EXHIBIT 10.12
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
STENTOR, INC.
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TABLE OF CONTENTS
Page
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1 ACCOUNTING AND OTHER TERMS........................................................... 1
2 LOAN AND TERMS OF PAYMENT............................................................ 1
2.1 Credit Extensions........................................................... 1
2.2 Interest Rate, Payments..................................................... 2
2.3 Fees........................................................................ 4
3 CONDITIONS OF LOANS.................................................................. 4
3.1 Conditions Precedent to Initial Credit Extension............................ 4
3.2 Conditions Precedent to all Credit Extensions............................... 4
4 CREATION OF SECURITY INTEREST........................................................ 5
4.1 Grant of Security Interest.................................................. 5
4.2 Authorization to File....................................................... 5
5 REPRESENTATIONS AND WARRANTIES....................................................... 5
5.1 Due Organization and Authorization.......................................... 5
5.2 Collateral.................................................................. 5
5.3 Litigation.................................................................. 6
5.4 No Material Adverse Change in Financial Statements.......................... 6
5.5 Solvency.................................................................... 6
5.6 Regulatory Compliance....................................................... 6
5.7 Subsidiaries................................................................ 6
5.8 Full Disclosure............................................................. 6
6 AFFIRMATIVE COVENANTS................................................................ 7
6.1 Government Compliance....................................................... 7
6.2 Financial Statements, Reports, Certificates................................. 7
6.3 Inventory; Returns.......................................................... 8
6.4 Taxes....................................................................... 8
6.5 Insurance................................................................... 8
6.6 Primary Accounts............................................................ 8
6.7 Financial Covenants......................................................... 8
6.8 Further Assurances.......................................................... 8
7 NEGATIVE COVENANTS................................................................... 9
7.1 Dispositions................................................................ 9
7.2 Changes in Business, Ownership, Management or Business Locations............ 9
7.3 Mergers or Acquisitions..................................................... 9
7.4 Indebtedness................................................................ 9
7.5 Encumbrance................................................................. 9
7.6 Distributions; Investments.................................................. 9
7.7 Transactions with Affiliates................................................ 10
7.8 Subordinated Debt........................................................... 10
7.9 Compliance.................................................................. 10
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8 EVENTS OF DEFAULT.................................................................... 10
8.1 Payment Default............................................................. 10
8.2 Covenant Default............................................................ 10
8.3 Material Adverse Change..................................................... 11
8.4 Attachment.................................................................. 11
8.5 Insolvency.................................................................. 11
8.6 Other Agreements............................................................ 11
8.7 Judgments................................................................... 11
8.8 Misrepresentations.......................................................... 11
9 BANK'S RIGHTS AND REMEDIES........................................................... 11
9.1 Rights and Remedies......................................................... 12
9.2 Power of Attorney........................................................... 12
9.3 Accounts Collection......................................................... 13
9.4 Bank Expenses............................................................... 13
9.5 Bank's Liability for Collateral............................................. 13
9.6 Remedies Cumulative......................................................... 13
9.7 Demand Waiver............................................................... 13
10 NOTICES.............................................................................. 13
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER........................................... 14
12 GENERAL PROVISIONS................................................................... 14
12.1 Successors and Assigns...................................................... 14
12.2 Indemnification............................................................. 14
12.3 Time of Essence............................................................. 14
12.4 Severability of Provision................................................... 14
12.5 Amendments in Writing, Integration.......................................... 14
12.6 Counterparts................................................................ 15
12.7 Survival.................................................................... 15
12.8 Confidentiality............................................................. 15
12.9 Attorneys' Fees, Costs and Expenses......................................... 15
13 DEFINITIONS.......................................................................... 15
13.1 Definitions................................................................. 15
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EXHIBIT 10.12
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ("Agreement") dated
December 13, 2004, between SILICON VALLEY BANK ("Bank"), whose address is 0000
Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and STENTOR, INC. ("Borrower"),
whose address is 0000 Xxxxxx Xxxx., Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000-0000,
provides the terms on which Bank will lend to Borrower and Borrower will repay
Bank. This Agreement amends and restates in its entirety the Loan and Security
Agreement by and between the parties hereto dated January 10, 2001, as the same
has been modified from time to time (the "Original Loan Agreement"). The parties
agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement will be construed 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.
2 LOAN AND TERMS OF PAYMENT
2.1 CREDIT EXTENSIONS.
Borrower will pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.
2.1.1 EQUIPMENT FACILITY.
(a) Subject to the terms and conditions of this Agreement, Bank agrees
to lend to Borrower, from time to time prior to the Commitment Termination Date,
equipment advances (each an "Equipment Advance" and collectively the "Equipment
Advances") in an aggregate amount not to exceed the Committed Equipment Line.
When repaid, the Equipment Advances may not be re-borrowed. The proceeds of the
Equipment Advances will be used solely to reimburse Borrower for the purchase of
Eligible Equipment purchased within 120 days of the Equipment Advance. Each
Equipment Advance shall be considered a promissory note evidencing the amounts
due hereunder for all purposes. Bank's obligation to lend hereunder shall
terminate on the earlier of (i) the occurrence and continuance of an Event of
Default, or (ii) the Commitment Termination Date. For purposes of this Section,
there shall be no more than six (6) Equipment Advances, and the minimum amount
of each Equipment Advance is $200,000. Not more than $1,500,000 of the Equipment
Advances may be used to finance the purchase of Eligible Equipment which is not
located in the United States.
(b) To obtain an Equipment Advance, Borrower will deliver to Bank a
completed Loan Supplement signed by a Responsible Officer or his or her
designee, copies of invoices for the Financed Equipment and such additional
information as Bank may request at least five (5) Business Days before the
proposed Funding Date. On each Funding Date, Bank will specify in the Loan
Supplement for each Equipment Advance, the Basic Rate, the Loan Factor, and the
Payment Dates. If Borrower satisfies the conditions of each Equipment Advance
specified herein, Bank will disburse such Equipment Advance by internal transfer
to Borrower's deposit account with Bank. Each Equipment Advance may not exceed
100% of the Original Stated Cost.
(c) Bank's obligation to lend the undisbursed portion of the Committed
Equipment Line will terminate if, in Bank's sole discretion, there has been a
material adverse change in the general affairs, management, results of
operation, condition (financial or otherwise) or the prospects of Borrower,
whether or not arising from transactions in the ordinary course of business, or
there has been any material adverse deviation by Borrower from the most recent
business plan of Borrower presented to and accepted by Bank prior to the
execution of this Agreement.
(d) Term loans previously advanced by Bank to Borrower pursuant to the
Original Loan Agreement are set forth on Schedule 2.1.1 attached hereto (the
"Existing Equipment Term Loans"). The Existing Equipment Term Loans, to the
extent currently outstanding, shall for all purposes of this Agreement, be
"Equipment Advances" hereunder and be governed by all the terms and conditions
of this Agreement, except that the principal and interest of the Existing
Equipment Term Loans shall continue to be payable in accordance with the
amortization schedule set forth on Schedule 2.1.1, and except that the Existing
Term Loans shall not reduce availability under the Committed Equipment Line.
2.1.2 REVOLVING ADVANCES.
(a) Bank will make revolving advances ("Revolving Advances") not exceeding the
Committed Revolving Line. Amounts borrowed under this Section may be repaid and
reborrowed during the term of this Agreement. Amounts borrowed hereunder may be
prepaid at any time without penalty or premium.
(b) To obtain a Revolving Advance, Borrower must notify Bank by facsimile or
telephone by 12:00 p.m. Pacific time on the Business Day the Revolving Advance
is to be made. Borrower must promptly confirm the notification by delivering to
Bank the Payment/Advance Form. Bank will credit Revolving Advances to Borrower's
deposit account. Bank may make Revolving Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Revolving 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 will indemnify Bank
for any loss Bank suffers due to such reliance.
(c) The Committed Revolving Line terminates on the Revolving Maturity Date,
when all Revolving Advances are immediately payable.
2.2 INTEREST RATE, PAYMENTS.
2.2.1 AS TO EQUIPMENT ADVANCES.
(a) Principal and Interest Payments On Payment Dates. Borrower will
repay the Equipment Advances on the terms provided in the applicable Loan
Supplement. Borrower will make payments monthly in advance of principal and
accrued interest for each Equipment Advance (collectively, "Scheduled
Payments"), on the first day of the month following the Funding Date (or
commencing on the Funding Date if the Funding Date is the first day of the
month) with respect to such Equipment Advance and continuing thereafter during
the Repayment Period on the first day of each calendar
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month (each a "Payment Date"), in an amount equal to the Loan Factor multiplied
by the Loan Amount for such Equipment Advance as of such Payment Date. All
unpaid principal and accrued interest is due and payable in full on the last
Payment Date with respect to such Equipment Advance. Payments received after
12:00 noon Pacific time are considered received at the opening of business on
the next Business Day. An Equipment Advance may only be prepaid in accordance
with Section 2.2.1(f).
(b) Interest Rate. Borrower will pay interest on the Payment Dates (as
described above) at the per annum rate of interest equal to the Basic Rate
determined by Bank as of the Funding Date for each Equipment Advance in
accordance with the definition of the Basic Rate. Any amounts outstanding during
the continuance of an Event of Default shall bear interest at a per annum rate
equal to the Basic Rate plus four and one-half percent (4.5%). If any change in
the law increases Bank's expenses or decreases its return from the Equipment
Advances, Borrower will pay Bank upon request the amount of such increase or
decrease.
(c) Interim Payment. In addition to the Scheduled Payments, on the
Funding Date for each Equipment Advance (unless the Funding Date is the first
Business Day of the month) Borrower shall pay to Bank an amount (the "Interim
Payment") equal to (i) the initial Equipment Advance multiplied by (ii) the sum
of the Prime Rate plus 2 percentage points, divided by (iii) 360 days and then
multiplied by (iv) the number of days from the actual Funding Date of the
Equipment Advance until the first day of the month following such Equipment
Advance.
(d) Final Payment. On the Maturity Date with respect to each Equipment
Advance, Borrower will pay the unpaid principal and accrued interest and all
other amounts due on such date with respect to such Equipment Advance.
(e) Mandatory Prepayment Upon an Acceleration. If the Equipment Advances
are accelerated following the occurrence of an Event of Default or otherwise,
then Borrower will immediately pay to Bank (without duplication) (i) all due and
unpaid Scheduled Payments (including principal and interest) with respect to
each Equipment Advance, (ii) all remaining unpaid principal, (iii) all accrued
unpaid interest, including the default rate of interest, to the date of the
prepayment, and (iv) all other sums, if any, that shall have become due and
payable with respect to any Equipment Advance.
(f) Permitted Prepayment of Loans. Borrower shall have the option to
prepay all, but not less than all, of (x) the Existing Equipment Term Loans or
(y) the other Equipment Advances advanced by Bank under this Agreement, provided
Borrower (i) provides written notice to Bank of its election to prepay the
Existing Equipment Term Loans or the Equipment Advances at least three (3)
Business Days prior to such prepayment, and (ii) pays, on the date of the
prepayment (A) all unpaid principal with respect to such Equipment Advance; (B)
all unpaid accrued interest to the date of the prepayment; and (C) all other
sums, if any, that shall have become due and payable hereunder with respect to
this Agreement. Prepayments on the Equipment Advances may be made at any time
without penalty or premium.
2.2.2 AS TO REVOLVING ADVANCES.
(a) Interest Rate. Revolving Advances accrue interest on the outstanding
principal balance at a per annum rate equal to the greater of (X) one-half of
one
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percentage point (.50%) above the Prime Rate; and (Y) four and three-quarters
percent (4.75%) After an Event of Default, Obligations accrue interest at 4.5
percent above the rate effective immediately before the Event of Default. The
interest rate increases or decreases when the Prime Rate changes. Interest is
computed on a 360 day year for the actual number of days elapsed.
(b) Payments. Interest due on the Committed Revolving Line is payable on
the 1st of each month. Payments received after 12:00 noon Pacific time are
considered received at the opening of business on the next Business Day. When a
payment is due on a day that is not a Business Day, the payment is due the next
Business Day and additional interest shall accrue.
2.2.3 REQUEST TO DEBIT ACCOUNTS.
Bank may debit any of Borrower's deposit accounts, whether now or
hereafter existing, for principal and interest payments owing or any amounts
Borrower owes Bank. Bank will promptly notify Borrower when it debits Borrower's
accounts. These debits are not a set-off.
2.3 FEES.
Borrower will pay:
(a) Loan Fees. A fully earned, non-refundable Facility Fee of $22,500
(including documentation and other fees) due on the Closing Date, and an Advance
Fee of $2,500 per Revolving Advance (not to exceed $2,500 in any calendar
quarter) due and payable on the Funding Date of each Revolving Advance.
(b) Bank Expenses. All Bank Expenses (including reasonable attorneys' fees and
reasonable expenses) incurred through and after the date of this Agreement, are
payable when due.
3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.
Bank's obligation to make the initial Credit Extension is subject to the
condition precedent that it receive the agreements, documents and fees it
requires.
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 must 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 may 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 of Section 5
remain true.
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4 CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST.
Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank may place a "hold" on any deposit account pledged as
Collateral. If the Agreement is terminated, Bank's lien and security interest in
the Collateral will continue until Borrower fully satisfies its Obligations.
4.2 AUTHORIZATION TO FILE.
Borrower authorizes Bank to file financing statements without notice to
Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in
order to perfect or protect Bank's interest in the Collateral.
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 execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation 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 other deposit account, other than the deposit accounts
described in the Schedule. 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 at a warehouse). In the event that Borrower, after the date hereof, intends
to store or otherwise deliver the Collateral to such a bailee, then Borrower
will receive the prior written consent of Bank and such bailee must acknowledge
in writing that the bailee is holding such Collateral for the benefit of Bank.
All Inventory is in all material respects of good and marketable quality, free
from material defects.
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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, threatened by
or against Borrower or any Subsidiary in which a likely adverse decision could
reasonably be expected to cause a Material Adverse Change.
5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.
All consolidated financial statements for Borrower 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.
The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and 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). Borrower has
complied in all material respects with the Federal Fair Labor Standards Act.
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 do so could not reasonably be
expected to cause a Material Adverse Change.
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
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certificates and written statements 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 and forecasted results.
6 AFFIRMATIVE COVENANTS
Borrower will do all of the following for so long as Bank has an
obligation to lend, or there are outstanding Obligations:
6.1 GOVERNMENT COMPLIANCE.
Borrower will 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
cause a material adverse effect on Borrower's business or operations. Borrower
will 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 will deliver to Bank: (i) as soon as available, but no later than
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 120 days after the last day
of Borrower's fiscal year, audited consolidated financial statements prepared
under GAAP, consistently applied, together with an unqualified opinion on the
financial statements from an independent certified public accounting firm
reasonably acceptable to Bank; provided that the audited financial statements
for the fiscal year ending December 31, 2003 shall be delivered to Bank not
later than January 31, 2005; (iii) 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 $100,000 or more; and (iv) budgets, sales
projections, operating plans or other financial information Bank reasonably
requests.
(b) Within 45 days after the last day of Borrower's fiscal year, Borrower will
deliver to Bank the annual financial projection.
(c) Borrower will deliver to Bank a Compliance Certificate in the form of
Exhibit D hereto together with the financial statements delivered pursuant to
Section 6.2(a)(i) above.
(d) Allow Bank to audit Borrower's Collateral at Borrower's expense. Such
audits will be conducted not more than once per calendar year so long as no
Event of Default has occurred and is continuing.
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6.3 INVENTORY; RETURNS.
Borrower will keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary practices as they exist at execution of
this Agreement. Borrower must promptly notify Bank of all returns, recoveries,
disputes and claims, that involve more than $100,000.
6.4 TAXES.
Borrower will make, and cause each Subsidiary to make, timely payment of
all material federal, state, and local taxes or assessments and will deliver to
Bank, on demand, appropriate certificates attesting to the payment.
6.5 INSURANCE.
Borrower will keep its business and the Collateral insured for risks and
in amounts, as Bank may reasonably request. Insurance policies will be in a
form, with companies, and in amounts that are satisfactory to Bank in Bank's
reasonable discretion. All property policies will have a lender's loss payable
endorsement showing Bank as an additional loss payee and all liability policies
will show the Bank as an additional insured and provide that the insurer must
give Bank at least 20 days notice before canceling its policy. At Bank's
request, Borrower will deliver certified copies of policies and evidence of all
premium payments. Proceeds payable under any policy will, at Bank's option, be
payable to Bank on account of the Obligations.
6.6 PRIMARY ACCOUNTS.
Borrower will maintain its primary depository and operating accounts with
Bank, and shall maintain at least 85% of its available investable funds with
Bank or an Affiliate of Bank at all times.
6.7 FINANCIAL COVENANTS.
(a) MINIMUM EBITDA. Borrower shall maintain as of the last day of each
fiscal quarter EBITDA of not less than $1,100,000 for the quarter ended June 30,
2004, $1,600,000 for the quarter ending September 30, 2004, and $2,190,000 for
the quarter ending December 31, 2004. The minimum EBITDA for fiscal years 2005
and thereafter will be mutually agreed to by Bank and Borrower on or before
January 31 of each year.
(b) MINIMUM LIQUIDITY. Borrower shall maintain as of the last day of
each month a ratio of (i) unrestricted cash and cash equivalents plus 60% of
Accounts to (ii) total outstanding Obligations of not less than 1.75 to 1.00.
6.8 FURTHER ASSURANCES.
Borrower will 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.
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7 NEGATIVE COVENANTS
Borrower will not do any of the following without Bank's prior written
consent, which will not be unreasonably withheld:
7.1 DISPOSITIONS.
Convey, sell, lease, transfer or otherwise dispose of (collectively
"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 senior management or change in its
ownership of greater than 25% (other than by the sale of Borrower's equity
securities in a public offering or to venture capital investors approved by
Bank). Borrower will not, without at least 30 days prior written notice,
relocate its chief executive office or add any new offices or business
locations.
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, except where (i) no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement and (ii) such transaction would not result in a decrease of more than
25% of Tangible Net Worth. A Subsidiary may merge or consolidate into another
Subsidiary 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
here, subject to Permitted Liens.
7.6 DISTRIBUTIONS; INVESTMENTS.
Except as permitted by Section 7.3 above (i) directly or indirectly
acquire or own any Person, or make any Investment in any Person, other than
Permitted Investments,
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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,
other than for repurchases of stock in connection with the termination or other
departure of Borrower's employees, provided that the amount paid therefore shall
not exceed $150,000 in any fiscal year and no such payment may be made while a
Default or Event of Default has occurred and is continuing.
7.7 TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter into or permit any material transaction with
any Affiliate except transactions that are in the ordinary course of Borrower's
business and on terms 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 under the
terms of the Subordinated Debt, or amend any provision in any document relating
to the Subordinated Debt without Bank's prior written consent.
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.
If Borrower fails to pay any of the Obligations within 3 days after their
due date. During the additional period the failure to cure the default is not an
Event of Default (but no Credit Extension will be made during the cure period);
8.2 COVENANT DEFAULT.
If Borrower violates any financial covenant contained in Section 6.7 or
any covenant in Section 7 or does not perform or observe any other material
term, condition or covenant in this Agreement, any Loan Documents, or in any
agreement between Borrower and Bank and as to any default under a term,
condition or covenant that can be cured, has not cured the default within 10
days after it occurs, or if the default cannot be cured within 10 days or cannot
be cured after Borrower's attempts within 10 day period, and the default may be
cured within a reasonable time, then Borrower has an
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additional period (of not more than 30 days) to attempt to cure the default.
During the additional time, the failure to cure the default is not an Event of
Default (but no Credit Extensions will be made during the cure period);
8.3 MATERIAL ADVERSE CHANGE.
If there (i) occurs a material impairment in the perfection or priority of
the Bank's security interest in the Collateral or in the value of such
Collateral taken as a whole which is not covered by adequate insurance or (ii)
is a material impairment of the prospect of repayment of any portion of the
Obligations.
8.4 ATTACHMENT.
If 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 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower's assets by any government agency and not paid within 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 Extensions will be
made during the cure period);
8.5 INSOLVENCY.
If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 60 days (but no Credit Extensions will be made before
any Insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS.
If there is a default in any agreement between Borrower and a third party
that gives the third party the right to accelerate any Indebtedness exceeding
$100,000 or that could cause a Material Adverse Change;
8.7 JUDGMENTS.
If a money judgment(s) in the aggregate of at least $100,000 is rendered
against Borrower and is unsatisfied and unstayed for 10 days (but no Credit
Extensions will be made before the judgment is stayed or satisfied); or
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.
9 BANK'S RIGHTS AND REMEDIES
11
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;
(d) Make any payments and do any acts it considers necessary or reasonable to
protect its security interest in the Collateral. Borrower will assemble the
Collateral if Bank requires 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; and
(g) Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY.
Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney 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) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
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.
12
9.3 ACCOUNTS COLLECTION.
When an Event of Default occurs and continues, (i) Bank may notify any
Person owing Borrower money of Bank's security interest in the funds and verify
the amount of the Account, and (ii) Borrower must 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.
9.4 BANK EXPENSES.
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons, Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are 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.
If Bank complies with reasonable banking practices and Section 9-207 of
the Code, it is not liable 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, bailee, or
other person. 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. 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 is
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 about 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 to the addresses set forth at the beginning of
this Agreement. A party may change its notice address by giving the other party
written notice.
13
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
California 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 Santa Xxxxx County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF 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 GENERAL PROVISIONS
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 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.
12.2 INDEMNIFICATION.
Borrower will indemnify, defend and hold harmless Bank and its officers,
employees, and agents 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 TIME OF ESSENCE.
Time is of the essence for the performance of all obligations in this
Agreement.
12.4 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other provision
in determining the enforceability of any provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing and signed by Borrower
and Bank. This Agreement represents the entire agreement about this subject
matter, and supersedes prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement merge into this Agreement and
the Loan Documents.
14
12.6 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.
12.7 SURVIVAL.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.
12.8 CONFIDENTIALITY.
In handling any confidential information, Bank will 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 loans, (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.
12.9 ATTORNEYS' FEES, COSTS AND EXPENSES.
In any action or proceeding between Borrower and Bank arising out of the
Loan Documents, the prevailing party will be entitled to recover its reasonable
attorneys' fees and other reasonable costs and expenses incurred, in addition to
any other relief to which it may be entitled.
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.
"AFFILIATE" of a Person 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.
15
"BANK EXPENSES" are all audit fees and expenses and reasonable costs and
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"BASIC RATE" is, as of the Funding Date, the per annum rate of interest
(based on a year of 360 days) equal to the sum of (a) the U.S. Treasury note
yield to maturity for a term equal to the Treasury Note Maturity as quoted in
The Wall Street Journal on the day the Loan Supplement is prepared, plus (b) the
Loan Margin.
"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.
"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 California Uniform Commercial Code.
"COLLATERAL" is the property described on Exhibit A.
"COMMITMENT TERMINATION DATE" is the date 12 months from the date hereof.
"COMMITTED EQUIPMENT LINE" is a Credit Extension of up to $5,000,000.
"COMMITTED REVOLVING LINE" is an Advance of up to $10,000,000.
"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.
"CREDIT EXTENSION" is each Revolving Advance, Equipment Advance or any
other extension of credit by Bank for Borrower's benefit.
16
"EBITDA" is Borrower's consolidated earnings before interest expense,
income taxes, depreciation, amortization of intangible assets and other non-cash
charges made to Borrower's income.
"ELIGIBLE EQUIPMENT" is general purpose computer equipment, office
equipment, engineering, test and laboratory equipment, furnishings, and, subject
to the limitations set forth below, Other Equipment that complies with all of
Borrower's representations and warranties to Bank and which is acceptable to
Bank in all respects. Equipment financed with the proceeds of Equipment Advances
may be new or used.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"EQUIPMENT ADVANCE" is defined in Section 2.1.1.
"ERISA" is the Employment Retirement Income Security Act of 1974, and its
regulations.
"FINANCED EQUIPMENT" is defined in the Loan Supplement.
"FUNDING DATE" is any date on which an Equipment Advance or Revolving
Advance is made to or on account of Borrower.
"GAAP" is generally accepted accounting principles.
"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" are proceedings 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.
"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.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
17
"LOAN AMOUNT" is, with respect to any Equipment Advance, the amount of
such Equipment Advance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes or
guaranties executed by Borrower or any 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.
"LOAN FACTOR" is the percentage which results from amortizing the
Equipment Advance over the Repayment Period, using the Basic Rate as the
interest rate.
"LOAN MARGIN" is 450 basis points.
"LOAN SUPPLEMENT" is attached as Exhibit B.
"MATERIAL ADVERSE CHANGE" is defined in Section 8.3.
"MATURITY DATE" is, with respect to each Equipment Advance, the last day
of the Repayment Period for such Equipment Advance, or if earlier, the date of
acceleration of such Equipment Advance by Bank following an Event of Default.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including cash management services,
letters of credit and foreign exchange contracts, if any and including interest
accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.
"ORIGINAL STATED COST" is (i), the original cost to the Borrower of the
item of new Eligible Equipment (including, to the extent permitted hereunder,
any and all freight, installation, and tax) or (ii) the fair market value
assigned to such item of used Eligible Equipment by mutual agreement of Borrower
and Bank at the time of making of the Equipment Advance.
"OTHER EQUIPMENT" is leasehold improvements, sales tax, freight and
installation expenses, intangible property such as computer software and
software licenses, equipment specifically designed or manufactured for Borrower,
other intangible property, limited use property and other similar property.
Unless otherwise agreed to by Bank not more than 35% of the Equipment financed
with the proceeds of Equipment Advances shall consist of Other Equipment.
"PAYMENT/ADVANCE FORM" is a Loan Payment/Advance Request Form in the form
of Exhibit C attached to this Agreement.
"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 Schedule;
(c) Subordinated Debt;
18
(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;
(f) other Indebtedness of Borrower not exceeding $100,000 in the
aggregate outstanding at any time;
(g) Indebtedness with respect to capital lease obligations not to exceed
$1,000,000 in the aggregate outstanding at any time; and
(h) extensions, renewals, refundings, refinancings, modifications,
amendments and restatements of any of the Indebtedness in (a)
through (g) above, provided that the principal amount thereof is not
increased and the terms thereof are not modified to impose more
burdensome terms upon Borrower.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Closing Date;
(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;
(c) Investments consisting of the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary
course of Borrower's business;
(d) Investments consisting of (i) travel advances and employee
relocation loans and other employee loans in the ordinary course of
business not to exceed $100,000 in the aggregate at any time, and
(ii) loans to employees, officers or directors relating to the
purchase of equity securities of Borrower or its subsidiaries
pursuant to employee stock purchase plans or agreements approved by
Borrower's board of directors in an aggregate amount not at anytime
to exceed $100,000;
(e) Investments consisting of notes receivable or prepaid royalties and
other credit extensions, to customers and suppliers who are not
Affiliates, in the ordinary course of business in an aggregate
amount not to exceed $100,000;
(f) Investments in Subsidiaries not to exceed $1,500,000 in the
aggregate in any fiscal year of Borrower; and
(g) other Investments aggregating not in excess of $500,000 at any time.
19
"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 Borrower's Books,
if they have no priority over any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries 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) Licenses or sublicenses granted in the ordinary course of Borrower's
business and any interest or title of a licensor or under any
license or sublicense, if the licenses and sublicenses permit
granting Bank a security interest;
(e) Leases or subleases and 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
(f) Liens to secure payment of worker's compensation, employment
insurance, old age pensions or other social security obligations of
Borrower in the ordinary course of business of Borrower; and
(g) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), 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 association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it is
not Bank's lowest rate.
"REPAYMENT PERIOD" as to the Equipment Advances, is 36 months.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.
"REVOLVING ADVANCE" is defined in Section 2.1.2.
"REVOLVING MATURITY DATE" is the date 24 months from the date hereof.
20
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's indebtedness owed to Bank and which is reflected in a written
agreement in a manner and form acceptable to Bank and approved by Bank in
writing.
"SUBSIDIARY" is for any Person, 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.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus, (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
patents, trade and service marks and names, copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities.
"TOTAL LIABILITIES" is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.
"TREASURY NOTE MATURITY" is 36 months.
21
This Amended and Restated Loan and Security Agreement is executed as of the date
first written above.
BORROWER:
STENTOR, INC.
By: [Signature by Authorized Agent]
Title: ______________________________
BANK:
SILICON VALLEY BANK
By: [Signature by Authorized Agent]
Title: ______________________________
22
EXHIBIT 10.12
EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest in
and to the following:
All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;
All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, financial assets,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired and Borrower's Books relating to the foregoing;
All copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired; all 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
and accessions to and proceeds thereof.
Notwithstanding the foregoing, the Collateral shall not be deemed to
include any copyrights, copyright applications, copyright registration and like
protection in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; any patents, patent
applications and like protections including without limitation improvements,
divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same, trademarks, servicemarks and applications
therefor, whether registered or not, and the goodwill of the business of
Borrower connected with and symbolized by such trademarks, 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 damage by way of any past, present and
future infringement of any of the foregoing (collectively, the "Intellectual
Property"), except that the Collateral shall include the proceeds of all the
Intellectual Property that are accounts, (i.e. accounts receivable) of Borrower,
or general intangibles consisting of rights to payment, if a judicial authority
(including a U.S. Bankruptcy Court) holds that a security interest in the
underlying Intellectual Property is necessary to have a security interest in
such accounts and general intangibles of Borrower that are proceeds of the
Intellectual Property, then the Collateral shall automatically, and effective as
of the Closing Date, include the Intellectual Property to the extent necessary
to permit perfection of Bank's security interest in such accounts and general
intangibles of Borrower that are proceeds of the Intellectual Property.
Borrower and Bank are parties to that certain Negative Pledge Agreement,
whereby Borrower, in connection with Bank's loan or loans to Borrower, has
agreed, among other things, not to sell, transfer, assign, mortgage, pledge,
lease, grant a security interest in, or encumber any of Borrower's Intellectual
Property, without Bank's consent.
2
EXHIBIT 10.12
EXHIBIT B
FORM OF LOAN AGREEMENT SUPPLEMENT
LOAN AGREEMENT SUPPLEMENT No. [ ]
LOAN AGREEMENT SUPPLEMENT No. [ ], dated______ , 200_ ("Supplement"), to the
Amended and Restated Loan and Security Agreement dated as of December __, 2004
(the "Loan Agreement) by and between the undersigned ("Borrower"), and Silicon
Valley Bank ("Bank"). Capitalized terms used herein but not otherwise defined
herein are used with the respective meanings given to such terms in the Loan
Agreement.
To secure the prompt payment by Borrower of all amounts from time to time
outstanding under the Loan Agreement, and the performance by Borrower of all the
terms contained in the Loan Agreement, Borrower grants Bank, a first priority
security interest in each item of equipment and other property described in
Annex A hereto, which equipment and other property shall be deemed to be
additional Financed Equipment and Collateral. The Loan Agreement is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
Annex A (Equipment Schedule) and Annex B (Loan Terms Schedule) are attached
hereto.
The proceeds of the Loan should be transferred to Borrower's account with Bank
set forth below:
Bank Name: Silicon Valley Bank
Account No.: ____________________
Borrower hereby certifies that (a) the foregoing information is true and correct
and authorizes Bank to endorse in its respective books and records, the Basic
Rate applicable to the Funding Date of the Loan contemplated in this Loan
Agreement Supplement and the principal amount set forth in the Loan Terms
Schedule; (b) the representations and warranties made by Borrower in the Loan
Agreement are true and correct on the date hereof and will be true and correct
on such Funding Date. No Event of Default has occurred and is continuing under
the Loan Agreement. This Supplement may be executed by Borrower and Bank in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
This Supplement is delivered as of this day and year first above written.
SILICON VALLEY BANK STENTOR, INC.
By:___________________________________ By:___________________________________
Name:______________________________ Name:______________________________
Title:_____________________________ Title:_____________________________
Annex A - Description of Financed Equipment
Annex B - Loan Terms Schedule
Annex A to Exhibit B
The Equipment being financed with the Equipment Advance which this Loan
Agreement Supplement is being executed is listed below (the "Financed
Equipment"). Upon the funding of such Equipment Advance, the Financed Equipment
listed on this schedule automatically shall be deemed to be a part of the
Collateral.
Description of Equipment: Make Xxxxx Xxxxxx # Xxxxxxx #
Xxxxx X to Exhibit B
LOAN TERMS SCHEDULE #________
Loan Funding Date: ____________, 200_
Original Loan Amount: $____________
Basic Rate:___________%
Loan Factor:___________%
Scheduled Payment Dates and Amounts*:
One (1) payment of $______ due _____________
______ payment of $______ due monthly in advance from _____ through _______.
One (1) payment of $_______ due ______________
Maturity Date:___________
Payment No. Payment Date
1
2
3
4
.. . .
35
[36]
.. . .
*/ The amount of each Scheduled Payment will change as the Loan Amount
changes.
December 13, 2004 // N
EXHIBIT 10.12
EXHIBIT C
LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 12:00 P.S.T.
FAX TO: DATE:______________
[ ] LOAN PAYMENT:
STENTOR, INC. (Borrower)
From Account #____________________ To Account #____________________
(Deposit Account #) (Loan Account #)
Principal $____________________and/or Interest $______________________
All Borrower's representation and warranties in the Amended and Restated
Loan and Security Agreement are true, correct and complete in all material
respects up to and including the date of the transfer request for a loan
payment, but those representations and warranties expressly referring to
another date shall be true, correct and complete in all material respects as
of that 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 Amended and Restated
Loan and Security Agreement are true, correct and complete in all material
respects up to and including the date of the 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 that 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 12:00pm, P.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 #_____________________________
December 13, 2004 // N
EXHIBIT 10.12
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
FROM: STENTOR, INC.
The undersigned Responsible Officer of Stentor, Inc. ("Borrower")
certifies 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 Responsible
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 + CC Monthly within 30 days Yes No
Annual (Audited) FYE within 120 days Yes No
Annual projected financial statements Annually within 45 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Monthly Basis:
Minimum Liquidity 1.75:1.00 ____:1.00 Yes No
Maintain on a Quarterly Basis:
Minimum EBITDA $1,100,000 (Q2/04) $_______ Yes No
$1,600,000 (Q3/04)
$2,190,000 (Q4/04)
Have there been updates to Borrower's intellectual property? Yes / No
Borrower only has deposit accounts located at the following institutions:______.
COMMENTS REGARDING EXCEPTIONS: See Attached.
BANK USE ONLY
Received by:____________________________
AUTHORIZED SIGNER
Date:___________________________________
Verified:_______________________________
AUTHORIZED SIGNER
Date:___________________________________
Compliance Status: Yes No
Sincerely,
STENTOR, INC.
________________________________________
SIGNATURE
________________________________________
TITLE
________________________________________
DATE
December 13, 2004 // N
CORPORATE BORROWING RESOLUTION
BORROWER: STENTOR, INC. BANK: SILICON VALLEY BANK
0000 XXXXXX XXXX., XXXXX 000 0000 XXXXXX XXXXX
XXXXXXXX, XX 00000 XXXXX XXXXX, XX 00000-0000
I, THE SECRETARY OR ASSISTANT SECRETARY OF STENTOR, INC. ("BORROWER"), CERTIFY
that Borrower is a corporation existing under the laws of the State of Delaware.
I certify that at a meeting of Borrower's Directors (or by other authorized
corporate action) duly held the following resolutions were adopted.
It is resolved that ANY ONE of the following officers of Borrower, whose name,
title and signature is below:
NAMES POSITIONS ACTUAL SIGNATURES
----- --------- -----------------
___________________ ___________________ ___________________
___________________ ___________________ ___________________
___________________ ___________________ ___________________
___________________ ___________________ ___________________
may act for Borrower and:
BORROW MONEY. Borrow money from Silicon Valley Bank ("Bank").
EXECUTE LOAN DOCUMENTS. Execute any loan documents Bank requires.
GRANT SECURITY. Grant Bank a security interest in any of Borrower's
assets.
NEGOTIATE ITEMS. Negotiate or discount all drafts, trade acceptances,
promissory notes, or other indebtedness in which Borrower has an interest
and receive cash or otherwise use the proceeds.
LETTERS OF CREDIT. Apply for letters of credit from Bank.
FOREIGN EXCHANGE CONTRACTS. Execute spot or forward foreign exchange
contracts.
ISSUE WARRANTS. Issue warrants for Borrower's stock.
FURTHER ACTS. Designate other individuals to request advances, pay fees
and costs and execute other documents or agreements (including documents
or agreement that waive Borrowers right to a jury trial) they think
necessary to effectuate these Resolutions.
Further resolved that all acts authorized by these Resolutions and performed
before they were adopted are ratified. These Resolutions remain in effect and
Bank may rely on them until Bank receives written notice of their revocation.
I certify that the persons listed above are Borrower's officers with the titles
and signatures shown following their names and that these resolutions have not
been modified are currently effective.
CERTIFIED TO AND ATTESTED BY:
X ______________________________________________
*Secretary or Assistant Secretary
X ______________________________________________
*NOTE: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, this resolution should
also be signed by a second Officer or Director of Borrower.
December 13, 2004 // <>
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