EXHIBIT 10.21
FIFTH LOAN MODIFICATION AGREEMENT
This Fifth Loan Modification Agreement (the "AGREEMENT") is entered
into on February 29, 2004, by and between TRIPATH IMAGING, INC. ("BORROWER"),
whose address is 0000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, and
SILICON VALLEY BANK ("BANK"), whose address is 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx,
Xxxxxxxxxx 00000.
1. DESCRIPTION OF EXISTING INDEBTEDNESS. Among other indebtedness
which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant
to, among other documents, a Loan and Security Agreement, dated as of January
31, 2000, as amended by that certain First Loan Modification Agreement dated as
of January 31, 2001, as further amended by that certain Second Loan Modification
Agreement dated as of January 31, 2002, as further amended by that certain Third
Loan Modification Agreement dated as of June 17, 2002, as further amended by
that certain Fourth Loan Modification Agreement effective as of January 31, 2003
(collectively, the "Loan Agreement"). The Loan Agreement provides for, among
other things, a committed line of credit in the original principal amount of
Five Million Dollars ($5,000,000). Hereinafter, all indebtedness owing by
Borrower to Bank shall be referred to as the "Indebtedness."
2. DESCRIPTION OF CHANGE IN TERMS OF LOAN AGREEMENT.
(a) Section 2.1.1 of the Loan Agreement is hereby amended
by deleting Section 2.1.1 of the Loan Agreement and substituting in lieu thereof
the following:
"2.1.1 Revolving Advances.
(a) Subject to and upon the terms and conditions
of this Agreement, Bank agrees to make Advances to Borrower in an
aggregate outstanding amount not to exceed the Committed Revolving
Line; provided, however, that, at any time that the ratio of Borrower's
cash, cash equivalents, short term investments and accounts receivable
to Borrower's Current Liabilities, less current deferred revenue, is
not at least 2.50 to 1.00, then Bank agrees to make Advances to
Borrower in an aggregate outstanding amount not to exceed the Borrowing
Base and shall have no obligation to make any Advances to Borrower in
an aggregate outstanding amount in excess of the Borrowing Base.
Subject to the terms and conditions of this Agreement, amounts borrowed
pursuant to this Section 2.1 may be repaid and reborrowed at any time
during the term of this Agreement.
(b) To obtain an Advance, Borrower must notify
Bank by facsimile or telephone by 3:00 p.m. Pacific time on the
Business Day the Advance is to be made. Borrower must promptly confirm
the notification by delivering to Bank the Payment/Advance Form
attached as Exhibit B. Bank will credit Advances to Borrower's deposit
account. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or
without instructions if the Advances are necessary to meet Obligations
which have become due. Bank may rely on any telephone notice given by a
person whom Bank believes is a Responsible Officer or designee.
Borrower will indemnify Bank for any loss Bank suffers due to that
reliance.
(c) The Committed Revolving Line terminates on
the Maturity Date, when all Advances and interest charges are
immediately payable."
(b) The following is inserted immediately following
Section 2.1.1 of the Loan Agreement:
"2.1.2 Cash Management Sublimit. Borrower may use up to
$3,000,000 (the "Cash Management Services Sublimit") for Bank's cash
management services, which may include merchant services, direct
deposit, letters of credit, business credit cards, check cashing
services and other cash management services (the "Cash Management
Services"). All amounts Bank pays for Cash Management Services will be
treated as an Advance under the Line of Credit. Amounts advanced to
Borrower under the Cash Management Services may not exceed the Cash
Management Services Sublimit. Each letter of credit will have an expiry
date of no later than 180 days after the Maturity Date. In the event
that the Maturity Date with respect to the Committed Revolving Line is
not extended to a date after January 28, 2005 by the mutual agreement
of Borrower and Bank and any letters of credit, business credit cards
or other Cash Management Services remain outstanding as of January 28,
2005, then Borrower will secure with cash any and all outstanding
balances under the Cash Management Services with the Bank. Borrower
agrees to execute any further documentation in connection with the
letters of credit as Bank may reasonably request.
2.1.3 Customer Use Assets Sublimit.
(a) Borrower may use up to $1,000,000 (the
"Customer Use Assets Sublimit") for Customer Use Assets (the "Customer
Use Assets Services"). All amounts Bank pays for Customer Use Assets
Services will be treated as an Advance under the Line of Credit (each a
"Customer Use Assets Advance"). Amounts advanced to Borrower under the
Customer Use Assets Services may not exceed the Customer Use Assets
Sublimit.
(b) Subject to the terms and conditions of this
Agreement, through the Maturity Date, Bank will make Customer Use
Assets Advances not exceeding, in the aggregate, the Customer Use
Assets Sublimit. The Customer Use Assets Services may be used only to
purchase Customer Use Assets; Bank will have no obligation to make
Customer Use Assets Advances after 90 days after the purchase of the
Customer Use Assets for which the Customer Use Assets Advance will be
used if Borrower has not timely submitted appropriate supporting
documentation, including invoices and the Payment/Advance Form. Any
Customer Use Assets Advance may not exceed 100% of the equipment
invoice, excluding taxes, shipping, warranty charges, freight discounts
and installation expense for the applicable Customer Use Assets.
(c) Notwithstanding any other term or condition
of this Agreement to the contrary, except upon an Event of Default,
interest accrues from the date of each Customer Use Assets Advance at
the rate of Prime Rate plus 1.25% percentage points per annum.
Notwithstanding any other term or condition of this Agreement to the
contrary, Customer Use Assets Advances are payable in 36 equal monthly
installments of principal, plus accrued interest, beginning on the date
one month immediately after the applicable Customer Use Assets Advance.
(d) To obtain an Customer Use Assets Advance,
Borrower must include a copy of the invoice for the Customer Use Assets
being financed with the Payment/Advance Form."
(b) Section 6.11 of the Loan Agreement is hereby amended
by deleting Section 6.11 of the Loan Agreement in its entirety and inserting the
following in lieu thereof:
-2-
"6.11 Tangible Net Worth. Borrower shall maintain, as of
the last day of each calendar month, a Tangible Net Worth of at least
$35,000,000.00."
(c) Section 1.1 of the Loan Agreement is hereby amended
by deleting the definition of "Committed Revolving Line" and by substituting in
lieu thereof the following new definition of such term:
"COMMITTED REVOLVING LINE" is a Credit Extension of
up to $7,500,000.
(d) Section 1.1 of the Loan Agreement is hereby amended
by deleting the definition of "Maturity Date" and by substituting in lieu
thereof the following new definition of such term:
"MATURITY DATE" shall mean January 28, 2005.
(e) Section 1.1 of the Loan Agreement is hereby amended
by inserting the following new definition:
"CUSTOMER USE ASSETS" shall mean new equipment to be
held by Borrower as Borrower's inventory, to be located at the premises
of Borrower's customer(s) and in which Bank has a valid, perfected
security interest; provided, however, that Customer Use Assets will, at
all times that such equipment is located at the premises of Borrower's
customer(s) be identified as the property of Borrower.
(f) Exhibits C and D attached to the Loan Agreement are
hereby amended by deleting Exhibits C and D attached to the Loan Agreement and
substituting in lieu thereof Exhibits C and D attached hereto.
(g) The Schedule I attached to the Loan Agreement is
hereby amended by substituting in lieu thereof the Schedule I attached hereto.
3. CONSISTENT CHANGES. The Loan Agreement is hereby amended
wherever necessary to reflect the changes described above.
4. BANK EXPENSES. Without limiting the Borrower's obligations
under the Loan Agreement, Borrower agrees to pay (i) a Facility Fee equal to (x)
one-quarter percent (1/4%) of the Committed Revolving Line (i.e., Eighteen
Thousand Seven Hundred Fifty Dollars ($18,750.00)), which shall be fully earned
and non-refundable when paid, and (y) one-sixteenth percent (1/16%) of the
unused portion of Committed Revolving Line, calculated as of the last day of the
calendar quarter immediately preceding each relevant payment date described
below, which shall be payable in arrears quarterly beginning on the first (1st)
day of the fiscal quarter immediately following the date hereof (i.e., April 1,
2004) and continuing on the first (1st) day of each fiscal quarter thereafter
during the term of the Loan Agreement (i.e., July 1, 2004, October 1, 2004, and
January 1, 2005), and (ii) on demand all of the Bank's reasonable attorney's
fees and expenses and all other reasonable out-of-pocket costs incurred by the
Bank in connection with its evaluation, negotiation, documentation or
consummation of this Fifth Loan Modification Agreement and the transactions
contemplated hereby, and any reasonable attorney's fees and expenses previously
incurred by the Bank in connection with the Loan Agreement, as amended, which
have not previously been paid.
5. NO DEFENSES OF BORROWER. Borrower agrees that it has no
defenses against the obligations to pay any amounts under the Indebtedness.
-3-
6. CONTINUING VALIDITY. Borrower understands and agrees that in
modifying the existing Indebtedness, Bank is relying upon Borrower's
representations, warranties, and agreements, as set forth in that certain Loan
Agreement and the Intellectual Property Security Agreement, dated as of January
31, 2000, by and between Borrower and Bank (the "BORROWER IP SECURITY
AGREEMENT") and upon representations, warranties and agreements made and agreed
to by (i) Autocyte North Carolina, LLC ("AUTOCYTE"), as set forth in that
certain Autocyte Guaranty and the Intellectual Property Security Agreement,
dated as of January 31, 2000, by and between Autocyte and Bank (the "AUTOCYTE IP
SECURITY AGREEMENT"), (ii) Cell Analysis Systems, Inc. ("CELL ANALYSIS"), as set
forth in that certain Cell Analysis Guaranty and the Intellectual Property
Security Agreement, dated as of January 31, 2000, by and between Cell Analysis
and Bank (the "CELL ANALYSIS IP SECURITY AGREEMENT"), and (iii) TriPath
Oncology, Inc. ("TRIPATH ONCOLOGY"), as set forth in that certain TriPath
Oncology Guaranty and the Intellectual Property Security Agreement, dated as of
January 31, 2002, by and between TriPath Oncology and Bank (the "TRIPATH
ONCOLOGY IP SECURITY AGREEMENT"). Except as expressly modified pursuant to this
Fifth Loan Modification Agreement, the terms of the Loan Agreement, the Borrower
IP Security Agreement, the Autocyte Guaranty, the Autocyte IP Security
Agreement, the Cell Analysis Guaranty, the Cell Analysis IP Security Agreement,
the TriPath Oncology Guaranty and the TriPath Oncology IP Security Agreement
remain unchanged and in full force and effect and, except as expressly provided
in Schedule I attached hereto, each of Borrower, Autocyte, Cell Analysis and
TriPath Oncology represents and warrants to Bank that the representations and
warranties included in the Loan Agreement, the Borrower IP Security Agreement,
the Autocyte Guaranty, the Autocyte IP Security Agreement, the Cell Analysis
Guaranty, the Cell Analysis IP Security Agreement, the TriPath Oncology
Guaranty, and the TriPath Oncology IP Security Agreement are true and correct as
of the date hereof. Bank's agreement to modifications to the existing
Indebtedness pursuant to this Fifth Loan Modification Agreement in no way shall
obligate Bank to make any future modifications to the Indebtedness. Nothing in
this Fifth Loan Modification Agreement shall constitute a satisfaction of the
Indebtedness. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Loan Agreement and the Guaranties, unless
the party is expressly released by Bank in writing. No maker, endorser, or
guarantor will be released by virtue of this Fifth Loan Modification Agreement.
The terms of this paragraph apply not only to this Fifth Loan Modification
Agreement, but also to all subsequent loan modification agreements entered into
between Borrower and Bank.
7. CONDITIONS. The effectiveness of this Fifth Loan Modification
Agreement is conditioned upon the following:
(a) Bank's receipt of this Fifth Loan Modification
Agreement duly executed by Borrower and Autocyte, Cell Analysis and TriPath
Oncology;
(b) Subordination of any and all existing notes payable
of Borrower, upon terms and conditions satisfactory to Bank in Bank's sole
discretion; provided, that monthly payments or principal and interest may be
made by Borrower under such notes payable so long as no Event of Default has
occurred or is continuing under the Loan Agreement.
(c) Applicable recordation cover sheets for filing with
the United States Patent and Trademark Office and the United States Copyright
Office;
(d) Borrower's payment of the Bank's fees and expenses
pursuant to Section 4 of this Fifth Loan Modification Agreement, and any
reasonable attorney's fees and expenses previously incurred by the Bank in
connection with the Loan Agreement, as amended, which have not previously been
paid;
-4-
(e) Autocyte, Cell Analysis, and TriPath Oncology shall
have consented to the modifications of the Indebtedness pursuant to the First
Loan Modification Agreement, dated as of January 31, 2001, the Second Loan
Modification Agreement, dated as of January 31, 2002, the Third Loan
Modification Agreement, dated as of June 17, 2002, the Fourth Loan Modification
Agreement effective as of January 31, 2003, and this Fifth Loan Modification
Agreement by signing one or more counterparts of this Fifth Loan Modification
Agreement in the appropriate space indicated below and returning the same to
Bank; and
(f) Such other documents, and completion of other
matters, as Bank may reasonably deem necessary or appropriate.
[Remainder of this page is intentionally left blank]
-5-
This Fifth Loan Modification Agreement is executed as of the year and
date first written above.
BORROWER: BANK:
TRIPATH IMAGING, INC. SILICON VALLEY BANK
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxxx
----------------------------- ---------------------------
Name: Xxxxxxx X. Xxxx Name: Xxxxxx X. Xxxxxx
--------------------------- -------------------------
Title: Senior Vice-President and CFO Title: Vice-President
------------------------------ -----------------------
The undersigned Guarantors hereby consent to the modifications to the
Indebtedness pursuant to the First Loan Modification Agreement, dated as of
January 31, 2001, the Second Loan Modification Agreement, dated as of January
31, 2002, the Third Loan Modification Agreement, dated as of June 17, 2002, the
Fourth Loan Modification Agreement, effective as of January 31, 2003, and this
Fifth Loan Modification Agreement, and hereby ratify all the provisions of the
Guaranty and confirm that all provisions of such document are in full force and
effect.
GUARANTOR:
AUTOCYTE NORTH CAROLINA, LLC
By: /s/ Xxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxx X. Xxxx
-------------------------------
Title: Senior Vice-President and CFO
------------------------------
CELL ANALYSIS SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxx X. Xxxx
-------------------------------
Title: Senior Vice-President and CFO
------------------------------
TRIPATH ONCOLOGY, INC.
By: /s/ Xxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxx X. Xxxx
-------------------------------
Title: Senior Vice-President and CFO
------------------------------
-6-
SCHEDULE I
Schedule I to Fifth Loan Modification Agreement, dated as of February
29, 2004, by and among Silicon Valley Bank, TriPath Imaging, Inc., Autocyte
North Carolina, LLC, and TriPath Oncology, Inc.
-7-
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: TriPath Imaging, Inc. Lender: Silicon Valley Bank
Commitment Amount: $7,500,000
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of _____________ $ ____________
2. Additions (please explain on reverse) $ ____________
3. TOTAL ACCOUNTS RECEIVABLE $ ____________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $ ____________
5. Balance of 50% over 90 day accounts $ ____________
6. Concentration Limits $ ____________
7. Foreign Accounts $ ____________
8. Governmental Accounts $ ____________
9. Contra Accounts $ ____________
10. Promotion or Demo Accounts $ ____________
11. Intercompany/Employee Accounts $ ____________
12. Other (please explain on reverse) $ ____________
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $ ____________
14. Eligible Accounts (#3 minus #13) $ ____________
15. LOAN VALUE OF ACCOUNTS (80% of #14) $ ____________
BALANCES
16. Maximum Loan Amount $ ____________
17. Total Funds Available (Lesser of #15 or #16) $ ____________
18. Present balance owing on Line of Credit $ ____________
19. Outstanding under Sublimits ( ) $ ____________
20. RESERVE POSITION (#17 minus #18 and #19) $ ____________
The undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the
undersigned and Silicon Valley Bank.
COMMENTS:
TRIPATH IMAGING, INC.
By: ___________________________
Authorized Signer
-8-
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: TriPath Imaging, Inc.
The undersigned authorized officer (the "Officer") of TriPath Imaging, Inc.,
certifies that under the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the "Agreement"), (i) Borrower is in complete
compliance for the period ending _______________ with all required covenants
except as noted below and (ii) all representations and warranties in the
Agreement are true and correct in all material respects on this date. Attached
are the required documents supporting the certification. The Officer certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) consistently applied from one period to the next except, with
respect to the audited annual financial statements, as explained in an
accompanying letter or footnotes. The Officer acknowledges that no borrowings
may be requested at any time or date of determination that Borrower is not in
compliance with any of the terms of the Agreement, and that compliance is
determined not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REQUIRED COMPLIES
-------- --------
REPORTING COVENANT
Monthly financial statements (with Compliance Monthly within 30 days Yes No
Certificate)
Annual financial statements (with Compliance FYE within 90 days Yes No
Certificate) (CPA Audited)
SEC filings, including 10Q and 10K Within 5 days of filing with SEC Yes No
Borrowing Base Certificate, A/R Aging* Monthly within 20 days Yes No
A/R Audit Annually Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Minimum Adjusted Quick Ratio At least 1.5 to 1.0 ____ to 1.0 Yes No
Minimum Tangible Net Worth At least $35,000,000 $__________ Yes No
* Required only if an Advance is outstanding.
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
SIGNATURE, TITLE AND DATE
----------------------------------------
BANK USE ONLY
Received by: ____
AUTHORIZED SIGNER
Date: ____
Verified: ________
AUTHORIZED SIGNER
Date: ____
Compliance Status: Yes No
----------------------------------------
-9-
