JOINDER AND FIRST LOAN MODIFICATION AGREEMENT
EXHIBIT 10.1
JOINDER AND FIRST LOAN MODIFICATION AGREEMENT
This Joinder and First Loan Modification Agreement (this “Loan Modification Agreement”) is
entered into as of December 31, 2010, by and between (i) SILICON VALLEY BANK, a California
corporation with a loan production office located at 000 Xxxxxxxxxx Xxxx, Xxxxxxxx 0, Xxxxx 000,
Xxxxxx, Xxxxxxxxxxxx 00000 (“Bank”), (ii) SAFEGUARD SCIENTIFICS, INC., a Pennsylvania corporation
(“SFE”), with offices located at 000 Xxxxx Xxxx Xxxxx, Xxxxxxxx 000, Xxxxx, Xxxxxxxxxxxx 00000,
SAFEGUARD DELAWARE, INC., a Delaware corporation (“SDI”) and SAFEGUARD SCIENTIFICS (DELAWARE),
INC., a Delaware corporation, each with offices located at 0000 X. Xxxxxx Xx., Xxxxx 0000,
Xxxxxxxxxx, XX 00000 (individually and collectively, the “Borrower”); and (iii) SAFEGUARD DELAWARE
II, INC., a Delaware corporation (“New Borrower”).
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and
obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan
arrangement dated as of May 27, 2009, evidenced by, among other documents, a certain Amended and
Restated Loan and Security Agreement dated as of May 27, 2009, between Borrower and Bank (as
amended, the “Loan Agreement”). Capitalized terms used but not otherwise defined herein shall have
the same meaning as in the Loan Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as
described in the Loan Agreement (together with any other collateral security granted to Bank, the
“Security Documents”). Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the “Existing Loan Documents”.
3. JOINDER AND ASSUMPTION. New Borrower has been formed by SDI and is a wholly owned
Subsidiary of SDI. New Borrower hereby joins the Loan and Security Agreement and each of the other
appropriate Loan Documents, and agrees to comply with and be bound by all of the terms, conditions
and covenants of the Loan and Security Agreement and each of the other appropriate Loan Documents,
as if New Borrower were originally named a “Borrower” and/or a “Debtor” therein. Without limiting
the generality of the preceding sentence, New Borrower hereby assumes and agrees to pay and perform
when due all present and future indebtedness, liabilities and obligations of SDI under the Loan
Agreement, including, without limitation, the Obligations. From and after the date hereof, all
references in the Loan Documents to “Borrower” and/or “Debtor” shall be deemed to refer to and
include New Borrower. Further, all present and future Obligations of SDI shall be deemed to refer
to all present and future Obligations of New Borrower. New Borrower acknowledges that the
Obligations are due and owing to Bank from Borrower including, without limitation, New Borrower,
without any defense, offset or counterclaim of any kind or nature whatsoever as of the date hereof.
4. GRANT OF SECURITY INTEREST. To secure the payment and performance of all of the
Obligations, New Borrower hereby grants to Bank a continuing lien upon and security interest in all
of New Borrower’s now existing or hereafter arising rights and interest in the Collateral, whether
now owned or existing or hereafter created, acquired, or arising, and wherever located, including,
without limitation, all of New Borrower’s assets listed on Exhibit A attached hereto and
all of New Borrower’s books relating to the foregoing and any and all claims, rights and interests
in any of the above and all substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of any or all of the
foregoing. New Borrower represents, warrants, and covenants that the security interest granted
herein is and shall at all times continue to be a first priority perfected security interest in the
Collateral (subject only to Permitted Liens that may have superior priority to Bank’s Lien under
the Loan Agreement). If New Borrower shall acquire a commercial tort claim, such New Borrower
shall promptly notify Bank in a writing signed by such New Borrower of the general details thereof
and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory
to Bank. New Borrower further covenants and agrees that by its execution hereof it shall provide
all such information, complete all such forms, and take all such actions, and enter into all such
agreements, in form and substance reasonably satisfactory to Bank that are reasonably deemed
necessary by Bank in order to grant and continue a valid, first perfected security interest to Bank
in the Collateral. New Borrower hereby authorizes Bank to file financing statements, without
notice to any Borrower, with all appropriate jurisdictions in order to perfect or protect Bank’s
interest or rights hereunder, including a notice that any disposition of the Collateral, by either
any Borrower or any other Person, may be deemed to violate the rights of Bank under the Code. Such
financing statements may indicate
the Collateral as “all assets of the Debtor” or words of similar effect, or as being of an equal or
lesser scope, or with greater detail, all in Bank’s discretion.
5. SUBROGATION AND SIMILAR RIGHTS. Borrower (in each case including, without limitation,
New Borrower) waives any suretyship defenses available to it under the Code or any other applicable
law. Borrower waives any right to require Bank to: (i) proceed against any other Borrower or any
other Person; (ii) proceed against or exhaust any security; or (iii) pursue any other remedy. Bank
may exercise or not exercise any right or remedy it has against any Borrower or any security it
holds (including the right to foreclose by judicial or non-judicial sale) without affecting any
Borrower’s liability. Notwithstanding any other provision of this Loan Modification Agreement, the
Loan Agreement, or other Loan Documents, Borrower irrevocably waives all rights that it may have at
law or in equity (including, without limitation, any law subrogating such Borrower to the rights of
Bank under the Loan Agreement) to seek contribution, indemnification or any other form of
reimbursement from any other Borrower or any other Person now or hereafter primarily or secondarily
liable for any of the Obligations, for any payment made by a Borrower with respect to the
Obligations in connection with the Loan Agreement or otherwise and all rights that it might have to
benefit from, or to participate in, any security for the Obligations as a result of any payment
made by any Borrower with respect to the Obligations in connection with the Loan Agreement or
otherwise. Any agreement providing for indemnification, reimbursement or any other arrangement
prohibited under this section shall be null and void. If any payment is made to any Borrower in
contravention of this section, such Borrower shall hold such payment in trust for Bank and such
payment shall be promptly delivered to Bank for application to the Obligations, whether matured or
unmatured.
6. REPRESENTATIONS AND WARRANTIES. Except as described in the revised Perfection
Certificate delivered in connection herewith, each Borrower hereby represents and warrants to Bank
that all representations and warranties in the Loan Documents made on the part of any Borrower are
true and correct on the date hereof with respect to New Borrower, with the same force and effect as
if New Borrower were originally named as “Borrower” in the Loan Documents. In addition, each
Borrower represents and warrants to Bank that this Loan Modification Agreement has been duly
executed and delivered by each such Borrower, and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
7. DESCRIPTION OF CHANGE IN TERMS.
| A. | Modifications to Loan Agreement. |
| 1 | The Loan Agreement shall be amended by inserting the following
new clause (vi) immediately following Section 6.2(a)(v) thereof: |
“(vi) when any Advances are outstanding, promptly when requested by Bank,
and in any event within one (1) Business Day after Bank’s request, copies of
any Letters of Intent related to the Private Security Portfolio that
Borrower has received and that has been utilized as the basis for any
increase in the Net Asset Value Report as it applies to any Private
Securities.”
| 2 | The Loan Agreement shall be amended by deleting the following
text appearing as Section 6.4 thereof: |
“6.4 Operating Accounts.
(a) Other than (i) its payroll account, (ii) a collateral account with
Comerica Bank sufficient to secure the Clarient Guaranty and (iii) escrow
accounts established from time to time in the ordinary course of business in
connection with Permitted Investment transactions, maintain with Bank and/or
Bank’s Affiliates (x) all depository and operating accounts and (y) not less
than seventy-five percent (75%) (by value) of Borrower’s investment and
securities accounts.
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(b) Other than described in clause (a)(i), (a)(ii) and (a) (iii) above,
provide Bank five (5) days prior-written notice before establishing any
Collateral Account at or with any bank or financial institution other than
Bank or Bank’s Affiliates. For each Collateral Account that Borrower at any
time maintains, Borrower shall cause the
applicable bank or financial institution (other than Bank) at or with which
any Collateral Account is maintained to execute and deliver a Control
Agreement or other appropriate instrument with respect to such Collateral
Account to perfect Bank’s Lien in such Collateral Account in accordance with
the terms hereunder, which Control Agreement may not be terminated without
the prior written consent of the Bank. The provisions of the previous
sentence shall not apply to deposit accounts exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the
benefit of Borrower’s employees and identified to Bank by Borrower as such.”
and inserting in lieu thereof the following:
“6.4 Operating Accounts.
(a) Other than (i) escrow accounts established from time to time in the
ordinary course of business in connection with Permitted Investment
transactions and (ii) depository, operating and/or securities accounts of
Subsidiaries of the Borrower which are not parties to the Loan Documents
that are maintained at financial institutions other than Bank and/or Bank’s
Affiliates in connection with Permitted Investment transactions, Borrower
shall maintain with Bank and/or Bank’s Affiliates (x) all depository and
operating accounts and (y) not less than the lesser of (i) seventy-five
percent (75%) (by value) of Borrower’s investment and securities accounts or
(ii) Eighty Million Dollars ($80,000,000).
(b) Other than as described in clause (a)(i) and (a)(ii) above, provide Bank
five (5) days prior-written notice before establishing any Collateral
Account at or with any bank or financial institution other than Bank or
Bank’s Affiliates. Other than as described in clause (a)(i) and (a)(ii)
above, for each Collateral Account that Borrower at any time maintains,
Borrower shall cause the applicable bank or financial institution (other
than Bank) at or with which any Collateral Account is maintained to execute
and deliver a Control Agreement or other appropriate instrument with respect
to such Collateral Account to perfect Bank’s Lien in such Collateral Account
in accordance with the terms hereunder, which Control Agreement may not be
terminated without the prior written consent of the Bank. The provisions of
the previous sentence shall not apply to deposit accounts exclusively used
for payroll, payroll taxes and other employee wage and benefit payments to
or for the benefit of Borrower’s employees and identified to Bank by
Borrower as such.”
| 3 | The Loan Agreement shall be amended by deleting the following
clause (d) from the definition of “Permitted Investments” contained in Section
13.1 thereof: |
“(d) Investments of other Subsidiaries in or to other Subsidiaries or
Borrower and Investments by Borrower in other Subsidiaries that are not
parties to the Loan Documents in an amount not to exceed One Million Dollars
($1,000,000.00) in the aggregate in any fiscal year;”
and inserting in lieu thereof the following:
“(d) (i) Investments of other Subsidiaries in or to other Subsidiaries or
Borrower that are not parties to the Loan Documents in an amount not to
exceed One Million Dollars ($1,000,000.00) in the aggregate in any fiscal
year and (ii) Investments of Borrower in Subsidiaries that are not parties
to the Loan Documents, in an aggregate amount not to exceed Fifty Million
Dollars ($50,000,000.00) at any time;”
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| 4 | The Loan Agreement shall be amended by deleting the following
definition of “Revolving Line Maturity Date” from Section 13.1 thereof: |
““Revolving Line Maturity Date” is December 31, 2010.”
and inserting in lieu thereof the following:
““Revolving Line Maturity Date” is December 31, 2012.”
| 5 | The Borrowing Base Certificate attached as Exhibit C to
the Loan Agreement is hereby deleted and replaced by Exhibit B attached
hereto. |
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| 6 | The Compliance Certificate attached as Exhibit D to the
Loan Agreement is hereby deleted and replaced by Exhibit C attached
hereto. |
8. CONDITIONS PRECEDENT. As a condition precedent to the effectiveness of this Loan
Modification Agreement and the Bank’s obligation to make further Advances under the Revolving Line,
the Bank shall have received the following documents prior to or concurrently with this Agreement,
each in form and substance satisfactory to the Bank:
| A. | Bank shall have received copies, certified by a duly authorized officer of each
Borrower (including, without limitation, New Borrower), to be true and complete as of
the date hereof, of each of (i) the governing documents of each Borrower (including,
without limitation, New Borrower) as in effect on the date hereof, (ii) the resolutions
of each Borrower (including, without limitation, New Borrower) authorizing the
execution and delivery of this Loan Modification Agreement, the other documents
executed in connection herewith and each Borrower’s performance of all of the
transactions contemplated hereby, and (iii) an incumbency certificate giving the name
and bearing a specimen signature of each individual who shall be so authorized on
behalf of each Borrower (including, without limitation, New Borrower); |
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| B. | a good standing certificate of each Borrower (including, without limitation,
New Borrower), certified by the Secretary of State of the state of incorporation of
each respective Borrower (including, without limitation, New Borrower), together with a
certificate of foreign qualification from the Secretary of State (or comparable
governmental entity) of each state in which each Borrower (including, without
limitation, New Borrower) is qualified to transact business as a foreign entity, if
any, in each case dated as of a date no earlier than thirty (30) days prior to the date
hereof; |
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| C. | certified copies, dated as of a recent date, of financing statement and other
lien searches of New each Borrower (including, without limitation, New Borrower), as
Bank may request and which shall be obtained by Bank, accompanied by written evidence
(including any UCC termination statements) that the Liens revealed in any such searched
either (i) will be terminated prior to or in connection with the Loan Modification
Effective Date, or (ii) in the sole discretion of Bank, will constitute Permitted
Liens; |
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| D. | a filed copy, which shall be filed by Bank, acknowledged by the appropriate
filing office in the State of Delaware, of a UCC Financing Statement, naming New
Borrower as “Debtor” and Bank as “Secured Party”. |
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| E. | a completed Perfection Certificate executed by Borrower, together with the duly
executed original signatures thereto; |
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| F. | evidence satisfactory to Bank that the insurance policies required for New
Borrower by the Loan Agreement are in full force and effect, together with appropriate
evidence showing lender loss payable and/or additional insured clauses or endorsements
in favor of Bank; and |
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| G. | such other documents as Bank may reasonably request. |
9. FEES. Borrower shall reimburse Bank for all legal fees and expenses incurred in
connection with this amendment to the Existing Loan Documents.
10. AUTHORIZATION TO FILE. Borrower hereby authorizes Bank to file UCC financing
statements without notice to Borrower, with all appropriate jurisdictions, as Bank deems
appropriate, in order to further perfect or
protect Bank’s interest in the Collateral, including a notice that any disposition of the
Collateral, by either the Borrower or any other Person, shall be deemed to violate the rights of
the Bank under the Code.
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11. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary
to reflect the changes described above.
12. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all
terms and conditions of all security or other collateral granted to the Bank, and confirms that the
indebtedness secured thereby includes, without limitation, the Obligations.
13. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that Borrower has no
offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or
otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or
counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby
expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.
14. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing
Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan
Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force
and effect. Bank’s agreement to modifications to the existing Obligations pursuant to this Loan
Modification Agreement in no way shall obligate Bank to make any future modifications to the
Obligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the
Obligations. It is the intention of Bank and Borrower to retain as liable parties all makers of
Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker will
be released by virtue of this Loan Modification Agreement.
15. RIGHT OF SET-OFF. In consideration of Bank’s agreement to enter into this Loan
Modification Agreement, Borrower hereby reaffirms and hereby grants to Bank, a lien, security
interest and right of set off as security for all Obligations to Bank, whether now existing or
hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter
in the possession, custody, safekeeping or control of Bank or any entity under the control of
Silicon Valley Bank (including a Bank subsidiary) or in transit to any of them. At any time after
the occurrence and during the continuance of an Event of Default, without demand or notice, Bank
may set off the same or any part thereof and apply the same to any liability or obligation of
Borrower even though unmatured and regardless of the adequacy of any other collateral securing the
loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY
AND IRREVOCABLY WAIVED.
16. JURISDICTION/VENUE. Section 11 of the Loan Agreement is hereby incorporated by
reference in its entirety.
17. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only when it
shall have been executed by Borrower and Bank.
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This Loan Modification Agreement is executed as of the date first written above.
| BORROWER: | ||||||
| SAFEGUARD SCIENTIFICS, INC. | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: | Xxxxxxx X. Xxxxxxxx | |||||
| Title: | Senior Vice President and Chief Financial Officer | |||||
| SAFEGUARD DELAWARE, INC. | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: | Xxxxxxx X. Xxxxxxxx | |||||
| Title: | Vice President | |||||
| SAFEGUARD SCIENTIFICS (DELAWARE), INC. | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: | Xxxxxxx X. Xxxxxxxx | |||||
| Title: | Vice President | |||||
| SAFEGUARD DELAWARE II, INC. | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: | Xxxxxxx X. Xxxxxxxx | |||||
| Title: | Vice President | |||||
BANK: |
||||||
| SILICON VALLEY BANK | ||||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxx | |||||
| Title: | Senior Vice President | |||||
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