EXHIBIT 10.61
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Agreement")
dated as of December 29, 2003, between SILICON VALLEY BANK, a California
chartered bank, with its principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx
Xxxxx, Xxxxxxxxxx 00000 and with a loan production office located at One Newton
Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
doing business under the name "Silicon Valley East" ("Bank") and IBASIS, INC., a
Delaware corporation with its chief executive office located at 00 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 ("Borrower"), provides the terms on
which Bank shall lend to Borrower and Borrower shall repay Bank. The parties
agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be constructed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including" (or includes) without
limitation," in this or any Loan Document. Capitalized terms in this Agreement
shall have the meanings set forth in Section 13.
2 LOAN AND TERMS OF PAYMENT
2.1 PROMISE TO PAY. Borrower hereby unconditionally promises to pay Bank
the unpaid principal amount of all Credit Extensions and interest on the unpaid
principal amount of the Credit Extensions as and when due in accordance with
this Agreement.
2.1.1 REVOLVING ADVANCES.
(a) AVAILABILITY. Bank shall make Advances to Borrower not
exceeding (i) the lesser of (A) the Revolving Line or (B) the Borrowing Base,
minus (ii) the amount of all outstanding Letters of Credit (including drawn but
unreimbursed Letters or Credit), minus (iii) the FX Reserve, and minus (iv) the
aggregate outstanding Advances hereunder (including any Cash Management
Services). Amounts borrowed under this Section may be repaid and reborrowed
during the term of this Agreement.
(b) BORROWING PROCEDURE. To obtain an Advance, Borrower must
notify Bank by facsimile or telephone by 3:00 p.m. Eastern time on the Business
Day the Advance is to be made. If such notification is by telephone, Borrower
must promptly confirm the notification by delivering to Bank a completed
Payment/Advance Form in the form attached as EXHIBIT B. Bank shall credit
Advances to Borrower's deposit account. Bank may make Advances under this
Agreement based on instructions from a Responsible Officer or his or her
designee or without instructions if the Advances are necessary to meet
Obligations which have become due. Bank may rely on any telephone notice given
by a person whom Bank believes is a Responsible Officer or designee. Borrower
shall indemnify Bank for any loss Bank suffers due to such reliance, except to
the extent caused by Bank's gross negligence or willful misconduct.
(c) TERMINATION; REPAYMENT. The Revolving Line terminates on the
Revolving Maturity Date, whereon the principal amount of all Advances and the
unpaid interest thereon, shall be immediately due and payable.
2.1.2 LETTERS OF CREDIT SUBLIMIT.
(a) Bank shall issue or have issued Letters of Credit for
Borrower's account not exceeding (i) the lesser of the Revolving Line or the
Borrowing Base minus (ii) the outstanding principal balance of any Advances
(including any Cash Management Services), minus (iii) the amount of all Letters
of Credit (including drawn but unreimbursed Letters of Credit), plus an amount
equal to any Letter of Credit Reserves. The face amount of outstanding Letters
of Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve) may not exceed $6,500,000.00. Each Letter of Credit shall have
an expiry date no later than 180 days after the Revolving Maturity Date provided
Borrower's Letter of Credit reimbursement obligation shall be secured by cash on
terms acceptable to Bank on and after (i) the Revolving Maturity Date if not
extended by Bank, or (ii) the occurrence of an Event of Default hereunder. All
Letters of Credit shall be, in form and substance, acceptable to Bank in its
sole discretion and shall be
subject to the terms and conditions of Bank's form of standard Application and
Letter of Credit Agreement. Borrower agrees to execute any further documentation
in connection with the Letters of Credit as Bank may reasonably request.
(b) The obligation of Borrower to immediately reimburse Bank for
drawings made under Letters of Credit shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement and such Letters of Credit, under all circumstances whatsoever.
Borrower shall indemnify, defend, protect, and hold Bank harmless from any loss,
cost, expense or liability, including, without limitation, reasonable attorneys'
fees, arising out of or in connection with any Letters of Credit, except to the
extent caused by Bank's gross negligence or willful misconduct.
(c) Borrower may request that Bank issue a Letter of Credit
payable in a currency other than United States Dollars. If a demand for payment
is made under any such Letter of Credit, Bank shall treat such demand as an
Advance to Borrower of the equivalent of the amount thereof (plus cable charges)
in United States currency at the then prevailing rate of exchange in San
Francisco, California, for sales of that other currency for cable transfer to
the country of which it is the currency.
(d) Upon the issuance of any letter of credit payable in a
currency other than United States Dollars, Bank shall create a reserve (the
"Letter of Credit Reserve") under the Revolving Line for letters of credit
against fluctuations in currency exchange rates, in an amount equal to ten
percent (10%) of the face amount of such letter of credit. The amount of such
reserve may be amended by Bank from time to time to account fro fluctuations in
the exchange rate. The availability of funds under the Revolving Line shall be
reduced by the amount of such reserve for so long as such letter of credit
remains outstanding.
2.1.3 FOREIGN EXCHANGE SUBLIMIT. If there is availability under the
Revolving Line and the Borrowing Base, then Borrower may enter in foreign
exchange forward contracts with the Bank under which Borrower commits to
purchase from or sell to Bank a set amount of foreign currency more than one
business day after the contract date (the "FX Forward Contract"). Bank shall
subtract 10% of each outstanding FX Forward Contract from the foreign exchange
sublimit, which sublimit is a maximum of $6,500,000.00 (the "FX Reserve"). The
total FX Forward Contracts at any one time may not exceed 10 times the amount of
the FX Reserve. Bank may terminate the FX Forward Contracts if an Event of
Default occurs.
2.1.4 CASH MANAGEMENT SERVICES SUBLIMIT. Borrower may use up to
$6,500,000.00 for the Bank's Cash Management Services, which may include
merchant services, direct deposit of payroll, business credit card, and check
cashing services identified in the various cash management services agreements
related to such Cash Management Services (the "Cash Management Services"). Such
aggregate amounts utilized under the Cash Management Services Sublimit shall at
all times reduce the amount otherwise available for Credit Extensions under the
Revolving Line. Any amounts Bank pays on behalf of Borrower or any amounts that
are not paid by Borrower for any Cash Management Services will be treated as
Advances under the Revolving Line and will accrue interest at the interest rate
applicable to Advances.
2.2 OVERADVANCES. If Borrower's Obligations under Section 2.1.1, 2.1.2,
2.1.3 and 2.1.4 exceed the lesser of either (i) the Revolving Line or (ii) the
Borrowing Base, Borrower must immediately pay in cash to Bank the excess.
2.3 INTEREST RATE; PAYMENTS.
(a) INTEREST RATE. The principal amounts outstanding under the
Revolving Line shall accrue interest at a per annum rate equal to the aggregate
of the Prime Rate PLUS one percent (1.0%). After an Event of Default,
Obligations shall bear interest at three percent (3.0%) above the rate effective
immediately before the Event of Default. The applicable interest rate hereunder
shall increase or decrease when the Prime Rate changes. Interest is computed on
the basis of a 360 day year for the actual number of days elapsed.
(b) PAYMENTS. Interest is payable on the first of each month.
Payments received after 3:00 p.m. Eastern time are considered received at the
opening of business on the next Business Day. When a payment is due on
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a day that is not a Business Day, the payment is due the next Business Day and
additional fees or interest, as applicable, shall continue to accrue.
(c) DEBIT OF ACCOUNTS. Bank may debit any of Borrower's deposit
accounts including Account Number _______________ for principal and interest
payments or any amounts Borrower owes Bank. Bank shall promptly notify Borrower
when it debits Borrower's accounts. These debits are not a set-off.
(d) REVOLVING LINE CLEAN-UP. Without notice or demand by Bank,
Borrower shall repay all Advances (not to include the face amount of any issued
but undrawn Letters of Credit) maintaining a zero dollar ($0.00) balance for a
period of forty-five (45) consecutive days during each calendar quarter during
the term hereof, and not request additional Advances during such forty-five (45)
day period.
2.4 FEES. Borrower shall pay to Bank:
(a) FACILITY FEE. A fully earned, non-refundable facility fee of
$38,000.00 due on the Closing Date; and
(b) LETTER OF CREDIT FEE. The Borrower shall pay the Bank's
customary fees and expenses for the issuance of Letter of Credit,
including, without limitation, a Letter of Credit Fee of one percent (1.0%)
per annum of the face amount of each Letter of Credit issued, upon the
issuance or renewal of such Letter of Credit by the Bank;
(c) UNUSED LINE FEE. In the event, in any calendar quarter, the
average daily principal balance of the Revolving Line (including the face
amount of issued but undrawn Letter of Credit) outstanding during the
quarter is less than $15,000,000.00, Borrower shall pay Bank an unused line
fee in an amount equal to 0.25% per annum on the difference between
$15,000,000.00 and the average daily principal balance of the Revolving
Credit (including the face amount of issued but undrawn Letters of Credit)
outstanding during the quarter, which unused line fee shall be computed and
paid quarterly, in arrears, on the first day of the following quarter.
(d) BANK EXPENSES. All Bank Expenses (including reasonable
attorneys' fees and expenses incurred through and after the Closing Date)
when due.
3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION. The Bank's
obligation to make the initial Credit Extension is subject to the condition
precedent that Bank shall have received, in form and substances satisfactory to
Bank, the following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower with respect to
articles, bylaws, incumbency and resolutions authorizing the execution and
delivery of this Agreement;
(c) guaranties by the Guarantor(s);
(d) insurance certificate;
(e) payment of the fees and Bank Expenses then due specified in
Section 2.4 hereof;
(f) Certificate of Foreign Qualification;
(g) Certificate of Good Standing/Legal Existence; and
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(h) such other documents, and completion of such other matters, as
Bank may reasonably deem necessary or appropriate.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Bank's obligations to
make each Credit Extension, including the initial Credit Extension, is subject
to the following:
(a) timely receipt of any Payment/Advance Form; and
(b) the representations and warranties in Section 5 shall be
materially true on the date of the Payment/Advance Form and on the
effective date of each Credit Extension and no Event of Default shall have
occurred and be continuing, or result from the Credit Extension. Each
Credit Extension is Borrower's representation and warranty on that date
that the representations and warranties in Section 5 remain true.
4 CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants Bank, to secure the
payment and performance in full of all of the Obligations and the performance of
each of Borrower's duties under the Loan Documents, a continuing security
interest in, and pledges and assigns to the Bank, the Collateral, wherever
located, whether now owned or hereafter acquired or arising, and all proceeds
and products thereof. Borrower warrants and represents that the security
interest granted herein shall be a first priority security interest in the
Collateral.
Except as noted on the Schedule, Borrower is not a party to, nor is bound by,
any material license or other agreement with respect to which the Borrower is
the licensee that prohibits or otherwise restricts Borrower from granting a
security interest in Borrower's interest in such license or agreement or any
other property. Without prior consent from Bank, Borrower shall not enter into,
or become bound by, any such license or agreement which is reasonably likely to
have a material impact on Borrower's business or financial condition. Borrower
shall take such steps as Bank requests to obtain the consent of, or waiver by,
any person whose consent or waiver is necessary for all such licenses or
contract rights to be deemed "Collateral" and for Bank to have a security
interest in it that might otherwise be restricted or prohibited by law or by the
terms of any such license or agreement, whether now existing or entered into in
the future.
If the Agreement is terminated, Bank's lien and security interest in the
Collateral shall continue until Borrower fully satisfies its Obligations. If
Borrower shall at any time, acquire a commercial tort claim, Borrower shall
promptly notify Bank in a writing signed by Borrower of the brief details
thereof and grant to Bank in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance satisfactory to Bank.
4.2 AUTHORIZATION TO FILE FINANCING STATEMENTS. Borrower hereby authorizes
Bank to file financing statements, without notice to Borrower, with all
appropriate jurisdictions in order to perfect or protect Bank's interest or
rights hereunder, which financing statements may indicate the Collateral as
"all assets of the Debtor" or words of similar effect, or as being of an equal
or lesser scope, or with greater detail, all in Bank's discretion.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION. Borrower and each Subsidiary is
duly existing and in good standing in its state of formation and qualified and
licensed to do business in, and in good standing in, any state in which the
conduct of its business or its ownership of property requires that it be
qualified except where the failure to do so could not reasonably be expected to
cause a Material Adverse Change. The Borrower represents and warrants to the
Bank that: (a) the Borrower's exact legal name is that indicated on the
Perfection Certificate and on the signature page hereof; and (b) the Borrower is
an organization of the type, and is organized in the jurisdiction, set forth in
the Perfection Certificate; and (c) the Perfection Certificate accurately sets
forth the Borrower's organizational identification number
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or accurately states that the Borrower has none; and (d) the Perfection
Certificate accurately sets forth the Borrower's place of business, or, if more
than one, its chief executive office as well as the Borrower's mailing address
if different, and (e) all other information set forth on the Perfection
Certificate pertaining to the Borrower is accurate and complete. If the Borrower
does not now have an organizational identification number, but later obtains
one, Borrower shall forthwith notify the Bank of such organizational
identification number.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's organizational documents,
nor constitute an event of default under any material agreement by which
Borrower is bound. Borrower is not in default under any agreement to which or by
which it is bound in which the default could reasonably be expected to cause a
Material Adverse Change.
5.2 COLLATERAL. Borrower has good title to the Collateral, free of Liens
except Permitted Liens. Borrower has no deposit account, other than the deposit
accounts with Bank and deposit accounts described in the Perfection Certificate
delivered to the Bank in connection herwith. The Accounts are bona fide,
existing obligations, and the service or property has been performed or
delivered to the account debtor or its agent for immediate shipment to and
unconditional acceptance by the account debtor. The Collateral is not in the
possession of any third party bailee (such as a warehouse). Except as hereafter
disclosed to the Bank in writing by Borrower, none of the components of the
Collateral shall be maintained at locations other than as provided in the
Perfection Certificate. In the event that Borrower, after the date hereof,
intends to store or otherwise deliver any portion of the Collateral to a bailee,
then Borrower will first receive the written consent of Bank and such bailee
must acknowledge in writing that the bailee is holding such Collateral for the
benefit of Bank. Borrower has no knowledge of any actual or imminent Insolvency
Proceeding of any account debtor whose accounts are an Eligible Account in any
Borrowing Base Certificate. All Inventory is in all material respects of good
and marketable quality, free from material defects. Borrower is the sole owner
of the Intellectual Property, except for non-exclusive licenses granted to its
customers in the ordinary course of business. Each Patent is valid and
enforceable and no part of the Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Intellectual Property violates the rights of any third party except to the
extent such claim could not reasonably be expected to cause a Material Adverse
Change.
5.3 LITIGATION. Except as shown in the Schedule, there are no actions or
proceedings pending or, to the knowledge of Borrower's Responsible Officers or
legal counsel, threatened by or against Borrower or any Subsidiary in which an
adverse decision could reasonably be expected to cause a Material Adverse
Change.
5.4 NO MATERIAL DEVIATION IN FINANCIAL STATEMENTS. All consolidated
financial statements for Borrower and any Subsidiary delivered to Bank fairly
present in all material respects Borrower's consolidated financial condition and
Borrower's consolidated results of operations. There has not been any material
deterioration in Borrower's consolidated financial condition since the date of
the most recent financial statements submitted to Bank.
5.5 SOLVENCY. Borrower is able to pay its debts (including trade debts) as
they mature.
5.6 REGULATORY COMPLIANCE. Borrower is not an "investment company" or a
company "controlled" by an "investment company" under the Investment Company
Act. Borrower is not engaged as one of its important activities in extending
credit for margin stock (under Regulations T and U of the Federal Reserve Board
of Governors). To Borrower's knowledge, Borrwer has complied in all material
respects with the Federal Fair Labor Standards Act. To Borrower's knowledge,
Borrower has not violated any laws, ordinances or rules, the violation of which
could reasonably be expected to cause a Material Adverse Change. None of
Borrower's or any Subsidiary's properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary has timely filed all required
tax returns and paid, or made adequate provision to pay, all material taxes,
except those being contested in good faith with adequate reserves under GAAP.
Borrower and each Subsidiary has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all government authorities that are necessary to continue its business as
currently conducted except where the failure to make such declarations, notices
or filings would not reasonably be expected to cause a Material Advserse Change.
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5.7 SUBSIDIARIES. Borrower does not own any stock, partnership interest or
other equity securities except for Permitted Investments.
5.8 FULL DISCLOSURE. No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank
taken together with all such written certificates and written statements given
to Bank contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not viewed as facts and that actual results during the period or
periods covered by such projections and forecasts may differ from the projected
or forecasted results).
6 AFFIRMATIVE COVENANTS
Borrower shall do all of the following:
6.1 GOVERNMENT COMPLIANCE. Borrower shall maintain its and all
Subsidiaries' legal existence and good standing in its jurisdiction of formation
and maintain qualification in each jurisdiction in which the failure to so
qualify would reasonably be expected to have a material adverse effect on
Borrower's business or operations. Borrower shall comply, and have each
Subsidiary comply, with all laws, ordinances and regulations to which it is
subject, noncompliance with which could have a material adverse effect on
Borrower's business or operations or would reasonably be expected to cause a
Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower shall deliver to Bank: (i) as soon as available, but
no later than thirty(30) days after the last day of each month, a company
prepared consolidated balance sheet and income statement covering Borrower's
consolidated operations during the period certified by a Responsible Officer and
in a form acceptable to Bank; (ii) as soon as available, but no later than one
hundred twenty (120) days after the last day of Borrower's fiscal year, audited
consolidated financial statements prepared under GAAP, consistently applied,
certified by an independent certified public accounting firm reasonably
acceptable to Bank; (iii) within five (5) days of filing, copies of all
statements, reports and notices made available to Borrower's security holders or
to any holders of Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K
filed with the Securities and Exchange Commission; (iv) a prompt report of any
legal actions pending or threatened against Borrower or any Subsidiary that
could result in damages or costs to Borrower or any Subsidiary of $250,000 or
more; (v) prompt notice of any material change in the composition of the
Intellectual Property, or the registration of any copyright, including any
subsequent ownership right of Borrower in or to any Copyright, Patent or
Trademark not shown in any intellectual property security agreement between
Borrower and Bank or knowledge of an event that materially adversely affects the
value of the Intellectual Property; and (vi) budgets, sales projections,
operating plans or other financial information reasonably requested by Bank.
(b) Within fifteen (15) days after the last day of each month,
Borrower shall deliver to Bank a Borrowing Base Certificate signed by a
Responsible Officer in the form of EXHIBIT C, with aged listings of accounts
receivable (by invoice date).
(c) Within thirty (30) days after the last day of each month,
Borrower shall deliver to Bank with the monthly financial statements a
Compliance Certificate signed by a Responsible Officer in the form of EXHIBIT D.
(d) Allow Bank to audit Borrower's Collateral at Borrower's
expense. Such audits shall be conducted no more than once every twelve (12)
months unless an Event of Default has occurred and is continuing.
6.3 INVENTORY;RETURNS. Borrower shall keep all Inventory in good and
marketable condition, free from material defects. Returns and allowances between
Borrower and its accounts debtors shall follow Borrower's customary
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practices as they exist at the Closing Date. Borrower must promptly notify Bank
of all returns, recoveries, disputes and claims that involve more than Fifty
Thousand Dollars ($50,000.00).
6.4 TAXES. Borrower shall make, and cause each Subsidiary to make, timely
payment of all material federal, state, and local taxes or assessments (other
than taxes and assessments which Borrower is contesting in good faith, with
adequate reserves maintained in accordance with GAAP) and will deliver to Bank,
on demand, appropriate certificates attesting to such payments.
6.5 INSURANCE. Borrower shall keep its business and the Collateral insured
for risks and in amounts, and as Bank may reasonably request. Insurance policies
shall be in a form, with companies, and in amounts that are reasonably
satisfactory to Bank. All property polices shall have a lender's loss payable
endorsement showing Bank as an additional loss payee and all liability policies
shall show the Bank as an additional insured and all policies shall provide that
the insurer must give Bank at least twenty (20) days notice before canceling its
policy. At Bank's request, Borrower shall deliver certified copies of policies
and evidence of all premium payments. Proceeds payable under any policy shall,
at Bank's option, be payable to Bank on account of the Obligations.
Notwithstanding the foregoing, so long as no Event of Default has occurred and
is continuing, Borrower shall have the option of applying the proceeds of any
casualty policy up to $250,000.00, in the aggregate, toward the replacement or
repair of destroyed or damaged property; provided that (i) any such replaced or
repaired property (a) shall be of equal or like value as the replaced or
repaired Collateral and (b) shall be deemed Collateral in which Bank has been
granted a first priority security interest and (ii) after the occurrence and
during the continuation of an Event of Default all proceeds payable under such
casualty policy shall, at the option of the Bank, be payable to Bank on account
of the Obligations. If Borrower fails to obtain insurance as required under
Section 6.5 or to pay any amount or furnish any required proof of payment to
third persons and the Bank, Bank may make all or part of such payment or obtain
such insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent, in its business judgment.
6.6 ACCOUNTS. In order to permit the Bank to monitor the Borrower's
financial performance and condition, Borrower, and all Borrower's Subsidiaries',
shall maintain all of Borrower's, and such Subsidiaries', depository operating,
and securities accounts with Bank. Any Guarantor shall maintain ALL depository,
operating and securities accounts with Bank.
6.7 FINANCIAL COVENANTS.
(a) UNRESTRICTED CASH AT BANK. Borrower shall maintain, at all
times, minimum unrestricted cash or cash equivalents at Bank of
$5,000,000.00.
(b) MAXIMUM NET LOSS. Borrower shall have maximum quarterly net
loss as follows:
(i) ($7,000,000.00) for the quarter ending
September 30,2003;
(ii) ($4,700,000.00) for the quarter ending
December 31, 2003;
(iii) ($4,500,000.00) for the quarter ending
March 31, 2004;
(iv) ($3,000,000.00) for the quarter ending June 30, 2004;
and
(v) ($1,000,000.00) for the quarter ending
September 30, 2004.
(c) MINIMUM NET PROFIT. Effective as of October 1, 2004 and to be
tested as of the last day of each calendar quarter thereafter, Borrower
shall have minimum quarterly net profit of at least one dollar ($1.00).
For the purposes of calculating net loss/net profit hereunder, the
following items shall be excluded (i) the amount of the write-off of Sonexis
investment, not to exceed $5,000,000, (ii) any charge in respect of change in
accounting for stock options relating to FAS 148, and (iii) any gain on troubled
debt restructuring.
6.8 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS. Borrower shall not
register any Copyrights or Mask Works in the United States Copyright Office
unless it: (i) has given at least fifteen (15) days' prior notice to Bank of its
intent to register such Copyrights or Mask Works and has provided Bank with a
copy of the application it intends to file
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with the United States Copyright Office (excluding exhibits thereto); (ii)
executes a security agreement/IP Agreement or such other documents as Bank may
reasonably request in order to maintain the perfection and priority of Bank's
security interest in the Copyrights proposed to be registered with the United
States Copyright Office; and (iii) records such security agreement/IP Agreement
with the United States Copyright Office contemporaneously with filing the
Copyright application(s) with the United States Copyright Office. Borrower shall
promptly provide to Bank a copy of the Copyright application(s) filed with the
United States Copyright Office, together with evidence of the recording of an
amendment to the IP Agreement necessary for Bank to maintain the perfection and
priority of its security interest in such Copyrights or Mask Works. Borrower
shall provide written notice to Bank of any application filed by Borrower in the
United States Patent Trademark Office for a patent or to register a trademark or
service xxxx within 30 days of any such filing. In addition, Borrower shall
comply with all terms of the IP Agreement.
6.9 FURTHER ASSURANCES. Borrower shall execute any further instruments and
take further action as Bank reasonably requests to perfect or continue Bank's
security interest in the Collateral or to effect the purposes of this Agreement.
7 NEGATIVE COVENANTS
Borrower shall not do any of the following without the Bank's prior written
consent:
7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise dispose of
(collectively a "Transfer"), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property, except for Transfers (i) of Inventory
in the ordinary course of business; (ii) of non-exclusive licenses and similar
arrangements for the use of the property of Borrower or its Subsidiaries in the
ordinary course of business; or (iii) of worn-out or obsolete Equipment.
7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.
Engage in or permit any of its Subsidiaries to engage in any business other than
the businesses currently engaged in by Borrower or reasonably related thereto,
or have a material change in its ownership or management. Borrower shall not,
without at least fifteen(15) days prior written notice to Bank: (i) relocate its
chief executive office, or add any new offices or business locations, including
warehouses (unless such new offices or business locations contain less than Five
Thousand Dollars ($5,000.00) in Borrower's assets or property), or (ii) change
its jurisdiction or organization, or (iii) change its organizational structure
or type, or (iv) change its legal name, or (v) change any organizational number
(if any) assigned by its jurisdiction of organization.
7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person; provided, however, Subsidiaries may
merge together or into Borrower.
7.4 INDEBTEDNESS. Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.
7.5 ENCUMBRANCE. Create, incur, or allow any Lien on any of its property,
or assign or convey any right to receive income, including the sale of any
Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interest granted herein. The Collateral may also be subject to Permitted Liens.
7.6 DISTRIBUTIONS; INVESTMENTS. (i) Directly or indirectly acquire or own
any Person, or make any Investment in any Person, other than Permitted
Investments, or permit any of its Subsidiaries to do so; or (ii) pay any
dividends or make any distribution or payment or redeem, retire or purchase any
capital stock.
7.7 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower, except
for transactions that are in the ordinary course of Borrower's business,
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upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a non-affiliated Person.
7.8 SUBORDINATED DEBT. Make or permit any payment on any Subordinated
Debt, except pursuant to the terms of the Subordinated Debt, or amend any
material provision in any document relating to the Subordinated Debt, without
Bank's prior written consent. Borrower and Bank hereby acknowledge and agree
that the Obligations are and shall at all times constitute "Designated Senior
Indebtedness" of Borrower with respect to each of its subordinated creditors,
including, without limitation, those subordinated creditors party to a certain
Indenture dated March 15, 2000 (the "Indenture"). Borrower hereby represents,
warrants and certifies that it has, on or about November 25, 2002, delivered to
the Trustee under the Indenture a notice in accordance with the terms of the
Indenture to confirm that the Obligations constitute Designated Senior
Indebtedness. Borrower hereby agrees that it will not materially modify any of
the terms and conditions of the Indenture without Bank's prior written consent
in each instance. Borrower shall not make any payments of any kind (including,
without limitation, pursuant to Section 13.1 of the Indenture) to, or for the
benefit of, any of the subordinated debt holders or the Trustee under the
Indenture without Bank's prior written consent in each instance; provided,
however, prior to the occurrence of an Event of Default, Borrower may make
regularly scheduled payments of interest in accordance with the terms of the
Indenture. Notwithstanding the foregoing or the terms of such Subordinated Debt,
Borrower shall be permitted to prepay principal amounts outstanding under
Subordinated Debt solely with the cash proceeds raised from the issuance of
equity in Borrower after the date hereof, provided that at the time of such
payment there is no Event of Default then existing or an event existing that
with the giving of notice or the lapse of time, or both, will be an Event of
Default, or no Event of Default would exist immediately after the making of such
payment.
7.9 COMPLIANCE. Become an "investment company" or a company, controlled by
an "investment company", under the Investment Company Act of 1940 or undertake
as one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Credit Extension for that purpose; fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the
Federal Fair Labor Standards Act or violate any other law or regulation, if the
violation could reasonably be expected to have a material adverse effect on
Borrower's business or operations or would reasonably be expected to cause a
Material Adverse Change, or permit any of its Subsidiaries to do so.
8. EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1 PAYMENT DEFAULT. Borrower fails to pay any of the Obligations within
three (3) days after their due date. During such three (3) day period the
failure to cure the default shall not constitute an Event of Default (but no
Credit Extension shall be made during such period);
8.2 COVENANT DEFAULT. Borrower fails or neglects to perform any obligation
in Section 6 or violates any covenant in Section 7 or fails or neglects to
perform, keep, or observe any other material term, provision, condition,
covenant or agreement contained in this Agreement, any Loan Documents, or in any
present or future agreement between Borrower and Bank and so to any default
under such other material term, provision, condition, covenant or agreement that
can be cured, has failed to cure the default within ten (10) days after the
occurrence thereof; provided, however, that if the default cannot by its nature
be cured within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is likely to
be cured within a reasonable time, then Borrower shall have an additional period
(which shall not in any case exceed thirty (30) days) to attempt to cure such
default, and within such reasonable time period the failure to cure the default
shall not be deemed an Event of Default (but no Credit Extensions shall be made
during such cure period). Grace periods provided under this section shall not
apply, among other things, to financial covenants or any other covenants that
are required to be satisfied, completed or tested by a date certain.
8.3 MATERIAL ADVERSE CHANGE. A Material Adverse Change occurs;
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8.4 ATTACHMENT. (i) Any material portion of Borrower's assets is attached,
seized, levied on, or comes into possession of a trustee or receiver and the
attachment, seizure or levy is not removed in ten (10) days; (ii) the service of
process upon the Borrower seeking to attach, by trustee or similar process, any
funds of the Borrower on deposit with the Bank, or any entity under control of
Bank (including a subsidiary); (iii) Borrower is enjoined, restrained, or
prevented by court order from conducting a material part of its business; (iv) a
judgment or other claim becomes a Lein on a material portion of Borrowers
assets; or (v) a notice of lein, levy, or assessment is filed against any of
Borrower's assets by any government agency and not paid within ten (10) days
after Borrower receives notice. These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Credit Extentions shall be
made during the cure period);
8.5 INSOLVENCY. (i) Borrower becomes insolvent; (ii) Borrower begins an
Insolvency Proceeding; or (iii) an Insolvency Proceeding is begun against
Borrower and not dismissed or stayed within thirty (30) days (but no Credit
Extensions shall be made before any Insolvency proceeding is dismissed);
8.6 OTHER AGREEMENTS. If there is a default in any agreement to which
Borrower is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indedtness in an amount in excess of $250,000.00 or that could result in a
material Adverse Change;
8.7 JUDGEMENTS. If a judgment or judgments for the payment of money in an
amount, individually or in the aggregate, of at least Two Hundred Thousand
Dollars ($200,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of ten (10) days (provided that no Credit
Extensions will be made prior to the satisfaction or stay of such judgment);
8.8 MISREPRESENTATIONS. If Borrower or any Person acting for Borrower
makes any material misrepresentation or material misstatement now or later in
any warranty or representation in this Agreement or in any writing delivered to
Bank or to induce Bank to enter this Agreement or any Loan Document.
8.9 GUARANTY. (i) Any guaranty of any Obligations terminates or ceases for
any reason to be full force; or (ii) any Guarantor does not perform any
obligation under any guaranty of the Obligations; or (iii) any material
misrepresentation or material misstatement exists now or later in any warranty
or representation in any guaranty of the Obligations or in any certificate
delivered to Bank in connection with the guaranty; or (iv) any circumstance
described in section 7, or Sections 8.4, 8.5 or 8.7 occurs to any Guarantor, or
(v) the liquidation, winding up, termination of existence, or insolvency of any
Guarantor.
9 BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES. When an Event of Default occurs and continues
Bank may, without notice or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an
Event of default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's
benefit under this Agreement or under any other agreement between Borrower and
Bank;
(c) Settle or adjust disputes and claims directly with account
debtors for amounts, on terms and in any order that Bank considers advisable in
its commercially reasonable judgment and notify any Person owing Borrower money
of Bank's security interest in such funds and verify the amount of such account.
Borrower shall collect all payments in trust for Bank and, if requested by Bank,
immediately deliver the payments to Bank in the form received from the account
debtor, with proper endorsements for deposit;
(d) Make any payments and do any acts it considers necessary or
reasonable in its commercially reasonable judgment to protect its security
interest in the Collateral. Borrower shall assemble the Collateral if Bank
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requests and make it available as Bank designates. Bank may enter premises where
the Collateral is located, take and maintain possession of any part of the
Collateral, and pay, purchase, contest, or compromise any Lien which appears to
be prior or superior to its security interest and pay all expenses incurred.
Borrower grants Bank a license to enter and occupy any of its premises, without
charge, to exercise any of Bank's rights or remedies;
(e) Apply to the Obligations any (i) balances and deposits of
Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or
the account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby
granted a non-exclusive, royalty-free license or other right to use, without
charge, Borrower's labels, patents, copyrights, mask works, rights of use of any
name, trade secrets, trade names, trademarks, service marks, and advertising
matter, or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section, borrower's
rights under all licenses and all franchise agreements inure to Bank's benefit;
(g) Bank may place a "hold" on any account maintained with Bank
and/or deliver a notice of exclusive control, any entitlement order, or other
directions or instructions pursuant to any control agreement or similar
agreements providing control of any Collateral; and
(h) Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY. Borrower hereby irrevocably appoints Bank as its
lawful attorney-in-fact, to be effective upon the occurrence and during the
continuance of an Event of Default, to: (i) endorse Borrower's name on any
checks or other forms of payment or security; (ii) sign Borrower's name on any
invoice or xxxx of lading for any Account or drafts against account debtors;
(iii) settle and adjust disputes and claims about the Accounts directly with
account debtors, for amounts and on terms Bank determines reasonable; (iv) make,
settle, and adjust all claims under Borrower's insurance policies; and (v)
transfer the Collateral into the name of Bank or a third party as the Code
permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign
Borrower's name on any documents reasonably necessary to perfect or continue the
perfection of any security interest regardless of whether an Event of Default
has occurred until all obligations have been satisfied in full and Bank is under
no further obligation to make Credit Extensions hereunder. Bank's foregoing
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Credit Extensions
terminates.
9.3 ACCOUNT NOTIFICATION/COLLECTION. In the event that an Event of Default
occurs and is continuing, Bank may notify any Person owing Borrower money of
Bank's security interest in the funds and verify and /or collect the amount of
the Account. After the occurrence of an Event of Default, any amounts received
by Borrower shall be held in trust by Borrower for Bank, and, if requested by
Bank, Borrower shall immediately deliver such receipts to Bank in the form
received from the account debtor, with proper endorsements for deposit.
9.4 BANK EXPENSES. Any amounts paid by Bank as provided herein are Bank
Expenses and are immediately due and payable, and shall bear interest at the
then applicable rate and be secured by the Collateral. No payments by Bank shall
be deemed an agreement to make similar payments in the future or Bank's waiver
of any Event of Default.
9.5 BANK'S LIABILITY FOR COLLATERAL. So long as the Bank complies with
reasonable banking practices regarding the safekeeping of collateral, the Bank
shall not be liable or responsible for: (a) the safekeeping of the Collateral;
(b) any loss or damage to the Collateral; (c) any diminution in the value of the
Collateral; or (d) any act or default of any carrier, warehouseman, xxxxxx, or
other person. Except as described above, Borrower bears all risk of loss, damage
or destruction of the Collateral.
9.6 REMEDIES CUMULATIVE. Bank's rights and remedies under this Agreement,
the Loan Documents, and all other agreements are cumulative. Bank has all rights
and remedies provided under the Code, by law, or in equity.
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Bank's exercise of one right or remedy is not an election, and Bank's waiver of
any Event of Default is not a continuing waiver. Bank's delay is not a waiver,
election, or acquiescence. No waiver hereunder shall be effective unless signed
by Bank and then is only effective for the specific instance and purpose for
which it was given.
9.7 DEMAND WAIVER. Borrower waives demand, notice of default or dishonor,
notice of payment and nonpayment; notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.
10. NOTICES
All notices or demands by any party to this Agreement or any other related
agreement must be in writing and be personally delivered or sent by an overnight
delivery service, by certified mail, postage prepaid, return receipt requested,
or by telefacsimile at the addresses listed below. Either Bank or Borrower may
change its notice address by giving the other party written notice
If to Borrower: IBASIS, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: _____________________
FAX: _____________________
If to Bank: Silicon Valley Bank
One Newton Executive Park, Suite 200
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Mr. Xxxxxxxx Xxxx
Fax: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esquire
FAX: (000) 000-0000
11. CHOICE OF LAW, VENUE AND JURY TRAIL WAIVER
Massachusetts's law governs the Loan Documents without regard to principles
of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Massachusetts; provided, however, that if for
any reason Bank cannot avail itself of such courts in the Commonwealth of
Massachusetts, Borrower accepts jurisdiction of the courts and venue in Santa
Xxxxx County, California. NOTWITHSTANDING THE FOREGOING, THE BANK SHALL HAVE
THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY
IN THE COURTS OF ANY OTHER JURISDICTION WHICH THE BANK DEEMS NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE
BANK'S RIGHTS AGAINST THE BORROWER OR ITS PROPERTY.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS
OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND
ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER
INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12. GENEREAL PROVISIONS
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12.1 SUCCESSORS AND ASSIGNS. This Agreement binds and is for the benefit of
the successors and permitted assigns of each party. Borrower may not assign this
Agreement or any rights or Obligations under it without Bank's prior written
consent which may be granted or withheld in Bank's discretion. Bank has the
right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights and benefits under this Agreement, the Loan Documents
or any related agreement.
12.2 INDEMNIFICATION. Borrower hereby indemnifies, defends and holds the
Bank and its officers, employees and agents harmless against: (a) all
obligations, demands, claims, and liabilities asserted by any other party in
connection with the transactions contemplated by the Loan Documents; and (b) all
losses or Bank Expenses incurred, or paid by Bank from, following, or
consequential to transactions between Bank and Borrower (including reasonable
attorneys' fees and expenses), except for losses caused by Bank's gross
negligence or willful misconduct.
12.3 RIGHT OF SET-OFF. Borrower and any guarantor hereby grant to Bank, a
lien, security interest and right of setoff as security for all Obligations to
Bank, whether now existing or hereafter arising upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of the Bank
(including a Bank subsidiary) or in transit to any of them. At any time after
the occurrence and during the continuance of an Event of Default, without demand
or notice, Bank may set off the same or any part thereof and apply the same to
any liability or obligation of Borrower and any guarantor even though unmatured
and regardless of the adequacy of any other collateral securing the Obligations.
ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
12.4 TIME OF ESSENCE. Time is of the essence for the performance of all
Obligations in this Agreement.
12.5 SEVERABILITY OF PROVISION. Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.
12.6 AMENDMENTS IN WRITING; INTEGRATION. All amendments to this Agreement
must be in writing signed by both Bank and Borrower. This Agreement and the Loan
Documents represent the entire agreement about this subject matter, and
supersede prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
into this Agreement and the Loan Documents.
12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, constitute
one Agreement.
12.8 SURVIVAL. All covenants, representations and warranties made in this
Agreement continue in full force while any Obligations remain outstanding. The
obligation of Borrower in Section 12.2 to indemnify Bank shall survive until the
statute of limitations with respect to such claim or cause of action shall have
run.
12.9 CONFIDENTIALITY. In handling any confidential information, Bank shall
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (i) to Bank's
subsidiaries or affiliates in connection with their business with Borrower; (ii)
to prospective transferees or purchasers of any interest in the Credit
Extensions (provided, however, Bank shall use commercially reasonable efforts in
obtaining such prospective transferee's or purchaser's agreement to the terms of
this provision); (iii) as required by law, regulation, subpoena, or other order,
(iv) as required in connection with Bank's examination or audit; and (v) as Bank
considers appropriate in exercising remedies under this Agreement. Confidential
information does not include information that either: (a) is in the public
domain or in Bank's possession when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank; or (b) is disclosed to Bank by a third
party, if Bank does not know that the third party is prohibited from disclosing
the information.
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12.10 RATIFICATION OF IP AGREEMENT. Borrower hereby ratifies, confirms, and
reaffirms, all and singular, the terms and conditions of the IP Agreement and
acknowledges, confirms and agrees that the IP Agreement contains an accurate and
complete listing of all Intellectual Property of Borrower and such IP Agreement
secures all Obligations.
12.11 AMENDED AND RESTATED AGREEMENT. This Agreement amends and restates,
in its entirety, a certain Loan and Security Agreement dated as of December 30,
2002 by and between, among other parties, Bank and Borrower.
12.12 TERMINATION OF EXIM AGREEMENT. Effective upon the repayment of all
obligations and liabilities outstanding thereunder, Borrower and Bank
acknowledge and agree that a certain Export-Import Bank Loan and Security
Agreement dated as of December 30, 2002 by and between, among other parties,
Bank and Borrower shall be terminated.
13 DEFINITIONS
13.1 DEFINITIONS. In this Agreement:
"ACCOUNTS" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its sale or lease of
goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing, as such definition may be amended from time to time according to the
Code.
"ADVANCE" or "ADVANCES" is a loan advance (or advances) under the Revolving
Line.
"AFFILIATE" is a Person that owns or controls directly or indirectly the
Person, any Person that controls or is controlled by or is under common control
with the Person, and each of that Person's senior executive officers, directors,
partners and, for any Person that is a limited liability company, that Person's
managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs or
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"BORROWER'S BOOKS" are all Borrower's books and records including ledgers,
records regarding Borrower's assets or liabilities, the Collateral, business
operations or financial condition and all computer programs or discs or any
equipment containing the information.
"BORROWING BASE" is 75.0% of Eiligible Accounts, as determined by Bank from
Borrower's most recent Borrowing Base Certificate; provided, however, that Bank
may, in its good faith business judgment and upon five (5) Business Days' notice
to Borrower, lower the percentage of the Borrowing Base after performing an
audit of Borrower's Collateral.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on which
the Bank is closed.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the Uniform Commercial Code as adopted in Massachusetts, as
amended and as may be amended and in effect from time to time.
"COLLATERAL" is any and all properties, rights and assets of the Borrower
granted by the Borrower to Bank or arising under the Code, now, or in the
future, in which the Borrower obtains an interest, or the power to transfer
rights, including, without limitation, the property described on EXHIBIT A.
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"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"COPYRIGHTS" are all copyright rights, applications or registrations and
like protections in each work or authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.
"CREDIT EXTENSION" is each Advance, Letter of Credit, F/X Forward Contract,
or any other extension of credit by Bank for Borrower's benefit.
"ELIGIBLE ACCOUNTS" are billed Accounts in the ordinary course of
Borrower's business that meet all Borrower's representations and warranties in
Section 5.2; BUT Bank may, in its good faith business judgment, change
eligibility standards by giving Borrower five (5) Business Days' notice. Unless
Bank agrees otherwise in writing, Eligible Accounts shall not include:
(a) Accounts that the account debtor has not paid within ninety
(90) days of invoice date;
(b) Accounts for an account debtor, fifty percent (50%) or more of
whose Accounts have not been paid within ninety (90) days of invoice date;
(c) Credit balances over ninety (90) days from invoice date;
(d) Accounts for an account debtor, including Affiliates, whose
total obligations to Borrower exceed twenty-five (25%) of all Accounts, for
the amounts that exceed that percentage, unless Bank approves in writing;
(e) Accounts for which the account debtor does not have its
principal place of business in the United States;
(f) Accounts for which the account debtor is a federal, state or
local government entity or any department, agency, or instrumentality
thereof;
(g) Accounts for which Borrower owes the account debtor, but only
up to the amount owed (sometimes called "contra" accounts, accounts
payable, customer deposits or credit accounts);
(h) Accounts for demonstration or promotional equipment, or in
which goods are consigned, sales guaranteed, sale or return, sale on
approval, xxxx and hold, or other terms if account debtor's payment may be
conditional;
(i) Accounts for which the account debtor is Borrower's Affiliate,
officer, employee, or agent;
(j) Accounts in which the account debtor disputes liability or
makes any claim and Bank reasonably believes there may be a basis for
dispute (but only up to the disputed or claimed amount), or if the account
debtor is subject to an Insolvency Proceeding, or becomes insolvent, or
goes out of business;
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(k) Accounts for which Bank reasonably determines collection to be
doubtful.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"ERISA" is the Employment Retirement Income Security Act of 1974, and its
regulations.
"FX FORWARD CONTRACT" is defined in Section 2.1.3.
"FX RESERVE" is defined in Section 2.1.3.
"GAAP" is generally accepted accounting principles.
"GUARANTOR" is any present or future guarantor of the Obligations,
including IBASIS GLOBAL, INC., Delaware corporation and IBASIS SECURITIES
CORPORATION, a Massachusetts corporation.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred price
of property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" is any proceeding by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INTELLECTUAL PROPERTY" is
(a) Copyrights, Trademarks, Patents, and Mask Works including
amendments, renewals, extensions and all licenses or other rights to use
and all license fees and royalties from the use;
(b) Any trade secrets and any Intellectual Property rights in
computer software and computer software products now or later existing,
created, acquired or held;
(c) All design rights which may be available to Borrower now or
later created, acquired or held;
(d) Any claims for damages (past, present or future) for
infringement of any of the rights above, with the right, but not the
obligation, to xxx and collect damages for use or infringement of the
intellectual property rights above.
All proceeds and products of the foregoing, including all insurance, indemnity
or warranty payments.
"INVENTORY" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.
"IP AGREEMENT" is a certain Intellectual Property Security Agreement dated
December 30, 2002 executed and delivered by Borrower to Bank.
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"LETTER OF CREDIT" means a letter of credit or similar undertaking issued
by Bank pursuant to Section 2.1.2.
"LETTER OF CREDIT RESERVE" has the meaning set forth in Section 2.1.2.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, the IP Agreement, any
note, or notes or guaranties executed by Borrower or Guarantor, and any other
present or future agreement between Borrower and/or for the benefit of Bank in
connection with this Agreement, all as amended, extended or restated.
"MASK WORKS" are all mask works or similar rights available for the
protection of semiconductor chips, now owned or later acquired.
"MATERIAL ADVERSE CHANGE" is: (i) A material impairment in the perfection
or priority of Bank's security interest in the Collateral or in the value of
such Collateral; (ii) a material adverse change in the business, operations, or
condition (financial or otherwise) of the Borrower; or (iii) a material
impairment of the prospect of repayment of any portion of the Obligations; or
(iv) Bank determines, based upon information available to it and in its
reasonable judgment, that there is a reasonable likelihood that Borrower shall
fail to comply with one or more of the financial convenants in Section 6 during
the next succeeding financial reporting period.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including letters of credit, cash
management services, and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.
"PATENTS" are patents, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same.
"PERFECTION CERTIFICATE" is a certain Perfection Certificate executed by
Borrower dated December 20, 2002.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Bank under this Agreement or the
Loan Documents;
(b) Indebtedness existing on the Closing Date and shown on the
Perfection Certificate;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors and with respect to surety
bonds and similar obligations incurred in the ordinary course of business;
(e) Indebtedness secured by Permitted Liens up to the amounts
described in the definition of Permitted Liens; and
(f) Extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (f) above,
provided that the principal amount thereof is not increased or the terms
thereof are not modified to impose more burdensome terms upon Borrower or
its Subsidiary, as the case may be.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Perfection Certificate and existing
on the Closing Date; and
-17-
(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any state maturing within
1 year from its acquisition, (ii) commercial paper maturing no more than 1
year after its creation and having the highest rating from either Standard
& Poor's Corporation or Xxxxx'x Investors Service, Inc. (iii) Bank's
certificates of deposit issued maturing no more than 1 year after issue,
and (iv) any other investments administered through the Bank.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Schedule
or arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges
or levies, either not delinquent or being contested in good faith and for
which Borrower maintains adequate reserves on its Books, IF they have no
priority over any of Bank's security interests;
(c) In addition to the Liens existing on the Closing Date and
shown on the Schedule, additional purchase money Liens securing not more
than $4,000,000.00 incurred in any fiscal year during the term of this
Agreement (i) on Equipment acquired or held by Borrower incurred for
financing the acquisition of the Equipment, or (ii) existing on equipment
when acquired, IF the Lien is confined to the property and improvements and
the proceeds of the equipment;
(d) Leases or subleases and non exclusive licenses or sublicenses
granted in the ordinary course of Borrower's business, IF the leases,
subleases, licenses and sublicenses permit granting Bank a security
interest; and
(e) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (d), BUT any
extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and the principal amount of the
indebtedness may not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
"PRIME RATE" is the greater of (i) four percent (4.0%) or (ii) Bank's most
recently announced "prime rate," even if it is not Bank's lowest rate.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, President,
Chief Financial Officer, Vice President(s), and Controller of Borrower.
"REVOLVING LINE" is an Advance or Advances of up to fifteen Million
Dollars ($15,000,000.00).
"REVOLVING MATURITY DATE" is January 5, 2005.
"SCHEDULE" is the Schedule of exception annexed hereto.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to Borrower's
debt to Bank (pursuant to a subordination agreement entered into between the
Bank, the Borrower and the subordinated creditor or pursuant to the terms of
such subordinated debt if approved in writing by Bank), on terms acceptable to
Bank.
"SUBSIDIARY" is any Person, corporation, partnership, limited liability
company, joint venture, or any other business entity of which more than 50% of
the voting stock or other equity interests is owned or controlled, directly or
indirectly, by the Person or one or more Affiliates of the Person.
-18-
"TRADEMARKS" are trademark and service xxxx rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Assignor connected with the trademarks.
-19-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts of the date first above written.
BORROWER:
IBASIS, INC
By: /s/ Xxxxxxx Xxxxxxx
-------------------------
Name: Xxxxxxx Xxxxxxx
------------------------
Title: CFO & Treasurer
-----------------------
BANK:
SILICON VALLEY BANK, d/b/a
SILICON VALLEY EAST
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
------------------------
Title: Vice President
-----------------------
SILICON VALLEY BANK
By: /s/ Xxxxxx Xxxxxx
-------------------------
Name: Xxxxxx Xxxxxx
------------------------
Title: AVP
-----------------------
(Signed in Santa Xxxxx
Country, California)
-20-
EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest in
and to the following:
All goods, equipment, inventory, contract rights or rights to payment of
money, leases, license agreements, franchise agreements, general intangibles
(including payment intangibles), accounts (including health-care receivables),
documents, instruments (including any promissory notes), chattel paper (whether
tangible or electronic), cash, deposit accounts, fixtures, letters of credit
rights (whether or not the letter of credit is evidenced by a writing),
commercial tort claims, securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and
Any copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work, whether
published or unpublished, now owned or later acquired; any patents, trademarks,
service marks and applications therefor; trade styles, trade names, any trade
secret rights, including any rights to unpatented inventions, know-how,
operating manuals, license rights and agreements and confidential information,
now owned or hereafter acquired; or any claims for damages by way of any past,
present and future infringement of any of the foregoing; and
All Borrower's books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.
-21-
EXHIBIT B
LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 E.S.T.
Fax To: (617) 969--5965 Date:____________________
LOAN PAYMENT:
SAMPLE DOCUMENTS CLIENT NAME (BORROWER)
From Account #_____________________ To Account #__________________________
(Deposit Account #) (Loan Account #)
Principal $____________________________ and/or Interest $______________________
All Borrower's representation and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
telephone transfer request for an advance, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date:
Authorized Signature:__________________ Phone Number:_________________________
LOAN ADVANCE:
Complete OUTGOING WIRE REQUEST section below if all or a portion of the funds
from this loan advance are for an outgoing wire.
From Account #_________________________ To Account #__________________________
(Loan Account #) (Deposit Account #)
Amount of Advance $____________________
All Borrower's representation and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
telephone transfer request for an advance, but those representations and
warranties expressly referring to another date shall be true, corrected and
complete in all material respects as of each date:
Authorized Signature:__________________ Phone Number:_________________________
OUTGOING WIRE REQUEST
COMPLETE ONLY IF ALL OR A PORTION OF FUNDS FROM THE LOAN ADVANCE ABOVE ARE TO BE
WIRED.
Deadline for same day processing is 3:00 pm, E.S.T.
Beneficiary Name:______________________ Amount of Wire: $_____________________
Beneficiary Bank:______________________ Account Number:___________________
City and State:________________________
Beneficiary Bank Transit (ABA) #:______ Beneficiary Bank Code
(Swift, Sort, Chip, etc.):____________
(For International Wire Only)
Intermediary Bank:_____________________ Transit (ABA) #:______________________
For Further Credit to:_________________________________________________________
Special Instruction:___________________________________________________________
BY SIGNING BELOW, I (WE) ACKNOWLEDGE AND AGREE THAT MY (OUR) FUNDS TRANSFER
REQUEST SHALL BE PROCESSED IN ACCORDANCE WITH AND SUBJECT TO THE TERMS AND
CONDITIONS SET FORTH IN THE AGREEMENTS(S) COVERING FUNDS TRANSFER SERVICE(S),
WHICH AGREEMENTS(S) WERE PREVIOUSLY RECEIVED AND EXECUTED BY ME (US).
Authorized Signature:________________ 2nd Signature (If Required):_________
Print Name/Title:___________________ Print Name/Title:________________________
Telephone #_________________________ Telephone #______________________________
-22-
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: Lender: Silicon Valley Bank
Commitment Amount: $15,000,000.00
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. Credit balances over 90 days $________________
7. Concentration Limits $________________
8. Foreign Accounts $________________
9. Governmental Accounts $________________
10. Contra Accounts $________________
11. Promotion or Demo Accounts $________________
12. Intercompany /Employee Accounts $________________
13. Other (please explain on reverse) $________________
14. TOTAL ACCOUTNS RECEIVABLE DEDUCTIONS $________________
15. Eligible Accounts (#3 minus #4) $________________
16. LOAN VALUE OF ACCOUNTS (75% of #15) $________________
BALANCES
17. Maximum Loan Amount $________________
18. Total Funds Available (Lesser of #17 or #16) $________________
19. Present balance owing on Line of Credit $________________
20. Outstanding under Sublimits (letters of credit,
FX contracts, cash mang.) $________________
21. RESERVE POSITION (#18 minus #19 and #20) $________________
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THIS IS TRUE, COMPLETE AND CORRECT,
AND THAT THE INFORMATION IN THIS BORROWING BASE CERTIFICATE COMPLIES WITH THE
REPRESENTATIONS AND WARRANTIES IN THE LOAN AND SECURITY AGREEMENT BETWEEN THE
UNDERSIGNED AND SILICON VALLEY BANK.
BANK USE ONLY
Received by:____________________
COMMENTS: AUTHORIZED SIGNER
Date:__________________________
By: Verified:______________________
----------------------------- AUTHORIZED SIGNER
Authorized Signer Date:__________________________
Compliance Status: Yes No
-23-
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: IBASIS, INC.
The undersigned authorized officer of iBasis, Inc. certificates that under
the terms and conditions of the Amended and Restated Loan and Security Agreement
between Borrower and Bank (the "Agreement"), (i) Borrower is in complete
compliance for the period ending______________ with all required covenants
except as noted below and (ii) all representations and warranties in the
Agreement are true and correct in all material respects on this date. Attached
are the required documents supporting the certification. The Officer certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) consistently applied from one period to the next except as
explained in an accompanying letter or footnotes. The Officer acknowledges that
no borrowings may be requested at any time or date of determination that
Borrower is not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES"
COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Monthly financial statements with CC Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
10-Q, 10-K and 8-K Within 5 days after filing with SEC Yes No
BBC A/R Agings Monthly within 15 days Yes No
The following Intellectual Property was registered after the Closing Date
(if blank, read "None")
________________________________________________________________________
________________________________________________________________________
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain:
Minimum Cash at SVB $5,000,000.00 $______ Yes No
Minimum net loss/profit $* $______ Yes No
* See Section 6.7 of the Agreement
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY
Received by:____________________
AUTHORIZED SIGNER
Sincerely,
Date:__________________________
-----------------------------
Verified:______________________
SIGNATURE AUTHORIZED SIGNER
----------------------------- Date:__________________________
TITLE Compliance Status: Yes No
-----------------------------
DATE
-24-
