THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
 |
THIRD
AMENDMENT
|
Date:
March 31, 2008
This
Third Amendment to Loan and Security Agreement (this "Amendment") is made
as
of the
above date by and between Sonic Solutions ("Borrower") and Union Bank of
California, N.A. ("Bank"),
with
reference to the following
facts:
A.
Borrower
and Bank are parties to that certain Loan and Security Agreement dated as
of
December 13, 2004, as amended from time to time, including by the First
Amendment to Loan and
Security Agreement dated as of December 20, 2005 and the Second Amendment to
Loan and Security Agreement dated as of September 28, 2007
(the
"Agreement"). Pursuant
to the Agreement, Bank has made loans and has extended other credit accommodations
to Borrower for the purposes permitted under the Agreement.
B.
Borrower
is currently in default of the Agreement for failing to comply
with the Quick Ratio covenant
set forth in Section 6.7(a) of the Agreement for the period ending December
31, 2007 and for failing to comply
with the minimum EBITDA covenant set forth in Section 6.7(c) of the Agreement
for the quarter ending December
31, 2007 (the "Existing Defaults").
C. Borrower
has requested that Bank amend the Agreement to (i) waive the Existing
Defaults,
and (ii)
extend the maturity date for the Revolving Line.
D.
Although Bank is under no obligation to do so, Bank is willing to waive the
Existing Defaults
on the
terms
and conditions set forth in this Amendment, so long as Borrower complies with
the terms, covenants and conditions
set forth in this Amendment in a timely manner.
F.
Bank
has
agreed to so amend certain provisions of the Agreement, but only to the extent,
in accordance with the terms, subject to the conditions and in reliance upon
the
representations and warranties set forth below
and
in the Agreement.
Therefore,
the parties hereto agree as follows:
1. Amendments
to the Agreement.
1.1 Section
1.1 of the Agreement is hereby amended by adding or revising the following
defined
terms in their entirety to read as follows:
"Revolving
Maturity Date" means June 30, 2008.
1.2 The
Agreement is hereby amended by inserting a new Section 5.18 to read as
follows:
5.18
Patriot
Act.
Borrower
and each of its Subsidiaries are in compliance, in all material respects, with
(i) the Trading with the Enemy Act, as amended, and each of the foreign assets
control
regulations of the United States Treasury Department (31 CFR, Subtitle
B,
Chapter V, as amended) and
any
other enabling legislation or executive order relating thereto, and (ii)
the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA
Patriot Act of 2001)
and
the USA PATRIOT Improvement and Reauthorization Act of
2005
(Pub. L. 109-177) (the "Patriot
Act")).
No
part
of the proceeds of the Advances or other credit extensions will be used,
directly
or
1
indirectly,
for any payments to any governmental official or employee, political party,
official of a political party,
candidate for political office, or anyone else acting in an official capacity,
in order to obtain, retain or direct
business or obtain any improper advantage, in violation of the United States
Foreign Corrupt Practices
Act of 1977, as amended.
2. Limited
Waivers of Existing Defaults. Subject
to terms and conditions set forth herein, the Bank hereby waive its default
rights with respect to the Existing Defaults, provided, however, that this
waiver applies only to
the
specific instances described above and for the time periods stated, and is
not a
waiver of any subsequent breach of any provision of the Agreement, nor is it
a
waiver of any breach of any other provision of the Agreement. Borrower
acknowledges and agrees that the Bank is not obligated to grant this or any
other waiver. .Further, the Bank
reserves all of the rights, powers and remedies available to it under the
Agreement and any other contracts or instruments executed by Borrower, including
the right to cease making advances to Borrower and to accelerate any or all
of
Borrower's indebtedness to the Bank if any subsequent breach of the same
provisions or any other provision of
the
Agreement should occur.
3. Additional
Provisions.
3.1
Patriot
Act Notice. Bank
is
subject to the USA Patriot Act and hereby notifies Borrower that pursuant to
the
requirements of that Act, Bank is required to obtain, verify and record
information that identifies Borrower, which information includes the name and
address of Borrower and other information that will allow Bank to identify
Borrower in accordance with that Act.
3.2 Affirmation
of Indebtedness. Borrower
affirms and admits the indebtedness evidenced by
the
Agreement and the other Loan Documents. Borrower acknowledges that it has no
claims, offsets or defenses with respect to the payments of sums due under
the
Agreement or the other Loan Documents. Borrower ratifies and confirms
each and all of the terms, conditions and covenants of the Agreement and other
Loan Documents as amended or modified by this Amendment and those provisions
not
so amended or modified and, except as specifically
amended or modified hereby, the Loan Documents remain in full force and effect.
The execution, delivery,
and performance of this Amendment shall not operate as a waiver of, or as an
amendment of, any right, power,
or
remedy of Bank under the Agreement or any other Loan Document, as in effect
prior to the date hereof. Unless otherwise defined, all initially capitalized
terms in this Amendment shall be as defined in the Agreement.
3.3 Representations
and Warranties. Borrower
represents and warrants that the representations
and warranties contained in the Agreement are true and correct in all material
respects as of the date of
this
Amendment, and, with the exception of the Existing Defaults, that no Event
of
Default has occurred and is continuing.
3.4 Effectiveness
of Agreement; Post-Closing Covenant. This
Amendment shall become effective
when the Bank has received this Amendment, duly executed by Borrower, and all
other required documents, fully executed, all required title insurance
endorsements, and sufficient funds to pay all fees and costs associated
with this Amendment.
3.5 Counterparts. This
Amendment may be executed in counterparts, each of which shall be deemed an
original but all of which together, shall constitute one and the same
agreement.
3.6 Successors. This
Amendment shall inure to the successors and assigns of Bank and the permitted
successors and assigns of Borrower.
2
IN
WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date
first written above.
BORROWER:
SONIC
SOLUTIONS, a California corporation
By:
/s/
Xxxx
Xxxxxx
Name: Xxxx
Xxxxxx
Title:
EVP,
Interim CFO & General Counsel
By:
/s/
A.
Xxxx
Xxxxxxxx
Name: A.
Xxxx
Xxxxxxxx
Title:
COO
BANK:
UNION
BANK OF CALIFORNIA, N.A.
By:
/s/
Xxxxx X.
Xxxxx
Name:
Xxxxx X.
Xxxxx
Title:
Vice
President
3
AFFIRMATION
OF GUARANTY
This
AFFIRMATION OF GUARANTY is made as of March 31, 2008, by the undersigned
("Guarantor") for
the
benefit of Union Bank of California. N.A. (`Bank").
RECITALS
Bank
and
Sonic Solutions ("Borrower") are parties to that certain Loan and Security
Agreement dated as of December
13, 2004, as amended from time to time (collectively, the "Loan Agreement").
Guarantor executed for the benefit of Bank an Unconditional Guaranty dated
as of
even date with the Loan Agreement (the "Guaranty"), guarantying
all amounts owing by Borrower to Bank. Borrower and Bank propose to enter into
a
Third Amendment to
Loan
and Security Agreement of even date herewith (the "Amendment"), which amends
the
Loan Agreement by, among
other things, extending the term of the loan facilities provided by Bank and
waiving certain specific financial covenant
violations. Bank has agreed to enter into the Amendment provided, among other
things, that Guarantor consents
to the entry by Borrower into the Amendment and related documents and agrees
that the Guaranty will remain
effective.
AGREEMENT
NOW,
THEREFORE, Guarantor agrees as follows:
1. Guarantor
consents to the execution, delivery and performance by Borrower of the Amendment
and
the
documents and instruments executed in connection therewith, as well as all
other
amendments, modifications
and restatements to the Loan Agreement.
2. The
Guaranty is and shall remain in full force and effect with respect to all of
Borrower's Obligations
(as defined in the Loan Agreement) as modified by the Amendment and otherwise.
Guarantor confirms that
Guarantor has no defenses against its obligations under the
Guaranty.
3. Guarantor
represents and warrants that the Representations and Warranties contained in
the
Guaranty
are true and correct as of the date of this Affirmation. Unless otherwise
defined, all capitalized terms in this
Affirmation shall be as defined in the Guaranty.
IN
WITNESS WHEREOF, the undersigned Guarantor has executed this Affirmation of
Guaranty as of the first
date above written.
INTERACTUAL
TECHNOLOGIES, INC.,
a
California corporation
/s/
A.
Xxxx
Xxxxxxxx
By:
A.
Xxxx Xxxxxxxx
Its:
CFO
4
