EXHIBIT 10.12
"LOAN AND SECURITY AGREEMENT"
SILICON VALLEY BANK
LOAN AND SECURITY AGREEMENT
BORROWER: Analogy, Inc.
ADDRESS: 0000 X.X. Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
DATE: March 10, 1997
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date
between SILICON VALLEY BANK ("Silicon"), whose address is 0000 Xxxxxx Xxxxx,
Xxxxx Xxxxx, Xxxxxxxxxx 00000 and the borrower named above (the "Borrower"),
whose chief executive office is located at the above address ("Borrower's
Address").
1. LOANS.
1.1 LOANS. Silicon will make one or more loans to the Borrower (the
"Loans") up to the amounts (the "Credit Limits") shown on the Schedule to
this Agreement (the "Schedule") as the Credit Limit for such loans. The terms
of the Loans are stated in this Agreement and in the Schedule. The terms of
the Schedule are incorporated into this Agreement. The Borrower is
responsible for monitoring the total amount of Loans and other Obligations
outstanding from time to time, and the Borrower shall not permit the amount
of any Loan to exceed at any time the applicable Credit Limit for such Loan.
The Borrower shall not permit the total amount of Loans and all other
obligations to exceed at any time the aggregate Credit Limit for the Loans.
If at any time the total of all outstanding Loans and all other Obligations
exceeds the aggregate Credit Limit, the Borrower shall immediately pay the
amount of the excess to Silicon, without notice or demand.
1.2 INTEREST; DEBIT TO DEPOSIT ACCOUNTS. All Loans and all other
monetary Obligations shall bear interest at the applicable rates shown on the
Schedule. Interest shall be payable monthly, on the due date shown on the
monthly billing from Silicon to the Borrower. The Borrower shall regularly
deposit all funds received from its business activities in accounts maintained
by the Borrower at Silicon. The Borrower hereby requests and authorizes
Silicon to debit any of the Borrower's accounts with Silicon, including
without limitation account no. 3300044729, for payments of interest and
principal due on the Loans and all other obligations owing by the Borrower to
Silicon. Silicon shall promptly notify the Borrower of all debits which
Silicon makes against the Borrower's accounts. Any such debit against the
Borrower's accounts shall in no way be deemed a setoff by Silicon.
Page 1 - LOAN AND SECURITY AGREEMENT
1.3 FEES. The Borrower shall pay to Silicon at closing a commitment
fee and other fees in the amounts shown on the Schedule. These fees are in
addition to all interest and other sums payable to Silicon and are not
refundable.
1.4 ADDITIONAL COSTS. In case of any law, regulation, treaty or
official directive or the interpretation or application thereof by any court
or any governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law) which:
(a) subjects Silicon to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by the Borrower
or otherwise with respect to the transactions contemplated hereby (except for
taxes on the overall net income of Silicon imposed by the United States of
America or any political subdivision thereof);
(b) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, Silicon; or
(c) imposes upon Silicon any other condition with respect to its
performance under this Agreement,
and the result of any of the foregoing is to increase the cost to Silicon,
reduce the income receivable by Silicon or impose any expense upon Silicon
with respect to any loans, Silicon shall notify the Borrower thereof.
Borrower agrees to pay to Silicon the amount of such increase in cost,
reduction in income or additional expense as and when such cost, reduction or
expense is incurred or determined, upon presentation by Silicon of a
statement of the amount and setting forth Silicon's calculation thereof, all
in reasonable detail, which statement shall be deemed true and correct absent
manifest error.
2. GRANT OF SECURITY INTEREST.
2.1 OBLIGATIONS. The term "Obligations" as used in this Agreement means
the following: the obligation to pay all Loans and all interest on the Loans
when due, and to pay and perform when due all other present and future
indebtedness, liabilities, obligations, guarantees, covenants, agreements,
warranties and representations of the Borrower to Silicon, whether joint or
several, monetary or non-monetary, and whether created pursuant to this
Agreement or any other present or future agreement (such as future agreements
relating to letters of credit issued by Silicon) or otherwise. Silicon may,
in its discretion, require that the Borrower pay monetary Obligations in cash
to Silicon, or charge them to the Borrower's Loan account, in which event they
shall bear interest at the rates applicable to the Loan to which such amounts
are charged.
2.2 COLLATERAL. As security for all Obligations, the Borrower hereby
grants Silicon a continuing security interest in all of the Borrower's
assets, including but not limited to all of the Borrower's interest in the
types of property described below, whether now owned or hereafter acquired,
and wherever located (collectively, the "Collateral"): (a) all accounts,
contract rights,
Page 2 - LOAN AND SECURITY AGREEMENT
chattel paper, letters of credit, documents, securities, money, and
instruments, and all other obligations now or in the future owing to the
Borrower; (b) all inventory, goods, merchandise, materials, raw materials,
work in process, finished goods, farm products, advertising, packaging and
shipping materials, supplies, and all other tangible personal property which
is held for sale or lease or furnished under contracts of service or consumed
in the Borrower's business, and all warehouse receipts and other documents;
(c) all equipment, including without limitation all machinery, fixtures,
trade fixtures, vehicles, furnishings, furniture, materials, tools, machine
tools, office equipment, computers and peripheral devices, appliances,
apparatus, parts, dies, and jigs; (d) all general intangibles including, but
not limited to, deposit accounts, goodwill, names, trade names, trademarks
and the goodwill of the business symbolized thereby, trademark applications,
trade secrets, drawings, blueprints, customer lists, patents, patent
applications, copyrights, copyright applications, security deposits, loan
commitment fees, federal, state and local tax refunds and claims, all rights
in all litigation presently or hereafter pending for any cause or claim
(whether in contract, tort or otherwise), and all judgments now or hereafter
arising therefrom, all rights to purchase or sell real or personal property,
all rights as a licensor or licensee of any kind, all royalties, licenses,
processes, telephone numbers, proprietary information, purchase orders, and
all insurance policies and claims (including without limitation credit,
liability, property and other insurance), and all other rights, privileges
and franchises of every kind; (e) all books and records, whether stored on
computers or otherwise maintained; (f) all of the Borrower's cash; and (g)
all substitutions, additions and accessions to any of the foregoing, and all
products, proceeds and insurance proceeds of the foregoing, and all
guaranties of and security for the foregoing; and all books and records
relating to any of the foregoing. In addition to the security interest
granted in this Agreement, the Obligations are secured by all liens and
security interests granted by Borrower to Silicon or any affiliate of Silicon
in any other document. Silicon's security interest in any present or future
technology (including patents, trade secrets, and other technology) shall be
subject to any licenses or rights now or in the future granted by the
Borrower to any third parties in the ordinary course of the Borrower's
business; provided that if the Borrower proposes to sell, license or grant
any other rights with respect to any technology in a transaction that, in
substance, conveys a major part of the economic value of that technology,
Silicon shall first be requested to release its security interest, and
Silicon may withhold such release in its discretion. The Borrower shall not,
either directly or through any agent, employee, licensee or designee, (a)
file an application for the *(See Ex. B) registration of any patent,
trademark, or copyright with the U.S. Patent and Trademark Office, the U.S.
Copyright Office, or any similar office or agency in any other country,
state, or any political subdivision (the "Offices"), or (b) file any
assignment of any patent, trademark, or copyright which the Borrower may
acquire from a third party with any one of the Offices unless the Borrower
shall, on or prior to the date of such filing, notify Silicon of such filing,
and, upon request of Silicon, execute and deliver any and all assignments,
agreements, instruments, documents and papers as Silicon may request to
evidence Silicon's interest in such patents, trademarks, or copyrights, as
the case may be, including the goodwill and general intangibles of the
Borrower relating thereto or represented thereby. The Borrower authorizes
Silicon to amend any applicable notice of security interest or assignment
executed pursuant to SECTION 4.9 of this Agreement without first obtaining
the Borrower's approval of or signature to such amendment and to record such
assignment with one or more of the Offices.
Page 3 - LOAN AND SECURITY AGREEMENT
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
The Borrower represents and warrants to Silicon as follows, and the
Borrower covenants that the following representations shall continue to be
true, and that the Borrower shall comply with all of the following covenants:
3.1 CORPORATE EXISTENCE AND AUTHORITY. The Borrower is and shall
continue to be duly authorized, validly existing and in good standing under
the laws of the state of its incorporation, as identified on the copy of the
Borrower's Articles of Incorporation delivered to Silicon. The Borrower is
and shall continue to be qualified and licensed to do business in all
jurisdictions in which any failure to do so would have a material adverse
effect on the Borrower. The execution, delivery and performance by the
Borrower of this Agreement, and all other documents executed by the Borrower
in connection with the Loans have been duly and validly authorized, are
enforceable against the Borrower in accordance with their terms, and do not
violate any law or any provision of, and are not grounds for acceleration
under, any agreement or instrument that is binding upon the Borrower.
3.2 NAME, TRADE NAMES AND STYLES. The name of the Borrower set forth
in the heading to this Agreement is its correct name. Listed on an Exhibit to
the Schedule are all prior names of the Borrower and all of the Borrower's
present and prior trade names. The Borrower shall give Silicon 15 days' prior
written notice before changing its name or doing business under any other
name. The Borrower has complied, and shall in the future comply, with all
laws relating to the conduct of business under a fictitious business name.
3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth
in the heading to this Agreement is the chief executive office for the
Borrower. In addition, the Borrower has places of business only at, and
Collateral of the Borrower is located only at, the locations set forth on the
Schedule. The Borrower shall give Silicon at least 15 days' prior written
notice before changing its chief executive office or moving Collateral (other
than inventory sold in the ordinary course of business) to any location other
than a location listed on the Schedule.
3.4 TITLE TO COLLATERAL; PERMITTED LIENS. The Borrower is now, and
shall at all times in the future be, the sole owner of all the Collateral,
except for items of equipment that are leased by the Borrower. The Collateral
now is and shall remain free and clear of any and all liens, charges,
security interests, encumbrances and adverse claims, except for the following
("Permitted Liens"): (a) purchase money security interests in specific items
of equipment, other than equipment financed by the Loans; (b) leases of
specific items of equipment; (c) liens for taxes not yet payable; (d)
additional security interests and liens consented to in writing by Silicon in
its sole discretion; and (e) security interests being terminated
substantially concurrently with this Agreement. Silicon shall have the right
to require, as a condition to its consent under subparagraph (d) above, that
the holder of the additional security interest or lien sign an intercreditor
agreement on terms satisfactory to Silicon in its sole discretion,
acknowledge that the holder's security interest is subordinate to Silicon's
security interest. Silicon now has, and shall continue to have, a first
priority, perfected and enforceable security interest in all of the
Collateral. The Collateral shall not be subject to any other liens or
security interests of any type except for the Permitted Liens. The Borrower
shall at all times defend
Page 4 - LOAN AND SECURITY AGREEMENT
Silicon and the Collateral against all claims of others. None of the
Collateral now is or shall be affixed to any real property in such a manner,
or with such intent, as to become a fixture.
3.5 MAINTENANCE OF COLLATERAL. The Borrower shall maintain the
Collateral in good working condition. The Borrower shall not use the
Collateral for any unlawful purpose. The Borrower shall immediately advise
Silicon in writing of any material loss or damage to the Collateral.
3.6 BOOKS AND RECORDS. The Borrower has maintained and shall maintain
at the Borrower's Address complete and accurate books and records, comprising
an accounting system in accordance with generally accepted accounting
principles.
3.7 FINANCIAL CONDITION AND STATEMENTS. All financial statements now
or in the future delivered to Silicon have been, and shall be, prepared in
conformity with generally accepted accounting principles and now and in the
future shall completely and accurately reflect the financial condition of the
Borrower, at the times and for the periods therein stated. Since the last
date covered by any such statement, there has been no material adverse change
in the financial condition or business of the Borrower. The Borrower is now
and shall continue to be solvent.
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. The Borrower has
timely filed, and shall timely file, all tax returns and reports required by
foreign, federal, state and local law. The Borrower has timely paid, and
shall timely pay, all foreign, federal, state and local taxes, assessments,
deposits and contributions now or in the future owed by the Borrower. The
Borrower may, however, defer payment of any contested taxes, provided that
the Borrower (a) in good faith contests the Borrower's obligation to pay the
taxes by appropriate proceedings promptly and diligently instituted and
conducted, (b) notifies Silicon in writing of the commencement of, and any
material development in, the proceedings, and (c) posts bonds or takes any
other steps required to keep the contested taxes from becoming a lien upon
any of the Collateral. The Borrower is unaware of any claims or adjustments
proposed for any of the Borrower's prior tax years which could result in
additional taxes becoming due and payable by the Borrower. The Borrower has
paid, and shall continue to pay all amounts necessary to fund all present and
future pension, profit sharing and deferred compensation plans in accordance
with their terms. The Borrower has not and shall not withdraw from
participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could
result in any liability of the Borrower, including, without limitation, any
liability to the Pension Benefit Guaranty Corporation or its successors or
any other governmental agency.
3.9 COMPLIANCE WITH LAW. The Borrower has complied, and shall comply,
in all material respects, with all provisions of all foreign, federal, state
and local laws and regulations relating to the Borrower, including, but not
limited to, those relating to ownership of real or personal property, conduct
and licensing of the Borrower's business, and environmental matters.
3.10 LITIGATION. Except as disclosed in the Schedule, there is no
claim, suit, litigation, proceeding or investigation pending or (to best of
the Borrower's knowledge) threatened by or
Page 5 - LOAN AND SECURITY AGREEMENT
against or affecting the Borrower in any court or before any governmental
agency (or any basis therefor known to the Borrower) which may result, either
separately or in the aggregate, in any material adverse change in the
financial condition or business of the Borrower, or in any material
impairment in the ability of the Borrower to carry on its business in
substantially the same manner as it is now being conducted. The Borrower
shall promptly inform Silicon in writing of any claim, proceeding, litigation
or investigation in the future threatened or instituted by or against the
Borrower involving amounts in excess of $100,000.
3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely
for lawful business purposes.
3.12 NO PATENTS OR TRADEMARKS. The Borrower does not own, and the
Borrower does not have pending any application for the registration of, any
patent or trademark with the U.S. Patent and Trademark Office or any similar
office or agency of any state of the United States of America or of any
foreign jurisdiction, except as disclosed in the Schedule.
3.13 HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous
substance," "disposal," "release," and "threatened release," as used in this
Agreement, shall have the same meanings as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended,
42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("XXXX"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 49 U.S.C. Section 6901, et seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant to
any of the foregoing. The Borrower represents and warrants that: (a) the
Borrower has no knowledge of (i) any use, generation, manufacture, storage,
treatment, disposal, release, or threatened release of any hazardous waste or
substance by any prior owners or occupants of any of the real properties
owned or operated by the Borrower, or (ii) any actual or threatened
litigation or claims of any kind by any person relating to such matters; (b)
neither the Borrower nor any subtenant, contractor, agent or other user
authorized by Borrower of any of the real properties shall use, generate,
manufacture, store, treat, dispose of, or release any hazardous waste or
substance on, under, or about any of the real properties owned or operated by
the Borrower except in compliance with all applicable federal, state, and
local laws, regulations, and ordinances, including without limitation those
laws, regulations and ordinances described above. The Borrower authorizes
Silicon and its agents, upon 24 hours prior notice (which need not be in
writing), to enter upon the real properties to make such inspections and
tests as Silicon may deem appropriate to determine compliance of the real
properties owned or operated by the Borrower with this Section of the
Agreement. Any inspections or tests made by Silicon shall be for Silicon's
purposes only and shall not be construed to create any responsibility or
liability on the part of Silicon to the Borrower or to any other person. The
Borrower hereby (a) releases and waives any future claims against Silicon for
indemnity or contribution in the event the Borrower becomes liable for
cleanup or other costs under any such laws, and (b) agrees to indemnify and
hold harmless Silicon against any and all claims, losses, liabilities,
damages, penalties, and expenses which Silicon may directly or indirectly
sustain or suffer resulting from a breach of this Section of the Agreement or
as a consequence of any use, generation, manufacture, storage, disposal,
release or threatened release occurring prior to the Borrower's ownership or
interest in real properties, whether or not the same was or should
Page 6 - LOAN AND SECURITY AGREEMENT
have been known to the Borrower. The provisions of this Section of the
Agreement, including the obligation to indemnify, shall survive the payment
of the obligations and the termination or expiration of this Agreement and
shall not be affected by Silicon's acquisition of any interest in any of the
real properties, whether by foreclosure or otherwise.
4. ADDITIONAL DUTIES OF THE BORROWER.
4.1 FINANCIAL AND OTHER COVENANTS. The Borrower shall at all times
comply with the financial and other covenants set forth in the Schedule.
4.2 OVERADVANCE; PROCEEDS OF ACCOUNTS. If for any reason the total of
all outstanding Loans and all other Obligations exceeds the total Credit
Limit, as stated in the Schedule, without limiting Silicon's other remedies,
and whether or not Silicon declares an Event of Default, the Borrower shall
remit to Silicon all checks and other proceeds of the Borrower's accounts and
general intangibles, in the same form as received by the Borrower, within one
day after the Borrower's receipt of the same, to be applied to the
Obligations in such order as Silicon shall determine in its discretion.
4.3 INSURANCE. The Borrower shall at all times insure all of the
tangible personal property Collateral and carry such other business
insurance, with insurers reasonably acceptable to Silicon, in such form and
amounts as Silicon may reasonably require. All such insurance policies shall
name Silicon as an additional loss payee, and shall contain a lenders loss
payee endorsement in form reasonably acceptable to Silicon. Upon receipt of
the proceeds of any such insurance, Silicon shall apply such proceeds in
reduction of the Obligations as Silicon shall determine in its sole and
absolute discretion, except that, provided no Event of Default has occurred,
Silicon shall release to the Borrower insurance proceeds with respect to
equipment totaling less than $100,000, which shall be utilized by the
Borrower for the replacement of the equipment with respect to which the
insurance proceeds were paid. Silicon may require reasonable assurance that
the insurance proceeds so released shall be so used. If the Borrower fails to
provide or pay for any insurance, Silicon may, but is not obligated to,
obtain the same at the Borrower's expense. The Borrower shall promptly
deliver to Silicon copies of all reports made to insurance companies.
Statutory notice regarding insurance:
WARNING
Unless you provide us with evidence of the insurance coverage as
required by our contract or loan agreement, we may purchase insurance at your
expense to protect our interest. This insurance may, but need not, also
protect your interest. If the collateral becomes damaged, the coverage we
purchase may not pay any claim you make or any claim made against you. You
may later cancel this coverage by providing evidence that you have obtained
property coverage elsewhere.
You are responsible for the cost of any insurance purchased by us. The
cost of this insurance may be added to your contract or loan balance. If the
cost is added to your contract or loan balance, the interest rate on the
underlying contract or loan will apply to this added amount. The effective
date of coverage may be the date your prior coverage lapsed or the date you
failed to provide proof of coverage.
Page 7 - LOAN AND SECURITY AGREEMENT
This coverage we purchase may be considerably more expensive than
insurance you can obtain on your own and may not satisfy any need for
property damage coverage or any mandatory liability insurance requirements
imposed by applicable law.
4.4 REPORT. The Borrower shall provide Silicon with such written
reports with respect to the Borrower as Silicon shall from time to time
reasonably specify, including but not limited to the financial reports
required as stated in the Schedule.
4.5 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At all reasonable times,
and upon ten business days' notice, Silicon, or its agents, shall have the
right to inspect the Collateral, and the right to audit and copy the
Borrower's accounting books, records, ledgers, journals, or registers and the
Borrower's books and records relating to the Collateral, provided that no
prior notice is required upon the occurrence and continuation of an Event of
Default. Silicon shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but Silicon shall have
the right to disclose any such information to its auditors, regulatory
agencies and attorneys, and pursuant to any subpoena or other legal process.
The Borrower shall reimburse Silicon for Silicon's actual costs for
conducting two such audits per year. Silicon may debit the Borrower's deposit
accounts with Silicon for the cost of such audits, in which event Silicon
shall send notification thereof to the Borrower.
4.6 NEGATIVE COVENANTS. Except as may be expressly permitted in the
Schedule, the Borrower shall not, without Silicon's prior written consent, do
any of the following: (a) merge or consolidate with another corporation,
except that the Borrower may merge or consolidate with another corporation if
the Borrower is the surviving corporation in the merger and the Borrower's
senior management continues in place after such merger or consolidation; (b)
acquire any assets, including stock of any other entity, outside the ordinary
course of business unless Borrower's senior management continues in place
after such acquisition; (c) enter into any other transaction outside the
ordinary course of business (except as permitted by the other provisions of
this Section); (d) sell or transfer any Collateral, except for the sale of
finished inventory in the ordinary course of the Borrower's business; (e)
make any loans of any money or any other assets to shareholders, employees or
any other person except in the ordinary course of business; (f) incur any
debts that are outside the ordinary course of business or that would have a
material, adverse effect on the Borrower or on the prospect of repayment of
the Obligations; (g) guarantee or otherwise become liable with respect to the
obligations of another party or entity; (h) pay or declare any dividends on
the stock of the Borrower (except for dividends payable solely in stock of
the Borrower; (i) redeem, retire, purchase or otherwise acquire, directly or
indirectly, any of the stock of the Borrower; (j) make any change in the
Borrower's capital structure which has a material adverse effect on that
Borrower or on the prospect of repayment of the Obligations; or (k) dissolve
or elect to dissolve. Transactions permitted by the foregoing provisions of
this Section are only permitted if no Event of Default and no event which
(with notice or passage of time or both) would constitute an Event of Default
would occur as a result of such transaction.
4.7 LITIGATION COOPERATION. Should any third-party suit or proceeding
be instituted by or against Silicon with respect to any Collateral or in any
manner relating to the Borrower, the Borrower shall, without expense to
Silicon, make available the Borrower and it officers,
Page 8 - LOAN AND SECURITY AGREEMENT
employees and agents and the Borrower's books and records to the extent that
Silicon may deem them reasonably necessary in order to prosecute or defend
any such suit or proceeding.
4.8 VERIFICATION. Silicon may, from time to time, following prior
notification to the Borrower, verify directly with the respective account
debtors the validity, amount and other matters relating to the Borrower's
accounts, by means of mail, telephone or otherwise, either in the name of the
Borrower or Silicon or such other name as Silicon may reasonably choose,
provided that no prior notification shall be required following an Event of
Default. Silicon shall not be required to obtain the Borrower's consent prior
to any such verification of accounts, whether or not an Event of Default has
occurred.
4.9 EXECUTE ADDITIONAL DOCUMENTATION. The Borrower agrees, at its
expense, on request by Silicon, to execute from time to time all documents in
form satisfactory to Silicon, as Silicon may deem reasonably necessary or
useful in order to perfect and maintain Silicon's perfected security interest
in the Collateral, and in order to fully consummate all of the transactions
contemplated by this Agreement.
4.10 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS. The Borrower shall
register or cause to be registered (to the extent not already registered)
with the United States Patent and Trademark Office or the United States
Copyright Office, as applicable, those intellectual property rights listed on
an exhibit to the Collateral Assignment, Patent Mortgage and Security
Agreement delivered to Silicon by the Borrower in connection with this
Agreement within thirty (30) days of the date of this Agreement. Borrower
shall register or cause to be registered with the United States Patent and
Trademark Office or the United States Copyright Office, as applicable, those
additional intellectual property rights developed or acquired by Borrower
from time to time in connection with any product prior to the sale or
licensing of such product to any third party, including without limitation
revisions or additions to the intellectual property rights listed on such
exhibit to the Collateral Assignment, Patent Mortgage and Security Agreement.
Borrower shall execute and deliver such additional instruments and documents
from time to time as Silicon shall reasonably request to perfect Silicon's
security interest in such additional intellectual property rights.
5. TERM.
5.1 MATURITY DATE. This Agreement shall continue in effect until the
payment in full of the Obligations; provided, however, that the Borrower
shall repay in full each Loan described on the Schedule, with all accrued but
unpaid interest on that Loan, on or before the Maturity Date stated on the
Schedule for such Loan.
5.2 EARLY TERMINATION. Subject to SECTION 5.3, this Agreement may be
terminated, without penalty, prior to the Maturity Date as follows: (a) by
the Borrower, effective three business days after written notice of
termination is given to Silicon; or (b) by Silicon at any time after the
occurrence of an Event of Default, without notice, effective immediately.
5.3 PAYMENT OF OBLIGATIONS. On the due dates stated in the Schedule,
or on any earlier effective date of termination, the Borrower shall pay and
perform in full all Obligations,
Page 9 - LOAN AND SECURITY AGREEMENT
whether evidenced by installment notes or otherwise, and whether or not all
or any part of such Obligations are otherwise then due and payable.
Notwithstanding any termination of this Agreement, all of Silicon's security
interests in all of the Collateral and all of the terms and provisions of
this Agreement shall continue in full force and effect until all Obligations
have been paid and performed in full; provided that, without limiting the fact
that Loans are discretionary on the part of Silicon, Silicon may, in its sole
discretion, refuse to make any further Loans after termination. No
termination shall in any way affect or impair any right or remedy of Silicon,
nor shall any such termination relieve the Borrower of any Obligation to
Silicon, until all of the Obligations have been paid and performed in full.
Upon payment and performance in full of all the Obligations and following
written request by Borrower, Silicon shall deliver to the Borrower (within 30
days) termination statements, requests for reconveyances and such other
documents as may be required to fully terminate any of Silicon's security
interests.
6. EVENTS OF DEFAULT AND REMEDIES.
6.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and the Borrower
shall give Silicon immediate written notice thereof: (a) any warranty,
representation, statement, report or certificate made or delivered to Silicon
by the Borrower or any of the Borrower's officers or employees, now or in the
future, shall be untrue or misleading in any material respect; or (b) the
Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation; or (c) the total outstanding balance of any Loan
exceeds the applicable Credit Limit, or the total Loans and other Obligations
outstanding at any time exceed the aggregate Credit Limit for all Loans; or
(d) the Borrower shall fail to comply with any of the financial covenants set
forth in the Schedule or shall fail to perform any other non-monetary
Obligation which by its nature cannot be cured; or (e) the Borrower shall
fail to pay or perform any other non-monetary Obligation, under this
Agreement or any other agreement or document relating to the Loans; or (f)
any levy, assessment, attachment, seizure, lien or encumbrance is made on all
or any part of the Collateral; or (g) dissolution, termination of existence,
insolvency or business failure of the Borrower, or appointment of a receiver,
trustee or custodian for all or any part of the property of, assignment for
the benefit of creditors by, or the commencement of any proceeding by the
Borrower under any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect; or (h) the commencement of any
proceeding against the Borrower or any guarantor of any of the Obligations
under any reorganization, bankruptcy, insolvency, arrangement, readjustment
of debt, dissolution or liquidation law or statute of any jurisdiction, now
or in the future in effect, which is not cured by the dismissal thereof
within 30 days after the date commenced; or (i) revocation or termination of,
or limitation of liability upon, any guaranty of Obligations; or (j)
commencement of proceedings by any guarantor of any of the Obligations under
any bankruptcy or insolvency law; or (k) the Borrower makes any payment on
account of any indebtedness or obligation which has been subordinated to the
Obligations, unless such payment is permitted in the applicable subordination
agreement, or if any person who has subordinated such indebtedness or
obligations terminates or in any way limits his subordination agreement; or
(l) the Borrower shall generally not pay its debts as they become due; or the
Borrower shall conceal, remove or transfer any part of its property, with
intent to hinder, delay
Page 10 - LOAN AND SECURITY AGREEMENT
or defraud its creditors, or make or suffer any transfer of any of its
property which may be fraudulent under any bankruptcy, fraudulent conveyance
or similar law; or (m) either the Borrower or any other party thereto shall
breach any subordination agreement executed in connection with the Loans; or
(n) the current shareholders of the Borrower shall cease to own more than 50%
of the outstanding common stock of the Borrower. If any of the foregoing
defaults, other than a failure to pay money and breach of an financial
covenant set forth in the Schedule, is curable, it may be cured (and no Event
of Default shall have occurred) if the Borrower cures the default within
fifteen days (or within thirty days in the case of clause (h) of this SECTION
6.1). Silicon may cease making any loan advances hereunder during the above
cure periods, and thereafter if an Event of Default has occurred.
6.2 REMEDIES. Upon the occurrence of any Event of Default and the
expiration of any applicable cure period under SECTION 6.1, and at any time
thereafter, Silicon, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by the Borrower), may do any one or
more of the following: (a) cease making Loans or otherwise extending credit
to the Borrower under this Agreement or any other document or agreement; (b)
accelerate and declare all or any part of the Obligations to be immediately
due, payable, and performable, notwithstanding any deferred or installment
payments allowed by any instrument evidencing or relating to any Obligation;
(c) take possession of any or all of the Collateral wherever it may be found,
and for that purpose the Borrower hereby authorizes Silicon without judicial
process to enter onto any of the Borrower's premises without interference to
search for, take possession of, keep, store, or remove any of the Collateral,
and remain on the premises or cause a custodian to remain on the premises in
exclusive control thereof without charge for so long as Silicon deems it
reasonably necessary in order to complete the enforcement of its rights under
this Agreement or any other agreement; provided, however, that should Silicon
seek to take possession of any or all of the Collateral by Court process, the
Borrower hereby irrevocably waives: (i) any bond and any surety or security
relating thereto required by any statute, court rule or otherwise as an
incident to such possession; (ii) any demand for possession prior to the
commencement of any suit or action to recover possession thereof; and (iii)
any requirement that Silicon retain possession of and not dispose of any such
Collateral until after trial or final judgment; (d) require the Borrower to
assemble any or all of the Collateral and make it available to Silicon at
places designated by Silicon which are reasonably convenient to Silicon and
the Borrower, and to remove the Collateral to such locations as Silicon may
deem advisable; (e) require the Borrower to deliver to Silicon, in kind, all
checks and other payments received with respect to all accounts and general
intangibles, together with any necessary endorsements, within one day after
the date received by the Borrower; (f) complete the processing, manufacturing
or repair of any Collateral prior to a disposition thereof and, for such
purpose and for the purpose of removal, Silicon shall have the right to use
the Borrower's premises, vehicles, hoists, lifts, cranes, equipment and all
other property without charge; (g) sell, lease or otherwise dispose of any of
the Collateral in its condition at the time Silicon obtains possession of it
or after further manufacturing, processing or repair, at any one or more
public and/or private sales, in lots or in bulk, for cash, exchange or other
property, or on credit, and to adjourn any such sale from time to time
without notice other than oral announcement at the time scheduled for sale;
Silicon shall have the right to conduct such disposition on the Borrower's
premises without charge, for such time or times as Silicon deems reasonable,
or on Silicon's premises, or elsewhere and the Collateral need not be located
at the place of
Page 11 - LOAN AND SECURITY AGREEMENT
disposition; Silicon may directly or through any affiliated company purchase
or lease any Collateral at any such public disposition, and if permissible
under applicable law, at any private disposition; any sale or other
disposition of Collateral shall not relieve the Borrower of any liability the
Borrower may have if any Collateral is defective as to title or physical
condition or otherwise at the time of sale; (h) demand payment of, and
collect any accounts and general intangibles comprising Collateral and, in
connection therewith, the Borrower irrevocably authorizes Silicon to endorse
or sign the Borrower's name on all collections, receipts, instruments and
other documents, to take possession of and open mail addressed to the
Borrower and remove therefrom payments made with respect to any item of the
Collateral or proceeds thereof, and, in Silicon's sole discretion, to grant
extensions of time to pay, compromise claims and settle accounts and the like
for less than face value; (i) offset against any sums in any general, special
or other deposit accounts maintained by the Borrower with Silicon; and (j)
demand and receive possession of any of the Borrower's federal and state
income tax returns and the books and records utilized in the preparation
thereof or referring thereto. All reasonable fees of professionals (including
attorneys' fees), expenses, costs, liabilities and obligations incurred by
Silicon with respect to the foregoing shall be added to and become part of
the Obligations, shall be due on demand, and shall bear interest at a rate
equal to the highest interest rate applicable to any of the Obligations.
Without limiting any of Silicon's rights and remedies, from and after the
occurrence of any Event of Default, the interest rate applicable to the
Obligations shall be increased by an additional two percent per annum above
the rate otherwise applicable.
6.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. The Borrower
and Silicon agree that a sale or other disposition (collectively, "Sale") of
any Collateral which complies with the following standards shall conclusively
be deemed to be commercially reasonable: (a) notice of the Sale is given to
the Borrower at least seven days prior to the Sale, and, in the case of a
public Sale, notice of the Sale is published at least seven days before the
Sale in a newspaper of general circulation in the county where the Sale is to
be conducted; (b) notice of the Sale describes the Collateral in general,
non-specific terms; (c) the Sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (d) the Sale commences
at any time between 8:00 a.m. and 6:00 p.m; (e) payment of the purchase
price in cash or by cashier's check or wire transfer is required; (f) with
respect to any Sale of any of the Collateral, Silicon may (but is not
obligated to) direct any prospective purchaser to ascertain directly from the
Borrower any and all information concerning the same. Silicon may employ
other methods of noticing and selling the Collateral, in its discretion, if
they are commercially reasonable.
6.4 POWER OF ATTORNEY. Effective only upon the occurrence and during
the continuance of an Event of Default, the Borrower hereby irrevocably
appoints Silicon (and any of Silicon's designated officers, or employees) as
the Borrower's true and lawful attorney to: (a) send requests for
verification of accounts or notify account debtors of Silicon's security
interest in the accounts; (b) endorse the Borrower's name on any checks or
other forms of payment or security that may come into Silicon's possession;
(c) sign the Borrower's name on any invoice or xxxx of lading relating to any
account, drafts against account debtors, schedules and assignments of
accounts, verifications of accounts, and notices to account debtors; (d)
make, settle, and adjust all claims under and decisions with respect to the
Borrower's
Page 12 - LOAN AND SECURITY AGREEMENT
policies of insurance; and (e) settle and adjust disputes and claims
respecting the accounts directly with account debtors, for amounts and upon
terms which Silicon determines to be reasonable; provided Silicon may
exercise such power of attorney to sign the name of the Borrower on any of
the documents described in SECTION 4.9 regardless of whether an Event of
Default has occurred. The appointment of Silicon as the Borrower's attorney
in fact, and each and every one of Silicon's rights and powers, being coupled
with an interest, is irrevocable until all of the Obligations have been fully
repaid and performed and Silicon's obligation to provide advances hereunder
is terminated.
6.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of
any Sale of the Collateral shall be applied by Silicon first to the costs,
expenses, liabilities, obligations and attorneys' fees incurred by Silicon in
the exercise of its rights under this Agreement, second to the interest due
upon any of the Obligations, and third to the principal of the Obligations,
in such order as Silicon shall determine in its sole discretion. Any surplus
shall be paid to the Borrower or other persons legally entitled thereto; the
Borrower shall remain liable to Silicon for any deficiency. If Silicon, in
its sole discretion, directly or indirectly enters into a deferred payment or
other credit transaction with any purchaser at any Sale or other disposition
of Collateral, Silicon shall have the option, exercisable at any time, in its
sole discretion, of either reducing the Obligations by the principal amount
of purchase price or deferring the reduction of the Obligations until the
actual receipt by Silicon of the cash therefor.
6.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set
forth in this Agreement, Silicon shall have all the other rights and remedies
accorded a secured party under the Uniform Commercial Code of Oregon and each
state in which any Collateral is located, and under all other applicable
laws, and under any other instrument or agreement now or in the future
entered into between Silicon and Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise
by Silicon of one or more of its rights or remedies shall not be deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Silicon to exercise any
rights or remedies shall not operate as a waiver thereof, but all rights and
remedies shall continue in full force and effect until all of the Obligations
have been fully paid and performed.
7. GENERAL PROVISIONS.
7.1 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by regular first-class mail,
or certified mail return receipt requested, addressed to Silicon or the
Borrower at the addresses shown in the heading to this Agreement, or at any
other address designated in writing by one party to the other party. In
addition, Borrower shall send a copy of any notice to Silicon to the
following address: 00000 X.X. Xxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000-0000,
Attn: Art Xxxxxxxx. All notices shall be deemed to have been given upon
delivery in the case of notices personally delivered to the Borrower or to
Silicon, or at the expiration of two business days following the deposit
thereof in the United States mail, with postage prepaid.
Page 13 - LOAN AND SECURITY AGREEMENT
7.2 SEVERABILITY. Should any provision of this Agreement be held by
any court of competent jurisdiction to be void or unenforceable, such defect
shall not affect the remainder of this Agreement, which shall continue in
full force and effect.
7.3 INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith (and the
Conditional Assignment for Security Purposes and Security Agreement
previously executed by the Borrower for the benefit of Silicon) are the
final, entire and complete agreement between the Borrower and Silicon and
supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this Agreement.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY SILICON
AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE
NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE
BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED
BY SILICON TO BE ENFORCEABLE.
7.4 WAIVERS. The failure of Silicon at any time or times to require the
Borrower to strictly comply with any of the provisions of this Agreement or
any other present or future agreement between the Borrower and Silicon shall
not waive or diminish any right of Silicon later to demand and receive strict
compliance therewith. Any waiver of any default shall not waive or affect any
other default, whether prior or subsequent thereto. None of the provisions of
this Agreement or any other agreement now or in the future executed by the
Borrower and delivered to Silicon shall be deemed to have been waived by any
act or knowledge of Silicon or its agents or employees, but only by a
specific written waiver signed by an officer of Silicon and delivered to the
Borrower. The Borrower waives demand, protest, notice of protest and notice
of default or dishonor, notice of payment and nonpayment, release,
compromise, settlement, extension or renewal of any commercial paper,
instrument, account, general intangible, document or guaranty at any time
held by Silicon on which the Borrower is or may in any way be liable, and
notice of any action taken by Silicon, unless expressly required by this
Agreement.
7.5 NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor any of
its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Silicon shall be liable for any claims,
demands, losses or damages, of any kind whatsoever, made, claimed, incurred
or suffered by the Borrower or any other party through the ordinary
negligence of Silicon, or any of its directors, officers, employees, agents,
attorneys, or any other person affiliated with or representing Silicon.
7.6 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by the Borrower and a duly
authorized officer of Silicon.
7.7 TIME OF ESSENCE. Time is of the essence in the performance by the
Borrower of each and every obligation under this Agreement.
Page 14 - LOAN AND SECURITY AGREEMENT
7.8 ATTORNEYS' FEES AND COSTS. The Borrower shall reimburse Silicon
for all reasonable attorneys' fees and fees of other professionals, and all
filing, recording, search, title insurance, appraisal, audit, and other
reasonable costs incurred by Silicon, pursuant to, or in connection with, or
relating to this Agreement (whether or not a lawsuit is filed), including,
but not limited to, any reasonable attorneys' fees and costs Silicon incurs
in order to do the following: prepare and negotiate this Agreement and the
documents relating to this Agreement; obtain legal advice in connection with
this Agreement; enforce, or seek to enforce, any of its rights; prosecute
actions against, or defend actions by, account debtors; commence, intervene
in, or defend any action or proceeding (including any appeal or review);
initiate any complaint to be relieved of the automatic stay in bankruptcy;
file or prosecute any probate claim, bankruptcy claim, third-party claim, or
other claim; examine, audit, copy, and inspect any of the Collateral or any
of the Borrower's books and records; or protect, obtain possession of, lease,
dispose of, or otherwise enforce Silicon's security interest in, the
Collateral and otherwise represent Silicon in any litigation relating to the
Borrower. If either Silicon or the Borrower files any lawsuit against the
other predicated on a breach of this Agreement, the prevailing party in such
action shall be entitled to recover its reasonable costs and professionals'
fees, including (but not limited to) reasonable attorneys' fees and costs
incurred in the the enforcement of, execution upon or defense of any order,
decree, award or judgment, and in any appeal or review by an appellate court.
All fees and costs to which Silicon may be entitled pursuant to this Section
shall immediately become part of the Borrower's Obligations, shall be due on
demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.
7.9 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of the parties hereto; provided,
however, that the Borrower may not assign or transfer any of its rights under
this Agreement without the prior written consent of Silicon, and any
prohibited assignment shall be void. No consent by Silicon to any assignment
shall release the Borrower from its liability for the Obligations. The
Borrower agrees and consents to Silicon's sale or transfer, whether now or
later, of one or more participation interests in the Loans to one or more
purchasers, whether related or unrelated to Silicon. Silicon may provide,
without any limitation whatsoever, to any one or more purchasers, or
potential purchasers, any information or knowledge Silicon may have about the
Borrower or about any other matter relating to the Loans and the Borrower
hereby waives any rights to privacy it may have with respect to such matters.
The Borrower additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such participation
interests. The Borrower also agrees that the purchasers of any such
participation interests shall be considered as the absolute owners of such
interests in the Loans and shall have all the rights granted under the
participation agreement or agreements governing the sale of such
participation interests.
7.10 SECTION HEADINGS; CONSTRUCTION. Section headings are only used in
this Agreement for convenience. The Borrower acknowledges that the headings
may not describe completely the subject matter of the applicable section, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. This Agreement has been
fully reviewed and negotiated between the parties and no uncertainty or
Page 15 - LOAN AND SECURITY AGREEMENT
ambiguity in any term or provision of this Agreement shall be construed
strictly against Silicon or the Borrower under any rule of construction or
otherwise.
7.11 MUTUAL WAIVER OF JURY TRIAL. THE BORROWER AND SILICON EACH HEREBY
WAIVE THE RIGHT TO TRAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER
PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN SILICON AND THE BORROWER,
OR ANY CONDUCT, ACTS OR OMISSIONS OF SILICON OR THE BORROWER OR ANY OF THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS
AFFILIATED WITH SILICON OR THE BORROWER, IN ALL OF THE FOREGOING CASES,
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
7.12 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts
and transactions hereunder and all rights and obligations of Silicon and the
Borrower shall be governed by, and construed in accordance with, the laws of
the State of Oregon. Any undefined term used in this Agreement that is
defined in the Oregon Uniform Commercial Code shall have the meaning assigned
to that term in the Oregon Uniform Commercial Code. As a material part of the
consideration to Silicon to enter into this Agreement, the Borrower (i)
agrees that all actions and proceedings relating directly or indirectly
hereto shall at Silicon's option, be litigated in courts located within
Oregon, and that the exclusive venue therefor shall be, at Silicon's option,
Washington County or Multnomah County, Oregon; (ii) consents to the
jurisdiction and venue of any such court and consents to service of process
in any such action or proceeding by personal delivery or any other method
permitted by law; and (iii) waives any and all rights the Borrower may have
to object to the jurisdiction of any such court, or to transfer or change the
venue of any such action or proceeding.
Borrower:
ANALOGY, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
-------------------------
Title: Vice President
----------------------
Silicon:
SILICON VALLEY BANK
By: /s/ Xxx Xxxxxx
-------------------------
Title: Senior Vice President
----------------------
Page 16 - LOAN AND SECURITY AGREEMENT
SCHEDULE TO LOAN AND SECURITY AGREEMENT
BORROWER: Analogy, Inc.
SECURED ACCOUNTS RECEIVABLE LINE OF CREDIT
CREDIT LIMIT: An amount not to exceed the lesser of: (i) $3,000,000 at
any one time outstanding; or (ii) the amount of the
"Borrowing Base", as defined below. For purposes of this
Schedule, the "Borrowing Base" shall mean the sum of 50% of
the Net Amount of Borrower's eligible accounts receivable.
With respect to Borrower's accounts, "Net Amount" means the
gross amount of the account, minus all applicable sales, use,
excise and other similar taxes and minus all discounts,
credits and allowances of any nature granted or claimed. The
amount of all letters of credit and foreign exchange
contracts issued by Silicon at the request of Borrower shall
reduce, dollar for dollar, the amount otherwise available to
be borrowed under the formula described in this paragraph.
Without limiting the fact that the determination of which
accounts are eligible for borrowing is a matter of Silicon's
discretion, the following shall not be deemed eligible for
borrowing: accounts outstanding for more than 90 days from
the invoice date and accounts subject to any contingencies.
INTEREST RATE: The interest rate applicable to this Loan shall be a rate
equal to the "Prime Rate" in effect from time to time, plus
1.00% per annum. Interest calculations shall be made on the
basis of a 360-day year and the actual number of days
elapsed. "Prime Rate" means the rate announced from time to
time by Silicon as its "prime rate"; it is a base rate upon
which other rates charged by Silicon are based, and it is
not necessarily the best rate available at Silicon. The
interest rate applicable to the Obligations shall change on
each date there is a change in the Prime Rate.
COMMITMENT FEE: One-quarter one percent (1/4%) per annum of the maximum
commitment amount of $3,000,000 or $7,500, which is fully
earned and payable at closing. (Any Commitment Fee
previously paid by the Borrower in connection with this loan
shall be credited against this Fee.)
MATURITY DATE: March 9, 1998, at which time all unpaid principal and
accrued but unpaid interest shall be due and payable.
Page 17 - LOAN AND SECURITY AGREEMENT
LETTERS OF CREDIT: Subject to the terms of this Agreement, as amended from
time to time, Silicon shall issue or cause to be issued under
the Credit Limit standby and commercial letters of credit for
the account of Borrower in an aggregate face amount not to
exceed the Credit Limit. Each such standby letter of credit
shall have an expiry date of no later than the Maturity Date.
All such letters of credit shall be, in form and substance,
acceptable to Silicon in its sole discretion and shall be
subject to the terms and conditions of Silicon's form
application and letter of credit agreement.
FOREIGN EXCHANGE
SUBLIMIT: Borrower may utilize up to the Credit Limit for spot and
future foreign exchange contracts (the "Exchange Contracts").
All Exchange Contracts must provide for delivery of
settlement on or before the Maturity Date. The limit
available at any time shall be reduced by the following
amounts (the "Foreign Exchange Reserve") on each day (the
"Determination date"): (i) on all outstanding Exchange
Contracts on which delivery is to be effected or settlement
allowed more than two business days from the determination
Date, 20% of the gross amount of the Exchange Contracts; plus
(ii) on all outstanding Exchange Contracts on which delivery
is to be effected or settlement allowed within two business
days after the Determination Date, 100% of the gross amount
of the Exchange Contract, the Borrower may request that
Silicon debit the Borrower's bank account with Silicon for
such amount, provided Borrower has immediately available
funds in such amounts in its bank account.
Whenever Borrower desires an advance, Borrower will notify
Silicon by facsimile transmission or by telephone not later
than 11:00 a.m. California time, two business days before
the advance is to be made. Each such notification shall be
promptly confirmed by a borrowing base certificate. Silicon
shall be entitled to rely on any such telephone notice given
by any person who Silicon reasonably believes to be an
officer of Borrower, and Borrower shall indemnify and hold
Silicon harmless for any damages or loss suffered by Silicon
as a result of such reliance.
Silicon may, in its discretion, terminate the Exchange
Contracts at any time (a) that an Event of Default occurs or
(b) that there is no sufficient availability under the
Credit Limit and Borrower does not have available funds in
its bank account to satisfy the Foreign Exchange Reserve. If
Silicon terminates the Exchange Contracts, and without
limitation of the FX Indemnity Provisions (as referred to
below), Borrower agrees to reimburse Silicon for any and all
fees, costs and expenses relating thereto or arising in
connection therewith.
Page 18 - LOAN AND SECURITY AGREEMENT
Borrower shall not permit the total gross amount of all
Exchange Contracts on which delivery is to be effected and
settlement allowed in any two business day period to be
more than the Credit Limit, nor shall Borrower permit the
total gross amount of all Exchange Contracts to which
Borrower is a party, outstanding at any one time, to exceed
the Credit Limit.
The Borrower shall execute all standard form applications and
agreements of Silicon in connection with the Exchange
Contracts, and without limiting any of the terms of such
applications and agreements the Borrower will pay all
standard fees and charges of Silicon in connection with the
Exchange Contracts.
Without limiting any of the other terms of this Agreement or
any such standard form applications and agreement of
Silicon, Borrower agrees to indemnify Silicon and hold it
harmless, from and against any and all claims, debts,
liabilities, demands, obligations, actions, costs and
expenses (including, without limitation, attorneys fees of
counsel of Silicon's choice), of every nature and
description which it may sustain or incur, based upon,
arising out of, or in any way relating to any of the
Exchange Contracts or any transactions relating thereto or
contemplated thereby (collectively referred to as the "FX
Indemnity Provisions").
PRIOR NAMES OF
BORROWER: See attached Exhibit B
TRADE NAMES OF
BORROWER: See attached Exhibit B
TRADEMARKS OF
BORROWER: See attached Exhibit B
OTHER LOCATIONS
AND ADDRESSES: See attached Exhibit B
MATERIAL ADVERSE
LITIGATION: See attached Exhibit B
FINANCIAL
COVENANTS: The Borrower shall at all times comply with all of the
following covenants, all of which shall be determined and
measured on a quarterly basis in accordance with generally
accepted accounting principles, on a consolidated basis with
any subsidiary of Borrower, except as otherwise stated below:
Page 19 - LOAN AND SECURITY AGREEMENT
TANGIBLE NET
WORTH: Borrower shall at all times maintain a Tangible Net Worth of
not less than $6,000,000.
DEBT TO TANGIBLE
NET WORTH RATIO: Borrower shall at all times maintain a ratio of total
liabilities to Tangible Net Worth of not more than 1.00:1.0.
For purposes of this calculation, total liabilities shall
exclude deferred revenues and debt, if any, that has been
subordinated to the Loans in a written subordination
agreement on terms satisfactory to Silicon.
PROFITABILITY: Borrower shall not incur a quarterly loss (as defined below)
in excess of $750,000, shall not incur any loss in two
consecutive quarters in excess of $1,000,000 in the
aggregate, and shall not incur losses in any three
consecutive quarters. For purposes of this paragraph, "loss"
means net income after taxes of less than $0.00, as reported
on Borrower's financial statements.
QUICK RATIO: Borrower shall maintain a ratio of Quick Assets (defined
below) to current liabilities less deferred revenue of not
less than 2.00:1.0.
DEFINITIONS: "Quick Assets" means cash on hand or on deposit in banks,
readily marketable securities issued by the United States,
readily marketable commercial paper rated "A-1" by Standard
& Poor's Corporation (or a similar rating by a similar
rating organization), certificates of deposit and banker's
acceptances, and accounts receivable (net of allowance for
doubtful accounts).
"Tangible Net Worth" means stockholders' equity plus debt,
if any, that has been subordinated to the Loans in a written
subordination agreement on terms satisfactory to Silicon,
and accrued interest thereon, less goodwill, patents,
capitalized software costs, deferred organizational costs,
tradenames, trademarks, and all other assets which would be
classified as intangible assets under generally accepted
accounting principles.
OTHER COVENANTS: Borrower shall at all times comply with all of the following
additional covenants:
BANKING RELATIONSHIP. Borrower shall at all times maintain
its primary domestic banking relationship with Silicon,
unless it obtains Silicon's prior written consent.
Page 20 - LOAN AND SECURITY AGREEMENT
FINANCIAL STATEMENTS AND REPORTS. The Borrower shall
provide Silicon: (a) within 50 days after the end of each
quarter, a quarterly financial statement (consisting of a
income statement and a balance sheet) prepared by the
Borrower in accordance with generally accepted accounting
principles; (b) within 20 days after the end of each month,
an accounts receivable aging report and an accounts payable
aging report, in such form as Silicon shall reasonably
specify; (c) within 20 days after the end of each month, a
Borrowing Base Certificate in the form attached to this
Agreement as Exhibit A, as Silicon may reasonably modify such
Certificate from time to time, signed by the Chief Financial
Officer of the Borrower; (d) within 50 days after the end of
each quarter, a Compliance Certificate in such form as
Silicon shall reasonably specify, signed by the Chief
Financial Officer of the Borrower, setting forth calculations
showing compliance (at the end of each such calendar quarter)
with the financial covenants set forth on the Schedule, and
certifying that throughout such quarter the Borrower was in
full compliance with all other terms and conditions of this
Agreement and the Schedule, and providing such other
information as Silicon shall reasonably request; and (e)
within 95 days following the end of the Borrower's fiscal
year, complete annual CPA-audited financial statements, such
audit being conducted by independent certified public
accountants reasonably acceptable to Silicon, together with
an unqualified opinion of such accountants.
CONDITIONS TO
CLOSING: Without in any way limiting the discretionary nature of
advances under this Agreement, before requesting any such
advance, the Borrower shall satisfy each of the following
conditions:
1. LOAN DOCUMENTS:
Silicon shall have received this Agreement, the Schedule,
and such other loan documents as Silicon shall require, each
duly executed and delivered by the parties thereto.
2. DOCUMENTS RELATING
TO AUTHORITY, ETC.:
Silicon shall have received each of the following in form
and substance satisfactory to it:
(a) Certified Copies of the Articles of Incorporation
and Bylaws of the Borrower;
(b) A Certificate of Good Standing issued by the
Secretary of State of the Borrower's state of incorporation
and such other states as Silicon may reasonably request with
respect to the Borrower;
Page 21 - LOAN AND SECURITY AGREEMENT
(c) A certified copy of a Resolution adopted by the
Board of Directors of the Borrower authorizing the
execution, delivery and performance of this Agreement, and
any other documents or certificates to be executed by the
Borrower in connection with this transaction; and
(d) Incumbency Certificates describing the office and
identifying the specimen signatures of the individuals
signing all such loan documents on behalf of the Borrower.
3. PERFECTION AND
PRIORITY OF SECURITY:
Silicon shall have received evidence satisfactory to it
that its security interest in the Collateral has been duly
perfected and that such security interest is prior to all
other liens, charges, security interests, encumbrances and
adverse claims in or to the Collateral other than Permitted
Liens, which evidence shall include, without limitation, a
certificate from the appropriate state agencies showing the
due filing and first priority of the UCC Financing Statements
to be signed by the Borrower covering the Collateral, and
evidence of the due filing of any Security Agreement in
Copyrighted Works with the U.S. Copyright Office or other
security documents required by Silicon.
4. INSURANCE: Silicon shall have received evidence satisfactory to it
that all insurance required by this Agreement is in full
force and effect, with loss payee designations and additional
insured designations as required by this Agreement.
5. OTHER INFORMATION:
Silicon shall have received such other statements, opinions,
certificates, documents and information with respect to
matters contemplated by this Agreement as it may reasonably
request, all of which must be acceptable to Silicon.
Silicon shall have conducted an examination of the Borrower's
books, records, ledgers, journals, and registers, as Silicon
may deem necessary, and shall be satisfied with the results
of such examination in its sole discretion.
Page 22 - LOAN AND SECURITY AGREEMENT
Silicon and the Borrower agree that the terms of this Schedule
supplement the Loan and Security Agreement between Silicon and the Borrower
and agree to be bound by the terms of this Schedule.
BORROWER:
ANALOGY, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------
Title: Vice President
-----------------------
SILICON:
SILICON VALLEY BANK
By: /s/ Xxx Xxxxxx
--------------------------
Title: Senior Vice President
-----------------------
Page 23 - LOAN AND SECURITY AGREEMENT
EXHIBIT A
[INSERT BORROWING BASE CERTIFICATE]
Page 24 - LOAN AND SECURITY AGREEMENT
EXHIBIT B
TRADENAMES
PRIOR NAMES
TRADEMARKS
OTHER LOCATIONS AND ADDRESSES*
MATERIAL ADVERSE LITIGATION
[OTHER DISLCOSURES]
* "Location" for the purposes of Section 3.3 of this Agreement shall mean
any place where Analogy conducts official business, currently, or in the
future.
** Analogy may, from time to time, file for intellectual property protection
of its intangible assets in the normal course of business without
notification to Silicon Valley Bank as required by Section 2.2(a)-page 3
of this Agreement. Upon request by Silicon Valley Bank, Analogy shall
provide a written status report of all intellectual property protection.
Page 25 - LOAN AND SECURITY AGREEMENT
