EXHIBIT 99.1
Dated as of
November 30, 2001
Sunrise Technologies International, Inc.
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, CEO
Re: Sunrise Technologies International, Inc. ("Borrower");
Silicon Valley Bank ("Bank")
Ladies and Gentlemen:
Reference is hereby made to that certain Loan and Security Agreement,
dated as of June 29, 2000, between Borrower and Bank, as amended by that certain
Loan Modification Agreement, dated September 20, 2000, the Extension and
Modification Agreement, dated June 22, 2001, the Amendment Number One to
Extension and Modification Agreement, dated August 3, 2001, the Extension Letter
Agreement, dated August 26, 2001, the Extension Letter Agreement, dated as of
September 10, 2001, by the Extension Letter Agreement, dated as of September 20,
2001, and by the Extension Letter Agreement, dated as of October 22, 2001 (as
amended, the "Loan Agreement"). Capitalized terms used in this letter agreement
(the "Extension Letter Agreement") are defined in the Loan Agreement unless
specifically defined herein.
On November 30, 2001, the Obligations will mature and become due and
payable. Borrower has requested Bank to extend the Revolving Maturity Date to
March 31, 2002. Bank has agreed to extend the Revolving Maturity Date to March
31, 2002, subject to the terms of this Extension Letter Agreement:
1. EXTENSION DATE. Bank agrees to extend the Revolving Maturity Date to
March 31, 2002 (the "Extension Maturity Date"). Accordingly, the outstanding
Obligations, including, but not limited to, all accrued and unpaid interest and
fees, shall be due and payable in full, without notice or demand, on the
Extension Maturity Date.
2. EXTENSION PAYMENT. In order to induce Bank to enter into this Extension
Letter Agreement, Borrower hereby agrees to make an extension fee payment to
Bank of $35,000 on the Extension Maturity Date (the "Extension Payment").
Borrower acknowledges that any failure to perform any of its obligations under
this Extension Letter Agreement, the Loan Agreement, or any Loan Documents shall
be deemed an Event of Default under the Loan Agreement and shall terminate
Bank's agreement to extend the Revolving Maturity Date to the Extension Date.
3. CONDITIONS PRECEDENT AND SUBSEQUENT.
(a) The effectiveness of this Extension Letter Agreement is
expressly conditioned upon the following:
(1) Bank and Borrower shall have entered into that certain
Collateral Substitution Agreement, of even date herewith, pursuant to which Bank
shall release its security interest in certain pledged shares of capital stock
of Borrower in exchange for a first priority security interest in the
trademarks, patents, copyrights and other intellectual property of Borrower (the
"IP Collateral").
(2) Bank and Borrower shall have entered into a Security
Agreement containing terms and conditions acceptable to Bank and pursuant to
which Borrower shall grant to Bank a first priority security interest in the IP
Collateral.
(3) Borrower shall provide evidence satisfactory to Bank that
Borrower and a bridge lender acceptable to Bank (the "Bridge Lender") shall have
entered into a loan agreement and/or promissory note (the "Bridge Loan
Agreement") containing terms and conditions satisfactory to Bank, including,
without limitation, (i) a commitment from Bridge Lender to make a bridge loan to
Borrower in the amount of $1,000,000, (ii) interest on the bridge loan at an
interest rate no greater than 10%, per annum, (iii) a maturity date no earlier
than March 31, 2002; and (iv) a security interest in the IP Collateral of equal
priority to Bank and with the right to share in the proceeds of the IP
Collateral.
(4) Bridge Lender and Bank shall have entered into an
inter-creditor agreement (the "Inter-Creditor Agreement") satisfactory to Bank,
in its sole discretion, pursuant to which Bridge Lender and Bank shall agree
that (i) the priority of their respective security interests in the IP
Collateral are of equal priority, subject to terms and conditions contained in
the Inter-Creditor Agreement, and (ii) Bank shall have the exclusive rights to
conduct private and/or public foreclosure sales of the IP Collateral, subject to
terms and conditions contained in the Inter-Creditor Agreement.
(5) Receipt by Bank of an executed copy of this Extension
Letter Agreement.
(6) Receipt by Bank of certified extracts from the meeting of
Borrower's Board of Directors authorizing the substitution of collateral
pursuant to the Collateral Substitution Agreement, the granting to Bank of a
security interest in the IP Collateral, and the execution of this Extension
Letter Agreement.
(b) The effectiveness of this Extension Letter Agreement is
expressly conditioned upon the following, the failure of any of which shall
constitute and event of default under this Extension Letter Agreement:
(1) Borrower shall perform all of its obligations under the
Bridge Loan Agreement and Bridge Lender shall have made the Bridge Loan by
December 24, 2001, as contemplated under the Bridge Loan Agreement.
(2) Borrower shall deliver to Bank on the first business day
of each week a report setting forth Borrower's collections during the prior
week, Borrower's current cash position, the location and amount of Borrower's
cash positions and a four week projection of Borrower's sources and uses of
cash.
(3) Receipt by Bank of the Extension Payment on or before the
Extension Maturity Date.
4. LOAN AGREEMENT. Except as modified by this Agreement, the Loan
Agreement shall remain unchanged and in full force and effect.
5. REAFFIRMATION OF BANK'S LIENS AND SECURITY INTERESTS. Borrower hereby
reaffirms the granting of, and represents and warrants that Bank has a first
priority, valid, enforceable, perfected and unavoidable lien on and security
interests in, all of the Collateral and that the Collateral secures all
Obligations.
6. NO WAIVER BY BANK. Except as otherwise expressly set forth in this
Agreement, this Agreement shall not constitute a waiver or modification of any
of Bank's rights or remedies, and it shall not preclude the exercise of any
right or remedy available to Bank at law or in equity, including any procedure
necessary or appropriate to enforce any of the terms and conditions set forth in
this Agreement, the Loan Agreement or any of the other Loan Documents. Bank
shall have the right to waive any of the rights, remedies, claims, powers,
benefits or privileges granted in or pursuant to this Agreement, the Loan
Agreement and the other Loan Documents, and Bank shall have no obligation or
duty to any other entity, with respect to the exercise of Bank's rights,
remedies, claims, powers, benefits and privileges. Any delay in or failure to
exercise any of Bank's rights, remedies, claims, powers, benefits or privileges
shall not subject Bank to any liability to any entity, and no other entity may
rely upon or in any way seek to assert as a defense to any obligation owing to
Bank such delay or failure. Such delay or failure, if any, shall not be deemed
to constitute a waiver of any such right, remedy, claim, power, benefit or
privilege of Bank. All of Bank's rights with respect to all of the matters
referred to in this Agreement and each of the Loan Documents, in general, and
this Section 6, in particular, are expressly reserved.
7. RELEASE BY BORROWER. Borrower, for itself and for its agents, servants,
employees, shareholders, subsidiaries, officers, directors, heirs, executors,
administrators, agents, successors and assigns forever releases and discharges
Bank and its agents, servants, employees, accountants, attorneys, shareholders,
subsidiaries, officers, directors, heirs, executors, administrators, successors
and assigns from any and all claims, demands, liabilities, accounts,
obligations, costs, expenses, liens, actions, causes of action, rights to
indemnity (legal or equitable), rights to subrogation, rights to contribution
and remedies of any nature whatsoever, known or unknown, which Borrower has, now
has, or has acquired, individually or jointly, at any time prior to the date of
the execution of this Agreement, including specifically, but not exclusively,
and without limiting the generality of the foregoing, any and all of the claims,
damages, demands and causes of action, known or unknown, suspected or
unsuspected by Borrower which:
(1) Arise out of the Loan Documents;
(2) Arise by reason of any matter or thing alleged or referred
to in, directly or indirectly, or in any way connected with, the Loan Documents;
or
(3) Arise out of or in any way are connected with any loss,
damage, or injury, whatsoever, known or unknown, suspected or unsuspected,
resulting from any act or omission by or on the part of the Bank or any party
acting on behalf of Bank committed or omitted prior to the date of this
Agreement.
8. WAIVER OF CALIFORNIA CIVIL CODE SECTION 1542. Borrower acknowledges
that there is a risk that subsequent to the execution of this Agreement it may
incur or suffer losses, damages or injuries which are in some way caused by the
transactions referred to in the Loan Documents or this Agreement, but which are
unknown and unanticipated at the time this Agreement is executed. Borrower does
hereby assume the above mentioned risks and agree that this Agreement shall
apply to all unknown or unanticipated results of the transactions and
occurrences described herein, as well as those known and anticipated, and upon
advice of counsel, Borrower does hereby knowingly waive any and all rights and
protections under California Civil Code Section 1542 which section has been duly
explained and reads as follows:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
9. LEGAL ADVICE OBTAINED. The advice of legal counsel has been obtained by
each party prior to signing this Agreement and each party executes this
Agreement voluntarily, with full knowledge of its significance, and with the
express intention of effecting the legal consequences provided by Section 1541
of the California Civil Code, namely, the extinguishment of obligations except
for the executory provisions of this Agreement.
10. COUNTERPARTS. This Agreement may be executed in counterparts, all of
which taken together shall constitute a single document.
11. COSTS AND EXPENSES. Borrower shall pay to Bank all of Bank's
out-of-pocket costs and expenses (including, without limitation, the fees and
expenses of its counsel, which counsel may include any local counsel deemed
necessary, documentation fees, and other fees) arising in connection with the
preparation, execution, and delivery of this Extension Letter Agreement, the
Collateral Substitution Agreement, the IP Security Agreement and all related
documents, as well as in connection with the negotiation of these documents.
12. MISCELLANEOUS. Except as specifically amended herein, all other terms
and provisions of the Loan Agreement, as amended from time to time, shall remain
in full force and effect.
13. HEADINGS. The headings in this Agreement are inserted for convenience
and are not a part of this Agreement.
14. FURTHER ASSURANCES. Upon request of a party hereto, each party will
take all reasonable actions, including execution of additional documents and
agreements, necessary or appropriate to carry out the terms, conditions and
intent of this Agreement.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and inure
to the benefit of the parties' respective successors and assigns.
16. ATTORNEYS' FEES; CHOICE OF LAW AND JURY TRIAL WAIVER. In the event it
becomes necessary for any party to bring an action or proceeding to construe or
enforce the terms and conditions set forth in this Agreement, the prevailing
party in such action or proceeding shall be entitled to recover reasonable
attorneys' fees and costs incurred in such action or proceeding, in addition to
all other relief awarded. This Agreement and all transactions hereunder and/or
evidenced hereby shall be governed by, construed under and enforced in
accordance with the laws of the State of California. The parties agree that all
actions or proceedings arising in connection with this Agreement shall be tried
and litigated only in the state and federal courts located in the County of
Santa ▇▇▇▇▇, State of California. Borrower waives any right it may have to
assert the doctrine of forum non conveniens or to object to such venue and
hereby consent to any court ordered relief. IN ANY ACTION TO ENFORCE THE TERMS
HEREOF, OR INVOLVING THIS AGREEMENT, BORROWER KNOWINGLY AND VOLUNTARILY WAIVES
ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION,
CLAIM, RIGHT OR REMEDY, WHETHER ARISING IN CONTRACT, TORT, AT LAW OR IN EQUITY
UNDER OR IN CONNECTION WITH THIS AGREEMENT, AND ANY OF THE OTHER LOAN DOCUMENTS,
AND CONSENTS TO A COURT TRIAL BEFORE A JUDGE.
17. NEUTRAL CONSTRUCTION. This Agreement is the product of negotiation
among the parties hereto and represents the jointly conceived, bargained-for and
agreed upon language mutually determined by the parties to express their
intentions in entering into this Agreement. Any ambiguity or uncertainty in this
Agreement shall be deemed to be caused by, or attributable to, all parties
hereto collectively. In any action or proceeding to enforce or interpret this
Agreement, the Agreement shall be construed in a neutral manner, and no term or
condition of this Agreement, or the Agreement as a whole, shall be construed
more or less favorably to any one party, or group of parties, to this Agreement.
In the event any provision contained in this Agreement is determined to be
unenforceable by a court competent jurisdiction, then that provision shall be
deemed omitted from this Agreement and the remaining provisions of this
Agreement shall continue to be in full force and effect.
Very truly yours,
SILICON VALLEY BANK
By:
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Name:
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Title:
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Agreed and Accepted as
of November 30, 2001
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
By:
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Name:
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Title:
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