SUPPLEMENT to the Loan and Security Agreement Dated as of September 26, 2003 between Volcano Therapeutics, Inc. (“Borrower”) and Venture Lending & Leasing III, Inc. (“Lender”)
Exhibit 10.6
SUPPLEMENT
to the
Loan and Security Agreement
Dated as of September 26, 2003
between
Volcano Therapeutics, Inc. (“Borrower”)
and
Venture Lending & Leasing III, Inc. (“Lender”)
to the
Loan and Security Agreement
Dated as of September 26, 2003
between
Volcano Therapeutics, Inc. (“Borrower”)
and
Venture Lending & Leasing III, Inc. (“Lender”)
This is a Supplement identified in the document entitled Loan and Security Agreement dated as
of September 26, 2003, between Borrower and Lender. All capitalized terms used in this Supplement
and not otherwise defined in this Supplement have the meanings ascribed to them in Section 10 of
the Loan and Security Agreement, which is incorporated in its entirety into this Supplement. In the
event of any inconsistency between the provisions of that document and this Supplement, this
Supplement is controlling. Execution of this Supplement by the Lender and Borrower shall constitute
execution of the Loan and Security Agreement.
In addition to the provisions of the Loan and Security Agreement, the parties agree
as follows:
Part
1. — Additional Definitions:
“Commitment”: Subject to the terms and conditions set forth in the Loan and
Security
Agreement and this Supplement, Lender commits to make Equipment and/or Inventory Loans to Borrower
up to the aggregate original principal amount of Seven Million Dollars ($7,000,000.00) to finance
Currently Owned Equipment and Inventory and/or the acquisition of Eligible Equipment and Inventory;
provided, however, that Five Million Dollars ($5,000,000) of the Commitment shall be immediately
available to the Borrower and may be used to refinance Currently Owned Equipment and Inventory
and/or future acquisitions of Eligible Equipment and Eligible Inventory and that the remaining Two
Million Dollars ($2,000,000) of the Commitment shall be contingent upon Borrower providing evidence
satisfactory to Lender that Borrower has received at least Eight Million Dollars ($8,000,000) of
new equity funding (excluding the conversion of any debt funded prior to August 1, 2003),
subsequent to August 1, 2003, but prior to December 31, 2004; provided further, that Borrower may
elect, on or before March 31, 2004, to use up to One Million Dollars ($1,000,000.00) of the
contingent Two Million Dollars ($2,000,000.00) of the Commitment (if and when the contingency has
been satisfied) for Currently Owned Equipment and Inventory.
“Current Book Value” means (i) with respect to a Loan for Currently Owned Equipment and
Inventory that is funded on or before October 31, 2003, the value of any item of Eligible Equipment
and/or Inventory set forth in the asset valuation report prepared by Ernst & Young as of July 18,
2003 (the “EY Value”); and (ii) with respect to a Loan for Currently Owned Equipment and Inventory
that is funded after October 31, 2003, the value of any item of Eligible Equipment and/or Inventory
determined as the product of (a) the EY Value, multiplied by (b) a fraction in which (i) the
numerator is 36, less the number of full or partial months after October 31, 2003 in which the
Borrowing Request is made, and in which (ii) the denominator is 36 (i.e. a Loan requested in the
sixth month after October 31, 2003 will have a Current Book Value of 30/36 of the EY Value).
“Currently Owned Equipment and Inventory” means Eligible Equipment and Eligible
Inventory to which Borrower holds title at the time of a Borrowing Request and that was acquired
and /or produced by the Borrower on or after January 1, 2001.
“Designated
Rate”: means (i) for each Loan, a fixed rate of interest per annum equal to the
Prime Rate as published on the Business Day on which Lender prepares the Note for such Loan
following Borrower’s submission of the Borrowing Request for such Loan, plus two and 538/1000
percent (2.538%); provided, however, that in no event shall the Designated Rate for an Loan
be less than six and 538/1000 percent (6.538%).
“Eligible Equipment” means Intravascular Ultrasound Systems, WaveMap Systems, computer
equipment, lab and shop equipment, manufacturing equipment, test equipment, office equipment and
other standard hardware approved by Lender in writing (such approval to be evidenced by Lender’
execution of the respective Borrowing Request) and that is not the subject of a license
agreement(s) between Borrower and any Person.
“Eligible Inventory” means Intravascular Ultrasound Systems, including Catheter Utilization
Equipment and WaveMap Systems (whether or not the same may have been Eligible Equipment), or items
approved by Lender in writing (such approval to be evidenced by Lender’ execution of the respective
Borrowing Request) which Borrower (a) has placed in the possession of a third party under a lease,
license or other use agreement, as part of Borrower’s so-called Customer Utilization Program or
otherwise, (b) holds for sale or lease to a third party or is to be furnished under a contract of
service, (c) is furnished by the Borrower to a third person under a contract of service; provided,
however, that no item of Evaluation Inventory shall be Eligible Inventory at a time when Lender’s
Collateral includes other Evaluation Inventory having an aggregate current Book Value of
$500,000.00 or more; and, provided, further, that “Eligible Inventory” shall not include any item
described herein that is utilized by Borrower in its Customer Acquisition Program.
“Equipment and/or Inventory Loan” means any Loan requested by Borrower and funded by Lender to
finance Borrower’s acquisition or carrying of specific items of Eligible Equipment and/or Eligible
Inventory, as the case may be.
“Evaluation Inventory” means Eligible Inventory which Borrower has furnished to third persons
solely for purposes of evaluation for future purchases.
“Loan” means an Equipment Loan or an Inventory Loan, or both, as the context
requires.
“Permitted Indebtedness” means all amounts owing to Silicon Valley Bank under that certain
Loan and Security Agreement, dated July 18, 2003, as may be amended or supplemented from time to
time; provided, however, that such amendment or supplement does not increase the amount of
borrowings under such agreement, the amortization of such amounts, or otherwise materially
adversely effect Lender’s rights hereunder.
“Permitted Lien” includes, in addition to those liens defined in the Loan and
Security Agreement, the security interest in favor of Silicon Valley Bank securing the
Permitted Indebtedness.
“Prime Rate” means the “prime rate” of interest, as published from time to time by The
Wall Street Journal in the “Money Rates” section of its Western Edition newspaper.
“Terminal Payment” means a payment equal to ten percent (10%) of the original principal
amount of such Loan payable upon the maturity of such Loan.
“Termination Date” means the earliest of (a) the date Lender may terminate making Loans or
extending other credit pursuant to the rights of Lender under Article 7 of the Loan and Security
Agreement, or (b) October 31, 2003, as to the Five Million Dollar portion of the Commitment
designated for Currently Owned Equipment and Inventory, or (c) December 31, 2004, for the Two
Million Dollar portion of the Commitment designated for future purchases of Eligible Equipment
and/or Eligible Inventory.
“Threshold Amount” means Fifty Thousand Dollars ($50,000.00).
Part 2. — Additional Covenants and Conditions:
1. Use of Proceeds; Limitations on Loans.
(a)
Equipment and Inventory Loan Facility. Subject to the terms and conditions of the
Agreement, Lender agrees to make:
(i) Loans for Currently Owned Equipment and Inventory located in the United
States to Borrower from time to time from the Closing Date and to and including the Termination
Date in an
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aggregate original principal amount up to but not exceeding the lesser of (A) the then
unfunded portion of the Commitment, and (B) an amount equal to 100% of the Borrower’s Current
Book Value for the subject Eligible Equipment and/or Eligible Inventory.
(ii) Loans for Currently Owned Equipment and Inventory located outside the United
States to Borrower from time to time from the Closing Date and to and including the Termination
Date in an aggregate original principal amount up to but not exceeding the lesser of (A) the then
unfunded portion of the Commitment, and (B) an amount equal to 50% of the Borrower’s Current Book
Value for the subject Eligible Equipment and/ or Eligible Inventory.
(iii) Loans to Borrower for future purchases of Eligible Equipment and/ or Eligible
Inventory from time to time from the Closing Date and to and including the Termination Date in an
aggregate original principal amount up to but not exceeding the lesser of (A) the then unfunded
portion of the Two Million Dollars ($2,000,000.00) of the Commitment that may be used to finance
future purchases of Eligible Equipment and/or Eligible Inventory, and (B) the amount paid or
payable by Borrower to a manufacturer, vendor or dealer who is not an Affiliate of Borrower for
each item of Eligible Equipment or Eligible Inventory being financed with the proceeds of such
Equipment and/or Inventory Loan as shown on an invoice dated within 90 days of the funding Date of
the Equipment and/ or Inventory Loan therefor (excluding any commissions and any portion of the
amount invoiced which relates to servicing of the Eligible Equipment, delivery, freight and
installation charges or sales taxes payable upon acquisition) (“Original Cost”).
(iv) All Eligible Equipment and Eligible Inventory financed hereunder
shall be
located at all times at Borrower’s principal place of business in Rancho Cordova, California,
current or future hospital locations, or such other place of business located within or outside the
United States approved by Lender in writing prior to the Funding Date of any Equipment Loan..
Borrower shall provide a monthly statement of all Equipment and Inventory financed by Lender which
shall include the location of all such Equipment and Inventory.
(b) Sale
of Equipment or Inventory Collateral; Substitute Collateral.
Notwithstanding anything
to the contrary in Section 6.3 of the Loan and Security Agreement prohibiting Borrower’s sale of
Eligible Inventory financed by Lender, and in addition to those provisions, Borrower may sell in the
ordinary course of its business an item of Eligible Inventory which constitutes Collateral so long
as Borrower complies with the provisions of this Section l(b). If Borrower proposes to sell any item
of Inventory Collateral (a “Sale Item”), Borrower shall give to Lender prompt written notice
thereof. No later than the date on which Borrower conveys title to
the Sale Item to its customer,
Borrower shall (i) replace such Sale Item with Eligible
Equipment or Eligible Inventory of a model,
type and feature configuration, having capabilities no less than that of the Sale Item immediately
prior to the date of such sale, and having a Current Book Value no less than the that of such Sale
Item as of the date immediately prior to such sale; or (ii) provide other substitute Collateral
satisfactory to Lender; in either of which cases such replacement Eligible Equipment, Eligible
Inventory or other acceptable Collateral shall for all purposes of the Loan and Security Agreement
become part of the Collateral, and Borrower shall provide Lender with evidence reasonably
satisfactory to Lender of Borrower’s good and marketable title
to such replacement Collateral (free
of any Liens other than those created by the Loan and Security Agreement and Permitted Liens);
(c) Minimum
Funding Amount. Loan or Loans requested by Borrower to be made on
a single Business
Day shall be for a minimum aggregate principal amount of One Hundred Thousand
Dollars ($100,000.00).. Borrower shall not submit a Borrowing Request more frequently than once each
month.
2. Prepayment.
Borrower may voluntarily prepay any Loan in whole but not in part
at any time
by tendering to Lender payment in respect of such Loan (i) all accrued and unpaid Basic Interest on
such Loan as of the date of prepayment; (ii) the undiscounted Terminal Payment on such Loan, if
applicable; and (iii) an amount equal to the undiscounted, total amount of all installment payments
of principal and Basic Interest that would have accrued and been payable from the date of prepayment
through the stated Maturity Date of the Loan had it remained outstanding and been paid in accordance
with the terms of the related Note.
3. Limitations on Other Indebtedness; Subordination of Debt to Lender. At all times after
the initial Loan is advanced and so long as any Loans remain outstanding, Borrower shall not incur
or permit to exist any Indebtedness for borrowed money, other than Permitted Indebtedness to Silicon
Valley Bank, unless such
3
Indebtedness is (a) approved by the Lender in its sole and reasonable discretion, and (b) the right
to payment of such Indebtedness, the priority of any Lien (other than a Permitted Lien) securing
the same, and the rights of the holder thereof to enforce remedies against Borrower following
default have been made subordinate to the Liens of Lender and the prior payment of the Obligations
to Lender under the Loan Documents pursuant to a written subordination agreement approved by Lender
in its sole, reasonable discretion (except that regularly scheduled payments of accrued interest on
such subordinated Indebtedness may be paid by Borrower and retained by the holder so long as no
Event of Default has occurred).
5. Partial Releases of Silicon Valley Bank Lien. As an additional condition precedent
under Section 4.2 of the Loan and Security Agreement, on or prior to each Borrowing Date, Lender
shall be in receipt of an executed release from Silicon Valley Bank of any and all Liens on the
Collateral that is the subject of the Borrowing Request.
6. Issuance of Warrant to Lender. As additional consideration for the making of the
Commitment, Lender shall be issued a warrant issued by Borrower (the “Warrant”) initially
exercisable for 140,000 of fully paid and nonassessable shares of the Borrower’s Series B Preferred
Stock. The Warrant shall be in substantially the form attached hereto as Exhibit “D” and shall be
exercisable at any time and from time to time through
December 31, 2014. Borrower acknowledges that
Lender has assigned its rights to receive the Warrant to its parent,
Venture Lending & Leasing III,
LLC; in connection therewith, Borrower shall issue the Warrant
directly to Venture Lending & Leasing
III, LLC. Upon request of Borrower, Lender shall furnish to Borrower a copy of the agreement in
which Lender assigned the Warrant to Venture Lending & Leasing III, LLC.
7. Fee Payment. As an additional condition precedent under Section 4.1 of the Loan and
Security Agreement, on or prior to the initial Borrowing Date, Borrower shall pay Lender Seven
Thousand Dollars ($7,000.00).
8. Delivery of Ernst & Young Valuation. As an additional condition precedent under 4.1 of
the Loan and Security Agreement, Borrower shall deliver to the Lender not less than 5 Business Days
prior to the first Borrowing Date a true copy of the Ernst & Young asset valuation report dated as
of July 18, 2003, regarding the Borrower’s Currently Owned Equipment and Inventory.
9. Completion of Due Diligence; Payment and Disposition of Commitment Fee. As an
additional condition precedent under Section 4.1 of the Loan and Security Agreement, Lender shall
have completed to its satisfaction its due diligence review of Borrower’s business and financial
condition and prospects, and Lender’s credit committee shall have approved the Commitment. If this
condition is not satisfied, Lender shall refund to Borrower the Thirty-Five Thousand Dollar
($35,000.00) commitment fee previously paid to Lender on account of the Commitment. Lender agrees
that with respect to each Loan advanced, on the Borrowing Date
applicable to such Loan, Lender shall
credit against the payments due from Borrower on such date in respect
of such Loan an amount equal
to the product of Thirty-Five Thousand Dollars ($35,000.00) and a fraction the numerator of which
is the principal amount of such Loan and the denominator of which is Seven Million Dollars
($7,000,000.00), until the aggregate amount of such credits equals but does not exceed Thirty-Five
Thousand Dollars ($35,000.00).
10. Insurance Coverage. As an additional condition precedent to each Loan under Section 4.2 of
the Loan Agreement, on or prior to the Borrowing Date for a specific Loan, Borrower shall provide to
Lender insurance certificates or endorsements showing that all-risk casualty insurance coverage is
in effect with respect to each item of Equipment or Inventory that is provided as collateral
security for such Loan, in amounts and of the types required under Section 5.5 of the Loan and
Security Agreement. The certificate or endorsement shall name Lender
as additional loss payee with
respect to the Equipment or Inventory, and specify that coverage as to Lender shall not
be invalidated by any action of or breach of warranty by Borrower of any provision thereof pursuant
to a standard lender’s loss payable clause, include a waiver of subrogation rights against Lender,
and provide for at least thirty (30) days’ prior written notice to Lender by the underwriter or
insurance company in the event of cancellation or expiration.
4
11. Debits to Account for ACH Transfers. For purposes of Section 2.2 and 5.10 of the
Loan and Security Agreement, Borrower’s Primary Operating Account is:
Silicon Valley Bank
Account No.: 3300392276
Routing No.: ###-##-####
Account No.: 3300392276
Routing No.: ###-##-####
Loans will be advanced to the account specified above and payments will be automatically debited
from the same account.
Part 3. — Additional Representations:
Borrower represents and warrants that as of the Closing Date and each Borrowing Date:
| a) | Its chief executive office is located at: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| b) | Its Equipment is located at: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, except as otherwise disclosed in the Borrowing Request for an Equipment Loan. | ||
| c) | Its Records are located at: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. | ||
| d) | In addition to its chief executive office, Borrower maintains
offices or operates its business at the following locations: 1) ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 2) ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ |
| e) | Other than its full corporate name, Borrower has conducted business using the following trade names or fictitious business names: Cardio Technology, Inc. | ||
| f) | Borrower’s Federal Tax I.D. number is: ▇▇-▇▇▇▇▇▇▇. | ||
| g) | Borrower’s Delaware state corporation I.D. number is: _________. |
5
Part 4. — Additional Loan Documents:
Form of Note |
Exhibit “A” | |||
Form of Borrowing Request |
Exhibit “B” | |||
Form of Compliance Certificate |
Exhibit “C” | |||
Form of Warrant |
Exhibit “D” | |||
Form of Landlord Waiver |
Exhibit “E” | |||
Form of Legal Opinion |
Exhibit “F” | |||
[Signature Page Follows]
6
IN WITNESS WHEREOF, the parties have executed this Supplement as of the date first
above written.
| BORROWER: | ||||||
| VOLCANO THERAPEUTICS, INC. | ||||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ | |||||
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇▇ | |||||
| Title: | CFO | |||||
Address for Notices:
|
Attn: | |||||
| ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, | ||||||
| ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||||||
| Fax #: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||||
| LENDER: | ||||||
| VENTURE LENDING & LEASING III, INC. | ||||||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||||
| Title: | Chief Executive Officer | |||||
| Address for Notices: | Attn: Chief Financial Officer | |||||
| ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ | ||||||
| ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||||
| Fax #: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||||
7
EXHIBIT “A”
FORM OF PROMISSORY NOTE
[Note No. X-XXX]
| $ | , ▇▇▇ | |
| ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ |
The undersigned (“Borrower”) promises to pay to the order of VENTURE LENDING & LEASING III,
INC., a Maryland corporation (“Lender”), at its office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as Lender may designate in writing, in lawful
money of the United States of America,
the principal sum of
Dollars ($ ), with Basic Interest thereon
(except as otherwise provided herein) from the date hereof until maturity, whether scheduled or
accelerated, at a fixed rate per annum equal to [ the Prime Rate on the Business Day Lender
prepares the Note plus 2.538%, but
in no event less than 6.538%; the “Designated Rate”)
[, and a Terminal Payment in the sum of
[10.00% of face amount] Dollars ($ ) payable on the Maturity Date.]
This Note is one of the Notes referred to in, and is entitled to all the benefits of, a Loan
and Security Agreement dated as of September, 2003, between Borrower and Lender (the “Loan
Agreement”). Each capitalized term not otherwise defined herein shall have the meaning set forth in
the Loan Agreement. The Loan Agreement contains provisions for the acceleration of the maturity of
this Note upon the happening of certain stated events.
Principal of and interest on this Note shall be payable as follows:
On the Borrowing Date, Borrower shall pay (i) interest at a rate of twelve percent (13.2%) per
annum, in advance, on the outstanding principal balance of this Note for the period from the
Borrowing Date through [the last day of the same
month]; and (ii) a first
(1st)
amortization installment of principal and Basic Interest at the Designated Rate in
the amount of , in advance for the month of [first full month after
Borrowing Date] and (iii) a thirty-sixth (36th), amortization installment of principal and Basic Interest at the
Designated Rate in the amount of $ , in advance for the month of [date of last regular
amortization payment].
Commencing on the first day of the second full month after the Borrowing Date, and continuing
on the first day of each consecutive month thereafter, principal and Basic Interest at the
Designated Rate shall be payable, in
advance, in thirty-three (33) equal consecutive installments of Dollars
($ ) each, with a 34th installment equal to the entire unpaid principal balance and accrued Basic
Interest
at the Designated Rate on , 200 . The Terminal Payment and unpaid expenses, fees, interest and
principal amount shall be due and payable on [one month
later], 200 .]
Any unpaid payments of principal or interest on this Note shall bear interest from their
respective maturities, whether scheduled or accelerated, at a rate per annum equal to the Default
Rate. Borrower shall pay such interest on demand.
Interest, charges and fees shall be calculated for actual days elapsed on the basis of a
360-day year, which results in higher interest, charge or fee payments than if a 365-day year were
used. In no event shall Borrower be obligated to pay interest, charges or fees at a rate in excess
of the highest rate permitted by applicable law from time to time in effect.
If Borrower is late in making any payment under this Note by more than five (5) Business Days,
Borrower agrees to pay a “late charge” of five percent (5%) of the installment due, but not less
than fifty dollars ($50.00) for any one such delinquent payment. This late charge may be charged by
Lender for the purpose of defraying the expenses incidental to the handling of such delinquent
amounts. Borrower acknowledges that such late charge represents a reasonable sum considering all of
the circumstances existing on the date of this Note and represents a fair and reasonable estimate
of the costs that will be sustained by Lender due to the failure of Borrower to make timely
payments. Borrower further agrees that proof of actual damages would be costly and inconvenient.
Such late charge shall be paid without prejudice to the right of Lender to collect any other
amounts provided to be paid or to declare a default under this Note or any of the other Loan
Documents or from exercising any other rights and remedies of Lender.
This Note shall be governed by, and construed in accordance with, the laws of the State of
California.
| VOLCANO THERAPEUTICS, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Its: | ||||||
EXHIBIT “B”
FORM OF BORROWING REQUEST
[Date]
Venture Lending & Leasing III, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Volcano Therapeutics, Inc.
Gentlemen:
Reference is made to the Loan and Security Agreement dated as of September , 2003
(as amended from time to time, the “Loan Agreement”, the capitalized terms used herein as defined
therein), between Venture Lending & Leasing III, Inc. and Volcano Therapeutics, Inc. (the
“Company”).
The undersigned is the of the Company, and hereby requests on behalf
of the Company a Loan under the Loan Agreement, and in that connection certifies as follows:
1. The type(s) of the proposed Loan is/are [an Equipment and/or Inventory Loan/Currently
Owned Equipment and/or Inventory][ an Equipment and/or Inventory Loan/Future Purchase]. The
amount of the proposed Loan is and /100 Dollars
($ ). The Borrowing Date of the proposed Loan is , 200 .
2. [If for future purchases of Equipment/and or Inventory] The Eligible Equipment and
/or Eligible Inventory to be financed with the proceeds of the Equipment and/ or Inventory Loan are
described, and are or will be located at the address(es) shown, on the attached Schedule 1
or amendment or supplement to Schedule 1, which is hereby incorporated by reference in and
made a part of the Loan Agreement. The requested amount of the Equipment and/ or Inventory Loan does
not exceed the aggregate of one hundred percent (100%) of the amount
paid or payable by Borrower to
a non-affiliated manufacturer, vendor or dealer for such items of
Eligible Equipment and/or
Inventory as shown on an invoice therefor (excluding any commissions and any portion of the
payment which relates to the servicing of the equipment or item and sales taxes payable by Borrower
upon acquisition, and delivery charges). No item of Eligible Equipment or Inventory has been owned
or was incurred by Borrower earlier than 90 days before the
proposed Borrowing Date. [If Evaluation
Inventory is included in the funding request] The aggregate Current Book Value of all Evaluation
Inventory previously financed by the Lender and continuing as part of the Collateral, including the
Current Book Value of the Evaluation Inventory to be financed by this Borrowing Request, does not
exceed $500,000.00.
[If for Currently Owned Equipment in the United States] The Eligible Equipment and /or
Eligible Inventory to be financed with the proceeds of the Equipment and/ or Inventory Loan are
Currently Owned Equipment and Inventory located within the United States are described, and will be
located at the address(es) shown, on the attached Schedule 1 or amendment or supplement to
Schedule 1, which is hereby incorporated by reference in and made a part of the Loan
Agreement. The requested amount of the Loans for Currently Owned Equipment and Inventory located in
the United States does not exceed 100% of the Borrower’s Current Book Value, as that term is
defined in the Supplement to the Loan and Security Agreement, for the subject equipment and/or
inventory. All such Equipment and Inventory was acquired by the Borrower on or after January 1,
2001. [If Evaluation Inventory is included in the funding
request] The aggregate Current Book
Value of all Evaluation Inventory previously financed by the Lender and continuing as part of the
Collateral, including the Current Book Value of the Evaluation Inventory to be financed by this
Borrowing Request, does not exceed $500,000.00.
[If for Currently Owned Equipment outside the United States] The Eligible Equipment and /or
Eligible Inventory to be financed with the proceeds of the Equipment and/ or Inventory Loan are
Currently Owned Equipment and Inventory located outside the United States are described, and will
be located at the address(es)
shown, on
the attached Schedule 1 or amendment or supplement to Schedule 1, which
is hereby incorporated by reference in and made a part of the Loan Agreement. The requested amount
of the Loans for Currently Owned Equipment and Inventory located outside the United States does not
exceed 50% of the Borrower’s Current Book Value, as that term is defined in the Supplement to the
Loan and Security Agreement, for the subject equipment and/or inventory. All such Equipment and
Inventory was acquired by the Borrower on or after January 1, 2001. [If Evaluation Inventory is
included in the funding request] The aggregate Current Book Value of all Evaluation Inventory
previously financed by the Lender and continuing as part of the Collateral, including the Current
Book Value of the Evaluation Inventory to be financed by this Borrowing Request, does not exceed
$500,000.00.
3. Title to the Eligible Equipment and /or the Eligible Inventory to be financed by
this Borrowing Request is held by the Borrower and not by any of its subsidiaries.
4. As of this date, no Default or Event of Default has occurred and is continuing, or
will result from the making of the proposed Loan, the representations and warranties of the Company
contained in Article 3 of the Loan Agreement are true and correct, and the conditions precedent
described in Article 4 of the Loan Agreement have been met.
5. No event that has had or could reasonably be expected to have a Material Adverse Change
has occurred.
6. If updated since the date of the last Borrowing Request, the Company’s most
recent
[financial projections or business plan] dated
, as approved by the Company’s Board of Directors on , are enclosed herewith.
7. As of the date hereof, Borrower has no outstanding Indebtedness except for (I)
Permitted Indebtedness and (ii) such Indebtedness that has been approved by the Lender and the
right to payment of which, the priority of any Lien (other than a Permitted Lien) securing the
same, and the rights of the holder thereof to enforce remedies against Borrower following default
have been made subordinate to Lender’s Liens and to the prior payment of the Obligations to Lender
under the Loan Documents pursuant to written subordination agreement(s) which have been approved by
Lender (except that regularly scheduled payments of accrued interest on such subordinated
Indebtedness may be paid so long as no Event of Default has occurred).
The Company shall notify you promptly before the funding of the Loan if any of the matters to
which I have certified above shall not be true and correct on the Borrowing Date
| Very truly yours, | ||||||||
| VOLCANO THERAPEUTICS, INC. | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
Schedule 1 to the Loan and Security Agreement
Description of Equipment/Inventory
Quantity |
Article | Make | Year Mfg. | Model/ Serial # |
Location | üif Inventory | ||||||||||||||||||
See attached continuation to Schedule 1
together with all improvements, replacements, accessions and additions thereto, wherever
located, and all Proceeds thereof arising from the sale, lease, rental or other use or
disposition of any such property, including all rights to payment with respect to insurance or
condemnation, returned premiums, or any cause of action relating to any of the foregoing.
| VOLCANO THERAPEUTICS, INC. | ||||
By: |
||||
Name: |
||||
Its: |
||||
| VENTURE LENDING & LEASING III, INC. | ||||
By: |
||||
Name: |
||||
Its: |
||||
EXHIBIT “C”
COMPLIANCE CERTIFICATE
Venture
Lending & Leasing III, Inc.
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Re: Volcano Therapeutics, Inc..
Gentlemen:
Reference is made to the Loan and Security Agreement dated as of September , 2003 (as the same have
been and may be amended from time to time, the “Loan Agreement”, the capitalized terms used herein
as defined therein), between Venture Lending & Leasing III, Inc. and Volcano Therapeutics, Inc..
(the “Company”).
The undersigned authorized representative of the Company hereby certifies that in accordance
with the terms and conditions of the Loan Agreement, the Company is in complete compliance for the
financial reporting
period ending with all required financial reporting under the Loan Agreement, except as noted
below.
Attached herewith are the required documents supporting the foregoing certification. The
undersigned further certifies that the accompanying financial statements have been prepared in
accordance with GAAP, and are consistent from one period to the next, except as explained below.
Indicate
compliance status by circling Yes/No under “Complies”
| REPORTING REQUIREMENT | REQUIRED | COMPLIES | ||
Interim Financial Statements
|
Monthly within 30 days | YES/NO | ||
Audited Financial Statements
|
FYE within 120 days | YES/NO | ||
Most Recent Financial Projections or Business Plan dated |
With each Borrowing Request | YES/NO | ||
Current Fixed Asset List
(including locations) of all Equipment
and Inventory which constitute Lender’s
Collateral under the Loan Agreement
(List shall include the number and location
of all Evaluation Inventory)
|
Monthly within 30 days | YES/NO |
| Very truly yours, | ||||||||
| VOLCANO THERAPEUTICS, INC. | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
EXHIBIT “D”
FORM OF WARRANT
EXHIBIT “E”
FORM OF LANDLORD WAIVER
EXHIBIT “F”
FORM OF LEGAL OPINION