EXHIBIT 10.20
LOAN AND SECURITY AGREEMENT
Agreement No. ___________ Dated as of December 31, 1997
between
MMC/GATX PARTNERSHIP NO. I
and
TRANSAMERICA BUSINESS CREDIT CORPORATION
as Lenders
and
EXODUS COMMUNICATIONS, INC.
a California corporation
0000 Xxx Xxxxx Xxxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
as Borrower
CREDIT AMOUNT: $8,000,000
Commitments: MMC/GATX Partnership No. I: $4,000,000
Transamerica Business Credit Corporation $4,000,000
Repayment Period: 12 months
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Treasury Note Maturity: 36 months
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Loan Margin: 709 basis points
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Commitment Termination Date: March 31, 1998
The defined terms and information set forth on this cover page are a part of
the LOAN AND SECURITY AGREEMENT, dated as of the date first written above (this
"Agreement"), entered into by and between MMC/GATX PARTNERSHIP NO. I and
TRANSAMERICA BUSINESS CREDIT CORPORATION (each individually a "Lender" and
collectively, "Lenders") and the borrower ("Borrower") set forth above. The
terms and conditions of this Agreement agreed to between Lenders and Borrower
are as follows:
ARTICLE I
INTERPRETATION
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I.1. Certain Definitions. Unless otherwise indicated in this Agreement or any
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other Operative Document, the following terms, when used in this Agreement or
any other Operative Document, shall have the following respective meanings:
"Borrower's Home State" shall mean the state in which Borrower's principal
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place of business is located.
"Business Day" shall mean any day other than a Saturday, Sunday or public
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holiday under the laws of California, Illinois or Borrower's Home State or other
day on which banking institutions are authorized or obligated to close in
California, Illinois or Borrower's Home State.
"Claim" has the meaning given to that term in Section 10.03.
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"Collateral" has the meaning given to that term in Section 5.01(a).
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"Commitment Fee" has the meaning given to that term in Section 2.04.
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"Commitment Termination Date" shall mean the date specified on the cover
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page of this Agreement.
"Commitment" means, with respect to each Lender, the amount set forth
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following such term on the cover page of this Agreement and "Commitments" means
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all such amounts collectively.
"Credit Amount" shall mean the maximum amount that Lenders are committed to
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lend (if the conditions specified in Schedule 3 are satisfied), which amount is
set forth following such term on the cover page of this Agreement.
"Current Assets" shall mean the aggregate amount of all of the consolidated
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assets of Borrower and its Subsidiaries that would, in accordance with GAAP, be
classified on a balance sheet as current assets.
"Current Liabilities" shall mean the aggregate amount of all of the
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consolidated liabilities of Borrower and its Subsidiaries that would, in
accordance with GAAP, be classified on a balance sheet as current liabilities.
"Default" shall mean any event which with the passing of time or the giving
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of notice or both would become an Event of Default hereunder.
"Default Rate" shall mean the per annum rate of interest equal to the
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higher of (i) 18% or (ii) the Prime Rate plus 6%, but such rate shall in no
event be more than the highest rate permitted by applicable law.
"Disclosure Schedule" has the meaning set forth in the definition of the
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term "Permitted Liens."
"Environmental Law" shall mean the Resource Conservation and Recovery Act
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of 1987, the Comprehensive Environmental Response, Compensation and Liability
Act, and any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree (in each case having the force of law)
regulating or imposing liability or standards of conduct concerning any
Hazardous Material, as now or at any time hereafter in effect.
"Equity Securities" of any Person shall mean (a) all common stock,
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preferred stock, participations, shares, partnership interests or other equity
interests in and of such Person (regardless of how designated and whether or not
voting or non-voting) and (b) all warrants, options and other rights to acquire
any of the foregoing.
"Event of Default" has the meaning given to that term in Section 9.01.
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"Funding Date" shall mean the date on which the Loan is made to or on
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account of Borrower under this Agreement.
"GAAP" shall mean generally accepted accounting principles and practices as
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in effect in the United States of America from time to time, consistently
applied.
"Hazardous Material" means any hazardous, dangerous or toxic constituent
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material, pollutant, waste or other substance, whether solid, liquid or gaseous,
which is regulated by any federal, state or local governmental authority.
"Indebtedness" shall mean, with respect to Borrower or any Subsidiary, the
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aggregate amount of, without duplication, (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or services (excluding
trade payables aged less than 180 days), (d) all capital lease obligations of
such Person, (e) all obligations or liabilities of others secured by a lien on
any asset of such Person, whether or not such obligation or liability is
assumed, (f) all obligations or liabilities of others guaranteed by such Person;
and (g) any other obligations or liabilities which are required by GAAP to be
shown as debt on the balance sheet of such Person. Unless otherwise indicated,
the term "Indebtedness" shall include all Indebtedness of Borrower and the
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Subsidiaries.
"Intellectual Property" shall mean all of Borrower's right, title and
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interest in and to patents, patent rights (and applications therefor),
trademarks and service marks (and applications and registrations therefor),
inventions, copyrights, mask works (and applications and registrations
therefor), trade names, trade styles, software and computer programs, trade
secrets, methods, processes, know how, drawings, specifications, descriptions,
and all memoranda, notes, and records with respect to any research and
development, all whether now owned or subsequently acquired or developed by
Borrower and whether in tangible or intangible form or contained on magnetic
media readable by machine together with all such magnetic media.
"Lien" shall mean any pledge, bailment, lease, mortgage, hypothecation,
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conditional sales and title retention agreements, charge, claim, encumbrance or
other lien in favor of any Person.
"Loan" means the Loan advanced by Lenders to Borrower under this Agreement
----
according to their respective pro rata share of the Credit Amount based on each
Lender's respective commitment.
"Loan Margin" shall mean the number of basis points set forth following
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such term on the cover page of this Agreement.
"Loan Rate" shall mean, with respect to the Loan, the per annum rate of
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interest (based on a year of twelve 30 day months) equal to the sum of (a) the
U.S. Treasury note rate of a term equal to the Treasury
Note Maturity as quoted in The Wall Street Journal on the date the Notes are
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prepared, plus (b) the Loan Margin.
"Make-Whole Premium" shall mean an amount equal to the greater of (i) zero
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and (ii) the excess of (x) the sum of the present values, at the date of
prepayment of the amount of each remaining scheduled payment of interest on and
principal on the Loan, or portion of such payment, which will not be required to
be made as a result of such prepayment (each such payment an "Amount Payable")
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(each such Amount Payable discounted separately at the Treasury Rate, determined
on the date three (3) Business Days before the date of prepayment, compounded
monthly, from the date such Amount Payable would be due), over (y) the principal
amount of such Note to be prepaid. The "Treasury Rate" shall be the yield (as
quoted in The Wall Street Journal on the date which is three (3) Business Days
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prior to the date of prepayment) on U.S. Treasury securities adjusted to a
constant maturity equal to the then remaining number of full months to maturity
of the Note.
"Note"shall mean the secured promissory note of Borrower substantially in
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the form of Exhibit A.
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"Obligations" has the meaning given to that term in Section 5.01.
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"Operative Documents" shall mean this Agreement, the Note, the Warrant, the
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Landlord Waiver and Consent(s) and all other documents, instruments and
agreements executed and delivered in connection herewith or therewith or in
respect of the closing of the transactions contemplated hereby or thereby.
"Payment Date" means the first Business Day of each calendar month.
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"Permitted Indebtedness" shall mean and include:
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(a) Indebtedness of Borrower to Lenders;
(b) Indebtedness of Borrower secured by Liens permitted under clause (e)
of the definition of Permitted Liens;
(c) Indebtedness arising from the endorsement of instruments in the
ordinary course of business;
(d) Indebtedness existing on the date hereof and set forth on the
Disclosure Schedule;
(e) Subordinated Indebtedness; and
(f) Other Indebtedness of Borrower not exceeding One Hundred Thousand
Dollars ($100,000) at any time.
"Permitted Investments" shall mean and include:
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(b) Deposits with commercial banks organized under the laws of the
United States or a state thereof to the extent such deposits are fully
insured by the Federal Deposit Insurance Corporation;
(c) Investments in marketable obligations issued or fully guaranteed by
the United States and maturing not more than one (1) year from the date of
issuance; and
(d) Investments in open market commercial paper rated at least "A1" or
"P1" or higher by a national credit rating agency and maturing not more
than one (1) year from the creation thereof.
(e) Investments pursuant to or arising under currency agreements or
interest rate agreements entered into in the ordinary course of business;
(f) Investments consisting of deposit accounts of Borrower in which
Lenders have a perfected security interest; and
(g) Other Investments aggregating not in excess of Two Hundred Fifty
Thousand Dollars ($250,000) at any time.
"Permitted Liens" shall mean (a) the Lien created by this Agreement, (b)
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Liens for fees, taxes, levies, imposts, duties or other governmental charges of
any kind which are not yet delinquent or which are being contested in good faith
by appropriate proceedings which suspend the collection thereof (provided,
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however, that such proceedings do not involve any substantial danger of the
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sale, forfeiture or loss of any item of equipment and that Borrower has
adequately bonded such Lien or reserves sufficient to discharge such Lien have
been provided on the books of Borrower), (c) Liens identified on the disclosure
schedule attached hereto as Schedule 2 ("Disclosure Schedule"), (d) Liens to
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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, (e) Liens upon any equipment or other personal property
acquired by Borrower after the date hereof to secure (i) the purchase price of
such equipment or other personal property or (ii) lease obligations or
indebtedness incurred solely for the purpose of financing the acquisition of
such equipment or other personal property; provided that (A) such Liens are
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confined solely to the equipment or other personal property so acquired and the
amount secured does not exceed the acquisition price thereof, and (B) no such
Lien shall be created, incurred, assumed or suffered to exist in favor of
Borrower's officers, directors or shareholders holding five percent (5%) or more
of Borrower's Equity Securities, (f) carriers', warehousemen's, mechanics',
landlords', materialmen's, repairmen's or other similar Liens arising in the
ordinary course of business which are not delinquent or remain payable without
penalty or which are being contested in good faith and by appropriate
proceedings, and (g) non-exclusive licenses of Intellectual Property entered
into in the ordinary course of business and licenses, Liens or similar
arrangements entered into in connection with joint ventures and corporate
collaborations and (h) Liens securing Indebtedness to working capital lenders.
"Person" shall mean and include an individual, a partnership, a
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corporation, a business trust, a joint stock company, a limited liability
company, an unincorporated association or other entity and any domestic or
foreign national, state or local government, any political subdivision thereof,
and any department, agency, authority or bureau of any of the foregoing.
"Prime Rate" shall mean the interest rate per annum specified in the "Money
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Rates" column of The Wall Street Journal, but such rate shall in no event be
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more than the highest interest rate permitted by applicable law.
"Subordinated Indebtedness" shall mean Indebtedness subordinated to the
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Obligations on terms and conditions acceptable to Lenders in their sole
discretion.
"Subsidiary" shall mean any corporation of which a majority of the
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outstanding capital stock entitled to vote for the election of directors
(otherwise than as the result of a default) is owned by Borrower directly
or indirectly through Subsidiaries.
"Term" shall mean the period from and after the date hereof until the
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payment or satisfaction in full of all Obligations under this Agreement and the
other Operative Documents.
"Treasury Note Maturity" shall mean the period of months set forth
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following such term on the cover page of this Agreement.
"Warrants" shall mean the separate warrants in favor of each of the Lenders
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to purchase securities of Borrower substantially in the forms of Exhibits B-1
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and B-2.
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I.2. Headings Headings. in this Agreement and each of the other Operative
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Documents are for convenience of reference only and are not part of the
substance hereof or thereof.
I.3. Plural Terms. All terms defined in this Agreement or any other
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Operative Document in the singular form shall have comparable meanings when
used in the plural form and vice versa.
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I.4. Construction. This Agreement is the result of negotiations among,
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and has been reviewed by, Borrower and Lenders and their respective counsel.
Accordingly, this Agreement shall be deemed to be the product of all parties
hereto, and no ambiguity shall be construed in favor of or against Borrower or
Lenders.
I.5. Entire Agreement. This Agreement, together with the terms set forth
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in each of the other Operative Documents, taken together, constitute and,
contain the entire agreement of Borrower and Lenders and, with regard to their
respective subject matters, supersede any and all prior agreements, term sheets,
negotiations, correspondence, understandings and communications among the
parties, whether written or oral, with respect to their respective subject
matters.
I.6. Other Interpretive Provisions. References in this Agreement to
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"Articles," "Sections," "Exhibits," "Schedules" and "Annexes" are to recitals,
articles, sections, exhibits, schedules and annexes herein and hereto unless
otherwise indicated. References in this Agreement and each of the other
Operative Documents to any document, instrument or agreement shall include (a)
all exhibits, schedules, annexes and other attachments thereto, (b) all
documents, instruments or agreements issued or executed in replacement thereof,
and (c) such document, instrument or agreement, or replacement or predecessor
thereto, as amended, modified and supplemented from time to time and in effect
at any given time. The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement or any other Operative Document shall
refer to this Agreement or such other Operative Document, as the case may be, as
a whole and not to any particular provision of this Agreement or such other
Operative Document, as the case may be. The words "include" and "including" and
words of similar import when used in this Agreement or any other Operative
Document shall not be construed to be limiting or exclusive. Unless otherwise
indicated in this Agreement or any other Operative Document, all accounting
terms used in this Agreement or any other Operative Document shall be construed,
and all accounting and financial computations hereunder or thereunder shall be
computed, in accordance with generally accepted accounting principles as in
effect in the United States of America from time to time.
ARTICLE II
THE CREDIT
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II.1. Credit Facility
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(a) The Credit Amount. Subject to the terms and conditions of this
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Agreement and relying upon the representations and warranties herein set forth
as and when made or deemed to be made, each Lender agrees to lend to Borrower
such Lender's pro rata share of the Credit Amount (based upon the respective
Commitment of each Lender). The Loan may not be prepaid except in accordance
with Section 2.02(e).
(b) Loan Interest Rate. Borrower shall pay interest on the unpaid
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principal amount of the Loan from the date of the Loan until the Loan is paid in
full, at a per annum rate of interest equal to the Loan Rate determined in
accordance with the definition of Loan Rate. The Loan Rate applicable to the
Loan shall not be subject to change in the absence of manifest error. All
computations of interest on the Loan shall be based on a year of twelve 30 day
months. If Borrower pays interest on the Loan which is determined to be in
excess of the then legal maximum rate, then that portion of each interest
payment representing an amount in excess of the then legal maximum rate shall be
deemed a payment of principal and applied against the principal of the Loan.
(c) Payments of Principal and Interest. Borrower shall make payments of
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accrued interest only on the outstanding principal amount of the Loan on each
Payment Date, commencing on the next Payment Date after the Loan is made,
through and including December 1, 1998. If not earlier prepaid pursuant to
Section 2.02(e), on January 4, 1999, Borrower shall repay the entire outstanding
principal amount of the Loan, plus accrued interest through and including such
date. Notwithstanding the preceding sentence, if Borrower closes an initial
public offering of its common stock having aggregate net proceeds of not less
than $25,000,000, prior to January 4, 1999, then payments shall be made as set
forth in the first two sentences of this Section 2.01(c), but the principal of
the Loan shall be payable in twelve equal installments plus accrued interest on
the outstanding principal balance on each Payment Date, commencing on January 4,
1999; provided, that only if Borrower and both Lenders agree, Borrower may
prepay all of the principal and accrued interest on January 4, 1999.
(d) Loan Fee. On January 4, 1999, in addition to any outstanding
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principal, accrued interest and other amounts then due, Borrower shall pay to
each Lender a separate loan fee in the amount of $60,000.
II.2.
Use of Proceeds; the Loan and the Note; Disbursement.
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(a) Use of Proceeds. The proceeds of the Loan shall be used solely for
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working capital or general corporate purposes of Borrower.
(b) The Loan and the Note. The obligation of Borrower to repay each
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Lender's pro rata share of the unpaid principal amount of and interest on the
Loan shall be evidenced by a Note issued to each Lender and each Lender is
authorized to endorse on a grid annexed to its Note appropriate notations
regarding payments made on the Note; provided, however, that the failure to
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make, or an error in making, any such notation shall not limit or otherwise
affect the obligations of Borrower hereunder.
(c) Disbursement. Each Lender shall disburse its pro rata portion of the
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Loan by wire transfer to Borrower unless otherwise directed in writing by
Borrower. Notwithstanding anything stated herein to the contrary, neither
Lender shall have any obligation to advance funds on behalf of the other Lender.
(d) Termination of Commitment to Lend. Notwithstanding anything to the
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contrary in the Operative Documents, Lenders' obligations to advance the Loan
hereunder shall terminate on the earlier of (i) the occurrence of any Event of
Default hereunder, and (ii) the Commitment Termination Date.
(e) Prepayment. If Borrower has received a commitment for debt financing
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(in the form of an executed term sheet or proposal letter which is subject to
agreement on definitive documentation, but not credit approval), which would be
senior to or on parity with the Loan in lien priority or senior to the Loan in
right of payment, in an aggregate principal amount of not less than $15,000,000,
Borrower shall give Lenders written notice thereof and Lenders shall have the
option to cause Borrower to prepay to the Lenders at the closing of the new debt
financing the outstanding principal amount of the Loan, at a prepayment price
equal to the principal amount of the Loan outstanding, plus interest accrued
thereon through and including the date of such prepayment, plus a premium equal
to the Make-Whole Premium. Lenders shall give written notice to Borrower within
ten (10) Business Days of receipt of notice from Borrower of whether Lenders
will require such prepayment. If Lenders do not require such prepayment but are
unwilling to amend this document to permit the incurrence of the Indebtedness in
connection with the new debt financing on the terms and conditions proposed,
Borrower shall have the right to prepay all and not less than all of the
principal amount of the Loan at the prepayment price specified above.
II.3. Other Payment Terms.
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(a) Place and Manner. Borrower shall make all payments due to Lenders in
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lawful money of the United States, in immediately available funds, at the
address for payments and in the manner specified in Section 10.05(b).
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(b) Date. Whenever any payment due hereunder shall fall due on a day
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other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall be included in the computation of
interest or fees, as the case may be.
(c) Default Rate. If either (i) any amounts required to be paid by
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Borrower under this Agreement or the other Operative Documents (including
principal or interest payable on the Loan, any fees or other amounts) remain
unpaid after such amounts are due, or (ii) an Event of Default has occurred and
is continuing, Borrower shall pay interest on the outstanding principal balance
hereunder from the date due or from the date of the Event of Default, as
applicable, until such past due amounts are paid in full or until all Events of
Defaults are cured, as applicable, at a per annum rate equal to the Default
Rate, such rate to change from time to time as the Prime Rate shall change. All
computations of such interest at the Default Rate shall be based on a year of
360 days and actual days elapsed.
II.4. Commitment Fee. Borrower has paid a Commitment Fee in the
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aggregate amount of $20,000 (the "Commitment Fees"). Any portion of the
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Commitment Fees not utilized to pay Lenders' expenses in connection with the
negotiation, documentation and funding of the Loan will be applied to amounts
due under one or both of the Notes, as determined by Lenders, in the order in
which such amounts are due. If the Loan is not made, any remaining balance of
the Commitment Fees shall be retained by one or both of the Lenders as they
shall determine.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
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III.1. Representations and Warranties. Except as set forth in the
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Disclosure Schedule, Borrower makes the following representations and warranties
to Lenders as of the date hereof and again on the Funding Date:
(a) Organization and Qualification. Borrower is a corporation duly
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organized, validly existing and in good standing under the laws of its state of
incorporation and is duly qualified to do business in Borrower's Home State.
Borrower has no Subsidiaries.
(b) Authority. Borrower has all necessary corporate power, authority and
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legal right and has obtained all approvals and consents and has given all
notices necessary to execute and deliver this Agreement and the other Operative
Documents and to perform the terms hereof and thereof. Borrower has all
requisite corporate power and authority to own and operate its properties and to
carry on its businesses as now conducted.
(c) Conflict with Other Instruments, etc. Neither the execution and
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delivery of any Operative Document to which Borrower is a party nor the
consummation of the transactions therein contemplated nor compliance with the
terms, conditions and provisions thereof will conflict with or result in a
breach of any of the terms, conditions or provisions of the charter or the
bylaws of Borrower or, to its knowledge, any law or any regulation, order, writ,
injunction or decree of any court or governmental instrumentality or any
material agreement or instrument to which Borrower is a party or by which it or
any of its properties is bound or to which it or any of its properties is
subject, or constitute a default thereunder or result in the creation or
imposition of any Lien, other than Permitted Liens.
(d) Title to Properties. Borrower has good and marketable title to the
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Collateral, free and clear of all Liens, other than Permitted Liens. Borrower
has title and ownership of, or is licensed under, all Intellectual Property,
with no known infringement of the rights of others. Borrower has not received
any communications alleging that Borrower has violated, or by conducting its
business as proposed, would violate any proprietary rights of any other Person.
Borrower has no knowledge of any infringement or violation by it of the
intellectual property rights of any third party and has no knowledge of any
violation or infringement by a third party of any of its Intellectual Property.
The Collateral and the Intellectual Property constitute substantially all of the
assets and property of Borrower. Borrower does not own any right, title or
interest in or to any real property or motor vehicles, other than motor vehicles
leased for executives as part of a benefit arrangement.
(e) Authorization, Governmental Approvals, etc. The execution and
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delivery by Borrower of each Operative Document, the granting of the security
interest in the Collateral, the issuance of the Warrant, the issuance of the
securities into which the Warrant is exercisable, the issuance of any securities
into which the securities issuable upon exercise of the Warrant are convertible,
and the performance of the obligations herein and therein contemplated have each
been duly authorized by all necessary action on the part of Borrower. No
authorization, consent, approval, license or exemption of, and no registration,
qualification, designation, declaration or filing with, or notice to, any Person
is, was or will be necessary to (i) the valid execution and delivery of any
Operative Document to which Borrower is a party, (ii) the performance of
Borrower's obligations under any Operative Document, or (iii) the granting of
the security interest in the Collateral, except for filings in connection with
the perfection of the security interest in any of the Collateral or the issuance
of the Warrant. The Operative Documents have been or will be duly executed and
delivered and constitute or will constitute legal, valid and binding obligations
of Borrower, enforceable in accordance with their respective terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency or other
similar laws of general application relating to or affecting the enforcement of
creditors' rights or by general principles of equity.
(f) Litigation. There are no actions, suits, proceedings or
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investigations pending or, to the
knowledge of Borrower, threatened against or affecting Borrower, or the business
or any property or asset owned by it, before any court or governmental
department, agency or instrumentality which, if adversely determined, could
reasonably be expected to have a material adverse effect on the financial
condition, business or operations of Borrower.
(g) Security Interest. Assuming the proper filing of one or more
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financing statement(s) identifying the Collateral with the proper state and/or
local authorities, the security interests in the Collateral granted to Lenders
pursuant to this Agreement (i) constitute and will continue to constitute first
priority security interests (except to the extent any other Permitted Lien
existing on the date of this Agreement may create any priority to Lenders' Lien
under this Agreement) and (ii) are and will continue to be superior and prior to
the rights in the Collateral of all other creditors of Borrower (except to the
extent of such Permitted Liens).
(h) Executive Offices. The principal place of business and chief
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executive office of Borrower, and the office where Borrower will keep all
records and files regarding the Collateral, is set forth on the cover page of
this Agreement.
(i) Solvency, Etc. Borrower is Solvent (as defined below) and, after
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the execution and delivery of the Operative Documents and the consummation of
the transactions contemplated thereby, Borrower will be Solvent. "Solvent" shall
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mean, with respect to any Person on any date, that on such date (a) the fair
value of the property of such Person is greater than the fair value of the
liabilities (including, without limitation, contingent liabilities) of such
Person, (b) the present fair saleable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature and (d)
such Person is not engaged in business or a transaction, and is not about in
business or a transaction, for which such Person's property would constitute an
unreasonably small capital.
(j) Catastrophic Events; Labor Disputes. None of Borrower or its
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properties is or has been affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or other casualty that could reasonably be expected to have a material
adverse effect on the financial condition, business or operations of Borrower.
There are no disputes presently subject to grievance procedure, arbitration or
litigation under any of the collective bargaining agreements, employment
contracts or employee welfare or incentive plans to which Borrower is a party,
and there are no strikes, lockouts, work stoppages or slowdowns, or, to the best
knowledge of Borrower, jurisdictional disputes or organizing activity occurring
or threatened which could reasonably be expected to have a material adverse
effect on the financial condition, business or operations of Borrower.
(k) No Material Adverse Effect . No event has occurred and no condition
--------------------------
exists which could reasonably be expected to have a material adverse effect on
the financial condition, business or operations of Borrower since December 31,
1996.
(l) Accuracy of Information Furnished. None of the Operative Documents
---------------------------------
and none of the other certificates, statements or information furnished to
Lenders by or on behalf of Borrower in connection with the Operative Documents
or the transactions contemplated thereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Lenders recognize that all financial
projections furnished to Lenders by or on behalf of Borrower in connection with
the Operative Documents or the transactions contemplated thereby are not to be
viewed as facts and that actual results
during the period or periods covered by such projections may differ from the
projected or forecasted results.
(m) Certain Agreements of Officers, Employees and Consultants.
---------------------------------------------------------
(i) No officer, employee or consultant of Borrower is, or is now
expected to be, in violation of any term of any employment contract, proprietary
information agreement, nondisclosure agreement, noncompetition agreement, or any
other contract or agreement or any restrictive covenant relating to the right of
any such officer, employee or consultant to be employed by Borrower because of
the nature of the business conducted or to be conducted by Borrower or relating
to the use of trade secrets or proprietary information of others, and to the
best of Borrower's knowledge, after due inquiry, the continued employment of
Borrower's officers, employees and consultants do not subject Borrower to any
liability for any claim or claims arising out of or in connection with any such
contract, agreement, or covenant.
(ii) To the knowledge of Borrower, no officers of Borrower, and no
employee or consultant of Borrower whose termination, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect,
has any present intention of terminating his or her employment or consulting
relationship with Borrower.
ARTICLE IV
REPORTING REQUIREMENTS
----------------------
IV.1. Furnishing Reports . Borrower shall furnish to Lenders:
------------------
(a) Financial Statements. So long as Borrower is not subject to the
--------------------
reporting requirements of Section 12 or Section 15 of the Securities and
Exchange Act of 1934, as amended, promptly as they are available, unaudited
monthly and audited annual financial statements of Borrower and such other
financial information as Lenders may reasonably request from time to time. From
and after such time as Borrower becomes a publicly reporting company, promptly
as they are available and in any event: (i) at the time of filing of Borrower's
Form 10-K with the Securities and Exchange Commission after the end of each
fiscal year of Borrower, the financial statements of Borrower filed with such
Form 10-K; and (ii) at the time of filing of Borrower's Form 10-Q with the
Securities and Exchange Commission after the end of each of the first three
fiscal quarters of Borrower, the financial statements of Borrower filed with
such Form 10-Q.
(b) Notice of Defaults. As soon as possible, and in any event within
------------------
five (5) Business Days after the discovery of a Default or Event of Default
provide Lenders with an Officer's Certificate of Borrower setting forth the
facts relating to or giving rise to such Default or Event of Default and the
action which Borrower proposes to take with respect thereto.
(b) Miscellaneous. Such other information as Lenders may reasonably
-------------
request from time to time.
ARTICLE V
GRANT OF SECURITY INTEREST
GENERAL PROVISIONS CONCERNING SECURITY
--------------------------------------
V.1. Grant of Security Interest. Borrower, in order to secure the payment
--------------------------
of the principal and interest with respect to the Loan made pursuant to this
Agreement, all other sums due under and in respect hereof and of the other
Operative Documents, including fees, charges, expenses and attorneys' fees and
costs
and the performance and observance by Borrower of all other terms, conditions,
covenants and agreements herein and in the other Operative Documents (all such
amounts and obligations being herein sometimes called the "Obligations"), does
-----------
hereby grant to Lenders and their successors and assigns, a security interest in
and to the following property (collectively, the "Collateral"): All right,
----------
title, interest, claims and demands of Borrower in and to:
(a) All goods and equipment now owned or hereafter acquired, including,
without limitation, all laboratory equipment, computer equipment, office
equipment, 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;
(b) 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, and
Borrower's books relating to any of the foregoing;
(c) All contract rights and general intangibles (except to the extent
included within the definition of Intellectual Property), now owned or
hereafter acquired, including, without limitation, goodwill, license agreements,
franchise agreements, blueprints, drawings, purchase orders, customer lists,
route lists, infringements, claims, computer programs, computer disks, computer
tapes, literature, reports, catalogs, design rights, income tax refunds,
payments of insurance and rights to payment of any kind;
(d) 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 (subject, in each case, to the contractual
rights of third parties to require funds received by Borrower to be expended in
a particular manner), 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 and Borrower's books relating
to any of the foregoing;
(e) All documents, cash, deposit accounts, letters of credit, certificates
of deposit, instruments, chattel paper and investment property, including,
without limitation, all securities, whether certificated or uncertificated,
security entitlements, securities accounts, commodity contracts and commodity
accounts, and all financial assets held in any securities account or otherwise,
wherever located, now owned or hereafter acquired and Borrower's books relating
to the foregoing;
(f) Any and all claims, rights and interests in any of the above and all
substitutions for, additions and accessions to and proceeds thereof, including,
without limitation, insurance, condemnation, requisition or similar payments and
proceeds of the sale or licensing of Intellectual Property to the extent such
proceeds no longer constitute Intellectual Property; but
(g) Excluding, all Intellectual Property.
---------
V.2. Duration of Security Interest. Lenders' security interest in the
-----------------------------
Collateral shall continue until the payment in full and the satisfaction of all
Obligations, whereupon such security interest shall terminate. Lenders, upon
payment in full and the satisfaction of the Obligations, shall execute such
further documents and take such further actions as may be necessary to effect
the release and/or termination contemplated by
this Section 5.02, including duly executing and delivering termination
------------
statements for filing in all relevant jurisdictions.
V.3. Possession of Collateral. Except as set forth in Section 5.04, so
------------------------
long as no Event of Default has occurred and is continuing, Borrower shall
remain in full possession, enjoyment and control of the Collateral (except only
as may be otherwise required by Lenders for perfection of its security interest
therein) and to manage, operate and use the same and each part thereof with the
rights and franchises appertaining thereto; provided, however, that the
possession, enjoyment, control and use of the Collateral shall at all times be
subject to the observance and performance of the terms of this Agreement.
V.4. Location of Collateral. The Collateral is and shall remain in the
----------------------
possession of Borrower at Borrower's address stated on the cover page of this
Agreement.
V.5. Lien Subordination. Lenders agree that the Liens granted to them
------------------
hereunder shall be subordinate to the Liens of existing and future lenders
providing equipment financing and equipment lessors, and to the Lien of Silicon
Valley Bank; provided that, in the case of equipment financings and leasing,
--------
such Liens are confined solely to the equipment so financed and the proceeds
thereof; and provided, further, that the Obligations hereunder shall not be
-------- -------
subordinate in right of payment to any obligations to other lenders or equipment
lessors and Lenders' rights and remedies hereunder shall not in any way be
subordinate to the rights and remedies of any such lenders or equipment lessors.
Lenders agree to execute and deliver such agreements and documents as may be
reasonably requested by Borrower from time to time which set forth the lien
subordination described in this Section 5.05 and are reasonably acceptable to
------------
Lenders. Lenders shall have no obligation to execute any agreement or document
which would impose obligations, restrictions or lien priority on Lenders which
are less favorable to Lenders than those described in this Section 5.05.
------------
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
VI.1. Affirmative Covenants
---------------------
(a) Payment of Taxes, etc. Borrower shall pay and discharge all taxes,
---------------------
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien upon any of its properties; provided that there shall be no
--------
requirement to pay any such tax, assessment, charge, levy or claim (i) which is
being contested in good faith and by appropriate proceedings or which presents
no risk of seizure, forfeiture, levy or other event which could jeopardize any
Collateral or (ii) for which payment in full is bonded or reserved in Borrower's
financial statements.
(b) Inspection Rights. Borrower shall, at any reasonable time and from
-----------------
time to time, permit Lenders or any of its agents or representatives to inspect
the Collateral, to examine and make copies of and abstracts from the records and
books of account of, and visit the properties of, Borrower and to discuss the
affairs, finances and accounts of Borrower with any of its officers or directors
relating in each case to Lenders' capacity as lenders and secured party
hereunder and with respect to the Collateral.
(c) Maintenance of Equipment and Similar Assets. Borrower shall keep and
-------------------------------------------
maintain all items of equipment and other similar types of personal property
that form any significant portion or portions of the Collateral in good
operating condition and repair and shall make all necessary replacements thereof
and
renewals thereto so that the value and operating efficiency thereof shall at all
times be maintained and preserved. Borrower shall not permit any such material
item of Collateral to become a fixture to real estate or an accession to other
personal property, without the prior written consent of Lenders. Borrower shall
not permit any such material item of Collateral to be operated or maintained in
violation of any applicable law, statute, rule or regulation. With respect to
items of leased equipment (to the extent Lenders have any security interest in
any residual Borrower's interest in such equipment under the lease), Borrower
shall keep, maintain, repair, replace and operate such leased equipment in
accordance with the terms of the applicable lease.
(d) Insurance.
---------
(i) Borrower shall, obtain and maintain for the Term, at its own
expense, (x) "all risk" insurance against loss or damage to the Collateral, (y)
commercial general liability insurance (including contractual liability,
products liability and completed operations coverages) reasonably satisfactory
to Lenders, and (z) such other insurance against such other risks of loss and
with such terms, as shall in each case be reasonably satisfactory to or
reasonably required by Lenders (as to carriers, amounts and otherwise). The
amount of the "all risk" insurance shall be determined to Lenders' reasonable
satisfaction as of each anniversary date of this Agreement and the appropriate
amount of coverage shall be put in effect on the next succeeding renewal or
inception date of such insurance.
(ii) The deductible with respect to "all-risk" insurance required by
clause (x) above and product liability insurance required by clause (y) above
shall not exceed $25,000; otherwise there shall be no deductible with respect to
any insurance required to be maintained hereunder. The amount of commercial
general liability insurance (other than products liability coverage and
completed operations insurance) required by clause (y) above shall be at least
$5,000,000 per occurrence. The amount of the products liability and completed
operations insurance required by clause (y) above shall be at least $5,000,000
per occurrence. Each "all risk" policy shall: (x) name Lenders as loss payees,
(y) provide for each insurer's waiver of its right of subrogation against
Lenders, and (z) provide that such insurance (A) shall not be invalidated by any
action of, or breach of warranty by, Borrower of a provision of any of its
insurance policies, and (B) shall waive set-off, counterclaim or offset against
Lenders. Each liability policy shall (w) name Lenders as additional insureds in
the full amount of Borrower's liability coverage limits (or the coverage limits
of any successor to Borrower or such successor's parent which is providing
coverage) and (x) provide that such insurance shall have cross-liability and
severability of interest endorsements (which shall not increase the aggregate
policy limits of Borrower's insurance). All insurance policies shall (y)
provide that Borrower's insurance shall be primary without a right of
contribution of Lenders' insurance, if any, or any obligation on the part of
Lenders to pay premiums of Borrower, and (z) shall contain a clause requiring
the insurer to give Lenders at least 30 days' prior written notice of its
cancellation (other than cancellation for non-payment for which 10 days' notice
shall be sufficient). Borrower shall on or prior to the first Funding Date and
prior to each policy renewal, furnish to Lenders certificates of insurance or
other evidence satisfactory to Lenders that such insurance coverage is in
effect.
ARTICLE VII
NEGATIVE COVENANTS
------------------
VII.1. Negative Covenants. So long as the Obligations remain outstanding,
------------------
Borrower shall not:
(a) Name; Location of Chief Executive Office and Collateral. Without
-------------------------------------------------------
thirty (30) days prior
written notice to Lenders, change its chief executive office or principal place
of business or remove or cause to be removed from the location set forth on the
cover page hereof or move any Collateral to a location other than that set forth
on the cover page hereof.
(b) Liens on Collateral. Create, incur, assume or suffer to exist any Lien
-------------------
of any kind upon any Collateral, whether now owned or hereafter acquired, except
Permitted Liens.
(c) Negative Pledge Regarding Intellectual Property. Create, incur, assume
-----------------------------------------------
or suffer to exist any Lien of any kind upon any Intellectual Property, whether
now owned or hereafter acquired, except Permitted Liens.
(d) Dispositions of Collateral or Intellectual Property. Convey, sell,
---------------------------------------------------
offer to sell, lease, transfer, exchange or otherwise dispose of (collectively,
a "Transfer") all or any part of the Collateral or Intellectual Property to any
--------
Person, other than: (i) transfers of inventory in the ordinary course of
business; (ii) transfers of non-exclusive licenses and similar arrangements for
the use of the property of Borrower in the ordinary course of business; or (iii)
transfers of worn-out or obsolete equipment.
(e) Distributions. (i) Pay any dividends or make any distributions on its
-------------
Equity Securities; (ii) purchase, redeem, retire, defease or otherwise acquire
for value any of its Equity Securities (other than repurchases by cancellation
of indebtedness pursuant to the terms of employee stock purchase plans, employee
restricted stock agreements or similar arrangements in an aggregate amount not
to exceed $100,000); (iii) return any capital to any holder of its Equity
Securities as such; (iv) make any distribution of assets, Equity Securities,
obligations or securities to any holder of its Equity Securities as such; or (v)
set apart any sum for any such purpose; provided, however, that Borrower may pay
dividends payable solely in Common Stock.
(f) Mergers or Acquisitions. Merge or consolidate with or into any other
-----------------------
Person or acquire or all or substantially all of the capital stock or assets of
another Person.
(g) Transactions With Affiliates. Enter into any contractual obligation
----------------------------
with any affiliate or engage in any other transaction with any affiliate except
upon terms at least as favorable to Borrower as an arms-length transaction with
unaffiliated Persons.
(h) Maintenance of Accounts. Maintain any deposit accounts or accounts
-----------------------
holding securities owned by Borrower except (i) accounts located at Silicon
Valley Bank and Citibank, N.A. and (ii) other accounts with respect to which
Lenders take such action as they deem necessary to obtain a perfected security
interest in such account.
(i) Indebtedness Payments. (i) Without the prior written consent of
---------------------
Lenders (which shall not be unreasonably withheld or delayed), prepay, redeem,
purchase, defease or otherwise satisfy in any manner prior to the scheduled
repayment thereof any Indebtedness for borrowed money (other than amounts due
under this Loan Agreement or the Note) or lease obligations, (ii) amend, modify
or otherwise change the terms of any Indebtedness for borrowed money (other than
the Obligations) or lease obligations so as to accelerate the scheduled
repayment thereof or (iii) repay any notes to officers, directors or
shareholders.
(j) Subsidiaries. Without the prior written consent of Lenders, form any
------------
Subsidiary (other than in connection with the reincorporation of Borrower in
Delaware).
(k) Indebtedness. Create, incur, assume or permit to exist any
------------
Indebtedness except Permitted
Indebtedness.
(l) Investments. Make any Investment except for Permitted Investments.
-----------
ARTICLE VIII
CONDITIONS PRECEDENT
--------------------
VIII.1. Closing. At the time of execution and delivery of this Agreement,
-------
Borrower shall have duly executed and/or delivered to Lenders the items set
forth in Part I of Schedule 3.
--------------------
VIII.2. Other Conditions. The obligation of Lenders to make the Loan
----------------
shall be subject to the execution and/or delivery to Lenders of each of the
items set forth in Part I of Schedule 3 and the satisfaction of by Borrower of
--------------------
each condition set forth in Part II of Schedule 3.
---------------------
VIII.3. Covenant to Deliver. Borrower agrees (not as a condition but as a
-------------------
covenant) to deliver to Lenders each item required to be delivered to Lenders as
a condition to the Loan, if the Loan is advanced. Borrower expressly agrees that
the extension of the Loan prior to the receipt by Lenders of any such item shall
not constitute a waiver by Lenders of Borrower's obligation to deliver such
item.
ARTICLE IX
DEFAULT AND REMEDIES
--------------------
IX.1. Events of Default. An "Event of Default" shall mean the
-----------------
occurrence of one or more of the following described events:
(a) Borrower shall (i) default in the payment of principal of or interest
on the Loan when the same is due, or (ii) default in the payment of any expense
or other amount payable hereunder or thereunder for five (5) days after receipt
of written notice from Lenders that the same is due; or
(b) Borrower shall breach any provision of Section 7.01 or Section
------------ -------
6.01(d); or
(c) Borrower shall default in the performance of any covenant, agreement
or obligation (other than a covenant, agreement or obligation referred to in,
Section 9.01(a) or Section 9.01(b)) contained in any Operative Document (other
--------------- ---------------
than the Warrant) and Borrower shall fail to cure within thirty (30) days after
receipt of written notice from Lenders any default in the performance of any
such covenant, agreement or obligation contained therein; or
(d) Borrower shall have breached the terms of the Warrant; or
(e) Any representation or warranty made herein or on the Funding Date by
Borrower in any Operative Document, or any certificate or financial statement
furnished pursuant to the provisions of any Operative Document, shall prove to
have been false or misleading in any material respect as of the time made or
furnished; or
(f) Any Operative Document shall in any material respect cease to be, or
Borrower shall assert that any Operative Document is not, a legal, valid and
binding obligation of Borrower enforceable in accordance with its terms; or
(g) A default shall exist under any agreement with any third party or
parties which consists of the failure to pay any Indebtedness at maturity or
which results in a right by such third party or parties, whether or not
exercised, to accelerate the maturity of any Indebtedness of Borrower in an
amount in excess of Two Hundred Fifty Thousand Dollars ($250,000) or a default
shall exist under any financing agreement with a Lender or any of such Lender's
affiliates; or
(h) A proceeding shall have been instituted in a court of competent
jurisdiction seeking a decree or order for relief in respect of Borrower in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or for the appointment of a receiver,
liquidator, assignee, custodian, trustee (or similar official) of Borrower or
for any substantial part of its property, or for the winding-up or liquidation
of its affairs, and such proceeding shall remain undismissed or unstayed and in
effect for a period of thirty (30) consecutive days or such court shall enter a
decree or order granting the relief sought in such proceeding; or
(i) Borrower shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an involuntary case under any
such law, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian (or other similar official)
of Borrower or for any substantial part of its property, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any corporate action in furtherance of
any of the foregoing; or
(j) A final judgment or order for the payment of money in excess of One
Hundred Thousand Dollars ($100,000) (exclusive of amounts covered by insurance
issued by an insurer not an affiliate of Borrower) shall be rendered against
Borrower and the same shall remain undischarged for a period of thirty (30) days
during which execution shall not be effectively stayed, or any judgment, writ,
assessment, warrant of attachment, or execution or similar process shall be
issued or levied against a substantial part of the property of Borrower and such
judgment, writ, or similar process shall not be released, stayed, vacated or
otherwise dismissed within thirty (30) days after issue or levy.
IX.2. Consequences of Event of Default.
--------------------------------
(a) If an Event of Default specified under any of clauses (a) through (g)
-----------------------
or (j) of Section 9.01 shall occur and be continuing, Lenders may (i) declare
------ ------------
the Loan, together with interest thereon, plus any premium and all other
liabilities of Borrower hereunder and under the other Operative Documents to be
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived, and (ii) terminate
its commitment to make the Loan and terminate any commitment to advance money or
extend credit to or for the benefit of Borrower pursuant to any other agreement
or commitment extended by Lenders to Borrower.
(b) If an Event of Default specified under clause (h) or (i) of Section
----------------------------
9.01 shall occur, then immediately and without notice (i) the Loan, together
----
with interest thereon, plus premium, if any, and all other liabilities of
Borrower hereunder and under the other Operative Documents shall automatically
become due and payable, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived, and (ii) Lenders' commitment
hereunder to make the Loan and any other commitment of Lenders to Borrower to
advance money or extend credit pursuant to any other agreement or commitment
shall be terminated.
IX.3. Rights Regarding Collateral. Borrower agrees that when any Event
---------------------------
of Default has occurred
and is continuing, Lenders shall have the rights, options, duties and remedies
of a secured party as permitted by law and, in addition to and without limiting
the foregoing, Lenders may exercise any one or more or all, and in any order, of
the remedies herein set forth, including the following:
(a) Lenders, personally or by agents or attorneys, shall have the right
(subject to compliance with any applicable mandatory legal requirements) to
require Borrower to assemble the Collateral and make it available to Lenders at
a place to be designated by Lenders or to take immediate possession of the
Collateral, or any portion thereof, and for that purpose may pursue the same
wherever it may be found, and may enter any of premises of Borrower, with or
without notice, demand, process of law or legal procedure, to the extent
permitted by applicable law, and search for, take possession of, remove, keep
and store the same, or use and operate or lease the same until sold. In
furtherance of Lenders' rights hereunder, Borrower hereby grants to Lenders an
irrevocable, non-exclusive license (exercisable without royalty or other payment
by Lenders) to use, license or sublicense any patent, trademark, trade name,
copyright or other intellectual property in which Borrower now or hereafter has
any right, title or interest together with the right of access to all media in
which any of the foregoing may be recorded or stored; provided, however, that
such license shall only be exercisable in connection with the disposition of
Collateral upon Lenders' exercise of their remedies hereunder.
(b) Lenders may, if at the time such action may be lawful and always
subject to compliance with any mandatory legal requirements, either with or
without taking possession and either before or after taking possession, without
instituting any legal proceedings whatsoever, having first given notice of such
sale by registered or certified mail to Borrower once at least ten (10) days
prior to the date of such sale, and having first given any other notice which
may be required by law, sell and dispose of the Collateral, or any part thereof,
at a private sale or at public auction, to the highest bidder, in one lot as an
entirety or in separate lots, and either for cash or on credit and on such terms
as Lenders may determine, and at any place (whether or not it be the location of
the Collateral or any part thereof) designated in the notice referred to above.
To the extent permitted by applicable law, any such sale or sales may be
adjourned from time to time by announcement at the time and place appointed for
such sale or sales, or for any such adjourned sale or sales, without further
published notice, and Borrower, Lenders or the holder or holders of the Note, or
of any interest therein, may bid and become the purchaser at any such sale.
(c) Lenders may proceed to protect and enforce this Agreement and the
other Operative Documents by suit or suits or proceedings in equity, at law or
in bankruptcy, and whether for the specific performance of any covenant or
agreement herein contained or in execution or aid of any power herein granted;
or for foreclosure hereunder, or for the appointment of a receiver or receivers
for any real property security or any part thereof, or for the recovery of
judgment for the Obligations or for the enforcement of any other proper, legal
or equitable remedy available under applicable law.
IX.4. Waiver by Borrower. Upon the occurrence of an Event of Default,
------------------
to the extent permitted by law, Borrower covenants that it will not at any time
insist upon or plead, or in any manner whatsoever claim or take any benefit or
advantage of, any stay or extension law now or at any time hereafter in force,
nor claim, take nor insist upon any benefit or advantage of or from any law now
or hereafter in force providing for the valuation or appraisement of the
Collateral or any part thereof prior to any sale or sales thereof to be made
pursuant to any provision herein contained, or to the decree, judgment or order
of any court of competent jurisdiction; nor, after such sale or sales, claim or
exercise any right under any statute now or hereafter made or enacted by any
state or otherwise to redeem the property so sold or any part thereof, and, to
the full extent legally permitted, except as to rights expressly provided
herein, hereby expressly waives for itself and on behalf of each and every
Person, except decree or judgment creditors of Borrower, acquiring
any interest in or title to the Collateral or any part thereof subsequent to the
date of this Agreement, all benefit and advantage of any such law or laws, and
covenants that it will not invoke or utilize any such law or laws or otherwise
hinder, delay or impede the execution of any power herein granted and delegated
to Lenders, but will suffer and permit the execution of every such power as
though no such power, law or laws had been made or enacted.
IX.5. Effect of Sale. Any sale, whether under any power of sale
--------------
available to Lenders or by virtue of judicial proceedings, shall operate to
divest all right, title, interest, claim and demand whatsoever, either at law or
in equity, of Borrower in and to the property sold, and shall be a perpetual
bar, both at law and in equity, against Borrower, its successors and assigns,
and against any and all persons claiming the property sold or any part thereof
under, by or through Borrower, its successors or assigns.
IX.6. Application of Collateral Proceeds. The proceeds and/or avails
----------------------------------
of the Collateral, or any part thereof, and the proceeds and the avails of any
remedy hereunder (as well as any other amounts of any kind held by Lenders at
the time of, or received by Lenders after, the occurrence of an Event of Default
hereunder) shall be paid to and applied as follows:
(a) First, to the payment of reasonable costs and expenses, including all
-----
amounts expended to preserve the value of the Collateral, of foreclosure or
suit, if any, and of such sale and the exercise of any other rights or remedies,
and of all proper fees, expenses, liability and advances, including reasonable
legal expenses and attorneys' fees, incurred or made hereunder by Lenders;
(b) Second, to the payment to Lenders of the amount then owing or unpaid
------
on the Note, and in case such proceeds shall be insufficient to pay in full the
whole amount so due, owing or unpaid upon the Note, then first, to the unpaid
-----
interest thereon, second, to unpaid principal thereof and third to the remaining
------ -----
balance of the Obligations under the Note; such application to be made upon
presentation of the Note, and the notation thereon of the payment, if partially
paid, or the surrender and cancellation thereof, if fully paid;
(c) Third, to the payment of other amounts then payable to Lenders under
-----
any of the Operative Documents; and
(d) Fourth, to the payment of the surplus, if any, to Borrower, its
------
successors and assigns, or to whomsoever may be lawfully entitled to receive the
same.
IX.7. Reinstatement of Rights. If Lenders shall have proceeded to
-----------------------
enforce any right under this Agreement or any other Operative Document by
foreclosure, sale, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely, then and in every such case (unless otherwise ordered by a court of
competent jurisdiction), Lenders shall be restored to their former position and
rights hereunder with respect to the property subject to the security interest
created under this Agreement.
ARTICLE X
MISCELLANEOUS
-------------
X.1. Modifications, Amendments or Waivers. The provisions of any
------------------------------------
Operative Document may be modified, amended or waived only by a written
instrument signed by the parties thereto.
X.2. No Implied Waivers; Cumulative Remedies; Writing Required. No
---------------------------------------------------------
delay or failure of Lenders in exercising any right, power or remedy hereunder
shall affect or operate as a waiver thereof; nor shall any single or partial
exercise thereof or any abandonment or discontinuance of steps to enforce such a
right, power or remedy preclude any further exercise thereof or of any other
right, power or remedy. The rights and remedies hereunder of Lenders are
cumulative and not exclusive of any rights or remedies which it would otherwise
have. Any waiver, permit, consent or approval of any kind or character on the
part of Lenders of any breach or default under this Agreement or any such waiver
of any provision or condition of this Agreement must be in writing and shall be
effective only in the specified instance and to the extent specifically set
forth in such writing.
X.3. Expenses; Indemnification. Borrower agrees upon demand to pay
-------------------------
or reimburse Lenders for all liabilities, obligations and out-of-pocket
expenses, including reasonable fees and expenses of counsel for Lenders, from
time to time arising in connection with the enforcement or collection of sums
due under the Operative Documents. Borrower shall indemnify, reimburse and hold
Lenders, each of Lenders' partners, and each of their respective successors,
assigns, agents, officers, directors, shareholders, servants, agents and
employees harmless from and against all liabilities, losses, damages, actions,
suits, demands, claims of any kind and nature (including claims relating to
environmental discharge, cleanup or compliance), all costs and expenses
whatsoever to the extent they may be incurred or suffered by such indemnified
party in connection therewith (including reasonable attorneys' fees and
expenses), fines, penalties (and other charges of applicable governmental
authorities), licensing fees relating to any item of Collateral, damage to or
loss of use of property (including consequential or special damages to third
parties or damages to Borrower's property), or bodily injury to or death of any
person (including any agent or employee of Borrower) (each, a "Claim"), directly
or indirectly relating to or arising out of the use of the proceeds of the Loan
or otherwise, the falsity of any representation or warranty of Borrower or
Borrower's failure to comply with the terms of this Agreement or any other
Operative Document during the Term. The foregoing indemnity shall cover, without
limitation, (i) any Claim in connection with a design or other defect (latent or
patent) in any item of equipment included in the Collateral, (ii) any Claim for
infringement of any patent, copyright, trademark or other intellectual property
right, (iii) any Claim resulting from the presence on or under or the escape,
seepage, leakage, spillage, discharge, emission or release of any Hazardous
Materials on the premises of Borrower, including any Claims asserted or arising
under any Environmental Law, or (iv) any Claim for negligence or strict or
absolute liability in tort; provided, however, that Borrower shall not indemnify
-----------------
Lenders for any liability incurred by Lenders as a direct and sole result of
Lenders' gross negligence or willful misconduct. Such indemnities shall continue
in full force and effect, notwithstanding the expiration or termination of this
Agreement. Upon Lenders' written demand, Borrower shall assume and diligently
conduct, at its sole cost and expense, the entire defense of Lenders, each of
its partners, and each of their respective, agents, employees, directors,
officers, shareholders, successors and assigns against any indemnified Claim
described in this Section 10.03. Borrower shall not settle or compromise any
-------------
Claim against or involving Lenders without first obtaining Lenders' written
consent thereto, which consent shall not be unreasonably withheld.
X.4. Waivers. (a) Borrower shall give Lenders written notice within
-------
one hundred eighty (180) days of obtaining knowledge of the occurrence of any
claim or cause of action it believes it has, or may seek to assert to allege
against Lenders whether such claim is based in law or equity, arising under or
related to this Agreement or any of the other Operative Documents or to the
transactions contemplated hereby or thereby, or any act or omission to act by
Lenders with respect hereto or thereto, and that if it shall fail to give such
notice to Lenders with regard to any such claim or cause of action, Borrower
shall be deemed to have waived, and shall be forever barred from bringing or
asserting such claim or cause of action in any suit, action or proceeding in any
court or before any governmental agency or authority or any arbitrator.
(b) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR
ANYWHERE ELSE, BORROWER AGREES THAT IT SHALL NOT SEEK FROM LENDERS UNDER ANY
THEORY OF LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES.
X.5. Notices; Payments.
-----------------
(a) All notices and other communications given to or made upon any party
hereto in connection with this Agreement shall be in writing (including telexed,
telecopied or telegraphic communication) and mailed (by certified or registered
mail), telexed, telegraphed, telecopied or delivered to the respective parties,
as follows:
Borrower: At the address set forth on the cover page of this
Agreement.
Lenders: MMC/GATX PARTNERSHIP NO. I
c/o GATX Capital Corporation
Four Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone No.: 000-000-0000
Telecopier No.: 000-000-0000
Attention: Contract Administration
with a copy of all financial information to:
XXXXX XXXXXXXX & COMPANY
0 Xxxxxx Xxx, Xxxxx 000X
Xxxxxx, Xxxxxxxxxx 00000
and
TRANSAMERICA BUSINESS CREDIT CORPORATION
00 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxx 000000-0000
or in accordance with any subsequent written direction from either party to the
other. All such notices and other communications shall, except as otherwise
expressly herein provided, be effective when received; or in the case of
delivery by messenger or overnight delivery service, when left at the
appropriate address.
(b) Unless Lenders specify otherwise in writing, all payments shall be
made by wire transfer to:
MMC/GATX PARTNERSHIP NO. I
c/o GATX Capital Corporation, as Agent
Bank Name: NationsBank
Bank Address: Xxxxxx Xxxxx 00000
Account No.: 3750878673
ABA Routing No.: 000000000
Reference: Exodus Communications, Inc.
Account Name: GATX Capital Corporation
and
TRANSAMERICA BUSINESS CREDIT CORPORATION
Bank Name: The First National Bank of Chicago
Bank Address: Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Account No.: 55-75427
ABA Routing No.: 000-000-000
Reference: Exodus Communications, Inc.
Customer No. 1077-001
Account Name: Transamerica Technology Finance
X.6. Termination. This Agreement shall terminate at the end of the
-----------
Term; provided, however, that the termination of this Agreement shall not affect
-------- -------
any of the rights and remedies of Lenders hereunder, it being understood and
agreed that all such rights and remedies shall continue in full force and effect
until payment of all amounts owed to Lenders under or in connection with the
Operative Documents, whether on account of principal, interest, fees or
otherwise.
X.7. Severability. If any provision of any Operative Document is held
------------
invalid or unenforceable to any extent or in any application, the remainder of
such Operative Document and all other Operative Documents, or the application of
such provision to different Persons or circumstances or in different
jurisdictions, shall not be affected thereby.
X.8. Survival. All representations, warranties, covenants and
--------
agreements of Borrower contained herein or made in writing in connection
herewith shall survive the execution and delivery of the Operative Documents,
the making of the Loan hereunder, the granting of security and the issuance of
the Note.
X.9. Relationship of Parties. Subject to a separate Intercreditor
-----------------------
Agreement between the Lenders, Borrower and each Lender acknowledge, understand
and agree that:
(a) The relationship between the Borrower, on the one hand, and Lenders,
on the other, is, and at all time shall remain solely that of a borrower and
lenders. Lenders shall not under any circumstances be construed to be partners
or joint venturers of Borrower or any of its Affiliates; nor shall Lenders under
any circumstances be deemed to be in a relationship of confidence or trust or a
fiduciary relationship with Borrower or any of its Affiliates, or to owe any
fiduciary duty to Borrower or any of its Affiliates. Lenders do not undertake
or assume any responsibility or duty to Borrower or any of its Affiliates to
select, review, inspect, supervise, pass judgment upon or otherwise inform the
Borrower or any of its Affiliates of any matter in connection with its or their
Property, any Collateral held by any Lender or the operations of Borrower or any
of its Affiliates. Borrower and each of its Affiliates shall rely entirely on
their own judgment with respect to such matters, and any review, inspection,
supervision, exercise of judgment or supply of information undertaken or assumed
by any Lender in connection with such matters is solely for the protection of
Lenders and neither Borrower nor any Affiliate is entitled to rely thereon.
(b) The relationship between the Lenders is, and at all time shall remain
solely that of co-lenders. Lenders shall not under any circumstances be
construed to be partners or joint venturers of each other; nor shall the Lenders
under any circumstances be deemed to be in a relationship of confidence or trust
or a fiduciary relationship with each other, or to owe any fiduciary duty to
each other. Lenders do not undertake or assume any responsibility or duty to
each other to select, review, inspect, supervise, pass judgment upon or
otherwise inform each other of any matter in connection with Borrower or
Borrower's Property, any Collateral held by any Lender or the operations of
Borrower. Each Lender shall rely entirely on its own judgment with respect to
such matters, and any review, inspection, supervision, exercise of judgment or
supply of information undertaken or assumed by any Lender in connection with
such matters is solely for the protection of such Lender.
X.10. Governing Law. This Agreement, the other Operative Documents
-------------
and the rights and obligations of the parties hereto and thereto shall be
governed by and construed and enforced in accordance with the laws of the State
of California. Any action to enforce this Agreement against Borrower may be
brought in California or, with regard to Collateral, may also be brought
wherever such Collateral is located.
X.11. Successors and Assigns. This Agreement and the other Operative
----------------------
Documents shall be binding upon and inure to the benefit of Lenders, all future
holders of the Note, Borrower and their respective successors and permitted
assigns, except that Borrower may not assign or transfer its rights hereunder or
any interest herein without the prior written consent of Lenders; provided, that
the reincorporation of Borrower from a California corporation to a Delaware
corporation shall not be deemed an assignment or transfer under this Section
10.11. Lenders may sell to any other financial entity (a "Participant")
participation interests in Lenders' rights under this Agreement and the other
Operative Documents; provided that notwithstanding the sale of participations,
Lenders shall remain solely responsible for the performance of its obligations
under this Agreement, Lenders shall remain the holder of the Note for all
purposes under this Agreement and Borrower shall continue to deal solely and
directly with Lenders in connection with this Agreement and the other Loan
Documents. Lenders may disclose the Operative Documents and any other financial
or other information relating to Borrower or any Subsidiary to any potential
Participant, provided that such Participant agrees to protect the
confidentiality of such documents and information using the same measures that
it uses to protect its own confidential information.
X.12. Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument.
X.13. Further Assurances. Borrower will, at its own expense, from
------------------
time to time do, execute, acknowledge and deliver all further acts, deeds,
conveyances, transfers and assurances, and all financing and continuation
statements and similar notices, reasonably necessary or proper for the
perfection of the security interest being herein provided for in the Collateral,
whether now owned or hereafter acquired.
X.14. Power of Attorney in Respect of the Collateral. Borrower does
----------------------------------------------
hereby irrevocably appoint Lenders (which appointment is coupled with an
interest), the true and lawful attorney-in-fact of Borrower with full power of
substitution, for it and in its name (a) to perform (but Lenders shall not be
obligated to and shall incur no liability to Borrower or any third party for
failure to perform) any act which Borrower is obligated by this Agreement to
perform, (b) to ask, demand, collect, receive, receipt for, xxx for, compound
and give acquittance for any and all rents, issues, profits, avails,
distributions, income, payment draws and
other sums in which a security interest is granted under Section 5.01 with full
------------
power to settle, adjust or compromise any claim thereunder as fully as if
Lenders were Borrower itself, (c) to receive payment of and to endorse the name
of Borrower to any items of Collateral (including checks, drafts and other
orders for the payment of money) that come into Lenders' possession or under
Lenders' control, (d) to make all demands, consents and waivers, or take any
other action with respect to, the Collateral, (e) in Lenders' discretion, to
file any claim or take any other action or institute proceedings, either in its
own name or in the name of Borrower or otherwise, which Lenders may reasonably
deem necessary or appropriate to protect and preserve the right, title and
interest of Lenders in and to the Collateral, and (f) to otherwise act with
respect thereto as though Lenders were the outright owner of the Collateral;
provided, however, that the power of attorney herein granted shall be
-------- -------
exercisable only upon the occurrence and during the continuation of an Event of
Default unless in Lenders' reasonable opinion immediate action is necessary to
preserve or protect the Collateral. Borrower agrees to reimburse Lenders upon
demand for all reasonable costs and expenses, including attorneys' fees and
expenses, which Lenders may incur while acting as Borrower's attorney in fact
hereunder, all of which costs and expenses are included within the Obligations.
X.15. Confidentiality. All information (other than periodic reports
---------------
filed by Borrower with the Securities and Exchange Commission) disclosed by
Borrower to Lenders in writing or through inspection pursuant to this Agreement
shall be considered confidential. Lenders agree to use the same degree of care
to safeguard and prevent disclosure of such confidential information as Lenders
uses with its own confidential information, but in any event no less than a
reasonable degree of care. Lenders shall not disclose such information to any
third party (other than Lenders' or Lenders' partner's attorneys and auditors
subject to the same confidentiality obligation set forth herein) and shall use
such information only for purposes of evaluation of its investment in Borrower
and the exercise of Lenders' rights and the enforcement of their remedies under
this Agreement and the other Operative Agreements. The obligations of
confidentiality shall not apply to any information that (a) was known to the
public prior to disclosure by Borrower under this Agreement, (b) becomes known
to the public through no fault of Lenders, (c) is disclosed to Lenders by a
third party' having a legal right to make such disclosure, or (d) is
independently developed by Lenders.
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed this Agreement as of the day and year first above
written.
EXODUS COMMUNICATIONS, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
MMC/GATX PARTNERSHIP NO. I
By: Xxxxx Xxxxxxxx & Company, as general partner
By:______________________________________
Name:____________________________________
Title:___________________________________
TRANSAMERICA BUSINESS CREDIT CORPORATION
By:______________________________________
Name:____________________________________
Title:___________________________________
SCHEDULES
1 Funding Certificate
2 Disclosure Schedule
3 Conditions Precedent
EXHIBITS
A Form of Secured Promissory Note
B Form of Warrant
C Form of Opinion of Counsel
SCHEDULE 1
FUNDING CERTIFICATE
The undersigned, ____________________________________,being the duly
elected and acting __________________________________ of EXODUS COMMUNICATIONS,
INC., a California corporation ("Borrower"), does hereby certify to MMC/GATX
Partnership No. I, and TRANSAMERICA BUSINESS CREDIT CORPORATION in connection
with that certain Loan and Security Agreement dated as of December 31, 1997,
(the "Loan Agreement"; with other capitalized terms used below having the
meanings ascribed thereto in the Loan Agreement) that:
1. The representations and warranties made by Borrower in Article III of
-----------
the Loan Agreement and in the other Operative Documents are true and
correct as of the date hereof.
2. No event or condition has occurred and is continuing that would
constitute a Default or an Event of Default under the Loan Agreement
or any other Operative Document.
3. Borrower is in compliance with the covenants and requirements
contained in Articles IV, VI and VII of the Loan Agreement.
-----------------------
4. All conditions referred to in Article VIII of the Loan Agreement to
------------
the making of the Loan to be made on or about the date hereof been
satisfied.
5. No material adverse change in the general affairs, management, results
of operations, condition (financial or otherwise) or prospects of
Borrower, whether or not arising from transactions in the ordinary
course of business, has occurred.
Dated: _____________, 1998
EXODUS COMMUNICATIONS, INC.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
SCHEDULE 2
DISCLOSURE SCHEDULE
SCHEDULE 3
CONDITIONS PRECEDENT
PART I:
------
At the time of execution and delivery of this Agreement, there shall also
have been duly executed and delivered to Lenders:
(a) The Warrants;
(b) Copies, certified by the Secretary, Assistant Secretary or Chief
Financial Officer of Borrower as of the closing date, of Borrower's
charter documents and bylaws and of all documents evidencing corporate
action taken by Borrower authorizing the execution, delivery and
performance of the Operative Documents to which Borrower is a party,
in form and substance satisfactory to Lenders and its counsel;
(c) Good standing certificate from Borrower's state of incorporation and
the state in which Borrower's principal place of business is located,
together with certificates of the applicable governmental authorities
that Borrower is in compliance with the franchise tax laws of each
such state, each dated as of a recent date;
(d) Evidence of the insurance coverage required by Section 6.01(d) of this
---------------
Agreement;
(e) All necessary consents of shareholders and other third parties with
respect to the execution, delivery and performance of this Agreement,
the Warrant, the Note and the other Operative Documents;
(f) Form UCC-1 Financing Statements, duly executed by Borrower, or other
documents, and Borrower shall have taken such actions, if any, as
Lenders shall reasonably determine are necessary or desirable to
perfect and protect its security interest in the Collateral;
(g) All other documents as Lenders shall have reasonably requested.
PART II
-------
On or prior to the Funding Date of the Loan, each of the items set forth in
Part I of this Schedule 3 shall have been delivered to Lenders and the following
-------------------------
conditions shall have been satisfied or waived by Lenders:
(a) Borrower shall have provided to Lenders such documents, instruments
and agreements as Lenders shall reasonably request to evidence the
perfection and priority of the security interests granted to Lenders
pursuant to Article V;
---------
(b) No Event of Default or Default shall have occurred and be continuing;
(c) Borrower shall have duly executed and delivered to each Lender a Note
in the amount of the pro rata portion of the Loan made by such Lender;
(d) In Lenders' sole discretion, there shall not have occurred any
material adverse change in the general affairs, management, results of
operations, condition (financial or otherwise) or prospects of
Borrower, whether or not arising from transactions in the ordinary
course of business, and there shall not have occurred since the date
first written on the cover page of this Agreement any material adverse
deviation by Borrower from the business plan of Borrower presented to
and not disapproved by Lenders;
(e) The representations and warranties contained in this Agreement and the
other Operative Documents to which Borrower is a party shall be true
and correct in all material respects as if made on such Funding Date;
(f) Each of the Operative Documents remains in full force and effect;
(g) A favorable opinion of counsel for Borrower, dated as of the closing
date, in the form attached hereto as Exhibit C;
---------
(h) Notices of Security Interest to Depository Banks or Securities Account
Control Agreements in the forms provided by Lenders; and
(h) The Funding Date of the Loan shall not be later than the Commitment
Termination Date.
EXHIBIT A
SECURED PROMISSORY NOTE
$_________________ Dated: ___________, 1998
FOR VALUE RECEIVED, the undersigned, EXODUS COMMUNICATIONS, INC.
("Borrower"), a California corporation, HEREBY PROMISES TO PAY to the order of
--------
[MMC/GATX PARTNERSHIP NO. I, a California general partnership] [TRANSAMERICA
BUSINESS CREDIT CORPORATION] ("Lender") the principal amount of Four Million
------
Dollars ($4,000,000) or such lesser amount as shall equal the outstanding
principal balance of the of the pro rata portion of the Loan made to Borrower
pursuant to the Loan and Security Agreement referred to below (the "Loan
----
Agreement"), and to pay all other amounts due with respect to the Loan on the
---------
dates and in the amounts set forth in the Loan Agreement.
Interest on the principal amount of this Note from the date of this Note
shall accrue at the Loan Rate or, if applicable, the Default Rate. The Loan
Rate for this Note is _________% per annum based on a year of twelve 30 day
months. Principal, accrued interest and other amounts due under this Note shall
be paid as set forth in the Loan Agreement.
Principal, interest and all other amounts due with respect to the Loan, are
payable in lawful money of the United States of America to Lender by wire
transfer according to the wire transfer instructions set forth in the Loan
Agreement. The principal amount of this Note and the interest rate applicable
thereto, and all payments made with respect thereto, shall be recorded by Lender
and, prior to any transfer hereof, endorsed on the grid attached hereto which is
part of this Note.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Loan and Security Agreement, dated as of December 31, 1997, to
which Borrower and Lender are parties. The Loan Agreement, among other things,
(a) provides for the making of a secured Loan to Borrower, and (b) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events.
This Note may be prepaid only as set forth in the Loan Agreement.
This Note and the obligation of Borrower to repay the unpaid principal
amount of the Loan, interest on the Loan and all other amounts due Lenders under
the Loan Agreement is secured under the Loan Agreement.
Presentment for payment, demand, notice of protest and all other demands
and notices of any kind in connection with the execution, delivery, performance
and enforcement of this Note are hereby waived.
Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys' fees and costs, incurred by Lenders in the
enforcement or attempt to enforce any of Borrower's obligations hereunder not
performed when due. This Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of California.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by
one of its officers thereunto duly authorized on the date hereof.
EXODUS COMMUNICATIONS, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
LOAN INTEREST RATE AND PAYMENTS OF PRINCIPAL
Principal Scheduled
Date Amount Interest Rate Payment Amount Notation By
---- --------- ------------- -------------- -----------
EXHIBIT B-1
FORM OF WARRANT
EXHIBIT B-2
FORM OF WARRANT
EXHIBIT C
FORM OF OPINION OF COUNSEL
___________, 199__
MMC/GATX Partnership No. I
c/o GATX Capital Corporation, Agent
Four Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
and
Transamerica Business Credit Corporation
Gentlemen:
We have acted as counsel for EXODUS COMMUNICATIONS, INC. (the
"Borrower") in connection with (i) the execution of the Loan and Security
Agreement of even date herewith (the "Loan") between Borrower and MMC/GATX
Partnership No. I and TRANSAMERICA BUSINESS CREDIT CORPORATION ("Lenders"), (ii)
the issuance of two warrants to purchase Borrower's Series D Preferred Stock
(the "Warrants") and (iii) the transactions contemplated thereby. This opinion
is being rendered to you pursuant to Section 8.01 of the Loan Agreement.
Capitalized terms not otherwise defined in this opinion have the meaning given
them in the Loan Agreement.
In connection with this opinion and our representation, we have
examined originals, or copies certified or otherwise identified to our
satisfaction, of the following:
(i) The Loan Agreement;
(ii) The Warrants;
(iii) The Notes dated as of December 31, 1997;
(iv) The Restated Articles of Incorporation and the Bylaws of Borrower,
each as in effect on the date hereof;
(v) The certificate of an officer of Borrower as to certain factual
matters ("Officer Certificate");
(vi) Certificates issued by the Secretary of State of the State of
California dated _______________________, _____, certifying the good
standing of Borrower;
(vii) Such other documents, records, and certificates as we have deemed
necessary or appropriate as a basis for the opinions hereafter
expressed.
The Loan Agreement, the Note and the Warrant are hereinafter referred to as
the "Transaction
Documents."
In such examinations we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
originals of all documents submitted to us as certified, facsimile, telecopied
or photostatic copies thereof. As to certain matters of fact material to our
opinion, we have relied upon the Officer Certificate and upon your
representations in the Transaction Documents.
As used in this opinion, the expression "to the best of our knowledge,"
means the actual present knowledge or belief of those attorneys in our firm who
have or who are currently representing Borrower. We have not undertaken any
independent investigation to determine the existence or nonexistence of other
facts, and no inference as to our knowledge of the existence or nonexistence of
other facts should be drawn from the fact of this firm's representation of
Borrower in connection with the Transaction Documents.
Based upon and subject to the foregoing and subject to the qualifications
contained herein, we are of the opinion that:
(a) Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of California.
(b) Borrower has the requisite corporate power and authority to
execute, deliver and perform the Transaction Documents and to issue the Warrant.
All action on the part of Borrower, its directors and its shareholders necessary
for the authorization, execution, delivery and performance of the Transaction
Documents, has been taken. The Transaction Documents have been duly executed
and delivered by an authorized officer of Borrower.
(c) The execution, delivery and performance of the Transaction
Documents do not conflict with or violate any provision of Borrower's Restated
Articles of Incorporation or Bylaws or of applicable law and, to the best of our
knowledge, do not conflict with or constitute a default under any provision of
any judgment, writ, decree, order or material agreement, indenture, or
instrument to which Borrower is a party or by which it is bound.
(d) The Transaction Documents constitute legal, valid and binding
obligations of Borrower, enforceable in accordance with their respective terms.
To our knowledge, no filing need be made with any governmental authority with
respect to the Transaction Documents in connection with an exemption from state
usury laws or in connection with any other matter.
(e) The Series D Preferred Stock issuable upon exercise of the Warrant
have been duly authorized and reserved for issuance upon such exercise, and when
issued in accordance with the terms of the Warrant, will be duly authorized,
validly issued, fully paid and non-assessable.
(f) The shares of Common Stock issuable upon conversion of the Series
D Preferred Stock into which the Warrant is convertible, have been duly
authorized and reserved and for issuance, when so issued in accordance with the
terms of Borrower's Restated Articles of Incorporation, will be validly issued,
fully paid and non-assessable.
The opinions set forth above are subject to the following additional
qualifications, assumptions, limitations and exceptions:
(A) The effect of bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other similar laws relating to or affecting the
rights and remedies of creditors generally.
(B) Limitations imposed by general equitable principles upon the
specific enforceability of any of the provisions of the Transaction Documents
and upon the availability of injunctive relief or other equitable remedies.
(C) We express no opinion as to the enforceability of any choice of
law provision in the documents.
(D) We express no opinion as to the compliance or noncompliance with
applicable antifraud statutes under the rules and regulations of state and
federal securities laws concerning the issuance of the Warrant.
(E) We express no opinion herein concerning any law other than the law
of the State of California and the federal laws of the United States of America.
This opinion is furnished to you solely for your benefit and may not be
relied upon by any other person (other than assignees of any of your rights)
without our prior written consent, which consent shall not be unreasonably
withheld or delayed.
Very truly yours,
