SILICON VALLEY INTERNET PARTNERS
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
DATED AS OF MARCH 25, 1998
TABLE OF CONTENTS
PAGE
1. DEFINITIONS AND CONSTRUCTION 1
1.1 Definitions 1
1.2 Accounting Terms 9
2. LOAN AND TERMS OF PAYMENT 9
2.1 Revolving Facility Advances 9
2.2 Letters of Credit Subfacility 10
2.3 Letter of Credit Reimbursement; Reserve 10
2.4 Equipment Advances 11
2.5 Overadvances 12
2.6 Interest Rates, Payments, and Calculations 12
2.7 Crediting Payments 12
2.8 Fees 13
2.9 Additional Costs 13
2.10 Term 14
3. CONDITIONS OF LOANS 14
3.1 Conditions Precedent to Initial Advance 14
3.2 Conditions Precedent to all Advances 15
4. CREATION OF SECURITY INTEREST 15
4.1 Grant of Security Interest 15
4.2 Delivery of Additional Documentation Required 15
4.3 Right to Inspect 16
5. REPRESENTATIONS AND WARRANTIES 16
5.1 Due Organization and Qualification 16
5.2 Due Authorization; No Conflict 16
5.3 No Prior Encumbrances 16
5.4 Bona Fide Eligible Accounts 16
5.5 Merchantable Inventory 16
5.6 Name; Locations; Location of Chief Executive Office 16
5.7 Litigation 16
5.8 No Material Adverse Change in Financial Statements 17
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5.9 Solvency 17
5.10 Regulatory Compliance 17
5.11 Environmental Condition 17
5.12 Taxes 18
5.13 Subsidiaries 18
5.14 Government Consents 18
5.15 Full Disclosure 18
6. AFFIRMATIVE COVENANTS 18
6.1 Good Standing 18
6.2 Government Compliance 18
6.3 Financial Statements, Reports, Certificates 18
6.4 Inventory; Returns 19
6.5 Taxes 19
6.6 Insurance 20
6.7 Principal Depository 20
6.8 Quick Ratio; Minimum Cash 20
6.9 Debt-Net Worth Ratio 20
6.10 Maximum Quarterly Losses 20
6.11 Registration of Intellectual Property Rights 21
6.12 Use Of Proceeds 21
6.13 Further Assurances 21
7. NEGATIVE COVENANTS 21
7.1 Dispositions 21
7.2 Change in Business 21
7.3 Mergers or Acquisitions 22
7.4 Indebtedness 22
7.5 Advances to Employees or Shareholders 22
7.6 Encumbrances 22
7.7 Distributions 22
7.8 Investments 22
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7.9 Transactions with Affiliates 23
7.10 Subordinated Debt 23
7.11 Inventory and Equipment 23
7.12 Compliance 23
8. EVENTS OF DEFAULT 23
8.1 Payment Default 23
8.2 Covenant Default 23
8.3 Material Adverse Change 24
8.4 Attachment 24
8.5 Insolvency 24
8.6 Other Agreements 24
8.7 Subordinated Debt 25
8.8 Judgments 25
8.9 Misrepresentations 25
9. BANK'S RIGHTS AND REMEDIES 25
9.1 Rights and Remedies 25
9.2 Power of Attorney 26
9.3 Accounts Collection 27
9.4 Bank Expenses 27
9.5 Bank's Liability for Collateral 27
9.6 Remedies Cumulative 27
9.7 Demand; Protest 27
10. NOTICES 27
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER 28
12. GENERAL PROVISIONS 28
12.1 Successors and Assigns 28
12.2 Indemnification 29
12.3 Time of Essence 29
12.4 Severability of Provisions 29
12.5 Amendments in Writing, Integration 29
iii
12.6 Counterparts 29
12.7 Survival 29
12.8 Confidentiality 29
iv
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the "AGREEMENT") is
entered into as of March 25, 1998, by and between VENTURE BANKING GROUP (f/k/a
Venture Lending), a division of CUPERTINO NATIONAL BANK ("BANK") and SILICON
VALLEY INTERNET PARTNERS ("BORROWER"). This Agreement amends and restates in its
entirety the Loan and Security Agreement by and between the Bank and the
Borrower dated as of September 19, 1996, as amended February 19, May 7, June 6
and July 25, 1997 (the "PREVIOUS AGREEMENT").
RECITALS
Borrower wishes to obtain credit from time to time from Bank, and Bank
desires to extend credit to Borrower. This Agreement sets forth the terms on
which Bank will advance credit to Borrower, and Borrower will repay the amounts
owing to Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"ACCOUNTS" means all presently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
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 Borrower.
"ADVANCE" or "ADVANCES" means an Advance made pursuant to SECTION
2.1 or SECTION 2.4 hereof.
"AFFILIATE" means, with respect to any Person, any Person that owns
or controls directly or indirectly such Person, any Person that controls or is
controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, and Partners.
"BANK EXPENSES" means all reasonable costs or expenses (including
reasonable attorneys' fees and expenses) incurred in connection with the
preparation, negotiation, administration, and enforcement of the Loan Documents;
and Bank's reasonable attorneys' fees and expenses incurred in amending,
enforcing or defending the Loan Documents, whether or not suit is brought.
"BORROWER'S BOOKS" means all of Borrower's books and records
including: ledgers; records concerning Borrower's assets or liabilities, the
Collateral, business operations or
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financial condition; and all computer programs, or tape files, and the equipment
containing such information.
"BORROWING BASE" has the meaning set forth in SECTION 2.1 hereof.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, or
other day on which banks in the State of California are authorized or required
to close.
"CLOSING DATE" means the date of this Agreement.
"CODE" means the California Uniform Commercial Code.
"COLLATERAL" means the property, described on EXHIBIT A attached
hereto.
"COMMITTED EQUIPMENT LINE" means One Million Two Hundred and Fifty
Thousand Dollars ($1,250,000).
"COMMITTED LETTER OF CREDIT SUBFACILITY" means Two Million Dollars
($2,000,000).
"COMMITTED REVOLVING LINE" means Five Million Dollars ($5,000,000).
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct
or indirect liability, contingent or otherwise, of that Person with respect to
(i) any indebtedness, lease, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable; (ii) any obligations with respect to undrawn letters of credit issued
for the account of that Person; and (iii) all obligations arising under any
interest rate, currency or commodity swap agreement, interest rate cap
agreement, interest rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; provided, however, that the term "Contingent
Obligation" shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith; provided, however, that such
amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement.
"CURRENT ASSETS" means, as of any applicable date, all amounts that
should, in accordance with GAAP, be included as current assets on the
consolidated balance sheet of Borrower and its Subsidiaries as at such date.
"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 Borrower and its Subsidiaries, as at such date,
plus, to the extent not already included therein, all outstanding Advances made
under this Agreement, including all Indebtedness that is payable
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upon demand or within one year from the date of determination thereof unless
such Indebtedness is renewable or extendable at the option of Borrower or any
Subsidiary to a date more than one year from the date of determination, but
excluding Subordinated Debt and Eligible Deferred Revenue.
"DAILY BALANCE" means the amount of the respective Obligations owed
at the end of a given day.
"ELIGIBLE ACCOUNTS" means those Accounts that arise in the ordinary
course of Borrower's business that comply with all of Borrower'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 notification thereof to Borrower 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, or, with respect to Fortune 500 Accounts, one
hundred and twenty (120) days;
(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, or, with respect to Fortune 500 Accounts, where the
account debtor has failed to pay within one hundred and twenty (120) days;
(C) Accounts with respect to which the account debtor is an
officer, employee, or agent of Borrower;
(D) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, ▇▇▇▇ and hold,
or retentions or other terms by reason of which the payment by the account
debtor is conditional;
(E) Accounts with respect to which the account debtor is an
Affiliate of Borrower;
(F) Accounts with respect to which the account debtor does not
have its principal place of business in the United States;
(G) Accounts with respect to which the account debtor is the
United States or any department, agency, or instrumentality of the United
States;
(H) Accounts with respect to which Borrower is liable to the
account debtor for goods sold or services rendered by the account debtor to
Borrower, but only to the extent of any amounts owing to the account debtor
against amounts owed to Borrower;
(I) Accounts with respect to an account debtor, including
Subsidiaries and Affiliates, whose total obligations to Borrower exceed thirty
percent (30%) of all Accounts,
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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;
(K) Accounts with respect to which the account debtor is a
distributor, unless pre-approved by Bank in writing; and
(L) Accounts the collection of which Bank reasonably
determines to be doubtful.
"ELIGIBLE DEFERRED REVENUE" means non-refundable subscription
agreements for publication services (not including software sales or licensing).
"EQUIPMENT" means all present and future machinery, equipment,
tenant leasehold improvements, furniture, fixtures, vehicles, tools, parts,
attachments and Software in which Borrower has any interest.
"EQUIPMENT LINE" means the facility under which Borrower may request
Bank to issue cash advances, as specified in SECTION 2.4 hereof.
"EQUIPMENT LINE MATURITY DATE" means September 18, 2001.
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended, and the regulations thereunder.
"FORTUNE 500 ACCOUNTS" means Accounts where the account debtor is a
"FORTUNE 500" company, as specified by Fortune Magazine, and identified as such
in writing by Borrower to Bank prior to or concurrent with Borrower's submission
of its Borrowing Base Certificate (as described in Section 6.3 hereof) for the
month in which such identification is applicable. A list of such Accounts
identified as Fortune 500 Accounts as of the Closing Date is attached hereto as
EXHIBIT G.
"GAAP" means generally accepted accounting principles as in effect
from time to time.
"INDEBTEDNESS" means (a) all indebtedness for borrowed money or the
deferred purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations and (d) all Contingent
Obligations to the extent not otherwise included under the definition of
Indebtedness.
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"INSOLVENCY PROCEEDING" means any proceeding commenced by or against
any person or entity under any provision of the United States Bankruptcy Code,
as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
"INVENTORY" means all present and future inventory in which Borrower
has any interest, including merchandise, raw materials, parts, supplies, packing
and shipping materials, work in process and finished products intended for sale
or lease or to be furnished under a contract of service, of every kind and
description now or at any time hereafter owned by or in the custody or
possession, actual or constructive, of Borrower, including such inventory as is
temporarily out of its 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.
"INVESTMENT" means any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"LETTER OF CREDIT SUBFACILITY" means the facility under which
Borrower may request Bank to issue Letters of Credit, as specified in SECTION
2.2 hereof.
"LIEN" means any mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.
"LOAN DOCUMENTS" means, collectively, this Agreement, any note or
notes executed by Borrower in connection with this Agreement, and any other
agreement entered into between Borrower and Bank in connection with this
Agreement, all as amended or extended from time to time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business operations or condition (financial or otherwise) of Borrower and its
Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents.
"NEGOTIABLE COLLATERAL" means all of Borrower's present and future
letters of credit of which it is a beneficiary, notes, drafts, instruments,
securities, documents of title, and chattel paper.
"OBLIGATIONS" means all debt, principal, interest, Bank Expenses and
other amounts owed to Bank by Borrower pursuant to this Agreement or any other
agreement, whether absolute or contingent, due or to become due, now existing or
hereafter arising, including any interest that accrues after the commencement of
an Insolvency Proceeding and including any
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debt, liability, or obligation owing from Borrower to others that Bank may have
obtained by assignment or otherwise.
"PARTNERS" shall mean Persons with which Borrower organizes as
co-owners to carry on a business for profit.
"PAYMENT DATE" means the eighteenth (18th) calendar day of each
month.
"PERIODIC PAYMENTS" means all installments or similar recurring
payments that Borrower may now or hereafter become obligated to pay to Bank
pursuant to the terms and provisions of any instrument, or agreement now or
hereafter in existence between Borrower and Bank.
"PERMITTED INDEBTEDNESS" means:
(A) Indebtedness of Borrower in favor of Bank arising under
this Agreement or any other Loan Document;
(B) Indebtedness existing on the Closing Date and disclosed in
the Schedule;
(C) Subordinated Debt;
(D) Indebtedness to trade creditors incurred in the ordinary
course of business;
(E) Indebtedness secured by SECTIONS (A) AND (C) of Permitted
Liens, provided that the principal amount thereof is not increased and the terms
thereof are not modified to impose more burdensome terms upon Borrower;
(F) Other Indebtedness of Borrower, not exceeding One Hundred
Thousand Dollars ($100,000) in the aggregate at any one time; and
(G) Extensions, refinancing, modifications, amendments and
restatements of any Permitted Indebtedness, provided that the principal amount
thereof is not increased or the terms thereof are not modified to impose more
burdensome terms upon Borrower.
"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 ▇▇▇▇▇'▇ Investors Service, Inc., and (iii)
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certificates of deposit maturing no more than one (1) year from the date of
investment therein issued by Bank;
(C) Extensions of credit in the nature of accounts receivable,
notes receivable, prepaid royalties and other extensions of credit, arising from
the sale or lease of goods or services to customers or suppliers (not including
Affiliates or Subsidiaries) in the ordinary course of business;
(D) Investments constituting acquisitions permitted under
SECTION 7.3;
(E) Deposit accounts of Borrower otherwise permitted
hereunder;
(F) Other Investments aggregating not in excess of Two Hundred
and Fifty Thousand Dollars ($250,000) at any time;
(G) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers or suppliers and
in settlement of delinquent obligations of, and other disputes with, customers
or suppliers arising in the ordinary course of business; and
(H) Investments in joint ventures consisting of licensing of
technology or the providing of technical support entered into in the ordinary
course of Borrower's business not interfering in any material respect with the
business of Borrower.
"PERMITTED LIENS" means the following:
(A) Any Liens existing on the Closing Date and disclosed in
the Schedule or arising under this Agreement or the other Loan Documents;
(B) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over any of Bank's
security interests;
(C) Liens on Equipment leased by Borrower or any Subsidiary
pursuant to an operating or capital lease in the ordinary course of business
(including proceeds thereof and accessions thereto) incurred solely for the
purpose of financing the lease of such Equipment (including Liens pursuant to
leases permitted pursuant to SECTION 7.1 hereof and Liens referred to in UCC
financing statements regarding leases permitted by the Agreement), provided that
the lien is confined solely to the property so acquired and improvements
thereon, and the proceed of such equipment;
(D) licenses and sublicenses granted to others in the ordinary
course of Borrower's business not interfering in any material respect with the
business of Borrower;
(E) Liens arising from judgments, decrees or attachments to
the extent and only so long as such judgment, decree or attachment has not
caused or resulted in an Event of Default;
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(F) Easements, reservations, rights-of-way, restrictions,
minor defects or irregularities in title or other similar charges or
encumbrances affecting real property in a manner not materially or adversely
affecting the value or use of such property or resulting in a Material Adverse
Effect;
(G) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payments of customs or duties in connection with
the importation or exportation of goods;
(H) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of setoff or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution;
(I) Liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by Liens of the type described in
clauses (a), (c) and (d) and above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase;
(J) Liens arising by operation of law or regulation and
securing obligations not yet due; and
(K) Liens securing Subordinated Debt and other Liens
subordinated to the Lien of Bank on terms and conditions reasonably satisfactory
to Bank.
"PERSON" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.
"PRIME RATE" means the variable rate of interest, per annum, most
recently published in the Money Rate Section of the West Coast Edition of The
Wall Street Journal, as the "prime rate," whether or not such rate is the lowest
rate available from Bank. When a range of rates is published, the higher of the
rates shall apply at the time the rate is changed.
"QUICK ASSETS" means, at any date as of which the amount thereof
shall be determined, the consolidated cash, cash-equivalents, accounts
receivable and investments, with maturities not to exceed 90 days, of Borrower
determined in accordance with GAAP.
"RESPONSIBLE OFFICER" means each of the Chief Executive Officer, the
Chief Financial Officer and the Controller of Borrower.
"REVOLVING FACILITY" means the facility under which Borrower may
request Bank to issue cash advances, as specified in SECTION 2.1 hereof.
"REVOLVING FACILITY MATURITY DATE" means March 24, 1999.
"SCHEDULE" means the schedule of exceptions attached hereto, if any.
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"SOFTWARE" means the programs, routines, and symbolic languages that
control the operations of computer hardware.
"SUBORDINATED DEBT" means any debt incurred by Borrower that is
subordinated to the debt owing by Borrower to Bank on terms reasonably
acceptable to Bank (and identified as being such by Borrower and Bank).
"SUBSIDIARY" means any corporation or partnership in which (i) any
general partnership interest or (ii) more than 50% of the stock of which by the
terms thereof ordinary voting power to elect the Board of Directors, managers or
trustees of the entity shall, at the time as of which any determination is being
made, be owned by Borrower, either directly or through an Affiliate.
"TANGIBLE NET WORTH" means at any date as of which the amount
thereof shall be determined, the consolidated total assets of Borrower 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; plus, deferred revenue,
including without limitation, Eligible Deferred Revenue.
"TOTAL LIABILITIES" means at any date as of which the amount thereof
shall be determined, all obligations that should, in accordance with GAAP, be
classified as liabilities on the consolidated balance sheet of Borrower,
including in any event all Indebtedness, but specifically excluding Subordinated
Debt and Eligible Deferred Revenue.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP and all calculations made
hereunder shall be made in accordance with GAAP. When used herein, the terms
"financial statements" shall include the notes and schedules thereto.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVING FACILITY ADVANCES. Subject to and upon the terms and
conditions of this Agreement, Bank agrees to make Advances to Borrower under
this Revolving Facility in an aggregate amount not to exceed the lesser of (i)
the Committed Revolving Line or (ii) the Borrowing Base, minus in each case the
amount of all outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit). For purposes of this Agreement, "BORROWING BASE" shall mean
an amount equal to (i) eighty percent (80%) of Eligible Accounts (the "ACCOUNTS
SUBLIMIT") plus (ii) One Million Dollars ($1,000,000) (the "OVERADVANCE
SUBLIMIT"). Subject to the terms and conditions of this Agreement, amounts
borrowed pursuant to this SECTION 2.1 may be repaid and reborrowed at any time
during the term of this Agreement.
Whenever Borrower desires an Advance, Borrower will notify Bank by
facsimile transmission or telephone no later than 3:00 p.m. California time, on
the Business Day that the Advance is to be made. Each such telephone
notification shall be promptly confirmed by a Payment/Advance Form in
substantially the form of EXHIBIT B hereto. Bank is authorized to
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make Advances under this Agreement, based upon instructions received from a
Responsible Officer, or without instructions if in Bank's discretion such
Advances are necessary, to meet Obligations which have become due and remain
unpaid. Bank shall be entitled to rely on any telephonic notice given by a
person who Bank reasonably believes to be a Responsible Officer, and Borrower
shall indemnify and hold Bank harmless for any damages or loss suffered by Bank
as a result of such reliance. Bank will credit the amount of Advances made under
this SECTION 2.1 to Borrower's deposit account.
The Revolving Facility shall terminate on the Revolving Facility Maturity
Date, at which time all Advances under this SECTION 2.1 and other amounts due
under this Agreement shall be immediately due and payable.
2.2 LETTERS OF CREDIT SUBFACILITY.
(A) Subject to the terms and conditions of this Agreement,
Bank agrees to issue or cause to be issued letters of credit ("LETTERS OF
CREDIT") for the account of Borrower in an aggregate face amount not to exceed
(i) the lesser of the Committed Revolving Line or the Borrowing Base minus (ii)
the then outstanding principal amount of Advances under the Revolving Facility
provided that the face amount of outstanding Letters of Credit (including drawn
but unreimbursed Letters of Credit) shall not in any case exceed the Committed
Letter of Credit Subfacility). Each such Letter of Credit shall have an
expiration date no later than sixty (60) days after the Revolving Facility
Maturity Date provided that Borrower's letter of credit reimbursement obligation
to Bank and any other Obligations shall be secured by cash or cash equivalents
on terms acceptable to Bank at any time after the Revolving Facility Maturity
Date if such Revolving Facility Maturity Date is not extended by Bank. All such
letters of credit shall be, in form and substance, acceptable to Bank in its
sole discretion and shall be subject to the terms and conditions of Bank's form
of application and letter of credit agreement
(B) All amounts actually paid by Bank in respect to a Letter
of Credit may, at the option of the Bank, when paid, constitute an Advance under
the Revolving Facility, otherwise Borrower shall immediately reimburse Bank for
such amounts.
(C) The Obligation of Borrower to reimburse Bank for drawings
made under Letters of Credit shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement
and such Letters of Credit under all circumstances whatsoever. Borrower shall
indemnify, defend and hold Bank harmless from any loss, cost, expense or
liability, including, without limitation, reasonable attorneys' fees, arising
out of or in connection with any letters of credit.
2.3 LETTER OF CREDIT REIMBURSEMENT; RESERVE.
(A) Borrower may request that Bank issue a letter of credit
payable in a currency other than United States Dollars. If a demand for payment
is made under any such letter of credit, Bank shall treat such demand as an
advance to Borrower of the equivalent of the amount thereof (plus cable charges)
in United States currency at the then prevailing rate of exchange in San
Francisco, California, for sales of that other currency for cable transfer to
the country of which it is the currency.
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(B) Upon the issuance of any letter of credit payable in a
currency other than United States Dollars, Bank shall create a reserve under the
Revolving Facility for letters of credit against fluctuations in currency
exchange rates, in an amount equal to twenty percent (20%) of the face amount of
such letter of credit. The amount of such reserve may be amended by Bank from
time to time to account for fluctuations in the exchange rate. The availability
of funds under the Revolving Facility shall be reduced by the amount of such
reserve for so long as such letter of credit remains outstanding.
2.4 EQUIPMENT ADVANCES. Borrower may from time to time until
September 18, 1998 (the "EQUIPMENT AVAILABILITY END DATE") request Advances
(each an "EQUIPMENT ADVANCE" and collectively, the "EQUIPMENT ADVANCES") from
Bank in an aggregate amount not to exceed the Committed Equipment Line. To
evidence each Equipment Advance, Borrower shall deliver to Bank, at the time of
each Equipment Advance request, an invoice for the Equipment to be purchased.
Total Equipment Advances for the purchase of Software shall not exceed Two
Hundred and Fifty Thousand Dollars ($250,000). The Equipment Advances shall be
used only to purchase Equipment and shall not exceed One Hundred Percent (100%)
of the invoice amount of such Equipment approved from time to time by Bank,
excluding taxes, shipping, warranty charges, freight discounts and installation
expense.
It is understood by Bank and Borrower that, as of the Closing Date,
Equipment Advances of One Million Forty-Five Thousand eight Hundred Seventy
Eight Dollars and Sixty Cents ($1,045,878.60) have been made under the Committed
Equipment Line. Of such amount, Equipment Advances of Three Hundred Twenty-Five
Thousand Four Hundred Dollars and Eighty-Seven Cents ($325,400.87) was
outstanding on September 18, 1997 and is being paid to Bank by Borrower in
thirty-six equal monthly installments of principal plus accrued interest (at the
rate specified in Section 2.6(a)) which began on October 18, 1997. With respect
to the remainder of such Equipment Advances made prior to the Closing Date and
any additional Equipment Advances made after the Closing Date, interest shall
accrue from the date of each Equipment Advance at the rate specified in SECTION
2.6(A), and shall be payable monthly for each month through the Equipment
Availability End Date and such Equipment Advances that are outstanding on the
Equipment Availability End Date will be payable in thirty-six (36) equal monthly
installments of principal plus accrued interest, beginning on the Payment Date
of the month following such date.
When Borrower desires to obtain an Equipment Advance, Borrower shall
notify Bank (which notice shall be irrevocable) by facsimile transmission to be
received no later than 3:00 p.m. Pacific time one (1) Business Day before the
day on which the Equipment Advance is to be made. Such notice shall be
substantially in the form of EXHIBIT B. The notice shall be signed by a
Responsible Officer and include a copy of the invoice for the Equipment and/or
Software to be financed.
2.5 OVERADVANCES. If, the amount of Obligations owed by Borrower to
Bank pursuant to SECTION 2.1 of this Agreement is greater than the lesser of (i)
the Committed Revolving Line or (ii) the Borrowing Base, Borrower shall
immediately pay to Bank, in cash, the amount of such excess.
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2.6 INTEREST RATES, PAYMENTS, AND CALCULATIONS.
(A) INTEREST RATE. Except as set forth in SECTION 2.6(B), (i)
any Advances under SECTION 2.1 subject to the Accounts Sublimit shall bear
interest, on the average Daily Balance, at a rate equal to one-half (0.50)
percentage point above the Prime Rate or (ii) any Advances under SECTION 2.1
subject to the Overadvance Sublimit shall bear interest, on the average Daily
Balance, at a rate equal to one (1.0) percentage point above the Prime Rate;
whether an Advance is considered under (i) or (ii) above shall be based on the
most recent Borrowing Base Certificate provided to Bank by Borrower. Except as
set forth in SECTION 2.6(B), any Equipment Advances under SECTION 2.4 shall bear
interest, on the average Daily Balance, at a rate equal to one (1.0) percentage
point above the Prime Rate.
(B) DEFAULT RATE. All Obligations shall bear interest, from
and during the occurrence of an Event of Default (and written notice thereof,
except that no notice shall be required for an Event of Default under SECTION
8.5), at a rate equal to five (5) percentage points above the interest rate
applicable immediately prior to the occurrence of the Event of Default.
(C) PAYMENTS. Interest hereunder shall be due and payable on
the Payment Date of each month during the term hereof. Bank shall, at its
option, charge such interest, all Bank Expenses, and all Periodic Payments
against any of Borrower's deposit accounts or against the Committed Revolving
Line, in which case those amounts shall thereafter accrue interest at the rate
then applicable hereunder. Borrower hereby authorizes Bank to debit any of its
deposit accounts with Bank for payment of any amounts owing by Borrower to Bank.
Bank will notify Borrower of all debits which Bank makes against Borrower's
accounts. Any such debits shall in no way be deemed a set-off. Any interest not
paid when due shall be compounded by becoming a part of the Obligations, and
such interest shall thereafter accrue interest at the rate then applicable
hereunder.
(D) COMPUTATION. In the event the Prime Rate is changed from
time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased effective as of 12:01 a.m. on the day the Prime Rate is
changed, by an amount equal to such change in the Prime Rate. All interest
chargeable under the Loan Documents shall be computed on the basis of a three
hundred sixty (360) day year for the actual number of days elapsed.
2.7 CREDITING PAYMENTS. Prior to the occurrence of an Event of
Default, Bank shall credit a wire transfer of funds, check or other item of
payment to such deposit account or Obligation as Borrower specifies. Unless
otherwise agreed in writing by Bank, after the occurrence and during the
continuance of an Event of Default, the receipt by Bank of any wire transfer of
funds, check, or other item of payment shall be immediately applied to
conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary contained herein, any wire
transfer or payment received by Bank after 12:00 noon California time shall be
deemed to have been received by Bank as of the opening of business on the
immediately following Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such
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payment shall instead be due on the next Business Day, and additional fees or
interest, as the case may be, shall accrue and be payable for the period of such
extension.
2.8 FEES. Borrower shall pay to Bank the following:
(A) FACILITY FEE. Loan. A Facility Fee equal to $12,500 shall
be payable, fully earned and nonrefundable at or prior to the closing Date. All
fees paid to Bank by Borrower prior to the Closing Date pursuant to the Previous
Agreement are fully earned and non-refundable.
(B) FINANCIAL EXAMINATION AND APPRAISAL FEES. Bank's customary
fees and out-of-pocket expenses for Bank's audits of Borrower's Accounts, and
for each appraisal of Collateral and financial analysis and examination of
Borrower performed from time to time by Bank or its agents; and
(C) BANK EXPENSES. Upon the date hereof, all Bank Expenses
incurred through the Closing Date, including reasonable attorneys' fees and
expenses, and, after the date hereof, all Bank Expenses, including reasonable
attorneys' fees and expenses, as and when they become due.
2.9 ADDITIONAL COSTS. In case any change in 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), in each case
after the date of this Agreement:
(A) Subjects Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by Borrower or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of Bank 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, Bank; or
(C) imposes upon Bank 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 Bank, reduce
the income receivable by Bank or impose any expense upon Bank with respect to
any loans, Bank shall notify Borrower thereof. Borrower agrees to pay to Bank
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 Bank of a statement of the amount and setting forth Bank's
calculation thereof, all in reasonable detail, which statement shall be deemed
true and correct absent manifest error.
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2.10 TERM. This Agreement shall become effective on the Closing Date
and, subject to SECTION 12.7, shall continue in full force and effect for a term
ending on the later of the Revolving Facility Maturity Date or the Equipment
Line Maturity Date. Notwithstanding the foregoing, Bank shall have the right to
terminate its obligation to make Advances under this Agreement immediately and
without notice upon the occurrence and during the continuance of an Event of
Default. Notwithstanding termination, Bank's Lien on the Collateral shall remain
in effect for so long as any Obligations are outstanding.
3. CONDITIONS OF LOANS.
3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of Bank
to make the initial Advance is subject to the condition precedent that Bank
shall have received, in form and substance satisfactory to Bank, the following:
(A) this Agreement;
(B) a certificate of the Secretary of Borrower with respect to
incumbency and resolutions authorizing the execution and delivery of this
Agreement;
(C) certificate of the Secretary of the States of California
and Massachusetts as to Borrower's standing and qualification to do business;
(D) certified copies of Borrower's articles of incorporation
and bylaws;
(E) a promissory note for the Committed Revolving Line in
substantially the form of EXHIBIT E hereto;
(F) a promissory note for the Committed Equipment Line in
substantially the form of EXHIBIT F hereto;
(G) a collateral assignment, patent mortgage and security
agreement was executed and delivered under the Previous Agreement;
(H) a letter pursuant to the collateral assignment, patent
mortgage and security agreement;
(I) financing statements (Forms ▇▇▇-▇, ▇ ▇▇ ▇ ▇▇▇ ▇▇, ▇▇, ▇▇
and NY) as determined necessary or desirable by Bank;
(J) warrant to purchase stock;
(K) the insurance certificate was executed and delivered under
the Previous Agreement;
(L) payment of the fees and Bank Expenses then due specified
in SECTION 2.8 hereof; and
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(M) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.
3.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of Bank to
make each Advance, including the initial Advance, is further subject to the
following conditions:
(A) timely receipt by Bank of the Payment/Advance Form as
provided in SECTION 2.1 or 2.4; and
(B) the representations and warranties contained in SECTION 5
shall be true and correct in all material respects on and as of the date of such
Payment/Advance Form and on the effective date of each Advance as though made at
and as of each such date, and no Event of Default shall have occurred and be
continuing, or would result from such Advance. The making of each Advance shall
be deemed to be a representation and warranty by Borrower on the date of such
Advance as to the accuracy of the facts referred to in this SECTION 3.2(B).
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower grants and pledges to Bank
a continuing security interest in all presently existing and hereafter acquired
or arising Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents. Except as set forth in the
Schedule, such security interest constitutes a valid, first priority security
interest in the presently existing Collateral, and will constitute a valid,
first priority security interest in Collateral acquired after the date hereof.
Notwithstanding any other provision in this SECTION 4.1, the term "Collateral"
shall not include any rights which are now or hereafter held by Borrower as
licensee to the extent, and solely to the extent, that such rights are not
assignable or capable of being encumbered as a matter of law or under written
terms of the license or other agreement applicable thereto (but solely to the
extent that any such restriction shall be enforceable against Borrower under
applicable law) and, provided further, that upon the elimination of any such
disability, such grant of a security interest shall automatically extend to such
rights.
4.2 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Borrower shall
from time to time execute and deliver to Bank, at the request of Bank, all
Negotiable Collateral, all financing statements and other documents that Bank
may reasonably request, in form satisfactory to Bank, to perfect and continue
perfected Bank's security interests in the Collateral and in order to fully
consummate all of the transactions contemplated under the Loan Documents.
4.3 RIGHT TO INSPECT. Bank (through any of its officers, employees,
or agents) shall have the right, upon reasonable prior notice, from time to time
during Borrower's usual business hours, to inspect Borrower's Books and to make
copies thereof and to check, test, and appraise the Collateral in order to
verify Borrower's financial condition or the amount, condition of, or any other
matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants as
follows:
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5.1 DUE ORGANIZATION AND QUALIFICATION. Borrower and each Subsidiary
is a corporation duly existing and in good standing under the laws of its state
of incorporation and qualified and licensed to do business in, and is in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be so qualified, except for states as to which any
failure to so qualify would not have a Material Adverse Effect.
5.2 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Articles of Incorporation or Bylaws, nor will
they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound. Borrower is not in default
under any agreement to which it is a party or by which it is bound, which
default could have a Material Adverse Effect.
5.3 NO PRIOR ENCUMBRANCES. Borrower has good and indefeasible title
to the Collateral, free and clear of Liens, except for Permitted Liens.
5.4 BONA FIDE ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide
existing obligations. The property giving rise to such Eligible Accounts has
been delivered to the account debtor or to the account debtor's agent for
immediate shipment to and unconditional acceptance by the account debtor.
Borrower has not received notice of actual or imminent Insolvency Proceeding of
any account debtor that is included in any Borrowing Base Certificate as an
Eligible Account.
5.5 MERCHANTABLE INVENTORY. All Inventory is in all material
respects of good and marketable quality, free from all material defects.
5.6 NAME; LOCATIONS; LOCATION OF CHIEF EXECUTIVE OFFICE. Except as
disclosed in the Schedule, Borrower has not done business under any name other
than as set forth on the signature page hereof or at any location other than
that specified in SECTION 10 hereof. The chief executive office of Borrower is
located at the address indicated in SECTION 10 hereof.
5.7 LITIGATION. Except as set forth in the Schedule, there are no
actions or proceedings pending by or against Borrower or any Subsidiary before
any court or administrative agency in which an adverse decision could have a
Material Adverse Effect or a material adverse effect on Borrower's interest or
Bank's security interest in the Collateral. Borrower does not have knowledge of
any such pending or threatened actions or proceedings.
5.8 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All
consolidated financial statements related to Borrower and any Subsidiary that
have been delivered by Borrower to Bank fairly present in all material respects
Borrower's consolidated financial condition as of the date thereof and
Borrower's consolidated results of operations for the period then ended. There
has not been a material adverse change in the consolidated financial condition
of Borrower since the date of the most recent of such financial statements
submitted to Bank.
5.9 SOLVENCY. Borrower is solvent and able to pay its debts
(including trade debts) as they mature.
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5.10 REGULATORY COMPLIANCE. Borrower and each Subsidiary has met the
minimum funding requirements of ERISA with respect to any employee benefit plans
subject to ERISA. No event has occurred resulting from Borrower's failure to
comply with ERISA that is reasonably likely to result in Borrower's incurring
any liability that could have a Material Adverse Effect. Borrower is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940. Borrower is not engaged
principally, or as one of the important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations G, T and U of the Board of Governors of the Federal
Reserve System). Borrower has complied with all the provisions of the Federal
Fair Labor Standards Act. Borrower has not violated any statutes, laws,
ordinances or rules applicable to it, violation of which could have a Material
Adverse Effect.
5.11 ENVIRONMENTAL CONDITION. None of Borrower's or any Subsidiary's
properties or assets has ever been used by Borrower or any Subsidiary. or, to
the best of Borrower's knowledge, by previous owners or operators, in the
disposal of, or to produce, store, handle, treat, release, or transport, any
hazardous waste or hazardous substance other than in accordance with applicable
law; to the best of Borrower's knowledge, none of Borrower's properties or
assets has ever been designated or identified in any manner pursuant to any
environmental protection statute as a hazardous waste or hazardous substance
disposal site, or a candidate for closure pursuant to any environmental
protection statute; no lien arising under any environmental protection statute
has attached to any revenues or to any real or personal property owned by
Borrower or any Subsidiary; and neither Borrower nor any Subsidiary has received
a summons, citation, notice, or directive from the Environmental Protection
Agency or any other federal, state or other governmental agency concerning any
action or omission by Borrower or any Subsidiary resulting in the releasing, or
otherwise disposing of hazardous waste or hazardous substances into the
environment.
5.12 TAXES. Borrower and each Subsidiary has filed or caused to be
filed all tax returns required to be filed, and has paid, or has made adequate
provision for the payment of, all taxes reflected therein.
5.13 SUBSIDIARIES. Borrower does not own any stock, partnership
interest or other equity securities of any Person, except for Permitted
Investments.
5.14 GOVERNMENT CONSENTS. Borrower and each Subsidiary has obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower's business as currently conducted,
except where any failure to do so would not reasonably be expected to have a
Material Adverse Effect.
5.15 FULL DISCLOSURE. No representation, warranty or other statement
made by Borrower in any certificate or written statement furnished to Bank
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower are not to be viewed as facts and that actual
17
results during the period or periods covered by any such projections and
forecasts may differ from the projected or forecasted results).
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Bank may have any commitment to make
an Advance hereunder, Borrower shall do all of the following:
6.1 GOOD STANDING. Borrower shall maintain its and each of its
Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could have a Material Adverse Effect. Borrower shall
maintain, and shall cause each of its Subsidiaries to maintain, to the extent
consistent with prudent management of Borrower's business, in force all
licenses, approvals and agreements, the loss of which could have a Material
Adverse Effect.
6.2 GOVERNMENT COMPLIANCE. Borrower shall meet, and shall cause each
Subsidiary to meet, the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which could have a Material Adverse Effect or a material adverse effect on the
Collateral or the priority of Bank's Lien on the Collateral.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower shall
deliver to Bank: (a) as soon as available, but in any event within forty-five
(45) days after the end of each month, a company prepared consolidated balance
sheet and income statement covering Borrower's consolidated operations during
such period, certified by a Responsible Officer; (b) as soon as available, but
in any event within one hundred twenty (120) days after the end of Borrower's
fiscal year, audited consolidated financial statements of Borrower prepared in
accordance with GAAP, consistently applied, together with an opinion on such
financial statements of an independent certified public accounting firm
reasonably acceptable to Bank; (c) within five (5) days upon becoming available,
copies of all statements, reports and notices sent or made available generally
by Borrower to its security holders or to any holders of Subordinated Debt and
all reports on Form 10-K and 10-Q filed with the Securities and Exchange
Commission; (d) promptly upon receipt of notice thereof, a report of any legal
actions pending or threatened against Borrower or any Subsidiary that could
result in damages or costs to Borrower or any Subsidiary of Two Hundred Thousand
Dollars ($200,000) or more; and (e) such budgets, sales projections, operating
plans or other financial information as Bank may reasonably request from time to
time.
Within forty-five (45) days after the last day of each month, Borrower
shall deliver to Bank a Borrowing Base Certificate signed by a Responsible
Officer in substantially the form of EXHIBIT C hereto and aged listings of
accounts receivable and accounts payable.
Notwithstanding any provision of this Agreement to the contrary, Borrower
shall not be required to disclose any document, information or other matter that
the disclosure of which to Bank, or their designated representative, is then
prohibited by law.
18
Borrower shall deliver to Bank a Compliance Certificate signed by a
Responsible Officer in substantially the form of EXHIBIT D hereto within
forty-five (45) days after the end of each month.
Bank shall have a right from time to time hereafter to audit Borrower's
Accounts at Borrower's expense, provided that such audits will be conducted no
more often than every twelve (12) months unless an Event of Default has occurred
and is continuing.
The statements, reports and certificates required under the SECTION 6.3
include reports for the reporting periods ending prior to the Closing Date which
were required under the Previous Agreement and had not been delivered to Bank as
of the Closing Date.
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 Fifty
Thousand Dollars ($50,000).
6.5 TAXES. Borrower shall make, and shall cause each Subsidiary to
make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to Bank, on demand, appropriate certificates attesting to
the payment or deposit thereof; and Borrower will make, and will cause each
Subsidiary to make, timely payment or deposit of all material tax payments and
withholding taxes required of it by applicable laws, including, but not limited
to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, and federal income taxes, and will, upon request, furnish Bank with proof
satisfactory to Bank indicating that Borrower or a Subsidiary has made such
payments or deposits; provided that Borrower or a Subsidiary need not make any
payment if the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP)
by Borrower.
6.6 INSURANCE.
(A) Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain insurance
relating to Borrower's ownership and use of the Collateral in amounts and of a
type that are customary to businesses similar to Borrower's.
(B) All such policies of insurance shall be in such form, with
such companies, and in such amounts as reasonably satisfactory, to Bank. All
such policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Bank, showing Bank as an additional loss
payee thereof and all liability insurance policies shall show the Bank as an
additional insured, and shall specify that the insurer must give at least twenty
(20) days notice to Bank before canceling its policy for any reason. Upon Bank's
request,
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Borrower shall deliver to Bank certified copies of such policies of insurance
and evidence of the payments of all premiums therefor. All proceeds payable
under any such policy, shall, at the option of Bank, be payable to Bank to be
applied on account of the Obligations.
6.7 PRINCIPAL DEPOSITORY. Borrower shall maintain its principal
depository, operating and investment accounts with Bank.
6.8 QUICK RATIO; MINIMUM CASH. Beginning with the report for the
period ending February 28, 1998, Borrower shall maintain, as of the last day of
each fiscal month, either (i) a ratio of Quick Assets to Current Liabilities of
at least 1.25 to 1.00 or (ii) cash and cash equivalents of not less than One
Million Five Hundred Thousand Dollars ($1,500,000).
6.9 DEBT-NET WORTH RATIO. Beginning with the report for the period
ending February 28, 1998, Borrower shall maintain, as of the last day of each
fiscal month, a ratio of Total Liabilities to Tangible Net Worth of not more
than 2.0 to 1.0. From and after September 30, 1998, Borrower shall maintain, as
of the last day of each fiscal month, a ratio of Total Liabilities to Tangible
Net Worth of not more than 5.0 to 1.0.
6.10 MAXIMUM QUARTERLY LOSSES. Borrower may suffer a loss not to
exceed Two Million Dollars ($2,000,000) for the fiscal quarter ending March 31,
1998; One Million Five Hundred Thousand Dollars ($1,500,000) for the fiscal
quarter ending June 30, 1998; One Million Two Hundred Thousand Dollars
($1,200,000) for the fiscal quarter ending September 30, 1998; and Five Hundred
Thousand Dollars ($500,000) for the fiscal quarter ending December 31, 1998.
6.11 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS. 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 Exhibits A,
B and C to the Collateral Assignment, Patent Mortgage and Security Agreement by
Borrower in favor of Bank dated as of September 19, 1996 within fifteen (15)
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 Exhibits A, B and C. Borrower shall execute and deliver
such additional instruments and documents from time to time as Bank shall
reasonably request to perfect Bank's security interest in such additional
intellectual property rights.
6.12 USE OF PROCEEDS. Borrower shall use the Advances under the
Committed Revolving Line for working capital and for operating expenses only.
Borrower shall use the Advances under the Committed Equipment Line for the
acquisition of Equipment only.
6.13 FURTHER ASSURANCES. At any time and from time to time Borrower
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Bank to effect the purposes of this Agreement.
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7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the outstanding Obligations or
for so long as Bank may have any commitment to make any Advances, Borrower will
not do any of the following:
7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise dispose
of (collectively, a "TRANSFER"), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, other than: (i) Transfers of
Inventory in the ordinary course of business; (ii) Transfers of non-exclusive
licenses or exclusive licenses and similar arrangements for the use of the
property of Borrower or its Subsidiaries within certain geographic regions;
(iii) Transfers of worn-out or obsolete Equipment; (iv) Transfers which
constitute liquidations of Investments permitted under SECTIONS 7.3 OR 7.8; or
(v) Transfers of software and copyrights not fundamental to the operation of
Borrower's business.
7.2 CHANGE IN BUSINESS. Engage in any business, or permit any of its
Subsidiaries to engage in any business, other than the businesses currently
engaged in by Borrower and any business substantially similar or related thereto
(or incidental thereto), or suffer a material change in Borrower's ownership.
Borrower will not, without thirty (30) days prior written notification to Bank,
relocate its chief executive office.
7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any of
its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person unless the
Borrower, or its Subsidiary, is the surviving entity following such merger or
acquisition and if such merger, consolidation or acquisition does not result in
a Material Adverse Effect or the purchase price of such acquisition does not
exceed in the aggregate $500,000 plus net proceeds received by Borrower after
the date hereof from the sale of its equity securities or Subordinated Debt.
7.4 INDEBTEDNESS. Create, incur, assume or be or remain liable with
respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.
7.5 ADVANCES TO EMPLOYEES OR SHAREHOLDERS. Advance by way of
payment, credit or other manner, any unearned funds to employees or shareholders
of Borrower, except for advances consisting of (i) travel advances, employee
relocation loans and other employee loans and advances in the ordinary course of
Borrower's business, (ii) advance payments to sales personnel based on future
anticipated commissions or sales estimates, and (iii) loans to employees,
officers or directors relating to the purchase of equity securities of Borrower
or its Subsidiaries pursuant to employee stock purchase plans or agreements
approved by Borrower's Board of Directors, and the aggregate of all advances
outstanding at any one time under clauses (i), (ii), or (iii) above shall not
exceed the following amounts: for the period from the date hereof until June 30,
1998, $600,000 and thereafter, $900,000.
7.6 ENCUMBRANCES. Create, incur, assume or suffer to exist any Lien
with respect to any of its property, or assign or otherwise convey any right to
receive income,
21
including the sale of any Accounts, or permit any of its Subsidiaries so to do,
except for Permitted Liens.
7.7 DISTRIBUTIONS. Pay any cash dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock; provided, for so long as no Event of Default has occurred
and is continuing, Company may redeem or repurchase its securities in an amount
in any fiscal year not exceeding $50,000 in connection with any agreement
between Company and any officer, director or employee of Company wherein Company
is obligated or entitled to repurchase from such officer, director or employee
shares of equity securities of Company upon such person's termination of
employment or services or other event.
7.8 INVESTMENTS. Directly or indirectly acquire or own, or make any
Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments.
7.9 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into
or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a nonaffiliated Person.
7.10 SUBORDINATED DEBT. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Bank's prior written consent.
7.11 INVENTORY AND EQUIPMENT. Store the Inventory with a bailee,
warehouseman, or similar party unless Bank has received a pledge of the
warehouse receipt covering such Inventory. Except for Inventory sold in the
ordinary course of business and except for such other locations as Bank may
approve in writing, Borrower shall keep the Inventory and Equipment and
Borrower's Books relating thereto only at the locations previously discussed on
the Schedule or set forth in SECTION 10 hereof or on the Schedule and such other
locations of which Borrower gives Bank prior written notice and as to which
Borrower signs and files a financing statement where needed to perfect Bank's
security interest.
7.12 COMPLIANCE. Become an "investment company" controlled by an
"investment company," within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose. Fail
to meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur, fail to comply with the
Federal Fair Labor Standards Act or violate any law or regulation, which
violation could have a Material Adverse Effect or a material adverse effect on
the Collateral or the priority of Bank's Lien on the Collateral, or permit any
of its Subsidiaries to do any of the foregoing.
8. EVENTS OF DEFAULT.
22
Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement:
8.1 PAYMENT DEFAULT. If Borrower fails to pay the principal of, or
any interest on, any Advances when due and payable; or fails to pay any portion
of any other Obligations not constituting such principal or interest, including
without limitation Bank Expenses, within thirty (30) days of receipt by Borrower
of an invoice for such other Obligations;
8.2 COVENANT DEFAULT. If Borrower fails to perform any obligation
under SECTION 6.6, 6.7, 6.8, 6.9, 6.10 OR 6.11 or violates any of the covenants
contained in ARTICLE 7 of this Agreement, or fails or neglects to perform, keep,
or observe any other material term, provision, condition, covenant, or agreement
contained in this Agreement, in any of the Loan Documents, or in any other
present or future agreement between Borrower and Bank and as to any default
under such other term, provision, condition, covenant or agreement that can be
cured, has failed to cure such default within ten (10) days after Borrower
receives notice thereof or any officer of Borrower becomes aware thereof;
provided, however, that if the default cannot by its nature be cured within the
ten (10) day period or cannot after diligent attempts by Borrower be cured
within such ten (10) day period, and such default is likely to be cured within a
reasonable time, then Borrower shall have an additional reasonable period (which
shall not in any case exceed thirty, (30) days) to attempt to cure such default,
and within such reasonable time period the failure to have cured such default
shall not be deemed an Event of Default (provided that no Advances will be
required to be made during such cure period);
8.3 MATERIAL ADVERSE CHANGE. If there occurs a material adverse
change in Borrower's business or financial condition, or if there is a material
impairment of the ability of Borrower to repay any portion of the Obligations or
a material impairment of the value or priority of Bank's security interests in
the Collateral;
8.4 ATTACHMENT. If any material portion of Borrower's assets is
attached, seized, 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 or rescinded within twenty (20) 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 becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment 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 twenty (20)
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);
8.5 INSOLVENCY. If Borrower becomes insolvent, or if an Insolvency
Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced
against
23
Borrower and is not dismissed or stayed within twenty (20) days (provided that
no Advances will be made prior to the dismissal of such Insolvency Proceeding);
8.6 OTHER AGREEMENTS. If there is a default in any agreement to
which Borrower is a party with a third party or parties resulting in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of One Hundred Thousand
Dollars ($100,000) or that could have a Material Adverse Effect;
8.7 SUBORDINATED DEBT. If Borrower makes any payment on account of
Subordinated Debt, except to the extent such payment is allowed under any
subordination agreement entered into with Bank;
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 Thousand
Dollars ($100,000) shall be rendered against Borrower and shall remain
unsatisfied and unseated for a period of ten (10) days (provided that no
Advances will be made prior to the satisfaction or stay of such judgment); or
8.9 MISREPRESENTATIONS. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Bank by any Responsible
Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document.
9. BANK'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence and during the
continuance of an Event of Default, Bank may, at its election, without notice of
its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:
(A) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
SECTION 8.5 all Obligations shall become immediately due and payable without any
action by Bank);
(B) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement or under any other agreement between
Borrower and Bank;
(C) Settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that Bank reasonably
considers advisable;
(D) Without notice to or demand upon Borrower, make such
payments and do such acts as Bank considers necessary or reasonable to protect
its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Bank so requires, and to make the Collateral available to Bank as
Bank may designate. Borrower authorizes Bank to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Bank's determination appears to be prior or superior to
its security interest and to pay all
24
expenses incurred in connection therewith. With respect to any of Borrower's
owned premises, Borrower hereby grants Bank a license to enter into possession
of such premises and to occupy the same, without charge, for up to one hundred
twenty (120) days in order to exercise any of Bank's rights or remedies provided
herein, at law, in equity, or otherwise;
(E) Without notice to Borrower set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by Bank, or
(ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Bank;
(F) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Bank is hereby granted a license or other right, solely
pursuant to the provisions of this SECTION 9.1, to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this SECTION 9.1, Borrower's
rights under all licenses and all franchise agreements shall inure to Bank's
benefit;
(G) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrower's premises) as Bank
determines is commercially reasonable, and apply any proceeds to the Obligations
in whatever manner or order Bank deems appropriate;
(H) Bank may credit bid and purchase at any public sale;
(I) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower; and
(J) Demand that Borrower (i) deposit cash with Bank in an
amount equal to the amount of any Letters of Credit remaining undrawn, as
collateral security for the repayment of any future drawings under such Letters
of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii)
pay in advance all Letter of Credit fees scheduled to be paid or payable over
the remaining term of the Letters of Credit.
9.2 POWER OF ATTORNEY. Effective only upon the occurrence and during
the continuance of an Event of Default, Borrower hereby irrevocably appoints
Bank (and any of Bank's designated officers, or employees) as Borrower's true
and lawful attorney to: (a) send requests for verification of Accounts or notify
account debtors of Bank's security interest in the Accounts; (b) endorse
Borrower's name on any checks or other forms of payment or security that may
come into Bank's possession; (c) sign Borrower's name on any invoice or ▇▇▇▇ 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 Borrower's policies of insurance; and (e) settle and adjust disputes
and claims respecting the accounts directly with account debtors, for amounts
and upon terms which Bank determines to be reasonable; provided Bank may
exercise such power of attorney to sign the name of Borrower on any of the
documents described in SECTION 4.2
25
regardless of whether an Event of Default has occurred. The appointment of Bank
as Borrower's attorney in fact, and each and every one of Bank's rights and
powers, being coupled with an interest, is irrevocable until all of the
Obligations have been fully repaid and performed and Bank's obligation to
provide advances hereunder is terminated.
9.3 ACCOUNTS COLLECTION. At any time from the date of this
Agreement, Bank may notify, any Person owing funds to Borrower of Bank's
security interest in such funds and verify the amount of such Account. Borrower
shall collect all amounts owing to Borrower for Bank, receive in trust all
payments as Bank's trustee, and immediately deliver such payments to Bank in
their original form as received from the account debtor, with proper
endorsements for deposit.
9.4 BANK EXPENSES. If Borrower fails to pay any amounts or furnish
any required proof of payment due to third persons or entities, as required
under the terms of this Agreement, then Bank may do any or all of the following:
(a) make payment of the same or any part thereof; (b) set up such reserves under
the Revolving Facility, as Bank deems necessary to protect Bank from the
exposure created by such failure; or (c) obtain and maintain insurance policies
of the type discussed in SECTION 6.6 of this Agreement, and take any action with
respect to such policies as Bank deems prudent. Any amounts so paid or deposited
by Bank shall constitute Bank Expenses, shall be immediately due and payable,
and shall bear interest at the then applicable rate hereinabove provided, and
shall be secured by the Collateral. Any payments made by Bank shall not
constitute an agreement by Bank to make similar payments in the future or a
waiver by Bank of any Event of Default under this Agreement.
9.5 BANK'S LIABILITY FOR COLLATERAL. So long as Bank complies with
reasonable banking practices, Bank shall not in any way or manner be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
thereto occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of
loss, damage or destruction of the Collateral shall be borne by Borrower.
9.6 REMEDIES CUMULATIVE. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Bank of one right
or remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election, or acquiescence by it. No waiver by Bank
shall be effective unless made in a written document signed on behalf of Bank
and then shall be effective only in the specific instance and for the specific
purpose for which it was given.
9.7 DEMAND; PROTEST. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Bank on which Borrower may in any way be liable.
26
10. NOTICES. Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, certified mail, postage prepaid, return receipt
requested, or by telefacsimile to Borrower or to Bank, as the case may be, at
its addresses set forth below:
If to Borrower: Silicon Valley Internet Partners
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
If to Bank: Venture Banking Group
Three ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
California, without regard to principles of conflicts of law. Each of Borrower
and Bank hereby submits to the exclusive jurisdiction of the state and Federal
courts located in the County of Santa ▇▇▇▇▇, State of California. BORROWER AND
BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF
THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY
RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
12. GENERAL PROVISIONS.
12.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
may be assigned by Borrower without Bank's prior written consent, which consent
may be granted or withheld in Bank's sole discretion. Bank shall have the right
without the consent of or notice to Borrower to sell, transfer,
27
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights and benefits hereunder.
12.2 INDEMNIFICATION. Borrower shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank
as a result of or in any way arising out of, following, or consequential to
transactions between Bank and Borrower whether under this Agreement, or
otherwise (including without limitation reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE. Time is of the essence for the performance of
all obligations set forth in this Agreement.
12.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION. This Agreement cannot be
amended or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
12.7 SURVIVAL. All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described
in SECTION 12.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Bank have run.
12.8 CONFIDENTIALITY. In handling any confidential information Bank
shall exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any
non-public information thereby received or received pursuant to this Agreement
except that disclosure of such information may be made (i) to the subsidiaries
or affiliates of Bank in connection with their present or prospective business
relations with Borrower, (ii) to prospective transferees or purchasers of any
interest in the Loans, provided that they have entered into a comparable
confidentiality agreement in favor of Borrower and have delivered a copy to
Borrower, (iii) as required by law, regulations, rule or order, subpoena,
judicial order or similar order, (iv) as may be required in connection with the
examination, audit or similar investigation of Bank and (v) as Bank may
determine in connection with the enforcement of any remedies hereunder.
Confidential information hereunder shall not include information that either:
(a) is in the public domain or in the knowledge or possession of
28
Bank when disclosed to Bank, or becomes part of the public domain after
disclosure to Bank through no fault of Bank; or (b) is disclosed to Bank by a
third party, provided Bank does not have actual knowledge that such third party
is prohibited from disclosing such information. For purposes of this SECTION
12.8, the Bank and Borrower agree that all information that Bank receives from
the Borrower relating to the business, operations or condition of Borrower or
its subsidiaries shall be treated as "confidential information" unless otherwise
indicated by Borrower or herein.
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SILICON VALLEY INTERNET PARTNERS
By: /s/ Signature Illegible
Title: Vice President & CFO
VENTURE BANKING GROUP, a division of
Cupertino National Bank
By: /s/ Signature Illegible
Title: AVP
30
A
The Collateral shall consist of all right, title and interest of Borrower
in and to the following:
(A) All goods and equipment now owned or hereafter acquired,
including, without limitation, all machinery, fixtures, vehicles (including
motor vehicles and trailers), and any interest in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located;
(B) 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 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
Borrower's Books relating to any of the foregoing;
(C) All contract rights and general intangibles now owned or
hereafter acquired, including, without limitation, goodwill, trademarks,
servicemarks, trade styles, trade names, patents, patent applications, leases,
license agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
(D) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods, the licensing of technology
or the rendering of services by 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 Borrower and Borrower's
Books relating to any of the foregoing;
(E) All documents, cash, deposit accounts, securities,
investment property, letters of credit, certificates of deposit, instruments and
chattel paper now owned or hereafter acquired and Borrower's Books relating to
the foregoing;
(F) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter acquired;
all trade secret rights, including all rights to unpatented inventions,
know-how, operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or similar rights
available for the protection of semiconductor chips, now owned or hereafter
acquired; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and
(G) Any and all claims, rights and interests in any of the
above and all substitutions for, additions and accessions to and proceeds
thereof.
1
EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM DEADLINE FOR
SAME DAY PROCESSING IS 3:00 P.M., P.S.T.
TO: VENTURE BANKING GROUP DATE:_____________________________
FAX#: (▇▇▇) ▇▇▇-▇▇▇▇ TIME:_____________________________
FROM: SILICON VALLEY INTERNET PARTNERS
CLIENT NAME (BORROWER)
REQUESTED BY:___________________________________________________________________
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:___________________________________________________________
PHONE NUMBER:___________________________________________________________________
FROM ACCOUNT #________ TO ACCOUNT # ________________________________________
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
PRINCIPAL INCREASE (ADVANCE) $_______________________
PRINCIPAL PAYMENT (ONLY) $_______________________
INTEREST PAYMENT (ONLY) $_______________________
PRINCIPAL AND INTEREST (PAYMENT) $_______________________
OTHER INSTRUCTIONS:__________________________________________
All representations and warranties of Borrower stated in the Amended and
Restated Loan and Security Agreement are true, correct and complete in all
material respect as of the date of the telephone request for an Advance
confirmed by this Borrowing Certificate; provided, however, that those
representations and warranties expressly referring to another date shall be
true, correct and complete in all material respects as of such date.
BANK USE ONLY
TELEPHONE REQUEST:
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
------------------------------ ------------------------------
Authorized Requester Phone #
------------------------------ ------------------------------
Received By (Bank) Phone #
Authorized Signature (Bank)
2
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: Silicon Valley Internet Partners Lender: Venture Banking Group
Commitment Amount: $5,000,000
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) $__________
BALANCES
16. Maximum Loan Amount ($5,000,000) $__________
17. Total Funds Available (Lesser of #15 or #16) $__________
18. a. Present Balance of Accounts Sublimit $__________
b. Present Balance of Overadvance Sublimit $__________
(Maximum $1,000,000)
c. Present Balance owing on Line of Credit $__________
(#18a plus #18b)
19. a. Present Balance on Letter of Credit Subfacility $__________
(Accounts Sublimit)
b. Present Balance on Letter of Credit Subfacility $__________
(Overadvance Sublimit up to $1,000,000)
c. Present Balance on Letter of Credit Subfacility $__________
(Maximum $2,000,000)
20. RESERVE POSITION (#17 minus #18c and #19c) $__________
*and pre-approved Fortune 500 Accounts over 120 days
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 Amended and
Restated Loan and Security Agreement between the undersigned and Venture Banking
Group.
COMMENTS:
Silicon Valley Internet Partners
By:
-------------------------
Authorized Signer
BANK USE ONLY
Rec'd By:
----------------------
Authorized Signer
Date:
----------------
Verified:
----------------------
Authorized Signer
3
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: Venture Banking Group
FROM: Silicon Valley Internet Partners
The undersigned authorized officer of Silicon Valley Internet Partners
hereby certifies that in accordance with the terms and conditions of the Amended
and Restated Loan and Security Agreement between Borrower and Bank (the
"Agreement"), (i) Borrower is in complete compliance for the period ending
____________________ 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 as explained in an accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Monthly financial statements Monthly within 45 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
Borrowing Base, A/R & A/P Agings Monthly within 45 days (when applicable) Yes No
A/R Audit Annual Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Monthly Basis:
Minimum Quick Ratio* 1.25:1.00 ______:1.0 Yes No
Maximum Debt/Tangible Net Worth** 2.0:1.0 ______:1.0 Yes No
Maintain on a Quarterly Basis
Maximum Permitted Loss
03/31/98 $2,000,000 __________ Yes No
06/30/98 $1,500,000 __________ Yes No
09/30/98 $1,200,000 __________ Yes No
12/31/98 $ 500,000 __________ Yes No
*or maintain minimum cash and cash equivalents of $1,500,000
**From and after September 30, 1998: 5:00:1.00.
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
--------------------------
SIGNATURE
-------------------------
TITLE
----------------------------
DATE
BANK USE ONLY
Received by:
----------------
AUTHORIZED
SIGNER
Date:
--------------------
Verified:
--------------------
AUTHORIZED
Date:
-------------------
4
EXHIBIT E
REVOLVING LINE PROMISSORY NOTE
$5,000,000 Palo Alto, California
March 25, 1998
FOR VALUE RECEIVED, the undersigned, SILICON VALLEY INTERNET PARTNERS, a
California corporation (the "Borrower"), promises to pay to the order of VENTURE
BANKING GROUP, A DIVISION OF CUPERTINO NATIONAL BANK ("Bank"), at such place as
the holder hereof may designate, in lawful money of the United States of
America, the aggregate unpaid principal amount of all Advances made by Bank to
Borrower under SECTION 2.1 of that certain Amended and Restated Loan and
Security Agreement between Borrower and Bank of even date herewith, as amended
from time to time (the "Loan Agreement"), up to a maximum principal amount of
Five Million Dollars ($5,000,000). Borrower shall also pay interest on the
aggregate unpaid principal amount of such Advances at the rates and in
accordance with the terms of the Loan Agreement. The entire principal amount and
all accrued but unpaid interest thereon shall be due and payable on the
Revolving Facility Maturity Date. All capitalized terms used herein but not
defined herein shall have the same meaning as given to them in the Loan
Agreement.
Bank is hereby authorized by Borrower to endorse on Bank's books and records
each Advance made by Bank under this Note and the amount of each payment or
prepayment of principal of each such Advance received by Bank; it being
understood, however, that failure to make any such endorsement (or any errors in
notation) shall not affect the obligations of Borrower with respect to Advances
made hereunder, and payments of principal by Borrower shall be credited to
Borrower notwithstanding the failure to make a notation (or any errors in
notation) thereof on such books and records.
Borrower promises to pay Bank all costs and expenses of collection of this Note
and to pay all reasonable attorneys' fees incurred in such collection or in any
suit or action to collect this Note or in any appeal thereof. Borrower waives
presentment, demand, protest, notice of protest, notice of dishonor, notice of
nonpayment, and any and all other notices and demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note, as well
as any applicable statute of limitations. No delay by Bank in exercising any
power or right hereunder shall operate as a waiver of any power or right. Time
is of the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern the
rights and obligations of Borrower with respect to all obligations hereunder.
This Note amends and restates in its entirety that certain Revolving Line
Promissory Note made by Borrower in favor of Bank dated July 25, 1997.
BORROWER AND BANK HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. This Note shall be deemed to be made under, and shall be
construed in accordance with and governed by the laws of the State of
California, excluding conflicts of laws principles.
SILICON VALLEY INTERNET PARTNERS
By:
--------------------------
Printed Name:
----------------
Title:
-----------------------
5
EXHIBIT F
EQUIPMENT LINE PROMISSORY NOTE
$1,250,000. Palo Alto, California
March 25, 1998
FOR VALUE RECEIVED, the undersigned, SILICON VALLEY INTERNET PARTNERS, a
California corporation (the "Borrower"), promises to pay to the order of VENTURE
BANKING GROUP, A DIVISION OF CUPERTINO NATIONAL BANK ("Bank"), at such place as
the holder hereof may designate, in lawful money of the United States of
America, the aggregate unpaid principal amount of all Advances made by Bank to
Borrower under SECTION 2.4 of that certain Amended and Restated Loan and
Security Agreement between Borrower and Bank of even date herewith, as amended
from time to time (the "Loan Agreement"), up to a maximum principal amount of
One Million Two Hundred and Fifty Thousand Dollars ($1,250,000). Borrower shall
pay installments of principal and interest with respect to Equipment Advances in
accordance with SECTIONS 2.4 and 2.6 of the Loan Agreement. All capitalized
terms used herein but not defined herein shall have the same meaning as given to
them in the Loan Agreement.
Bank is hereby authorized by Borrower to endorse on Bank's books and records
each Advance made by Bank under this Note and the amount of each payment or
prepayment of principal of each such Advance received by Bank; it being
understood, however, that failure to make any such endorsement (or any errors in
notation) shall not affect the obligations of Borrower with respect to Advances
made hereunder, and payments of principal by Borrower shall be credited to
Borrower notwithstanding the failure to make a notation (or any errors in
notation) thereof on such books and records.
Borrower promises to pay Bank all costs and expenses of collection of this Note
and to pay all reasonable attorneys' fees incurred in such collection or in any
suit or action to collect this Note or in any appeal thereof. Borrower waives
presentment, demand, protest, notice of protest, notice of dishonor, notice of
nonpayment, and any and all other notices and demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note, as well
as any applicable statute of limitations. No delay by Bank in exercising any
power or right hereunder shall operate as a waiver of any power or right. Time
is of the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern the
rights and obligations of Borrower with respect to all obligations hereunder.
This Note amends and restates in its entirety that certain Equipment Line
Promissory Note made be Borrower in favor of Bank dated September 19, 1996.
BORROWER AND BANK HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. This Note shall be deemed to be made under, and shall be
construed in accordance with and governed by the laws of the State of
California, excluding conflicts of laws principles.
SILICON VALLEY INTERNET PARTNERS
By:
----------------------------
Title:
-------------------------
6
EXHIBIT G
FORTUNE 500 ACCOUNTS
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO., INC.
BANKAMERICA CORPORATION
AMERICAN EXPRESS COMPANY
▇.▇. ▇▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇ FARGO & COMPANY
THE BANK OF NEW YORK COMPANY
Tandem
Compaq
Deutshche Bank
7
SCHEDULE
I. Existing Indebtedness (Section 1.1)
II. Existing Investments (Section 1.1)
III. Existing Liens (Section 1.1)
IV. Names and Locations (Section 5.6)
Plus below -(1)
V. Litigation (Section 5.7)
(1) a. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
b. ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
c. ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (expected to move in
5/1/98)
8
REVOLVING LINE PROMISSORY NOTE
$5,000,000 Palo Alto, California
March 25, 1998
FOR VALUE RECEIVED, the undersigned, SILICON VALLEY INTERNET PARTNERS, a
California corporation (the "Borrower"), promises to pay to the order of VENTURE
BANKING GROUP, A DIVISION OF CUPERTINO NATIONAL BANK ("Bank"), at such place as
the holder hereof may designate, in lawful money of the United States of
America, the aggregate unpaid principal amount of all Advances made by Bank to
Borrower under SECTION 2.1 of that certain Amended and Restated Loan and
Security Agreement between Borrower and Bank of even date herewith, as amended
from time to time (the "Loan Agreement"), up to a maximum principal amount of
Five Million Dollars ($5,000,000). Borrower shall also pay interest on the
aggregate unpaid principal amount of such Advances at the rates and in
accordance with the terms of the Loan Agreement. The entire principal amount and
all accrued but unpaid interest thereon shall be due and payable on the
Revolving Facility Maturity Date. All capitalized terms used herein but not
defined herein shall have the same meaning as given to them in the Loan
Agreement.
Bank is hereby authorized by Borrower to endorse on Bank's books and records
each Advance made by Bank under this Note and the amount of each payment or
prepayment of principal of each such Advance received by Bank; it being
understood, however, that failure to make any such endorsement (or any errors in
notation) shall not affect the obligations of Borrower with respect to Advances
made hereunder, and payments of principal by Borrower shall be credited to
Borrower notwithstanding the failure to make a notation (or any errors in
notation) thereof on such books and records.
Borrower promises to pay Bank all costs and expenses of collection of this Note
and to pay all reasonable attorneys' fees incurred in such collection or in any
suit or action to collect this Note or in any appeal thereof. Borrower waives
presentment, demand, protest, notice of protest, notice of dishonor, notice of
nonpayment, and any and all other notices and demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note, as well
as any applicable statute of limitations. No delay by Bank in exercising any
power or right hereunder shall operate as a waiver of any power or right. Time
is of the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern the
rights and obligations of Borrower with respect to all obligations hereunder.
This Note amends and restates in its entirety that certain Revolving Line
Promissory Note made by Borrower in favor of Bank dated July 25, 1997.
BORROWER AND BANK HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. This Note shall be deemed to be made under, and shall be
construed in accordance with and governed by the laws of the State of
California, excluding conflicts of laws principles.
SILICON VALLEY INTERNET PARTNERS
By: /s/ Signature Illegible
Printed Name:
Title:
5
EQUIPMENT LINE PROMISSORY NOTE
$1,250,000. Palo Alto, California
March 25, 1998
FOR VALUE RECEIVED, the undersigned, SILICON VALLEY INTERNET PARTNERS, a
California corporation (the "Borrower"), promises to pay to the order of VENTURE
BANKING GROUP, A DIVISION OF CUPERTINO NATIONAL BANK ("Bank"), at such place as
the holder hereof may designate, in lawful money of the United States of
America, the aggregate unpaid principal amount of all Advances made by Bank to
Borrower under SECTION 2.4 of that certain Amended and Restated Loan and
Security Agreement between Borrower and Bank of even date herewith, as amended
from time to time (the "Loan Agreement"), up to a maximum principal amount of
One Million Two Hundred and Fifty Thousand Dollars ($1,250,000). Borrower shall
pay installments of principal and interest with respect to Equipment Advances in
accordance with SECTIONS 2.4 and 2.6 of the Loan Agreement. All capitalized
terms used herein but not defined herein shall have the same meaning as given to
them in the Loan Agreement.
Bank is hereby authorized by Borrower to endorse on Bank's books and records
each Advance made by Bank under this Note and the amount of each payment or
prepayment of principal of each such Advance received by Bank; it being
understood, however, that failure to make any such endorsement (or any errors in
notation) shall not affect the obligations of Borrower with respect to Advances
made hereunder, and payments of principal by Borrower shall be credited to
Borrower notwithstanding the failure to make a notation (or any errors in
notation) thereof on such books and records.
Borrower promises to pay Bank all costs and expenses of collection of this Note
and to pay all reasonable attorneys' fees incurred in such collection or in any
suit or action to collect this Note or in any appeal thereof. Borrower waives
presentment, demand, protest, notice of protest, notice of dishonor, notice of
nonpayment, and any and all other notices and demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note, as well
as any applicable statute of limitations. No delay by Bank in exercising any
power or right hereunder shall operate as a waiver of any power or right. Time
is of the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern the
rights and obligations of Borrower with respect to all obligations hereunder.
This Note amends and restates in its entirety that certain Equipment Line
Promissory Note made be Borrower in favor of Bank dated September 19, 1996.
BORROWER AND BANK HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. This Note shall be deemed to be made under, and shall be
construed in accordance with and governed by the laws of the State of
California, excluding conflicts of laws principles.
SILICON VALLEY INTERNET PARTNERS
By: /s/ Signature Illegible
Title:
6
DISBURSEMENT REQUEST AND AUTHORIZATION
BORROWER: Silicon Valley Internet Partners BANK: Venture Banking Group
LOAN TYPE. This is a Variable Rate, Revolving Line of Credit of a principal
amount up to $5,000,000 and an Equipment Line of a principal amount up to
$1,250,000.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for business.
SPECIFIC PURPOSE. The specific purpose of this loan is: working capital needs.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Bank's conditions for making the loan have been
satisfied. Please disburse the loan proceeds as follows:
Revolving Line
Amount paid to Borrower directly: $____________
Undisbursed Funds $____________
Principal $____________
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
Prepaid Finance Charges Paid in Cash: $_________
$12,500 Loan Fee
$________ Accounts Receivables Audit
Other Charges Paid in Cash: $_________
$__________ UCC Search Fees
$__________ UCC Filing Fees
$__________ Patent Filing Fees
$__________ Trademark Filing Fees
$__________ Copyright Filing Fees
$__________ Outside Counsel Fees and Expenses
Total Charges Paid in Cash $___________
AUTOMATIC PAYMENTS. Borrower hereby authorizes Bank automatically to deduct from
Borrower's account numbered 3/04/92 the amount of any loan payment. If the funds
in the account are insufficient to cover any payment, Bank shall not be
obligated to advance funds to cover the payment.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO BANK THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION AS
DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO BANK. THIS
AUTHORIZATION IS DATED AS OF MARCH 25, 1998.
BORROWER:
Silicon Valley Internet Partners
Authorized Officer /s/ Signature Illegible
1.
CORPORATE BORROWING RESOLUTION
BORROWER: Silicon Valley Internet Partners BANK: Venture Banking Group
I, THE UNDERSIGNED, Secretary or Assistant Secretary of Silicon Valley Internet
Partners ("Borrower"), hereby certify that Borrower is a corporation duly
organized and existing under and by virtue of the laws of the State of
California.
I FURTHER CERTIFY that at a meeting of the Directors of Borrower (or by other
duly authorized corporate action in lieu of a meeting), duly called and held, at
which a quorum was present and voting, the following resolutions were adopted.
BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of Borrower, whose actual signatures are shown below:
NAMES POSITIONS ACTUAL SIGNATURES
----- --------- -----------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ President & CEO
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CFO /s/ Signature Illegible
--------------------- --------------------- ---------------------
acting for and on behalf of Borrower and as its act and deed be, and they hereby
are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Venture Banking Group
("Bank"), on such terms as may be agreed upon between the officers of
Borrower and Bank, such sum or sums of money as in their judgment should
be borrowed.
EXECUTE LOAN DOCUMENTS. To execute and deliver to Bank the loan documents
of Borrower, on Bank's forms, at such rates of interest and on such terms
as may be agreed upon, evidencing the sums of money so borrowed or any
indebtedness of Borrower to Bank, and also to execute and deliver to Bank
one or more renewals, extensions, modifications, refinancings,
consolidations, or substitutions for one or more of the loan documents, or
any portion of the loan documents.
GRANT SECURITY. To grant a security interest to Bank in any of Borrower's
assets, which security interest shall secure all of Borrower's obligations
to Bank.
NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to Borrower or in which Borrower may have an
interest, and either to receive cash for the same or to cause such
proceeds to be credited to the account of Borrower with Bank, or to cause
such other disposition of the proceeds derived therefrom as they may deem
advisable.
LETTERS OF CREDIT. To execute letter of credit applications and other
related documents pertaining to Bank's issuance of letters of credit.
1.
ISSUE WARRANTS. To issue warrants to purchase Borrower's capital stock,
for such class, series and number, and on such terms, as an officer of
Borrower shall deem appropriate.
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay any
and all fees and costs, and to execute and deliver such other documents
and agreements, including agreements waiving the right to a trial by jury,
as they may in their discretion deem reasonably necessary or proper in
order to carry into effect the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of Borrower's agreements or commitments in effect at the
time notice is given.
I FURTHER CERTIFY that the persons named above are principal officers of the
Corporation and occupy the positions set opposite their respective names; that
the foregoing Resolutions now stand of record on the books of the Corporation;
and that they are in full force and effect and have not been modified or revoked
in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on March 25, 1998 and attest
that the signatures set opposite the names listed above are their genuine
signatures.
CERTIFIED TO AND ATTESTED BY:
X /s/ Signature Illegible
Secretary or Assistant Secretary
2
UNIFORM COMMERCIAL CODE -- FINANCING STATEMENT -- FORM UCC-1
REORDER FROM
REGISTRE, INC
▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇. ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
IMPORTANT -- READ INSTRUCTIONS ON BACK BEFORE FILLING OUT FORM
This FINANCING STATEMENT is presented to a Filing No. of Additional
Officer for filing pursuant to the Uniform Commercial Code Sheets Presented 3
3. |_| The Debtor is a transmitting utility
1. Debtor(s) (Last Name First) and Address(es).
SILICON VALLEY INTERNET
PARTNERS
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇. 35TH FLOOR
NEW YORK, N.Y. 10021
2. Secured Party(ies) Name(s) and Address(es)
CUPERTINO NATIONAL BANK &
TRUST
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
4. For Filing Officer Date, Time, No. Filing Office
5. This Financing Statement covers the following types (or items) of property:
THIS FINANCING STATEMENT COVERS ALL RIGHT, TITLE AND INTEREST OF DEBTOR IN, TO
AND UNDER ALL INVESTMENT PROPERTY AND ALL PROCEEDS THEREOF, AS MORE FULLY
DESCRIBED IN EXHIBIT A ATTACHED HERETO AND INCORPORATED
HEREIN.
*SEE SCHEDULE I ATTACHED HERETO AND INCORPORATED HEREIN.
|_| Products of the Collateral are also covered.
6.Assignee(s) of Secured Party and Address(es)
|_| The described crops are growing or to be grown on.
|_| The described goods are or are to be affixed to
|_| The lumber to be cut or minerals or the like (including oil and gas) is on *
*(Described Real Estate Below)
8. Describe Real Estate Here
|_| This statement is to be indexed in the Real Estate Records:
9. Name of a Record Owner
No & Street Town or City County Section Block Lot
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party
to file this statement, or
|_| which is proceeds of the original collateral described above in which
a security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of
the debtor, or |_| as to which the filing has lapsed, or already subject
to a security interest in another jurisdiction:
|_| when the collateral was brought into the state, or |_| when the
debtor's location was changed to this state.
SILICON VALLEY INTERNET PARTNERS CUPERTINO NATIONAL BANK & TRUST
-------------------------------- -------------------------------
By /s/ Signature Illegible TITLE: CFO By /s/ Signature Illegible TITLE: VP
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) FILING OFFICER COPY - NUMERICAL
(5/82) STANDARD FORM - FORM UCC - 1 -- Approved by Secretary of State of New
York
EXHIBIT A
FINANCING STATEMENT BETWEEN
CUPERTINO NATIONAL BANK & TRUST, AS SECURED PARTY
AND
SILICON VALLEY INTERNET PARTNERS, AS DEBTOR
The Collateral shall consist of all right, title and interest of Debtor in
and to the following:
(A) All goods and equipment now owned or hereafter acquired,
including, without limitation, all machinery, fixtures, vehicles (including
motor vehicles and trailers), and any interest in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located;
(B) 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 Debtor'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 Debtor's
Books relating to any of the foregoing;
(C) All contract rights and general intangibles now owned or
hereafter acquired, including, without limitation, goodwill, trademarks,
servicemarks, trade styles, trade names, patents, patent applications, leases,
license agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
(D) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
Debtor arising out of the sale or lease of goods, the licensing of technology or
the rendering of services by Debtor, 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 Debtor and Debtor's Books
relating to any of the foregoing;
(E) All documents, cash, deposit accounts, securities,
investment property, letters of credit, certificates of deposit, instruments and
chattel paper now owned or hereafter acquired and Debtor's Books relating to the
foregoing;
(F) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter acquired;
all trade secret rights, including all rights to unpatented inventions,
know-how, operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or similar rights
available for the protection of semiconductor chips, now owned or hereafter
acquired; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and
(G) Any and all claims, rights and interests in any of the
above and all substitutions for, additions and accessions to and proceeds
thereof.
SCHEDULE I
FINANCING STATEMENT BETWEEN
CUPERTINO NATIONAL BANK & TRUST, AS SECURED PARTY
AND
SILICON VALLEY INTERNET PARTNERS, AS DEBTOR
This financing statement is filed pursuant to Section 8601 of the New York
Uniform Commercial Code for the purpose of continuing the perfection of the
Secured Party's security interest in the foregoing property as originally set
forth in the financing statement filed with this filing office on August 12,
1997 as Document No. 167871 (the foregoing property being deemed to be fully
included in the property described as Collateral in such prior financing
statement).
Some or all of the collateral is located on the following addresses:
1) ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2) ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3) ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
4) ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (expected to move in 05/01/98)
1.
[EXHIBIT OMITTED]
EXHIBIT A
FINANCING STATEMENT BETWEEN
CUPERTINO NATIONAL BANK & TRUST, AS SECURED PARTY
AND
SILICON VALLEY INTERNET PARTNERS, AS DEBTOR
The Collateral shall consist of all right, title and interest of Debtor in
and to the following:
(A) All goods and equipment now owned or hereafter acquired,
including, without limitation, all machinery, fixtures, vehicles (including
motor vehicles and trailers), and any interest in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located;
(B) 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 Debtor'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 Debtor's
Books relating to any of the foregoing;
(C) All contract rights and general intangibles now owned or
hereafter acquired, including, without limitation, goodwill, trademarks,
servicemarks, trade styles, trade names, patents, patent applications, leases,
license agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
(D) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
Debtor arising out of the sale or lease of goods, the licensing of technology or
the rendering of services by Debtor, 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 Debtor and Debtor's Books
relating to any of the foregoing;
(E) All documents, cash, deposit accounts, securities,
investment property, letters of credit, certificates of deposit, instruments and
chattel paper now owned or hereafter acquired and Debtor's Books relating to the
foregoing;
(F) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter acquired;
all trade secret rights, including all rights to unpatented inventions,
know-how, operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or similar rights
available for the protection of semiconductor chips, now owned or hereafter
acquired; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and
(G) Any and all claims, rights and interests in any of the
above and all substitutions for, additions and accessions to and proceeds
thereof.
VOID AFTER MARCH 26, 2008
SERIES C PREFERRED STOCK PURCHASE WARRANT
THIS WARRANT HAS BEEN, AND THE SHARES OF SERIES C PREFERRED STOCK WHICH MAY BE
PURCHASED PURSUANT TO THE EXERCISE OF THIS WARRANT (THE "SHARES"), WILL BE
ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES
OF SERIES C PREFERRED STOCK ISSUABLE HEREUNDER OR ANY SHARES INTO WHICH SUCH
SHARES ARE CONVERTIBLE, (TOGETHER, THE "SECURITIES") HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY AND ITS COUNSEL THAT SUCH DISPOSITION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE
SECURITIES LAWS.
NO. C-2 5,517 SHARES
SILICON VALLEY INTERNET PARTNERS
WARRANT TO PURCHASE SHARES OF SERIES C PREFERRED STOCK
THIS CERTIFIES that, for value received, VENTURE BANKING GROUP (the
"REGISTERED HOLDER"), is entitled, upon the terms and subject to the conditions
hereinafter set forth, to subscribe for and purchase from Silicon Valley
Internet Partners, a California corporation with principal offices at ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "COMPANY"), at any time until March 26,
2008, subject to the provisions of Section 9, (the "EXPIRATION DATE") shares of
the Company's Series C Preferred Stock (the "SERIES C PREFERRED") as follows:
This Warrant will be exercisable for a total of Five Thousand Five Hundred
Seventeen (5,517) fully paid and nonassessable shares of Series C Preferred at a
price per share equal to $3.625 (the "EXERCISE PRICE"), subject to the
provisions and upon the terms and conditions hereinafter set forth.
1. Method of Exercise; Payment.
(a) Cash Exercise. The purchase rights represented by this Warrant
may be exercised by the Holder, in whole or in part, from time to time by: (i)
the surrender of this Warrant (with the notice of exercise form (the "NOTICE OF
EXERCISE") attached hereto as Exhibit A duly executed) at the principal office
of the Company; (ii) the execution of a Series C Preferred Stock Purchase
Agreement and all exhibits thereto, including without limitation an Amended and
Restated
Shareholder Rights Agreement, Amended and Restated Voting Agreement, and Amended
and Restated Co-Sale Agreement in the same form as the Series C Preferred Stock
Purchase Agreement dated as of October 10, 1997 by and among the Company and the
Purchasers (defined therein), the Amended and Restated Shareholder Rights
Agreement dated as of June 6, 1997 by and among the Company, the Purchasers
(defined therein) and the Prior Rights Holders (defined therein), the Amended
and Restated Voting Agreement dated as of June 6, 1997 by and among the Company
and the Shareholders (defined therein), and the Amended and Restated Co-Sale
Agreement dated as of June 6, 1997 by and among the Company, the Common
Shareholders (defined therein) and the Preferred Shareholders (defined therein)
(collectively, the "Series C Transaction Documents"); and (iii) by the payment
to the Company of an amount equal to the Exercise Price multiplied by the number
of the Shares being purchased, which amount may be paid, at the election of the
Holder, by wire transfer or certified check payable to the order of the Company.
The person or persons in whose name(s) any certificate(s) representing Shares
shall be issuable upon exercise of this Warrant shall be deemed to have become
the holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the Shares represented thereby (and such Shares shall be deemed to
have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised.
(b) Net Issue Exercise. In lieu of exercising this Warrant pursuant
to Section 1(a) hereof, the Holder may elect to receive a number of Shares equal
to the value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant and the fully executed Series C
Transaction Documents at the principal office of the Company, together with the
Notice of Exercise in which alternative No. 1 is initiated by the Holder. In
such event, the Company shall issue to the Holder a number of Shares computed
using the following formula:
X = Y (A-B)/A
Where X = the number of Shares to be issued to the Holder.
Y = the number of Shares subject to this warrant.
A = the fair market value of one share of the Company's Series C Preferred
Stock.
B = the Exercise Price (as adjusted to the date of such calculation).
(c) Fair Market Value. For purposes of this Section 2, the fair
market value of the Company's Series C Preferred Stock shall mean:
(i) The average of the closing bid and asked prices of the
Company's Common Stock quoted in the Over-The-Counter Market Summary or the
closing price quoted on any exchange on which the Common Stock is listed,
whichever is applicable, as published in the Western
2
Edition of The Wall Street Journal for the ten (10) trading days prior to the
date of determination of fair market value multiplied by the number of shares of
Common Stock into which each share of Series C Preferred Stock is convertible;
(ii) If the Company's Common Stock is not traded
Over-The-Counter or on an exchange, the fair market value of the Series C
Preferred Stock per share shall be the price per share which the Company could
obtain from a willing buyer for shares sold by the Company from authorized but
unissued shares of Series C Preferred Stock as such price shall be agreed by the
parties hereto, or if agreement cannot be reached within five (5) business days
of delivery of the notice pursuant to Section 1(b) hereof, as shall be
determined by a panel of appraisers. One appraiser shall be selected by the
Holder, one appraiser shall be chosen by the Company and the third appraiser
shall be chosen by the first two appraisers. If the appraisers cannot reach
agreement as to the fair market value on the foregoing basis on or before the
thirtieth (30th) day following the Holder's notice of election pursuant to
Section 1(b), then each appraiser shall deliver its appraisal and the appraisal
which is neither the highest nor the lowest shall be the fair market value of a
share of Series C Preferred Stock. In the event that the Holder fails to choose
an appraiser or the three appraisers fail to deliver an appraisal on or before
the thirtieth (30th) day after such notice, the appraisal of the appraiser
selected by the Company shall control and shall be fair market value for the
purposes of this Warrant. The cost of the appraiser selected by each party shall
be borne by that party and the cost of the third appraiser shall be borne
one-half (1/2) by each party. Appraisers selected under this Section 1(c) must
be unaffiliated with the Holder and the Company and must have reasonable
professional qualifications for the appraisal.
(d) Stock Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the Shares so purchased shall be
delivered to the Holder within a reasonable time and, unless this Warrant has
been fully exercised or has expired, a new Warrant representing the Shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the Holder within such time.
(e) Condition of Exercise Unless exercised pursuant to an effective
registration statement under the Act which includes the Shares so exercised, it
shall be a condition to any exercise of this Warrant that the Company shall have
received, at the time of such exercise, a representation in writing from the
Holder in the form attached hereto as Exhibit A-1, that the Shares being issued
upon exercise are being acquired for investment and not with a view to any sale
or distribution thereof.
2. Stock Fully Paid: Reservation of Shares. All of the Shares issuable
upon the exercise of the rights represented by this Warrant will, upon issuance
and receipt of the Exercise Price therefor, be fully paid and nonassessable, and
free from all preemptive rights, rights of first refusal or first offer, taxes,
liens and charges with respect to the issuance thereof. During the period within
which the rights represented by this Warrant may be exercised, the Company shall
at all times have authorized and reserved for issuance sufficient shares of its
Series C Preferred Stock and Common Stock to provide for the exercise of the
rights represented by this Warrant.
3
3. Adjustment of Exercise Price and Number of Shares. The number and kind
of Shares purchasable upon the exercise of this Warrant and the Exercise Price
therefor shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Stock Splits, Dividends and Combinations. In the event that the
Company shall at any time subdivide the outstanding shares of Series C Preferred
Stock, or shall issue a stock dividend on its outstanding shares of Series C
Preferred Stock, the number of Shares issuable upon exercise of this Warrant
immediately prior to such subdivision or to the issuance of such stock dividend
shall be proportionately increased, and the Exercise Price shall be
proportionately decreased, and in the event that the Company shall at any time
combine the outstanding shares of Series C Preferred Stock, the number of Shares
issuable upon exercise of this Warrant immediately prior to such combination
shall be proportionately decreased, and the Exercise Price shall be
proportionately increased, effective at the close of business on the date of
such subdivision, stock dividend or combination, as the case may be.
(b) Recapitalizations. If at any time or from time to time there
shall be a recapitalization of the Series C Preferred Stock (other than a
subdivision, combination or merger or sale of assets transaction provided for
elsewhere in this Section 3), provision shall be made so that the Holder of this
Warrant will thereafter be entitled to receive upon exercise of this Warrant the
number of shares of stock or other securities or property of the Company to
which a Holder of Series C Preferred Stock would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 3 with respect to the rights of
the Holder of this Warrant after the recapitalization to the end that the
provisions of this Section 3 (including adjustment of the Exercise Price then in
effect and the number of shares issuable upon exercise of this Warrant) shall be
applicable after that event in as nearly an equivalent manner as may be
practicable.
(c) Merger. If at any time there shall be a capital reorganization
of the shares of the Company's stock (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), or a merger or consolidation of the Company with or into another
corporation, whether or not the Company is the surviving corporation, other than
as provided for in Section 9 herein (a "Merger Event"), then as a part of such
Merger Event, lawful provision shall be made so that the Holder shall thereafter
be entitled to receive, upon exercise of the Warrant, the number of shares of
stock or other securities of the successor corporation resulting from such
Merger Event, equivalent in value to that which would have been issuable if
Holder had exercised this Warrant immediately prior to the Merger Event. In any
such case, appropriate adjustment (as determined in good faith by the Company's
Board of Directors) shall be made in the application of the provisions of this
Warrant with respect to the rights and interest of the Holder after the Merger
Event to the end that the provisions of this Warrant (including adjustments of
the Exercise Price and number of Shares purchasable) shall be applicable to the
greatest extent possible.
(d) Notices. Upon any adjustment of the Exercise Price and any
increase or decrease in the number of Shares purchasable upon the exercise of
this Warrant in accordance with Section 2 hereof, then, and in each such case,
the Company, within thirty (30) days thereafter, shall
4
give written notice thereof to the Holder at the address of such Holder as shown
on the books of the Company which notice shall state the Exercise Price as
adjusted and, if applicable, the increased or decreased number of Shares
purchasable upon the exercise of this Warrant, setting forth in reasonable
detail the method of calculation of each. Any written notice by the Company
required or permitted hereunder shall be given by hand delivery or first class
mail, postage prepaid, addressed to the Holder at the address shown on the books
of the Company for the Holder.
4. Restrictions on Transfer.
(a) Holder agrees not to make any disposition of all or any portion
of the Shares or the Warrant, except to an affiliate of Holder, unless and
until:
(i) There is then in effect a registration statement under the
1933 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(ii) Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and the transferee has
agreed in writing to be bound by this Section 4. If reasonably requested by the
Company, Holder shall furnish the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
of such shares under the 1933 Act. Notwithstanding the foregoing, the
restrictions imposed upon the transferability of any of the Shares or rights to
acquire Shares do not apply to transfers from the beneficial owner of any of the
aforementioned securities to its nominee or from such nominee to its beneficial
owners, and shall terminate as to any particular Shares when a letter shall have
been issued to Holder at its request by the staff of the Securities and Exchange
Commission or a ruling shall have been issued to the Holder at its request by
such Commission stating that no action shall be recommended by such staff or
taken by such Commission, as the case may be, if such security is transferred
without registration under the 1933 Act in accordance with the conditions set
forth in such letter or ruling and such letter or ruling specifies that no
subsequent restrictions on transfer are required. It is agreed that the Company
will not require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
(b) Notwithstanding the above, the Shares shall also be subject to
all restrictions on transfer set forth in the Series C Transaction Documents,
including without limitation a one hundred eighty (180) day market-standoff
period upon the Company's initial public offering.
5. Fractional Shares. No fractional shares of Common Stock will be issued
in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
6. Representations and Warranties by the Company.
5
(a) Due Authority. The execution and delivery by the Company of this
Warrant and the performance of all obligations of the Company hereunder,
including the issuance to Holder of the right to acquire Shares, have been duly
authorized by all necessary corporate action on the part of the Company. This
Warrant is consistent with the Company's Amended and Restated Articles of
Incorporation, and does not contravene any law or governmental rule, regulation
or order applicable to it, and does not and will not contravene any provision
of, or constitute a default under, any indenture, mortgage, contract or other
instrument to which it is a party or by which it is bound. This Warrant
constitutes a legal, valid and binding agreement of the Company, enforceable in
accordance with its respective terms.
(b) Consents and Approvals. No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, Federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant, except for the filing of notices pursuant to
Regulation D under the 1933 Act and any filing required by applicable state
securities law, which filings shall be made by the time required thereby.
(c) Holder's Additional Rights. The Series C Preferred Stock
issuable upon exercise of this Warrant shall have the anti-dilution rights,
registration rights, and information rights set forth in the Series C
Transaction Documents.
7. Representations and Warranties by the Holder. Holder represents and
warrants to the Company as follows:
(a) This Warrant is being acquired for Holder's own account, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Act, and the
Holder has no present intention of selling or engaging in any public
distribution thereof pursuant to a registration or exemption.
(b) Holder understands that the Warrant and the Shares have not been
registered under the Act by reason of their issuance in a transaction exempt
from the registration and prospectus delivery requirements of the Act pursuant
to Section 4(2) thereof, and that they must be held by Holder indefinitely, and
that Holder must therefore bear the economic risk of such investment
indefinitely, unless a subsequent disposition thereof is registered under the
Act or is exempted from such registration. The Holder further understands that
the Shares have not been qualified under the California Securities Law of 1968
(the "CALIFORNIA LAW") by reason of their issuance in a transaction exempt from
the qualification requirements of the California Law pursuant to Section
25102(f) thereof, which exemption depends upon, among other things, the bona
fide nature of the Holder's investment intent expressed above.
(c) The Holder has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
purchase of this Warrant and the Shares purchasable pursuant to the terms of
this Warrant and of protecting its interests in connection therewith.
6
(d) The Holder is able to bear the economic risk of the purchase of
the Shares pursuant to the terms of this Warrant.
8. Rights of Shareholders. Nothing contained herein shall confer upon
Holder any of the rights of a Shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to Shareholders at
any meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
stock, change of par value, consolidation, merger, conveyance, or otherwise) or
to receive notice of meetings, or to receive dividends or subscription rights or
otherwise until the Warrant shall have been exercised and the Shares purchasable
upon the exercise hereof shall have become deliverable, as provided herein.
9. Expiration of Warrant.
The Expiration Date of this Warrant shall be the earlier of:
(a) 5:00 p.m., California local time, on March 26, 2008;
(b) five (5) years after the Company's initial public offering under
the Securities Act of 1933, as amended;
(c) the automatic conversion of the Series C Preferred Stock of the
Company into Common Stock of the Company, according to the terms of the Series C
Transaction Documents;
(d) a consolidation or merger of the Company with or into another
corporation (other than a consolidation or merger with another corporation in
which the Company's Shareholders immediately preceding such consolidation or
merger own at least fifty percent (50%) of the voting securities of the
successor entity following such consolidation or merger and which does not
result in any reclassification of the Shares issuable upon exercise of this
Warrant); or
(e) a sale of all or substantially all of the assets of the Company.
The Company shall give Holder written notice of Holder's right to
exercise this Warrant in the form attached as Exhibit B not more than ninety
(90) days and not less than thirty (30) days before the Expiration Date. If the
notice is not so given, the Expiration Date shall automatically be extended
until thirty (30) days after the date the Company delivers the notice to Holder.
10. Miscellaneous.
(a) This Warrant is being delivered in the State of California and
shall be construed and enforced in accordance with and governed by the laws of
such State. The parties expressly stipulate that any litigation under this
Warrant shall be brought in the State courts of the Counties of Santa ▇▇▇▇▇ or
San Francisco, California and in the United States District Court for the
7
Northern District of California. The parties agree to submit to the jurisdiction
and venue of those courts.
(b) The headings in this Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof.
(c) The terms of this Warrant shall be binding upon and shall inure
to the benefit of any successors in interest of the Company or the Holder. This
Warrant and all rights hereunder are not assignable or transferable by Company
or Holder, except for such permitted transfers to successors in interest and in
accordance with Section 4 herein, and any attempt to assign or transfer the
rights hereunder shall be void and of no further effect.
(d) This Warrant and the other documents delivered pursuant hereto,
including without limitation the Series C Transaction Documents, constitute the
full and entire understanding and agreement between the parties with regard to
the subjects hereof and thereof.
(e) The Company shall not, by amendment of its Amended and Restated
Articles of Incorporation, or through any other means, directly or indirectly,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant and shall at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant against
impairment.
(f) Upon receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant and, in the case
of any such loss, theft or destruction, upon delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation, upon surrender and cancellation of such Warrant, the Company at
its expense will execute and deliver to the holder of record, in lieu thereof, a
new Warrant of like date and tenor.
(g) This Warrant and any provision hereof may be amended, waived or
terminated only by an instrument in writing signed by the Company and Holder.
8
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
Issued this 26th day of March, 1998.
SILICON VALLEY INTERNET PARTNERS
By: /s/ signature illegible
Title: Vice President & CFO
Acknowledged and Accepted:
VENTURE BANKING GROUP
By: /s/ signature Illegible
Title: AVP
EXHIBIT A
NOTICE OF EXERCISE
TO: SILICON VALLEY INTERNET PARTNERS
Attention: President
1. In lieu of exercising the attached Warrant for cash or check, the
undersigned hereby elects to effect the net issuance provision of Section 1(b)
of this Warrant and receive __________ (leave blank if you choose Alternative
No. 2 below) shares of Series C Preferred Stock pursuant to the terms of this
Warrant. (Initial here if the undersigned elects this alternative). ___________.
2. The undersigned hereby elects to purchase ______________ (leave blank
if you choose alternative No. 1 above) shares of Series C Preferred Stock of
Silicon Valley Internet Partners pursuant to the terms of this Warrant, and
tenders herewith payment of the purchase price of such shares in full.
3. Please issue a certificate or certificates representing said shares of
Series C Preferred Stock in the name of the undersigned or in such other name as
is specified below:
--------------------------------------------------
(Name)
--------------------------------------------------
--------------------------------------------------
(Address)
4. The undersigned hereby represents and warrants that the aforesaid
shares of Series C Preferred Stock are being acquired for the account of the
undersigned for investment and not with a view to, or for resale, in connection
with the distribution thereof, and that the undersigned has no present intention
of distributing or reselling such shares except pursuant to a registration or
exemption, and all representations and warranties of the undersigned set forth
in Section 7 of the attached Warrant are true and correct as of the date hereof.
In support thereof, the undersigned agrees to execute an Investment
Representation Statement in a form substantially similar to the form attached to
the Warrant as Exhibit A-1.
------------------------------------------
(Signature and Date)
Title:
-----------------------------------
EXHIBIT B
NOTICE THAT WARRANT IS ABOUT TO EXPIRE
(Name of Holder)
(Address of Holder)
Attn: Chief Financial Officer
Dear ____________________:
This is to advise you that the Warrant issued to you described below will
expire on ________________________, 19__.
Issuer: Silicon Valley Internet Partners
Issue Date: March 26, 1998
Class of Security Issuable: Series C Preferred Stock
Exercise Price per Share:
Number of Shares Issuable:
Procedure for Exercise:
Please contact [name of contact person at (phone number)] with any
questions you may have concerning exercise of the Warrant. This is your only
notice of pending expiration.
Silicon Valley Internet Partners
By:
-----------------------------
Its:
----------------------------
EXHIBIT A-I
INVESTMENT REPRESENTATION STATEMENT
PURCHASER : VENTURE BANKING GROUP
COMPANY : SILICON VALLEY INTERNET PARTNERS
SECURITY : SERIES C PREFERRED STOCK ISSUED UPON EXERCISE OF THE SERIES C
PREFERRED STOCK PURCHASE WARRANT ISSUED ON MARCH 26, 1998
AMOUNT : _______ SHARES
DATE : _________________, ____
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:
(a) I am aware of the Company's business affairs and financial condition,
and have acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Securities. I am purchasing these
Securities for my own account for investment purposes only and not with a view
to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933, as amended (the "Securities Act") except
pursuant to a registration of exemption.
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein. In this connection, I understand that, in the view of the
Securities and Exchange Commission (the "SEC"), the statutory basis for such
exemption may be unavailable if my representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. Moreover, I understand that the
Company is under no obligation to register the Securities. In addition, I
understand that the certificate evidencing the Securities will be imprinted with
a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel for
the Company.
(d) I am familiar with the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or
indirectly, from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions.
The Securities may be resold in certain limited circumstances subject to
the provisions of Rule 144, which requires among other things: (1) the
availability of certain public information about the Company, (2) the resale
occurring not less than one year, and in some circumstances two years, after the
party has held, within the meaning of Rule 144, the securities to be sold; and,
in the case of an affiliate, or of a non-affiliate who has held the securities
less than two years, and in some circumstances three years, (3) the sale being
made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934) and the amount of securities being sold during
any three month period not exceeding the specified limitations stated therein,
if applicable.
(e) I agree, in connection with the Company's initial underwritten public
offering of the Company's securities, (1) not to sell, make short sale of, loan,
grant any options for the purchase of, or otherwise dispose of any shares of
Common Stock of the Company held by me (other than those shares included in the
registration) without the prior written consent of the Company or the
underwriters managing such initial underwritten public offering of the Company's
securities for one hundred eighty (180) days from the effective date of such
registration, and (2) I further agree to execute any agreement reflecting (1)
above as may be requested by the underwriters at the time of the public
offering; provided however that in the case of both e(1) and e(2) the officers
and directors of the Company who own the stock of the Company also agree to such
restrictions.
(f) I further understand that in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
------------------------------------
(Signature)
By:
---------------------------------
Title:
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Date: , 19
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2
WARRANT RECEIPT
The undersigned hereby acknowledges receipt of a Warrant to Purchase 5,517
Shares of Series C Preferred Stock of Silicon Valley Internet Partners, a
California corporation, dated as of March 26, 1998.
The undersigned further acknowledges that said Warrant contains the legend
referring to the Securities Act of 1933, as amended, and sets forth certain
restrictions on sale or transfer of the securities.
VENTURE BANKING GROUP
Dated: 3/27/99 /s/ Signature Illegible
By
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
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Name
AVP
---
Title
Return receipt to:
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▇▇▇▇▇ ▇▇▇▇, B2-9
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
SILICON VALLEY INTERNET PARTNERS
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Venture Banking Group
Three ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Pursuant to the Amended and Restated Loan and Security Agreement dated as of
March 25, 1998 and the Collateral Assignment, Patent Mortgage and Security
Agreement dated as of September 19, 1996 (the "Collateral Assignment"), each by
and between Venture Banking Group and Silicon Valley Internet Partners, the
undersigned hereby agrees to and authorizes (i) the amendment of Exhibits A, B
and C to the Collateral Assignment to include the following additional
copyrights, patents, or trademarks and (ii) the filing of such amended Exhibits
A, B and C with the U.S. Copyright Office and/or the U.S. Patent and Trademark
Office, respectively:
[See Attached]
Silicon Valley Internet Partners
Signature: /s/ Signature Illegible
By:
Dated: 3/20/98
Exhibit "C" attached to that certain Collateral Assignment, Patent Mortgage and
Loan Agreement dated September 19, 1996.
EXHIBIT "C"
TRADEMARKS
TRADEMARK CLASS COUNTRY APPLICATION APPLICATION REG. REG. STATUS
DESCRIPTION # NO. DATE NO. DATE
Viant USA 75-366,796 10-2-97 Pending
Design only USA 75-232,600 1-28-97 Pending
Silicon Valley Internet USA 75-108,013 5-22-96 Pending
Partners
SVIP USA 75-107,991 5-22-96 Pending
8