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EXHIBIT 10.18.2
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Agreement")
is entered into as of July 7, 1998, but effective as of June 30, 1998, by
and among SILICON VALLEY BANK, a California-chartered bank ("Bank") with its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx
00000 and with a loan production office located at One Central Plaza, 00000
Xxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxx 00000 and VISUAL NETWORKS,
INC., a Delaware corporation ("Company"), VISUAL NETWORKS OPERATIONS, INC., a
Delaware corporation ("Visual Operations"), VISUAL NETWORKS INVESTMENTS,
INC., a California corporation ("Visual Investments"), VISUAL NETWORKS
TECHNOLOGIES, INC., a California corporation ("Visual Technologies") and
VISUAL NETWORKS OF TEXAS, L.P., a Texas limited partnership ("Visual Texas";
together with Visual Operations, Visual Investments, Visual Technologies and
the Company being called collectively, the "Borrowers" and each a "Borrower").
RECITALS.
A. The Company and Bank have entered into that certain Loan and
Security Agreement dated January 8, 1998 (as amended by this Agreement, the
"Loan Agreement"), pursuant to which Bank agreed to establish a revolving
credit facility (as the same may be increased from time to time, the
"Committed Revolving Line") in favor of the Company in the maximum principal
amount of Seven Million and No/100 Dollars ($7,000,000.00).
B. The Company has created three (3) wholly-owned subsidiaries,
Visual Operations, Visual Investments and Visual Technologies, and a wholly
owned partnership, Visual Texas. The Company has requested that Bank (i)
consent to the transfer of certain assets as more fully described on
Schedules A, B, C and D attached hereto from the Company to Visual
Operations, Visual Investments, Visual Technologies and Visual Texas,
respectively, (ii) amend certain provisions of the Loan Agreement and (iii)
release some of the existing Collateral and Bank has agreed, on the
condition, among others, that Visual Operations, Visual Investments,
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Visual Technologies and Visual Texas be added as co-obligors on all of the
Obligations, that Visual Operations, Visual Investments, Visual Technologies and
Visual Texas each grant the Bank a first lien and security interest on certain
of its assets, and that this Agreement be executed and delivered by the
Borrowers to Bank.
C. Unless otherwise defined herein, capitalized terms used herein
shall have the respective meanings set forth in the Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Borrowers and Bank do hereby agree as follows:
1. Recitals. The parties hereto acknowledge and agree that the
above Recitals are true and correct in all material respects and that the
same are incorporated herein and made a part hereof by reference.
2. Definitions.
(a) From and after the date hereof, the definitions of
"Collateral", "Current Liabilities", "Eligible Accounts", "Permitted
Indebtedness", "Permitted Investment", "Quick Assets", and "Responsible
Officer", "Revolving Maturity Date" and "Tangible Net Worth" set forth in
Section 1.1 of the Loan Agreement are hereby amended and restated in their
entirety as follows:
"Collateral" means all right, title and interest of any 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 the any 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 the Borrower's Books relating to any of the foregoing;
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(b) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to any
Borrower arising out of the sale or lease of goods, the licensing of
technology or the rendering of services by any 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 any Borrower and the Borrower's Books relating to any of the
foregoing; and (c) Any and all claims, rights and interests in any of the
above and all substitutions for, additions and accessions to and all cash
and non cash proceeds thereof.
"Current Liabilities" means, as of any applicable date, all amounts
that should, in accordance with GAAP, be included as current liabilities
on the consolidated balance sheet of the Company and its Subsidiaries, as
at such date, plus, to the extent not already included therein, all
outstanding Credit Extensions made under this Agreement, including all
Indebtedness that is payable upon demand or within one year from the date
of determination thereof unless such Indebtedness is renewable or
extendable at the option of the Company or any Subsidiary to a date more
than one year from the date of determination, but excluding Subordinated
Debt and deferred revenues.
"Eligible Accounts" means those Accounts that arise in the ordinary
course of the Company's business that comply with all of the Company's
representations and warranties to Bank set forth in Section 5.4;
provided, that standards of eligibility may be fixed and revised from
time to time by Bank in Bank's reasonable judgment and upon prior
notification thereof to the Company in accordance with the provisions
hereof. Unless otherwise agreed to by Bank, Eligible Accounts shall not
include the following:
(a) Accounts that the account debtor has failed to pay within
ninety (90) days of invoice date;
(b) Accounts with respect to an account debtor, fifty percent
(50%) of whose Accounts the account debtor has failed to pay within
ninety (90) days of invoice date;
(c) Accounts with respect to which the account debtor is an
officer, employee, or agent of the Company;
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(d) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, xxxx
and hold, or other terms by reason of which the payment by the account
debtor may be conditional;
(e) Accounts with respect to which the account debtor is an
Affiliate (other than by virtue of being directly or indirectly under
common ownership or control with the Company) of the Company;
(f) Accounts with respect to which the account debtor does not
have its principal place of business in the United States and Accounts
arising from products shipped to or services provided to branches or
offices located in the United States of any account debtor that does
not have its principal place of business in the United States;
(g) Accounts with respect to which the account debtor is a
federal, state, or local governmental entity or any department, agency,
or instrumentality thereof;
(h) Accounts with respect to which the Company is liable to the
account debtor for goods sold or services rendered by the account
debtor to the Company, but only to the extent of any amounts owing to
the account debtor against amounts owed to the Company;
(i) Accounts with respect to an account debtor, including
Subsidiaries and Affiliates, whose total obligations to the Company
exceed twenty-five percent (25%) of all Accounts, except with respect
to Sprint/United Management Company, AT&T Corp. and MCI
Telecommunications Corp., as to which the percentage shall be forty
percent (40%), to the extent such obligations exceed the aforementioned
percentage, except as approved in writing by Bank;
(j) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Bank
believes, in its sole discretion, that there may be a basis for dispute
(but only to the extent of the amount subject to such dispute or
claim), or is subject to any Insolvency Proceeding, or becomes
insolvent, or goes out of business; and
(k) Accounts the collection of which Bank reasonably determines
to be doubtful.
"Permitted Indebtedness" means:
(a) Indebtedness of any Borrower in favor of Bank arising
under this Agreement or any other Loan Document;
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(b) Indebtedness existing on the Closing Date and
disclosed in the Schedule;
(c) Subordinated Debt, including intercompany debt which
is subordinated to the repayment of all Indebtedness in favor of the
Bank in a form satisfactory to the Bank in all material respects;
(d) Indebtedness to trade creditors incurred in the
ordinary course of business;
(e) Indebtedness secured by Permitted Liens;
(f) Warranty and product support obligations which arise
in the ordinary course and conduct of any Borrower's business;
(g) Indebtedness in respect of taxes permitted under
Section 6.5; and
(h) Other Indebtedness, not otherwise permitted by
Section 7.4 not exceeding Three Hundred Thousand Dollars ($300,000) in
the aggregate outstanding at any time.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in
the Schedule;
(b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any
agency or any State thereof maturing within one (1) year from the date
of acquisition thereof, (ii) commercial paper maturing no more than one
(1) year from the date of creation thereof and currently having the
highest rating obtainable from either Standard & Poor's Corporation or
Xxxxx'x Investors Service, Inc., and (iii) certificates of deposit
maturing no more than one (1) year from the date of investment therein
issued by Bank;
(c) Investments pursuant to or arising under currency
agreements or interest rate agreements entered into in the ordinary
course of business;
(d) Loans or advances to officers and employees approved
by the Board of Directors in an aggregate amount not in excess of
Twenty Thousand Dollars ($20,000) outstanding at any time
(e) Intercompany Loans or advances to any Subsidiaries
that are now or hereafter parties to this Agreement and the Loan
Documents; and
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(f) Investments in eligible securities set forth in
Schedule E attached hereto.
"Quick Assets" means, as of any applicable date, the
consolidated cash, cash equivalents, accounts receivable and
investments with maturities of fewer than ninety (90) days of Company
determined in accordance with GAAP.
"Responsible Officer" means each of the Chief Executive Officer,
the President, the Treasurer, the Chief Financial Officer, the Vice
President of Finance, the Director of Treasury Operations and the
Controller of Borrower.
"Revolving Maturity Date" shall mean April 5, 1999.
"Tangible Net Worth" means at any date as of which the amount
thereof shall be determined, the consolidated total assets of the
Company and its Subsidiaries minus, without duplication, (i) the sum of
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) all reserves not already deducted from
assets, and (ii) Total Liabilities.
From and after the date hereof, all references in the Loan Agreement to the
"Collateral", "Current Liabilities", "Eligible Accounts", "Permitted
Indebtedness", "Permitted Investments", "Quick Assets", "Responsible
Officer", "Revolving Maturity Date" and "Tangible Net Worth" shall have the
meanings set forth herein and all references to Exhibit A shall be deemed to
refer to the Collateral described above. From and after the date hereof, all
references in the Loan Agreement to the "Borrower" shall be deemed to refer
to the Borrowers defined in this Agreement.
3. Advances. Section 2.1 of the Loan Agreement is hereby amended
and restated in its entirety to read as follows
2.1 Advances. Subject to and upon the terms and conditions of
this Agreement, Bank agrees to make Advances to Borrower and issue
Letters of Credit, in an aggregate amount not to exceed the Committed
Revolving Line or the Borrowing Base, whichever is less. For purposes
of this Agreement, "Borrowing Base" shall mean an amount equal to
eighty percent (80%) of Eligible Accounts, minus the face amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters
of Credit) as determined by Bank with reference to the most recent
Borrowing Base Certificate delivered by Borrower. Subject to the terms
and conditions of this Agreement, amounts
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borrowed pursuant to this Section 2.1 may be repaid and reborrowed at any
time during the term of this Agreement.
On the Closing Date, Borrower shall execute and deliver to Bank
the Revolving Promissory Note.
4. Borrowing Base Certificate. From and after the effective date
hereof, notwithstanding anything set forth in Section 6.3 of the Loan
Agreement to the contrary, the Borrowers shall be required to deliver
Borrowing Base Certificates and the aged listings of accounts receivable and
accounts payable only for any calendar month when Advances are outstanding
under the Committed Revolving Line.
5. Inventory; Returns. Section 6.4 of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
6.4 Inventory; Returns. Borrower shall keep all Inventory in
good and marketable condition, free from all material defects. Returns
and allowances, if any, as between Borrower and its account debtors
shall be on the same basis and in accordance with the usual customary
practices of Borrower, as they exist at the time of the execution and
delivery of this Agreement. Borrower shall promptly notify Bank of all
returns and recoveries and of all disputes and claims, where the
return, recovery, dispute or claim involves more than Two Hundred
Thousand Dollars ($200,000).
6. Financial Covenants. Sections 6.8 and 6.11 of the Loan Agreement
are hereby deleted in their entirety. Sections 6.9 and 6.10 of the Loan
Agreement are hereby amended and restated in their entirety to read as
follows:
6.9 Tangible Net Worth. The Company shall maintain, as of the
last day of each fiscal quarter, a Tangible Net Worth of not less than
$30,000,000.
6.11 Quick Ratio. The Company shall maintain, as of the last
day of each fiscal quarter, a ratio of Quick Assets to Current
Liabilities of at least 1.5 to 1.0.
7. Financial Reporting. Section 6.3(a) of the Loan Agreement is
hereby deleted in its entirety as follows:
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(a) as soon as available, but in any event within forty five (45) days
after the end of each quarter, a company prepared balance sheet and
income statement covering Borrower's operations during such period,
certified by an officer of Borrower (without any personal liability
therefore other than liability based on fraud or criminal misconduct)
reasonably acceptable to Bank;
Except as expressly amended hereby, Section 6.3 shall remain unchanged.
8. Events of Default. Sections 8.4 and 8.8 of the Loan Agreement
are hereby amended and restated in their entirety to read as follows:
8.4 Attachment. If any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied
upon, or comes into the possession of any trustee, receiver or person
acting in a similar capacity and such attachment, seizure, writ or
distress warrant or levy has not been removed, discharged, bonded over
or rescinded within ten (10) days, or if Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a
judgment or other claim in excess of One Hundred Fifty Thousand Dollars
($150,000) in the aggregate becomes a lien or encumbrance upon any
material portion of Borrower's assets, or if a notice of lien, levy, or
assessment for an amount in excess of One Hundred Fifty Thousand
Dollars ($150,000) is filed of record with respect to any of Borrower's
assets by the United States Government, or any department, agency, or
instrumentality thereof, or by any state, county, municipal, or
governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the
foregoing shall constitute an Event of Default where such action or
event is stayed or an adequate bond has been posted pending a good
faith contest by Borrower (provided that no Advances will be required
to be made during such cure period);
8.8 Judgments. If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least One
Hundred Fifty Thousand Dollars ($150,000) shall be rendered against
Borrower and shall remain unsatisfied and unstayed for a period of ten
(10) days (provided that no Advances will be made prior to the
satisfaction or stay of such judgment); or
9. Assumption of Obligations. Visual Operations, Visual
Technologies, Visual Investments and Visual Texas hereby jointly and
severally with the Company covenant, promise and agree (a) to pay the
Obligations at the times, in the manner and in all respects as provided in
the Loan Agreement and the Loan Documents, (b) to perform each and all of the
covenants,
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agreements and obligations in the Loan Agreement to be performed by the Company
therein, at the time, in the manner and in all respects as therein provided, and
(c) to be bound by each and all of the terms and provisions of the Note and the
Loan Agreement as though the Note and the Loan Agreement had originally been
jointly and severally made, executed and delivered by each of the Borrowers.
10. Transferred Assets. For purposes of the Loan Agreement, Bank
hereby consents to the transfer by the Company to Visual Investments of the
assets set forth on Schedule A attached hereto, the transfer by the Company
to Visual Technologies of the assets set forth on Schedule B attached hereto,
the transfer by the Company to Visual Operations of the assets set forth on
Schedule C attached hereto and the transfer by the Company to Visual Texas of
the assets set forth on Schedule D attached hereto (the assets set forth on
Schedule A, Schedule B, collectively, the "Transferred Assets"). Bank hereby
releases its lien and security interest on the Transferred Assets and any
other assets that are not within the meaning of "Collateral" and agrees to
execute and deliver to the Company, UCC partial releases covering the
Transferred Assets and any other assets that are not within the meaning of
"Collateral". Notwithstanding anything set forth herein to the contrary, the
assets of Visual Investments and Visual Technologies other than the
Collateral described herein will not be subject to the lien created by the
Loan Documents or included in the calculation of the Borrowing Base.
11 Grant of Security Interests. Visual Operations, Visual
Investments, Visual Technologies and Visual Texas each hereby assign, pledge
and grant to the Bank, and agrees that the Bank shall have a perfected and
continuing security interest in, and lien on, all Collateral of Visual
Operations, Visual Investments, Visual Technologies and Visual Texas and any
and all claims, rights and interests in any of the above and all
substitutions for, additions and accessions to and proceeds thereof. Each of
the Borrowers represents to the Bank that its chief executive office and the
address where the Borrower's Books are kept is set forth on Schedule F
attached hereto and the Borrowers shall keep the Inventory only (a) at the
locations set forth in
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Schedule F attached hereto; (b) at various additional locations operated by
Timeplex, Inc., provided, that if the value of Inventory kept at any such
location exceeds $50,000, the Borrowers shall notify Bank, and upon Bank's
request Borrowers will promptly sign and file a financing statement in such
location to perfect Bank's security interest; and (c) such other locations of
which Borrowers give Bank prior written notice and as to which Borrowers sign
and file a financing statement where needed to perfect Bank's security interest.
12 Additional Events of Default. In addition to the Events of
Default set forth in the Loan Agreement, the failure of the Borrowers to
perform under this Agreement shall constitute an Event of Default thereunder.
13 Exhibits. From and after the effective date of this Agreement,
Exhibits C, D and E to the Loan Agreement are replaced in their entirety with
Exhibits C, D and E attached hereto. The Borrowers shall execute and deliver
to the Bank on the date hereof their Amended and Restated Revolving
Promissory Note in the form of Exhibit E attached hereto and incorporated
herein by reference (the "Replacement Note") in substitution for and not
satisfaction of, the issued and outstanding Note; and the Replacement Note
shall be the "Note" and/or the "Revolving Promissory Note" for all purposes
of the Loan Documents.
14 Conditions Precedent. This Agreement shall become effective on
the date Bank receives the following documents, each of which shall be
satisfactory in form and substance to Bank:
(a) The fully executed Replacement Note;
(b) True and complete copies of the Articles of Incorporation
and by-laws for Visual Operations, Visual Technologies and Visual
Investments, together with evidence of good standing in all appropriate
jurisdictions;
(c) True and complete copies of the Partnership Agreement, and
all amendments thereto for Visual Texas, together with Certified Certificate
of Limited Partnership for Visual Texas;
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(d) The favorable opinion of counsel for Borrowers satisfactory
to Bank;
(e) Proof that Borrowers have paid all costs and expenses to
Bank in connection with this Agreement, including but not limited to Bank's
reasonable attorneys fees;
(f) All documents and instruments (including, without
limitation, UCC-1 and UCC-3 statements) required to be filed, registered or
recorded in order to create, in favor of the Bank, a perfected Lien in the
Collateral (subject only to the Permitted Liens) in form and in sufficient
number for filing, registration, and recording in each office in each
jurisdiction in which such filings, registrations and recordations are
required, and (b) delivered such evidence as the Bank may deem satisfactory
that all necessary filing fees and all recording and other similar fees, and
all taxes and other expenses related to such filings, registrations and
recordings will be or have been paid in full, and
(g) Such other information, instruments, opinions, documents,
certificates and reports as Bank may deem necessary.
15 Representations. Each Borrower hereby confirms that the
covenants set forth in Section 5 of the Loan Agreement, are true and correct
as of the date hereof, and that no Event of Default has occurred or is
continuing immediately prior to or upon the execution of this Agreement.
16 Counterparts. This Agreement may be executed in any number of
duplicate originals or counterparts, each of which duplicate original or
counterpart shall be deemed to be an original and all taken together shall
constitute one and the same instrument.
17 Loan Documents; Governing Law; Etc. This Agreement is one of the
Loan Documents defined in the Loan Agreement and shall be governed and
construed in accordance with the laws of the State of Maryland. The headings
and captions in this Agreement are for the convenience of the parties only
and are not a part of this Agreement.
18 Acknowledgments. Each Borrower hereby confirms to Bank the
enforceability and validity of each of the Loan Documents. In addition, each
Borrower hereby agrees that the
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execution and delivery of this Agreement and the terms and provisions, covenants
or agreements contained in this Agreement shall not in any manner release,
impair, lessen, modify, waive or otherwise limit the joint and several liability
and obligations of Borrowers under the terms of any of the Loan Documents,
except as otherwise specifically set forth in this Agreement. Each Borrower
issues, ratifies and confirms the representations, warranties and covenants
contained in the Loan Documents.
19 Modifications. This Agreement may not be supplemented, changed,
waived, discharged, terminated, modified or amended, except by written
instrument executed by the parties.
[SIGNATURES ARE ON THE FOLLOWING PAGES]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
WITNESS/ATTEST: VISUAL NETWORKS, INC.
/s/ XXXXXXX X. XXXXX By: /s/ XXXXX X. XXXXXXXX
--------------------- --------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Treasurer
WITNESS/ATTEST: VISUAL NETWORKS OPERATIONS, INC.
/s/ XXXXXXX X. XXXXX By: /s/ XXXXX X. XXXXXXXX
--------------------- --------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Treasurer
WITNESS/ATTEST: VISUAL NETWORKS TECHNOLOGIES, INC.
/s/ XXXXXXX X. XXXXX By: /s/ XXXXX X. XXXXXXXX
--------------------- --------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Treasurer
WITNESS/ATTEST: VISUAL NETWORKS INVESTMENTS, INC.
/s/ XXXXXXX X. XXXXX By: /s/ XXXXX X. XXXXXXXX
--------------------- --------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Treasurer
WITNESS/ATTEST: VISUAL NETWORKS OF TEXAS, L.P.
By: Visual Networks of Texas Operations, Inc., its
general partner
/s/ XXXXXXX X. XXXXX By: /s/ XXXXX X. XXXXXXXX
--------------------- --------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Treasurer
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SILICON VALLEY BANK
By: /s/ XXXXX TOWER
--------------------------------------
Xxxxx Tower
Senior Vice President
SILICON VALLEY BANK
By: /s/ XXX XXXXX
--------------------------------------
Name: Xxx Xxxxx
Title: Vice President
(Signed in Santa Clara, California
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SCHEDULE F
Address of Books and Records and Chief Executive Office of Each Borrower:
Locations of Inventory of Each Borrower:
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EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: Visual Networks, Inc.
Bank: Silicon Valley Bank
I Commitment Amount: $7,000,000
ACCOUNTS RECEIVABLE
1 Accounts Receivable Book Value as of $
--- -----------
2 Additions (please explain on reverse) $
-----------
3 TOTAL ACCOUNTS RECEIVABLE $
-----------
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4 Amounts over 90 days due $
-----------
5 Balance of 50% over 90 day accounts $
-----------
6 Concentration Limits $
-----------
7 Foreign Accounts $
-----------
8 Governmental Accounts $
-----------
9 Contra Accounts $
-----------
10 Promotion or Demo Accounts $
-----------
11 Intercompany/Employee Accounts $
-----------
12 Other (please explain on reverse) $
-----------
13 TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $
-----------
14 Eligible Accounts (#3 minus #13) $
-----------
15 LOAN VALUE OF ACCOUNTS (80% of #14) $
-----------
a65535
b65535 BALANCES
16 Maximum Loan Amount $7,000,000
17 Total Funds Available [Lesser of #15 or #16)] $
-----------
18 Present balance owing on Line of Credit $
-----------
19 Outstanding under Sublimit for Letters of Credit $
-----------
20 RESERVE POSITION (#17 minus #18 and #19) $
-----------
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.
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COMMENTS:
Visual Networks, Inc.
By:
-----------------------
Authorized Signer
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EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: VISUAL NETWORKS, INC.
The undersigned authorized officer of VISUAL NETWORKS, INC. 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 , 199_ 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. The Officer
expressly acknowledges that no borrowings may be requested by Borrower at any
time or the date of determination that Borrower is not in compliance with any
of the terms of the Agreement, and that such compliance is determined not
just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES"
COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Quarterly financial statements Quarterly within 45 days Yes/No
Annual (CPA Audited) FYE within 90 days Yes/No
A/R & A/P Agings Monthly within 30 days
Borrowing Base Certificates (when borrowing) Yes/No
A/R Audit Annually (when borrowing) Yes/No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Tangible Net Worth: $30,000,000; _______ Yes No
Quick Ratio 1.5 to 1.0 _______ Yes No
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BANK USE ONLY
Received by:
AUTHORIZED SIGNER
Date:
Verified:
AUTHORIZED SIGNER
------------------------------------------------------------------------------
Date:
Compliance Status: Yes No
------------------------------------------------------------------------------
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
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Visual Networks, Inc.
BY:
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Title
Date
