SILICON VALLEY BANK EXHIBIT 10.2
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: TERAYON COMMUNICATION SYSTEMS, INC.
ADDRESS: 0000 XXXXXX XXXX XXXX
XXXXX XXXXX, XXXXXXXXXX 00000
DATE: AUGUST 10, 1998
This Schedule forms an integral part of the Loan and Security Agreement between
Silicon Valley Bank and the above-borrower of even date.
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1. CREDIT LIMIT
(Section 1.1): An amount not to exceed the lesser of $5,000,000 at any
one time outstanding (the "Maximum Credit Limit") or the
sum of (A) and (B) below:
(A) RECEIVABLE LINE. 80% of the amount of Borrower's
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Eligible Receivables (as defined in Section 8
above) (the "Receivable Line"); plus
(B) PURCHASE ORDER LINE. An amount equal to the lesser
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of $2,000,000 or 25% of "Eligible Purchase Orders"
(as defined below) (the "Purchase Order Line").
As used herein, "Eligible Purchase Orders" means, at any
date, firm purchase orders held by Borrower which are
acceptable to Silicon in its sole discretion in all
respects and are for products due to be shipped within
the following six months.
Upon the next issuance of equity or subordinated debt
securities by Borrower, the proceeds thereof shall be
used to repay in full all sums due under the Purchase
Order Line, and thereafter no further Loans will be
available under the Purchase Order Line.
In the event the Commitment which the Borrower has
received from Silicon dated July 7, 1998 for mezzanine
financing terminates or is terminated for any reason, all
sums due under the Purchase Order Line shall become due
and payable, and thereafter no further Loans will be
available under the Purchase Order Line.
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2. INTEREST.
INTEREST RATE (Section 1.2):
A rate equal to the "Prime Rate" in effect from time to
time, plus 2% per annum. Interest shall be calculated
on the basis of a 360-day year for the actual number of
days elapsed. "Prime Rate" means the rate announced
from time to time by Silicon as its "prime rate;" it is
a base rate upon which other rates charged by Silicon
are based, and it is not necessarily the best rate
available at Silicon. The interest rate applicable to
the Obligations shall change on each date there is a
change in the Prime Rate.
MINIMUM MONTHLY INTEREST (Section 1.2): none
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3. FEES (Section 1.4):
Loan Fee: $50,000, payable concurrently herewith. (any commitment
fee previously paid by the borrower in connection with
this loan shall be credited against this fee.)
Purchase Order
Facility Fee: $10,000, payable on the date of the first Loan with
respect to Eligible Purchase Orders.
Unused Line Fee: Commencing on the first anniversary date of this
Agreement, in the event, in any calendar month (or
portion thereof at said date and at the end of the term
hereof), the average daily principal balance of the Loans
outstanding during the month is less than $5,000,000,
Borrower shall pay Silicon an unused line fee in an
amount equal to 0.25% per annum on the difference between
$5,000,000 and the average daily principal balance of the
Loans outstanding during the month, which unused line fee
shall be computed and paid monthly, in arrears, on the
first day of the following month.
Collateral
Monitoring
Fee: $500 per month, payable in arrears, for the first four
full calendar months during the term hereof and
prorated for any partial calendar month at the
beginning of the term hereof, and thereafter $1,000 per
month, payable in arrears (prorated for any partial
calendar month at end of the term of this Agreement).
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4. MATURITY DATE
(Section 6.1): Two years from the date of this Agreement, subject to
automatic renewal as provided in Section 6.1 above, and
early termination as provided in Section 6.2 above.
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5. FINANCIAL COVENANTS
(Section 5.1): Borrower shall comply with all of the following
covenants. Compliance shall be determined as of the end
of each month, except as otherwise specifically
provided below:
MINIMUM TANGIBLE
NET WORTH: Borrower shall maintain a Tangible Net Worth of not
less than a deficit $1,000,000.
DEFINITIONS. For purposes of the foregoing financial covenants, the
following terms shall have the following meanings:
"Tangible Net Worth" shall mean the excess of total
assets over total liabilities, determined in accordance
with generally accepted accounting principles, with the
following adjustments:
(A) there shall be excluded from assets: (i) notes,
accounts receivable and other obligations owing to the
Borrower from its officers or other Affiliates (except
that Xxxx Communications shall not be deemed to be an
"Affiliate" for purposes of this clause), and (ii) all
assets which would be classified as intangible assets
under generally accepted accounting principles,
including without limitation goodwill, licenses,
patents, trademarks, trade names, copyrights,
capitalized software and organizational costs, licenses
and franchises
(B) there shall be excluded from liabilities: all
indebtedness which is subordinated to the Obligations
under a subordination agreement in form specified by
Silicon or by language in the instrument evidencing the
indebtedness which is acceptable to Silicon in its
discretion.
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6. REPORTING.
(Section 5.3): Borrower shall provide Silicon with the following, in
such form as Silicon shall specify:
1. Monthly Receivable agings, aged by invoice date,
within fifteen days after the end of each month.
2. Monthly accounts payable agings, aged by invoice date,
and outstanding or held check registers, if any,
within fifteen days after the end of each month.
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3. Monthly reconciliations of Receivable agings (aged by
invoice date), transaction reports, and general ledger,
within fifteen days after the end of each month.
4. Monthly lists of all extended term invoices and a
Backlog/Purchase Order Report, within fifteen days
after the end of each month.
5. Monthly unaudited financial statements, as soon as
available, and in any event within thirty days after the
end of each month.
6. Monthly Compliance Certificates, within thirty days after
the end of each month, in such form as Silicon shall
reasonably specify, signed by the Chief Financial Officer
of Borrower, certifying that as of the end of such month
Borrower was in full compliance with all of the terms and
conditions of this Agreement, and setting forth
calculations showing compliance with the financial
covenants set forth in this Agreement and such other
information as Silicon shall reasonably request,
including, without limitation, a statement that at the
end of such month there were no held checks.
7. Quarterly unaudited financial statements, as soon as
available, and in any event within forty-five days after
the end of each fiscal quarter of Borrower.
8. Annual operating budgets (including income statements,
balance sheets and cash flow statements, by month) for
the upcoming fiscal year of Borrower within thirty days
prior to the end of each fiscal year of Borrower.
9. Annual financial statements, as soon as available, and in
any event within 120 days following the end of Borrower's
fiscal year, certified by independent certified public
accountants acceptable to Silicon.
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7. COMPENSATION
(Section 5.5): [Intentionally omitted]
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8. BORROWER INFORMATION:
PRIOR NAMES OF
BORROWER
(Section 3.2): See Representations and Warranties of Borrower dated July
7, 1998. (Since said date, Borrower has re-incorporated
in Delaware under its current name.)
PRIOR TRADE
NAMES OF BORROWER
(Section 3.2): See Representations and Warranties of Borrower dated
July 7, 1998
EXISTING TRADE
NAMES OF BORROWER
(Section 3.2): See Representations and Warranties of Borrower dated
July 7, 1998
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OTHER LOCATIONS AND
ADDRESSES
(Section 3.3): See Representations and Warranties of Borrower dated
July 7, 1998
MATERIAL ADVERSE
LITIGATION
(Section 3.10): None
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9. OTHER COVENANTS
(Section 5.1): Borrower shall at all times comply with all of the
following additional covenants:
(1) BANKING RELATIONSHIP. Borrower shall at all times
maintain its primary banking relationship with
Silicon.
Borrower: Silicon:
TERAYON COMMUNICATION SYSTEMS, INC. SILICON VALLEY BANK
By_______________________________ By_______________________________
President or Vice President Title____________________________
By_______________________________
Secretary or Ass't Secretary
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EXHIBIT A TO LOAN AND SECURITY AGREEMENT
NONASSIGNABLE RIGHTS (SECTION 2.1)
Rights under that certain License No. 7881 between Borrower and Wind River
Systems, Inc., 0000 Xxxxxxxx Xxxxxx, Xxxxxxx XX 00000
