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EXHIBIT 10.19
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
INTERNAP NETWORK SERVICES CORPORATION
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TABLE OF CONTENTS
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1 ACCOUNTING AND OTHER TERMS...........................................................4
2 LOAN AND TERMS OF PAYMENT............................................................4
2.1 Credit Extensions.............................................................4
2.2 Overadvances..................................................................5
2.3 Interest Rate, Payments.......................................................5
2.4 Fees..........................................................................5
3 CONDITIONS OF LOANS..................................................................5
3.1 Conditions Precedent to Initial Credit Extension..............................5
3.2 Conditions Precedent to all Credit Extensions.................................5
4 CREATION OF SECURITY INTEREST........................................................6
4.1 Grant of Security Interest....................................................6
5 REPRESENTATIONS AND WARRANTIES.......................................................6
5.1 Due Organization and Authorization............................................6
5.2 Collateral....................................................................6
5.3 Litigation....................................................................6
5.4 No Material Adverse Change in Financial Statements............................6
5.5 Solvency......................................................................7
5.6 Regulatory Compliance.........................................................7
5.7 Subsidiaries..................................................................7
5.8 Full Disclosure...............................................................7
6 AFFIRMATIVE COVENANTS................................................................7
6.1 Government Compliance.........................................................7
6.2 Financial Statements, Reports, Certificates...................................7
6.3 Inventory; Returns............................................................8
6.4 Taxes.........................................................................8
6.5 Insurance.....................................................................8
6.6 Primary Accounts..............................................................8
6.7 Financial Covenants...........................................................9
6.8 Further Assurances............................................................9
7 NEGATIVE COVENANTS...................................................................9
7.1 Dispositions..................................................................9
7.2 Changes in Business, Ownership, Management or Business Locations..............9
7.3 Mergers or Acquisitions.......................................................9
7.4 Indebtedness..................................................................9
7.5 Encumbrance..................................................................10
7.6 Distributions; Investments...................................................10
7.7 Transactions with Affiliates.................................................10
7.8 Subordinated Debt............................................................10
7.9 Compliance...................................................................10
8 EVENTS OF DEFAULT...................................................................10
8.1 Payment Default..............................................................10
8.2 Covenant Default.............................................................10
8.3 Material Adverse Change......................................................11
8.4 Attachment...................................................................11
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8.5 Insolvency...................................................................11
8.6 Other Agreements.............................................................11
8.7 Judgments....................................................................11
8.8 Misrepresentations...........................................................11
9 BANK'S RIGHTS AND REMEDIES..........................................................11
9.1 Rights and Remedies..........................................................11
9.2 Power of Attorney............................................................12
9.3 Accounts Collection..........................................................12
9.4 Bank Expenses................................................................12
9.5 Bank's Liability for Collateral..............................................12
9.6 Remedies Cumulative..........................................................12
9.7 Demand Waiver................................................................13
10 NOTICES.............................................................................13
11 CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER.........................................13
12 GENERAL PROVISIONS..................................................................13
12.1 Successors and Assigns.......................................................13
12.2 Indemnification..............................................................13
12.3 Time of Essence..............................................................13
12.4 Severability of Provision....................................................13
12.5 Amendments in Writing, Integration...........................................14
12.6 Counterparts.................................................................14
12.7 Survival.....................................................................14
12.8 Confidentiality..............................................................14
12.9 Effect of Amendment and Restatement..........................................14
12.10 Attorneys'Fees, Costs and Expenses...........................................14
13 DEFINITIONS.........................................................................15
13.1 Definitions..................................................................15
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THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated June 30,
1999, between SILICON VALLEY BANK ("Bank"), whose address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ with a loan production office located at ▇▇▇ ▇▇▇▇▇
▇▇▇. ▇.▇., ▇▇▇. ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and INTERNAP NETWORK SERVICES
CORPORATION ("Borrower"), whose address is Two Union, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
RECITALS
A. Bank and Borrower are parties to that certain QuickStart Loan and
Security Agreement, together with all Schedules made a part thereof, dated
November 3, 1997, as amended (collectively, the "Original Agreement").
B. Borrower and Bank desire in this Agreement to set forth their
agreement with respect to a working capital loan and to amend and restate in its
entirety without novation the Original Agreement in accordance with the
provisions herein.
AGREEMENT
The parties agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document. This Agreement shall be construed to
impart upon Bank a duty to act reasonably at all times.
2 LOAN AND TERMS OF PAYMENT
2.1 CREDIT EXTENSIONS.
Borrower will pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions,
when due.
2.1.1 REVOLVING ADVANCES.
(a) Bank will make Advances not exceeding the lesser of (A) the
Committed Revolving Line minus the QuickStart Payoff minus the Cash Management
Services Sublimit or (B) the Borrowing Base. Amounts borrowed under this Section
may be repaid and reborrowed during the term of this Agreement. Notwithstanding
the foregoing, the QuickStart Payoff will not be subject to the Borrowing Base
until the earlier to occur of: (a) June 30, 1999 or (b) Borrower's ability to
support the QuickStart Payoff under the Borrowing Base.
(b) To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 3:00 p.m. Pacific time on the Business Day the Advance is to be
made. Borrower must promptly confirm the notification by delivering to Bank the
Payment/Advance Form attached as Exhibit B. Bank will credit Advances to
Borrower's deposit account. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become
due. Bank may rely on any telephone notice given by a person whom Bank believes
is a Responsible Officer or designee. Borrower will indemnify Bank for any loss
Bank suffers due to reliance.
(c) The Committed Revolving Line terminates on the Revolving Maturity
Date, when all Advances and other amounts due under this Agreement are
immediately payable.
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2.1.2 CASH MANAGEMENT SERVICES SUBLIMIT.
Borrower may use up to $300,000 for Bank's Cash Management Services,
which may include, business credit card services identified in various cash
management services agreements related to such services (the "Cash Management
Services"). All amounts Bank pays for any Cash Management Services will be
treated as Advances under the Committed Revolving Line.
2.2 OVERADVANCES.
If Borrower's Obligations under Section 2.1.1 and Section 2.1.2 exceed
the Committed Revolving Line or obligations under Section 2.1.1 exceed the
Borrowing Base, Borrower must immediately pay Bank the excess.
2.3 INTEREST RATE, PAYMENTS.
(a) Interest Rate. Advances accrue interest on the outstanding principal
balance at a per annum rate of 1.00 percentage point above the Prime Rate. After
an Event of Default, Obligations accrue interest at 5 percent above the rate
effective immediately before the Event of Default. The interest rate increases
or decreases when the Prime Rate changes. Interest is computed on a 360 day year
for the actual number of days elapsed.
(b) Payments. Interest due on the Committed Revolving Line is payable on
the last day of each month. Bank may debit any of Borrower's deposit accounts
including Account Number _____________________________ for principal and
interest payments or any amounts Borrower owes Bank. Bank will notify Borrower
when it debits Borrower's accounts. These debits are not a set-off. Payments
received after 2:00 p.m. Pacific time are considered received at the opening of
business on the next Business Day. When a payment is due on a day that is not a
Business Day, the payment is due the next Business Day and additional fees or
interest accrue.
2.4 FEES.
Borrower will pay:
(a) Facility Fee. A fully earned, non-refundable Facility Fee of $6,000
due on the Closing Date; and
(b) Bank Expenses. All Bank Expenses (including reasonable attorneys'
fees and expenses) incurred through and after the date of this Agreement, are
payable when due.
3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.
Bank's obligation to make the initial Credit Extension is subject to;
(a) The condition precedent that it receive the agreements, documents
and fees it requires; and
(b) Borrower's initial Credit Extension shall be used to payoff
Borrower's existing QuickStart facility with Bank in an amount equal to the
QuickStart Payoff. Notwithstanding the foregoing, the QuickStart Payoff will not
be subject to the Borrowing Base until the earlier to occur of: (a) June 30,
1999 or (b) Borrower's ability to support the QuickStart Payoff under the
Borrowing Base.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.
Bank's obligations to make each Credit Extension, including the initial
Credit Extension, is subject to the following:
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(a) timely receipt of any Payment/Advance Form as specified in Section
2.1.1 above; and
(b) the representations and warranties in Section 5 must be materially
true on the date of the Payment/Advance Form and on the effective date of each
Credit Extension except as otherwise disclosed to Bank and no Event of Default
may have occurred and be continuing, or result from the Credit Extension. Each
Credit Extension is Borrower's representation and warranty on that date that the
representations and warranties of Section 5 remain true except as otherwise
disclosed to Bank.
4 CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST.
Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank may place a "hold" on any deposit account pledged as
Collateral.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION.
Borrower and each Subsidiary is duly existing and in good standing in
its state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified except where failure to so qualify would
have a material adverse effect on Borrower.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the default could cause a Material Adverse Change.
5.2 COLLATERAL.
Borrower has good title to the Collateral, free of Liens except
Permitted Liens. The Accounts are bona fide, existing obligations, and the
service or property has been performed or delivered to the account debtor or its
agent for immediate shipment to and unconditional acceptance by the account
debtor. Borrower has no notice of any actual or imminent Insolvency Proceeding
of any account debtor whose accounts are an Eligible Account in any Borrowing
Base Certificate. All Inventory is in all material respects of good and
marketable quality, free from material defects.
5.3 LITIGATION.
Except as shown in the Schedule, there are no actions or proceedings
pending or, to Borrower's knowledge, threatened by or against Borrower or any
Subsidiary in which an adverse decision could cause a Material Adverse Change.
5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.
All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations. There has not been any material deterioration in Borrower's
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.
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5.5 SOLVENCY.
The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.
5.6 REGULATORY COMPLIANCE.
Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations G, T and U of the Federal Reserve Board of Governors). Borrower has
complied with the Federal Fair Labor Standards Act. Borrower has not violated
any laws, ordinances or rules, the violation of which could cause a Material
Adverse Change. None of Borrower's or any Subsidiary's properties or assets has
been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge,
by previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally. Borrower and each Subsidiary has
timely filed all required tax returns and paid, or made adequate provision to
pay, all taxes, except those being contested in good faith with adequate
reserves under GAAP. Borrower and each Subsidiary has obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all government authorities that are necessary to continue
its business as currently conducted.
5.7 SUBSIDIARIES.
Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments.
5.8 FULL DISCLOSURE.
No representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained in the certificates or statements not misleading.
6 AFFIRMATIVE COVENANTS
Borrower will do all of the following:
6.1 GOVERNMENT COMPLIANCE.
Borrower will maintain its and all Subsidiaries' legal existence and
good standing in its jurisdiction of formation and maintain qualification in
each jurisdiction in which the failure to so qualify could have a material
adverse effect on Borrower's business or operations. Borrower will comply, and
have each Subsidiary comply, with all laws, ordinances and regulations to which
it is subject, noncompliance with which could have a material adverse effect on
Borrower's business or operations or cause a Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower will deliver to Bank: (i) as soon as available, but no
later than 30 days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower's consolidated
operations during the period, in a form and certified by a Responsible Officer
acceptable to Bank; (ii) as soon as available, but no later than 90 days after
the last day of Borrower's fiscal year, audited consolidated financial
statements prepared under GAAP, consistently applied, together with an
unqualified opinion on the financial statements from an independent certified
public accounting firm acceptable to Bank; (iii) a prompt 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
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of $100,000 or more; and (iv) budgets, sales projections, operating plans or
other financial information Bank requests.
(b) Within 30 days after the last day of each month, Borrower will
deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in
the form of Exhibit C together with a subscriber report.
(c) Within 30 days after the last day of each month, Borrower will
deliver to Bank with the monthly financial statements a Compliance Certificate
signed by a Responsible Officer in the form of Exhibit D.
(d) Bank has the right to audit Borrower's Collateral at Borrower's
expense, if an Event of Default has occurred and is continuing.
6.3 INVENTORY; RETURNS.
Borrower will keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary practices as they exist at execution of
this Agreement. Borrower must promptly notify Bank of all returns, recoveries,
disputes and claims, that involve more than $50,000.
6.4 TAXES.
Borrower will make, and cause each Subsidiary to make, timely payment of
all material federal, state, and local taxes or assessments and will deliver to
Bank, on demand, appropriate certificates attesting to the payment.
6.5 INSURANCE.
Borrower will keep its business and the Collateral insured for risks and
in amounts, as Bank requests. Insurance policies will be in a form, with
companies, and in amounts that are satisfactory to Bank. All property policies
will have a lender's loss payable endorsement showing Bank as an additional loss
payee and all liability policies will show the Bank as an additional insured and
provide that the insurer must give Bank at least 20 days notice before canceling
its policy. At Bank's request, Borrower will deliver certified copies of
policies and evidence of all premium payments. Proceeds payable under any policy
relating to Collateral to the extent not subject to a Permitted Lien, will, at
Bank's option, be payable to Bank on account of the Obligations. Statutory
notice regarding insurance:
WARNING
Unless you provide us with evidence of the insurance coverage as
required by our contract or loan agreement, we may purchase insurance at your
expense to protect our interest. This insurance may, but need not, also protect
your interest. If the collateral becomes damaged, the coverage we purchase may
not pay any claim you make or any claim made against you. You may later cancel
this coverage by providing evidence that you have obtained property coverage
elsewhere.
You are responsible for the cost of any insurance purchased by us. The
cost of this insurance may be added to your contract or loan balance. If the
cost is added to your contract or loan balance, the interest rate on the
underlying contract or loan will apply to this added amount. The effective date
of coverage may be the date your prior coverage lapsed or the date you failed to
provide proof of coverage.
This coverage we purchased may be considerably more expensive than
insurance you can obtain on your own and may not satisfy any need for property
damage coverage or any mandatory liability insurance requirements imposed by
applicable law.
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6.6 PRIMARY ACCOUNTS.
Borrower will maintain a depository account with Bank.
6.7 FINANCIAL COVENANTS.
Borrower will maintain as of the last day of each month:
(i) QUICK RATIO. A ratio of Quick Assets to Current Liabilities
of at least 1.50 to 1.00 or have available commitments of at least twice the
outstanding loan amount.
(ii) TANGIBLE NET WORTH. A Tangible Net Worth of at least
$25,000,000 for the quarter ended March 31, 1999; $15,000,000 for the quarter
ending June 30, 1999; $4,000,000 for the quarter ending September 30, 1999; and
$50,000,000 for the quarter ending December 31, 1999, and thereafter.
(iii) MONTHLY REVENUE LEVEL. Borrower shall not report a decline
in the revenue on a rolling, three month average.
6.8 FURTHER ASSURANCES.
Borrower will execute any further instruments and take further action as
Bank requests to perfect or continue Bank's security interest in the Collateral
or to effect the purposes of this Agreement.
7 NEGATIVE COVENANTS
Borrower will not do any of the following:
7.1 DISPOSITIONS.
Convey, sell, lease, transfer or otherwise dispose of (collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, other than Transfers (i) of Inventory in the ordinary
course of business; (ii) of non-exclusive licenses and exclusive licenses in
geographic regions and similar arrangements for the use of the property of
Borrower or its Subsidiaries in the ordinary course of business; (iii) of
worn-out or obsolete Equipment; (iv) sale leaseback transactions; (v) Permitted
Investments; or (vi) Permitted Liens.
7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.
Engage in or permit any of its Subsidiaries to engage in any business
other than the businesses currently engaged in by Borrower or have a material
change in its ownership of greater than 49%. Borrower will not, without at least
30 days prior written notice, relocate its chief executive office or add any new
offices or business locations.
7.3 MERGERS OR ACQUISITIONS.
Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except where (i) no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement and (ii) result in a decrease of more than 25% of Tangible Net Worth.
A Subsidiary may merge or consolidate into another Subsidiary or into Borrower.
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7.4 INDEBTEDNESS.
Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.
7.5 ENCUMBRANCE.
Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
here.
7.6 DISTRIBUTIONS; INVESTMENTS.
Directly or indirectly acquire or own any Person, or make any Investment
in any Person, other than Permitted Investments, or permit any of its
Subsidiaries to do so. Pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock; provided, that Borrower may redeem
or repurchase its securities in connection with any agreement between Borrower
and any officer, director or employee of Borrower wherein Borrower is obligated
or entitled to repurchase from such officer, director or employee share of
equity securities of Borrower upon such person's termination of employment or
services or other event not to exceed $500,000.
7.7 TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter or permit any material transaction with any
Affiliate except transactions that are in the ordinary course of Borrower's
business, on terms less favorable to Borrower than would be obtained in an arm's
length transaction with a non-affiliated Person.
7.8 SUBORDINATED DEBT.
Make or permit any payment on any Subordinated Debt, except under the
terms of the Subordinated Debt, or amend any provision in any document relating
to the Subordinated Debt without Bank's prior written consent.
7.9 COMPLIANCE.
Become an "investment company" or a company controlled by an "investment
company," under the Investment Company Act of 1940 or undertake as one of its
important activities extending credit to purchase or carry margin stock, or use
the proceeds of any Credit Extension for that 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 other law or regulation, if the violation
could have a material adverse effect on Borrower's business or operations or
cause a Material Adverse Change, or permit any of its Subsidiaries to do so.
8 EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1 PAYMENT DEFAULT.
If Borrower fails to pay any of the Obligations;
8.2 COVENANT DEFAULT.
If Borrower does not perform any obligation in Section 6 or violates any
covenant in Section 7 or does not perform or observe any other material term,
condition or covenant in this Agreement, any Loan
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Documents, or in any agreement between Borrower and Bank and as to any default
under a term, condition or covenant that can be cured, has not cured the default
within 10 days after it occurs, or if the default cannot be cured within 10 days
or cannot be cured after Borrower's attempts within 10 day period, and the
default may be cured within a reasonable time, then Borrower has an additional
period (of not more than 30 days) to attempt to cure the default. During the
additional time, the failure to cure the default is not an Event of Default (but
no Credit Extensions will be made during the cure period);
8.3 MATERIAL ADVERSE CHANGE.
(i) If there occurs a material impairment in the perfection or priority
of the Bank's security interest in the Collateral or in the value of such
Collateral which is not covered by adequate insurance or (ii) if the Bank
determines, based upon information available to it and in its reasonable
judgment, that there is a material impairment of the prospect of repayment of
the Obligations..
8.4 ATTACHMENT.
If any material portion of Borrower's assets is attached, seized, levied
on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower's assets by any government agency and not paid within 10 days
after Borrower receives notice. These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Credit Extensions will be
made during the cure period);
8.5 INSOLVENCY.
If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Credit Extensions will be made before
any Insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS.
If there is a default in any agreement between Borrower and a third
party that gives the third party the right to accelerate any Indebtedness
exceeding $100,000 or that could cause a Material Adverse Change;
8.7 JUDGMENTS.
If a money judgment(s) of at least $100,000 is rendered against Borrower
and is unsatisfied and unstayed for 30 days (but no Credit Extensions will be
made before the judgment is stayed or satisfied); or
8.8 MISREPRESENTATIONS.
If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document.
9 BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES.
When an Event of Default occurs and continues Bank may, without notice
or demand, do any or all of the following:
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(a) Declare all Obligations immediately due and payable (but if an Event
of Default described in Section 8.5 occurs all Obligations are immediately due
and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's benefit
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, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrower will
assemble the Collateral if Bank requires and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank's rights
or remedies;
(e) Apply to the Obligations any (i) balances and deposits of Borrower
it holds, or (ii) any amount held by Bank owing to or for the credit or the
account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral; and
(g) Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY.
Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or ▇▇▇▇ of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Credit Extensions
terminates.
9.3 ACCOUNTS COLLECTION.
When an Event of Default occurs and continues, Bank may notify any
Person owing Borrower money of Bank's security interest in the funds and verify
the amount of the Account. Borrower must collect all payments in trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank in the form
received from the account debtor, with proper endorsements for deposit.
9.4 BANK EXPENSES.
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.
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9.5 BANK'S LIABILITY FOR COLLATERAL.
If Bank complies with reasonable banking practices it is not liable for:
(a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral;
(c) any diminution in the value of the Collateral; or (d) any act or default of
any carrier, warehouseman, bailee, or other person. Borrower bears all risk of
loss, damage or destruction of the Collateral except for Bank's gross negligence
and willful misconduct.
9.6 REMEDIES CUMULATIVE.
Bank's rights and remedies under this Agreement, the Loan Documents, and
all other agreements are cumulative. Bank has all rights and remedies provided
under the Code, by law, or in equity. Bank's exercise of one right or remedy is
not an election, and Bank's waiver of any Event of Default is not a continuing
waiver. Bank's delay is not a waiver, election, or acquiescence. No waiver is
effective unless signed by Bank and then is only effective for the specific
instance and purpose for which it was given.
9.7 DEMAND WAIVER.
Borrower waives demand, 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 held by Bank on which Borrower is
liable.
10 NOTICES
All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A Party may change its notice address by giving the other Party
written notice.
11 CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER
Washington law governs the Loan Documents without regard to principles
of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in King County, Washington.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS.
This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any
rights under it without Bank's prior written consent which may be granted or
withheld in Bank's discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank's obligations, rights and benefits
under this Agreement.
12.2 INDEMNIFICATION.
Borrower will indemnify, defend and hold harmless Bank and its officers,
employees, and agents against: (a) all obligations, demands, claims, and
liabilities asserted by any other party in connection
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with the transactions contemplated by the Loan Documents; and (b) all losses or
Bank Expenses incurred, or paid by Bank from, following, or consequential to
transactions between Bank and Borrower (including 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 in this
Agreement.
12.4 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other provision
in determining the enforceability of any provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing and signed by
Borrower and Bank. This Agreement represents the entire agreement about this
subject matter, and supersedes prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Agreement merge into this
Agreement and the Loan Documents. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN
MONEY, EXTEND CREDIT, OR FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW. UNDER OREGON OR WASHINGTON LAW, MOST
AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE BANK AFTER OCTOBER 3, 1989
CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY
OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN
WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY US TO BE ENFORCEABLE.
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, are an original, and all taken together, constitute one Agreement.
12.7 SURVIVAL.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.
12.8 CONFIDENTIALITY.
In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates
in connection with their business with Borrower, (ii) to prospective transferees
or purchasers of any interest in the Loans, (iii) as required by law,
regulation, subpoena, or other order, (iv) as required in connection with Bank's
examination or audit and (v) as Bank considers appropriate exercising remedies
under this Agreement. Confidential information does not include information that
either: (a) is in the public domain or in Bank's possession when disclosed to
Bank, or becomes part of the public domain after disclosure to Bank; or (b) is
disclosed to Bank by a third party, if Bank does not know that the third party
is prohibited from disclosing the information.
12.9 EFFECT OF AMENDMENT AND RESTATEMENT.
This Agreement is intended to and does completely amend and restate,
without novation, the Original Agreement. All credit extensions or loans
outstanding under the Original Agreement are and
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shall continue to be outstanding under this Agreement. All security interests
granted under the Original Agreement are hereby confirmed and ratified and shall
continue to secure all Obligations under this Agreement.
12.10 ATTORNEYS' FEES, COSTS AND EXPENSES.
In any action or proceeding between Borrower and Bank arising out of the
Loan Documents, the prevailing party will be entitled to recover its reasonable
attorneys' fees and other costs and expenses incurred, in addition to any other
relief to which it may be entitled.
13 DEFINITIONS
13.1 DEFINITIONS.
In this Agreement:
"ACCOUNTS" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its sale or lease of
goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
"ADVANCE" or "ADVANCES" is a loan advance (or advances) under the
Committed Revolving Line.
"AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"BASE SUBSCRIBER RATE" means the recurring monthly revenue received by
Borrower per Subscriber, on a rolling three month basis.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs or
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"BORROWER'S BOOKS" are all Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs or
any equipment containing the information.
"BORROWING BASE" is QuickStart Payoff plus the percentage (set forth
below) of the prior rolling three month Base Subscriber Rate as determined by
Bank from Borrower's most recent Borrowing Base Certificate, adjusted as
follows:
MONTHLY CHURN RATE BORROWING BASE
------------------ --------------
Less than 5% 80%
5% to 7% 75%
10% to 12% 65%
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which the Bank is closed.
"CASH MANAGEMENT SERVICES" are defined in Section 2.1.2.
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"CHURN RATE" means the average monthly cancellations of services
provided to Subscribers, on a rolling three (3) month basis, divided by the
number of Subscribers as of the last day of the month being measured.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the Washington Uniform Commercial Code.
"COLLATERAL" is the property described on Exhibit A.
"COMMITTED REVOLVING LINE" is an Advance of up to $3,000,000.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"CREDIT EXTENSION" is each Advance or any other extension of credit by
Bank for Borrower's benefit.
"CURRENT LIABILITIES" are the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.
"GAAP" is generally accepted accounting principles.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INVENTORY" is 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 later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
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"INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes
or guaranties executed by Borrower or Guarantor, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated.
"MATERIAL ADVERSE CHANGE" is defined in Section 8.3.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later under the Agreement or any other Loan
Document, including letters of credit and exchange contracts, cash management
services, and including interest accruing after Insolvency Proceedings begin and
debts, liabilities, or obligations of Borrower assigned to Bank.
"ORIGINAL AGREEMENT" has the meaning set forth in recital paragraph A.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Bank under this Agreement or any other
Loan Document;
(b) Indebtedness existing on the Closing Date and shown on the Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary course of
business;
(e) Indebtedness secured by Permitted Liens;
(f) Other Indebtedness of Borrower, not exceeding $500,000 in the
aggregate outstanding at any time;
(g) Indebtedness with respect to capital lease obligations (including
leases of real property);
(h) Prepaid royalties and deferred revenue in connection with prepaid
support services not to exceed $500,000;
(i) Indebtedness of up to $7,500,000 to Finova Capital Corporation in
connection with an equipment loan; and
(j) Extensions, renewals, refundings, refinancings, modifications,
amendments and restatements of any of the items of Permitted Indebtedness (a)
through (j) above, provided that the principal amount thereof is not increased
or the terms thereof are not modified to impose more burdensome terms upon
Borrower.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Closing Date;
(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard & Poor's
Corporation or ▇▇▇▇▇'▇ Investors Service, Inc., and (iii) Bank's certificates of
deposit issued maturing no more than 1 year after issue;
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(c) Extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the ordinary
course of business;
(d) Investments consisting of the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business;
(e) 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;
(f) Investments consisting of (i) travel advances, employee relocation
loans and other employee loans and advances in the ordinary course of business
not to exceed $500,000, (ii) loans to employees, officers or directors relating
to the purchase of equity securities of Borrower, and (iii) other loans to
officers and employees approved by the Board of Directors;
(g) Investments in ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Auction Rate Preferred; and
(h) other Investments aggregating not in excess of $500,000 at any time.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries incurred for financing the acquisition of the Equipment,
(ii) existing on equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the equipment, or (iii) lien on up
to $2,500,000 of existing Equipment to be encumbered relation to an equipment
loan;
(d) Leases or subleases and licenses or sublicenses granted in the
ordinary course of Borrower's business and any interest or title of a lessor,
licensor or under any lease or license, if the leases, subleases, licenses and
sublicenses permit granting Bank a security interest;
(e) Liens securing capital lease obligations on assets subject to such
capital leases;
(f) Liens on equipment leased by Borrower pursuant to an operating lease
(including sale-leaseback transactions) 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 arising from
UCC financing statements regarding leases permitted by this Agreement);
(g) Easements, reservations, rights-of-way, restrictions, minor defects
or irregularities in title and other similar Liens affecting real property not
interfering in any material respect with the ordinary conduct of the business or
Borrower;
(h) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of custom duties in connection with the
importation of goods;
(i) 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;
(j) Liens on Equipment in favor of Finova Capital Corporation and other
Equipment Lenders, which Liens do not in the aggregate exceed $7,500,000 at any
time; and
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(k) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c) above, but any
extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness may
not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it
is not Bank's lowest rate.
"QUICK ASSETS" is, on any date, the Borrower's consolidated,
unrestricted cash, cash equivalents, net billed accounts receivable and
investments with maturities of fewer than 12 months determined according to
GAAP.
"QUICKSTART PAYOFF" is the amount necessary to fully repay Borrower's
outstanding Quickstart facility with Bank.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower or other
such person specifically authorized by Borrower..
"REVOLVING MATURITY DATE" is June 30, 2000.
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's debt to Bank (and identified as subordinated by Borrower and Bank).
"SUBSCRIBER" means a customer and paid subscriber of Borrower services.
"SUBSIDIARY" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries including non-current Subordinated Debt, minus,
(i) 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) reserves not already deducted from assets, and (ii) Total Liabilities
excluding Subordinated Debt.
"TOTAL LIABILITIES" is on any day, obligations that should, under GAAP,
be classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.
BORROWER:
INTERNAP NETWORK SERVICES CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
Title: Director of Finance
-------------------------------------
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BANK:
SILICON VALLEY BANK
By: /s/ ▇. ▇. ▇▇▇▇▇
----------------------------------------
Title: Vice President
-------------------------------------
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EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest
in and to the following:
All goods and equipment (other than equipment financed elsewhere) 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;
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;
All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, leases, license agreements,
franchise agreements, blueprints, drawings, purchase orders, customer lists,
route lists, claims, literature, reports, catalogs, income tax refunds, payments
of insurance and rights to payment of any kind;
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;
All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, financial assets,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired and Borrower's Books relating to the foregoing
(excluding cash pledged to another party); and
Any and all claims, rights and interests in any of the above and all
substitutions for, additions and accessions to and proceeds thereof.
NOTWITHSTANDING THE FOREGOING, THE COLLATERAL SHALL NOT BE DEEMED TO
INCLUDE ANY COPYRIGHTS, COPYRIGHT APPLICATIONS, COPYRIGHT REGISTRATION AND LIKE
PROTECTION IN EACH WORK OF AUTHORSHIP AND DERIVATIVE WORK THEREOF, WHETHER
PUBLISHED OR UNPUBLISHED, NOW OWNED OR HEREAFTER ACQUIRED; ANY PATENTS, PATENT
APPLICATIONS AND LIKE PROTECTIONS INCLUDING WITHOUT LIMITATION IMPROVEMENTS,
DIVISIONS, CONTINUATIONS, RENEWALS, REISSUES, EXTENSIONS AND
CONTINUATIONS-IN-PART OF THE SAME, TRADEMARKS, SERVICEMARKS AND APPLICATIONS
THEREFOR, WHETHER REGISTERED OR NOT, AND THE GOODWILL OF THE BUSINESS OF
BORROWER CONNECTED WITH AND SYMBOLIZED BY SUCH TRADEMARKS, ANY TRADE SECRET
RIGHTS, INCLUDING ANY RIGHTS TO UNPATENTED INVENTIONS, KNOW-HOW, OPERATING
MANUALS, LICENSE RIGHTS AND AGREEMENTS AND CONFIDENTIAL INFORMATION, NOW OWNED
OR HEREAFTER ACQUIRED; OR ANY CLAIMS FOR DAMAGE BY WAY OF ANY PAST, PRESENT AND
FUTURE INFRINGEMENT OF ANY OF THE FOREGOING (COLLECTIVELY, THE "INTELLECTUAL
PROPERTY"), EXCEPT THAT THE COLLATERAL SHALL INCLUDE THE PROCEEDS OF ALL THE
INTELLECTUAL PROPERTY THAT ARE ACCOUNTS, I.E. ACCOUNTS RECEIVABLE, OF BORROWER;
AND TO THE EXTENT THAT THE BORROWER IS IN DEFAULT OF THIS AGREEMENT, IF A
JUDICIAL AUTHORITY (INCLUDING A U.S. BANKRUPTCY COURT) HOLDS THAT A SECURITY
INTEREST IN THE UNDERLYING INTELLECTUAL PROPERTY IS NECESSARY TO HAVE A SECURITY
INTEREST IN SUCH ACCOUNTS OF BORROWER THAT ARE PROCEEDS OF THE INTELLECTUAL
PROPERTY, THEN THE COLLATERAL SHALL INCLUDE THE INTELLECTUAL PROPERTY SOLELY TO
THE EXTENT NECESSARY TO PERMIT PROTECTION OF BANK'S SECURITY INTEREST IN SUCH
ACCOUNTS OF BORROWER THAT ARE PROCEEDS OF THE INTELLECTUAL PROPERTY.
22
EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.
TO: CENTRAL CLIENT SERVICE DIVISION DATE:
-----------------------------
FAX#: (▇▇▇) ▇▇▇-▇▇▇▇ TIME:
-----------------------------
-------------------------------------------------------------------------------
FROM: INTERNAP NETWORK SERVICES CORPORATION
--------------------------------------------------------------------------------
CLIENT NAME (BORROWER)
REQUESTED BY:
------------------------------------------------------------------
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:
----------------------------------------------------------
PHONE NUMBER:
-------------------------------------------------------------------
FROM ACCOUNT # TO ACCOUNT #
-------------------------------- -----------------------
REQUESTED TRANSACTION TYPE REQUESTED DOLLAR AMOUNT
PRINCIPAL INCREASE (ADVANCE) $
-----------------------------
PRINCIPAL PAYMENT (ONLY) $
-----------------------------
INTEREST PAYMENT (ONLY) $
-----------------------------
PRINCIPAL AND INTEREST (PAYMENT) $
-----------------------------
OTHER INSTRUCTIONS:
-------------------------------------------------------------
--------------------------------------------------------------------------------
All Borrower's representations and warranties in the Amended and Restated Loan
and Security Agreement are true, correct and complete in all material respects
on the date of the telephone request for and Advance confirmed by this Borrowing
Certificate; but those representations and warranties expressly referring to
another date shall be true, correct and complete in all material respects as of
that 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)
--------------------------------------------------------------------------------
23
EXHIBIT C
BORROWING BASE CERTIFICATE
--------------------------------------------------------------------------------
Borrower: INTERNAP NETWORK SERVICES CORPORATION Bank: Silicon Valley Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Commitment Amount: $3,000,000
--------------------------------------------------------------------------------
BORROWING BASE
1. Total Subscribers as of _________ $_______________
2. Base Subscriber Rate* $_______________
3. Additions (please explain on reverse) $_______________
4. Loan Value (80% of #2*) $_______________
*75% of #2 if Churn Rate is 5% to 7%
*65% of #2 if Churn Rate is 10% to 12%
BALANCES
5. Maximum Loan Amount $_______________
6. Total Funds Available [Lesser of #5 or #4] $_______________
7. Present balance owing on Line of Credit $_______________
8. Outstanding under Sublimits (Cash Management) $_______________
9. QuickStart Payoff (through the earlier to occur of (a) ablility to be
supported by the Borrowing Base or (b) 5/3/99) $_______________
10. RESERVE POSITION (#6 minus #7, #8 and #9) $_______________
The undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Amended and Restated Loan and Security
Agreement between the undersigned and Silicon Valley Bank.
COMMENTS:
___________________________
BANK USE ONLY
INTERNAP NETWORK SERVICES CORPORATION Rec'd By: ________________
Auth. Signer
Date: ____________________
By: ____________________________________ Verified:_________________
Authorized Signer Auth. Signer
Date:_____________________
__________________________
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EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FROM: INTERNAP NETWORK SERVICES CORPORATION
The undersigned authorized officer of INTERNAP NETWORK SERVICES
CORPORATION ("Borrower") certifies that under 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 in the Agreement are true and correct in all
material respects on this date. Attached are the required documents supporting
the certification. The Officer certifies that these are prepared in accordance
with Generally Accepted Accounting Principles (GAAP) consistently applied from
one period to the next except as explained in an accompanying letter or
footnotes. The Officer acknowledges that no borrowings may be requested at any
time or date of determination that Borrower is not in compliance with any of the
terms of the Agreement, and that compliance is determined not just at the date
this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES"
COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Monthly financial statements+Comp. Cert Monthly within 30 days Yes No
Annual (Audited) FYE within 90 days* Yes No
Borrowing Base Certificate + Monthly within 30 days Yes No
Subscriber report
*120 days for 1998FYE.
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Monthly Basis:
Minimum Quick Ratio 1.50:1.00 _____:1.00 Yes No
Minimum Tangible Net Worth * $________ Yes No
Monthly Pre-billed revenue level No decline on a $________ Yes No
rolling 3 month average
* of at least $25,000,000 the quarter ended March 31, 1999; $15,000,000 for the
quarter ending June 30, 1999; $4,000,000 for the quarter ending September 30,
1999; and $50,000,000 for the quarter ending December 31, 1999, and thereafter.
COMMENTS REGARDING EXCEPTIONS: See Attached.
----------------------------------------
BANK USE ONLY
Received by:________________________
AUTHORIZED SIGNER
Date: ______________________________
Verified: __________________________
AUTHORIZED SIGNER
Date:_______________________________
Compliance Status: Yes No
----------------------------------------
25
Sincerely,
INTERNAP NETWORK SERVICES CORPORATION
______________________________________
SIGNATURE
______________________________________
TITLE
______________________________________
DATE
2
26
[LOGO]
SILICON VALLEY BANK
PRO FORMA INVOICE FOR LOAN CHARGES
BORROWER: INTERNAP NETWORK SERVICES CORPORATION
LOAN OFFICER: ▇▇▇▇▇▇▇ ▇▇▇▇▇
DATE: JUNE 30, 1999
REVOLVING LOAN FEE $6,000.00
UCC FILING FEE 40.00
DOCUMENTATION FEE 1,000.00
LEGAL FEE 250.00
TOTAL FEE DUE $7,290.00
=========
PLEASE INDICATE THE METHOD OF PAYMENT:
{ } A CHECK FOR THE TOTAL AMOUNT IS ATTACHED.
{ } DEBIT DDA # __________________ FOR THE TOTAL AMOUNT.
{ } LOAN PROCEEDS
BORROWER:
BY: ________________________________________
(AUTHORIZED SIGNER)
____________________________________________
SILICON VALLEY BANK (DATE)
ACCOUNT OFFICER'S SIGNATURE
27
NEGATIVE PLEDGE AGREEMENT
This Negative Pledge Agreement is made as of June 30, 1999, by and
between INTERNAP NETWORK SERVICES CORPORATION ("Borrower") and Silicon Valley
Bank ("Bank").
In connection with, among other documents, the Amended and Restated Loan and
Security Agreement (the "Loan Documents") being concurrently executed herewith
between Borrower and Bank, Borrower agrees as follows:
1. Borrower shall not sell, transfer, assign, mortgage, pledge,
lease, grant a security interest in, or encumber any of
Borrower's intellectual property, including, without limitation,
the following:
a. Any and all copyright rights, copyright applications,
copyright registrations and like protections in each
work or authorship and derivative work thereof, whether
published or unpublished and whether or not the same
also constitutes a trade secret, now or hereafter
existing, created, acquired or held;
b. All mask works or similar rights available for the
protection of semiconductor chips, now owned or
hereafter acquired;
c. Any and all trade secrets, and any and all intellectual
property rights in computer software and computer
software products now or hereafter existing, created,
acquired or held;
d. Any and all design rights which may be available to
Borrower now or hereafter existing, created, acquired or
held;
e. All patents, patent applications and like protections
including, without limitation, improvements, divisions,
continuations, renewals, reissues, extensions and
continuations-in-part of the same, including without
limitation the patents and patent applications;
f. Any trademark and servicemark rights, whether registered
or not, applications to register and registrations of
the same and like protections, and the entire goodwill
of the business of Borrower connected with and
symbolized by such trademarks, including without
limitation;
g. Any and all claims for damages by way of past, present
and future infringements of any of the rights included
above, with the right, but not the obligation, to ▇▇▇
for and collect such damages for said use or
infringement of the intellectual property rights
identified above;
h. All licenses or other rights to use any of the
Copyrights, Patents, Trademarks or Mask Works, and all
license fees and royalties arising from such use to the
extent permitted by such license or rights; and
i. All amendments, extensions, renewals and extensions of
any of the Copyrights, Trademarks, Patents, or Mask
Works; and
j. All proceeds and products of the foregoing, including
without limitation all payments under insurance or any
indemnity or warranty payable in respect of any of the
foregoing;
2. It shall be an event of default under the Loan Documents between
Borrower and Bank if there is a breach of any term of this
Negative Pledge Agreement.
28
3. Capitalized terms used but not otherwise defined herein shall
have the same meaning as in the Loan Documents.
BORROWER:
INTERNAP NETWORK SERVICES CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Title: Director of Finance
-------------------------------
BANK:
SILICON VALLEY BANK
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Title: AVP
-------------------------------
2
29
CORPORATE BORROWING RESOLUTION
BORROWER: INTERNAP NETWORK SERVICES BANK: SILICON VALLEY BANK
CORPORATION ▇▇▇ ▇▇▇▇▇ ▇▇▇. ▇.▇., ▇▇▇. ▇▇▇
TWO UNION, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
I, THE UNDERSIGNED SECRETARY OR ASSISTANT SECRETARY OF INTERNAP NETWORK SERVICES
CORPORATION ("BORROWER"), HEREBY CERTIFY that Borrower is a corporation duly
organized and existing under and by virtue of the laws of the State of
Washington.
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
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ V.P. of Finance and Admin/CFO /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------- ----------------------------- ------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Director of Finance /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------- ----------------------------- ------------------------
------------------- ----------------------------- ------------------------
------------------- ----------------------------- ------------------------
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 Silicon Valley Bank
("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.
30
FOREIGN EXCHANGE CONTRACTS. To execute and deliver foreign exchange
contracts, either spot or forward, from time to time, in such amount as,
in the judgment of the officer or officers herein authorized.
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
Borrower and occupy the positions set opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Borrower; 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 June 30, 1999 and attest that
the signatures set opposite the names listed above are their genuine signatures.
CERTIFIED TO AND ATTESTED BY:
X /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
*Secretary or Assistant Secretary
X
----------------------------------------------
*NOTE: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, this resolution should
also be signed by a second Officer or Director of Borrower.
2