EXHIBIT 10.14
Silicon Valley Bank
QUICK START LOAN AND SECURITY AGREEMENT
Borrower: Stampmaster, Inc. Address: 0000 Xxxx Xxxxxxxx Xxxx Xxxx.,
Xxxxx 000
Date: May 1, 1998 Xxxxxxxx Xxxxxxx, XX 00000
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK ("Silicon"), whose address is 0000 Xxxxxx Xxxxx, Xxxxx
Xxxxx, Xxxxxxxxxx 00000 and the borrower named above (jointly and severally, the
"Borrower"), whose chief executive office is located at the above address
("Borrower's Address").
1. Loans. Silicon will make loans to Borrower (the "Loans") in amounts
determined by Silicon in its reasonable business judgment up to the amount (the
"Credit Limit") shown on the Schedule to this Agreement (the "Schedule"),
provided no Event of Default and no event which, with notice or passage of time
or both, would constitute an Event of Default has occurred. All Loans and other
monetary Obligations will bear interest at the rate shown on the Schedule.
Interest will be payable monthly, on the date shown on the monthly billing from
Silicon. silicon may, in its discretion, charge interest to Borrower's deposit
accounts maintained with Silicon.
2. Security Interest. As security for all present and future indebtedness,
guarantees, liabilities, and other obligations, of Borrower to Silicon
(collectively, the "Obligations), Borrower hereby grants Silicon a continuing
security interest in all of Borrower's interest in the following types of
property, whether now owned or hereafter acquired, and wherever located
(collectively, the "Collateral"): All "accounts," "general intangibles,"
"contract rights," "chattel paper," "documents," "letters of credit,"
"instruments," "deposit accounts," "inventory," farm products," "investment
property," "fixtures" and equipment," as such terms are defined in Division 9 of
the California Uniform Commercial Code in effect on the date hereof, and all
products, proceeds and insurance proceeds of the foregoing.
3. Representations And Agreements Of Borrower. Borrower represents to Silicon
as follows, and Borrower agrees that the following representations will continue
to be true, and that Borrower will comply with all of the following agreements
throughout the term of this Agreement:
3.1 Corporate Existence and Authority. Borrower, if a corporation, is and
will continue to be, duly authorized validly existing and in good standing under
the laws of the jurisdiction of its incorporation. The execution, delivery and
performance by Borrower of this Agreement, and all other documents contemplated
hereby have been duly and validly authorized, and do not violate any law or any
provision of, and are not grounds for acceleration under, any agreement or
instrument which is binding upon Borrower.
3.2 Name; Places of Business. The name of Borrower set forth in this
Agreement is its correct name. Borrower shall give Silicon 15 days' prior
written notice before changing its name. 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 15 days prior written notice
before changing its chief executive office or locating the Collateral at any
other location.
3.3 Collateral. Silicon has and will at all times continue to have a first-
priority perfected security interest in all of the Collateral, other than
specific equipment. Borrower will immediately advise Silicon in writing of any
material loss or damage to the Collateral.
3.4 Financial Condition and Statements. All financial statements now or in
the future delivered to Silicon have been, and will be, prepared in conformity
with generally accepted accounting principles. Since the last date covered by
any such statement, there has been no material adverse change in the financial
condition or business of Borrower. Borrower will provide Silicon: (i) within 30
days after the end of each month, a monthly financial statement prepared by
Borrower, and such other information as Silicon shall reasonably request; (ii)
within 120 days following the end of Borrower's fiscal year, complete annual
financial statements, certified by independent certified public accountants
acceptable to Silicon and accompanied by the unqualified report thereon by said
independent
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certified public accountants; and (iii) other financial information reasonably
requested by Silicon from time to time.
3.5 Taxes; Compliance with Law. Borrower has filed and will file, when due,
all tax returns and reports required by applicable law, and Borrower has paid,
and will pay, when due, all taxes, assessments, deposits and contributions now
or in the future owed by Borrower. Borrower has complied, and will comply, in
all material respects, with all applicable laws, rules and regulations.
3.6 Insurance. Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance as is
customary in Borrower's industry.
3.7 Access to Collateral and Books and Records. At reasonable times, on one
business day 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.
3.8 Operating Accounts. Borrower shall maintain its primary operating
accounts with Silicon.
3.9 Additional Agreements. Borrower shall not, without Silicon's prior
written consent, do any of the following: (i) enter into any transaction outside
the ordinary course of business, except for the ordinary course of business,
except for the sale of capital stock to venture investors, strategic partners,
and equipment lessors; (ii) sell or transfer any Collateral, except for (A) sale
of finished inventory in the ordinary course of Borrower's business, and the
sale of obsolete or unneeded equipment in the ordinary course of business and
(B) the sale and leaseback of Borrower's equipment if any such transaction or
series of transactions are consummated within 90 days of the date hereof and the
aggregate value of the equipment that is the subject of such transactions does
not exceed $125,000; (iii) pay or declare any dividends on Borrower's stock
(except for dividends payable solely in stock of Borrower); or (iv) redeem,
retire, purchase or otherwise acquire, directly or indirectly, any of Borrower's
stock other than the repurchase of up to the greater of (A) repurchases of
Borrower's stock from Borrower's employees or directors pursuant to written
agreement with the Borrower in an aggregate amount not to exceed $20,000 in any
fiscal year or (B) five percent (5%) of Borrower's then issued stock in any
fiscal year from Borrower's employees or directors pursuant to written agreement
with the Borrower.
4. Term. This Agreement shall continue in effect until the maturity date set
forth on the Schedule (the "Maturity Date"). This Agreement may be terminated,
without penalty, prior to the Maturity Date as follows: (i) by Borrower,
effective three business days after written notice of termination is given to
Silicon; or (ii) by Silicon at any time after the occurrence of an Event of
Default, without notice, effective immediately. On the Maturity Date or on any
earlier effective date of termination, Borrower shall pay all Obligations in
full, whether or not such Obligations are otherwise then due and payable. No
termination shall in any way affect or impair any security interest or other
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 termination of
this Agreement, 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.
5. Events of Default and Remedies. The occurrence of any of the following
events shall constitute an "Event of Default" under this Agreement: (a) Any
representation, statement, report or certificate given to Silicon by Borrower or
any of its officers, employees or agents, now or in the future, is untrue or
misleading in a material respect; or (b) Borrower fails to pay when due any Loan
or any interest thereon or any other monetary Obligation; or (c) the total
Obligations outstanding at any time exceed the Credit Limit, or (d) Borrower
fails to perform any other non-monetary Obligation, which failure is not cured
within 5 business days after the date due; or (e) 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 or against 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 (f) a material
change in the ownership of Borrower, without the prior written consent of
Silicon; or (g) a material adverse change in the business, operations, or
financial or other condition of Borrower. If an Event of Default occurs,
Silicon, shall have the right to accelerate and declare all of the Obligations
to be immediately due and payable, increase the interest rate by an additional
four percent
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Silicon Valley Bank Quick Start Loan and Security Agreement
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per annum. and exercise all rights and remedies accorded it by applicable law.
6. General If any provision of this Agreement is held to be unenforceable, the
remainder of this Agreement shall still continue in full force and effect. This
Agreement and any other written agreements, documents and instruments executed
in connection herewith are the 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 in this Agreement or in other written
agreements signed by the parties in connection this Agreement. The failure of
Silicon at any time to require Borrower to comply strictly with any of the
provisions of this Agreement shall not waive Silicon's right later to demand and
receive strict compliance. Any waiver of a default shall not waive any other
default. None of the provisions of this Agreement may be waived except by a
specific written waiver signed by an officer of Silicon and delivered to
Borrower. The provisions of this Agreement may not be amended, except in a
writing signed by Borrower and Silicon. Borrower shall reimburse Silicon for all
reasonable attorneys' fees and all other reasonable costs incurred by Silicon,
in connection with this Agreement (whether or not a lawsuit is filed). If
Silicon or Borrower files any lawsuit against the other predicated on a breach
of this Agreement, the prevailing party shall be entitled to recover its
reasonable costs and attorneys' fees from the non-prevailing party. Borrower may
not assign any rights under this Agreement without Silicon's prior written
consent. This Agreement shall be governed by the laws of the State of
California.
7. 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 CONDUCT, ACT OR OMISSION OF
SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
ATTORNEYS OR AFFILIATES.
Borrower:
STAMPMASTER, INC.
By: /s/ Xxxxx XX XxXxxxxxx, CFO
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President or Vice President
By: /s/ Xxx Xxxxxxxxx, Secretary
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Secretary or Ass't Secretary
Silicon:
SILICON VALLEY BANK
By: /s/ Xxxxx X. Xxxxxxxx
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Title: SVP
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Silicon Valley Bank
Schedule to
QuickStart Loan and Security Agreement (Master)
BORROWER: Stampmaster, Inc.
DATE: May 1, 1998
This Schedule is an integral part of the Loan and Security Agreement
between Silicon Valley Bank ("Silicon") and the above-named borrower
("Borrower") of even date.
Credit Limit $300,000 (includes, without limitation, Equipmen
(Section 1): Advances and the Merchant Services and Business Visa
Reserve, if any), subject to increase as set forth below.
Interest Rate (Section 1): A rate equal to the "Prime Rate" in effect from time to
time, plus I% per annum. Interest shall be calculated on
the basis of a 360-day year for the actual number of
days elapsed. "Prime Rate" means 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.
Maturity Date (Section 4): October 8, 1999
Other Locations and Addresses
(Section 3.2): ---------------------------------------------------------
Other Agreements: Borrower also agrees as follows:
1. Loan Fee. Borrower shall concurrently pay Silicon a
non-refundable Loan Fee in the amount of $1,500.
2. Banking Relationship. Borrower shall at all times
maintain its primary banking relationship with Silicon.
3. Warrants. Concurrently herewith, Borrower shall
execute and deliver to Silicon a seven year warrant (the
"Warrant") to purchase stock for 4,000 Series A
Preferred Shares of the Borrower at an initial exercise
price of $.40 per share. Further, each increase in the
Credit Limit by $1,000 above the $300,000 level
irrevocably entitles
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Silicon to one additional Series A Preferred Share of the
Borrower as part of the Warrant; Silicon may from time
to time request that the Borrower modify the Warrant to
reflect such increase, and Borrower agrees to do so.
4. Potential Credit Limit Increases. For each $5,000
that the Borrower receives in net proceeds from equity
financing transactions consummated after the date hereof
and prior to December 31, 1998, the Credit Limit set
forth above shall be deemed to be increased by $ 1,000,
up to a maximum Credit Limit of $ 1,000,000.
Borrower: Silicon:
STAMPMASTER, INC. SILICON VALLEY BANK
By /s/ Xxxxx XX XxXxxxxxx By /s/ Xxxxx X. Xxxxxxxx, SVP
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President or Vice President Title
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Silicon Valley Bank
Schedule to
QuickStart Loan and Security Agreement (Equipment Advances)
BORROWER: Stampmaster, Inc.
DATE: May 1, 1998
This Schedule is an integral part of the Loan and Security Agreement
between Silicon Valley Bank ("Silicon") and the above-named borrower
("Borrower") of even date.
Credit Limit (Equipment) $300,000 (such amount to be funded under the aggregate
Credit Limit), subject to increase as more fully set forth
(Section 1): in the Schedule to QuickStart Loan and Security Agreement
(Master) of even date herewith. Equipment Advances will be
made only on or prior to January 9, 1999 (the "Last Advance
Date") and only for the purpose of purchasing equipment
reasonably acceptable to Silicon. Borrower must provide
invoices for the equipment to Silicon on or before the Last
Advance Date.
Interest Rate (Section 1): A rate equal to the "Prime Rate" in effect from time to
time, plus I% per annum. Interest shall be calculated on the
basis of a 360-day year for the actual number of days
elapsed. "Prime Rate" means 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.
Maturity Date (Section 4): After the Last Advance Date, the unpaid principal balance of
the Loans shall be repaid in 24 equal monthly installments
of principal commencing on February 9, 1999 and continuing
on the same day of each month thereafter until the entire
unpaid principal balance of the Equipment Advances and all
accrued and unpaid interest have been paid (subject to
Silicon's right to accelerate the Loans on an Event of
Default).
Borrower: Silicon:
STAMPMASTER, INC. SILICON VALLEY BANK
By /s/ Xxxxx XX XxXxxxxxx By /s/ Xxxxx X Xxxxxxxx
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President or Vice President Title SVP
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