IN CONNECTION WITH THE TERMINATION OF SUCH PERSON'S
EMPLOYMENT OR SERVICES, PROVIDED NO EVENT OF DEFAULT OR EVENT WHICH WITH NOTICE
OR LAPSE OF TIME WOULD CONSTITUTE AN EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING
-EXCEPT FOR THE FOLLOWING, IN AN AGGREGATE AMOUNT FOR ALL SUCH LOANS
NOT TO EXCEED $200,000 AT ANY TIME OUTSTANDING: TRAVEL ADVANCES, EMPLOYEE
RELOCATION LOANS AND OTHER EMPLOYEE LOANS AND ADVANCES IN THE ORDINARY COURSE OF
BUSINESS, LOANS TO EMPLOYEES, OFFICERS AND DIRECTORS THE PROCEEDS OF WHICH ARE
USED CONCURRENTLY TO PURCHASE EQUITY SECURITIES OF BORROWER, AND OTHER LOANS TO
OFFICERS AND EMPLOYEES APPROVED BY BORROWER'S BOARD OF DIRECTORS
5.6 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 Borrower, Borrower shall, without expense to Silicon, make available
Borrower and its officers, employees and agents and 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.
5.7 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by
Silicon, to execute all documents and take all actions, 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
the transactions contemplated by this Agreement.
6. TERM.
6.1 MATURITY DATE. This Agreement shall continue in effect until the
maturity date set forth on the Schedule (the "Maturity Date"), subject to
Section 6.3 below.
6.2 EARLY TERMINATION. This Agreement may be terminated prior to the
Maturity Date as follows: (i) by 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. If this Agreement is terminated by Borrower or by
Silicon under this Section 6.2, Borrower shall pay to Silicon a termination
fee in an amount equal to *, provided that no termination fee shall be
charged if the credit facility hereunder is replaced with a new facility from
another division of Silicon Valley Bank. The termination fee shall be due and
payable on the effective date of termination and thereafter shall bear
interest at a rate equal to the highest rate applicable to any of the
Obligations.
*AND DURING THE CONTINUANCE
**$100,000
6.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, 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; provided
that, without limiting the fact that Loans are subject to the 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 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 and termination of this
Agreement, Silicon shall promptly deliver to Borrower termination statements,
requests for reconveyances and such other documents as may be required to fully
terminate Silicon's security interests.
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and Borrower
shall give Silicon immediate written notice thereof: (a) Any warranty
representation, statement, report or certificate made or delivered to Silicon
by Borrower or any of Borrower's officers, employees or agents, now or in the
future, shall be untrue or misleading in a material respect *; or (b)
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 shall exceed the Credit Limit ***; or (d) 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) Borrower shall fail to perform any other
non-monetary Obligation, which failure is not cured within **** Business Days
after the date ***** or (f) any levy, assessment, attachment, seizure, lien
or encumbrance (other than a Permitted Lien) 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) any default or event of default occurs under any
obligation secured by a Permitted Lien, which is not cured within any
applicable cure period or waived in writing by the holder of the Permitted
Lien; or (h) Borrower breaches any material contract or obligation, which has
or may reasonably be expected to have a material adverse effect on Borrower's
business or financial condition; or (i) Dissolution, termination of
existence, insolvency or business failure of 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 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 (j) the commencement
of any proceeding against 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; or (k) 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 (1) 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 (m) 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 (n) there shall be a change in
the record or beneficial ownership of an aggregate of more than 20% of the
outstanding shares of stock of Borrower, in one or more transactions,
compared to the ownership of outstanding shares of stock of Borrower in
effect on the date hereof*******, without the prior written consent of
Silicon; or (o) Borrower shall generally not pay its debts as they become
due, or Borrower shall conceal, remove or transfer any part of its property,
with intent to hinder, delay or defraud its creditors, or make or suffer any
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or (p) there shall be a material
adverse change in Borrower's business or financial condition; or (q) Silicon
may cease making any Loans hereunder during any of the above cure periods,
and thereafter if an Event of Default has occurred********.
*WHEN MADE
** ,PROVIDED THAT BORROWER SHALL HAVE 30 DAYS TO CURE ANY EVENT OF DEFAULT
ARISING FROM THE FAILURE TO PAY WHEN DUE ANY MONETARY OBLIGATION OTHER THAN THE
PAYMENT OF ANY LOAN OR INTEREST THEREON, SUCH 30 DAYS TO BEGIN UPON THE
OCCURRENCE OF SUCH EVENT OF DEFAULT
***, SUBJECT TO THE PROVISIONS OF SECTION 1.3 ABOVE
**** 3
***** SILICON GIVES WRITTEN NOTICE TO BORROWER OF SUCH EVENT OF DEFAULT
****** HAVING AN AGGREGATE VALUE IN EXCESS OF $25,000
******* OTHER THAN IN CONNECTION WITH AN INITIAL PUBLIC OFFERING OF
BORROWER'S STOCK
******** AND IS CONTINUING
7.2 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 Borrower-, may do any one or more
of the following: (a) Cease making Loans or otherwise extending credit to
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
Borrower hereby authorizes Silicon without judicial process to enter onto any of
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
of the Collateral by Court process, 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
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 Borrower, and to remove the Collateral to such locations as Silicon
may deem advisable; (e) 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 Borrower's premises,
vehicles, hoists, lifts, cranes, equipment and all other property without
charge; (f) 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 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 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 Borrower of any liability Borrower may have if any Collateral is
defective as to title or physical condition or otherwise at the time of sale;
(g) Demand payment of, and collect any Receivables and General Intangibles
comprising Collateral and, in connection therewith, Borrower irrevocably
authorizes Silicon to endorse or sign Borrower's name on all collections,
receipts, instruments and other documents, to take possession of and open mail
addressed to 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 Receivables and
the like for less than face value; (h) Offset against any sums in any of
Borrower's general, special or other Deposit Accounts with Silicon; and (i)
Demand and receive possession of any of Borrower's federal and state income tax
returns and the books and records utilized in the preparation thereof or
refer-ring 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.
*DURING THE CONTINUANCE OF SUCH EVENT OF DEFAULT
**BY BORROWER
-(EXCEPT THAT SILICON SHALL GIVE BORROWER ONE GENERAL NOTICE, CONCURRENTLY
WITH OR PRIOR TO EXERCISING ANY OF' THE FOLLOWING REMEDIES, WHICH NOTICE MAY BE
GIVEN VIA FACSIMILE (WHICH WILL BE DEEMED TO HAVE BEEN GIVEN THE DAY OF
ELECTRONIC CONFIRMATION OF DELIVERY VIA FACSIMILE, OR IF THAT DAY IS NOT A
BUSINESS DAY, THEN THE NEXT BUSINESS DAY AFTER ELECTRONIC CONFIRMATION OF
DELIVERY VIA FACSIMILE), STATING, IN GENERAL TERMS, THAT "SILICON IS PROCEEDING
TO EXERCISE ITS RIGHTS AND REMEDIES" OR WORDS OF SIMILAR EFFECT (BUT NO SUCH
NOTICE SHALL BE REQUIRED IF EXIGENT CIRCUMSTANCES MAKE IT UNDULY DIFFICULT OR
IMPRACTICAL TO GIVE ANY SUCH NOTICE)), SILICON
7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. 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 The commercially reasonable: (i) Notice of the sale is given to
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,
nonspecific 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 Borrower any and all
information concerning the same. Silicon shall be free to employ other methods
of noticing and selling the Collateral, in its discretion, if they are
commercially reasonable.
7.4 POWER OF ATTORNEY. Upon the occurrence * of any Event of Default,
without limiting Silicon's other rights and remedies, 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
Borrower, and at Borrower's expense, to do any or all of the following, in
Borrower's name or otherwise, but Silicon agrees to exercise the following
powers
in a commercially reasonable manner: (a) Execute on behalf of Borrower any
documents that Silicon may, in its sole discretion, deem advisable in order to
perfect and maintain Silicon's security interest in the Collateral, or in order
to exercise a right of 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 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 Borrower, any invoices relating to any Receivable, 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 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 Receivables 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
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,
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 Borrower pursuant to this Agreement and any other present or
future agreements. 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 Borrower.
*AND DURING THE CONTINUANCE
7.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any
sale of the Collateral shall be applied by Silicon first to the reasonable
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 Borrower or other persons legally entitled thereto;
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 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.
7.6 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 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.
8. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"ACCOUNT DEBTOR" means the obligor on a Receivable.
"AFFILIATE" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.
"BUSINESS DAY" means a day on which Silicon is open for business.
"CODE" means the Uniform Commercial Code as adopted and in effect in the
State of California from time to time.
"COLLATERAL" has the meaning set forth in Section 2.1 above.
"DEFAULT" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"DEPOSIT ACCOUNT" has the meaning set forth in Section 9105 of the Code.
"ELIGIBLE INVENTORY" [NOT APPLICABLE].
"ELIGIBLE RECEIVABLES" means Receivables arising in the ordinary course
of Borrower's business from the sale of goods or rendition of services, which
Silicon, in its * judgment, shall deem eligible for borrowing, based on such
considerations as Silicon may from time to time deem appropriate. Without
limiting the fact that the determination of which Receivables are eligible
for borrowing is a matter of Silicon's discretion, the following (the
"MINIMUM ELIGIBILITY REQUIREMENTS") are the minimum requirements for a
Receivable to be an Eligible Receivable: (i) the Receivable must not be
outstanding for more than 90 days from its invoice date, (ii) the Receivable
must not represent progress xxxxxxxx, or be due under a fulfillment or
requirements contract with the Account Debtor, (iii) the Receivable must not
be subject to any contingencies (including Receivables arising from sales on
consignment, guaranteed sale or other terms pursuant to which payment by the
Account Debtor may be conditional), (iv) the Receivable must not be owing
from an Account Debtor with whom the Borrower has any dispute (whether or not
relating to the particular Receivable)*, (v) the Receivable must not be owing
from an Affiliate of Borrower, (vi) the Receivable must not be owing from an
Account Debtor which is subject to any insolvency or bankruptcy proceeding,
or whose financial condition is not acceptable to Silicon, or which, fails or
goes out of a material portion of its business, (vii) the Receivable must not
be owing from the United States or any department, agency or instrumentality
thereof (unless there has been compliance, to Silicon's satisfaction, with
the United States Assignment of Claims Act), (viii) the Receivable must not
be owing from an Account Debtor located outside the United States or Canada
(unless pre-approved by Silicon in its discretion in writing, or backed by a
letter of credit satisfactory to Silicon, or FCIA insured satisfactory to
Silicon), (ix) the Receivable must not be owing from an Account Debtor to
whom Borrower is or may be liable for goods purchased from such Account
Debtor or otherwise. Receivables owing from one Account Debtor will not be
deemed Eligible Receivables to the extent they exceed 25% of the total
Receivables outstanding. In addition, if more than 50% of the Receivables
owing from an Account Debtor are outstanding more than 90 days from their
invoice date (without regard to unapplied credits) or are otherwise not
eligible Receivables, then all Receivables owing from that Account Debtor
will be deemed ineligible for borrowing. Silicon may, from time to time, in
its ** revise the Minimum Eligibility Requirements, upon written notice to
the Borrower.
* PROVIDED THAT, IN THAT CASE, THEN RECEIVABLES OWING FROM THE ACCOUNT
DEBTOR WILL BE INELIGIBLE ONLY TO THE EXTENT OF THE AMOUNT OF SUCH DISPUTE.
**GOOD FAITH BUSINESS JUDGMENT
"EQUIPMENT" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
"EVENT OF DEFAULT" means any of the events set forth in Section 7.1 of this
Agreement.
"GENERAL INTANGIBLES" means all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, Deposit Accounts, inventions, designs, drawings, blueprints, patents,
patent applications, trademarks and the goodwill of the business symbolized
thereby, names, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, security and other deposits, 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, rights to purchase or sell
real or personal property, rights as a licensor or licensee of any kind,
royalties, telephone numbers, proprietary information, purchase orders, and all
insurance policies and claims (including without limitation life insurance, key
man insurance, credit insurance, liability insurance, property insurance and
other insurance), tax refunds and claims, computer programs, discs, tapes and
tape files, claims under guaranties, security interests or other security held
by or granted to Borrower, all rights to indemnification and all other
intangible property of every kind and nature (other than Receivables).
"INVENTOR" means all of Borrower's now owned and hereafter acquired goods,
merchandise or other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease (including without limitation
all raw materials, work in process, finished goods and goods in transit), and
all materials and supplies of every kind, nature and description which are or
might be used or consumed in Borrower's business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
merchandise or other personal property, and all warehouse receipts, documents of
title and other documents representing any of the foregoing. *
*"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect on the
business, operations, results of operations, assets, liabilities or condition of
Borrower, (ii) the impairment of Borrower's ability to perform its obligations
under this Agreement or any other present or future documents or agreements
between Borrower and Silicon, or of Silicon to enforce the Obligations or
realize upon the Collateral, or (iii) a material adverse effect on the value of
the Collateral or the amount which Silicon would be likely to receive in the
liquidation of the Collateral.
"OBLIGATION" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Silicon, whether evidenced by this Agreement or any
note or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by Silicon in
Borrower's debts owing to others), absolute or contingent, due or to become due,
including, without limitation, all interest, charges, expenses, fees, attorney's
fees, expert witness fees, audit fees, letter of credit fees, collateral
monitoring fees, closing fees, facility fees, termination fees, minimum interest
charges and any other sums chargeable to Borrower under this Agreement or under
any other present or future instrument or agreement between Borrower and
Silicon.
"PERMITTED LIENS" means the following: (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, which consent shall not
be unreasonably withheld; (v) security interests being terminated substantially
concurrently with this Agreement; (vi) liens of materialmen, mechanics,
warehousemen, carriers, or other similar liens arising in the ordinary course of
business and securing obligations which are not delinquent; (vii) liens incurred
in connection with the extension, renewal or refinancing of the indebtedness
secured by liens of the type described above in clauses (i) or (ii) above,
provided that any extension, renewal or replacement lien is limited to the
property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; (viii)
Liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods*. Silicon will have
the right to require, as a condition to its consent tinder 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 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.
*(ix) LIENS IN FAVOR OF XXXXXX HEALTHCARE CORPORATION, WHICH ARE SUBJECT TO
AN INTERCREDITOR AGREEMENT BETWEEN SILICON AND XXXXXX HEALTHCARE CORPORATION
DATED AS OF JANUARY 29, 1999 (AS AMENDED FROM TIME TO TIME)
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"RECEIVABLES" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, securities, securities accounts, investment
property, documents and all other forms of obligations at any time owing to
Borrower, all guaranties and other security therefor, all merchandise returned
to or repossessed by Borrower, and all rights of stoppage in transit and all
other rights or remedies of an unpaid vendor, lienor or secured party.
"RESERVES" means, as of any date of determination, such amounts as Silicon
may from time to time establish and revise in good faith reducing the amount of
Loans, Letters of Credit and other financial accommodations which would
other-wise be available to Borrower under the lending formula(s) provided in the
Schedule: (a) to reflect events, conditions, contingencies or risks which, as
determined by Silicon in good faith, do or may affect (i) the Collateral or any
other property which is security for the Obligations or its value (including
without limitation any increase in delinquencies of Receivables), (ii) the
assets, business or prospects of Borrower or any Guarantor, or (iii) the
security interests and other rights of Silicon in the Collateral (including the
enforceability, perfection and priority thereof); or (b) to reflect Silicon's
good faith belief that any collateral report or financial information furnished
by or on behalf of Borrower or any Guarantor to Silicon is or may have been
incomplete, inaccurate or misleading in any material respect; or (c) in respect
of any state of facts which Silicon determines in good faith constitutes an
Event of Default or may, with notice or passage of time or both, constitute an
Event of Default.
OTHER TERMS. All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in accordance with
generally accepted accounting principles, consistently applied. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meanings
provided by the Code, to the extent such terms are defined therein.
9. GENERAL PROVISIONS.
9.1 INTEREST COMPUTATION. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by Silicon (including
proceeds of Receivables and payment of the Obligations in full) shall be deemed
applied by Silicon on account of the Obligations three Business Days after
receipt by Silicon of immediately available funds, and, for purposes of the
foregoing, any such funds received after 12:00 Noon on any day shall be deemed
received on the next Business Day. Silicon shall not, however, be required to
credit Borrower's account for the amount of any item of payment which is
unsatisfactory to Silicon in its sole discretion, and Silicon may charge
Borrower's loan account for the amount of any item of payment which is returned
to Silicon unpaid.
9.2 APPLICATION OF PAYMENTS. All payments with respect to the Obligations
may be applied, and in Silicon's sole discretion reversed and re-applied, to the
Obligations, in such order and manner as Silicon shall determine in its sole
discretion.
9.3 CHARGES TO ACCOUNTS. Silicon may, in its discretion, require that
Borrower pay monetary Obligations in cash to Silicon, or charge them to
Borrower's Loan account, in which event they will bear interest at the same rate
applicable to the Loans. Silicon may also, in its discretion, charge any
monetary Obligations to Borrower's Deposit Accounts maintained with Silicon.
9.4 MONTHLY ACCOUNTINGS. Silicon shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Silicon), unless Borrower
notifies Silicon in writing to the contrary within thirty days after each
account is rendered, describing the nature of any alleged errors or admissions.
9.5 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, or certified mail return receipt
requested, addressed to Silicon or 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. Notices to Silicon shall be directed to the Commercial
Finance Division, to the attention of the Division Manager or the Division
Credit Manager. All notices shall be deemed to have been given upon delivery in
the case of notices personally delivered, or at the expiration of one Business
Day following delivery to the private delivery service, or two Business Days
following the deposit thereof in the United States mail, with postage prepaid.
9.6 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.
9.7 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 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.
9.8 WAIVERS. The failure of Silicon at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement or any
other present or future agreement between 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, and whether or not similar. None of the
provisions of this Agreement or any other agreement now or in the future
executed by 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 authorized officer of Silicon and
delivered to Borrower. 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 Borrower is or may in any way be liable, and notice of any
action taken by Silicon, unless expressly required by this Agreement.
9.9 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 Borrower
or any other party through the ordinary negligence of Silicon, or any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Silicon, but nothing herein shall relieve Silicon from
liability for its own gross negligence or willful misconduct.
9.10 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by Borrower and a duly
authorized officer of Silicon.
9.11 TIME OF ESSENCE. Time is of the essence in the performance by Borrower
of each and every obligation under this Agreement.
9.12 ATTORNEYS FEES AND COSTS. 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 or Borrower; 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 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 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 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 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.
9.13 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 Borrower and Silicon; provided,
however, that 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
Borrower from its liability for the Obligations.
9.14 JOINT AND SEVERAL LIABILITY. If 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.
9.15 LIMITATION OF ACTIONS. Any claim or cause of action by Borrower
against Silicon, its directors, officers, employees, agents, accountants or
attorneys, based upon, arising from, or relating to this Loan Agreement, or
any other present or future document or agreement, or any other transaction
contemplated hereby or thereby or relating hereto or thereto, or any other
matter, cause or thing whatsoever, occurred, done, omitted or suffered to be
done by Silicon, its directors, officers, employees, agents, accountants or
attorneys, shall be barred unless asserted by Borrower by the commencement of
an action or proceeding in a court of competent jurisdiction by the filing of
a complaint within * after the first act, occurrence or omission upon which
such claim or cause of action, or any part thereof, is based, and the service
of a summons and complaint on an officer of Silicon, or on any other person
authorized to accept service on behalf of Silicon, within thirty (30) days
thereafter. Borrower agrees that such ** period is a reasonable and
Sufficient time for Borrower to investigate and act upon any such claim or
cause of action. The ** one year period provided herein shall not be waived,
tolled, or extended except by the written consent of Silicon in its sole
discretion. This provision shall survive any termination of this Loan
Agreement or any other present or future agreement.
*TWO YEARS **TWO-YEAR
9.16 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used in
this Agreement for convenience. Borrower and Silicon acknowledge 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. The term
"including", whenever used in this Agreement, shall mean "including (but not
limited to)". 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 Borrower under any rule
of construction or otherwise.
9.17 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and
transactions hereunder and all rights and obligations of Silicon and Borrower
shall be governed by the laws of the State of California. As a material part of
the consideration to Silicon to enter into this Agreement, Borrower (i) agrees
that all actions and proceedings relating directly or indirectly to this
Agreement shall, at Silicon's option, be litigated in courts located within
California, and that the exclusive venue therefor shall be Santa Xxxxx 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 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.
9.18 MUTUAL WAIVER OF JURY TRIAL. 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 BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR BORROWER, IN
ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
BORROWER:
XXXXXXXX.XXX
By /s/ Xxxxxx X. Xxxxxx
PRESIDENT OR VICE PRESIDENT
By /s/ Xxxxxx X. Xxxxxxx
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
By /s/ Xxxxxxxxxxx Xxxx
TITLE Vice President
--------------------------------------------------------------------------------
SILICON VALLEY BANK
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
Borrower: XXXXXXXX.XXX
Address: 0000 X. Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Date: January 27, 2000
This Schedule forms an integral part of the Loan and Security Agreement
between Silicon Valley Bank and the above-borrower of even date.
================================================================================
1. CREDIT LIMIT
(Section 1.1): An amount not to exceed the lesser of. (i)
$10,000,000 at any one time outstanding (the
"Maximum Credit Limit"); or (ii) 75% of the amount
of Borrower's Eligible Receivables (as defined in
Section 8 above).
CASH MANAGEMENT SERVICES AND RESERVES.
Borrower may use up to $1,000,000 of Loans available
hereunder for Silicon's Cash Management Services (as
defined below), including, merchant services,
business credit card, ACH and other services
identified in the cash management services agreement
related to such service (the "Cash Management
Services"). Silicon may, in its sole discretion,
reserve against Loans which would otherwise be
available hereunder such sums as Silicon shall
determine in connection with the Cash Management
Services, and Silicon may charge to Borrower's Loan
account, any amounts that may become due or owing to
Silicon in connection with the Cash Management
Services. Borrower agrees to execute and deliver to
Silicon all standard form applications and
agreements of Silicon in connection with the Cash
Management Services, and, without limiting any of
the terms of such applications and agreements,
Borrower will pay all standard fees and charges of
Silicon in connection with the Cash Management
Services. The Cash Management Services shall
terminate on the Maturity Date.
LETTER OF CREDIT SUBMIT
(Section 1.5): $100,000
================================================================================
2. INTEREST.
INTEREST RATE (Section 1.2):
A rate equal to the "Prime Rate" in effect from
time to time, plus 2.25% 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 is a change in the Prime Rate.
MINIMUM MONTHLY
INTEREST
(Section 1.2) not applicable
================================================================================
3. FEES (SECTION 1.4):
Loan Fee: $61,250, payable concurrently herewith.
Collateral
Monitoring
Fee: $750 per month, payable in arrears (prorated for
any partial month at the beginning and at
termination of this Agreement.
================================================================================
4. MATURITY DATE
(Section 6.1): One year from the date of this Agreement.
================================================================================
5. FINANCIAL COVENANTS
(Section 5.1): Borrower shall comply with each of the following
covenant(s). Compliance shall be determined as of
the end of each month, except as otherwise
specifically provided below:
MAXIMUM
TANGIBLE
NET DEFICIT: Borrower shall maintain a Tangible Net Deficit of
not more than $22,000,000.
DEFINITIONS. For purposes of this foregoing financial
covenants, the following term shall have the
following meaning:
"Tangible Net Deficit" shall mean the excess of
total liabilities over total assets, determined
in accordance with generally accepted accounting
principles, with the following adjustments:
(A) there shall be excluded from assets: (i) notes,
accounts receivable and other obligations owing to
the Borrower from its officers or other Affiliates,
and (ii) 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
(B) there shall be excluded from liabilities:
all indebtedness which is subordinated to the
Obligations under a subordination agreement in form
specified by Silicon or by language in the
instrument evidencing the indebtedness which is
acceptable to Silicon in its discretion.
================================================================================
6. REPORTING.
(Section 5.3):
Borrower shall provide Silicon with the following:
1. Monthly Receivable agings, aged by invoice date,
within fifteen days after the end of each month.
2. Monthly accounts payable agings, aged by invoice
date, within fifteen days after the end of each
month.
3. Monthly reconciliations of Receivable agings
(aged by invoice date), transaction reports, and
general ledger, within thirty days after the end
of each month.
4. Monthly unaudited financial statements, as soon
as available, and in any event within thirty
days after the end of each month.
5. Monthly Compliance Certificates, within thirty
days after the end of each month, in such form
as Silicon shall reasonably specify, signed by
the Chief Financial Officer of Borrower,
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 Silicon
shall reasonably request, including, without
limitation, a statement that at the end of such
month there were no held checks.
6. Monthly outstanding or held check registers, if
any, within thirty days after the end of each
month.
7. Quarterly unaudited financial statements, as
soon as available, and in any event within
thirty days after the end of each fiscal quarter
of Borrower.
8. Annual operating budgets (including income
statements, balance sheets and cash flow
statements, by month) for the upcoming fiscal
year of Borrower within thirty days prior to the
end of each fiscal year of Borrower.
9. Annual financial statements, as soon as
available, and in any event within 120 days
following the end of Borrower's fiscal year,
certified by independent certified public
accountants acceptable to Silicon.
================================================================================
7. COMPENSATION
(Section 5.5): [Omitted].
================================================================================
8. BORROWER INFORMATION:
PRIOR NAMES OF
BORROWER
(Section 3.2): Omnicell Technologies, Inc.
PRIOR TRADE
NAMES OF BORROWER
(Section 3.2): None
EXISTING TRADE
NAMES OF BORROWER
(Section 3.2): None
OTHER LOCATIONS AND
Addresses (Section 3.3): See Exhibit A hereto
MATERIAL ADVERSE
LITIGATION (Section 3.10): None
================================================================================
9. OTHER COVENANTS
(Section 5.1):
Borrower shall at all times comply with all of the
following additional covenants:
(1) BANKING RELATIONSHIP. Borrower shall at all times
maintain its primary banking relationship with
Silicon.
(2) SUBORDINATION OF INSIDE DEBT. All present and future
indebtedness of the Borrower to its officers,
directors and shareholders ("Inside Debt") shall, at
all times, be subordinated to the Obligations
pursuant to a subordination agreement on Silicon's
standard form. Borrower represents and warrants that
there is no Inside Debt presently outstanding,
except for the following: _____________ . Prior to
incurring any Inside Debt in the future, Borrower
shall cause the person to whom such Inside Debt will
be owed to execute and deliver to Silicon a
subordination agreement on Silicon's standard form.
(3) COPYRIGHT FILINGS. Concurrently, Borrower is
executing and delivering to Silicon a Collateral
Assignment, Patent Mortgage and Security Agreement
between Borrower and Silicon (the "Intellectual
Property Agreement"). Within 90 days after the date
hereof, Borrower shall (i) cause all of its computer
software, the licensing of which results in
Receivables, to be registered with the United States
Copyright Office, (ii) complete the Exhibits to the
Intellectual Property Agreement with all of the
information called for with respect to such
software, (iii) cause the Intellectual Property
Agreement to be recorded in the United States
Copyright Office, and (iv) provide evidence of such
recordation to Silicon.
Borrower: Silicon:
XXXXXXXX.XXX SILICON VALLEY BANK
By /s/ Xxxxxx X. Xxxxxx By /s/ Xxxxxxxxxxx Xxxx
President or Vice President Title Vice President
By /s/ Xxxxxx X. Xxxxxxx
Secretary or Asst Secretary
SILICON VALLEY BANK
AMENDMENT TO LOAN DOCUMENTS
BORROWER: XXXXXXXX.XXX
ADDRESS: 0000 X. XXXXXX XXXXX
XXXX XXXX, XXXXXXXXXX 00000
DATE: JANUARY 27, 2000
THIS AMENDMENT TO LOAN DOCUMENTS is entered into between SILICON VALLEY
BANK (" Silicon") and the borrower named above (the "Borrower"), with reference
to the various loan and security agreements and other documents, instruments and
agreements between them, including but not limited to that certain Loan and
Security Agreement dated March 26, 1999 (as amended, if at all, the "Existing
Loan Agreement"; the Existing Loan Agreement and all related documents,
instruments and agreements may be referred to collectively herein as the
"Existing Loan Documents").
The Parties agree to amend the Existing Loan Documents, as follows:
1. PRESENT LOAN BALANCE. Borrower acknowledges that the present unpaid
principal balance of the Borrower's indebtedness, liabilities and obligations to
Silicon under the Existing Loan Documents, including interest accrued through
1-27-00 is $0.00 (the "Present Loan Balance"), and that said sum is due and
owing without any defense, offset, or counterclaim of any kind.
2. AMENDMENT TO EXISTING LOAN DOCUMENTS. The Existing Loan Documents
are hereby amended in their entirety to read as set forth in the Loan and
Security Agreement, and related documents, being executed concurrently
(collectively, the "New Loan Documents"). The Borrower acknowledges that the
Present Loan Balance shall be the opening balance of the Loans pursuant to the
New Loan Documents as of the date hereof, and shall, for all purposes, be deemed
to be Loans made by Silicon to the Borrower pursuant to the New Loan Documents.
Notwithstanding the execution of the New Loan Documents, the following Existing
Loan Documents shall continue in full force and effect and shall continue to
secure all present and future indebtedness, liabilities, guarantees and other
Obligations (as defined in the New Loan Documents): All standard documents of
Silicon entered into by the Borrower in connection with Letters of Credit and/or
Foreign Exchange Contracts; all security agreements, collateral assignments and
mortgages, including but not limited to those relating to patents, trademarks,
copyrights and other intellectual property; all lockbox agreements and/or
blocked account agreements; and all UCC-1 financing statements and other
documents filed with governmental offices which perfect liens or security
interests in favor of Silicon. In addition, in the event the Borrower has
previously issued any stock options, stock purchase warrants or securities to
Silicon, the same and all documents and agreements relating thereto shall also
continue in full force and effect.
3. GENERAL PROVISIONS. This Amendment and the New Loan Documents 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.
Borrower: Silicon:
XXXXXXXX.XXX SILICON VALLEY BANK
By /s/ Xxxxxx X. Xxxxxx By /s/
President or Vice President Title Vice President
By /s/ Xxxxxx X. Xxxxxxx
Secretary or Ass't Secretary
SILICON VALLEY BANK
CERTIFIED RESOLUTION AND INCUMBENCY CERTIFICATE
BORROWER: XXXXXXXX.XXX,
A CORPORATION ORGANIZED UNDER THE LAWS
OF THE STATE OF CALIFORNIA
DATE: JANUARY 27, 2000
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.
RESOLVED FURTHER, that any officer of this corporation be, and he or she is
hereby 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.
RESOLVED FURTHER, that Silicon may conclusively rely upon a certified copy
of these resolutions and a certificate of the Secretary or Ass't Secretary
of this corporation as to the officers of this corporation and their
offices and signatures, and continue to conclusively rely on such certified
copy of these resolutions and said certificate for all past, present and
future transactions until written notice of any change hereto or thereto is
given to Silicon by this corporation by certified mail, return receipt
requested.
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:
NAMES OFFICE(S) ACTUAL SIGNATURES
----- --------- -----------------
Xxxxxxx X. Xxxxx Chairman /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx President and Chief Executive Officer /s/ Xxxxxxx X. Xxxxx
------------------------------- ------------------------------------- -------------------------
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary or
Assistant Secretary on the date set forth above.
/s/ Xxxxxx X. Xxxxxxx
Secretary or Assistant Secretary
COLLATERAL ASSIGNMENT, PATENT MORTGAGE
AND SECURITY AGREEMENT
This Collateral Assignment, Patent Mortgage and Security Agreement is
made as of January 27, 2000 by and between XXXXXXXX.XXX ("Assignor"), and
Silicon Valley Bank, a California banking corporation ("Assignee").
RECITALS
A. Assignee has agreed to lend to Assignor certain funds (the "Loans"),
pursuant to a Loan and Security Agreement dated January 26, 2000 (the "Loan
Agreement") and Assignor desires to borrow such funds from Assignee.
B. In order to induce Assignee to make the Loans, Assignor has agreed
to assign certain intangible property to Assignee for purposes of securing the
obligations of Assignor to Assignee.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. ASSIGNMENT, PATENT MORTGAGE AND GRANT OF SECURITY INTEREST. As
collateral security for the prompt and complete payment and
performance of all of Assignor's present or future
indebtedness, obligations and liabilities to Assignee,
Assignor hereby assigns, transfers, conveys and grants a
security interest and mortgage to Assignee, as security, but
not as an ownership interest, in and to Assignor's entire
right, title and interest in, to and under the following (all
of which shall collectively be called the "Collateral"):
(a) All of present and future United States registered
copyrights and copyright registrations, including, without limitation, the
registered copyrights listed in EXHIBIT A-1 to this Agreement (and including all
of the exclusive rights afforded a copyright registrant in the United States
under 17 U.S.C. Section 106 and any exclusive rights which may in the future
arise by act of Congress or otherwise) and all present and future applications
for copyright registrations (including applications for copyright registrations
of derivative works and compilations) (collectively, the "Registered
Copyrights"), and any and all royalties, payments, and other amounts payable to
Assignor in connection with the Registered Copyrights, together with all
renewals and extensions of the Registered Copyrights, the right to recover for
all past, present, and future infringements of the Registered Copyrights, and
all computer programs, computer databases, computer program flow diagrams,
source codes, object codes and all tangible property embodying or incorporating
the Registered Copyrights, and all other rights of every kind whatsoever
accruing thereunder or pertaining thereto.
(b) All present and future copyrights which are not registered
in the United States Copyright Office (the "Unregistered Copyrights"), whether
now owned or hereafter acquired, including without limitation the Unregistered
Copyrights listed in EXHIBIT A-2 to this Agreement, and any and all royalties,
payments, and other amounts payable to Assignor in connection with the
Unregistered Copyrights, together with all renewals and extensions of the
Unregistered Copyrights, the right to recover for all past, present, and future
infringements of the Unregistered Copyrights, and all computer programs,
computer databases, computer program flow diagrams, source codes, object codes
and all tangible property embodying or incorporating the Unregistered
Copyrights, and all other rights of every kind whatsoever accruing thereunder or
pertaining thereto. The Registered Copyrights and the Unregistered Copyrights
collectively are referred to herein as the "Copyrights."
(c) All right, title and interest in and to any and all
present and future license agreements with respect to the Copyrights, including
without limitation the license agreements listed in EXHIBIT A-3 to this
Agreement (the "Licenses").
(d) All present and future accounts, accounts receivable and
other rights to payment arising from, in connection with or relating to the
Copyrights.
(e) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
(f) Any and all design rights which, may be available to
Assignor now or hereafter existing, created, acquired or held;
(g) All patents, patent applications and like protections
including, without limitation, improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including without
limitation the patents and patent applications set forth on EXHIBIT B attached
hereto (collectively, the "Patents");
(h) Any trademark and servicemark rights, whether registered
or not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Assignor connected with
and symbolized by such trademarks, including without limitation those set forth
on EXHIBIT C attached hereto (collectively, the "Trademarks")
(i) Any and all claims for damages by way of past, present and
future infringements of any of the rights included above, with the right, but
not the obligation, to xxx for and collect such damages for said use or
infringement of the intellectual property rights identified above;
(j) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights;
(k) All amendments, extensions, renewals and extensions of any
of the Copyrights, Trademarks or Patents; and
(l) All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.
THE INTEREST IN THE COLLATERAL BEING ASSIGNED HEREUNDER SHALL NOT BE CONSTRUED
AS A CURRENT ASSIGNMENT, BUT AS A CONTINGENT ASSIGNMENT TO SECURE ASSIGNOR'S
OBLIGATIONS TO ASSIGNEE UNDER THE LOAN AGREEMENT.
2. AUTHORIZATION AND REQUEST. Assignor authorizes and requests that the
Register of Copyrights and the Commissioner of Patents and Trademarks
record this conditional assignment.
3. COVENANTS AND WARRANTIES. Assignor represents, warrants, covenants and
agrees as follows:
(a) ASSIGNOR IS NOW THE SOLE OWNER OF THE COLLATERAL, EXCEPT FOR
NON-EXCLUSIVE LICENSES GRANTED BY ASSIGNOR TO ITS CUSTOMERS IN THE
ORDINARY COURSE OF BUSINESS.
(b) Listed on Exhibits A-1 and A-2 are all copyrights owned by Assignor, in
which Assignor has an interest, or which are used in Assignor's
business.
(c) Each employee, agent and/or independent contractor who has participated
in the creation of the property constituting the Collateral has either
executed an assignment of his or her rights of authorship to Assignor
or is an employee of Assignor acting within the scope of his or her
employment and was such an employee at the time of said creation.
(d) All of Assignor's present and future software, computer programs and
other works of authorship subject to United States copyright
protection, the sale, licensing or other disposition of which results
in royalties receivable, license fees receivable, accounts receivable
or other sums owing to Assignor (collectively, "Receivables"), have
been and shall be registered with the United States Copyright Office
prior, to the date Assignor requests or accepts any loan from Assignee
with respect to such Receivables and prior to the date Assignor
includes any such Receivables in any accounts receivable aging,
borrowing base report or certificate or other similar report provided
to Assignee, and Assignor shall provide to Assignee copies of all such
registrations promptly upon the receipt of the same.
(e) Assignor shall undertake all reasonable measures to cause its
employees, agents and independent contractors to assign to Assignor all
rights of authorship to any copyrighted material in which Assignor has
or may subsequently acquire any right or interest.
(f) Performance of this Assignment does not conflict with or result in a
breach of any agreement to which Assignor is bound, except to the
extent that certain intellectual property agreements prohibit the
assignment of the rights thereunder to a third party without the
licensor's or other party's consent and this Assignment constitutes an
assignment.
(g) During the term of this Agreement, Assignor will not transfer or
otherwise encumber any interest in the Collateral, except for
non-exclusive licenses granted by Assignor in the ordinary course of
business or as set forth in this Assignment;
(h) Each of the Patents is valid and enforceable, and no part of the
Collateral has been judged invalid or unenforceable, in whole or in
part, and no claim has been made that any part of the Collateral
violates the rights of any third party;
(i) Assignor shall promptly advise Assignee of any material adverse change
in the composition of the Collateral, including but not limited to any
subsequent ownership right of the Assignor in or to any Trademark,
Patent or Copyright not specified in this Assignment;
(j) Assignor shall (i) protect, defend and maintain the validity and
enforceability of the Trademarks, Patents and Copyrights, (ii) use its
best efforts to detect infringements of the Trademarks, Patents and
Copyrights and promptly advise Assignee in writing of material
infringements detected and (iii) not allow any Trademarks, Patents, or
Copyrights to be abandoned, forfeited or dedicated to the public
without the written consent of Assignee, which shall not be
unreasonably withheld unless Assignor determines that reasonable
business practices suggest that abandonment is appropriate.
(k) Assignor shall promptly register the most recent version of any of
Assignor's Copyrights, if not so already registered, and shall, from
time to time, execute and file such other instruments, and take such
further actions as Assignee may reasonably request from time to time to
perfect or continue the perfection of Assignee's interest in the
Collateral;
(l) This Assignment creates, and in the case of after acquired Collateral,
this Assignment will create at the time Assignor first has rights in
such after acquired Collateral, in favor of Assignee a valid and
perfected first priority security interest in the Collateral in the
United States securing the payment and performance of the obligations
evidenced by the Loan Agreement upon making the filings referred to in
clause (m) below;
(m) To its knowledge, except for, and upon, the filing with the United
States Patent and Trademark office with respect to the Patents and
Trademarks and the Register of Copyrights with respect to the
Copyrights necessary to perfect the security interests and assignment
created hereunder and except as has been already made or obtained, no
authorization, approval or other action by, and no notice to or filing
with, any U.S. governmental authority or U.S. regulatory body is
required either (i) for the grant by Assignor of the security interest
granted hereby or for the execution, delivery or performance of this
Assignment by Assignor in the U.S. Or (ii) for the perfection in the
United States or the exercise by Assignee of its rights and remedies
thereunder;
(n) All information heretofore, herein or hereafter supplied to Assignee by
or on behalf of
(o) Assignor shall not enter into any agreement that would materially
impair or conflict with Assignor's obligations hereunder without
Assignee's prior written consent, which consent shall not be
unreasonably withheld. Assignor shall not permit the inclusion in any
material contract to which it becomes a party of any provisions that
could or might in any way prevent the creation of a security interest
in Assignor's rights and interest in any property included within the
definition of the Collateral acquired under such contracts, except that
certain contracts may contain anti-assignment provisions that could in
effect prohibit the creation of a security interest in such contracts.
(p) Upon any executive officer of Assignor obtaining actual knowledge
thereof, Assignor will promptly notify Assignee in writing of any event
that materially adversely affects the value of any material Collateral,
the ability of Assignor to dispose of any material Collateral or the
rights and remedies of Assignee in relation thereto, including the levy
of any legal process against any of the Collateral.
4. ASSIGNEE'S RIGHTS. Assignee shall have the right, but not the
obligation, to take, at Assignor's sole expense, any actions that
Assignor is required under this Assignment to take but which Assignor
fails to take, after fifteen (15) days' notice to Assignor. Assignor
shall reimburse and indemnify Assignee for all reasonable costs and
reasonable expenses incurred in the reasonable exercise of its rights
under this section 4.
5. INSPECTION RIGHTS. Assignor hereby grants to Assignee and its
employees, representatives and agents the right to visit, during
reasonable hours upon prior reasonable written notice to Assignor, and
any of Assignor's plants and facilities that manufacture, install or
store products (or that have done so during the prior six-month period)
that are sold utilizing any of the Collateral, and to inspect the
products and quality control records relating thereto upon reasonable
written notice to Assignor and as often as may be reasonably requested,
but not more than one (1) in every six (6) months; provided, however,
nothing herein shall entitle Assignee access to Assignor's trade
secrets and other proprietary information.
6. FURTHER ASSURANCES; ATTORNEY IN FACT.
(a) Upon an Event of Default, on a continuing basis thereafter,
Assignor will, subject to any prior licenses, encumbrances and
restrictions and prospective licenses, make, execute, acknowledge and
deliver, and file and record in the proper filing and recording places
in the United States, all such instruments, including, appropriate
financing and continuation statements and collateral agreements and
filings with the United States Patent and Trademarks Office and the
Register of Copyrights, and take all such action as may reasonably be
deemed necessary or advisable, or as requested by Assignee, to perfect
Assignee's security interest in all Copyrights, Patents and Trademarks
and otherwise to carry out the intent and purposes of this Collateral
Assignment, or for assuring and confirming to Assignee the grant or
perfection of a security interest in all Collateral.
(b) Upon an Event of Default, Assignor hereby irrevocably appoints Assignee
as Assignor's attorney-in-fact, with full authority in the place and
stead of Assignor and in the name of Assignor, Assignee or otherwise,
from time to time in Assignee's discretion, upon Assignor's failure or
inability to do so, to take any action and to execute any instrument
which Assignee may deem necessary or advisable to accomplish the
purposes of this Collateral Assignment, including:
(i) To modify, in its sole discretion, this Collateral
Assignment without first obtaining Assignor's approval of or signature to such
modification by amending Exhibit A-I, Exhibit X-0, Xxxxxxx X-0, Exhibit B and
Exhibit C, thereof, as appropriate, to include reference to any right, title or
interest in any Copyrights, Patents or Trademarks acquired by Assignor after the
execution hereof or to delete any reference to any right, title or interest in
any Copyrights, Patents or Trademarks in which Assignor no longer has or claims
any right, title or interest; and
(ii) To file, in its sole discretion, one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of Assignor where permitted by law.
7. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default under the Assignment:
(a) An Event of Default occurs under the Loan Agreement; or
(b) Assignor breaches any warranty or agreement made by Assignor in this
Assignment.
8. REMEDIES. Upon the occurrence and continuance of an Event of
Default, Assignee shall have the right to exercise all the remedies of
a secured party under the California Uniform Commercial Code, including
without limitation the right to require Assignor to assemble the
Collateral and any tangible property in which Assignee has a security
interest and to make it available to Assignee at a place designated by
Assignee. Assignee shall have a nonexclusive, royalty free license to
use the Copyrights, Patents and Trademarks to the extent reasonably
necessary to permit Assignee to exercise its rights and remedies upon
the occurrence of an Event of Default. Assignor will pay any expenses
(including reasonable attorney's fees) incurred by Assignee in
connection with the exercise of any of Assignee's rights hereunder,
including without limitation any expense incurred in disposing of the
Collateral. All of Assignee's rights and remedies with respect to the
Collateral shall be cumulative.
9. INDEMNITY. Assignor agrees to defend, indemnify and hold harmless
Assignee and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by
any other party in connection with the transactions contemplated by
this Agreement, and (b) all losses or expenses in any way suffered,
incurred, or paid by Assignee as a result of or in any way arising out
of, following or consequential to transactions between Assignee and
Assignor, whether under this Assignment or otherwise (including without
limitation, reasonable attorneys fees and reasonable expenses), except
for losses arising form or out of Assignee's gross negligence or
willful misconduct.
10. RELEASE. At such time as Assignor shall completely satisfy all of
the obligations secured hereunder, Assignee shall execute and deliver
to Assignor all assignments and other instruments as may be reasonably
necessary or proper to terminate Assignee's security interest in the
Collateral, subject to any disposition of the Collateral which may have
been made by Assignee pursuant to this Agreement. For the purpose of
this Agreement, the obligations secured hereunder shall be deemed to
continue if Assignor enters into any bankruptcy or similar proceeding
at-a time when any amount paid to Assignee could be ordered to be
repaid as a preference or pursuant to a similar theory, and shall
continue until it is finally determined that no such repayment can be
ordered.
11. NO WAIVER. No course of dealing between Assignor and Assignee, nor any
failure to exercise nor any delay in exercising, on the part of
Assignee, any right, power, or privilege under this Agreement or under
the Loan Agreement or any other agreement, shall operate as a waiver.
No single or partial exercise of any right, power, or privilege under
this Agreement or under the Loan Agreement or any other agreement by
Assignee shall preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or
privilege by Assignee.
12. RIGHTS ARE CUMULATIVE. All of Assignee's rights and remedies with
respect to the Collateral whether established by this Agreement, the
Loan Agreement, or any other documents or agreements, or by law shall
be cumulative and may be exercised concurrently or in any order.
13. COURSE OF DEALING. No course of dealing, nor any failure to exercise,
nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.
14. ATTORNEYS' FEES. If any action relating to this Assignment is brought
by either party hereto against the other party, the prevailing party
shall be entitled to recover reasonable attorneys fees, costs and
disbursements.
15. AMENDMENTS. This Assignment may be amended only by a written instrument
signed by both parties hereto. To the extent that any provision of this
Agreement conflicts with any provision of the Loan Agreement, the
provision giving Assignee greater rights or remedies shall govern, it
being understood that the purpose of this Agreement is to add to, and
not detract from, the rights granted to Assignee under the Loan
Agreement. This Agreement, the Loan Agreement, and the documents
relating thereto comprise the entire agreement of the parties with
respect to the matters addressed in this Agreement.
16. SEVERABILITY. The provisions of this Agreement are severable. If any
provision of this Agreement is held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such provision or
part thereof in any other jurisdiction, or any other provision of this
Agreement in any jurisdiction.
17. COUNTERPARTS. This Assignment may be executed in two or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute the same instrument.
18. CALIFORNIA LAW AND JURISDICTION. This Assignment shall be governed by
the laws of the State of California, without regard for choice of law
provisions. Assignor and Assignee consent to the nonexclusive
jurisdiction of any state or federal court located in Orange County,
California.
19. CONFIDENTIALITY. In handling any confidential information, Assignee
shall exercise the same degree of care that it exercises with respect
to its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or
received pursuant to this Assignment except that the disclosure of this
information may be made (i) to the affiliates of the Assignee, (ii) to
prospective transferee or purchasers of an interest in the obligations
secured hereby, provided that they have entered into a comparable
confidentiality agreement in favor of Assignor and have delivered a
copy to Assignor, (iii) as required by law, regulation, rule or order,
subpoena judicial order or similar order and (iv) as may be required in
connection with the examination, audit or similar investigation of
Assignee.
20. WAIVER OF RIGHT TO JURY TRIAL. ASSIGNEE AND ASSIGNOR 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: (I)
THIS AGREEMENT; OR (II) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR
AGREEMENT BETWEEN ASSIGNEE AND ASSIGNOR; OR (III) ANY CONDUCT, ACTS OR
OMISSIONS OF ASSIGNEE OR ASSIGNOR OR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
ASSIGNEE OR ASSIGNOR; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING
IN CONTRACT OR TORT OR OTHERWISE.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment on the
day and year first above written.
ASSIGNOR:
XXXXXXXX.XXX
By: /s/ Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
Name (please Print):
Xxxxxx X. Xxxxxx
ADDRESS OF ASSIGNOR:
0000 X. Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
--------------------------------------------------------------------------------
SILICON VALLEY BANK
AMENDMENT TO LOAN DOCUMENTS
BORROWER: XXXXXXXX.XXX
DATE: MAY 2, 2001
THIS AMENDMENT TO LOAN DOCUMENTS is entered into between Silicon Valley
Bank ("Silicon") and the borrower named above ("Borrower").
The Parties agree to amend the Loan and Security Agreement between
them, dated January 27, 2000 (as otherwise amended, if at all, the "Loan
Agreement"), as follows, effective as of the date hereof. (Capitalized terms
used but not defined in this Amendment, shall have the meanings set forth in the
Loan Agreement.)
1. WAIVER OF REQUIRED NOTICE. Reference is hereby made to that
certain Standby Facility Agreement between the parties dated January 27, 2000
(the "Standby Agreement"). The Standby Agreement requires that the Borrower
provide Silicon with at least 30 days' prior written notice (the "Notice
Requirement") in order for the Borrower to be able to request Loans in
accordance with the terms and provisions of the Loan Agreement. Silicon hereby
waives the Notice Requirement with respect to the Loans, if any, made after the
date hereof and prior to the termination of the Standby Period (as defined in
the Standby Agreement) as provided for below. It is understood by the parties
hereto, however, that such waiver does not constitute a waiver of any other
provision or term of the Loan Agreement or any related document nor an agreement
to waive in the future this requirement or any other provision or term of the
Loan Agreement or any related document.
2. MODIFICATION TO CREDIT LIMIT. The first paragraph of Section 1
of the Schedule to Loan and Security Agreement which currently reads as follows:
"An amount not to exceed the lesser of: (i) $10,000,000 at any
one time outstanding (the "Maximum Credit Limit"); or (ii) 75%
of the amount of Borrower's Eligible Receivables (as defined in
Section 8 above)."
is hereby amended to read as follows:
"An amount not to exceed the lesser of: (i) $10,000,000 at any
one time outstanding (the "Maximum Credit Limit"); or (ii) 75%
of the amount of Borrower's Eligible Receivables (as defined in
Section 8 above); provided, however, that notwithstanding the
foregoing, until the termination of the Standby Period (as
defined in the Standby Agreement) as provided for below, the
maximum principal amount of Loans, if any, outstanding under the
Loan Agreement shall not exceed $3,000,000.
-1-
Notwithstanding anything to the contrary in the Standby
Agreement, the Standby Period will terminate upon the Borrower
providing Silicon with at least 10 days prior written notice
that the Standby Period is to terminate, together with such
information relating to the Receivables and other Collateral as
Silicon shall specify. Upon the termination of the Standby
Period, Borrower will, then and thereafter, provide Silicon with
the daily reporting of transactions and daily schedules and
assignments of Receivables and schedules of collections, as
called for by Section 4.3 of the Loan Agreement, and Borrower
shall deliver all proceeds of Receivables to Silicon, as called
for by Section 4.4 of the Loan Agreement."
3. MODIFIED MATURITY DATE. Section 4 of the Schedule to Loan and
Security Agreement is hereby amended to read as follows:
"4. MATURITY DATE
(Section 6.1): JUNE 15, 2001."
4. ADDITIONAL FINANCIAL COVENANT. The following financial covenant
is hereby added to Section 5 of the Schedule to Loan and Security Agreement:
"MINIMUM EXCESS
AVAILABILITY: Until such time as the
Standby Period is terminated,
Borrower shall maintain a
minimum Excess Availability
of at least $1,500,000.
Minimum Excess Availability
shall mean the amount equal
to the Credit Limit less the
principal amount of
outstanding Loans."
5. MODIFIED REPORTING REQUIREMENT. Until such time as the Standby
Period is terminated, within 5 (five) days after the 15th day of each month and
the end of each month, Borrower shall deliver to Silicon a Borrowing Base
Certificate signed by the Chief Executive Officer, President, Chief Financial
Officer or Controller of Borrower in substantially the form of Exhibit A hereto,
together with aged listings of accounts receivable.
6. FEE. In consideration for Silicon entering into this Amendment,
Borrower shall concurrently pay Silicon a fee in the amount of $2,500, which
shall be non-refundable and in addition to all interest and other fees payable
to Silicon under the Loan Documents. Silicon is authorized to charge said fee to
Borrower's loan account.
7. 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.
8. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any
prior written amendments to the Loan Agreement signed by Silicon and Borrower,
and the other written documents and agreements between Silicon and Borrower set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and
-2-
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 Borrower shall continue
in full force and effect and the same are hereby ratified and confirmed.
BORROWER: SILICON:
XXXXXXXX.XXX, INC. SILICON VALLEY BANK
BY /s/ Xxxxxx X. Xxxxxx BY /s/ Xxxxxxx Xxxxxx
------------------------------------ ------------------------------
PRESIDENT OR VICE PRESIDENT TITLE VP, Market Manager
---------------------------
BY
------------------------------------
SECRETARY OR ASS'T SECRETARY
-3-
EXHIBIT A
BORROWING BASE CERTIFICATE
Borrower: XXXXXXXX.XXX Bank: Silicon Valley Bank
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of_________ $______________________
2. Additions (please explain on reverse) $______________________
3. TOTAL ACCOUNTS RECEIVABLE $______________________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $________________
5. Balance of 50% over 90 day accounts $________________
6. Concentration Limits $________________
7. Foreign Accounts $________________
8. Governmental Accounts $________________
9. Contra Accounts $________________
10. Promotion or Demo Accounts $________________
11. Intercompany/Employee Accounts $________________
12. Other (please explain on reverse) $________________
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $______________________
14. Eligible Accounts (#3 minus #13) $______________________
15. LOAN VALUE OF ACCOUNTS (____% of #14) $______________________
16. Inventory Value as of______________ $________________
17. LOAN VALUE OF INVENTORY (____% of #16) $______________________
BALANCES
18. Maximum Loan Amount $______________________
19. Total Funds Available [Lesser of #18 or (#15 plus #17)] $______________________
20. Present balance owing on Line of Credit $______________________
21. Outstanding under Sublimits ( ) $______________________
22. RESERVE POSITION (#19 minus #20 and #21) $______________________
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE FOREGOING IS
TRUE, COMPLETE AND CORRECT, AND THAT THE INFORMATION REFLECTED IN THIS BORROWING
BASE CERTIFICATE COMPLIES WITH THE REPRESENTATIONS AND WARRANTIES SET FORTH IN
THE LOAN AND SECURITY AGREEMENT BETWEEN THE UNDERSIGNED AND SILICON VALLEY BANK.
COMMENTS:
=====================================================
BANK USE ONLY
RECEIVED BY:______________
DATE:________________
REVIEWED
BY:______________
COMPLIANCE STATUS: YES / NO
======================================================
XXXXXXXX.XXX
By: _______________________
Authorized Signer
-1-
--------------------------------------------------------------------------------
SILICON VALLEY BANK
AMENDMENT TO LOAN DOCUMENTS
BORROWER: XXXXXXXX.XXX
ADDRESS: 0000 X. XXXXXX XXXXX
XXXX XXXX, XXXXXXXXXX 00000
DATE: JUNE 14, 2001
THIS AMENDMENT TO LOAN DOCUMENTS is entered into between Silicon Valley
Bank ("Silicon") and the borrower named above ("Borrower").
The Parties agree to amend the Loan and Security Agreement between
them, dated January 27, 2000 (as otherwise amended, if at all, the "Loan
Agreement"), as follows, effective as of the date hereof. (Capitalized terms
used but not defined in this Amendment, shall have the meanings set forth in the
Loan Agreement.)
1. MODIFIED CREDIT LIMIT. The first paragraph of Section 1 of the Schedule
to Loan and Security Agreement, which currently reads as follows:
"An amount not to exceed the lesser of: (i) $10,000,000 at any
one time outstanding (the "Maximum Credit Limit"); or (ii) 75% of
the amount of Borrower's Eligible Receivables (as defined in
Section 8 above); provided, however, that notwithstanding the
foregoing, until the termination of the Standby Period (as
defined in the Standby Agreement) as provided for below, the
maximum principal amount of Loans, if any, outstanding under the
Loan Agreement shall not exceed $3,000,000.",
is hereby amended and restated in its entirety to read as follows:
"An amount not to exceed the lesser of: (i) $10,000,000 at any
one time outstanding (the "Maximum Credit Limit"); or (ii) 80% of
the amount of Borrower's Eligible Receivables (as defined in
Section 8 above); provided, however, that notwithstanding the
foregoing, until the termination of the Standby Period (as
defined in that certain Standby Facility Agreement, dated January
27, 2000, between Borrower and Silicon (as amended, the "Standby
Agreement")) as provided for below, the maximum principal amount
of Loans, if any, outstanding under the Loan Agreement shall not
exceed $2,000,000."
-1-
2. MODIFIED COLLATERAL MONITORING FEE. The "Collateral Monitoring Fee"
portion of Section 3 of the Schedule to Loan and Security Agreement, which
currently reads as follows:
"Collateral Monitoring Fee: $750 per month, payable in
arrears (prorated for any
partial month at the beginning
and at termination of this
Agreement).",
is hereby amended and restated in its entirety to read as follows:
"Collateral Monitoring Fee: $750 per month, payable in
arrears (prorated for any
partial month at the beginning
and at termination of this
Agreement); PROVIDED, HOWEVER,
that such monthly amount of
the Collateral Monitoring Fee
shall be increased to $1,000
per month from and after the
first date (if ever) that
Silicon makes a Loan or issues
a Letter of Credit hereunder
or that any amounts are due or
owing to Silicon hereunder in
respect of Cash Management
Services."
3. MODIFIED MATURITY DATE. Section 4 of the Schedule to Loan and Security
Agreement, which currently reads as follows:
"4. MATURITY DATE
(Section 6.1): JUNE 15, 2001.",
is hereby amended and restated in its entirety to read as follows:
"4. MATURITY DATE
(Section 6.1): JUNE 30, 2002."
4. MODIFIED FINANCIAL COVENANTS. Section 5 of the Schedule to Loan and
Security Agreement, which currently reads as follows:
"5. FINANCIAL COVENANTS
(Section 5.1): Borrower shall comply with each of
the following covenant(s). Compliance
shall be determined as of the end of
each month, except as otherwise
specifically provided below:
MINIMUM TANGIBLE
NET WORTH: As of January 31, 2001 and
the last day of each month thereafter,
Borrower shall maintain a Tangible Net
Worth of not less than the sum of (a)
($35,000,000) plus (b) 50% of any
proceeds of the issuance of any equity
or other subordinated debt by Borrower
from and after January 27, 2001. [Note:
A Dollar amount in parentheses () is a
negative Dollar amount.]
-2-
MINIMUM EXCESS
AVAILABILITY: Until such time as the
Standby Period is terminated, Borrower
shall maintain a minimum Excess
Availability of at least $1,500,000.
Minimum Excess Availability shall mean
the amount equal to the Credit Limit
less the principal amount of outstanding
Loans.
DEFINITIONS. For purposes of the
foregoing financial covenants, the
following term shall have the following
meaning:
"Tangible Net Worth" shall mean the
excess of total assets over total
liabilities, determined in accordance
with generally accepted accounting
principles, with the following
adjustments:
(A) there shall be excluded
from assets: (i) notes, accounts
receivable and other obligations
owing to the Borrower from its
officers or other Affiliates, and
(ii) 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
(B) there shall be excluded
from liabilities: all indebtedness
which is subordinated to the
Obligations under a subordination
agreement in form specified by
Silicon or by language in the
instrument evidencing the
indebtedness which is acceptable to
Silicon in its discretion."
is hereby amended and restated in its entirety to read as follows:
"5. FINANCIAL COVENANTS
(Section 5.1): Borrower shall comply with each of
the following covenant(s). Compliance
shall be determined as of the end of
each month, except as otherwise
specifically provided below:
MINIMUM TANGIBLE
NET WORTH: As of January 31, 2001 and
the last day of each month thereafter,
Borrower shall maintain a Tangible Net
Worth of not less than the sum of (a)
the Base TNW Amount (as defined below),
plus (b) 50% of any proceeds of the
-3-
issuance of any equity or other
subordinated debt by Borrower from and
after January 27, 2001.
As used herein, the term "Base TNW Base
Amount" means, with respect to the last
day of a particular month as set forth
in the following table, the Dollar
amount set forth opposite such month
[Note: A Dollar amount in parentheses ()
is a negative Dollar amount.]:
----------------------------- ---------------------------
Month TNW Base Amount
----------------------------- ---------------------------
April 2001 ($27,000,000)
----------------------------- ---------------------------
May 2001 ($27,000,000)
----------------------------- ---------------------------
June 2001 ($24,000,000)
----------------------------- ---------------------------
July 2001 ($27,000,000)
----------------------------- ---------------------------
August 2001 ($27,000,000)
----------------------------- ---------------------------
September 2001 ($24,000,000)
----------------------------- ---------------------------
October 2001 ($25,000,000)
----------------------------- ---------------------------
November 2001 ($25,000,000)
----------------------------- ---------------------------
December 2001 ($24,000,000)
----------------------------- ---------------------------
January 2002 ($24,000,000)
----------------------------- ---------------------------
February 2002 ($24,000,000)
----------------------------- ---------------------------
March 2002 ($24,000,000)
----------------------------- ---------------------------
April 2002 ($24,000,000)
----------------------------- ---------------------------
May 2002 ($24,000,000)
----------------------------- ---------------------------
June 2002 ($24,000,000)
----------------------------- ---------------------------
MINIMUM LIQUIDITY: Until such time as
the Standby Period is terminated,
Borrower shall maintain a minimum
Liquidity (as such term is defined
below) of at least $3,000,000. As used
herein, the term
-4-
"Liquidity" means, as of any date of
determination, the sum of (1) the
aggregate amount of unrestricted cash of
Borrower that is free and clear of Liens
(other than Liens in favor of Silicon),
plus (2) Borrower's Excess Availability
(as such term is defined below). As used
herein, the term "Excess Availability"
means, as of any date of determination,
the amount equal to the Credit Limit
less (y) the sum of the principal amount
of outstanding Loans, plus (without
duplication) (z) any reserves
established by Silicon against Loans
otherwise available hereunder.
DEFINITIONS. For purposes of the
foregoing financial covenants, the
following term shall have the following
meaning:
"Tangible Net Worth" shall mean the
excess of total assets over total
liabilities, determined in accordance
with generally accepted accounting
principles, with the following
adjustments:
(A) there shall be excluded
from assets: (i) notes, accounts
receivable and other obligations
owing to the Borrower from its
officers or other Affiliates, and
(ii) 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.
(B) there shall be excluded
from liabilities: all indebtedness
which is subordinated to the
Obligations under a subordination
agreement in form specified by
Silicon or by language in the
instrument evidencing the
indebtedness which is acceptable to
Silicon in its discretion.
(C) the obligations of
Borrower in respect of the Series J
Preferred Stock issued by Borrower
to Sun Healthcare shall be excluded
from liabilities so long as Borrower
does not make any payments (other
than in stock of Borrower) in
respect of such obligations; it
being acknowledged and agreed that
such payments are restricted under
Section 5.5 hereof."
-5-
5. FEE. In consideration for Silicon entering into this Amendment,
Borrower shall concurrently pay Silicon a fee in the amount of $100,000 (i.e.,
1% of the Maximum Credit Limit), which shall be non-refundable and in addition
to all interest and other fees payable to Silicon under the Loan Documents.
Silicon is authorized to charge said fee to Borrower's loan account.
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.
7. AMENDMENT TO XXXXXX INTERCREDITOR AGREEMENT. Borrower hereby covenants
and agrees that, during the 60 days following the execution and delivery of this
Amendment (or, if earlier, by August 15, 2001), Borrower shall use commercially
reasonable efforts to deliver to Silicon an amendment to that certain
Intercreditor Agreement, dated as of January 29, 1999, between Silicon and
Xxxxxx Healthcare Corporation, duly executed by Xxxxxx Healthcare Corporation,
which amendment shall be in form and substance satisfactory to Silicon and shall
be in full force and effect.
[remainder of page intentionally left blank; signature page follows]
-6-
8. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and Borrower, and the
other written documents and agreements between Silicon and 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
Borrower shall continue in full force and effect and the same are hereby
ratified and confirmed.
BORROWER: SILICON:
XXXXXXXX.XXX SILICON VALLEY BANK
BY /s/ Xxxxxx X. Xxxxxx BY /s/ Xxxxxxx Xxxxxx
---------------------------------- -----------------------------
PRESIDENT OR VICE PRESIDENT TITLE VP, Market Manager
--------------------------
BY
----------------------------------
SECRETARY OR ASS'T SECRETARY
-7-
