Exhibit 10.36
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LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
INHIBITEX, INC.,
AS BORROWER
AND
SILICON VALLEY BANK,
AS BANK
FEBRUARY 11, 2003
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT dated February 11, 2003, between
SILICON VALLEY BANK ("Bank"), whose address is 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx,
Xxxxxxxxxx 00000 and having a loan production office at 0000 Xxxxxxxxx Xxxx, XX,
Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 and INHIBITEX, INC., a corporation organized
and in good standing in the State of Delaware ("Borrower"), whose address is
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000 provides the terms
on which Bank will lend to Borrower and Borrower will repay Bank. The parties
agree as follows:
1. ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document.
2. LOAN AND TERMS OF PAYMENT
2.1 PROMISE TO PAY.
Borrower promises to pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.
2.1.1 TERM LOAN.
(a) Bank will make a Term Loan available to Borrower. The Term
Loan may be drawn down in installments (each an "Advance" and, collectively, the
"Advances") which shall be available to Borrower through July 31, 2003 (the
"Availability End Date"). Each Advance shall be in a minimum amount of $500,000
and the number of Advances is limited to five (5).
Interest accrues from the date of each Advance at the rate in Section 2.2(a) and
is payable monthly. Advances outstanding on the Availability End Date are
payable in thirty-six (36) equal monthly installments of principal, plus accrued
interest, beginning on the 1st of each month commencing on August 1, 2003 and
ending on July 1, 2006 (the "Maturity Date"). On the Maturity Date, or on such
earlier date that the principal balance of the Advance is repaid or becomes due
and payable (whether by acceleration, prepayment or otherwise), Borrower will
pay an additional amount equal to three and one half percent (3.50%) of the
original principal amount of such Advance.
(b) All Advances shall be evidenced by the Term Note to be
executed and delivered by Borrower to Bank on the Closing Date and shall be
repaid in accordance with the terms of the Term Note. Advances when repaid may
not be reborrowed.
(c) To obtain an Advance, Borrower must notify Bank (the notice is
irrevocable) by facsimile no later than 3:00 p.m. Eastern time one (1) Business
Day before the day on which the Advance is to be made. Borrower must promptly
confirm the notification by delivering to Bank the Payment/Advance Request Form
attached as Exhibit B (the "Payment/Advance Form"). Subject to the terms hereof,
Bank will credit Advances to Borrower's deposit account on the date requested on
the Request Form. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become
due. Bank may rely on any telephone notice given by a person who is a
Responsible Officer. Borrower will indemnify Bank for any loss Bank suffers due
to such reliance.
2.2 INTEREST RATE, PAYMENTS.
(a) Interest Rate. Advances accrue interest on the outstanding
principal balance thereof in accordance with the Term Loan Promissory Note at a
per annum rate of the greater of (i) 1.75 percentage points above the Prime Rate
as in effect on the date such Advance is made and (ii) six and one half percent
(6.50%). After an Event of Default, Obligations accrue interest at five percent
(5%) above the rate effective immediately before the Event of Default. The
interest rate shall not increase or decrease when the Prime Rate changes.
Interest is computed on a 360 day year for the actual number of days elapsed.
(b) Payments. Interest due on the Advances is payable on the 1st
of each month. Bank may debit upon Borrower's authorization Borrower's deposit
account, Account Number _____________________________ for principal and interest
payments owing. Bank will promptly notify Borrower when it debits Borrower's
accounts. These debits are not a set-off and do not represent the exercise of a
remedy. Payments received after 2:00 p.m. Eastern time are considered received
at the opening of business on the next Business Day. When a payment is due on a
day that is not a Business Day, the payment is due the next Business Day and
additional fees or interest accrue.
2.3 PREPAYMENT. Borrower has the right to prepay all or any portion of the
principal of any Advance at any time; provided, however, that (i) Borrower
provides irrevocable notice to Bank, in writing, of its election to prepay such
Advance, at least fifteen (15) days prior to the date of such prepayment; (ii)
on the date of prepayment, Borrower pays all accrued and unpaid interest on the
principal amount prepaid; and (iii) on the date of prepayment, Borrower pays an
amount (the "Prepayment Premium") equal to either (A) two percent (2%) of the
principal amount prepaid, if the date of prepayment is made on or prior to the
first anniversary of the date such Advance was made, or (B) one percent (1%) of
the principal amount prepaid, if the date of prepayment is after the first
anniversary but on or prior to the second anniversary of the date such Advance
was made. Borrower shall pay the Prepayment Premium whether the prepayment of
all or any portion of the principal of any Advance is voluntary or involuntary;
provided, however, that no Prepayment Premium shall be payable to the extent
Borrower prepays the Term Loan from the proceeds of a new loan provided by Bank.
2.4 FEES.
Borrower will pay:
(a) Facility Fee. A fee in the amount of Twenty-Two Thousand Five
Hundred Dollars ($22,500), of which $10,000 has previously been paid, which fee
shall be fully earned when paid and shall not be subject to rebate or refund in
whole or in part for any reason.
(b) Bank Expenses. All Bank Expenses (including reasonable
attorneys' fees and reasonable expenses) incurred through and after the date of
this Agreement, are payable when due.
2.5 ADDITIONAL COSTS. If any new law or regulation increases Bank's costs
or reduces its income for any loan, Borrower will pay the increase in cost or
reduction in income or additional expense; provided, however, that Borrower
shall not be liable for any amount attributable to any period before 180 days
prior to the date Bank notifies Borrower of such increased costs. Bank agrees
that it will allocate any increased costs among its customers similarly affected
in good faith and in a manner consistent with Bank's customary practice.
3. CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO CLOSING.
(a) Bank's obligation to make the initial Advance is subject to
the condition precedent that it receive the agreements, documents and fees it
requires.
(b) Bank must have received, reviewed and found reasonably
satisfactory Borrower's audited financial statements for the fiscal year of
Borrower ended December 31, 2001, and the interim unaudited financial statements
for the month of December, 2002 and the year-to-date period ended December 31,
2002.
3.2 CONDITIONS PRECEDENT TO ALL ADVANCES.
Bank's obligation to make each Advance, including the initial Advance,
is subject to the following:
(a) timely receipt of any Payment/Advance Form;
(b) since December 31, 2001, Borrower must have experienced no
Material Adverse Change;
(c) no Event of Default or event which, without notice, lapse of
time or both, would constitute an Event of Default, may have occurred and be
continuing, or result from the Advance;
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(d) the representations and warranties in Section 5 must be true
on the date of the Payment/Advance Form and on the effective date of each
Advance. Each Advance is Borrower's representation and warranty on that date
that the representations and warranties of Section 5 remain true.
4. CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST.
Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank upon the occurrence of any Event of Default, may place a "hold"
on any deposit account of Borrower maintained with Bank. If this Agreement is
terminated, Bank's lien and security interest in the Collateral will continue
until Borrower fully satisfies its Obligations.
4.2 AUTHORIZATION TO FILE.
Borrower authorizes Bank to file financing statements without notice to
Borrower, with all appropriate jurisdictions within the United States, as Bank
deems appropriate, in order to perfect or protect Bank's interest in the
Collateral. Bank agrees that it shall, upon the request of Borrower, following
the termination of the Term Loan and the payment in full of the Obligations (a)
terminate all such financing statements, (b) terminate any control agreement
then in effect with respect to any account of Borrower that has been pledged to
the Bank and (c) take such other action to evidence termination of the Bank's
Liens as Borrower may reasonably request.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION.
Borrower and each Subsidiary is duly existing and in good standing in
the state of Delaware and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified, except where the failure to do so would
not reasonably be expected to cause a Material Adverse Change. Borrower and each
Subsidiary's exact legal name are as set forth on the first page of this
Agreement. The execution, delivery and performance of the Loan Documents have
been duly authorized, and do not conflict with Borrower's formation documents,
nor constitute an event of default under any material agreement by which
Borrower is bound. Borrower is not in default under any agreement to which, or
by which it is bound, in which the default would reasonably be expected to cause
a Material Adverse Change.
5.2 COLLATERAL.
Borrower has good title to the Collateral, free of Liens except
Permitted Liens. The Accounts are bona fide, existing obligations, and the
service or property has been performed or delivered to the account debtor or its
agent for immediate shipment to and unconditional acceptance by the account
debtor. Borrower has no notice of any actual or imminent Insolvency Proceeding
of any account debtor. All Inventory is in all material respects of good and
marketable quality, free from material defects.
5.3 LITIGATION.
Except as shown in the Schedule, there are no actions or proceedings
pending or, to the knowledge of Borrower's Responsible Officers, threatened by
or against Borrower or any Subsidiary in which a likely adverse decision would
reasonably be expected to cause a Material Adverse Change.
5.4 FINANCIAL STATEMENTS.
All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations as of the date and for the period then ended. There has not been any
Material Adverse Change in Borrower's consolidated financial condition since the
date of the most recent consolidated financial statements submitted to Bank.
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5.5 SOLVENCY.
The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement or any of the Loan Documents; and Borrower is able to pay its debts
(including trade debts) as they mature; provided, however, that for purposes of
this Agreement any obligation for the future redemption of a preferred stock is
deemed not to constitute a liability or debt of Borrower until such time as the
holder of such preferred stock gives notice of the exercise of such right of
redemption.
5.6 REGULATORY COMPLIANCE.
Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors). To its
knowledge, Borrower has complied in all material respects with the Federal Fair
Labor Standards Act. Borrower has not violated any laws, ordinances or rules,
the violation of which would reasonably be expected to cause a Material Adverse
Change. None of Borrower's or any Subsidiary's properties or assets has been
used by Borrower or any Subsidiary or, to the best of Borrower's knowledge, by
previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally. Borrower and each Subsidiary has
timely filed all required tax returns and paid, or made adequate provision to
pay, all material taxes, except those being contested in good faith with
adequate reserves under GAAP. Borrower and each Subsidiary has obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all government authorities that are necessary to
continue its business as currently conducted, except where the failure to do so
would not reasonably be expected to cause a Material Adverse Change.
5.7 SUBSIDIARIES.
Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments.
5.8 FULL DISCLOSURE.
No written representation, warranty or other statement of Borrower in
any certificate or written statement given to Bank (taken together with all such
written certificates and written statements to Bank) contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained in the certificates or statements not misleading (it
being recognized by Bank that the projections and forecasts provided by Borrower
in good faith and based upon reasonable assumptions are not viewed as facts and
that actual results during the period or periods covered by such projections and
forecasts may differ from the projected and forecasted results).
6. AFFIRMATIVE COVENANTS
Borrower will do all of the following for so long as Bank has an
obligation to make any Advance, or there are outstanding Obligations:
6.1 GOVERNMENT COMPLIANCE.
Borrower will maintain its and all Subsidiaries legal existence and
good standing as a Registered Organization in only the State of Delaware and
maintain qualification in each jurisdiction in which the failure to so qualify
would reasonably be expected to cause a material adverse effect on Borrower's
business or operations. Borrower will comply, and have each Subsidiary comply,
with all laws, ordinances and regulations to which it is subject, noncompliance
with which would reasonably be expected to cause a Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower will deliver to Bank: (i) as soon as available, but
no later than thirty (30) days after the last day of each month, a company
prepared consolidated balance sheet and income statement covering Borrower's
consolidated operations during the period, certified by a Responsible Officer
and in the form attached; (ii) as soon as available, but no later than one
hundred twenty (120) days after the last day of Borrower's fiscal year, audited
consolidated financial statements prepared under GAAP,
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consistently applied, together with an unqualified opinion on the financial
statements from an independent certified public accounting firm reasonably
acceptable to Bank; (iii) if securities of the Company are publicly traded,
within five (5) days of filing, copies of all statements, reports and notices
made available to Borrower's security holders or to any holders of Subordinated
Debt and all reports on Form 10-K, 10-Q and 8-K with the Securities and Exchange
Commission; (iv) a prompt report of any legal actions pending or threatened
against Borrower or any Subsidiary that would result in damages or costs to
Borrower or any Subsidiary of $250,000 or more; (v) as soon as available, but no
later than forty-five (45) days after the last day of the Borrower's fiscal
year, Borrower prepared operating budget for the fiscal year or other financial
information Bank reasonably requests; and (vi) prompt notice of any material
change in the composition of the Intellectual Property or knowledge of an event
that materially adversely affects the value of the Intellectual Property.
(b) Within thirty (30) days after the last day of each month,
Borrower will deliver to Bank with the monthly financial statements a Compliance
Certificate signed by a Responsible Officer in the form of Exhibit C.
(c) Bank has the right to audit Borrower's Collateral at
Borrower's expense. Such audits will be conducted no more often than once every
twelve (12) months unless an Event of Default has occurred and is continuing.
6.3 INVENTORY; RETURNS.
Borrower will keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary practices as they exist at execution of
this Agreement. Borrower must promptly notify Bank of all returns, recoveries,
disputes and claims, that involve more than $50,000.
6.4 TAXES.
Borrower will make, and cause each Subsidiary to make, timely payment
of all material federal, state, and local taxes or assessments (other than taxes
and assessments which Borrower is contesting in good faith, with adequate
reserves maintained in accordance with GAAP) and will deliver to Bank, on
demand, appropriate certificates attesting to the payment.
6.5 INSURANCE.
Borrower will keep its business and the Collateral insured for risks
and in amounts as the Board of Directors shall reasonably determine in good
faith; provided, however, that the risks covered and the amount of coverage
shall not be less than in effect on the date hereof. Insurance policies will be
in a form and with companies as the Board of Directors of Borrower shall
determine in good faith consistent with past practice. All property policies
will have a lender's loss payable endorsement showing Bank as an additional loss
payee and all liability policies will show the Bank as an additional insured and
provide that the insurer must give Bank at least twenty (20) days notice before
canceling its policy. At Bank's request, Borrower will deliver certified copies
of policies and evidence of all premium payments. Proceeds payable under any
policy will, at Bank's option, be payable to Bank on account of the Obligations.
6.6 PRIMARY ACCOUNTS.
Borrower will maintain its primary operating accounts with Bank.
6.7 FINANCIAL COVENANTS.
For so long as there are any outstanding Advances, Borrower will
maintain at all times in its depository or operating accounts with Bank a
minimum of the greater of (i) Five Million Dollars ($5,000,000) of cash, cash
equivalents or Short-term Investments and (ii) twenty five percent (25%) of the
aggregate cash, cash equivalents and Short-term Investments held by Borrower at
any financial institution; provided, however, that such amount shall be reduced
by an amount equal to the insurance proceeds paid to Bank and applied to the
Term Loan pursuant to Section 6.5 hereof provided that there shall be no such
reduction of the deposit required by this Section 6.7 if, and for so long as,
there then exists an Event of Default or any event or condition which, with
notice, lapse of time or both, would constitute an Event of Default.
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6.8 FURTHER ASSURANCES.
Borrower will execute any further instruments and take further action
as Bank reasonably requests to perfect or continue Bank's security interest in
the Collateral or to effect the purposes of this Agreement.
6.9 CO-INVESTMENT RIGHT.
Borrower hereby grants to Bank or Bank's affiliates (including, but not
limited to, Silicon Valley Bancshares and Silicon Valley BancVentures, Inc.) the
right to invest up to One Million Dollars ($1,000,000) in the next round of
private equity financing led by a new lead investor (the "Subsequent Equity
Financing") on the same terms, conditions and pricing offered to the investors
in such Subsequent Equity Financing. Borrower shall provide Bank with written
notice of the Subsequent Equity Financing (the "Equity Notice") at least ten
(10) business days after agreement to term sheet. The Equity Notice shall
contain the general terms, conditions and pricing of such Subsequent Equity
Financing and shall be delivered to Bank's General Counsel, 0000 Xxxxxx Xxxxx,
XX 000, Xxxxx Xxxxx, XX 00000. Bank and Bank's affiliates shall have the right
in their sole discretion to participate in such Subsequent Equity Financing by
notifying Borrower within 10 days after receipt of Borrower's notice, and
nothing herein shall be construed as creating an obligation on Bank and Bank's
affiliates to participate in such Subsequent Equity Financing. The rights of
Bank and its affiliates pursuant to this provision shall survive the termination
of this Agreement.
7. NEGATIVE COVENANTS
Borrower will not do any of the following without Bank's prior written
consent, for so long as Bank has an obligation to make Advances or there are any
outstanding Obligations:
7.1 DISPOSITIONS.
Convey, sell, lease, transfer or otherwise dispose of (collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
the Collateral, except (i) at any time when a certificate of deposit has not
been pledged to Lender as contemplated by the last paragraph of Section 8
hereof, for Transfers (a) of Inventory in the ordinary course of business; (b)
of licenses and similar arrangements for the use of the property of Borrower or
its Subsidiaries in the ordinary course of business; or (c) of worn-out,
obsolete or fully depreciated Equipment and (ii) at any time when a certificate
of deposit has been pledged to Lender as contemplated by the last paragraph of
Section 8 hereof, Transfers which do not, in a single transaction or related
series of transactions, constitute a transfer of more than 50% of the assets of
the Borrower.
7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.
Engage in or permit any of its Subsidiaries to engage in any business
other than the businesses currently engaged in by Borrower or reasonably related
thereto or have a material change in its management of greater than thirty-three
percent (33%) within a twelve (12) month period or have a change in its
ownership of greater than thirty-three percent (33%) (other than by the sale of
Borrower's equity securities in a public offering or to venture capital
investors so long as Borrower identifies and advises Bank of the venture capital
investors prior to the closing of the investment). Borrower will provide at
least thirty (30) days prior written notice of any change in its state of
formation, relocation of its chief executive office or addition of any new
offices or business locations.
7.3 MERGERS OR ACQUISITIONS.
Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except where (i) no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement and (ii) such transaction would not result in a decrease of more than
twenty five percent (25%) of Tangible Net Worth. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.
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7.4 INDEBTEDNESS.
Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.
7.5 ENCUMBRANCE.
Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
here, subject to Permitted Liens.
7.6 DISTRIBUTIONS; INVESTMENTS.
Directly or indirectly acquire or own any Person, or make any
Investment in any Person, other than Permitted Investments, or permit any of its
Subsidiaries to do so. Pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock (other than for repurchase of
securities from employees of Borrower upon the death, disability, termination of
employment or exercise of other buy-sell arrangements of such employee;
provided, however, that the aggregate amount of such repurchases shall not
exceed $250,000 in any fiscal year).
7.7 TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter into or permit to exist any material
transaction with any Affiliate of Borrower, except for (i) transactions that are
in the ordinary course of Borrower's business, upon fair and reasonable terms
that are no less favorable to Borrower than would be obtained in an arm's length
transaction with a nonaffiliated Person and (ii) issuances by Borrower of equity
securities or options, warrants or other rights exercisable or convertible into
or exchangeable for common stock of Borrower.
7.8 SUBORDINATED DEBT.
Make or permit any payment on any Subordinated Debt, except under the
terms of the Subordinated Debt, or amend any provision in any document relating
to the Subordinated Debt without Bank's prior written consent.
7.9 COMPLIANCE.
Become an "investment company" or a company controlled by an
"investment company," under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Advance for that purpose; fail to meet the
minimum funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair
Labor Standards Act or violate any other law or regulation, if the violation or
noncompliance would reasonably be expected to cause a Material Adverse Change,
or permit any of its Subsidiaries to do so.
8. EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1 PAYMENT DEFAULT.
If Borrower fails to pay any of the Obligations within five (5) days
after their due date.
8.2 COVENANT DEFAULT.
If Borrower does not perform any obligation in Section 6 or violates
any covenant in Section 7 or if Borrower does not perform or observe any other
material term, condition or covenant in this Agreement, any Loan Documents, or
in any agreement between Borrower and Bank and as to any failure to perform or
observe, violation or default under a term, condition or covenant that can be
cured, has not cured the default within ten (10) days after it comes to the
attention of an officer of Borrower, or if the failure to perform or observe,
violation or default under a term, condition or covenant cannot be cured within
ten (10) days or cannot be cured after Borrower's attempts within such ten (10)
day period, and the default may be cured within a reasonable time, then Borrower
has an additional period (of not more than thirty
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(30) days) to attempt to cure the default. During the additional time, the
failure to cure the default is not an Event of Default (but no Advances will be
made during the cure period);
8.3 MATERIAL ADVERSE CHANGE.
If there (i) occurs a material adverse change in the business,
operations, or condition (financial or otherwise) of Borrower and its
Subsidiaries taken as a whole, or (ii) is a material impairment of Borrower's
ability to repay the outstanding Obligations in their entirety or (iii) is a
material impairment of the value or priority of Bank's security interests in the
Collateral;
8.4 ATTACHMENT.
If any material portion of Borrower's assets is attached, seized,
levied on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in thirty (30) days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower's assets by any government agency and not paid within thirty
(30) days after Borrower receives notice. These are not Events of Default if
stayed or if a bond is posted pending contest by Borrower (but no Advances will
be made during the cure period);
8.5 INSOLVENCY.
If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within sixty (60) days (but no Advances will be made before
any Insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS.
If there is a default in any agreement between Borrower and a third
party that gives the third party the right to accelerate any Indebtedness
exceeding $250,000 or that would cause a Material Adverse Change;
8.7 JUDGMENTS.
If a money judgment(s) in the aggregate of at least $250,000 is
rendered against Borrower and is unsatisfied and unstayed for thirty (30) days
(but no Advances will be made before the judgment is stayed or satisfied);
8.8 MISREPRESENTATIONS.
If Borrower or a Responsible Officer makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document;
8.9 SUBSIDIARIES.
If any circumstance described in Sections 8.3, 8.4, 8.5 or 8.7 occurs
to any Subsidiary of Borrower which results in a Material Adverse Change to
Borrower and its Subsidiaries taken as a whole;
8.10 PREFERRED STOCK REDEMPTION.
If one or more holders of preferred stock issued by Borrower give
notice to Borrower of the exercise of a right of redemption and (i) the
aggregate redemption price payable to all such holders would be greater than
$2,500,000, or (ii) giving effect to such redemption, there would exist an Event
of Default or any event or condition which, with the giving of notice, the
passage of time or both, would constitute an Event of Default.
Borrower has the right to cure an Event of Default under Sections 6.3,
8.2, arising out of a failure to comply with the provisions of Sections 6.3,
6.7, 7.4, 7.5 (except with respect to the certificate of deposit pledged
hereunder), 7.6 or 7.7, by pledging to Bank a certificate of deposit issued by
Bank in a principal amount of one hundred and five percent (105%) of all
outstanding Obligations, which has a term acceptable to Bank; provided, however,
that Bank shall have no obligation to make any further Advances so long as such
Event of Default exists or would exist in the absence of the pledged certificate
of deposit
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and Borrower shall have no obligation to comply with (x) any of the covenants
set forth in Sections 6.3, 6.7, 7.4, 7.5 (except with respect to the certificate
of deposit pledged hereunder), 7.6 or 7.7 or (y) commencing 91 days after the
date such certificate of deposit is pledged to the Bank and provided that no
Event of Default has occurred under Section 8.5 hereof prior to the end of such
91 day period, the last 3 sentences of Section 6.5, in each case for so long as
this cure is in effect. If following the pledge of a certificate of deposit in
accordance with this paragraph there then exist no Events of Default (other than
the Events of Default that were cured by the pledge of such certificate of
deposit), Bank agree that it shall, upon the written request of Borrower,
rescind any notice of exclusive control that Bank has given with respect to any
account of Borrower as a result of such cured Events of Default.
9. BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES.
When an Event of Default occurs and continues Bank may, without notice
or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's
benefit under this Agreement or under any other agreement between Borrower and
Bank;
(c) Settle or adjust disputes and claims directly with account
debtors for amounts, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrower will
assemble the Collateral if Bank requires and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank's rights
or remedies;
(e) Apply to the Obligations any (i) balances and deposits of
Borrower with Bank or its Affiliate it holds, or (ii) any amount held by Bank
owing to or for the credit or the account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell the Collateral. Bank is granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower's rights in its labels, Patents, Copyrights, rights of use of any name,
trade secrets, trade names, Trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section, Borrower's
rights under all licenses and all franchise agreements inure to Bank's benefit;
provided, however, that (i) Bank shall act in good faith to preserve the value
of any property it shall use pursuant to such license or right in the exercise
of its remedies hereunder, and (ii) upon the completion of the sale of all
collateral by Bank and the completion by Bank of its exercise of its remedies
hereunder, such license shall terminate);
(g) Dispose of the Collateral according to the Code; and
(h) Bank may place a "hold" on any account maintained with Bank
and deliver a notice of exclusive control, any entitlement order, or other
directions or instructions pursuant to any control agreement or similar
agreements providing control of any Collateral, provided that Bank agrees that
it will not deliver a notice of exclusive control, any entitlement order, or
other direction or instructions pursuant to any control agreement or similar
agreement providing control of any Collateral unless an Event of Default occurs
and continues.
9.2 POWER OF ATTORNEY.
Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or xxxx of lading for any Account or drafts against
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account debtors, (iii) make, settle, and adjust all claims under Borrower's
insurance policies; (iv) settle and adjust disputes and claims about the
Accounts directly with account debtors, for amounts and on terms Bank determines
reasonable; and (v) transfer the Collateral into the name of Bank or a third
party as the Code permits. Bank may exercise the power of attorney to sign
Borrower's name on any documents necessary to perfect or continue the perfection
of any security interest regardless of whether an Event of Default has occurred.
Bank's appointment as Borrower's attorney in fact, and all of Bank's rights and
powers, coupled with an interest, are irrevocable until all Obligations have
been fully repaid and performed and Bank's obligation to provide Advances
terminates.
9.3 ACCOUNTS COLLECTION.
When an Event of Default occurs and continues, Bank may notify any
Person owing Borrower money of Bank's security interest in the funds and verify
the amount of the Account. Borrower must collect all payments in trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank in the form
received from the account debtor, with proper endorsements for deposit.
9.4 BANK EXPENSES.
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons, Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.
9.5 BANK'S LIABILITY FOR COLLATERAL.
If Bank complies with reasonable banking practices and the Code, it is
not liable for: (a) the safekeeping of the Collateral; (b) any loss or damage to
the Collateral; (c) any diminution in the value of the Collateral; or (d) any
act or default of any carrier, warehouseman, bailee, or other person. Borrower
bears all risk of loss, damage or destruction of the Collateral.
9.6 REMEDIES CUMULATIVE.
Bank's rights and remedies under this Agreement, the Loan Documents,
and all other agreements are cumulative. Bank has all rights and remedies
provided under the Code, by law, or in equity. Bank's exercise of one right or
remedy is not an election, and Bank's waiver of any Event of Default is not a
continuing waiver. Bank's delay is not a waiver, election, or acquiescence. No
waiver is effective unless signed by Bank and then is only effective for the
specific instance and purpose for which it was given.
9.7 DEMAND WAIVER.
Borrower waives demand, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.
10. NOTICES
All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement, and shall be deemed to have been given: (a) if delivered in
person, when delivered; (b) if delivered by overnight delivery service, one
Business Day after delivery to such courier properly addressed; (c) if by
certified U.S. Mail, four Business Days after depositing in the United States
mail, with postage prepaid and properly addressed; or (d) if delivered by
telefacsimile, on the date of transmission if confirmed and if transmitted on a
Business Day before 4:00 p.m. (eastern time) or, if not, on the next succeeding
Business Day. A party may change its notice address by giving the other party
written notice.
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11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
Georgia law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in the State of Georgia provided, however, that if
for any reason the Bank can not avail itself of the courts of the State of
Georgia, the Borrower and Bank each submit to the jurisdiction of the State and
Federal Courts in Santa Xxxxx County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12. GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS.
This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any
rights under it without Bank's prior written consent which may be granted or
withheld in Bank's discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank's obligations, rights and benefits
under this Agreement.
12.2 INDEMNIFICATION.
Borrower will indemnify, defend and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands, claims,
and liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for losses or Bank Expenses caused by Bank's gross negligence or willful
misconduct.
12.3 TIME OF ESSENCE.
Time is of the essence for the performance of all obligations in this
Agreement.
12.4 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other
provision in determining the enforceability of any provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing and signed by
Borrower and Bank. This Agreement represents the entire agreement about this
subject matter, and supersedes prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Agreement merge into this
Agreement and the Loan Documents.
12.6 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.
12.7 SURVIVAL.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.
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12.8 CONFIDENTIALITY.
In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates
in connection with their business with Borrower, (ii) to prospective transferees
or purchasers of any interest in the loans (provided, however, Bank shall use
commercially reasonable efforts in obtaining such prospective transferee or
purchasers agreement of the terms of this provision), (iii) as required by law,
regulation, subpoena, or other order after notice to Borrower and provided that
such disclosure is subject to a protective order, if one is available, (iv) as
required in connection with Bank's examination or audit and (v) as Bank
reasonably considers appropriate exercising remedies under this Agreement.
Confidential information does not include information that either: (a) is in the
public domain or in Bank's possession when disclosed to Bank, or becomes part of
the public domain after disclosure to Bank; or (b) is disclosed to Bank by a
third party, unless that third party is permitted to disclose the information.
12.9 ATTORNEYS' FEES, COSTS AND EXPENSES.
In any action or proceeding between Borrower and Bank arising out of
the Loan Documents, the prevailing party will be entitled to recover its
reasonable attorneys' fees and other reasonable costs and expenses incurred, in
addition to any other relief to which it may be entitled.
12.10 EFFECTIVE DATE.
Notwithstanding anything set forth in this Agreement or any Loan
Document to the contrary, this Agreement and all of the Loan Documents shall not
be effective until the date on which the Bank executes this Agreement as
indicated on the signature page to this Agreement.
13. DEFINITIONS
13.1 DEFINITIONS.
In this Agreement:
"ACCOUNTS" has the meaning set forth in the Code and includes all
existing and later arising accounts, contract rights, and other obligations owed
Borrower in connection with its sale or lease of goods (including licensing
software and other technology) or provision of services, all credit insurance,
guaranties, other security and all merchandise returned or reclaimed by Borrower
and Borrower's Books relating to any of the foregoing.
"ADVANCE" or "ADVANCES" has the meaning set forth in Section 2.1.1.
"AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs
and expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings); provided, however, attorneys'
fees and expenses incurred in connection with the preparation and negotiation of
the Loan Documents in excess of $25,000 shall be deemed not to be Bank Expenses.
"BORROWER'S BOOKS" are all Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs or
any equipment containing the information.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which the Bank is closed.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the Uniform Commercial Code, in effect in the State of
Georgia as in effect from time to time.
"COLLATERAL" is the property described on Exhibit A.
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"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"COPYRIGHTS" are all copyright rights, applications or registrations
and like protections in each work or authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.
"CREDIT EXTENSION" is each Advance, the Term Loan, or any other
extension of credit by Bank for Borrower's benefit pursuant hereto.
"EQUIPMENT" has the meaning set forth in the Code and includes is all
present and future machinery, equipment, tenant improvements, furniture,
fixtures, vehicles, tools, parts and attachments in which Borrower has any
interest.
"ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.
"EVENT OF DEFAULT" has the meaning set forth in Section 8.
"GAAP" is United States generally accepted accounting principles.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INTELLECTUAL PROPERTY" is defined on Exhibit A.
"INTEREST RATE" has the meaning set forth in Section 2.2.
"INVENTORY" has the meaning set forth in the Code and includes is
present and future inventory in which Borrower has any interest, including
merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products intended for sale or lease or to be
furnished under a contract of service, of every kind and description now or
later owned by or in the custody or possession, actual or constructive, of
Borrower, including inventory temporarily out of its custody or possession or in
transit and including returns on any accounts or other Proceeds from the sale or
disposition of any of the foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, the Term Loan
Promissory Note, any note, or notes or guaranties executed by Borrower, and any
other present or future agreement between Borrower and/or for the benefit of
Bank in connection with this Agreement, all as amended, extended or restated.
"MATERIAL ADVERSE CHANGE" has the meaning set forth in Section 8.3.
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"MATURITY DATE" is defined in Section 2.1.1.
"OBLIGATIONS" are Advances under the Term Loan, interest, Bank Expenses
and other amounts Borrower owes Bank, including cash management services,
letters of credit and foreign exchange contracts, if any and including interest
accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.
"PATENTS" are patents, patent applications and like protections,
including improvements, divisions, continuations, renewals, reissues, extensions
and continuations-in-part of the same.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Bank under this Agreement or any
other Loan Document;
(b) Indebtedness existing on the Closing Date and shown on the
Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary
course of business; and
(e) Indebtedness secured by Permitted Liens.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Closing
Date; and
(b) Investments made in accordance with Borrower's Investment
Policy in effect from time to time, a copy of the current policy being attached
hereto as Exhibit D, which policy may not be revised without the consent of the
Bank, which consent shall not be unreasonably withheld;
(c) Any other investments in the aggregate amount of not more than
$1,000,000; and
(d) Investments in any Subsidiary of Borrower, whether currently
existing or hereafter formed; provided, however, that at the time such
investment is made (i) there exists no default or Event of Default, (ii) the
stock or other equity interests of such Subsidiary have been pledged to Bank as
security for the Obligations on terms and conditions satisfactory to Bank; (iii)
such Subsidiary shall have guaranteed the Obligations on terms and conditions
satisfactory to Bank; and (iv) Bank shall have been granted a first priority
perfected security interest on all of the assets (other than Intellectual
Property) of such Subsidiary on terms and conditions satisfactory to Bank.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Schedule
or arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges
or levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by
Borrower or its Subsidiaries incurred for financing the acquisition of the
Equipment, or (ii) existing on equipment when acquired, if the Lien is confined
to the property and improvements and the Proceeds of the equipment;
(d) Liens associated with licenses or sublicenses granted by
Borrower in the ordinary course of business and not otherwise prohibited by this
Agreement, if such liens have no priority over any of Bank's security interests;
(e) Liens associated with licenses or sublicenses granted to
Borrower in the ordinary course of Borrower's business in connection with
Borrower's leased premises or leased property if such liens have no priority
over any of Bank's security interests;
(f) Leases or subleases granted in the ordinary course of
Borrower's business, including in connection with Borrower's leased premises or
leased property;
14
(g) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PREPAYMENT PREMIUM" has the meaning set forth in Section 2.3.
"PROCEEDS" has the meaning described in the Code as in effect from time
to time.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it
is not Bank's lowest rate.
"REGISTERED ORGANIZATION" means an organization organized solely under
the law of a single state or the United States and as to which the state or the
United States must maintain a public record showing the organization to have
been organized.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer, Director of Accounting and the
Controller of Borrower.
"SCHEDULE" is any attached schedule of exceptions.
"SHORT-TERM INVESTMENTS" has the meaning set forth in Exhibit D.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's indebtedness owed to Bank and which is reflected in a written
agreement in a manner and form acceptable to Bank and approved by Bank in
writing.
"SUBSIDIARY" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.
"SUPPORTING OBLIGATION" means a Letter-of-credit right, secondary
obligation or obligation of a secondary obligor or that supports the payment or
performance of an account, chattel paper, a document, a general intangible, an
instrument or investment property.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus, (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
Patents, trade and service marks and names, Copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities.
"TERM LOAN" is a loan of up to Two Million Five Hundred Thousand
Dollars ($2,500,000).
"TERM LOAN PROMISSORY NOTE" is that certain Term Loan Promissory Note
of even date herewith in the maximum principal amount of Two Million Five
Hundred Thousand Dollars ($2,500,000) from Borrower in favor of Bank, together
with all renewals, amendments, modifications and substitutions, therefor.
"TOTAL LIABILITIES" is on any day, obligations that should, under GAAP,
be classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.
"TRADEMARKS" are trademark and servicemark rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Borrower connected with the trademarks.
[Signatures appear on the following page]
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BORROWER:
INHIBITEX, INC.
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Name: Xxxxxxx Xxxxx
Title: VP and CFO
BANK:
SILICON VALLEY BANK
By: /s/ Xxxxx Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
Title: SVP
Silicon Valley Bank has executed this Agreement this __ day of February,
2003.
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