JOINDER TO LOAN AND SECURITY AGREEMENT
Exhibit 10.23
JOINDER TO
LOAN AND SECURITY AGREEMENT
LOAN AND SECURITY AGREEMENT
This Joinder to Loan and Security Agreement (this “Joinder”), dated as of November 3, 2009, is
executed and delivered by CLEARONE COMMUNICATIONS, INC., a Utah corporation (“New Borrower”), and
SQUARE 1 BANK (the “Bank”). Capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed to those terms in the Loan Agreement as defined below.
RECITALS
a. Netstreams, Inc., a Delaware corporation and Netstreams, LLC, a Delaware limited liability
company (collectively, “Borrower”) and the Bank are parties to that certain Loan and Security
Agreement dated as of November 12, 2008 (the “Loan Agreement”), and the Loan Agreement has been
amended from time to time, most recently by that “Fifth Amendment to Forbearance Agreement and
Sixth Amendment to Loan and Security Agreement” dated October 8, 2009 (as so amended from time to
time, the “Original Loan Agreement”). Additionally, there is a Sixth Amendment to Forbearance
Agreement dated October 29, 2009 (the “Sixth Amendment to Forbearance Agreement”), amending the
Forbearance Agreement and First Amendment to Loan and Security Agreement dated as of March 31,
2009.
b. Subject to the consummation of the Acquisition, defined below, from and after the
effectiveness of the Acquisition (the “Effective Time”) New Borrower, Borrower, and the Bank desire
to supplement the terms and provisions of the Original Loan Agreement as provided herein, and the
Original Loan Agreement as supplemented by this Joinder, and as may be hereafter further
supplemented, amended, modified or restated from time to time, shall be referred to collectively as
the “Loan Agreement.”
c. Borrower intends to enter into an agreement with New Borrower through which New Borrower
will acquire Borrower (the “Acquisition”). Bank hereby provides its consent to such Acquisition
and waives any provisions in the Loan Agreement which would be applicable to such Acquisition;
provided that New Borrower executes this Joinder for the purpose of acknowledging that it is and
shall be a Borrower under the Loan Agreement and the other Loan Documents.
d. New Borrower has read and approved the Loan Documents and has asked Bank to agree to allow
New Borrower to become a party to the Loan Documents in order to facilitate its ability to continue
to operate its business by achieving a stronger financial base for itself and its affiliated
companies.
NOW, THEREFORE, in consideration of the premises herein contained, and for other good and
valuable consideration (the receipt, sufficiency and adequacy of which are hereby acknowledged),
the parties hereto (intending to be legally bound) hereby agree as follows:
1. Incorporation. The foregoing preamble and recitals are incorporated herein by this
reference.
2. Joinder and Assumption.
(a) This Agreement shall not be effective until the Acquisition is consummated, which is the
Effective Time. From and after the Effective Time, New Borrower hereby absolutely and
unconditionally joins as and becomes a party to the Loan Agreement as a Borrower thereunder, (ii)
assumes, as a joint and several obligor thereunder, all of the obligations, liabilities and
indemnities of a Borrower under the Loan Agreement and all other Loan Documents, and (iii)
covenants and agrees to be bound by and adhere to all of the terms, covenants, waivers, releases,
agreements and
conditions of or respecting a Borrower with respect to the Loan Agreement and the other Loan
Documents and all of the representations and warranties contained in the Loan Agreement (in the
manner set forth in Section 4 of this Joinder) and the other Loan Documents with respect to New
Borrower. From and after the Effective Time, any reference to the term “Borrower” in the Loan
Agreement shall also include New Borrower. Except as expressly provided herein, the Loan Agreement
remains in full force and effect and is hereby ratified and confirmed in all respects.
(b) Notwithstanding the foregoing and the provisions of the Section 4 of the Loan Agreement,
New Borrower shall not be required to and does not grant any security interest in any of New
Borrower’s now owned and existing and hereafter acquired and arising assets as collateral for the
Liabilities. For clarity, New Borrower understands that the existing collateral arrangement with
respect to Borrower’s assets shall continue per the terms of the Original Loan Agreement.
(c) The Bank acknowledges that the representation of NetStreams, LLC, in the Sixth Amendment
to Forbearance Agreement regarding solvency may not have been accurate at such time and agrees to
waive that specific representation.
3. Consent to Terms of Acquisition. Bank hereby provides its consent to such
Acquisition and waives any provisions in the Loan Agreement which would be applicable to such
Acquisition; provided that New Borrower executes this Joinder for the purpose of acknowledging that
it is and shall be a Borrower under the Loan Agreement and the other Loan Documents. In connection
with the Acquisition and the requirements of Section 7.9 of the Loan Agreement, Bank also provides
it consent to the payment of Subordinated Debt to AV VIII Holdings, Inc., by New Borrower, on
behalf of Borrower, the principal amount of $250,000, plus accrued and unpaid interest. Such
payment shall not be considered a default under the terms of the Loan Agreement. Notwithstanding
Bank’s consent to such payment, the Subordination Agreement between Bank and AV VIII Holdings, Inc.
shall otherwise remain unmodified and in full force and effect following the date hereof.
4. Representations and Warranties. New Borrower hereby represents and warrants to the
Bank, which representations and warranties shall survive the execution and delivery hereof, that:
(a) this Joinder is the legally valid and binding obligation of New Borrower, enforceable against
New Borrower in accordance with its terms, (b) except as otherwise set forth below, each of the
representations and warranties contained in the Original Loan Agreement, as well as all other
representations and warranties contained in the other Loan Documents, are true and correct in all
respects to the extent required under the Original Loan Agreement.
5. Successors and Assigns. This Joinder shall be binding upon New Borrower, the
Borrowers, and the Bank and Bank’s successors and assigns, and shall inure to the benefit of the
New Borrower, the Banks and the Bank’s successors and assigns. No other person or entity shall be
a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim
in connection with, this Joinder. The New Borrower may not assign or transfer any of its rights or
obligations under this Joinder without the prior written consent of the Bank.
6. Severability; Construction. Wherever possible, each provision of this Joinder
shall be interpreted in such manner so as to be effective and valid under applicable law, but if
any provision of this Joinder shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such provision or invalidity, without invalidating
the remainder of such provision or the remaining provisions of this Joinder. All obligations of
the New Borrower and rights of the Bank expressed herein shall be in addition to and not in
limitation of those provided by applicable law.
6. Counterparts; Facsimile and other Electronic Transmission. This Joinder may be
executed in any number of counterparts and by the different parties hereto on separate counterparts
and each such counterpart shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Joinder. Receipt of an executed signature page to this
Joinder by facsimile or other electronic transmission shall constitute for all purposes effective
delivery thereof. Electronic records of this executed Joinder maintained by the Banks shall be
deemed to be originals. The Recitals hereto are hereby made a part of this Joinder by this
reference thereto.
7. GOVERNING LAW. THIS JOINDER SHALL BE A CONTRACT MADE UNDER AND BE CONSTRUED,
ENFORCED AND GOVERNED BY THE LAWS OF THE STATE OF NORTH CAROLINA APPLICABLE TO CONTRACTS MADE AND
TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
8. WAIVER OF JURY TRIAL. BANK AND BORROWER WAIVE ANY RIGHT TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREIN, INCLUDING CLAIMS BASED ON CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER COMMON
LAW OR STATUTORY BASES. ALL DISPUTES, CONTROVERSIES, CLAIMS, ACTIONS AND SIMILAR PROCEEDINGS
ARISING WITH RESPECT TO BORROWER’S ACCOUNT OR ANY RELATED AGREEMENT OR TRANSACTION SHALL BE BROUGHT
IN THE GENERAL COURT OF JUSTICE OF NORTH CAROLINA SITTING IN DURHAM COUNTY, NORTH CAROLINA OR THE
UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA, EXCEPT AS PROVIDED BELOW
WITH RESPECT TO ARBITRATION OF SUCH MATTERS. IF THE JURY WAIVER SET FORTH IN THIS SECTION IS NOT
ENFORCEABLE, THEN ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN WILL BE FINALLY SETTLED BY BINDING ARBITRATION IN
DURHAM COUNTY, NORTH CAROLINA IN ACCORDANCE WITH THE THEN-CURRENT COMMERCIAL ARBITRATION RULES OF
THE AMERICAN ARBITRATION ASSOCIATION BY ONE ARBITRATOR APPOINTED IN ACCORDANCE WITH SAID RULES.
THE ARBITRATOR SHALL APPLY NORTH CAROLINA LAW TO THE RESOLUTION OF ANY DISPUTE, WITHOUT REFERENCE
TO RULES OF CONFLICTS OF LAW OR RULES OF STATUTORY ARBITRATION. JUDGMENT ON THE AWARD RENDERED BY
THE ARBITRATOR MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF. NOTWITHSTANDING THE
FOREGOING, THE PARTIES MAY APPLY TO ANY COURT OF COMPETENT JURISDICTION FOR PRELIMINARY OR INTERIM
EQUITABLE RELIEF, OR TO COMPEL ARBITRATION IN ACCORDANCE WITH THIS PARAGRAPH. THE EXPENSES OF THE
ARBITRATION, INCLUDING THE ARBITRATOR’S FEES, REASONABLE ATTORNEYS’ FEES AND EXPERT WITNESS FEES,
INCURRED BY THE PARTIES TO THE ARBITRATION, MAY BE AWARDED TO THE PREVAILING PARTY, IN THE
DISCRETION OF THE ARBITRATOR, OR MAY BE APPORTIONED BETWEEN THE PARTIES IN ANY MANNER DEEMED
APPROPRIATE BY THE ARBITRATOR. UNLESS AND UNTIL THE ARBITRATOR DECIDES THAT ONE PARTY IS TO PAY
FOR ALL (OR A SHARE) OF SUCH EXPENSES, BOTH PARTIES SHALL SHARE EQUALLY IN THE PAYMENT OF THE
ARBITRATOR’S FEES AS AND WHEN BILLED BY THE ARBITRATOR.
IN WITNESS WHEREOF, the undersigned have caused this Joinder to Loan and Security Agreement to
be duly executed and delivered as of the date first above written.
| NEW BORROWER: CLEARONE COMMUNICATIONS, INC. |
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| By: | /s/ Xxxxxx Xxxxxxxxx | |||
| Name: | Xxxxxx Xxxxxxxxx | |||
| Its: | President and CEO | |||
| BANK: SQUARE 1 BANK |
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| By: | /s/ Xxxxx Xxxxxxxxxx | |||
| Name: | Xxxxx Xxxxxxxxxx | |||
| Its: | SVP | |||
Acknowledged and Agreed:
BORROWER:
| NETSTREAMS, INC. |
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| By: | /s/ Xxxxx X. Xxxxxx | |||
| Name: | Xxxxx X. Xxxxxx | |||
| Its: | CEO | |||
| NETSTREAMS, LLC |
||||
| By: | /s/ Xxxxx X. Xxxxxx | |||
| Name: | Xxxxx X. Xxxxxx | |||
| Its: | CEO | |||
