Exhibit 10.10(i)
AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This Amendment to Loan and Security Agreement is entered into as of June
10, 1998, by and between SILICON VALLEY BANK ("Bank") and FIRST VIRTUAL
CORPORATION ("Borrower").
RECITALS
Borrower and Bank are parties to that certain Loan and Security
Agreement dated as of July 3, 1996, and amended by that certain Amendment to
Loan and Security Agreement dated April 11, 1997, as modified by that certain
Loan Modification Agreement dated September 3, 1997, and as amended
thereafter (the "Agreement"). The parties desire to amend the Agreement in
accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. The definition of "Committed Line" under Section 1.1 is amended to
read "Ten Million Dollars ($10,000,000)." The definition of "Revolving
Maturity Date" under Section 1.1 is amended to read "June 11, 2000".
Paragraph (i) under the definition of "Eligible Accounts" under Section 1.1
is hereby amended to read "(i) Accounts with respect to an account debtor,
including Subsidiaries and Affiliates, whose total obligations to Borrower
exceed twenty-five percent (25%) of all Accounts, to the extent such
obligations exceed the aforementioned percentage, except as approved in
writing by Bank (provided that the concentration limit for Bay Networks shall
be fifty percent (50%) of all Accounts);".
2. Section 2.1 is amended to read as follows:
"2.1 ADVANCES. Subject to and upon the terms and conditions of this
Agreement, Borrower may request Advances in an aggregate outstanding amount
not to exceed the Committed Line MINUS the face amount of all outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit) MINUS
the Exchange Reserve. Notwithstanding the preceding sentence, if the
aggregate amount of outstanding Advances exceeds Two Million Dollars
($2,000,000), then Borrower may request Advances in an aggregate outstanding
amount not to exceed (i) the lesser of the Committed Line or the Borrowing
Base, MINUS (ii) the face amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) MINUS the Exchange
Reserve. For purposes of this Agreement, "Borrowing Base" shall mean an
amount equal to (i) eighty percent (80%) of Eligible Accounts and Eligible
Foreign Accounts; PLUS (ii) one hundred percent (100%) of Accounts that are
supported by one or more letters of credit in an amount and of a tenor, and
issued by a financial institution, acceptable to Bank; PLUS (iii) the lesser
of (a) fifty percent (50%) of the book value of Borrower's Inventory, or (b)
Two Million Dollars ($2,000,000)."
The Revolving Facility shall terminate on the Revolving Maturity Date,
at which time all Advances under this Section 2.1 shall be immediately due
and payable."
3. Section 2.1.1(a) is amended to read as follows:
"2.1.1 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this
Agreement, Bank agrees to issue or cause to be issued Letters of Credit for
the account of Borrower in an aggregate face amount not to exceed (i) the
lesser of the Committed Line or the Borrowing Base minus (ii) the then
outstanding principal balance of the Advances provided that the face amount
of outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit) shall not in any case exceed Two Million Dollars ($2,000,000) MINUS
the amount of the Exchange Reserve. Each such letter of credit shall have an
expiry date no later than the Maturity Date; provided that the expiry date
may be extended up to 180 days beyond the expiry date provided Borrower
secures its reimbursement and other obligations in connection with such
letter of credit upon terms reasonably acceptable to Bank. All such letters
of credit shall be, in form and substance, acceptable to Bank in its sole
discretion and shall be subject to the terms and conditions of Bank's form of
application and letter of credit agreement. All amounts actually paid by
Bank in respect of a letter of credit shall, when paid, constitute an Advance
under this Agreement."
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4. Section 2.1.4 is amended to read as follows:
"2.1.4 [Intentionally omitted.]"
5. Section 2.3(a) is amended to read as follows:
"(a) INTEREST RATE. Except as set forth in Section 2.3(b), any
Advances shall bear interest, on the average Daily Balance, at a rate equal
to the Prime Rate."
6. Section 6.3 is hereby deleted and replaced with the following:
"When there are any Obligations outstanding, Borrower shall deliver
to Bank: (a) within five (5) days upon becoming available, copies of all
statements, reports and notices sent or made available generally by Borrower
to its security holders or to any holders of Subordinated Debt and all
reports and notices sent or made on Form 10-K and 10-Q filed with the
Securities and Exchange Commission; (b) along with the Form 10-K's required
in this section, a Compliance Certificate signed by a Responsible Officer in
substantially the form of EXHIBIT D hereto; (c) promptly upon receipt of
notice thereof, a report of any legal actions pending or threatened against
Borrower or any Subsidiary that could result in damages or costs to Borrower
or any Subsidiary of One Hundred Thousand Dollars ($100,000) or more; and (d)
such budgets, sales projections, operating plans or other financial
information as Bank may reasonable request from time to time.
In the event aggregate outstanding Advances (including any Letters
of Credit or the Exchange Reserve) exceed Two Million Dollars ($2,000,000),
within twenty (20) days after the last day of each month, Borrower shall
deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer
in substantially the form of EXHIBIT C hereto, together with aged listings of
accounts receivable and accounts payable.
Bank shall have the right prior to funding an Advance that causes
the aggregate outstanding obligations under Section 2.1 to exceed Two Million
Dollars ($2,000,000), and a right from time to time hereafter to audit
Borrower's Accounts at Borrower's expense, provided that such audits will be
conducted no more often than every twelve (12) months unless an Event of
Default has occurred and is continuing."
7. Sections 6.6, 6.7, 6.8 and 6.9 are amended to read as follows:
"6.6 PRINCIPAL DEPOSITORY/DEMAND DEPOSIT ACCOUNT. Borrower shall
maintain its principal depository and operating accounts with Bank, PROVIDED
that quality of service is satisfactory, which satisfaction is to be determined
on a commercially reasonable basis. In addition to the foregoing, Borrower
shall maintain a demand deposit account with Bank with a compensating free
balance, not including service charge requirements, of at least One Million
Dollars ($1,000,000).
6.7 QUICK RATIO. Borrower shall maintain as of the last day of
each quarter a ratio of Quick Assets to Current Liabilities, excluding deferred
revenue, of at least 2.0 to 1.0.
6.8 DEBT-TANGIBLE NET WORTH. Borrower shall maintain as of the
last day of each quarter a ratio of Total Liabilities, excluding deferred
revenue, to Tangible Net Worth of not more than 1.0 to 1.0.
6.9 TANGIBLE NET WORTH. Borrower shall maintain as of the last
day of each quarter a Tangible Net Worth of not less than Thirty Million Dollars
($30,000,000), increasing on June 9, 1999 to Thirty Million Dollars
($30,000,000), PLUS, seventy-five percent (75%) of Borrower's net income or new
equity received over the previous twelve (12) months."
8. Sections 6.10 and 6.11 are amended to read as follow:
"6.10 [Intentionally omitted.]
6.11 [Intentionally omitted.]"
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9. Exhibit A is amended in its entirety to read as reflected on Exhibit A
attached hereto.
10. The Borrowing Base Certificate and Compliance Certificate to be
delivered after the date of this Amendment shall be in substantially the form of
EXHIBIT C and EXHIBIT D, respectively.
11. As a condition to the effectiveness of this Amendment, Bank shall have
received, in form and substance satisfactory to Bank, the following:
(a) resolutions by the Borrowers authorizing the execution and
delivery of this Amendment;
(b) UCC-2 amending the Collateral description in Exhibit A; and
(c) such other documents, and completion of such other matters, as
Bank may reasonably deem necessary or appropriate.
12. Unless otherwise defined, all capitalized terms in this Amendment
shall be as defined in the Agreement. Except as amended, the Agreement remains
in full force and effect.
13. Borrower represents and warrants that the Representations and
Warranties contained in the Agreement are true and correct as of the date of
this Amendment, and that no Event of Default has occurred and is continuing.
14. This Amendment may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one instrument.
15. As a condition to the effectiveness of this Amendment, Borrower
shall pay an additional fee in an amount equal to Eight Thousand Five Hundred
Dollars ($8,500), of which, Five Thousand Dollars ($5,000) is payable on the
date hereof and the balance of which, Three Thousand Five Hundred Dollars
($3,500) is due and payable on June 9, 1999, plus all Bank Expenses incurred in
connection with the preparation of this Amendment.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
first date above written.
FIRST VIRTUAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
_________________________________
Title: ______________________________
SILICON VALLEY BANK
By: /s/ Xxx Xxxxx
_________________________________
Title: ______________________________
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EXHIBIT A
The Collateral shall consist of all right, title and interest of Borrower in
and to the following:
(a) All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds,
including insurance proceeds, resulting from the sale or disposition of any
of the foregoing and any documents of title representing any of the above,
and Borrower's Books relating to any of the foregoing;
(b) All now existing and hereafter arising accounts, letters of credit,
contract rights, royalties, license rights and all other forms of obligations
owing to Borrower arising out of the sale or lease of goods, the licensing of
technology or the rendering of services by Borrower, whether or not earned by
performance, and any and all credit insurance, guaranties, and other security
therefor, as well as all merchandise returned to or reclaimed by Borrower and
Borrower's Books relating to any of the foregoing;
(c) Any and all claims, rights and interests in any of the above and
all substitutions for, additions and accessions to and proceeds thereof.
Notwithstanding the foregoing, the Collateral shall not be deemed to
include any copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work thereof,
whether published or unpublished, now owned or hereafter acquired; any
patents, trademarks, servicemarks and applications therefor, any trade secret
rights, including any rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now
owned or hereafter acquired; or any claims for damages by way of any past,
present and future infringement of any of the foregoing (the "Intellectual
Property") EXCEPT that the Collateral shall include the proceeds of, and all
rights to payment arising under the Intellectual Property.
EXHIBIT C
BORROWING BASE CERTIFICATE
_______________________________________________________________________________
Borrower: First Virtual Corporation Lender: Silicon Valley Bank
Commitment Amount: $10,000,000
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of ____ $________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
2. Amounts over 90 days due $________
3. Balance of 50% over 90 day accounts $________
4. Concentration Limits $________
5. Foreign Accounts $________
6. Governmental Accounts $________
7. Contra Accounts $________
8. Promotion or Demo Accounts $________
9. Intercompany/Employee Accounts $________
10. Other (please explain on reverse) $________
11. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $________
12. Eligible Accounts (#1 minus #11) $________
13. LOAN VALUE OF ACCOUNTS (80% of #12) $________
INVENTORY
14. Inventory Book Value as of ____ $________
15. LOAN VALUE OF INVENTORY (lesser of 50% of #14 or $2,000,000) $________
BALANCES
16. Maximum Loan Amount $10,000,000
17. Total Funds Available* $________
18. Present balance owing on Line of Credit $________
19. Outstanding under Sublimits () $________
20. RESERVE POSITION (#17 minus #18 and #19) $________
* #16 minus sublimits or upon aggregate Advances in excess of $2M, the lesser
of (i) #16 minus sublimits or (ii) #13 plus #15
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE FOREGOING IS TRUE, COMPLETE
AND CORRECT, AND THAT THE INFORMATION REFLECTED IN THIS BORROWING BASE
CERTIFICATE COMPLIES WITH THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THE
LOAN AND SECURITY AGREEMENT BETWEEN THE UNDERSIGNED AND SILICON VALLEY BANK.
COMMENTS:
|-----------------------------|
| BANK USE ONLY |
| |
| Rec'd By: ________ |
| Auth. Signer |
FIRST VIRTUAL CORPORATION | Date: ____________ |
| |
| Verified: ________ |
By: | Auth. Signer |
| Date: ____________ |
_______________________ | __________________ |
Authorized Signer |-----------------------------|
EXHIBIT D
FORM OF COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: FIRST VIRTUAL CORPORATION
The undersigned authorized officer of FIRST VIRTUAL CORPORATION hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower
is in complete compliance for the period ending ______________ with all
required covenants except as noted below and (ii) all representations and
warranties of Borrower stated in the Agreement are true and correct in all
material respects as of the date hereof. Attached herewith are the required
documents supporting the above certification. The Officer further certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
10-K and 10-Q financial statements Within 5 days(1) Yes No
A/R & A/P Agings Monthly within 20 days(2) Yes No
A/R Audit Annual(3) Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Quarterly Basis:
Minimum Quick Ratio 2.0:1.0 _____:1.0 Yes No
Liquidity 1.0:1.0 _____:1.0 Yes No
Tangible Net Worth $30,000,000(4) $________ Yes No
|-----------------------------|
COMMENTS REGARDING EXCEPTIONS: See Attached. | BANK USE ONLY |
| |
(1) Only when Obligations outstanding | Received By: _____________ |
(2) Only when aggregate Advances exceed | AUTHORIZED SIGNER |
$2,000,000 | |
(3) Prior to aggregate Advances in excess | Date: ____________________ |
of $2,000,000, and annually thereafter | |
(4) Increasing to $30,000,000 plus 75% of | Verified: ________________ |
net income or new equity on June 9, 1999 | AUTHORIZED SIGNER |
| |
Sincerely, | Date: ____________________ |
| |
|Compliance Status: Yes No |
|-----------------------------|
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