Exhibit 99.2
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SILICON VALLEY BANK
LOAN AND SECURITY AGREEMENT
BORROWER: IBASIS, INC., A DELAWARE CORPORATION
ADDRESS: 00 XXXXXX XXXXXX
XXXXXXXXXX, XXXXXXXXXXXXX 00000
BORROWER: IBASIS GLOBAL, INC., A DELAWARE CORPORATION
ADDRESS: 00 XXXXXX XXXXXX
XXXXXXXXXX, XXXXXXXXXXXXX 00000
DATE: DECEMBER 30, 2002
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK, a California-chartered bank, with its principal place of
business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a loan
production office located at One Xxxxxx Executive Park, Suite 200, 0000
Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 ("Silicon") and the borrowers
named above (jointly and severally, individually and collectively, the
"Borrower"), with offices located at the above address ("Borrower's Address").
The Schedule and Exhibits to this Agreement (the "Schedule" and the "Exhibits,"
respectively) shall for all purposes be deemed to be part of this Agreement, and
the same are integral parts of this Agreement. (Definitions of certain terms
used in this Agreement are set forth in Section 8 below.)
1. LOANS.
1.1 LOANS. Silicon will make loans to Borrower (the "Loans"), in
amounts determined by Silicon in its good faith business judgment, up to the
amounts (the "Credit Limit") shown on the Schedule, provided no Default or Event
of Default has occurred and is continuing, and subject to deduction of any
Reserves for accrued interest and such other Reserves as Silicon, in its good
faith business judgment, deems proper from time to time. Amounts borrowed may be
repaid and reborrowed during the term of this Agreement.
1.2 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth to
the contrary in this Agreement. Interest shall be payable monthly, on the last
day of the month. Interest may, in Silicon's discretion, be charged to
Borrower's loan account, and the same shall thereafter bear interest at the same
rate as the other Loans. Silicon may, in its discretion, charge interest to
Borrower's Deposit Accounts maintained with Silicon (other than Deposit Accounts
exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of Borrower's employees).
1.3 OVERADVANCES. If at any time or for any reason the total of all
outstanding Loans and all other Obligations exceeds the Credit Limit (an
"Overadvance"), Borrower shall immediately pay the amount of the excess to
Silicon, without notice or demand. Without limiting Borrower's obligation to
repay to Silicon on demand the amount of any Overadvance, Borrower agrees to pay
Silicon interest on the outstanding amount of any Overadvance, on demand, at a
rate equal to the interest rate which would otherwise be applicable to the
Overadvance, plus an additional two percent (2%) per annum.
1.4 FEES. Borrower shall pay Silicon the fees shown on the Schedule,
which are in addition to all interest and other sums payable to Silicon and are
not refundable.
1.5 LETTERS OF CREDIT. At the request of Borrower, Silicon may, in its
good faith business judgment, issue or arrange for the issuance of letters of
credit for the account of Borrower, in each case in form and substance
satisfactory to Silicon in its sole discretion (collectively, "Letters of
Credit"). The aggregate face amount of all outstanding Letters of Credit from
time to time (plus all Silicon exposure under any foreign exchange contracts and
Cash Management Services) shall not exceed the amount shown on the Schedule (the
"Letter of Credit Sublimit"), and shall be reserved against Loans which would
otherwise be available hereunder. Borrower shall pay all reasonable bank charges
(including charges of Silicon) for the issuance of Letters of Credit, together
with such additional fee as Silicon's letter of credit department shall
generally charge in connection with the issuance of Letters of Credit. Any
payment by Silicon under or in connection with a Letter of Credit shall
constitute a Loan hereunder on the date such payment is made. Each Letter of
Credit shall have an expiry date no later than thirty days prior to the Maturity
Date. Except on account of Silicon's gross negligence or wilfull misconduct,
Borrower hereby agrees to indemnify, save, and hold Silicon harmless from any
loss, cost, expense, or liability, including payments made by Silicon, expenses,
and reasonable attorneys' fees incurred by Silicon arising out of or in
connection with any Letters of Credit. Borrower agrees to be bound by the
regulations and interpretations of the issuer of any Letters of Credit
guarantied by Silicon and opened for Borrower's account or by Silicon's
interpretations of any Letter of Credit issued by Silicon for Borrower's
account, and Borrower understands and agrees that Silicon shall not be liable
for any error, negligence, or mistake, whether of omission or commission, in
following Borrower's instructions or those contained in the Letters of Credit or
any modifications, amendments, or supplements thereto except on account of
Silicon's gross negligence or wilfull misconduct. Borrower understands that
Letters of Credit may require Silicon to indemnify the issuing bank for certain
costs or liabilities arising out of claims by Borrower against such issuing
bank. Except on account of Silicon's gross negligence or wilfull misconduct,
Borrower hereby agrees to indemnify and hold Silicon harmless with respect to
any loss, cost, expense, or liability incurred by Silicon under any Letter of
Credit as a result of Silicon's indemnification of any such issuing bank. The
provisions of this Loan Agreement, as it pertains to Letters of Credit, and any
other present or future documents or agreements between Borrower and Silicon
relating to Letters of Credit are cumulative.
1.6 CASH MANAGEMENT SERVICES SUBLIMIT. In addition to Section 1.5
above, Borrower may also use up to the amount set forth on the Schedule for Cash
Management Services. Such aggregate amounts utilized under the Cash Management
Services Sublimit shall at all times reduce the amount otherwise available for
Loans, letters of credit, foreign exchange contracts or other credit
accommodations hereunder. Any amounts Silicon pays on behalf of Borrower or any
amounts that are not paid by Borrower for any Cash Management Services will be
treated as Loans hereunder and will accrue interest at the interest rate
applicable to Loans.
2. SECURITY INTEREST.
2.1 SECURITY INTEREST. To secure the payment and performance of all of
the Obligations when due, and the performance of each of the Borrower's duties
under this Agreement and all documents executed in connection herewith, Borrower
hereby grants to Silicon a continuing security interest in all of Borrower's
interest in the following, whether now owned or hereafter acquired, and wherever
located: All Inventory, Equipment, Payment Intangibles, Letter-of-Credit Rights,
Supporting Obligations, Receivables, and General Intangibles, including, without
limitation, all of Borrower's Intellectual Property, all of Borrower's Deposit
Accounts, and all money, and all property now or at any time in the future in
Silicon's possession (including claims and credit balances), and all proceeds
(including proceeds of any insurance policies, proceeds of proceeds and claims
against third parties), all products and all books and records related to any of
the foregoing (all of the foregoing, together with all other property in which
Silicon may now or in the future be granted a lien or security interest, is
referred to herein, collectively, as the "Collateral"). The security interest
granted herein shall be a first priority security interest in the Collateral.
Upon the occurrence and during the continuance of a Default, Silicon may place a
"hold" on any Deposit Account pledged as collateral. Except as disclosed to
Silicon in writing, Borrower is not a party to, nor is bound by, any material
license or other material agreement with respect to which the Borrower is the
licensee that prohibits or otherwise restricts Borrower from granting a security
interest in Borrower's interest in such license or agreement or any other
property. Without prior consent from Silicon, Borrower shall not enter into, or
become bound by, any such license or agreement which is reasonably likely to
have a material adverse impact on Silicon's business or financial condition.
Borrower shall use reasonable efforts to take such steps as Silicon requests to
obtain the consent of, or waiver by, any person whose consent or waiver is
necessary for all such licenses or contract rights to be deemed "Collateral" and
for Silicon to have a security interest in it that might otherwise be restricted
or prohibited by law or by the terms of any such license or agreement (to the
extent such restriction or prohibition is enforceable), whether now existing or
entered into in the future. Notwithstanding the foregoing, it is expressly
acknowledged and agreed that the security interest created in this Agreement
only with respect to Exim Eligible Foreign Accounts (as such term is defined in
the Exim Agreement) is subject to and subordinate to the security interest
granted to Silicon in the Exim Agreement with respect to such Exim Eligible
Foreign Accounts, but only to the extent any loans and advances are actually
made to Borrower under the Exim Agreement based upon such Exim Eligible Foreign
Accounts. If Borrower shall at any time, acquire a commercial tort claim,
Borrower shall promptly notify Silicon in a writing signed by Borrower of the
brief details thereof and grant to Silicon 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 satisfactory to Silicon.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
In order to induce Silicon to enter into this Agreement and to make
Loans, Borrower represents and warrants to Silicon as follows, and Borrower
covenants
that the following representations will continue to be true, and that Borrower
will at all times comply with all of the following covenants:
3.1 CORPORATE EXISTENCE AND AUTHORITY. Borrower, if a corporation, is
and will continue to be, duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Borrower is and will
continue to be qualified and licensed to do business in all jurisdictions in
which any failure to do so would have a material adverse effect on Borrower. The
execution, delivery and performance by Borrower of this Agreement, and all other
documents contemplated hereby (i) have been duly and validly authorized, (ii)
are enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights generally), (iii) do not violate Borrower's articles or certificate of
incorporation, Borrower's by-laws, or, to the best of Borrower's knowledge, any
law or any material agreement or instrument which is binding upon Borrower or
its property, and (iv) do not constitute grounds for acceleration of any
material indebtedness or obligation under any material agreement or instrument
which is binding upon Borrower or its property.
3.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names
within the past five (5) years. Borrower shall give Silicon 30 days' prior
written notice before changing its name or doing business under any other name.
Borrower has complied, and will in the future comply, with all laws relating to
the conduct of business under a fictitious business name.
3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in
the heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth on the Schedule. Borrower will give Silicon at least 30 days prior
written notice before opening any additional place of business, changing its
chief executive office, changing its state of formation or moving any of the
Collateral to a location other than Borrower's Address or one of the locations
set forth on the Schedule.
3.4 TITLE TO COLLATERAL; PERMITTED LIENS. Borrower is now, and will at
all times in the future be, the sole owner of all the Collateral, except as
otherwise permitted under this Agreement. The Collateral now is and will remain
free and clear of any and all liens, charges, security interests, encumbrances
and adverse claims, except for Permitted Liens. Silicon now has, and will
continue to have, a first-priority perfected and enforceable security interest
in all of the Collateral, subject only to the Permitted Liens, and Borrower will
at all times defend Silicon and the Collateral against all claims of others.
Except as otherwise permitted herein, none of the Collateral now is or will be
affixed to any real property in such a manner, or with such intent, as to become
a fixture. Borrower is not and will not become a lessee under any real property
lease pursuant to which the lessor may obtain any rights in any of the
Collateral and no such lease now prohibits, restrains, impairs or will prohibit,
restrain or impair Borrower's right to remove any Collateral from the leased
premises. Whenever any Collateral is located upon premises in which any third
party has an interest (whether as owner, mortgagee, beneficiary under a deed of
trust, lien or otherwise), Borrower shall, whenever requested by Silicon, use
its reasonable best efforts to cause such third party to execute and deliver to
Silicon, in form acceptable to Silicon, such waivers and subordinations as
Silicon shall specify, so as to ensure that Silicon's rights in the Collateral
are, and will continue to be, superior to the rights of any such third party.
Borrower will keep in full force and effect, and will comply with all the terms
of, any lease of real property where any of the Collateral now or in the future
may be located, except as may be determined in reasonable business judgment.
3.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the Collateral in
good working condition, and Borrower will not use the Collateral for any
unlawful purpose. Borrower will promptly advise Silicon in writing of any
material loss or damage to the Collateral.
3.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.
3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial
statements now or in the future delivered to Silicon have been, and will be,
prepared in conformity with generally accepted accounting principles and now and
in the future will completely and accurately reflect the financial condition of
Borrower, at the times and for the periods therein stated. Between the last date
covered by any such statement provided to Silicon and the date hereof, there has
been no material adverse change in the financial condition or business of
Borrower. Borrower is now and will continue to be solvent.
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has
timely filed, and will timely file, all tax returns and reports required by
foreign, federal, state and local law, and Borrower has timely paid, and will
timely pay, all foreign, federal, state and local taxes, assessments, deposits
and contributions now or in the future owed by Borrower. Borrower may, however,
defer payment of any contested taxes, provided that Borrower (i) in good faith
contests Borrower's obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (ii) notifies Silicon in
writing of the commencement of, and any material development in, the
proceedings, and (iii) posts bonds or takes any other steps required to keep the
contested taxes from becoming a lien upon any of the Collateral. Borrower is
unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid, and shall continue to pay all amounts necessary to
fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not and will not withdraw
from participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could result
in any liability of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency. Borrower shall, at all times,
utilize the services of an outside payroll service providing for the automatic
deposit of all payroll taxes payable by Borrower.
3.9 COMPLIANCE WITH LAW. Borrower has complied, and will comply, in all
material respects, with all provisions of all foreign, federal, state and local
laws and regulations relating to Borrower, including, but not limited to, those
relating to Borrower's ownership of real or personal property, the conduct and
licensing of Borrower's business, and all environmental matters; provided,
however, with respect to compliance with foreign laws, Borrower's failure to
comply with same shall only be deemed an Event of Default hereunder if such
failure to comply shall result in a material adverse effect on the business,
operations or condition of Borrower taken as a whole.
3.10 LITIGATION. Except as disclosed in the Schedule, there is no
claim, suit, litigation, proceeding or investigation pending or (to best of
Borrower's knowledge) threatened by or against or affecting Borrower in any
court or before any governmental agency (or any basis therefor known to
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of Borrower, or
in any material impairment in the ability of Borrower to carry on its business
in substantially the same manner as it is now being conducted. Borrower will
promptly inform Silicon in writing of any claim, proceeding, litigation or
investigation in the future threatened or instituted by or against Borrower
involving any single claim of $250,000 or more, or involving $500,000 or more in
the aggregate.
3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely
for working capital purposes. Borrower is not purchasing or carrying any "margin
stock" (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan will be used to purchase
or carry any "margin stock" or to extend credit to others for the purpose of
purchasing or carrying any "margin stock."
4. RECEIVABLES.
4.1 REPRESENTATIONS RELATING TO RECEIVABLES. Borrower represents and
warrants to Silicon as follows: Each Receivable with respect to which Loans are
requested by Borrower shall, on the date each Loan is requested and made, (i)
represent an undisputed bona fide existing unconditional obligation of the
Account Debtor created by the sale, delivery, and acceptance of goods or the
rendition of services in the ordinary course of Borrower's business, and (ii)
meet the Minimum Eligibility Requirements set forth in Section 8 below.
4.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE.
Borrower represents and warrants to Silicon as follows: All statements made and
all unpaid balances appearing in all invoices, instruments and other documents
evidencing the Receivables are and shall be true and correct and all such
invoices, instruments and other documents and all of Borrower's books and
records are and shall be genuine and in all respects what they purport to be,
and all signatories and endorsers have the capacity to
contract. All sales and other transactions underlying or giving rise to each
Receivable shall fully comply with all applicable laws and governmental rules
and regulations. To the best of Borrower's knowledge, all signatures and
endorsements on all documents, instruments, and agreements relating to all
Receivables are and shall be genuine, and all such documents, instruments and
agreements are and shall be legally enforceable in accordance with their terms.
4.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES. Borrower shall
deliver to Silicon transaction reports and loan requests, schedules and
assignments of all Receivables, and schedules of collections, all on Silicon's
standard forms; provided, however, that Borrower's failure to execute and
deliver the same shall not affect or limit Silicon's security interest and other
rights in all of Borrower's Receivables, nor shall Silicon's failure to advance
or lend against a specific Receivable affect or limit Silicon's security
interest and other rights therein. In the event Borrower has elected to be on
"non-borrowing reporting status" (see Section 6 of the Schedule), Borrower shall
furnish Silicon with a Loan request at least thirty (30) days prior to the
requested funding date. Otherwise, Loan requests received after 12:00 Noon will
not be considered by Silicon until the next Business Day. Together with each
such schedule and assignment, or later if requested by Silicon, Borrower shall
furnish Silicon with copies (or, at Silicon's request, originals) of all
contracts, orders, invoices, and other similar documents, and all shipping
instructions, delivery receipts, bills of lading, and other evidence of
delivery, for any goods the sale or disposition of which gave rise to such
Receivables, and Borrower warrants the genuineness of all of the foregoing.
Borrower shall also furnish to Silicon an aged accounts receivable trial balance
in such form and at such intervals as Silicon shall request. In addition,
Borrower shall deliver to Silicon the originals of all instruments, chattel
paper, security agreements, guarantees and other documents and property
evidencing or securing any Receivables, within five (5) Business Days upon
receipt thereof and in the same form as received, with all necessary
indorsements, all of which shall be with recourse. Borrower shall also provide
Silicon with copies of all credit memos within five (5) Business Days after the
date issued.
4.4 COLLECTION OF RECEIVABLES. Borrower shall cause the Account Debtors
to remit all Receivables to Silicon and Silicon shall hold all payments on, and
proceeds of, Receivables in a lockbox account, or such other "blocked account"
as Silicon may specify, pursuant to a blocked account agreement in such form as
Silicon may specify. All such payments on, and proceeds of, Receivables shall be
applied to the Obligations in such order as Silicon shall determine. Silicon or
its designee may, at any time, notify Account Debtors that the Receivables have
been assigned to Silicon.
4.5. REMITTANCE OF PROCEEDS. All proceeds arising from the disposition
of any Collateral shall be delivered, in kind, by Borrower to Silicon in the
original form in which received by Borrower within three (3) Business Days after
receipt by Borrower, to be applied to the Obligations in such order as Silicon
shall determine; provided that, if no Default or Event of Default has occurred,
Borrower shall not be obligated to remit to Silicon the proceeds of the sale of
worn out or obsolete equipment disposed of by Borrower in good faith in an arm's
length transaction for an aggregate
purchase price of $25,000 or less (for all such transactions in any fiscal
year). Borrower agrees that it will not commingle proceeds of Collateral with
any of Borrower's other funds or property, but will hold such proceeds separate
and apart from such other funds and property and in an express trust for
Silicon. Nothing in this Section 4.5 limits the restrictions on disposition of
Collateral set forth elsewhere in this Agreement.
4.6 DISPUTES. Borrower shall notify Silicon promptly of all disputes or
claims relating to Receivables. Borrower shall not forgive (completely or
partially), compromise or settle any Receivable for less than payment in full,
or agree to do any of the foregoing, except that Borrower may do so, provided
that: (i) Borrower does so in good faith, in a commercially reasonable manner,
in the ordinary course of business, and in arm's length transactions, which are
reported to Silicon on the regular reports provided to Silicon; (ii) no Default
or Event of Default has occurred and is continuing; and (iii) taking into
account all such discounts settlements and forgiveness, the total outstanding
Loans will not exceed the Credit Limit. Silicon may, at any time after the
occurrence of an Event of Default, settle or adjust disputes or claims directly
with Account Debtors for amounts and upon terms which Silicon considers
advisable in its reasonable credit judgment and, in all cases, Silicon shall
credit Borrower's Loan account with only the net amounts received by Silicon in
payment of any Receivables.
4.7 RETURNS. (Intentionally omitted).
4.8 VERIFICATION. Silicon may, from time to time, verify directly with
the respective Account Debtors the validity, amount and other matters relating
to the Receivables, by means of mail, telephone or otherwise, either in the name
of Borrower or Silicon or such other name as Silicon may choose.
4.9 NO LIABILITY. Silicon shall not under any circumstances be
responsible or liable for any shortage or discrepancy in, damage to, or loss or
destruction of, any goods, the sale or other disposition of which gives rise to
a Receivable, or for any error, act, omission, or delay of any kind occurring in
the settlement, failure to settle, collection or failure to collect any
Receivable, or for settling any Receivable in good faith for less than the full
amount thereof, nor shall Silicon be deemed to be responsible for any of
Borrower's obligations under any contract or agreement giving rise to a
Receivable. Nothing herein shall, however, relieve Silicon from liability for
its own gross negligence or willful misconduct.
5. ADDITIONAL DUTIES OF THE BORROWER.
5.1 FINANCIAL AND OTHER COVENANTS. Borrower shall at all times comply
with the financial and other covenants set forth in the Schedule.
5.2 INSURANCE. Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Silicon, in such form and amounts as Silicon
may reasonably require, and Borrower shall provide evidence of such insurance to
Silicon, so that Silicon is satisfied that such insurance is, at all times, in
full force and effect. All such insurance
policies shall name Silicon as an additional loss payee, and shall contain a
lenders loss payee endorsement in form reasonably acceptable to Silicon. Upon
receipt of the proceeds of any such insurance, Silicon shall apply such proceeds
in reduction of the Obligations as Silicon shall determine in its sole
discretion, except that, provided no Default or Event of Default has occurred
and is continuing, Silicon shall release to Borrower insurance proceeds with
respect to Equipment totaling less than $250,000, which shall be utilized by
Borrower for the replacement of the Equipment with respect to which the
insurance proceeds were paid. Silicon may require reasonable assurance that the
insurance proceeds so released will be so used. If Borrower fails to provide or
pay for any insurance, Silicon may, but is not obligated to, obtain the same at
Borrower's expense. Borrower shall promptly deliver to Silicon copies of all
reports made to insurance companies.
5.3 REPORTS. Borrower, at its expense, shall provide Silicon with the
written reports set forth in the Schedule, and such other written reports with
respect to Borrower (including budgets, sales projections, operating plans and
other financial documentation), as Silicon shall from time to time reasonably
specify.
5.4 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and
on one Business Day's notice, Silicon, or its agents, shall have the right to
inspect the Collateral, and the right to audit and copy Borrower's books and
records. Silicon shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but Silicon shall have the
right to disclose any such information to its auditors, regulatory agencies, and
attorneys, and pursuant to any subpoena or other legal process. The foregoing
inspections and audits shall be at Borrower's expense (but not in connection
with more than four (4) such audits in any calendar year if no Event of Default
has occured) and the charge therefor shall be $750 per person per day (or such
higher amount as shall represent Silicon's then current standard charge for the
same), plus reasonable out of pocket expenses. Borrower waives the benefit of
any accountant-client privilege or other evidentiary privilege precluding or
limiting the disclosure, divulgence or delivery of any of its books and records
(except that Borrower does not waive any attorney-client privilege).
5.5 NEGATIVE COVENANTS. Except as may be permitted in the Schedule,
Borrower shall not, without Silicon's prior written consent (which consent will
not be unreasonably withheld or delayed), do any of the following: (i) merge or
consolidate with another corporation or entity, provided, however, iBasis
Global, Inc. and iBasis Securities Corporation may (i) merge into iBasis, Inc.
or (ii) merge together); (ii) acquire any assets, except in the ordinary course
of business; (iii) enter into any other transaction outside the ordinary course
of business; (iv) sell or transfer any Collateral, except for the sale of
finished Inventory in the ordinary course of Borrower's business, and except for
the sale of obsolete or unneeded Equipment in the ordinary course of business;
(v) store any Inventory or other Collateral with any warehouseman or other third
party; (vi) sell any Inventory on a sale-or-return, guaranteed sale,
consignment, or other contingent basis; (vii) make any loans of any money or
transfer any of its assets, including loans and transfers to its Affiliates;
(viii) incur any debts outside the ordinary
course of business; (ix) guarantee or otherwise become liable with respect to
the obligations of another party or entity; (x) pay or declare any dividends on
Borrower's stock (except for dividends payable solely in stock of Borrower);
(xi) redeem, retire, purchase or otherwise acquire, directly or indirectly, any
of Borrower's stock and/or any of Borrower's 5 3/4% Convertible Subordinated
Notes or other subordinated debt instruments; (xii) make any change in
Borrower's capital structure which would have a material adverse effect on
Borrower or on the prospect of repayment of the Obligations; or (xiii) dissolve
or elect to dissolve. Transactions permitted by the foregoing provisions of this
Section 5.5 are only permitted if no Default or Event of Default would occur as
a result of such transaction.
5.6 LITIGATION COOPERATION. Should any third-party suit or proceeding
be instituted by or against Silicon with respect to any Collateral or in any
manner relating to Borrower, Borrower shall, without expense to Silicon, make
available Borrower and its officers, employees and agents and Borrower's books
and records, to the extent that Silicon may deem them reasonably necessary in
order to prosecute or defend any such suit or proceeding.
5.7 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by
Silicon, to execute all documents and take all actions, as Silicon may deem
reasonably necessary or useful in order to perfect and maintain Silicon's
perfected security interest in the Collateral, and in order to fully consummate
the transactions contemplated by this Agreement.
6. TERM.
6.1 MATURITY DATE. This Agreement shall continue in effect until the
maturity date set forth on the Schedule (the "Maturity Date"); provided that the
Maturity Date may be extended upon written agreement of the parties hereto.
6.2 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether or
not all or any part of such Obligations are otherwise then due and payable.
Without limiting the generality of the foregoing, if on the Maturity Date, or on
any earlier effective date of termination, there are any outstanding Letters of
Credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an amount
equal to the face amount of all such Letters of Credit plus all interest, fees
and cost due or to become due in connection therewith, to secure all of the
Obligations relating to said Letters of Credit, pursuant to Silicon's then
standard form cash pledge agreement. Notwithstanding any termination of this
Agreement, all of Silicon's security interests in all of the Collateral and all
of the terms and provisions of this Agreement shall continue in full force and
effect until all Obligations have been paid and performed in full; provided
that, without limiting the fact that Loans are subject to the good faith
business judgment of Silicon, Silicon may, in its sole discretion, refuse to
make any further Loans after termination. No termination shall in any way affect
or
impair any right or remedy of Silicon, nor shall any such termination relieve
Borrower of any Obligation to Silicon, until all of the Obligations have been
paid and performed in full. Upon payment and performance in full of all the
Obligations and written termination of this Agreement by Silicon, Silicon shall
promptly deliver to Borrower termination statements, requests for reconveyances
and such other documents as may be required to fully terminate Silicon's
security interests.
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and Borrower shall
give Silicon immediate written notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to Silicon by Borrower or any
of Borrower's officers, employees or agents, now or in the future, shall be
untrue or misleading in a material respect; or (b) Borrower shall fail to pay
when due any Loan or any interest thereon or any other monetary Obligation; or
(c) the total Loans and other Obligations outstanding at any time shall exceed
the Credit Limit; or (d) Borrower shall fail to comply with any of the financial
covenants set forth in the Schedule or shall fail to perform any other
non-monetary Obligation which by its nature cannot be cured; or (e) Borrower
shall fail to perform any other non-monetary Obligation, which failure is not
cured within 10 Business Days after the date due; or (f) any levy, assessment,
attachment, seizure, lien or encumbrance (other than a Permitted Lien) is made
on all or any material part of the Collateral which is not cured within 20 days
after the occurrence of the same, or immediately upon the service of process
upon Silicon seeking to attach by trustee, mesne or other process, any of
Borrower's funds on deposit with, or assets of the Borrower in the possession
of, Silicon; or (g) any default or event of default occurs under any obligation
secured by a Permitted Lien, which is not cured within any applicable cure
period or waived in writing by the holder of the Permitted Lien; or (h) Borrower
breaches any material contract or obligation, which has or is reasonably be
expected to have a material adverse effect on Borrower's business or financial
condition; or (i) Dissolution, termination of existence, insolvency or business
failure of Borrower; or appointment of a receiver, trustee or custodian, for all
or any part of the property of, assignment for the benefit of creditors by, or
the commencement of any proceeding by Borrower under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect;
or (j) the commencement of any proceeding against Borrower or any guarantor of
any of the Obligations under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect, which is not cured by the
dismissal thereof within 30 days after the date commenced; or (k) revocation or
termination of, or limitation or denial of liability upon, any guaranty of the
Obligations or any attempt to do any of the foregoing, or commencement of
proceedings by any guarantor of any of the Obligations under any bankruptcy or
insolvency law; or (l) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all of
the Obligations, or any
attempt to do any of the foregoing, or commencement of proceedings by or against
any such third party under any bankruptcy or insolvency law; or (m) Borrower
defaults under any agreement evidencing any indebtedness for borrowed money or
with respect to capitalized leases in an aggregate amount of $250,000 to any
third party; or (n) Borrower makes any payment on account of any indebtedness or
obligation which has been subordinated to the Obligations other than as
permitted in the applicable subordination agreement, or if any Person who has
subordinated such indebtedness or obligations terminates or in any way limits
his subordination agreement; or (o) there shall be a change in the record or
beneficial ownership of the outstanding shares of stock of Borrower, in one or
more transactions, compared to the ownership of outstanding shares of stock of
Borrower in effect on the date hereof, which results in a change of voting
control of Borrower, without the prior written consent of Silicon; or (p)
Borrower shall generally not pay its debts as they become due, or Borrower shall
conceal, remove or transfer any part of its property, with intent to hinder,
delay or defraud its creditors, or make or suffer any transfer of any of its
property which may be fraudulent under any bankruptcy, fraudulent conveyance or
similar law; or (q) there shall be (i) a material impairment in the perfection
or priority of Silicon's security interest in the Collateral or in the value of
such Collateral; (ii) a material adverse change in the business, operations or
condition (financial or otherwise) of the Borrower; (iii) a material impairment
of the prospect of repayment of any portion of the Obligations; or (iv) Silicon
determines, based upon information available to it and in its reasonable, good
faith judgment, that there is substantial likelihood that Borrower shall fail to
comply with one or more of the financial covenants in Section 5.1 during the
next succeeding financial reporting period; or (r) Silicon, acting in good faith
and in a commercially reasonable manner, deems itself insecure because of the
occurrence of an event prior to the effective date hereof of which Silicon had
no knowledge on the effective date or because of the occurrence of an event on
or subsequent to the effective date; or (s) Borrower shall breach any material
term of the IP Security Agreement, Exim Agreement or the Warrant.
7.2 REMEDIES. Upon the occurrence and during the continuance of any
Event of Default, and at any time thereafter, Silicon, at its option, and
without notice or demand of any kind (all of which are hereby expressly waived
by Borrower), may do any one or more of the following: (a) Cease making Loans or
otherwise extending credit to Borrower under this Agreement or any other
document or agreement; (b) Accelerate and declare all or any part of the
Obligations to be immediately due, payable, and performable, notwithstanding any
deferred or installment payments allowed by any instrument evidencing or
relating to any Obligation; (c) Take possession of any or all of the Collateral
wherever it may be found, and for that purpose Borrower hereby authorizes
Silicon without judicial process to enter onto any of Borrower's premises
without interference to search for, take possession of, keep, store, or remove
any of the Collateral, and remain on the premises or cause a custodian to remain
on the premises in exclusive control thereof, without charge for so long as
Silicon deems it reasonably necessary in order to complete the enforcement of
its rights under this Agreement or any other agreement; provided, however, that
should Silicon seek to take possession of any of the Collateral by Court
process, Borrower hereby irrevocably waives:
(i) any bond and any surety or security relating thereto required by any
statute, court rule or otherwise as an incident to such possession; (ii) any
demand for possession prior to the commencement of any suit or action to recover
possession thereof; and (iii) any requirement that Silicon retain possession of,
and not dispose of, any such Collateral until after trial or final judgment; (d)
Require Borrower to assemble any or all of the Collateral and make it available
to Silicon at places designated by Silicon which are reasonably convenient to
Silicon and Borrower, and to remove the Collateral to such locations as Silicon
may deem advisable; (e) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Silicon shall have the right to use Borrower's premises,
vehicles, hoists, lifts, cranes, equipment and all other property without
charge; (f) Sell, lease or otherwise dispose of any of the Collateral, in its
condition at the time Silicon obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private sales,
in lots or in bulk, for cash, exchange or other property, or on credit, and to
adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. Silicon shall have the right to
conduct such disposition on Borrower's premises without charge, for such time or
times as Silicon deems reasonable, or on Silicon's premises, or elsewhere and
the Collateral need not be located at the place of disposition. Silicon may
directly or through any affiliated company purchase or lease any Collateral at
any such public disposition, and if permissible under applicable law, at any
private disposition. Any sale or other disposition of Collateral shall not
relieve Borrower of any liability Borrower may have if any Collateral is
defective as to title or physical condition or otherwise at the time of sale;
(g) Demand payment of, and collect any Receivables and General Intangibles
comprising Collateral and, in connection therewith, Borrower irrevocably
authorizes Silicon to endorse or sign Borrower's name on all collections,
receipts, instruments and other documents, to take possession of and open mail
addressed to Borrower and remove therefrom payments made with respect to any
item of the Collateral or proceeds thereof, and, in Silicon's sole discretion,
to grant extensions of time to pay, compromise claims and settle Receivables and
the like for less than face value; (h) Offset against any sums in any of
Borrower's general, special or other Deposit Accounts with Silicon; and (i)
Demand and receive possession of copies of any of Borrower's federal and state
income tax returns and the books and records utilized in the preparation thereof
or referring thereto. All reasonable attorneys' fees, expenses, costs,
liabilities and obligations incurred by Silicon with respect to the foregoing
shall be added to and become part of the Obligations, shall be due on demand,
and shall bear interest at a rate equal to the highest interest rate applicable
to any of the Obligations. Without limiting any of Silicon's rights and
remedies, from and after the occurrence of any Event of Default, the interest
rate applicable to the Obligations shall be increased by an additional three
percent (3%) per annum.
7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and
Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to
Borrower at least ten days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least ten days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price in
cash or by cashier's check or wire transfer is required; (vi) With respect to
any sale of any of the Collateral, Silicon may (but is not obligated to) direct
any prospective purchaser to ascertain directly from Borrower any and all
information concerning the same. Silicon shall be free to employ other methods
of noticing and selling the Collateral, in its discretion, if they are
commercially reasonable.
7.4 POWER OF ATTORNEY. Upon the occurrence of any Event of Default,
without limiting Silicon's other rights and remedies, Borrower grants to Silicon
an irrevocable power of attorney coupled with an interest, authorizing and
permitting Silicon (acting through any of its employees, attorneys or agents) at
any time, at its option, but without obligation, with or without notice to
Borrower, and at Borrower's expense, to do any or all of the following, in
Borrower's name or otherwise, but Silicon agrees to exercise the following
powers in a commercially reasonable manner: (a) Execute on behalf of Borrower
any documents that Silicon may, in its reasonable discretion, deem advisable in
order to perfect and maintain Silicon's security interest in the Collateral, or
in order to exercise a right of Borrower or Silicon, or in order to fully
consummate all the transactions contemplated under this Agreement and all other
present agreements; (b) Execute on behalf of Borrower any document exercising,
transferring or assigning any option to purchase, sell or otherwise dispose of
or to lease (as lessor or lessee) any real or personal property which is part of
Silicon's Collateral or in which Silicon has an interest; (c) Execute on behalf
of Borrower, any invoices relating to any Receivable, any draft against any
Account Debtor and any notice to any Account Debtor, any proof of claim in
bankruptcy, any Notice of Lien, claim of mechanic's, materialman's or other
lien, or assignment or satisfaction of mechanic's, materialman's or other lien;
(d) Take control in any manner of any cash or non-cash items of payment or
proceeds of Collateral; endorse the name of Borrower upon any instruments, or
documents, evidence of payment or Collateral that may come into Silicon's
possession; (e) Endorse all checks and other forms of remittances received by
Silicon; (f) Pay, contest or settle any lien, charge, encumbrance, security
interest and adverse claim in or to any of the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; (g)
Grant extensions of time to pay, compromise claims and settle Receivables and
General Intangibles for less than face value and execute all releases and other
documents in connection therewith; (h) Pay any sums required on account of
Borrower's taxes or to secure the release of any liens therefor, or both; (i)
Settle and adjust, and give releases of, any insurance claim that relates to any
of the Collateral and obtain payment therefor; (j) Instruct any third party
having custody or control of any books or records belonging to, or relating to,
Borrower to give Silicon the same rights of access and other rights with respect
thereto as Silicon has under this Agreement; and (k) Take any action or pay any
sum required of Borrower pursuant to this Agreement and any other present
agreements. Any and all reasonable sums paid and any and all reasonable costs,
expenses, liabilities, obligations and attorneys' fees incurred by Silicon with
respect to the foregoing shall be added to and become part of the Obligations,
shall be payable on demand, and shall bear interest at a rate equal to the
highest interest rate applicable to any of the Obligations. In no event shall
Silicon's rights under the foregoing power of attorney or any of Silicon's other
rights under this Agreement be deemed to indicate that Silicon is in control of
the business, management or properties of Borrower.
7.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any
sale of the Collateral shall be applied by Silicon first to the reasonable
costs, expenses, liabilities, obligations and attorneys' fees incurred by
Silicon in the exercise of its rights under this Agreement, second to the
interest due upon any of the Obligations, and third to the principal of the
Obligations, in such order as Silicon shall determine in its sole discretion.
Any surplus shall be paid to Borrower or other persons legally entitled thereto;
Borrower shall remain liable to Silicon for any deficiency.
7.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set
forth in this Agreement, Silicon shall have all the other rights and remedies
accorded a secured party under the Massachusetts Uniform Commercial Code and
under all other applicable laws, and under any other instrument or agreement now
or in the future entered into between Silicon and Borrower, and all of such
rights and remedies are cumulative and none is exclusive. Exercise or partial
exercise by Silicon of one or more of its rights or remedies shall not be deemed
an election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Silicon to exercise any rights
or remedies shall not operate as a waiver thereof, but all rights and remedies
shall continue in full force and effect until all of the Obligations have been
fully paid and performed.
8. DEFINITIONS.
As used in this Agreement, the following terms have the following
meanings:
"ACCOUNT DEBTOR" means the obligor on a Receivable.
"AFFILIATE" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.
"BUSINESS DAY" means a day on which Silicon is open for business.
"CASH MANAGEMENT SERVICES" means Silicon's cash management services,
direct deposit of payroll, business credit card, and check cashing services as
may be further identified in the various cash management services agreements
related to such Cash Management Services.
"CODE" means the Uniform Commercial Code as adopted and in effect in
the Commonwealth of Massachusetts from time to time.
"COLLATERAL" has the meaning set forth in Section 2.1 above.
"DEFAULT" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"DEPOSIT ACCOUNT" has the meaning set forth in Section 9-102 of the
Code.
"ELIGIBLE RECEIVABLES" means Receivables arising in the ordinary course
of Borrower's business from the sale of goods or rendition of services, which
Silicon, in its good faith business judgment, shall deem eligible for borrowing,
based on such considerations as Silicon may from time to time deem appropriate.
Without limiting the fact that the determination of which Receivables are
eligible for borrowing is a matter of Silicon's good faith business judgment,
the following (the "MINIMUM ELIGIBILITY REQUIREMENTS") are the minimum
requirements for a Receivable to be an Eligible Receivable: (i) the Receivable
must not be outstanding for more than 90 days from its invoice date, (ii) the
Receivable must not represent progress xxxxxxxx, or be due under a fulfillment
or requirements contract with the Account Debtor, (iii) the Receivable must not
be subject to any contingencies (including Receivables arising from sales on
consignment, guaranteed sale or other terms pursuant to which payment by the
Account Debtor may be conditional, except as may otherwise be acceptable to
Silicon in its discretion), (iv) the Receivable must not be owing from an
Account Debtor with whom the Borrower has any dispute (whether or not relating
to the particular Receivable) to the extent of such dispute, (v) the Receivable
must not be owing from an Affiliate of Borrower, (vi) the Receivable must not be
owing from an Account Debtor which is subject to any insolvency or bankruptcy
proceeding, or whose financial condition is not acceptable to Silicon, or which,
fails or goes out of a material portion of its business, (vii) the Receivable
must not be owing from the United States or any department, agency or
instrumentality thereof (unless there has been compliance, to Silicon's
satisfaction, with the United States Assignment of Claims Act), (viii) the
Receivable must not be owing from an Account Debtor located outside the United
States (unless pre-approved by Silicon in its discretion in writing, or backed
by a letter of credit satisfactory to Silicon, or FCIA insured satisfactory to
Silicon), and (ix) the Receivable must not be owing from an Account Debtor to
whom Borrower is or may be liable for goods purchased from such Account Debtor
or otherwise to the extent of such contra account. Receivables owing from one
Account Debtor will not be deemed Eligible Receivables to the extent they exceed
25% of the total Receivables outstanding. In addition, if more than 50% of the
Receivables owing from an Account Debtor are outstanding more than 90 days from
their invoice date (without regard to unapplied credits) or are otherwise not
eligible Receivables, then all Receivables owing from that Account Debtor will
be deemed ineligible for borrowing. Silicon may, from time to time, in its good
faith business judgment, revise the Minimum Eligibility Requirements, upon
written notice to the Borrower.
"EQUIPMENT" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
"EVENT OF DEFAULT" means any of the events set forth in Section 7.1 of
this Agreement.
"EXIM AGREEMENT" means the Export-Import Bank Loan and Security
Agreement of even date between Silicon and Borrower, as may be amended,
restated, extended or replaced from time to time.
"GENERAL INTANGIBLES" means all general intangibles of Borrower,
whether now owned or hereafter created or acquired by Borrower, including,
without limitation, all choses in action, rights to payment for credit extended,
amounts due to Borrower, credit memoranda in favor of Borrower, warranty claims,
causes of action, corporate or other business records, deposits, Deposit
Accounts, inventions, designs, drawings, blueprints, patents, patent
applications, trademarks and the goodwill of the business symbolized thereby,
names, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, security and other deposits, rights in all
litigation presently or hereafter pending for any cause or claim (whether in
contract, tort or otherwise), and all judgments now or hereafter arising
therefrom, all claims of Borrower against Silicon, rights to purchase or sell
real or personal property, rights as a licensor or licensee of any kind,
royalties, telephone numbers, proprietary information, purchase orders, and all
insurance policies and claims (including without limitation life insurance, key
man insurance, credit insurance, liability insurance, property insurance and
other insurance), tax refunds and claims, computer programs, discs, tapes and
tape files, claims under guaranties, security interests or other security held
by or granted to Borrower, all rights to indemnification and all other
intangible property of every kind and nature (other than Receivables).
"INVENTORY" means all of Borrower's now owned and hereafter acquired
goods, merchandise or other personal property, wherever located, to be furnished
under any contract of service or held for sale or lease (including without
limitation all raw materials, work in process, finished goods and goods in
transit), and all materials and supplies of every kind, nature and description
which are or might be used or consumed in Borrower's business or used in
connection with the manufacture, packing, shipping, advertising, selling or
finishing of such goods, merchandise or other personal property, and all
warehouse receipts, documents of title and other documents representing any of
the foregoing.
"LETTER-OF-CREDIT RIGHTS" means all letter-of-credit rights including,
without limitation, "letter-of-credit rights" as defined in the Code and also
any right to payment or performance under a letter of credit, whether or not
the beneficiary has demanded or is at the time entitled to demand payment or
performance.
"OBLIGATIONS" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Silicon, whether evidenced by this Agreement or any
note or other instrument or document, including, without limitation, the
Borrower's obligations pursuant to the IP Security Agreement, the Exim Agreement
and the Warrant whether arising from an extension of credit, opening of a Letter
of Credit, banker's acceptance, foreign exchange contracts, loan, Cash
Management Services, guaranty, indemnification or otherwise, whether direct or
indirect (including, without limitation, those acquired by assignment and any
participation by Silicon in Borrower's debts owing to others), absolute or
contingent, due or to become due, including, without limitation, all interest,
charges, expenses, fees, attorney's fees, expert witness fees, audit fees,
letter of credit fees, collateral monitoring fees, closing fees, facility fees,
termination fees, minimum interest charges and any other sums chargeable to
Borrower under this Agreement or under any other present or future instrument or
agreement between Borrower and Silicon.
"PAYMENT INTANGIBLES" means all payment intangibles including, without
limitation, "payment intangibles" as defined in the Code and also any general
intangible under which the Account Debtor's primary obligation is a monetary
obligation.
"PERMITTED LIENS" means the following: (i) purchase money security
interests in, or leases of, specific items of Equipment existing on the date
hereof and described on the Schedule; (ii) for future purchase money financing
purchase money security interests in, or capital leases of, specific items of
Equipment in an amount not to exceed $4,000,000 in the aggregate in each fiscal
year entered into during the term of this Agreement; (iii) liens for taxes not
yet payable; (iv) additional security interests and liens consented to in
writing by Silicon, which consent shall not be unreasonably withheld; (v)
security interests being terminated substantially concurrently with this
Agreement; (vi) liens of materialmen, mechanics, warehousemen, carriers, or
other similar liens arising in the ordinary course of business and securing
obligations which are not delinquent or are otherwise being contested in good
faith by appropriate proceedings; (vii) liens incurred in connection with the
extension, renewal or refinancing of the indebtedness secured by liens of the
type described above in clauses (i) or (ii) above, provided that any extension,
renewal or replacement lien is limited to the property encumbered by the
existing lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase; and (viii) Liens in favor of customs
and revenue authorities which secure payment of customs duties in connection
with the importation of goods. Silicon will have the right to require, as a
condition to its consent under subsection (iv) above, that the holder of the
additional security interest or lien sign an intercreditor agreement on
Silicon's then standard form, acknowledge that the security interest is
subordinate to the security interest in favor of Silicon, and agree not to take
any action to enforce its subordinate security interest so long as any
Obligations remain outstanding, and that Borrower agree that any uncured default
in any obligation secured by
the subordinate security interest shall also constitute an Event of Default
under this Agreement.
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"RECEIVABLES" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), accounts receivable,
health-care insurance receivables, rights to payment, letters of credit,
contract rights, chattel paper, instruments, securities, securities accounts,
investment property, documents and all other forms of obligations at any time
owing to Borrower, all guaranties and other security therefor, all merchandise
returned to or repossessed by Borrower, and all rights of stoppage in transit
and all other rights or remedies of an unpaid vendor, lienor or secured party.
"RESERVES" means, as of any date of determination, such amounts as
Silicon may from time to time establish and revise in good faith and in a
commercially reasonable manner reducing the amount of Loans, Letters of Credit
and other financial accommodations which would otherwise be available to
Borrower under the lending formula(s) provided in the Schedule: (a) to reflect
events, conditions, contingencies or risks which, as determined by Silicon in
good faith and in a commercially reasonable manner, do or may affect (i) the
Collateral or any other property which is security for the Obligations or its
value (including without limitation any increase in delinquencies of
Receivables), (ii) the assets, business or prospects of Borrower or any
Guarantor, or (iii) the security interests and other rights of Silicon in the
Collateral (including the enforceability, perfection and priority thereof); or
(b) to reflect Silicon's good faith belief that any collateral report or
financial information furnished by or on behalf of Borrower or any guarantor to
Silicon is or may have been incomplete, inaccurate or misleading in any material
respect; or (c) in respect of any state of facts which Silicon determines in
good faith constitutes an Event of Default or may, with notice or passage of
time or both, constitute an Event of Default. Silicon shall, prior to the
occurrence of an Event of Default, provide five (5) Business Days' notice to
Borrower prior to instituting any Reserves (other than with respect to accrued
interest).
"SUPPORTING OBLIGATIONS" means all supporting obligations including,
without limitation, "supporting obligations" as defined in the Code and also any
letter-of-credit right or secondary obligation which supports the payment or
performance of an account, chattel paper, a document, a general intangible, an
instrument, or investment property.
"WARRANT" means that certain Warrant to Purchase Stock of even date
herewith granted to Silicon by iBasis, Inc.
OTHER TERMS. All accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in accordance
with generally accepted accounting principles, consistently applied. All other
terms contained in this Agreement, unless otherwise
indicated, shall have the meanings provided by the Code, to the extent such
terms are defined therein.
9. GENERAL PROVISIONS.
9.1 INTEREST COMPUTATION. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by Silicon (including
proceeds of Receivables and payment of the Obligations in full) shall be deemed
applied by Silicon on account of the Obligations three Business Days after
receipt by Silicon of immediately available funds, and, for purposes of the
foregoing, any such funds received after 12:00 Noon on any day shall be deemed
received on the next Business Day. Silicon shall not, however, be required to
credit Borrower's account for the amount of any item of payment which is
unsatisfactory to Silicon in its reasonable discretion, and Silicon may charge
Borrower's loan account for the amount of any item of payment which is returned
to Silicon unpaid.
9.2 APPLICATION OF PAYMENTS. All payments with respect to the
Obligations may be applied, and in Silicon's reasonable discretion reversed and
re-applied, to the Obligations, in such order and manner as Silicon shall
determine in its sole discretion.
9.3 CHARGES TO ACCOUNTS. Silicon may, in its reasonable discretion,
require that Borrower pay monetary Obligations in cash to Silicon, or charge
them to Borrower's Loan account, in which event they will bear interest at the
same rate applicable to the Loans. Silicon may also, in its discretion, charge
any monetary Obligations to Borrower's Deposit Accounts maintained with Silicon.
9.4 MONTHLY ACCOUNTINGS. Silicon shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Silicon), unless Borrower
notifies Silicon in writing to the contrary within sixty days after each account
is rendered, describing the nature of any alleged errors or admissions.
9.5 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, or certified mail return receipt
requested, addressed to Silicon or Borrower at the addresses shown in the
heading to this Agreement, or at any other address designated in writing by one
party to the other party. Notices to Silicon shall be directed to the Commercial
Finance Division, to the attention of the Division Manager or the Division
Credit Manager. All notices shall be deemed to have been given upon delivery in
the case of notices personally delivered, or at the expiration of one Business
Day following delivery to the private delivery service, or two Business Days
following the deposit thereof in the United States mail, with postage prepaid.
9.6 SEVERABILITY. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
9.7 INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and Silicon and supersede
all prior and contemporaneous negotiations and oral representations and
agreements, all of which are merged and integrated in this Agreement. There are
no oral understandings, representations or agreements between the parties which
are not set forth in this Agreement or in other written agreements signed by the
parties in connection herewith.
9.8 WAIVERS. The failure of Silicon at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement or any
other present or future agreement between Borrower and Silicon shall not waive
or diminish any right of Silicon later to demand and receive strict compliance
therewith. Any waiver of any default shall not waive or affect any other
default, whether prior or subsequent, and whether or not similar. None of the
provisions of this Agreement or any other agreement now or in the future
executed by Borrower and delivered to Silicon shall be deemed to have been
waived by any act or knowledge of Silicon or its agents or employees, but only
by a specific written waiver signed by an authorized officer of Silicon and
delivered to Borrower. Borrower waives demand, protest, notice of protest and
notice of default or dishonor, notice of payment and nonpayment, release,
compromise, settlement, extension or renewal of any commercial paper,
instrument, account, General Intangible, document or guaranty at any time held
by Silicon on which Borrower is or may in any way be liable, and notice of any
action taken by Silicon, unless expressly required by this Agreement.
9.9 NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor any of
its directors, officers, employees, agents, attorneys or any other Person
affiliated with or representing Silicon shall be liable for any claims, demands,
losses or damages, of any kind whatsoever, made, claimed, incurred or suffered
by Borrower or any other party through the ordinary negligence of Silicon, or
any of its directors, officers, employees, agents, attorneys or any other Person
affiliated with or representing Silicon, but nothing herein shall relieve
Silicon from liability for its own gross negligence or willful misconduct.
9.10 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by Borrower and a duly
authorized officer of Silicon.
9.11 TIME OF ESSENCE. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement.
9.12 ATTORNEYS FEES AND COSTS. Borrower shall reimburse Silicon for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by Silicon,
pursuant to, or in connection with, or relating to this Agreement (whether or
not a lawsuit is filed), including, but not limited to, any reasonable
attorneys' fees and costs Silicon incurs in order to do the following: prepare
and negotiate this Agreement and the documents relating to this Agreement;
obtain legal advice in connection with this Agreement or Borrower; enforce, or
seek to enforce, any of its rights; prosecute actions against, or defend actions
by, Account Debtors; commence, intervene in, or defend any action or proceeding;
initiate any complaint to be relieved of the automatic stay in bankruptcy; file
or prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; subject to the provisions of Section 5.4 of this Agreement, examine,
audit, copy, and inspect any of the Collateral or any of Borrower's books and
records; protect, obtain possession of, lease, dispose of, or otherwise enforce
Silicon's security interest in, the Collateral; and otherwise represent Silicon
in any litigation relating to Borrower. In satisfying Borrower's obligation
hereunder to reimburse Silicon for attorneys fees, Borrower may, for
convenience, issue checks directly to Silicon's attorneys, Xxxxxx & Xxxxxxxxxx,
LLP, but Borrower acknowledges and agrees that Xxxxxx & Xxxxxxxxxx, LLP is
representing only Silicon and not Borrower in connection with this Agreement. If
either Silicon or Borrower files any lawsuit against the other predicated on a
breach of this Agreement, Silicon, if the prevailing party, shall be entitled to
recover its reasonable costs and attorneys' fees, including (but not LIMITED to)
reasonable attorneys' fees and costs incurred in the enforcement of, execution
upon or defense of any order, decree, award or judgment. All attorneys' fees and
costs to which Silicon may be entitled pursuant to this Section 9.12 shall
immediately become part of Borrower's Obligations, shall be due on demand, and
shall bear interest at a rate equal to the highest interest rate applicable to
any of the Obligations.
9.13 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and Silicon; provided,
however, that Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Silicon, and any prohibited
assignment shall be void. No consent by Silicon to any assignment shall release
Borrower from its liability for the Obligations.
9.14 JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.
9.15 LIMITATION OF ACTIONS. Any claim or cause of action by Borrower
against Silicon, its directors, officers, employees, agents, accountants or
attorneys, based upon, arising from, or relating to this Loan Agreement, or any
other present or future document or agreement, or any other transaction
contemplated hereby or thereby or relating hereto or thereto, or any other
matter, cause or thing whatsoever, occurred, done, omitted or suffered to be
done by Silicon, its directors, officers, employees, agents, accountants or
attorneys, shall be barred unless asserted by Borrower by the commencement of an
action or proceeding in a court of competent jurisdiction by the filing of a
complaint within one year after the first act, occurrence or omission upon
which such claim or cause of action, or any part thereof, is based, and the
service of a summons and complaint on an officer of Silicon, or on any other
person authorized to accept service on behalf of Silicon, within thirty (30)
days thereafter. Borrower agrees that such one-year period is a reasonable and
sufficient time for Borrower to investigate and act upon any such claim or cause
of action. The one-year period provided herein shall not be waived, tolled, or
extended except by the written consent of Silicon in its sole discretion. This
provision shall survive any termination of this Loan Agreement or any other
present or future agreement.
9.16 RIGHT OF SET-OFF. Borrower and any guarantor hereby grant to
Silicon a lien, security interest, and right of setoff as security for all
Obligations to Silicon, 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 Silicon or any entity under the
control of Silicon Valley Bank 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, Silicon may set off the same or any part thereof and apply the same
to any liability or obligation of Borrower and any guarantor then due and
regardless of the adequacy of any other collateral securing the loan. ANY AND
ALL RIGHTS TO REQUIRE SILICON TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS, OR OTHER PROPERTY OF THE BORROWER
OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVED.
9.17 SECTION HEADINGS; CONSTRUCTION. Section headings are only used in
this Agreement for convenience. Borrower and Silicon acknowledge that the
headings may not describe completely the subject matter of the applicable
section, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement. The term
"including", whenever used in this Agreement, shall mean "including (but not
limited to)". This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against Silicon or Borrower under any rule
of construction or otherwise.
9.18 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts
and transactions hereunder and all rights and obligations of Silicon and
Borrower shall be governed by the laws of the Commonwealth of Massachusetts. As
a material part of the consideration to Silicon to enter into this Agreement,
Borrower (i) agrees that all actions and proceedings relating directly or
indirectly to this Agreement shall, at Silicon's option, be litigated in state
or federal courts located within Massachusetts; (ii) consents to the
jurisdiction and venue of any such court and consents to service of process in
any such action or proceeding by personal delivery or any other method permitted
by law; and (iii) waives any and all rights Borrower may have to object to the
jurisdiction of any such court, or to transfer or change the venue of any such
action or proceeding, provided, however, that if for any reason Silicon cannot
avail itself of such courts in the Commonwealth of Massachusetts, Borrower
accepts jurisdiction of the courts and venue in Santa Clara, California.
9.19 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND SILICON EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING
OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR BORROWER, IN
ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
9.20 CONFIDENTIALITY. In handling any confidential information, Silicon
shall exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (i) to Silicon's
subsidiaries or affiliates in connection with their present or prospective
business relations with Borrower; (ii) to prospective transferees or purchasers
of any interest in the Loans; (iii) as required by law, regulation, subpoena, or
other order; (iv) as required in connection with Silicon's examination or audit;
and (v) as Silicon reasonably considers appropriate in exercising remedies under
this Agreement. Confidential information does not include information that
either: (a) is in the public domain or in Silicon's possession when disclosed to
Silicon, or becomes part of the public domain after disclosure to Silicon
(through no act or omission of Silicon); or (b) is disclosed to Silicon by a
third party, which third party is not under any non-disclosure obligation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts as of the date first above written.
BORROWER:
IBASIS, INC.
BY /s/ XXXX XXXXXX
--------------------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ XXXXXXXX X. XXXXXXX
--------------------------------------------
SECRETARY OR ASS'T SECRETARY
IBASIS GLOBAL, INC.
BY /s/ XXXX XXXXXX
--------------------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ XXXXXXXX X. XXXXXXX
--------------------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK, D/B/A
SILICON VALLEY EAST
BY XXXX X. XXXX
--------------------------------------------
TITLE VICE PRESIDENT
--------------------------------------------
SILICON VALLEY BANK
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: IBASIS, INC., A DELAWARE CORPORATION
ADDRESS: 00 XXXXXX XXXXXX
XXXXXXXXXX, XXXXXXXXXXXXX 00000
BORROWER: IBASIS GLOBAL, INC., A DELAWARE CORPORATION
ADDRESS: 00 XXXXXX XXXXXX
XXXXXXXXXX, XXXXXXXXXXXXX 00000
DATE: DECEMBER 30, 2002
This Schedule forms an integral part of the Loan and Security Agreement between
Silicon Valley Bank and the above-borrower of even date.
================================================================================
1. CREDIT LIMIT
(Section 1.1): An aggregate amount of Loans and other Obligations
outstanding not to exceed the lesser of (A) or (B), below:
=======================================================================
(A)
==============================================================
(i) $15,000,000.00 (the "Maximum Credit Limit"); MINUS
================================================================================
(ii) any amounts outstanding under the Exim Agreement
(including the face amount of any letters of credit issued
thereunder); MINUS
==============================================================
(iii) the aggregate amounts then undrawn on all outstanding
Letters of Credit, Cash Management Services, foreign exchange
contracts, or any other accommodations issued or incurred, or
caused to be issued or incurred by Silicon for the account
and/or benefit of the Borrower.
================================================================================
(B)
SECTION 1. 70.0% of the amount of the Borrower's Eligible Receivables
(as defined in Section 8 above) (the "Receivables Loans"); MINUS
================================================================================
SECTION 2. the aggregate amounts then undrawn on all outstanding
Letters of Credit, Cash Management Services, foreign exchange contracts, or any
other accommodations issued or incurred, or caused to be issued or incurred by
Silicon for the account and/or benefit of the Borrower.
================================================================================
Silicon may, from time to time, modify the advance rate(s) set forth herein in
its good faith business judgment upon five (5) Business Days' notice to Borrower
based on changes in collection experience with respect to the Receivables or
other issues or factors relating to the Receivables or the Collateral.
================================================================================
LETTER OF CREDIT/FOREIGN EXCHANGE CONTRACT/CASH MANAGEMENT SERVICES
SUBLIMIT
(Section 1.5, 1.6): $6,500,000.00 MINUS ANY LETTERS OF CREDIT ISSUED ON
THE EXIM AGREEMENT
2. INTEREST.
INTEREST RATE (Section 1.2):
A rate equal to the "Prime Rate" in effect from time to time, plus 1.0%
per annum. Interest shall be calculated on the basis of a 360-day year for the
actual number of days elapsed. "Prime Rate" is the greater of (i) 5.25% or (ii)
the rate announced from time to time by Silicon as its "prime rate;" it is a
base rate upon which other rates charged by Silicon are based, and it is not
necessarily the best rate available at Silicon. The interest rate applicable to
the Obligations shall change on each date there is a change in the Prime Rate.
================================================================================
3. FEES (Section 1.4):
Initial Loan Fee: $150,000 payable concurrently herewith.
Supplemental Loan Fee: A fully earned as of the date hereof,
non-refundable annual fee of $75,000.00 due on the earlier to occur of (i)
acceleration of the Obligations after an Event of Default hereunder or (ii)
December 31, 2003.
Collateral Handling Fee: $1,000.00 ($500.00 when not borrowing and
Borrower has advised Silicon that it has elected to be on "non-borrowing
reporting status" pursuant to Section 6, below) per month, payable in arrears.
Unused Line Fee: In the event, in any calendar month (or portion
thereof at the beginning and end of the term hereof), the average daily
principal balance of all Obligations (including the face amount of any issued
but undrawn Letters of Credit) outstanding during the month is less than the
amount of the Maximum Credit Limit, Borrower shall pay Silicon an unused line
fee in an amount equal to 0.25% per annum on the difference between the amount
of the Maximum Credit Limit and the average daily principal balance of the
Obligations (including the face amount of any issued but undrawn Letters of
Credit) outstanding during the month, which unused line fee shall be computed
and paid monthly, in arrears, on the first day of the following month.
Cancellation Fee: If the Obligations are voluntarily or involuntarily
prepaid or if this Agreement is otherwise terminated prior to its maturity, the
Borrower shall pay to Silicon a termination fee of $150,000.00, provided that no
such termination fee shall be charged if the credit facility hereunder is
replaced or transferred to another division of Silicon. The termination fee
shall be due and payable upon prepayment by the Borrower in the case of
voluntary prepayments or upon demand by Silicon in the event of
involuntary prepayment, and if not paid immediately shall bear interest at a
rate equal to the highest rate applicable to any of the Obligations.
================================================================================
4. MATURITY DATE
(Section 6.1): December 29, 2004
================================================================================
5. FINANCIAL COVENANTS
(Section 5.1): Borrower shall comply with each of the following
covenant(s). Compliance shall be determined as of the end of each month, except
as otherwise specifically provided below:
A. MINIMUM TANGIBLE NET WORTH:
Borrower shall maintain a Tangible Net Worth of not less than:
(A) from the date of this Agreement through March 31,
2003 - $40,000,000.00
(B) from April 1, 2003 through June 30, 2003 - $33,300,000.00
(C) from July 1, 2003 through September 30, 2003 -
$29,100,000.00
(D) from October 1, 2003 through December 31, 2003 -
$26,300,000.00
(E) from January 1, 2004 through August 31, 2004 -
$26,000,000.00
(F) from September 1, 2004 through November 30, 2004 -
$28,500,000.00
(G) from December 1, 2004 and thereafter - $32,500,000.00
B. MINIMUM CASH OR EXCESS AVAILABILITY:
=======================================================================
The Borrower shall at all times maintain $3,000,000.00 in (i) cash
deposits maintained at Silicon, and/or (ii) excess "availability" under
this Agreement (net of Loans, Letters of Credit or other indebtedness
under this Agreement), as determined by Silicon based upon the Credit
Limit restrictions set forth in Section 1 above).
================================================================================
C. QUICK RATIO. Borrower shall at all times maintain a ratio of Quick
Assets to Current Liabilities of at least:
(A) from the date of this Agreement through March 31, 2003 -
0.95 to 1.0
(B) from April 1, 2003 through June 30, 2003 - 0.90 to 1.0
(C) from July 1, 2003 through September 30, 2003 - 0.85 to
1.0
(D) from October 1, 2003 through December 31, 2003 - 0.80 to
1.0
(E) from January 1, 2004 through March 31, 2004 - 0.85 to 1.0
(F) from April 1, 2004 through June 30, 2004 - 0.90 to 1.0
================================================================================
(G) from July 31, 2004 through September 30, 2004 - 0.95 to
1.0
(H) from October 1, 2004 and thereafter - 1.0 to 1.0
DEFINITIONS. For purposes of the foregoing financial covenants, the
following term shall have the following meaning:
"Current Assets" are amounts that under GAAP should be
included on that date as current assets on Borrower's consolidated balance
sheet.
"Current Liabilities" are the aggregate amount of Borrower's
Liabilities which mature within one (1) year, which shall include, without
limitation, all Obligations (other than the face amount of undrawn Letters of
Credit issued hereunder or under the Exim Agreement).
"Liabilities" shall have the meaning ascribed thereto by
generally accepted accounting principles.
"Quick Assets" is, on any date, the Borrower's consolidated,
unrestricted cash, cash equivalents, net billed accounts receivable and
investments with maturities of fewer than 12 months determined according to
GAAP.
"Tangible Net Worth" shall mean the excess of total assets
over total liabilities, determined in accordance with generally accepted
accounting principles, with the following adjustments:
(A) there shall be excluded from assets: (i) notes, accounts
receivable and other obligations owing to the Borrower from its officers or
other Affiliates, and (ii) all assets which would be classified as intangible
assets under generally accepted accounting principles, including without
limitation goodwill, licenses, patents, trademarks, trade names, copyrights,
capitalized software and organizational costs, licenses and franchises and (iii)
the value of Borrower's investment in E-Yak, a _________ corporation.
(B) there shall be excluded from liabilities: all indebtedness
which is subordinated to the Obligations under a subordination agreement in form
specified by Silicon or by language in the instrument evidencing the
indebtedness which is acceptable to Silicon in its discretion.
================================================================================
6. REPORTING.
(Section 5.3):
Borrower shall provide Silicon with the following:
1. Weekly (monthly, if Borrower has elected to be on "non-borrowing
reporting status"), and upon each loan request, borrowing base certificates and
transaction reports.
2. Monthly accounts payable agings, aged by invoice date, and
outstanding or held check registers, if any, within fifteen days after the end
of each month.
3. Monthly Receivable agings, aged by invoice date, and receivable
reconciliations, within fifteen days after the end of each month.
4. Monthly unaudited financial statements, as soon as available, and in
any event within thirty days after the end of each month.
5. Monthly Compliance Certificates, within thirty days after the end of
each month, in such form as Silicon shall reasonably specify, signed by the
Chief Financial Officer of Borrower, certifying that as of the end of such month
Borrower was in full compliance with all of the terms and conditions of this
Agreement, and setting forth calculations showing compliance with the financial
covenants set forth in this Agreement and such other information as Silicon
shall reasonably request, including, without limitation, a statement that at the
end of such month there were no held checks.
6. Annual operating budgets (including income statements, balance
sheets and cash flow statements, by month) for the upcoming fiscal year of
Borrower within thirty days prior to the end of each fiscal year of Borrower.
7. Annual financial statements, as soon as available, and in any event
within 90 days following the end of Borrower's fiscal year, certified by
independent certified public accountants acceptable to Silicon.
8. Such additional reports and information as Silicon may from time to
time specify.
Borrower may elect to be on "non-borrowing reporting status" if
Borrower notifies Silicon in writing that it so elects and there are no Loans or
other Obligations outstanding hereunder (including, without limitation, any
issued Letters of Credit). Notwithstanding the foregoing, Borrower may also
elect to be on "non-borrowing reporting status" if there are no Loans
outstanding or other Obligations outstanding other than issued Letters of
Credit, provided that Borrower maintains at least $10,000,000 in deposit
accounts or securities accounts at Silicon (or its affiliate in the case of
securities accounts). After Borrower has notified Silicon of its intention to be
on "non-borrower reporting status", as further set forth in Section 4.3 of this
Agreement, Borrower must provide Silicon at least 30 days prior written notice
of its intention to borrow.
================================================================================
7. BORROWER INFORMATION:
PRIOR NAMES OF
BORROWER
(Section 3.2): See Perfection Certificate of even date herewith
PRIOR TRADE
NAMES OF BORROWER
(Section 3.2): See Perfection Certificate of even date herewith
EXISTING TRADE
NAMES OF BORROWER
(Section 3.2): See Perfection Certificate of even date herewith
OTHER LOCATIONS AND
ADDRESSES (Section 3.3): See Perfection Certificate of even date
herewith
MATERIAL ADVERSE
LITIGATION (Section 3.10): None
================================================================================
8. OTHER COVENANTS
(Section 5.1): Borrower shall at all times comply with all of the
following additional covenants:
(1) BANKING RELATIONSHIP. In order for Silicon to properly monitor its
loan arrangement with the Borrower, Borrower shall at all times during the term
of this Agreement maintain all of its depository, operating and securities
accounts with Silicon (or an affiliate of Silicon with respect to securities
accounts).
(2) SUBORDINATION OF INSIDE DEBT. All present and future indebtedness
of the Borrower to its officers, directors and shareholders ("Inside Debt")
shall, at all times, be subordinated to the Obligations pursuant to a
subordination agreement on Silicon's standard form. Borrower represents and
warrants that there is no Inside Debt presently outstanding, except for the
following: NONE. Prior to incurring any Inside Debt in the future, Borrower
shall cause the person to whom such Inside Debt will be owed to execute and
deliver to Silicon a subordination agreement on Silicon's standard form.
(3) SUBORDINATION AGREEMENTS. Borrower represents and warrants that,
other than the Indenture (as hereinafter defined) and indebtedness secured by
Permitted Liens, Borrower has no indebtedness for money borrowed. Prior to
incurring any additional indebtedness, Borrower shall cause each new creditor to
execute and deliver to Silicon a subordination agreement on Silicon's standard
form subordinating to the Obligations the indebtedness of Borrower to any such
creditor. Borrower represents that none of the existing subordinated debt
outstanding under the Indenture is currently secured by any assets or property
of Borrower. In addition, as further described in Section 5.5 of this Agreement,
Borrower warrants that at no time will any of the subordinated debt be secured
by its assets or property. Notwithstanding the foregoing, up to $60,000,000 of
Borrower's existing unsecured subordinated debt may be converted to secured
subordinated debt and such debt shall be automatically be deemed a "Permitted
Lien" hereunder, provided, however, at the time of such conversion (i) such debt
and lien shall be fully subordinated to the debt and lien of Silicon upon such
terms, conditions and documentation, satisfactory to Silicon, (ii) such debt
shall be discounted by at least 50.0% (for example, upon conversion of each
$100.00 of unsecured subordinated debt to secured subordinated debt, at least
$50.00 will be forgiven by such subordinated creditor) and (iii) Silicon shall
have the option, in its sole discretion, to increase or otherwise adjust the
Tangible Net Worth Covenant set forth in Section 5 of the Schedule to this
Agreement. Borrower and Silicon hereby acknowledge and agree that the
Obligations are and shall at all times constitute "Designated Senior
Indebtedness" of Borrower with respect to each of its subordinated creditors,
including, without limitation, those subordinated creditors party to a certain
Indenture dated March 15, 2000 (the "Indenture"). Borrower hereby represents,
warrants and certifies that it has, on or about November 25, 2002, delivered to
the Trustee under the Indenture a notice in accordance with the terms of the
Indenture to confirm that the Obligations constitute Designated Senior
Indebtedness. Borrower hereby agrees that it will not materially modify any of
the terms and conditions of the Indenture without Silicon's prior written
consent in each instance. Borrower shall not make any payments of any kind
(including, without limitation, pursuant to Section 13.1 of the Indenture) to,
or for the benefit of, any of the subordinated debt holders or the Trustee under
the Indenture without Silicon's prior written consent in each instance;
provided, however, prior to the occurrence of an Event of Default, Borrower may
make regularly scheduled payments of interest in accordance with the terms of
the Indenture.
(4) INTELLECTUAL PROPERTY SECURITY AGREEMENT. As a condition precedent
to the effectiveness of this Agreement, Borrower shall have executed and
delivered to Silicon an Intellectual Property Security Agreement (the "IP
Security Agreement"), substantially in the form attached hereto as Exhibit B.
IBASIS, INC.
BY /s/ XXXX XXXXXX
---------------------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ XXXXXXXX X. XXXXXXX
---------------------------------------------
SECRETARY OR ASS'T SECRETARY
IBASIS GLOBAL, INC.
BY /s/ XXXX XXXXXX
---------------------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ XXXXXXXX X. XXXXXXX
---------------------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK, D/B/A
SILICON VALLEY EAST
BY /s/ XXXX X. XXXX
---------------------------------------------
TITLE VICE PRESIDENT
---------------------------------------------
