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SILICON VALLEY FINANCIAL SERVICES
A Division of Silicon Valley Bank
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xx 00000
(000) 000-0000 - Fax (000) 000-0000
FACTORING AGREEMENT
This Factoring Agreement (the "Agreement") is made on this Seventeenth
day of October, 1996, by and between Silicon Valley Financial Services (a
division of Silicon Valley Bank) ("Buyer") having a place of business at the
address specified above and ZYCAD CORPORATION, A DELAWARE corporation,
("Seller") having its principal place of business and chief executive office
at
Street Address: 00000 Xxxxxxx Xxxxxxx
City: Fremont
County: Alameda
State: California
Zip code: 94583-9942
Fax: 510/000-0000
1. DEFINITIONS. When used herein, the following terms shall have the
following meanings.
1.1. "Account Balance" shall mean, on any given day, the gross amount of
all Purchased Receivables unpaid on that day.
1.2. "Account Debtor" shall have the meaning set forth in the California
Uniform Commercial Code and shall include any person liable on any Purchased
Receivable, including without limitation, any guarantor of the Purchased
Receivable and any issuer of a letter of credit or banker's acceptance.
1.3. "Adjustments" shall mean all discounts, allowances, returns,
disputes, counterclaims, offsets, defenses, rights of recoupment, rights of
return, warranty claims, or short payments, asserted by or on behalf of any
Account Debtor with respect to any Purchased Receivable.
1.4. "Administrative Fee" shall have the meaning as set forth in Section
3.3 hereof.
1.5. "Advance" shall have the meaning set forth in Section 2.2 hereof.
1.6. "Collateral" shall have the meaning set forth in Section 8 hereof.
1.7. "Collections" shall mean all good funds received by Buyer from or
on behalf of an Account Debtor with respect to Purchased
Receivables.
1.8. "Compliance Certificate" shall mean a certificate, in a form
provided by Buyer to Seller, which contains the certification of the chief
financial officer of Seller that, among other things, the representations and
warranties set forth in this Agreement are true and correct as of the date
such certificate is delivered.
1.9. "Event of Default" shall have the meaning set forth in Section 9
hereof.
1.10. "Finance Charges" shall have the meaning set forth in Section 3.2
hereof.
1.11. "Invoice Transmittal" shall mean a writing signed by an authorized
representative of Seller which accurately identifies the receivables which
Buyer, at its election, may purchase, and includes for each such receivable
the correct amount owed by the Account Debtor, the name and address of the
Account Debtor, the invoice number, the invoice date and the account code.
1.12. "Obligations" shall mean all advances, financial accommodations,
liabilities, obligations, covenants and duties owing, arising, due or
payable by Seller to Buyer of any kind or nature, present or future, arising
under or in connection with this Agreement or under any other document,
instrument or agreement, whether or not evidenced by any note, guarantee or
other instrument, whether arising on account or by overdraft, whether direct
or indirect (including those acquired by assignment) absolute or contingent,
primary or secondary, due or to become due, now owing or hereafter arising,
and however acquired; including, without limitation, all Advances, Finance
Charges, Administrative Fees, interest, Repurchase Amounts, fees, expenses,
professional fees and attorneys' fees and any other sums chargeable to Seller
hereunder or otherwise.
1.13. "Purchased Receivables" shall mean all those accounts,
receivables, chattel paper, instruments, contract rights, documents, general
intangibles, letters of credit, drafts, bankers acceptances, and rights to
payment, and all proceeds thereof (all of the foregoing being referred to as
"receivables"), arising out of the invoices and other agreements identified
on or delivered with any Invoice Transmittal delivered by Seller to Buyer
which Buyer elects to purchase and for which Buyer makes an Advance.
1.14. "Refund" shall have the meaning set forth in Section 3.5 hereof.
1.15. "Reserve" shall have the meaning set forth in Section 2.4 hereof.
1.16. "Repurchase Amount" shall have the meaning set forth in Section
4.2 hereof.
1.17. "Reconciliation Date" shall mean the last calendar day of each
Reconciliation Period.
1.18. "Reconciliation Period" shall mean each calendar month of every
year.
2. PURCHASE AND SALE OF RECEIVABLES.
2.1. OFFER TO SELL RECEIVABLES. During the term hereof, and provided
that there does not then exist any Event of Default or any event that with
notice, lapse of time or otherwise would constitute an Event of Default,
Seller may request that Buyer purchase receivables and Buyer may, in its sole
discretion, elect to purchase receivables. Seller shall deliver to Buyer an
Invoice Transmittal with respect to any receivable for which a request for
purchase is made. An authorized representative of Seller shall sign each
Invoice Transmittal delivered to Buyer. Buyer shall be entitled to rely on
all the information provided by Seller to Buyer on or with the Invoice
Transmittal and to rely on the signature on any Invoice Transmittal as an
authorized signature of Seller.
2.2. ACCEPTANCE OF RECEIVABLES. Buyer shall have no obligation to
purchase any receivable listed on an Invoice Transmittal. Buyer may exercise
its sole discretion in approving the credit of each Account Debtor before
buying any receivable. Upon acceptance by Buyer of all or any of the
receivables described on any Invoice Transmittal, Buyer shall pay to Seller
80(%) percent of the face amount of each receivable Buyer desires to
purchase. Such payment shall be the "Advance" with respect to such
receivable. Buyer may, from time to time, in its sole discretion, change the
percentage of the Advance. Upon Buyer's acceptance of the receivable and
payment to Seller of the Advance, the receivable shall become a "Purchased
Receivable." It shall be a condition to each Advance that (i) all of the
representations and warranties set forth in Section 6 of this Agreement be
true and correct on and as of the date of the related Invoice Transmittal and
on and as of the date of such Advance as though made at and as of each such
date, and (ii) no Event of Default or any event or condition that with
notice, lapse of time or otherwise would constitute an Event of Default shall
have occurred and be continuing, or would result from such Advance.
Notwithstanding the foregoing, in no event shall the aggregate amount of all
Purchased Receivables outstanding at any time exceed Three Million One
Hundred Twenty Five Thousand and No/100 **** Dollars ($3,125,000.00).
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2.3 EFFECTIVENESS OF SALE TO BUYER. Effective upon Buyer's payment of
an Advance, and for and in consideration therefor and in consideration of the
covenants of this Agreement, Seller hereby absolutely sells, transfers and
assigns to Buyer, all of Seller's right, title and interest in and to each
Purchased Receivable and all monies due or which may become due on or with
respect to such Purchased Receivable. Buyer shall be the absolute owner of
each Purchased Receivable. Buyer shall have, with respect to any goods
related to the Purchased Receivable, all the rights and remedies of an unpaid
seller under the California Uniform Commercial Code and other applicable law,
including the rights of replevin, claim and delivery, reclamation and
stoppage in transit.
2.4 ESTABLISHMENT OF A RESERVE. Upon the purchase by Buyer of each
Purchased Receivable, Buyer shall establish a reserve. The reserve shall be
the amount by which the face amount of the Purchased Receivable exceeds the
Advance on that Purchased Receivable (the "Reserve"); provided, the Reserve
with respect to all Purchased Receivables outstanding at any one time shall
be an amount not less than 20(%) percent of the Account Balance at that time
and may be set at a higher percentage at Buyer's sole discretion. The reserve
shall be a book balance maintained on the records of Buyer and shall not be a
segregated fund.
3. COLLECTIONS, CHARGES AND REMITTANCES.
3.1 COLLECTIONS. Upon receipt by Buyer of Collections, Buyer shall
promptly credit such Collections to Seller's Account Balance on a daily
basis; provided, that if Seller is in default under this Agreement, Buyer
shall apply all Collections to Seller's Obligations hereunder in such order
and manner as Buyer may determine. If an item of collection is not honored or
Buyer does not receive good funds for any reason, the amount shall be
included in the Account Balance as if the Collections had not been received
and Finance Charges under Section 3.2 shall accrue thereon.
3.2 FINANCE CHARGES. On each Reconciliation Date Seller shall pay to
Buyer a finance charge in an amount equal to 1.5(%) percent per month of the
average daily Account Balance outstanding during the applicable Reconciliation
Period (the "Finance Charges"). Buyer shall deduct the accrued Finance
Charges from the Reserve as set forth in Section 3.5 below.
3.3 ADMINISTRATIVE FEE. On each Reconciliation Date Seller shall pay
to Buyer an Administrative Fee equal to .80(%) percent of the face amount of
each Purchased Receivable first purchased during that Reconciliation Period
(the "Administrative Fee"). Buyer shall deduct the Administrative Fee from
the Reserve as set forth in Section 3.5 below.
3.4 ACCOUNTING. Buyer shall prepare and send to Seller after the close
of business for each Reconciliation Period, an accounting of the transactions
for that Reconciliation Period, including the amount of all Purchased
Receivables, all Collections, Adjustments, Finance Charges, and the
Administrative Fee. The accounting shall be deemed correct and conclusive
unless Seller makes written objection to Buyer within thirty (30) days after
the Buyer mails the accounting to Seller.
3.5 REFUND TO SELLER. Provided that there does not then exist an Event
of Default or any event or condition that with notice, lapse of time or
otherwise would constitute an Event of Default, Buyer shall refund to Seller
by check after the Reconciliation Date, the amount, if any, which Buyer owes
to Seller at the end of the Reconciliation Period according to the accounting
prepared by Buyer for that Reconciliation Period (the "Refund"). The Refund
shall be an amount equal to:
(A) (1) The Reserve as of the beginning of that Reconciliation
Period, PLUS
(2) the Reserve created for each Purchased Receivable purchased
during that Reconciliation Period,
MINUS
(B) The total for that Reconciliation Period of:
(1) the Administrative Fee;
(2) Finance Charges;
(3) Adjustments;
(4) Repurchase Amounts, to the extent Buyer has agreed to
accept payment thereof by deduction from the Refund;
(5) the Reserve for the Account Balance as of the first day of
the following Reconciliation Period in the minimum
percentage set forth in Section 2.4 hereof; and
(6) all amounts due, including professional fees and expenses,
as set forth in Section 12 for which oral or written demand has been made by
Buyer to Seller during that Reconciliation Period to the extent Buyer has
agreed to accept payment thereof by deduction from the Refund.
In the event the formula set forth in this Section 3.5 results in an amount
due to Buyer from Seller, Seller shall make such payment in the same manner
as set forth in Section 4.3 hereof for repurchases. If the formula set forth
in this Section 3.5 results in an amount due to Seller from Buyer, Buyer
shall make such payment by check, subject to Buyer's rights under Section 4.3
and Buyer's rights of offset and recoupment.
4. RECOURSE AND REPURCHASE OBLIGATIONS.
4.1 RECOURSE. Buyer's acquisition of Purchased Receivables from Seller
shall be with full recourse against Seller. In the event the Obligations
exceed the amount of Purchased Receivables and Collateral, Seller shall be
liable for any deficiency.
4.2 SELLER'S AGREEMENT TO REPURCHASE. Seller agrees to pay to Buyer on
demand, the full face amount, or any unpaid portion, of any Purchased
Receivable:
(A) which remains unpaid ninety (90) calendar days after the
invoice date; or
(B) which is owned by any Account Debtor who has filed, or has had
filed against it, any bankruptcy case, assignment for the benefit
of creditors, receivership, or insolvency proceeding or who has
become insolvent (as defined in the United States Bankruptcy Code)
or who is generally not paying its debts as such debts become due;
or
(C) with respect to which there has been any breach of warranty or
representation set forth in Section 6 hereof or any breach of any
covenant contained in this Agreement; or
(D) with respect to which the Account Debtor asserts any discount,
allowance, return, dispute, counterclaim, offset, defense, right of
recoupment, right of return, warranty claim, or short payment;
together with all reasonable attorneys' and professional fees and expenses
and all court costs incurred by Buyer in collecting such Purchased Receivable
and/or enforcing its rights under, or collecting amounts owed by Seller in
connection with, this Agreement (collectively, the "Repurchase Amount").
4.3 SELLER'S PAYMENT OF THE REPURCHASE AMOUNT OR OTHER AMOUNTS DUE
BUYER. When any Repurchase Amount or other amount owing to Buyer becomes
due, Buyer shall inform Seller of the manner of payment which may be any one
or more of the following in Buyer's sole discretion: (a) in cash immediately
upon demand therefor; (b) by delivery of substitute invoices and an Invoice
Transmittal acceptable to Buyer which shall thereupon become Purchased
Receivables; (c) by adjustment to
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the Reserve pursuant to Section 3.5 hereof; (d) by deduction from or offset
against the Refund that would otherwise be due and payable to Seller; (e) by
deduction from or offset against the amount that otherwise would be forwarded
to Seller in respect of any further Advances that may be made by Buyer; or
(f) by any combination of the foregoing as Buyer may from time to time choose.
4.4 SELLER'S AGREEMENT TO REPURCHASE ALL PURCHASED RECEIVABLES. Upon
and after the occurrence of an Event of Default, Seller shall, upon Buyer's
demand (or, in the case of an Event of Default under Section 9(B),
immediately without notice or demand from Buyer) repurchase all the Purchased
Receivables then outstanding, or such portion thereof as Buyer may demand.
Such demand may, at Buyer's option, include and Seller shall pay to Buyer
immediately upon demand, cash in an amount equal to the Advance with respect
to each Purchased Receivable then outstanding together with all accrued
Finance Charges, Adjustments, Administrative Fees, attorney's and professional
fees, court costs and expenses as provided for herein, and any other
Obligations. Upon receipt of payment in full of the Obligations, Buyer shall
immediately instruct Account Debtors to pay Seller directly, and return to
Seller any Refund due to Seller. For the purpose of calculating any Refund
due under this Section only, the Reconciliation Date shall be deemed to be
the date Buyer receives payment in good funds of all the Obligations as
provided in this Section 4.4.
5. POWER OF ATTORNEY. Seller does hereby irrevocably appoint Buyer and its
successors and assigns as Seller's true and lawful attorney in fact, and
hereby authorizes Buyer, regardless of whether there has been an Event of
Default, (a) to sell, assign, transfer, pledge, compromise, or discharge the
whole or any part of the Purchased Receivables; (b) to demand, collect,
receive, xxx, and give releases to any Account Debtor for the monies due or
which may become due upon or with respect to the Purchased Receivables and to
compromise, prosecute, or defend any action, claim, case or proceeding
relating to the Purchased Receivables, including the filing of a claim or the
voting of such claims in any bankruptcy case, all in Buyer's name or Seller's
name, as Buyer may choose; (c) to prepare, file and sign Seller's name on any
notice, claim, assignment, demand, draft, or notice of or satisfaction of
lien or mechanics' lien or similar document with respect to Purchased
Receivables; (d) to notify all Account Debtors with respect to the Purchased
Receivables to pay Buyer directly; (e) to receive, open, and dispose of all
mail addressed to Seller for the purpose of collecting the Purchased
Receivables; (f) to endorse Seller's name on any checks or other forms of
payment on the Purchased Receivables; (g) to execute on behalf of Seller any
and all instruments, documents, financing statements and the like to perfect
Buyer's interests in the Purchased Receivables and Collateral; and (h) to do
all acts and things necessary or expedient, in furtherance of any such
purposes. If Buyer receives a check or item which is payment for both a
Purchased Receivable and another receivable, the funds shall first be applied
to the Purchased Receivable and, so long as there does not exist an Event of
Default or an event that with notice, lapse of time or otherwise would
constitute an Event of Default, the excess shall be remitted to Seller. Upon
the occurrence and continuation of an Event of Default, all of the power of
attorney rights granted by Seller to Buyer hereunder shall be applicable with
respect to all Purchased Receivables and all Collateral.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
6.1 RECEIVABLES' WARRANTIES, REPRESENTATIONS AND COVENANTS. To induce
Buyer to buy receivables and to render its services to Seller, and with full
knowledge that the truth and accuracy of the following are being relied upon
by the Buyer in determining whether to accept receivables as Purchased
Receivables, Seller represents, warrants, covenants and agrees, with respect
to each Invoice Transmittal delivered to Buyer and each receivable described
therein, that:
(A) Seller is the absolute owner of each receivable set forth
in the Invoice Transmittal and has full legal right to sell,
transfer and assign such receivables;
(B) The correct amount of each receivable is as set forth in the
Invoice Transmittal and is not in dispute;
(C) The payment of each receivable is not contingent upon the
fulfillment of any obligation or contract, past or future and any
and all obligations required of the Seller have been fulfilled as
of the date of the Invoice Transmittal;
(D) Each receivable set forth on the Invoice Transmittal is based
on an actual sale and delivery of goods and/or services actually
rendered, is presently due and owing to Seller, is not past due or
in default, has not been previously sold, assigned, transferred, or
pledged, and is free of any and all liens, security interests and
encumbrances other than liens, security interests or encumbrances
in favor of Buyer or any other division or affiliate of Silicon
Valley Bank;
(E) There are no defenses, offsets, or counterclaims against any
of the receivables, and no agreement has been made under which the
Account Debtor may claim any deduction or discount, except as
otherwise stated in the Invoice Transmittal;
(F) Each Purchased Receivable shall be the property of the Buyer
and shall be collected by Buyer, but if for any reason it should be
paid to Seller, Seller shall promptly notify Buyer of such payment,
shall hold any checks, drafts, or monies so received in trust for
the benefit of Buyer, and shall promptly transfer and deliver the
same to the Buyer;
(G) Buyer shall have the right of endorsement, and also the right
to require endorsement by Seller, on all payments received in
connection with each Purchased Receivable and any proceeds of
Collateral;
(H) Seller, and to Seller's best knowledge, each Account Debtor
set forth in the Invoice Transmittal, are and shall remain solvent
as that term is defined in the United States Bankruptcy Code and
the California Uniform Commercial Code, and no such Account Debtor
has filed or had filed against it a voluntary or involuntary
petition for relief under the United States Bankruptcy Code;
(I) Each Account Debtor named on the Invoice Transmittal will not
object to the payment for, or the quality or the quantity of the
subject matter of, the receivable and is liable for the amount set
forth on the Invoice Transmittal;
(J) Each Account Debtor shall promptly be notified, after
acceptance by Buyer, that the Purchased Receivable has been
transferred to and is payable to Buyer, and seller shall not take
or permit any action to countermand such notification; and
(K) All receivables forwarded to and accepted by Buyer after the
date hereof, and thereby becoming Purchased Receivables, shall
comply with each and every one of the foregoing representations,
warranties, covenants and agreements referred to above in this
Section 6.1.
6.2 ADDITIONAL WARRANTIES, REPRESENTATIONS AND COVENANTS. In addition
to the foregoing warranties, representations and covenants, to induce Buyer
to buy receivables and to render its services to Seller, Seller hereby
represents, warrants, covenants and agrees that:
(A) Seller will not assign, transfer, sell, or grant, or permit
any lien or security interest in any Purchased Receivables or
Collateral to or in favor of any other party, without Buyer's prior
written consent;
(B) The Seller's name, form of organization, chief executive
office, and the place where the records concerning all Purchased
Receivables and Collateral are kept is set forth at the beginning
of this Agreement, Collateral is located only at the location set
forth in the beginning of this Agreement, or, if located at any
additional location, as set forth on a schedule attached to this
Agreement, and Seller will give Buyer at least thirty (30) days
prior written notice if such name, organization, chief executive
office or other locations of Collateral or records concerning
Purchased Receivables or Collateral is changed or added and shall
execute any documents necessary to perfect Buyer's interest in the
Purchased Receivables and the Collateral;
Page 3 of 6
(C) Seller shall (i) pay all of its normal gross payroll for
employees, and all federal and state taxes, as and when due,
including without limitation all payroll and withholding taxes and
state sales taxes; (ii) deliver at any time and from time to time
at Buyer's request, evidence satisfactory to Buyer that all such
amounts have been paid to the proper taxing authorities; and (iii)
if requested by Buyer, pay its payroll and related taxes through a
bank or an independent payroll service acceptable to Buyer.
(D) Seller has not, as of the xxxx Xxxxxx delivers to Buyer an
Invoice Transmittal, or as of the xxxx Xxxxxx accepts any Advance
from Buyer, filed a voluntary petition for relief under the United
States Bankruptcy Code or had filed against it an involuntary
petition for relief;
(E) If Seller owns, holds or has any interest in, any copyrights
(whether registered, or unregistered), patents or trademarks, and
licenses of any of the foregoing, such interest has been disclosed
to Buyer and is specifically listed and identified on a schedule to
this Agreement, and seller shall immediately notify Buyer if Seller
hereafter obtains any interest in any additional copyrights,
patents, trademarks or licenses that are significant in value or
are material to the conduct of its business; and
(F) Seller shall provide Buyer with a Compliance Certificate (i)
on a quarterly basis to be received by Buyer no later than the
fifth calendar day following each calendar quarter, and; (ii) on a
more frequent or other basis if and as requested by Buyer.
7. ADJUSTMENTS. In the event of a breach of any of the representations,
warranties, or covenants set forth in Section 6.1, or in the event any
Adjustment or dispute is asserted by any Account Debtor, Seller shall
promptly advise Buyer and shall, subject to the Buyer's approval, resolve
such disputes and advise Buyer of any adjustments. Unless the disputed
Purchased Receivable is repurchased by Seller and the full Repurchase Amount
is paid, Buyer shall remain the absolute owner of any Purchased Receivable
which is subject to Adjustment or repurchase under Section 4.2 hereof, and
any rejected, returned, or recovered personal property, with the right to
take possession thereof at any time. If such possession is not taken by
Buyer, Seller is to resell it for Buyer's account at Seller's expense with
the proceeds made payable to Buyer. While Seller retains possession of said
returned goods, Seller shall segregate said goods and xxxx them "property of
Silicon Valley Financial Services."
8. SECURITY INTEREST. To secure the prompt payment and performance to
Buyer of all of the Obligations, Seller hereby grants to Buyer a continuing
lien upon and security interest in all of Seller's now existing or hereafter
arising rights and interest in the following, whether now owned or existing
or hereafter created, acquired, or arising, and wherever located
(collectively, the "Collateral");
(A) All accounts, receivables, contract rights, chattel paper,
instruments, documents, letters of credit, bankers acceptances,
drafts, checks, cash, securities, and general intangibles
(including, without limitation, all claims, causes of action,
deposit accounts, guaranties, rights in and claims under insurance
policies (including rights to premium refunds), rights of tax
refunds, copyrights, patents, trademarks, rights in and under
license agreements, and all other intellectual property);
(B) All inventory, including Seller's rights to any returned or
rejected goods, with respect to which Buyer shall have all the
rights of any unpaid seller, including the rights of replevin,
claim and delivery, reclamation, and stoppage in transit;
(C) All monies, refunds and other amounts due Seller, including,
without limitation, amounts due Seller under this Agreement
(including Seller's right of offset and recoupment);
(D) All equipment, machinery, furniture, furnishings, fixtures,
tools, supplies and motor vehicles;
(E) All farm products, crops, timber, minerals and the like
(including oil and gas);
(F) All accessions to, substitutions for, and replacements of, all
of the foregoing;
(G) All books and records pertaining to all of the foregoing; and
(H) All proceeds of the foregoing, whether due to voluntary or
involuntary disposition, including insurance proceeds.
Seller is not authorized to sell, assign, transfer or otherwise
convey any Collateral without Buyer's prior written consent, except for the
sale of finished inventory in the Seller's usual course of business. Seller
agrees to sign UCC financing statements, in a form acceptable to Buyer, and
any other instruments and documents requested by Buyer to evidence, perfect,
or protect the interests of Buyer in the Collateral. Seller agrees to deliver
to Buyer the originals of all instruments, chattel paper and documents
evidencing or related to Purchased Receivables and Collateral.
9. DEFAULT. The occurrence of any one or more of the following shall
constitute an Event of Default hereunder.
(A) Seller fails to pay any amount owed to Buyer as and when due;
(B) There shall be commenced by or against Seller any voluntary or
involuntary case under the United States Bankruptcy Code, or any
assignment for the benefit of creditors, or appointment of a
receiver or custodian for any of its assets;
(C) Seller shall become insolvent in that its debts are greater
than the fair value of its assets, or Seller is generally not
paying its debts as they become due or is left with unreasonably
small capital;
(D) Any involuntary lien, garnishment, attachment or the like is
issued against or attaches to the Purchased Receivables or any
Collateral;
(E) Seller shall breach any covenant, agreement, warranty, or
representation set forth herein, and the same is not cured to
Buyer's satisfaction within ten (10) days after Buyer has given
Seller oral or written notice thereof; provided, that if such
breach is incapable of being cured it shall constitute an immediate
default hereunder;
(F) Seller is not in compliance with, or otherwise is in default
under, any term of any document, instrument or agreement evidencing
a debt, obligation or liability of any kind or character of Seller,
now or hereafter existing, in favor of Buyer or any division or
affiliate of Silicon Valley Bank, regardless of whether such debt,
obligation or liability is direct or indirect, primary or
secondary, joint, several or joint and several, or fixed or
contingent, together with any and all renewals and extensions of
such debts, obligations and liabilities, or any part thereof;
(G) An event of default shall occur under any guaranty executed by
any guarantor of the Obligations of Seller to Buyer under this
Agreement, or any material provision of any such guaranty shall for
any reason cease to be valid or enforceable or any such guaranty
shall be repudiated or terminated, including by operation of law;
(H) A default or event of default shall occur under any agreement
between Seller and any creditor of Seller that has entered into a
subordination agreement with Buyer; or
(I) Any creditor that has entered into a subordination agreement
with Buyer shall breach any of the terms of or not comply with such
subordination agreement.
10. REMEDIES UPON DEFAULT. Upon the occurrence of an Event of Default, (1)
without implying any obligation to buy receivables, Buyer may cease buying
receivables or extending any financial accommodations to Seller; (2) all or a
portion of the Obligations shall be, at the option of and upon demand by
Buyer, or with respect to an Event of Default described in Section 9(B),
automatically and without notice or demand, due and payable in full; and (3)
Buyer shall have and may exercise all the rights and remedies under this
Agreement and under applicable law, including the rights and remedies of a
secured party under the California Uniform Commercial Code, all the power of
attorney rights described in Section 5 with respect to all Collateral, and
the right to collect, dispose of, sell, lease, use, and realize upon all
Purchased Receivables and all Collateral in any commercial reasonable manner.
Seller and Buyer agree that any notice of sale required to be given to Seller
shall be deemed
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to be reasonable if given five (5) days prior to the date on or after which
the sale may be held. In the event that the Obligations are accelerated
hereunder, Seller shall repurchase all of the Purchased Receivables as set
forth in Section 4.4.
11. ACCRUAL OF INTEREST. If any amount owed by Seller hereunder is not
paid when due, including, without limitation, amounts due under Section 3.5,
Repurchase Amounts, amounts due under Section 12, and any other Obligations,
such amounts shall bear interest at a per annum rate equal to the per annum
rate of the Finance Charges until the earlier of (i) payment in good funds or
(ii) entry of a final judgment thereof, at which time the principal amount of
any money judgment remaining unsatisfied shall accrue interest at the highest
rated allowed by applicable law.
12. FEES, COSTS AND EXPENSES; INDEMNIFICATION. The Seller will pay to
Buyer immediately upon demand all fees, costs and expenses (including fees of
attorneys and professionals and their costs and expenses) that Buyer incurs
or may from time to time impose in connection with any of the following: (a)
preparing, negotiating, administering, and enforcing this Agreement or any
other agreement executed in connection herewith, including any amendments,
waivers or consents in connection with any of the foregoing, (b) any
litigation or dispute (whether instituted by Buyer, Seller or any other
person) in any way relating to the Purchased Receivables, the Collateral,
this Agreement or any other agreement executed in connection herewith or
therewith, (d) enforcing any rights against Seller or any guarantor, or any
Account Debtor, (e) protecting or enforcing its interest in the Purchased
Receivables or the Collateral, (f) collecting the Purchased Receivables and
the Obligations, and (g) the representation of Buyer in connection with any
bankruptcy case or insolvency proceeding involving Seller, any Purchased
Receivable, the Collateral, any Account Debtor, or any guarantor. Seller
shall indemnify and hold Buyer harmless from and against any and all
claims, actions, damages, costs, expenses, and liabilities of any nature
whatsoever arising in connection with any of the foregoing.
13. SEVERABILITY, WAIVER, AND CHOICE OF LAW. In the event that any
provision of this Agreement is deemed invalid by reason of law, this
Agreement will be construed as not containing such provision and the
remainder of the Agreement shall remain in full force and effect. Buyer
retains all of its rights, even if it makes an Advance after a default. If
Buyer waives a default, it may enforce a later default. Any consent or waiver
under, or amendment of, this Agreement must be in writing. Nothing contained
herein, or any action taken or not taken by Buyer at any time, shall be
construed at any time to be indicative of any obligation or willingness on
the part of Buyer to amend this Agreement or to grant to Seller any waivers
or consents. This Agreement has been transmitted by Seller to Buyer at
Buyer's office in the State of California and has been executed and accepted
by Buyer in the State of California. This Agreement shall be governed by and
interpreted in accordance with the internal laws of the State of California.
14. ACCOUNT COLLECTION SERVICES. Certain Account Debtors may require or
prefer that all of Seller's receivables be paid to the same address and/or
party, or Seller and Buyer may agree that all receivables with respect to
certain Account Debtors be paid to one party. In such event Buyer and Seller
may agree that Buyer shall collect all receivables whether owned by Seller or
Buyer and (provided that there does not then exist an Event of Default or
event that with notice, lapse or time or otherwise would constitute an Event
of Default, and subject to Buyer's rights in the Collateral) Buyer agrees to
remit to Seller the amount of the receivables collections it receives with
respect to receivables other than Purchased Receivables. It is understood and
agreed by Seller that this Section does not impose any affirmative duty on
Buyer to do any act other than to turn over such amounts. All such
receivables and collections are Collateral and in the event of Seller's
default hereunder, Buyer shall have no duty to remit collections of
Collateral and may apply such collections to the obligations hereunder and
Buyer shall have the rights of a secured party under the California Uniform
Commercial Code.
15. NOTICES. All notices shall be given to Buyer and Seller at the
addresses or faxes set forth on the first page of this Agreement and shall be
deemed to have been delivered and received: (a) if mailed, three (3) calendar
days after deposited in the United States mail, first class, postage
pre-paid, (b) one (1) calendar day after deposit with an overnight mail or
messenger service; or (c) on the same date of confirmed transmission if sent
by hand delivery, telecopy, telefax or telex.
16. JURY TRIAL. SELLER AND BUYER EACH HEREBY (a) WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL ON ANY CLAIM OR ACTION ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT, ANY RELATED AGREEMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY; (b) RECOGNIZE AND AGREE THAT THE FOREGOING
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT;
AND (c) REPRESENT AND WARRANT THAT IT HAS REVIEWED THIS WAIVER, HAS
DETERMINED FOR ITSELF THE NECESSITY TO REVIEW THE SAME WITH ITS LEGAL
COUNSEL, AND KNOWINGLY AND VOLUNTARILY WAIVES ALL RIGHTS TO A JURY TRIAL.
17. TERM AND TERMINATION. The term of this Agreement shall be for one
(1) year from the date hereof, and from year to year thereafter unless
terminated in writing by Buyer or Seller. Seller and Buyer shall each have
the right to terminate this Agreement at any time. Notwithstanding the
foregoing, any termination of this Agreement shall not affect Buyer's
security interest in the Collateral and Buyer's ownership of the Purchased
Receivables, and this Agreement shall continue to be effective, and Buyer's
rights and remedies hereunder shall survive such termination, until all
transactions entered into and Obligations incurred hereunder or in connection
herewith have been completed and satisfied in full.
18. TITLES AND SECTION HEADINGS. The titles and section headings used
herein are for convenience only and shall not be used in interpreting this
Agreement.
Page 5 of 6
19. OTHER AGREEMENTS. The terms and provisions of this Agreement shall
not adversely affect the rights of Buyer or any other division or affiliate of
Silicon Valley Bank under any other document, instrument or agreement. The
terms of such other documents, instruments and agreements shall remain in
full force and effect notwithstanding the execution of this Agreement. In the
event of a conflict between any provision of this Agreement and any provision
of any other document, instrument or agreement between Seller on the one hand,
and Buyer or any other division or affiliate of Silicon Valley Bank on the
other hand, Buyer shall determine in its sole discretion which provision
shall apply. Seller acknowledges specifically that any security agreements,
liens and/or security interests currently securing payment of any obligations
of Seller owing to Buyer or any other division or affiliate of Silicon Valley
Bank also secure Seller's obligations under this Agreement, and are valid and
subsisting and are not adversely affected by execution of this Agreement.
Seller further acknowledges that (a) any collateral under other outstanding
security agreements or other documents between Seller and Buyer or any other
division or affiliate of Silicon Valley Bank secures the obligations of Seller
under this Agreement and (b) a default by Seller under this Agreement
constitutes a default under other outstanding agreements between Seller and
Buyer or any other division or affiliate of Silicon Valley Bank.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement on the
day and year above written.
SELLER: ZYCAD CORPORATION
By /s/ Xxxx X. Xxxxx
-------------------------------------
Title VP, Secretary & General Counsel
----------------------------------
BUYER: SILICON VALLEY FINANCIAL SERVICES
A division of Silicon Valley Bank
By
-------------------------------------
Title
----------------------------------
Page 6 of 6
[LOGO]
SILICON VALLEY FINANCIAL SERVICES
A Division of Silicon Valley Bank
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
(000) 000-0000 - Fax (000) 000-0000
SECRETARY'S CERTIFICATE OF RESOLUTION
The undersigned, as Secretary of Zycad Corporation, a Delaware
corporation (the "Corporation"), hereby certifies to Silicon Valley Financial
Services that at a meeting duly convened at which a quorum was present the
following resolutions were adopted by the Board of Directors of the
Corporation and that such resolutions have not been modified, amended, or
rescinded in any respect and are in full force and effect as of today's date.
RESOLVED, that this corporation be and hereby is authorized to sell this
corporation's accounts receivable to Silicon Valley Financial Services, a
division of Silicon Valley Bank, and to grant Silicon Valley Financial
Services a security interest in this corporation's assets, including, without
limitation, accounts, accounts receivable, contract rights, chattel paper,
general intangibles, instruments, documents, letters of credit, drafts,
inventory and equipment, presently owned or hereafter acquired and proceeds
and products of the foregoing (the "Collateral," as defined in the Factoring
Agreement).
RESOLVED, that this corporation be and hereby is authorized and directed
to execute and deliver certain agreements in connection with the sale of
receivables, and granting of security interests in the Collateral to Silicon
Valley Financial Services including, without limitations, a Factoring
Agreement and UCC-1 financial statement.
RESOLVED, that the following named officers of this corporation
("Authorized Officers") be, and any of them hereby are, authorized,
empowered, and directed to execute and deliver to Silicon Valley Financial
Services on behalf of this corporation all such further agreements and
instruments as may be deemed necessary or advisable in order to fully
effectuate the purposes and intent of the foregoing resolutions.
Print Names of Authorized Officers: Title:
Xxxxxxxx X. Xxxxx CEO
---------------------------------------- ------------------------------------
Xxxx X. Xxxxx VP and General Counsel, Secretary
---------------------------------------- ------------------------------------
XXXXXXX X. XXXXX Corporate Controller
---------------------------------------- ------------------------------------
---------------------------------------- ------------------------------------
---------------------------------------- ------------------------------------
---------------------------------------- ------------------------------------
RESOLVED, that the Secretary or Assistant Secretary of this corporation
be, and hereby is authorized, empowered and directed to certify to the
passage of the foregoing resolutions under the seal of this corporation.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this
Seventeenth day of October, 1996.
/s/ Xxxx X. Xxxxx
-------------------------------------------------
Signature
Secretary of ZYCAD CORPORATION
[LOGO]
SILICON VALLEY FINANCIAL SERVICES
A Division of Silicon Valley Bank
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
(000) 000-0000 - Fax (000) 000-0000
CERTIFICATION OF OFFICERS
The undersigned, being all of the officers of ZYCAD CORPORATION, a
Delaware corporation (the "Corporation"), hereby certify to Silicon Valley
Financial Services, a division of Silicon Valley Bank ("SVFS") that:
1. The correct name of the Corporation is Zycad Corporation, as set
forth in the Articles of Incorporation.
2. The Corporation was incorporated on June 22, 1981, under the laws of
the State of Delaware, and is in good standing under such laws.
3. The Corporation's place of business and chief executive office being
the place at which the Corporation maintains its books and records pertaining
to accounts, accounts receivables, contract rights, chattel paper, general
intangibles, instruments, documents, inventory, and equipment, is located at:
00000 XXXXXXX XXXXXXX
XXXXXXX, XXXXXXXXXX 00000-0000
4. The Corporation has other places of business at the following
addressees:
None
5. There is no provision in the Certificate of Incorporation, Articles
of Incorporation, or Bylaws of the Corporation, or in the laws of the State
of its incorporation, requiring any vote or consent of shareholders to
authorize the sale of receivables or the grant of a security interest in any
assets of the Corporation. Such power is vested exclusively in the
Corporation's Board of Directors.
6. The officers of the Corporation, and their respective titles and
signatures are as follows:
PRESIDENT:
/s/ Xxxxxxxx X. Xxxxx
------------------------------------------------------------
(Signature)
VICE PRESIDENT:
------------------------------------------------------------
(Signature)
SECRETARY:
/s/ Xxxx X. Xxxxx
------------------------------------------------------------
(Signature)
TREASURER:
------------------------------------------------------------
(Signature)
OTHER OFFICER:
TITLE: Corporate Controller
/s/ Xxxxxxx X. Xxxxx
------------------------------------------------------------
(Signature)
7. Except as indicated in this paragraph 7, each of the officers listed
in paragraph 6 has signatory powers with respect to all the Corporation's
transactions with SVFS. Explanation of exceptions:
8. The undersigned shall give SVFS prompt written notice of any change
or amendment with respect to any of the foregoing. Until such written notice
is received by SVFS, SVFS shall be entitled to rely upon the foregoing in all
respects.
IN WITNESS WHEREOF, the undersigned have executed this Certification of
Officers on OCTOBER 17, 1996.
PRESIDENT: /s/ Xxxxxxxx X. Xxxxx
----------------------------------------------------------------
VICE PRESIDENT:
----------------------------------------------------------------
SECRETARY: /s/ Xxxx X. Xxxxx
----------------------------------------------------------------
TREASURER:
----------------------------------------------------------------
