SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
Exhibit
10.1
SECOND AMENDMENT TO LOAN AND SECURITY
AGREEMENT
THIS
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into as
of July 24, 2009, by and between SILICON VALLEY BANK (“Bank”) and POKERTEK,
INC., a North Carolina corporation (“Borrower”), with its principal
place of business at 0000 Xxxxx Xxxx, Xxxxx X, Xxxxxxxx, Xxxxx Xxxxxxxx
00000.
Recitals
A. Bank and Borrower have
entered into that certain Loan and Security Agreement dated as of July 25, 2008
(as the same has and may continue to be from time to time further amended,
modified, supplemented or restated, the “Loan Agreement”).
B. Bank has extended
credit to Borrower for the purposes permitted in the Loan
Agreement.
C. Borrower has requested
that Bank (i) extend the Maturity Date, (ii) reduce the Facility Amount, and
(iii) amend certain other provisions of the Loan Agreement.
D. Although Bank is under
no obligation to do so, Bank is willing to amend certain provisions of the Loan
Agreement, all on the terms and conditions set forth in this Agreement, so long
as Borrower complies with the terms, covenants and conditions set forth in this
Agreement in a timely manner.
Agreement
Now,
Therefore, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:
1. Definitions. Capitalized
terms used but not defined in this Agreement, including its preamble and
recitals, shall have the meanings given to them in the Loan
Agreement.
2. Amendments
to Loan Agreement.
2.1 Section 2.1.1 (Financing of
Accounts). Section 2.1.1(b) of the Loan Agreement is hereby
amended by deleting it in its entirety and replacing it with the
following:
(b) Maximum
Advances. The aggregate face amount of all Financed
Receivables outstanding at any time may not exceed the Facility
Amount. The aggregate amount of all Canadian Account Advances
outstanding at any time may not exceed Canadian Facility Amount. The
sum of the aggregate amount of all Advances and Exim Advances outstanding at any
time may not exceed the Facility Limit.
2.2 Section 2.2.7 (Unused Commitment
Fee). Section 2.2.7 of the Loan Agreement is hereby is hereby
amended by deleting it in its entirety and replacing it with the
following:
2.2.7. Unused Commitment
Fee. Borrower shall pay to Bank a fee (the “Unused Commitment Fee”),
payable quarterly, in arrears, on a calendar year basis, in an amount equal to
..50% per annum of the average unused portion of the Total Commitment Amount, as
determined by Bank. Borrower shall not be entitled to any credit,
rebate, or repayment of any of the Unused Commitment Fee previously earned by
Bank pursuant to this Section notwithstanding any termination of this Agreement
or the suspension or termination of Bank’s obligation to make loans and advances
hereunder.
2.3 Section 13
(Definitions).
(a) The
following terms and their respective definitions as set forth in Section 13.1 of
the Loan Agreement are hereby deleted in their entirety and replaced in
alphabetical order with the following:
“Adjusted Quick Ratio” is the
ratio of (i) Quick Assets to (ii) Current Liabilities, minus the current portion
of (a) Deferred Revenue and (b) the Shareholder Loan.
“Facility Amount” is One
Million Five Hundred Sixty-Two Thousand Dollars ($1,562,000).
“Maturity Date” is July 23,
2010.
“Total Commitment Amount” is
Two Million Nine Hundred Fifty Thousand Eight Hundred Dollars
($2,950,800)
(b) Section
13.1 of the Loan Agreement is hereby amended by adding clauses (s) and (t)
immediately after clause (r) of the definition of Eligible Accounts in Section
13.1 of the Loan Agreement as follows:
(s) Accounts
owing from an Account Debtor for maintenance service contracts, unless Borrower
maintains at all times, to be tested as of the last day of each month, an
Adjusted Quick Ratio of greater than 1.50 to 1.00; and
(t) Accounts
owing from an Account Debtor that represent lease payment obligations under
lease agreements that are not considered to be license agreements.
(c) The
following terms and their respective definitions are hereby added in
alphabetical order to Section 13.1 of the Loan Agreement:
“Canadian Facility Amount” is
Five Hundred Thousand Dollars ($500,000).
“Exim Advances” means an
advance under the Exim Loan Agreement.
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“Facility Limit” is Two Million
Five Hundred Thousand Dollars ($2,500,000).
2.4 UBS Accounts. The
defined terms “UBS Debt”
and “UBS Securities
Account” and their respective definitions as set forth in Section 13.1 of
the Loan Agreement are hereby deleted in their entirety and all occurrences of
and references to such terms in the Loan Agreement are hereby deleted in their
entirety and from and after the date hereof shall be of no further force and
effect under the Loan Agreement.
2.5 Compliance
Certificate. Exhibit B of the Loan
Agreement is replaced in its entirety with Exhibit A attached
hereto. From and after the date of this Amendment, all references in
the Loan Agreement, to the Compliance Certificate shall be deemed to refer to
Exhibit A
attached hereto.
3. Limitation
of Amendments.
3.1 The
amendments set forth in Section 2 above are
effective for the purposes set forth herein and shall be limited precisely as
written and shall not be deemed to (a) be a consent to any amendment,
waiver or modification of any other term or condition of any Loan Document, or
(b) otherwise prejudice any right or remedy which Bank may now have or may
have in the future under or in connection with any Loan Document.
3.2 This
Agreement shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants and
agreements set forth in the Loan Documents, except as herein amended, are hereby
ratified and confirmed and shall remain in full force and effect.
4. Representations and
Warranties. To induce Bank to enter into this Agreement,
Borrower hereby represents and warrants to Bank as follows:
4.1 Immediately
after giving effect to this Agreement (a) the representations and
warranties contained in the Loan Documents are true, accurate and complete in
all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they are
true and correct as of such date), and (b) no Event of Default has occurred
and is continuing;
4.2 Borrower
has the power and authority to execute and deliver this Agreement and to perform
its obligations under the Loan Agreement, as amended by this
Agreement;
4.3 The
organizational documents of Borrower delivered to Bank on the Effective Date
remain true, accurate and complete and have not been amended, supplemented or
restated and are and continue to be in full force and effect;
4.4 The
execution and delivery by Borrower of this Agreement and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Agreement, have been duly authorized;
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4.5 The
execution and delivery by Borrower of this Agreement and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Agreement, do not and will not contravene (a) any law or regulation binding
on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or
other governmental or public body or authority, or subdivision thereof, binding
on Borrower, or (d) the organizational documents of Borrower;
4.6 The
execution and delivery by Borrower of this Agreement and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Agreement, do not require any order, consent, approval, license, authorization
or validation of, or filing, recording or registration with, or exemption by any
governmental or public body or authority, or subdivision thereof, binding on
Borrower, except as already has been obtained or made; and
4.7 This
Agreement has been duly executed and delivered by Borrower and is the binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws of general
application and equitable principles relating to or affecting creditors’
rights.
5. Counterparts. This
Agreement may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.
6. Effectiveness. This
Agreement shall be deemed effective upon (a) the due execution and delivery to
Bank of this Agreement by each party hereto, (b) the due execution and delivery
to Bank of that certain Second Amendment to Export-Import Bank Loan and Security
Agreement, dated as of the date hereof, by each party hereto, (c) the due
execution and delivery to Bank of that certain Export-Import Bank Borrower
Agreement, dated as of the date hereof, by each party hereto, (d) Borrower’s
payment of an amendment and extension fee in an amount equal to Fifteen Thousand
Seven Hundred Fifty Dollars ($15,750) and (e) payment of Bank’s legal fees
and expenses in connection with the negotiation and preparation of this
Agreement.
[Signature
Page Follows.]
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In Witness
Whereof, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first written above.
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BANK
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SILICON
VALLEY BANK
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Name:
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Title:
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Exhibit
A
EXHIBIT
B
SPECIALTY
FINANCE DIVISION
Compliance
Certificate
I, an
authorized officer of PokerTek, Inc. (“Borrower”) certify under the
Loan and Security Agreement (the “Agreement”) between Borrower
and Silicon Valley Bank (“Bank”) as follows (all
capitalized terms used herein shall have the meaning set forth in the
Agreement):
Borrower
represents and warrants for each Financed Receivable:
Each
Financed Receivable is an Eligible Account.
Borrower
is the owner with legal right to sell, transfer, assign and encumber such
Financed Receivable;
The
correct amount is on the Invoice Transmittal and is not disputed;
Payment
is not contingent on any obligation or contract and Borrower has fulfilled all
its obligations as of the Invoice Transmittal date;
Each
Financed Receivable is based on an actual sale and delivery of goods and/or
services rendered, is due to Borrower, is not past due or in default,
has not been previously sold, assigned, transferred, or pledged and is free of
any liens, security interests and encumbrances other than Permitted
Liens;
There are
no defenses, offsets, counterclaims or agreements for which the Account Debtor
may claim any deduction or discount;
It
reasonably believes no Account Debtor is insolvent or subject to any Insolvency
Proceedings;
It has
not filed or had filed against it Insolvency Proceedings and does not anticipate
any filing;
Bank has
the right to endorse and/ or require Borrower to endorse all payments received
on Financed Receivables and all proceeds of Collateral.
No
representation, warranty or other statement of Borrower in any certificate or
written statement given to Bank contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statement contained in
the certificates or statement not misleading.
[Signature
Page to Second Amendment to Loan and Security Agreement]
Additionally,
Borrower represents and warrants as follows:
Borrower
and each Subsidiary is duly existing and in good standing in its state of
formation and qualified and licensed to do business in, and in good standing in,
any state in which the conduct of its business or its ownership of property
requires that it be qualified except where the failure to do so could not
reasonably be expected to cause a Material Adverse Change. The
execution, delivery and performance of the Loan Documents have been duly
authorized, and do not conflict with Borrower’s organizational documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by
which it is bound in which the default could reasonably be expected to cause a
Material Adverse Change.
Borrower
has good title to the Collateral, free of Liens except Permitted
Liens. All inventory is in all material respects of good and
marketable quality, free from material defects.
Borrower
is not an “investment company” or a company “controlled” by an “investment
company” under the Investment Company Act of 1940, as
amended. Neither Borrower nor any of its Subsidiaries is a “holding
company” or an “affiliate” of a “holding company” or a “subsidiary company” of a
“holding company” as each term is defined and used in the Public Utility Holding
Company Act of 2005. Borrower is not engaged as one of its important
activities in extending credit for margin stock (under Regulations X, T and U of
the Federal Reserve Board of Governors). Borrower has complied in all
material respects with the Federal Fair Labor Standards Act. Borrower
has not violated any laws, ordinances or rules, the violation of which could
reasonably be expected to cause a Material Adverse Change. None of
Borrower’s or any Subsidiary’s properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary has timely filed all
required tax returns and paid, or made adequate provision to pay, all material
taxes, except those being contested in good faith with adequate reserves under
GAAP. Borrower and each Subsidiary has obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all government authorities that are necessary to continue
its business as currently conducted except where the failure to obtain or make
such consents, declarations, notices or filings would not reasonably be expected
to cause a Material Adverse Change.
All
representations and warranties in the Agreement are true and correct in all
material respects on this date, and Borrower represents that there is no
existing Event of Default.
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Please
indicate compliance status by circling Yes/No under “Complies”
column.
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Reporting Covenant
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Required
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Complies
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Monthly
financial statements with Compliance
Certificate
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Monthly
within 30 days
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Yes No
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Annual
financial statement (CPA Audited) + XX
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XXX
within 90 days
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Yes No
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10-Q,
10-K and 8-K
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Within
5 days after filing with SEC
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Yes No
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Deferred
Revenue report
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Monthly
within 30 days
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Yes No
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A/R
& A/P Agings
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Monthly
within 20 days
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Yes No
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Invoices
equal to or greater than 10% of EXIM Eligible Foreign
Accounts
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Quarterly
within 30 days
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Yes No
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Board
Projections
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Annual
within 5 days of approval
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Yes No
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Financial Covenants
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Required
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Actual
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Complies
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Maintain
at all times, to be tested as of the last day
of each month, commencing with the month ended July 31,
2009:
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Adjusted
Quick Ratio
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1.00
to 1.00
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___
to ___
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Yes No
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Eligibility for Maintenance
Xxxxxxxx
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Maintain
at all times, to be tested as of the last day of each month, commencing
with the month ended July 31, 2009:
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Adjusted
Quick Ratio of greater than:
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1.50
to 1.00
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___
to ___
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Yes No
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Sincerely,
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POEKERTEK,
INC.
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| Signature | |
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| Date | |
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