EXHIBIT 10.13
EQUIPMENT LOAN AND SECURITY AGREEMENT
Dated as of December 13, 2001
by and among
GATX VENTURES, INC.
as agent and a lender
THIRD COAST CAPITAL, a division of DVI Financial Services Inc.
as a lender
And
EGENERA, INC.
a Delaware corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
as borrower
CREDIT AMOUNT: $3,000,000
Commitment Commitment Percentage
---------- ---------------------
GATX Ventures, Inc.: $2,000,000 66.67%
Third Coast Capital, a division of
DVI Financial Services Inc.: $1,000,000 33.33%
Repayment Period: 36 months
Treasury Note Maturity: 36 months
Loan Margin: 900 basis points
Commitment Termination Date: April 30, 2002
Final Payment Percentage: Not applicable.
The terms and information set forth on this cover page are a part of the
attached Equipment Loan and Security Agreement, dated as of the date first
written above (this "Agreement"), entered into by and among GATX Ventures, Inc.
("GV"), in its individual capacity, Third Coast Capital, a division of DVI
Financial Services Inc. ("TCC"), in its individual capacity, (each individually
a "Lender" and collectively, "Lenders"), GV as agent, not individually, and
Egenera, Inc. ("Borrower"). The terms and conditions of this Agreement agreed to
between the parties hereto are as follows:
AGREEMENT
1. Definitions and Construction.
1.1 Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" means any Person that owns or controls directly or indirectly
ten percent (10%) or more of the stock of another entity, any Person that
controls or is controlled by or is under common control with such Persons or any
Affiliate of such Persons or each of such Person's officers, directors, joint
venturers or partners.
"Agent" means GV, not in its individual capacity, but solely in its
capacity as agent on behalf of and for the benefit of Lenders, and any successor
agent.
"Agent's Expenses" means all reasonable costs or expenses (including
reasonable attorneys' fees and expenses) incurred in connection with the
preparation, negotiation, documentation, administration and funding of the Loan
Documents; and Agent's reasonable attorneys' fees, costs and expenses incurred
in amending, modifying, enforcing or defending the Loan Documents (including
fees and expenses of appeal or review), including the exercise of any rights or
remedies afforded hereunder or under applicable law, whether or not suit is
brought, whether before or after bankruptcy or insolvency, including without
limitation, all fees and costs incurred by Agent in connection with Agent's
enforcement of its rights in a bankruptcy or insolvency proceeding filed by or
against Borrower or its Property.
"Agreement" means this Equipment Loan and Security Agreement, as the same
may from time to time be amended or supplemented.
"Basic Rate" means, as of the relevant Funding Date, the per annum rate of
interest (based on a year of twelve 30-day months) equal to the sum of (a) the
U.S. Treasury note yield to maturity for a term equal to the Treasury Note
Maturity as quoted in The Wall Street Journal on the date the Loan Agreement
Supplement is prepared (or in the event that such rate is no longer published in
the Wall Street Journal, in such other publication that provides a quotation of
such rate), plus (b) the Loan Margin. Notwithstanding the foregoing, the Basic
Rate shall not exceed the highest rate permitted by applicable law to be charged
on commercial loans.
"Borrower" has the meaning given to such term on the cover page hereof.
"Borrower's Next Qualified Financing" means the next sale or related group
of sales by Borrower of its Equity Securities resulting in gross proceeds to
Borrower of at least Ten Million Dollars ($10,000,000).
"Business Day" means any day that is not a Saturday, Sunday, or other day
on which banking institutions are authorized or required to close in California
or Massachusetts.
"Claim" has the meaning given to such term in Section 10.3.
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"Code" means the Uniform Commercial Code as adopted and in effect in the
State of California, as amended from time to time; provided that if by reason of
mandatory provisions of law, the creation and/or perfection or the effect of
perfection or non-perfection of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than California, the term "Code" shall also mean the Uniform Commercial Code as
in effect from time to time in such jurisdiction for purposes of the provisions
hereof relating to such creation, perfection or effect of perfection or
non-perfection.
"Collateral" has the meaning given to such term in Section 4.1, including,
without limitation, all Financed Equipment listed in any Loan Agreement
Supplement executed from time to time pursuant to Section 4.2.
"Commitment Termination Date" means the date following such term on the
cover page of this Agreement.
"Commitment" means, with respect to each Lender, the amount set forth on
the cover page of this Agreement under the column titled "Commitment" and
"Commitments" means all such amounts collectively.
"Commitment Percentage" means with respect to each Lender, the percentage
set forth on the cover page of this Agreement under the column titled
"Commitment Percentage."
"Credit Amount" means the amount set forth following such term on the
cover page of this Agreement.
"Default" means any event which with the passing of time or the giving of
notice or both would become an Event of Default hereunder.
"Default Rate" means the per annum rate of interest equal to five percent
(5%) over the Basic Rate, but such rate shall in no event be more than the
highest rate permitted by applicable law to be charged on commercial loans.
"Disclosure Schedule" means Exhibit A attached hereto.
"Eligible Equipment" means, to the extent reasonably acceptable to
Lenders, Equipment (excluding any and all freight, installation, taxes and other
soft costs relating to such Equipment) consisting of computer equipment, office
equipment, engineer lab equipment, test equipment and furnishings delivered to
Borrower by the manufacturer or vendor not more than ninety (90) days prior to
the Funding Date of the Loan relating to such Equipment, as evidenced by the
invoice date of such Equipment; provided that for the first Loan only, Eligible
Equipment may include Equipment delivered to Borrower at any time on or after
March 1, 2001.
"Environmental Laws" means all foreign, federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control
Act of 1972, the ▇▇▇▇▇ ▇▇▇▇▇
▇
▇▇▇▇▇▇▇▇ ▇▇▇, the Federal Resource Conservation and Recovery Act, the Toxic
Substances Control Act and the Emergency Planning and Community Right-to-Know
Act.
"Equipment" has the meaning given to such term in Section 4.1.
"Equity Securities" of any Person means (a) all common stock, preferred
stock, participations, shares, membership interests, partnership interests or
other equity interests in and of such Person (regardless of how designated and
whether or not voting or non-voting) and (b) all warrants, options and other
rights to acquire any of the foregoing.
"Event of Default" has the meaning given to such term in Section 8.
"Event of Loss" has the meaning given to such term in Section 6.10.
"Facility Fee" has the meaning given to such term in Section 2.7.
"Financed Equipment" has the meaning given to such term in Annex A to any
Loan Agreement Supplement, as amended or supplemented from time to time.
"Funding Date" means any date on which a Loan is made to or on account of
Borrower under this Agreement.
"GAAP" means generally accepted accounting principles as in effect in the
United States of America from time to time, consistently applied.
"Good Faith Deposit" has the meaning given to such term in Section 2.7.
"Governmental Authority" means (a) any federal, state, county, municipal
or foreign government, or political subdivision thereof, (b) any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality or public body, (c) any court or administrative tribunal or (d)
with respect to any Person, any arbitration tribunal or other non-governmental
authority to whose jurisdiction that Person has consented.
"GV" means GATX Ventures, Inc.
"Hazardous Materials" means all those substances which are regulated by,
or which may form the basis of liability under, any Environmental Law, including
all substances identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.
"Indebtedness" means, with respect to Borrower or any Subsidiary, the
aggregate amount of, without duplication, (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or services (excluding
trade payables aged less than 180 days), (d) all capital lease obligations of
such Person, (e) all obligations or liabilities of others secured by a Lien on
any asset of such Person, whether or not such obligation or liability is
assumed, (f) all obligations or liabilities of others guaranteed by
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such Person; and (g) any other obligations or liabilities which are required by
GAAP to be shown as debt on the balance sheet of such Person. Unless otherwise
indicated, the term "Indebtedness" shall include all Indebtedness of Borrower
and the Subsidiaries.
"Indemnified Person" has the meaning given to such term in Section 10.3.
"Interim Payment" means, with respect to each Loan, an amount equal to the
initial Loan Amount multiplied by the percentage equal to the product of (i) the
quotient derived from dividing the initial Loan Factor with respect to such Loan
by 30, and (ii) the number of days from (and including) the Funding Date of such
Loan to (but not including) the first Payment Date with respect to such Loan.
"Investment" means the purchase or acquisition of any capital stock,
equity interest, or any obligations or other securities of, or any interest in,
any Person, or the extension of any advance, loan, extension of credit or
capital contribution to, or any other investment in, any Person.
"Landlord Agreement" means an agreement substantially in the form of
Exhibit E or such other form as Lenders may agree to accept.
"Lenders" has the meaning given to such term on the cover page hereof.
"Lenders" Closing Expenses" has the meaning given to such term in Section
2.7.
"Lenders' Expenses" means all reasonable costs or expenses (including
reasonable attorneys' fees and expenses) incurred in connection with the
preparation, negotiation, documentation, administration and funding of the Loan
Documents; and Lenders' reasonable attorneys' fees, costs and expenses incurred
in amending, modifying, enforcing or defending the Loan Documents (including
fees and expenses of appeal or review), including the exercise of any rights or
remedies afforded hereunder or under applicable law, whether or not suit is
brought, whether before or after bankruptcy or insolvency, including without
limitation all fees and costs incurred by Lenders in connection with Lenders'
enforcement of their rights in a bankruptcy or insolvency proceeding filed by or
against Borrower or its Property.
"Lien" means any voluntary or involuntary security interest, pledge,
bailment, lease, mortgage, hypothecation, conditional sales and title retention
agreement, encumbrance or other lien with respect to any Property in favor of
any Person.
"Loan" means each advance of credit by Lenders to Borrower under this
Agreement in accordance with their Commitment Percentage.
"Loan Agreement Supplement" means a supplement to this Agreement in
substantially the form of Exhibit C.
"Loan Amount" means, with respect to each Loan, as of any date, the
outstanding principal amount of such Loan at such time.
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"Loan Documents" means, collectively, this Agreement, each Loan Agreement
Supplement, the Warrants, any Landlord Agreement, any Service Provider's Consent
and all other documents, instruments and agreements entered into in connection
with this Agreement, all as amended or extended from time to time.
"Loan Factor" means, with respect to each Loan, the amount set forth as a
percentage in the Loan Terms Schedule with respect to such Loan, which fully
amortizes the Loan over the Repayment Period applicable to such Loan in equal
periodic installments at the Basic Rate.
"Loan Margin" means the number of basis points set forth following such
term on the cover page of this Agreement.
"Loan Terms Schedule" means, with respect to each Loan, Annex B to the
Loan Agreement Supplement prepared by Lenders in connection with such Loan.
"Loan Value" means with respect to each Loan, an amount equal to the sum
of all remaining unpaid Scheduled Payments discounted to the relevant date at a
rate of six percent (6%) per annum; the "relevant date" shall be the Payment
Date on which payment of such amount is to be made, or if such date is not a
Payment Date, on the Payment Date immediately succeeding such date.
"Maturity Date" means, with respect to each Loan, the last day of the
Repayment Period for such Loan, or if earlier, the date of acceleration of such
Loan following an Event of Default or the date of prepayment, whichever is
applicable.
"Minimum Funding Amount" means One Hundred Thousand Dollars ($100,000).
"Obligations" means all debt, principal, interest, fees, charges, expenses
and attorneys' fees and costs and other amounts, obligations, covenants, and
duties owing by Borrower to Lenders or Agent of any kind and description, in
each case arising or incurred under any Loan Documents (other than the
Warrants), whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, including the Loan Value due with
respect to the Loans, and further including all Lenders' Expenses and Agent's
Expenses.
"Officer's Certificate" means a certificate executed by a Responsible
Officer substantially in the form of Exhibit G or such other form as Lenders may
agree to accept.
"Other Equipment" means, to the extent reasonably acceptable to Lenders,
tenant improvements and buildout costs, software, software licenses, tooling,
equipment specially manufactured for Borrower, and freight, installation and
sales taxes relating to Eligible Equipment and other soft costs.
"Payment Date" has the meaning given to such term in Section 2.2(a).
"Permitted Investments" shall mean and include any of the following
Investments:
(a) Demand deposits, certificates of deposit, bankers
acceptances, time deposits and other deposit accounts with commercial banks
organized under the laws of the
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United States and having an aggregate capital and surplus in excess of One
Hundred Million Dollars ($100,000,000).
(b) Investments in marketable obligations issued or fully
guaranteed by the United States and maturing not more than one (1) year from the
date of issuance.
(c) Investments in open market commercial paper rated at least
"A1" or "P1" or higher by a national credit rating agency and maturing not more
than one (1) year from the creation thereof.
(d) Investments pursuant to or arising under currency
agreements or interest rate agreements entered into in the ordinary course of
business.
(e) Investments in money market and other mutual funds
invested solely in the types of Investments described in clauses (a) through (d)
of this definition of Permitted Investments.
(f) Other Investments aggregating not in excess of Two Hundred
Fifty Thousand Dollars ($250,000) at any time.
"Permitted Liens" means:
(a) the Lien created by this Agreement and/or any Loan
Agreement Supplement;
(b) Liens for fees, taxes, levies, imposts, duties or other
governmental charges of any kind which are not yet delinquent or which are being
contested in good faith by appropriate proceedings which suspend the collection
thereof; provided that such proceedings do not involve any substantial danger of
the sale, forfeiture or loss of any item of Financed Equipment and that Borrower
has adequately bonded such Lien or reserves sufficient to discharge such Lien
have been provided on the books of Borrower;
(c) Liens to secure payment of worker's compensation,
employment insurance, old age pensions or other social security obligation of
Borrower arising pursuant to mandatory provisions of applicable law in the
ordinary course of Borrower's business; and
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings which suspend the payment
thereof; provided that such proceedings do not involve any substantial danger of
the sale, forfeiture or loss of any item of Financed Equipment and that Borrower
has adequately bonded such Lien or reserves sufficient to discharge such Lien
have been provided on the books of Borrower.
"Person" means and includes any individual, any partnership, any
corporation, any business trust, any joint stock company, any limited liability
company, any unincorporated association or any other entity and any domestic or
foreign national, state or local government,
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any political subdivision thereof, and any department, agency, authority or
bureau of any of the foregoing.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.
"Repayment Period" means the period beginning on the first Payment Date
and continuing for the period set forth following such term on the cover page of
this Agreement.
"Responsible Officer" has the meaning given to such term in Section 6.3.
"Scheduled Payments" has the meaning given to such term in Section 2.2(a).
"Service Provider's Consent" means an agreement substantially in the form
of Exhibit F or such other form as Lenders may agree to accept.
"Solvent" has the meaning given to such term in Section 5.12.
"Stated Cost" means (i) with respect to each item of Eligible Equipment,
the original cost to Borrower of the item of Eligible Equipment, and (ii) with
respect to each item of Other Equipment, the original cost to Borrower of the
item of Other Equipment.
"Subsidiary" means any corporation of which a majority of the outstanding
capital stock entitled to vote for the election of directors (otherwise than as
the result of a default) is owned by Borrower directly or indirectly through
Subsidiaries.
"TCC" means Third Coast Capital, a division of DVI Financial Services Inc.
"Transfer" has the meaning given to such term in Section 7.4.
"Term" means the period from and after the date hereof until the payment
in full of all amounts and liabilities payable under this Agreement and the
other Loan Documents, including principal and interest on the Loans (including
all Scheduled Payments with respect to each Loan).
"Treasury Note Maturity" means the period of months set forth following
such term on the cover page of this Agreement.
"Warrants" means separate warrants in favor of each of the Lenders and/or
their designees to purchase securities of Borrower, each substantially in the
form of Exhibits.
1.2 Other Interpretive Provisions. References in this Agreement to
"Articles," "Sections," "Exhibits, "Schedules" and "Annexes" are to recitals,
articles, sections, exhibits, schedules and annexes herein and hereto unless
otherwise indicated. References in this Agreement and each of the other Loan
Documents to any document, instrument or agreement shall include (a) all
exhibits, schedules, annexes and other attachments thereto, (b) all documents,
instruments or agreements issued or executed in replacement thereof, and (c)
such document, instrument or agreement, or replacement or predecessor thereto,
as amended,
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modified and supplemented from time to time and in effect at any given time. The
words "hereof," "herein" and "hereunder" and words of similar import when used
in this Agreement or any other Loan Document shall refer to this Agreement or
such other Loan Document, as the Case may be, as a whole and not to any
particular provision of this Agreement or such other Loan Document, as the case
may be. The words "include" and "including" and words or similar import when
used in this Agreement or any other Loan Document shall not be construed to be
limiting or exclusive. Unless otherwise indicated in this Agreement or any other
Loan Document, all accounting terms used in this Agreement or any other Loan
Document shall be construed, and all accounting and financial computations
hereunder or thereunder shall be computed, in accordance with GAAP, and all
terms describing Collateral shall be construed in accordance with the Code.
2. Loans: Repayment.
2.1 Commitment.
(a) The Credit Amount. Subject to the terms and conditions of
this Agreement and relying upon the representations and warranties herein set
forth as and when made or deemed to be made, Lenders agree to lend to Borrower,
severally and not jointly, from time to time on or prior to the Commitment
Termination Date, the Loans according to each Lender's pro rata share of the
Credit Amount (based upon the respective Commitment of each Lender) of an amount
equal to (i) one hundred percent (100%) of the Stated Cost of Eligible
Equipment, and (ii) one hundred percent (100%) of the Stated Cost of Other
Equipment; provided that the aggregate principal amount of the Loans shall not
exceed the Credit Amount at such time; provided further that the aggregate
original principal amount of all Loans relating to the financing of Other
Equipment shall not at any time exceed twenty-five percent (25%) of the
aggregate original principal amount of all Loans outstanding at such time. Loans
may not be prepaid except in accordance with Section 2.3.
(b) Promissory Note. Each Loan Terms Schedule shall be
considered a promissory note evidencing the amounts due hereunder for all
purposes.
(c) Use of Proceeds. The proceeds of the Loans shall be used
solely for the purchase of Eligible Equipment or Other Equipment or
reimbursement to Borrower of the Stated Cost of Eligible Equipment or Other
Equipment.
(d) Termination of Commitment to Lend. Notwithstanding
anything in the Loan Documents, each Lender's obligation to lend the undisbursed
portion of such Lender's Commitment to Borrower hereunder shall terminate on the
earlier of (i) at such Lender's sole election, the occurrence of any Default or
Event of Default hereunder, and (ii) the Commitment Termination Date.
Notwithstanding the foregoing, each Lender's obligation to lend the undisbursed
portion of such Lender's Commitment to Borrower shall terminate if, in such
Lender's sole judgment, there has been a material adverse change in the general
affairs, management, results of operations or condition (financial or otherwise)
of Borrower, whether or not arising from transactions in the ordinary course of
business, or there has been any material adverse deviation by Borrower from the
business plan of Borrower presented to Lenders on or before the date of this
Agreement. Each Lender shall provide Borrower written notice of such
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Lender's decision to terminate any further funding obligation pursuant to the
provisions of this Section 2.1(d) promptly following Borrower's request for a
funding hereunder and such Lender's decision to so terminate such further
funding obligation.
2.2 Payments.
(a) Scheduled Payments. Borrower shall make payments of
principal and accrued interest in advance for each Loan (collectively,
"Scheduled Payments") as set forth in the Loan Terms Schedule, commencing on the
date set forth on the Loan Terms Schedule applicable to such Loan and continuing
thereafter during the Repayment Period on the first Business Day of each
calendar month (each a "Payment Date"), in an amount equal to the Loan Factor
multiplied by the Loan Amount for such Loan as of such Payment Date.
(b) Interim Payment. Unless the Funding Date for a Loan is a
Payment Date, Borrower shall pay the Interim Payment payable with respect to
such Loan on the Funding Date, as specified in the Loan Terms Schedule
applicable to such Loan.
(c) Final Payment. Unless a Loan is prepaid in full in
accordance with the terms of this Agreement, on the Maturity Date with respect
to such Loan, Borrower shall pay, in addition to any unpaid Scheduled Payment,
accrued and unpaid interest and all other amounts due on such date with respect
to such Loan.
(d) Payment of Interest. Except as otherwise provided in
Section 2.2(f), Borrower shall pay interest on each Loan at a per annum rate of
interest equal to the Basic Rate. All computations of interest on Loans shall be
based on a year of twelve 30-day months. Notwithstanding any other provision
hereof, the amount of interest payable hereunder shall not in any event exceed
the maximum amount permitted by the law applicable to interest charged on
commercial loans.
(e) Application of Payments. All payments received by Lenders
prior to an Event of Default shall be applied as follows: (1) first to Lenders'
Expenses and Agent's Expenses then due and owing; and (2) second to all
Scheduled Payments then due and owing; provided that if such payments are not
sufficient to pay the whole amount then due, such payments shall be applied
first to unpaid interest at the Basic Rate, then to the remaining amount then
due. After an Event of Default, all payments and application of proceeds shall
be made as set forth in Section 9.7.
(f) Default Rate. Borrower shall pay interest at a per annum
rate equal to the Default Rate on any amounts required to be paid by Borrower
under this Agreement or the other Loan Documents (including Scheduled Payments
payable with respect to any Loan, accrued and unpaid interest, and any fees or
other amounts) which remain unpaid after such amounts are due beyond any
applicable grace periods. If an Event of Default has occurred and the
Obligations have been accelerated (whether automatically or by Lenders'
election), Borrower shall pay interest on the aggregate, outstanding accelerated
balance hereunder from the date of the Event of Default until all Events of
Default are cured, at a per annum rate equal to the Default Rate.
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2.3 Prepayments.
(a) Prepayment Upon an Event of Loss. If any Financed
Equipment is subject to an Event of Loss and Borrower is required to or elects
to prepay the Loan with respect to such Financed Equipment, then such Loan shall
be prepaid to the extent and in the manner provided in Section 6.10.
(b) Mandatory Prepayment Upon an Acceleration. If the Loans
are accelerated following the occurrence of an Event of Default or otherwise
(other than following an Event of Loss), then Borrower shall immediately pay to
Lenders (i) all accrued and unpaid Scheduled Payments with respect to each Loan
due prior to the date of prepayment, (ii) any accrued and unpaid interest, (iii)
the Loan Value of each Loan, and (iv) all other sums, if any, that shall have
become due and payable hereunder.
(c) Optional Prepayment. Upon ten (10) Business Days' prior
written notice to Lenders, Borrower may, at its option, (i) at any time after
April 30,2003, or (ii) at any time if Lender fails to consent to a merger,
consolidation or acquisition in accordance with Section 7.6, prepay all, and not
less than all, of the Loans in full by paying to Lenders an amount equal to (i)
all accrued and unpaid Scheduled Payments with respect to each Loan due prior to
the date of prepayment; (ii) any accrued and unpaid interest; (iii) the Loan
Value of each Loan, and (iv) all other sums, if any, that shall have become due
and payable hereunder. Except as set forth in this Section 2.3, the Loans may
not be prepaid.
2.4 Other Payment Terms.
(a) Place and Manner. Borrower shall make all payments due to
Agent or Lenders in lawful money of the United States. All payments of
principal, interest, fees and other amounts payable by Borrower hereunder shall
be made, in immediately available funds, not later than 10:00 a.m. California
time, on the date on which such payment is made. Borrower shall make payments to
Lenders as follows:
GV Payment
Credit: GATX Capital Corporation
Bank Name: Bank of America
Bank Address: ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Account No.: 3750878673
ABA Routing No.: 111-000012
Reference: EGENERA, INC. Invoice #___________________
TCC Payment
Credit: DVI Financial Services Inc.
Bank Name: Fleet Bank
Bank Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇
Account No.: 2181016540
ABA Routing No.: ▇▇▇▇▇▇▇▇▇
Reference: EGENERA, INC., Loan # ▇▇▇-▇▇▇▇-▇▇▇,
Invoice #_____________
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Any payment received by Agent or one Lender for the account of the other Lender
shall be paid promptly to such Lender, in like funds, for the Loan in respect of
which such payment is made.
(b) Date. Whenever any payment due hereunder shall fall due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in the
computation of interest or fees, as the case may be.
2.5 Procedure for Making Loans.
(a) Notice. Whenever Borrower desires that Lenders make a
Loan, Borrower shall be responsible for providing Agent with a list of equipment
proposed to be financed with such Loan together with such additional
information with respect to the Loan and the Eligible Equipment and the Other
Equipment as Agent shall reasonably request. Following the receipt by Agent of
such information in form and substance reasonably satisfactory to it, Agent
shall notify Borrower that the conditions set forth in Sections 3.2(b) and
3.2(c) have been met and Borrower may then notify Agent of the date on which
Borrower desires Lenders to make such Loan. Borrower's notice shall be made at
least five (5) Business Days in advance of the desired Funding Date, unless
Agent elects at its sole discretion to allow the Funding Date to be within 5
Business Days of the notice. Borrower's execution and delivery to Agent of the
Loan Agreement Supplement with the attached Loan Terms Schedule shall be
Borrower's agreement to the terms and calculations thereunder. Within two (2)
Business Days following receipt of such notice, Agent shall notify each Lender
by telephone or facsimile of the principal amount (including such Lender's
Commitment Percentage thereof) and Funding Date of the Loan being requested by
Borrower. Subject to the terms and conditions of this Agreement, as soon as
practicable on the Funding Date specified in the Loan Terms Schedule, each
Lender shall transfer an amount equal to its Commitment Percentage multiplied by
the amount of the Loan to the account specified in the Loan Agreement Supplement
in immediately available funds. Each Lender's obligation to advance an amount
equal to its Commitment Percentage of the Loan shall be expressly subject to the
satisfaction of the conditions set forth in Sections 3.1 and 3.2.
(b) Loan Factor and Loan Value Calculation. Prior to each
Funding Date, Agent, on behalf of Lenders, shall establish the Loan Factor and
the Basic Rate with respect to such Loan, which shall be set forth in the Loan
Agreement Supplement to be executed by Borrower with respect to each Loan and
shall be conclusive in the absence of a manifest error.
(c) Disbursement. Each Lender shall disburse its pro rata
portion of such Loan by wire transfer to Borrower at the account specified in
the Loan Agreement Supplement for the relevant Loan. Notwithstanding anything
stated herein to the contrary, no Lender shall have any obligation to advance
funds on behalf of the other Lender.
2.6 Minimum Funding Amount; Maximum Number of Fundings. Except with
the prior consent of Lenders, in Lenders' sole discretion, (i) there shall not
be more than one funding of a Loan in any one calendar month; and (ii) the
aggregate amount of each requested Loan shall
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not be less than the lesser of (a) the Minimum Funding Amount and (b) the
remaining Credit Amount.
2.7 Closing Expenses, Facility Fee and Good Faith Deposit. Borrower
shall pay Lenders' Expenses in connection with Lenders' due diligence and in
connection with the negotiation and documentation of this Agreement and the
other Loan Documents ("Lenders' Closing Expenses"). Borrower has previously paid
a good faith deposit in the amount of Thirty Thousand Dollars ($30,000) (the
"Good Faith Deposit"). Concurrently with its execution and delivery of this
Agreement Borrower shall pay a facility fee in the amount of Fifteen Thousand
Dollars ($15,000) (the "Facility Fee") which shall be retained by Lenders and be
deemed fully earned upon receipt. The Good Faith Deposit shall be applied toward
payment of the Facility Fee with the balance of the Good Faith Deposit being
used to pay Lenders' Closing Expenses. After payment of the Facility Fee and the
final determination and payment of all of Lenders' Closing Expenses, any
remaining balance of the Good Faith Deposit shall be applied, on a pro rata
basis, to Borrower's next Scheduled Payment on all then outstanding Loans. It is
agreed the legal fees of Agent's in-house counsel and TCC's in-house counsel in
connection with the negotiation and initial documentation of this Agreement and
the other Loan Documents shall be, in the case of Agent, Six Thousand Dollars
($6,000), and in the case of TCC, Three Thousand Dollars ($3,000).
3. Conditions of Loans.
3.1 Conditions Precedent to Closing. At the time of the execution
and delivery of this Agreement, Lenders shall have received, in form and
substance reasonably satisfactory to Lenders, all of the following (unless
Lenders have agreed to waive such condition or document, in which case such
condition or document shall be a condition precedent to the making of all Loans
and shall be deemed added to Section 3.2):
(a) Loan Agreement. This Agreement duly executed by Borrower
and each Lender.
(b) Warrants. The separate Warrants to be issued to each
Lender or their designees, each duly executed by Borrower.
(c) Intercreditor Agreement. An intercreditor agreement, in
form and substance satisfactory to Lenders, and duly executed by each Lender.
(d) Secretary's Certificate. A certificate of the secretary or
assistant secretary of Borrower with copies of the following documents attached:
(i) the certificate of incorporation and bylaws of Borrower certified by
Borrower as being in full force and effect on the date thereof, (ii) incumbency
and representative signatures, and (iii) resolutions authorizing the execution
and delivery of this Agreement and each of the other Loan Documents.
(e) Good Standing, Etc. A good standing certificate from
Borrower's state of incorporation, together with certificates of foreign
qualification from the state in which Borrower's principal place of business is
located and each other state in which Borrower is currently qualified to do
business, each dated as of a recent date.
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(f) Insurance. Evidence of the insurance coverage required by
Section 6.9 of this Agreement.
(g) Consents. All necessary consents of shareholders and other
third parties with respect to the execution, delivery and performance of this
Agreement, the Warrants and the other Loan Documents.
(h) Legal Opinion. A legal opinion of Borrower's counsel
substantially in the form of Exhibit D.
(i) Other Documents. Such other documents, and completion of
such other matters, as Lenders may deem necessary or appropriate.
3.2 Conditions Precedent to All Loans. The obligation of Lenders to
make each Loan, including the initial Loan, is further subject to the following
conditions:
(a) No Defaults. No Default or Event of Default shall have
occurred and be continuing.
(b) Documentation of Eligible Equipment. Borrower shall have
provided to Agent, with respect to the Eligible Equipment which is requested to
be financed with the proceeds of the Loan to be made on such Funding Date,
copies of such invoices, purchase orders, bills of sale, serial numbers,
agreements, canceled checks, and other documents as Lenders shall reasonably
request to evidence the ownership by Borrower of, and the payment in full by
Borrower of the purchase price of such Eligible Equipment, each in form and
substance reasonably satisfactory to Lenders.
(c) Documentation of Other Equipment. Borrower shall have
provided to Agent, with respect to the Other Equipment which is requested to be
financed with the proceeds of the Loan to be made on such Funding Date, copies
of such invoices, purchase orders, bills of sale, agreements, canceled checks,
and other documents as Lenders shall reasonably request to evidence the
ownership by Borrower of, and the payment in full of the purchase price by
Borrower of such Other Equipment, each in form and substance reasonably
satisfactory to Lenders.
(d) Access Agreements. Borrower shall have provided Agent with
the location of each item of Financed Equipment and a Landlord Agreement for
each such location (unless Borrower is the fee owner thereof) or a Service
Provider's Consent if any such Financed Equipment is located at a third party
service provider, as appropriate, which has been duly executed by each of the
parties thereto.
(e) Loan Agreement Supplement. Borrower, Agent and Lenders
shall have executed a Loan Agreement Supplement, including a Loan Terms Schedule
and a list of Financed Equipment with respect to the proposed Loan.
(f) Financing Statements. Agent shall have received such
documents, instruments and agreements, including UCC financing statements or
amendments to UCC financing statements, as Agent shall reasonably request to
evidence the perfection and priority of
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the security interests granted to Agent, on behalf of and for the benefit of
Lenders, pursuant to Section 4.
(g) Releases. Borrower shall have delivered to Agent, on
behalf of Lenders, a release, or estoppel letter, as appropriate, from any
Person having an existing Lien on any item of Eligible Equipment or Other
Equipment which is requested to be financed.
(h) Other Documents. Such other documents, and completion of
such other matters, as Agent may deem necessary or appropriate.
3.3 Covenant to Deliver. Borrower agrees (not as a condition but as
a covenant) to deliver to Agent each item required to be delivered to Agent
and/or Lenders as a condition to each Loan, if such Loan is advanced. Borrower
expressly agrees that the extension of such Loan prior to the receipt by Agent
or Lenders of any such item shall not constitute a waiver by Agent or Lenders of
Borrower's obligation to deliver such item, and any such extension in the
absence of a required item shall be in Lenders' sole discretion.
4. Creation of Security Interest.
4.1 Grant of Security Interest. Borrower grants to Agent, on behalf
and for the benefit of Lenders, a valid, first priority, continuing security
interest in all presently existing and hereafter acquired or arising Collateral
in order to secure prompt, full and complete payment of any and all Obligations
(other than any obligations arising solely under the Warrants) and in order to
secure prompt, full and complete performance by Borrower of each of its
covenants and duties under each of the Loan Documents. The "Collateral" shall
mean and include all right, title, interest, claims and demands of Borrower in
and to all of the following:
Each and every item of goods (and embedded computer programs
and supporting information included within the definition of "goods" under the
Code), equipment, fixtures or personal property which, in each such case, is
financed with or is designated as "Collateral" for the Obligations on and after
the date of this Agreement by designating such goods, equipment, fixtures and
personal property on an annex or exhibit to a Loan Agreement Supplement executed
by Borrower, whether now owned or hereafter acquired, together with all
substitutions, renewals or replacements of and additions, improvements,
accessions, replacement parts and accumulations to any and all of such goods,
equipment, fixtures or personal property (collectively, the "Equipment"),
together with all proceeds thereof, including, without limitation, insurance,
condemnation, requisition or similar payments, and all proceeds from sales,
renewals, releases or other dispositions thereof.
4.2 After-Acquired Property. All Financed Equipment which is
financed through Loans and any and all other Property generally described or
referred to as Collateral or Financed Equipment which is hereafter acquired by
Borrower shall ipso facto, and without any further conveyance, assignment or act
on the part of Borrower or Lenders, become and be subject to the security
interest herein granted as fully and completely as though specifically described
herein. The list of Financed Equipment shall be amended and supplemented on each
Funding Date by a Loan Agreement Supplement to incorporate all Financed
Equipment financed with the Loan advanced on such Funding Date; provided that
the failure to so amend and supplement the list of
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Financed Equipment shall not affect the grant by Borrower to Agent of the
security interest in such Financed Equipment pursuant to this Section 4. This
Agreement and the other documents in connection herewith may be otherwise
supplemented and amended from time to time, as required by Lenders, to reflect
additional Collateral to be subject to the security interest granted pursuant to
this Section 4.
4.3 Duration of Security Interest. Agent's security interest in the
Collateral shall continue until the payment in full and the satisfaction of all
Obligations and termination of the Commitments, whereupon such security interest
shall terminate; provided that if any item of Financed Equipment is subject to
an Event of Loss, then following the prepayment of the Loan with respect to such
item pursuant to Section 2.3, Agent shall release its security interest in such
item of Financed Equipment. Agent shall, at Borrower's sole cost and expense,
execute such further documents and take such further actions as may be
reasonably necessary to effect the release contemplated by this Section 4.3,
including duly executing and delivering termination statements for filing in all
relevant jurisdictions under the Code.
4.4 Location and Possession of Collateral. The Collateral is and
shall remain in the possession of Borrower at its location listed on the cover
page hereof, or if Lenders subsequently agree to any additional location, as set
forth in a Loan Agreement Supplement (except that Borrower may permit its
employees to use laptop computers or other similarly mobile equipment offsite in
the ordinary course of Borrower's business). Borrower shall remain in full
possession, enjoyment and control of the Collateral (except only as may be
otherwise required by Agent for perfection of its security interest therein) and
so long as no Event of Default has occurred, shall be entitled to manage,
operate and use the same and each part thereof with the rights and franchises
appertaining thereto; provided that the possession enjoyment, control and use of
the Collateral shall at all time be subject to the observance and performance of
the terms of this Agreement.
4.5 Markings on the Collateral. At Agent's request at any time
during the Term of the Loan (including any extension thereof) and after the
occurrence of an Event of Default, Borrower shall place in a conspicuous
location on each item of Financed Equipment a plaque or other marking to be
supplied by Lenders which reads substantially as follows:
GATX VENTURES, INC., as Agent for Lenders, Lienholder.
Such plaque or other marking shall not be removed (or if removed or
damaged such plaque or other marking shall be replaced) until the security
interest in favor of Agent in such item of Collateral is terminated pursuant to
this Agreement.
4.6 Delivery of Additional Documentation Required. Borrower shall
from time to time execute and deliver to Agent on behalf of Lenders, at the
request of Agent, all financing statements and other documents Agent may
reasonably request, in form satisfactory to Agent, to perfect and continue
Agent's perfected security interests in the Collateral and in order to
consummate fully all of the transactions contemplated under the Loan Documents.
4.7 Right to Inspect. Each Lender (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower's
15
usual business hours, to inspect Borrower's books and records and to make copies
thereof and to inspect, test, and appraise the Collateral in order to verify
Borrower's financial condition or the amount, condition of, or any other matter
relating to, the Collateral.
4.8 Intellectual Property. Borrower shall (i) protect, defend and
maintain the validity and enforceability of its material intellectual property
and promptly advise Lenders in writing of material infringements thereof, and
(ii) not allow any intellectual properly material to Borrower's business to be
abandoned, forfeited or dedicated to the public without the approval of
Borrower's Board of Directors.
5. Representations and Warranties. Except as set forth in the Disclosure
Schedule, Borrower represents, warrants and covenants as follows:
5.1 Organization and Qualification. Borrower is a corporation duly
organized and validly existing and in good standing under the laws of its state
of incorporation and qualified and licensed to do business in, and is in good
standing in, any state in which the conduct of its business or its ownership of
Property requires that it be so qualified or in which the Collateral is located,
except for such states as to which any failure to so qualify would not
reasonably be expected to have a material adverse effect on Borrower. Borrower
has no Subsidiaries.
5.2 Authority. Borrower has all necessary power and authority to
execute, deliver, and perform in accordance with the terms thereof, the Loan
Documents to which it is a party. Borrower has all requisite power and authority
to own and operate its Property and to carry on its businesses as now conducted.
5.3 Conflict with Other Instruments, etc. Neither the execution and
delivery of any Loan Document to which Borrower is a party nor the consummation
of the transactions therein contemplated nor compliance with the terms,
conditions and provisions thereof will conflict with or result in a breach of
(i) any of the terms, conditions or provisions of the certificate of
incorporation and the by-laws, or other organizational documents of Borrower,
(ii) any law or any regulation, except for such violations which could not,
either individually or in the aggregate, reasonably be expected to have a
material adverse effect on Borrower, (iii) any order, writ, injunction or decree
of any court or governmental instrumentality or (iv) any material agreement or
instrument to which Borrower is a party or by which it or any of its Property is
bound or to which it or any of its Property is subject, or constitute a default
thereunder or result in the creation or imposition of any Lien, other than
Permitted Liens.
5.4 Authorization; Enforceability. The execution and delivery of
this Agreement, the granting of the security interest in the Collateral, the
incurring of the Loans, the execution and delivery of the other Loan Documents
to which Borrower is a party and the consummation of the transactions herein and
therein contemplated have each been duly authorized by all necessary action on
the part of Borrower. The Loan Documents have been duly executed and delivered
and constitute legal, valid and binding obligations of Borrower, enforceable in
accordance with their respective terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency or other similar laws of general
application relating to or affecting the enforcement of creditors' rights or by
general principles of equity.
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5.5 No Prior Encumbrances. Borrower has good and marketable title to
the Collateral, free and clear of Liens except for Permitted Liens. Borrower has
good title and ownership of, or is licensed under, all of Borrower's current
intellectual property, with no known infringement of the rights of others,
except where the failure to have good title, ownership or license could not
reasonably be expected to have a material adverse effect on Borrower. Borrower
has not received any communications alleging that Borrower has violated, or by
conducting its business as proposed, would violate any proprietary rights of any
other Person. Borrower has no knowledge of any infringement or violation by it
of the intellectual property rights of any third party and has no knowledge of
any violation or infringement by a third party of any of its intellectual
property.
5.6 Name; Location of Chief Executive Office, Principal Place of
Business and Collateral. Borrower has not done business under any name other
than that specified on the signature page hereof. The chief executive office,
principal place of business, and the place where Borrower maintains its records
concerning the Collateral are presently located at the address set forth on the
cover page of this Agreement. The Collateral is presently located at the address
set forth on the cover page hereof, or if Lenders subsequently agree to any
other locations, as set forth in a Loan Agreement Supplement which is executed
by Agent and Lenders (except that Borrower may permit its employees to use
laptop computers or other similarly mobile equipment offsite in the ordinary
course of Borrower's business).
5.7 Litigation. There are no actions or proceedings pending by or
against Borrower before any court or administrative agency in which an adverse
decision could have a material adverse effect on Borrower or the aggregate value
of the Collateral. Borrower does not have knowledge of any such pending or
threatened actions or proceedings.
5.8 Financial Statements. All financial statements relating to
Borrower or any Affiliate that have been or may hereafter be delivered by
Borrower to each Lender present fairly in all material respects Borrower's
financial condition as of the date thereof and Borrower's results of operations
for the period then ended.
5.9 Security Interest. Assuming the proper filing of one or more
financing statement(s) identifying the Collateral with the proper state and/or
local authorities, the security interests in the Collateral granted to Agent
pursuant to this Agreement (i) constitute and will continue to constitute first
priority security interests (except to the extent any Permitted Liens may have a
superior priority to Agent's Lien under this Agreement) and (ii) are and will
continue to be superior and prior to the rights of all other creditors of
Borrower (except to the extent of such Permitted Liens).
5.10 No Material Adverse Effect. No event has occurred and no
condition exists which could reasonably be expected to have a material adverse
effect on the financial condition, business or operations of Borrower since
December 31, 2000.
5.11 Full Disclosure. No representation, warranty or other statement
made by Borrower in any Loan Document (including the Disclosure Schedule),
certificate or written statement furnished to Agent or either Lender contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained in such
17
certificates or statements not misleading. There is no fact known to Borrower
which materially adversely affects, or which could in the future be reasonably
expected to materially adversely affect, its ability to perform its obligations
under this Agreement, except for facts relating to general economic conditions
which could reasonably be expected to similarly affect all companies within the
same industry as Borrower.
5.12 Solvency, Etc. Borrower is Solvent (as defined below) and,
after the execution and delivery of the Loan Documents and the consummation of
the transactions contemplated thereby, Borrower will be Solvent. As used herein,
"Solvent" means, with respect to any Person on any date, that on such date (a)
the fair value of the property of such Person is greater than the fair value of
the liabilities (including, without limitation, contingent liabilities) of such
Person, (b) the present fair saleable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature and (d)
such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's property would
constitute an unreasonably small capital.
6. Affirmative Covenants. Borrower covenants and agrees that, until the
full and complete payment of the Obligations and the termination of the
Commitments, Borrower shall do all of the following:
6.1 Good Standing. Borrower shall maintain its corporate existence
and its good standing in its jurisdiction of incorporation and maintain
qualification in each jurisdiction in which the failure to so qualify could
reasonably be expected to have a material adverse effect on the financial
condition, operations or business of Borrower. Borrower shall maintain in force
all licenses, approvals and agreements, the loss of which could reasonably be
expected to have a material adverse effect on its financial condition,
operations or business.
6.2 Government Compliance. Borrower shall comply with all statutes,
laws, ordinances and government rules and regulations to which it is subject,
noncompliance with which could reasonably be expected to materially adversely
affect the financial condition, operations or business of Borrower.
6.3 Financial Statements, Reports, Certificates. Until such time as
Borrower is a publicly reporting company, Borrower shall deliver to each Lender:
(a) as soon as available, but in any event within thirty (30) days after the end
of each month, a company prepared balance sheet, income statement and cash flow
statement covering Borrower's operations during such period, certified by
Borrower's president, treasurer or chief financial officer (a "Responsible
Officer"); (b) as soon as available, but in any event within one hundred twenty
(120) days after the end of Borrower's fiscal year, audited financial statements
of Borrower prepared in accordance with GAAP, together with an unqualified
opinion on such financial statements of a nationally recognized or other
independent public accounting firm reasonably acceptable to Agent; and (c) such
other financial information as Lenders may reasonably request from time to time.
From and after such time as Borrower becomes a publicly reporting company,
Borrower shall deliver to each Lender promptly as they are available and in any
event: (x) at the time of
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filing of Borrower's Form 10-K with the Securities and Exchange Commission
after the end of each fiscal year of Borrower, the financial statements of
Borrower filed with such Form 10-K; and (y) at the time of filing of Borrower's
Form 10-Q with the Securities and Exchange Commission after the end of each of
the first three fiscal quarters of Borrower, the financial statements of
Borrower filed with such Form 10-Q. In addition, Borrower shall deliver to each
Lender (i) promptly upon becoming available, copies of all statements, reports
and notices sent or made available generally by Borrower to all of its security
holders, (ii) immediately upon receipt of notice thereof, a report of any
action, proceeding or governmental investigation involving Borrower that could
reasonably be expected to result in damages or costs to Borrower of One Hundred
Thousand Dollars ($100,000) or more, (iii) no less than thirty (30) days prior
to Borrower's incurrence of any Indebtedness for borrowed money in excess of One
Hundred Thousand Dollars ($100,000), written notice thereof describing in
reasonable detail the terms and conditions thereof, and (iv) such other
financial information as Lenders may reasonably request from time to time.
6.4 Certificates of Compliance. Each time financial statements are
furnished pursuant to Section 6.3 above, there shall be delivered to each
Lender, an Officer's Certificate signed by a Responsible Officer in the form of,
and certifying to the matters set forth in, Exhibit G hereto.
6.5 Notice of Event of Loss. As soon as possible, and in any event
within ten (10) days after Borrower has knowledge thereof, Borrower shall notify
Agent in writing in reasonable detail of any Event of Loss.
6.6 Notice of Defaults. As soon as possible, and in any event within
five (5) days after the discovery of a Default or an Event of Default, Borrower
shall provide Lenders with an Officer's Certificate setting forth the facts
relating to or giving rise to such Default or Event of Default and the action
which Borrower proposes to take with respect thereto.
6.7 Taxes. Borrower shall make due and timely payment or deposit of
all federal, state, and local taxes, assessments, or contributions required of
it by law or imposed upon any Property belonging to it, including the Financed
Equipment, and will execute and deliver to Agent, on demand, appropriate
certificates attesting to the payment or deposit thereof; and Borrower will make
timely payment or deposit of all tax payments and withholding taxes required of
it by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Agent with proof satisfactory to Agent and Lenders indicating that
Borrower has made such payments or deposits; provided that Borrower need not
make any payment if the amount or validity of such payment is contested in good
faith by appropriate proceedings which suspend the collection thereof; provided
that (i) such proceedings do not involve any substantial danger of the sale,
forfeiture or loss of any item of Financed Equipment, any material item of
Collateral or Collateral which in the aggregate is material to Borrower and (ii)
Borrower has adequately bonded such amounts or reserves sufficient to discharge
such amounts have been provided on the books of Borrower.
6.8 Use; Maintenance.
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(a) Use. Borrower, at its expense, shall make all necessary
site preparations and cause the Collateral to be operated in accordance with any
applicable manufacturer's manuals or instructions. So long as no Default or
Event of Default has occurred, Borrower shall have the right to quietly possess
and use the Collateral as provided herein without interference by Agent or
Lenders.
(b) Maintenance. Borrower, at its expense, shall maintain the
Collateral in good condition, reasonable wear and tear excepted, and will comply
in all material respects with all laws, rules and regulations to which the use
and operation of the Collateral may be or become subject. Such obligation shall
extend to repair and replacement of any partial loss or damage to the Collateral
which does not constitute an Event of Loss, regardless of the cause. If
maintenance is mandated by manufacturer, Borrower shall obtain and keep in
effect, at all times during the Term maintenance service contracts with
suppliers approved by Agent and Lenders, such approval not to be unreasonably
withheld. All parts furnished in connection with such maintenance or repair
shall immediately become part of the Collateral. All such maintenance, repair
and replacement services shall be, at Borrower's election, either (i)
immediately paid for and discharged by Borrower with the result that no Lien
will attach to the Collateral or (ii) paid within the terms provided by any such
provider of such services with the result that no Lien will attach thereto,
other than a Permitted Lien.
6.9 Insurance. Borrower shall, obtain and maintain for the Term, at
its own expense:
(a) All Risk Insurance. "All risk" insurance against loss or
damage to the Collateral. The coverage limit shall be not less than the
replacement cost of the Equipment. The deductible shall not exceed Twenty-Five
Thousand Dollars ($25,000). The policy shall name Agent and each Lender, as loss
payees with respect to the Collateral, shall not be invalidated by any action of
or breach of warranty by Borrower of any provision thereof and waive subrogation
against Agent, on behalf of Lenders, or Lenders.
(b) General Liability Insurance. Commercial general liability
insurance (including contractual liability, products liability and completed
operations coverages) reasonably satisfactory to Lenders. The limit of liability
(including Borrower's umbrella form excess liability) shall be at least Five
Million Dollars ($5,000,000) per occurrence. The policy shall be without
deductible, except for products liability coverage which may have a deductible
up to Twenty Five Thousand Dollars ($25,000). The policy(ies) shall name Agent,
on behalf of Lenders, as additional insured in the full amount of Borrower's
liability coverage limits (or the coverage limits of any successor to Borrower
or such successor's parent which is providing coverage), be primary and without
contribution as respects any insurance carried by Agent or Lenders, and contain
cross liability and severability of interest clauses.
(c) Other Insurance. Such other insurance against risks of
loss and with terms as shall be reasonably required by Agent and Lenders.
All policies of insurance shall be placed with financially sound,
commercial insurers reasonably satisfactory to Agent and Lenders. All policies
of insurance shall provide that Agent, on behalf of Lenders, shall be given
thirty (30) days notice of cancellation of coverage. This
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notice provision shall be without qualification. On or prior to the first
Funding Date and prior to each policy renewal, Borrower shall furnish to Agent,
on behalf of Lenders, certificates of insurance or other evidence satisfactory
to Agent that insurance complying with all of the above requirements is in
effect.
6.10 Loss; Damage; Destruction and Seizure.
(a) Risk of Loss. Borrower shall bear the risk of the Financed
Equipment being lost, stolen, destroyed, damaged beyond repair, rendered
permanently unfit for use, or seized by a Governmental Authority for any reason
whatsoever at any time until the expiration or termination of the Term.
(b) Event of Loss. Except to the extent otherwise permitted
under Section 6.10(c), if during the Term any item of Financed Equipment is
lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit for
use, or seized by a Governmental Authority for any reason whatsoever for a
period equal to at least the remainder of the Term (an "Event of Loss"), then in
each case Agent, on behalf of Lenders, shall receive from the proceeds of
insurance maintained pursuant to Section 6.9, from any award paid by the seizing
Governmental Authority or, to the extent not received from the proceeds of
insurance or award or both, from Borrower, on or before the Payment Date next
succeeding such Event of Loss, an amount equal to the sum of: (i) all accrued
and unpaid Scheduled Payments with respect to the Loan made to finance or
refinance the purchase of such Financed Equipment which are due prior to the
next such Payment Date; (ii) an amount equal to (A) the Loan Value with respect
to such Loan multiplied by (B) the aggregate Stated Cost of each affected item
of Financed Equipment divided by the Loan Amount; and (iii) all other sums, if
any, that shall have become due and payable hereunder with respect to such Loan,
including interest at the Default Rate with respect to any past due amounts. On
the date of receipt by Agent, on behalf of Lenders, of the amount specified
above with respect to each such item of Financed Equipment subject to an Event
of Loss, this Agreement shall terminate as to such Financed Equipment. Except as
provided in Section 6.10(c), any proceeds of insurance maintained by Borrower
pursuant to Section 6.9 and received by Borrower shall be paid to Agent, on
behalf of Lenders, promptly upon their receipt by Borrower. If any proceeds of
insurance or awards received from Governmental Authorities are in excess of the
amount owed under this Section 6.10, Agent shall promptly remit to Borrower the
amount in excess of the amount owed to Lenders.
(c) Repair or Replacement. So long as no Event of Default has
occurred, any proceeds of insurance maintained pursuant to Section 6.9 received
by any of Agent, Lenders or Borrower with respect to an item of Financed
Equipment, the repair of which is practicable, shall, at the election of
Borrower, be applied either to the repair or replacement of such Financed
Equipment or, upon Agent's receipt, on behalf of Lenders, of evidence of the
repair or replacement of the Financed Equipment reasonably satisfactory to
Lenders, to the reimbursement of Borrower for the cost of such repair or
replacement. All replacement parts and equipment acquired by Borrower in
replacement of Financed Equipment pursuant to this Section 6.10(c) shall
immediately become part of the Financed Equipment upon acquisition by Borrower.
Borrower shall take such actions and provide such documentation as may be
reasonably requested by Agent, on behalf of Lenders, to protect and preserve
their first priority security
21
interest and otherwise to avoid any impairment of Agent's and Lenders' rights
under the Loan Documents in connection with such repair or replacement.
6.11 Further Assurances. At any time and from time to time Borrower
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Lenders to effect the purposes of this
Agreement, including without limitation, the continued perfection and priority
of Agent's security interest in the Collateral.
6.12 Equity Investment.
(a) Right to Participate. Borrower shall permit GV, at GV's
option, to purchase, in Borrower's Next Qualified Financing (but not any other
financing), up to Two Hundred Fifty Thousand Dollars ($250,000) of the
securities sold in Borrower's Next Qualified Financing at the same price and on
the same terms as paid and received by the lead investor of Borrower's Next
Qualified Financing. Borrower shall permit TCC or its designee, at TCC's option,
to purchase, in Borrower's Next Qualified Financing (but not any other
financing), up to Two Hundred Fifty Thousand Dollars ($250,000) of the
securities sold in Borrower's Next Qualified Financing at the same price and on
the same terms as paid and received by the lead investor of Borrower's Next
Qualified Financing. The foregoing rights of each Lender to invest in Borrower's
Next Qualified Financing shall not apply to the extent that such participation
by such Lender or its permitted assignee would prevent Borrower from availing
itself of an appropriate exemption from the registration requirements of any
applicable securities laws due to the status of such participating Lender or
assignee.
(b) Notice. Borrower agrees that it shall notify each Lender
in writing promptly upon the execution by Borrower of a term sheet or letter of
intent setting forth the terms and conditions of Borrower's Next Qualified
Financing and in any event within five (5) days of such execution. Each Lender
agrees that (1) it shall notify Borrower and the other Lender as to whether or
not it intends to participate in Borrower's Next Qualified Financing, and the
aggregate amount of such Lender's proposed investment, within thirty (30)
following such Lender's receipt of the notice required hereby, and (2) such
Lender's failure to so notify Borrower within such thirty (30) day period shall
be deemed an election by such Lender not to so participate in Borrower's Next
Qualified Financing. In the event that a Lender shall have elected to
participate in Borrower's Next Qualified Financing in accordance with the terms
of this Section 6.12, such Lender shall close on such investment
contemporaneously with the lead investor in Borrower's Next Qualified Financing
or at such other time thereafter as Borrower and such Lender may agree.
(c) Assignment of Participation Right. This foregoing right of
purchase under this Section 6.12 may be assigned by a Lender to its Affiliates
(but not to any other Person without the prior written consent of Borrower,
regardless of whether such Lender is otherwise permitted to assign its interest
in the other Obligations hereunder), and if one Lender does not elect to
purchase the full amount of equity it is entitled to purchase under this Section
6.12, such Lender shall use its reasonable efforts to notify the other Lender of
such decision as promptly as practical and, so long as further notice of such
election is given to Borrower within the thirty (30) day period provided for in
Section 6.12(b) the other Lender may purchase such amount. Each
22
Lender shall provide prompt written notice to Borrower of any assignment of its
rights under this Section 6.12 and/or election to purchase any amount not
purchased by the other Lender.
7. Negative Covenants. Borrower covenants and agrees that until the full
and complete payment of the Obligations and termination of the Commitments,
Borrower will not do any of the following:
7.1 Chief Executive Office. Change its name, chief executive office,
principal place of business or any of the items set forth in Section 1 of the
Disclosure Schedule without thirty (30) days prior written notice to Lenders.
7.2 Collateral Control. Subject to its rights under Section 4, (i)
terminate, waive or release any material right with respect to any Collateral,
(ii) remove any items of Collateral from Borrower's facility located at the
address set forth on the cover page hereof or such other address agreed to in
writing by Lenders (except that Borrower may permit its employees to use laptop
computers or other similarly mobile equipment offsite in the ordinary course of
Borrower's business), or (iii) affix or attach or permit to be affixed or
attached to any item of Collateral any other item of property owned by Borrower
or any other lender, lessor or financing party which is not readily identifiable
or separable without any damage to such item of Collateral, without each
Lender's prior written consent.
7.3 Liens. Create, incur, assume or suffer to exist any Lien of any
kind upon any Collateral, whether now owned or hereafter acquired, except
Permitted Liens.
7.4 Other Dispositions of Collateral. Convey, sell, lease or
otherwise dispose of (collectively, a "Transfer") all or any part of the
Collateral to any Person except for (i) Transfers of Financed Equipment in which
Agent shall have released its security interest pursuant to Section 4.3.
7.5 Distributions. (i) Pay any dividends or make any distributions
on its Equity Securities; (ii) purchase, redeem, retire, defease or otherwise
acquire for value any of its Equity Securities (other than repurchases pursuant
to the terms of stock purchase or stock option plans, restricted stock
agreements or similar arrangements with directors, officers, employees,
consultants or advisors of Borrower in an aggregate amount not to exceed
$250,000); (iii) return any capital to any holder of its Equity Securities as
such; (iv) make any distribution of assets, Equity Securities, obligations or
securities to any holder of its Equity Securities as such (except for the
issuance of stock pursuant to warrants, stock options and similar obligations);
or (v) set apart any sum for any such purpose; provided that Borrower may pay
dividends payable solely in common stock.
7.6 Mergers or Acquisitions. Except with Lenders' prior written
consent granted in accordance with Section 12.4(c) merge or consolidate with or
into any other Person or acquire all or substantially all of the capital stock
or assets of another Person; provided that (a) if Lenders, in their sole
discretion, decline to grant their consent to any such merger, consolidation or
acquisition within twenty (20) days after written notice from Borrower
describing all material terms of such transaction (to the extent Borrower has
knowledge thereof),
23
Borrower may, subject to the consummation of such transaction, prepay the Loans
in accordance with Section 2.3(c).
7.7 Change in Ownership. Engage in or permit any of its Subsidiaries
to engage in any business other than the businesses currently engaged in by
Borrower or reasonably related thereto or have a material change in its
management (other than as disclosed to Lenders in writing prior to the date
hereof) or a change in its ownership of greater than twenty-five percent (25%)
(other than by the sale by Borrower of Borrower's Equity Securities in a public
offering or to venture capital investors so long as Borrower identities to
Lenders the venture capital investors prior to the closing of the investment).
7.8 Transactions With Affiliates. Enter into any contractual
obligation with any Affiliate or engage in any other transaction with any
Affiliate except upon terms at least as favorable to Borrower as an arms-length
transaction with Persons who are not Affiliates of Borrower.
7.9 Indebtedness Payments. Repay any notes to officers, directors or
shareholders.
7.10 Investments. Make any Investment except for Permitted
Investments.
7.11 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 Loan for that purpose; fail to
meet the minimum funding requirements of the Employment Retirement Income
Security Act of 1974, and its regulations, as amended from time to time
("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 reasonably be
expected to have a material adverse effect on Borrower's business or operations,
or permit any of its-Subsidiaries to do so.
8. Events of Default. Any one or more of the following events shall
constitute an event of default (each an "Event of Default") by Borrower under
this Agreement:
8.1 Failure to Pay. If Borrower fails to pay when due and payable or
when declared due and payable in accordance with the Loan Documents: (i) any
Scheduled Payment within five (5) Business Days of the relevant Payment Date or
the relevant Maturity Date; or (ii) any other portion of the Obligations within
five (5) Business Days after receipt of written notice from a Lender that such
payment is due.
8.2 Particular Covenant Defaults. If Borrower fails to perform any
obligation under Sections 6.9, 6.10 or 6.12 or violates any of the covenants
contained in Section 7 of this Agreement.
8.3 Other Covenant Defaults. If Borrower fails or neglects to
perform, keep, or observe any other material term, provision, condition,
covenant, or agreement contained in this Agreement (other than as set forth in
Sections 8.1, 8.2 or 8.4 through 8.13). in any of the other Loan Documents and
Borrower has failed to cure such default within thirty (30) days of the
24
occurrence of such default. During this 30-day period, the failure to cure the
default is not an Event of Default (but no Loans will be made during the cure
period).
8.4 Material Adverse Change. If there occurs a material adverse
change in Borrower's business, or if there is a material impairment of the
prospect of repayment of any portion of the Obligations owing to Lenders or a
material impairment of the value or priority of Agent's security interest in the
Collateral.
8.5 Seizure of Assets, Etc. If any material portion of Borrower's
assets is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes into the possession of any trustee, receiver or Person
acting in a similar capacity and such attachment, seizure, writ or distress
warrant or levy has not been removed, discharged or rescinded within thirty (30)
days, or if Borrower is enjoined, restrained, or in any way prevented by court
order from continuing to conduct all or any material part of its business
affairs, or if a judgment or other claim becomes a lien or encumbrance upon any
material portion of Borrower's assets, or if a notice of lien, levy, or
assessment is filed of record with respect to any material portion of Borrower's
assets by the United States Government, or any department, agency, or
instrumentality thereof, or by any state, county, municipal, or governmental
agency, and the same is not paid within thirty (30) days after Borrower receives
notice thereof; provided that none of the foregoing shall constitute an Event of
Default where such action or event is stayed or an adequate bond has been posted
pending a good faith contesting by Borrower.
8.6 Service of Process. The service of process upon any Lender
seeking to attach by a trustee or other process such funds of Borrower as may be
on deposit or otherwise held by any Lender, or the delivery upon any Lender of a
notice of foreclosure by any Person seeking to attach or foreclose on such funds
of Borrower as may be on deposit or otherwise held by any Lender, or the
delivery of a notice of foreclosure or exclusive control to any entity holding
or maintaining Borrower's deposit accounts or accounts holding securities by any
Person (other than Agent or Lenders) seeking to foreclose or attach any such
accounts or securities.
8.7 Default on Indebtedness. One or more defaults shall exist under
any agreements with any third party or parties (a) which consists of the failure
to pay any Indebtedness at maturity or (b) which results in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
Indebtedness which, in the case of either clause (a) or (b) of this Section 8.6,
is in an aggregate amount in excess of One Hundred Thousand Dollars ($100,000)
or a default shall exist under any financing agreement with a Lender or any
Affiliate of a Lender.
8.8 Undischarged Judgments. If a judgment or judgments for the
payment of money in an amount, individually or in the aggregate, of at least One
Hundred Thousand Dollars ($100,000) shall be rendered against Borrower and shall
remain unsatisfied and unstayed for a period of ten (10) days or more.
8.9 Misrepresentation. If any material misrepresentation or material
misstatement exists now or hereafter in any warranty, representation, statement,
certification, or report made to Agent or either Lender by Borrower or any
officer, employee, agent, or director of Borrower.
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8.10 Breach of Warrants. If Borrower shall breach any material term
of the Warrants.
8.11 Unenforceable Loan Document. If any Loan Document shall in any
material respect cease to be, or Borrower shall assert that any Loan Document is
not, a legal, valid and binding obligation of Borrower enforceable in accordance
with its terms.
8.12 Involuntary Bankruptcy Proceedings. If a proceeding shall have
been instituted in a court having jurisdiction in the premises seeking a decree
or order for relief in respect of Borrower in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, custodian,
trustee (or similar official) of Borrower or for any substantial part of its
property, or for the winding-up or liquidation of its affairs, and such
proceeding shall remain undismissed or unstayed and in effect for a period of
thirty (30) consecutive days or such court shall enter a decree or order
granting the relief sought in such proceeding.
8.13 Voluntary Petition. If Borrower shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian (or
other similar official) of Borrower or for any substantial part of its property,
or shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action in furtherance of any of the foregoing.
9. Agent's and Lenders' Rights and Remedies.
9.1 Rights and Remedies. Upon the occurrence of any Default or Event
of Default, neither Agent nor Lenders shall have any further obligation to
advance money or extend credit to or for the benefit of Borrower. In addition,
upon the occurrence of an Event of Default, Lenders or Agent on behalf of
Lenders, shall have the rights, options, duties and remedies of a secured party
as permitted by law and, in addition to and without limitation of the foregoing,
Agent or Lenders may, at the election of Lenders, without notice of election and
without demand, do any one or more of the following, all of which are authorized
by Borrower:
(a) Acceleration. Declare all Obligations, whether evidenced
by this Agreement, by any of the other Loan Documents, or otherwise, including
(i) all accrued and unpaid Scheduled Payments with respect to each Loan, (ii)
any accrued and unpaid interest, (iii) the Loan Value with respect to each Loan,
and (iv) all other sums, if any, that shall have become due and payable
hereunder, immediately due and payable; provided that upon the occurrence of an
Event of Default described in Section 8.12 or 8.13 all Obligations shall become
immediately due and payable without any action by Agent or Lenders;
(b) Protection of Collateral. Make such payments and do such
acts as Agent or Lenders consider necessary or reasonable to protect Agent's
security interest in the Collateral. Borrower agrees to assemble the Collateral
if Agent, on behalf of Lenders, so requires, and to make the Collateral
available to Agent as Agent may designate. Borrower authorizes Agent and its
designees and agents (to the extent Borrower has the legal right to give
26
such authorization) to enter the premises where the Collateral is located, to
take and maintain possession of the Collateral, or any part of it, and to pay,
purchase, contest, or compromise any Lien which in Lenders' determination
appears or is claimed to be prior or superior to their security interest and to
pay all expenses incurred in connection therewith. With respect to any of
Borrower's owned premises, Borrower hereby grants Agent, on behalf of Lenders, a
license to enter into possession of such premises and to occupy the same,
without charge, for up to one hundred twenty (120) days in order to exercise any
of Agent's or Lenders' rights or remedies provided herein, at law, in equity, or
otherwise;
(c) Preparation for Sale. Ship, reclaim, recover, store,
finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the
manner provided for herein) the Collateral;
(d) Sale of Collateral. Sell the Collateral at either a public
or private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including Borrower's
premises) as Lenders determine are commercially reasonable; and
(e) Purchase of Collateral. Credit bid and purchase all or any
portion of the Collateral at any public sale.
Any deficiency that exists after disposition of the Collateral as provided above
will be paid immediately by Borrower.
9.2 Set Off Right. Agent or Lenders may set off and apply to the
Obligations any and all indebtedness at any time owing to or for the credit or
the account of Borrower.
9.3 Effect of Sale. Any sale, whether under any power of sale hereby
given or by virtue of judicial proceedings, shall operate to divest all right,
title, interest, claim and demand whatsoever, either at law or in equity, of
Borrower in and to the Property sold, and shall be a perpetual bar, both at law
and in equity, against Borrower, its successors and assigns, and against any and
all Persons claiming the Property sold or any part thereof under, by or through
Borrower, its successors or assigns.
9.4 Power of Attorney in Respect of the Collateral. Borrower does
hereby irrevocably appoint Agent, on behalf of Lenders, and each Lender (which
appointment is coupled with an interest), the true and lawful attorney in fact
of Borrower with full power of substitution, for it and in its name to file any
notices of security interests, financing statements and continuations and
amendments thereof pursuant to the Code or federal law, as may be necessary to
perfect, or to continue the perfection of Agent's security interests in the
Collateral. Borrower does hereby irrevocably appoint Agent, on behalf of
Lenders, and each Lender (which appointment is coupled with an interest) on the
occurrence of an Event of Default and so long as such Event of Default has not
been waived by Lenders, the true and lawful attorney in fact of Borrower with
full power of substitution, for it and in its name: (a) to ask, demand, collect,
receive, receipt for, ▇▇▇ for, compound and give acquittance for any and all
rents, issues, profits, avails, distributions, income, payment draws and other
sums in which a security interest is granted under Section 4 with full power to
settle, adjust or compromise any claim thereunder as
27
fully as if Agent or any Lender were a Borrower itself; (b) to receive payment
of and to endorse the name of Borrower to any items of Collateral (including
checks, drafts and other orders for the payment of money) that come into Agent's
or any Lender's possession or under Agent's or any Lender's control; (c) to make
all demands, consents and waivers, or take any other action with respect to, the
Collateral; (d) in Agent's or any Lender's discretion to file any claim or take
any other action or proceedings, either in their own names or in the name of
Borrower or otherwise, which Agent or Lenders may reasonably deem necessary or
appropriate to protect and preserve the right, title and interest of Agent, on
behalf of Lenders, and Lenders in and to the Collateral; (e) to the extent
related to the Collateral or proceeds thereof, endorse Borrower's name on any
checks or other forms of payment or security; (f) make, settle, and adjust all
claims under Borrower's insurance policies; (g) transfer the Collateral into the
name of Agent or any Lender or a third party as the Code permits; or (h) to
otherwise act with respect thereto as though Agent, on behalf of Lenders, or any
Lender were the outright owner of the Collateral, in each case subject to
Agent's and Lenders' duty to act in a commercially reasonable manner and
otherwise in compliance with applicable law, including the Code.
9.5 Agent's Expenses and Lenders' Expenses. If Borrower fails to pay
any amounts or furnish any required proof of payment due to third persons or
entities, as required under the terms of this Agreement, then Agent may do any
or all of the following: (a) make payment of the same or any part thereof; or
(b) obtain and maintain insurance policies of the type discussed in Section 6.9
of this Agreement, and take any action with respect to such policies as Agent
deems prudent. Any amounts paid or deposited by Agent shall constitute Agent's
Expenses, shall be immediately due and payable, shall bear interest at the then
applicable rate hereinabove provided and shall be secured by the Collateral. Any
payments made by Agent shall not constitute an agreement by Agent to make
similar payments in the future or a waiver by Agent or any Lender of any Event
of Default under this Agreement. Borrower shall pay all reasonable fees and
expenses, including without limitation, Agent's Expenses and Lenders' Expenses,
incurred by Agent or Lenders in the enforcement or attempt to enforce any of the
Obligations hereunder not performed when due.
9.6 Remedies Cumulative. Agent's and Lenders' rights and remedies
under this Agreement, the Loan Documents, and all other agreements shall be
cumulative. Agent and Lenders shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by Agent or any Lender of one right or remedy shall be deemed an
election, and no waiver by Lenders of any Event of Default on Borrower's part
shall be deemed a continuing waiver. No delay by Agent or any Lender shall
constitute a waiver, election, or acquiescence by Agent or such Lender or any
other Lender.
9.7 Application of Collateral Proceeds. The proceeds and/or avails
of the Collateral, or any part thereof, and the proceeds and the avails of any
remedy hereunder (as well as any other amounts of any kind held by Agent, on
behalf of Lenders, at the time of or received by Agent, on behalf of Lenders,
after, the occurrence of an Event of Default hereunder) shall be paid to and
applied, without duplication, as follows:
(a) First, to the payment of out-of-pocket costs and expenses,
including all amounts expended to preserve the value of the Collateral, of
foreclosure or suit, if any, and of such sale and the exercise of any other
rights or remedies, and of all proper fees, expenses,
28
liability and advances, including reasonable legal expenses and attorneys' fees,
incurred or made hereunder by Agent or any Lender, including without limitation,
Agent's Expenses and Lenders' Expenses;
(b) Second, to the payment to Lenders of the amount then owing
or unpaid on the Loans for Scheduled Payments, any accrued and unpaid interest,
the Loan Value of the Loans, and all other Obligations with respect to all
Loans; provided that if such proceeds shall be insufficient to pay in full the
whole amount so due, owing or unpaid upon the Loans, then to the unpaid interest
thereon, then to the Loan Value of the Loans, and then to the payment of other
amounts then payable to Lenders under any of the Loan Documents; and
(c) Third, to the payment of the surplus, if any, to Borrower,
its successors or assigns, or to whomsoever may be lawfully entitled to receive
the same.
9.8 Reinstatement of Rights. If Agent or Lenders shall have
proceeded to enforce any right under this Agreement or any other Loan Document
by foreclosure, sale, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely, then and in every such case (unless otherwise ordered by a court of
competent jurisdiction), Agent and Lenders shall be restored to their former
position and rights hereunder with respect to the Property subject to the
security interest created under this Agreement.
10. Waivers; Indemnification.
10.1 Demand; Protest. Except as otherwise expressly provided herein
or in any other Loan Document, Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Agent or a Lender on which Borrower may in any
way be liable.
10.2 Agent's Liability for Collateral. So long as Agent complies
with its obligations, if any, under the Code, neither Agent or Lenders shall in
any way or manner be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage thereto occurring or arising in any manner or
fashion from any cause other than Lender's gross negligence or willful
misconduct; (c) any diminution in the value thereof; or (d) any act or default
of any carrier, warehouseman, bailee, forwarding agency, or other Person
whomsoever. All risk of loss, damage or destruction of the Collateral shall be
borne by Borrower.
10.3 Indemnification and Waiver.
(a) General Indemnity. Borrower agrees upon demand to pay or
reimburse Lenders and Agent for all liabilities, obligations and out-of-pocket
expenses, including Agent's Expenses and Lenders' Expenses and reasonable fees
and expenses of counsel for Lenders or Agent, from time to time arising in
connection with the enforcement or collection of sums due under the Loan
Documents, and in connection with any amendment or modification of the Loan
Documents or any "work-out" in connection with the Loan Documents. Borrower
shall indemnify, reimburse and hold Lenders and Agent, each of Lenders' and
Agent's partners, and
29
each of their respective successors, assigns, agents, attorneys, officers,
directors, shareholders, servants, agents and employees (each an "Indemnified
Person") harmless from and against all liabilities, losses, damages, actions,
suits, demands, claims of any kind and nature (including claims relating to
environmental discharge, cleanup or compliance), all costs and expenses
whatsoever to the extent they may be incurred or suffered by such Indemnified
Person in connection therewith (including reasonable attorneys' fees and
expenses), fines, penalties (and other charges of applicable Governmental
Authorities), licensing fees relating to any item of Collateral, damage to or
loss of use of property (including consequential or special damages to third
parties or damages to Borrower's property), or bodily injury to or death of any
person (including any agent or employee of Borrower) (each, a "Claim"), directly
or indirectly relating to or arising out of the use of the proceeds of the
Loans, the falsity of any representation or warranty of Borrower or Borrower's
failure to comply with the terms of this Agreement or any other Loan Document
during the Term. The foregoing indemnity shall cover, without limitation, (i)
any Claim in connection with a design or other defect (latent or patent) in any
item of equipment included in the Collateral, (ii) any Claim for infringement of
any patent, copyright, trademark or other intellectual property right, (iii) any
Claim resulting from the presence on or under or the escape, seepage, leakage,
spillage, discharge, emission or release of any Hazardous Materials on the
premises owned, occupied or leased by Borrower, including any Claims asserted or
arising under any Environmental Law, (iv) any Claim for negligence or strict or
absolute liability in tort, or (v) any Claim asserted as to or arising under any
Landlord Agreement or any Service Provider's Consent; provided that Borrower
shall not indemnify Lenders or Agent for any liability incurred by Lenders or
Agent as a direct result of Lenders' or Agent's gross negligence or willful
misconduct. Such indemnities shall continue in full force and effect,
notwithstanding the expiration or termination of this Agreement. Upon Lenders'
or Agent's written demand, Borrower shall assume and diligently conduct, at its
sole cost and expense, the entire defense of Lenders or Agent, each of its
partners, and each of their respective, agents, employees, directors, officers,
shareholders, successors and assigns against any indemnified Claim described in
this Section 10.3(a). Borrower shall not settle or compromise any Claim against
or involving Lenders or Agent without first obtaining Lenders' or Agent's
written consent thereto, which consent shall not be unreasonably withheld.
(b) Waivers. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT OR ANYWHERE ELSE, BORROWER AGREES THAT IT SHALL NOT
SEEK FROM LENDERS OR AGENT UNDER ANY THEORY OF LIABILITY (INCLUDING ANY THEORY
IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES.
(c) Survival; Defense. The obligations in this Section 10.3
shall survive payment of all other Obligations pursuant to Section 12.8. At the
election of any Indemnified Person, Borrower shall defend such Indemnified
Person using legal counsel satisfactory to such Indemnified Person in such
Person's reasonable discretion, at the sole cost and expense of Borrower. All
amounts owing under this Section 10.3 shall be paid within thirty (30) days
after written demand.
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11. Notices.
Unless otherwise provided in this Agreement, all notices or demands by any
party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by certified mail, postage
prepaid, return receipt requested, or by pre-paid nationally recognized
overnight courier or by prepaid facsimile to Borrower or to Lenders, as the case
may be, at their respective addresses set forth below:
If to Borrower: Egenera, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
PH: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇, Gesmer & ▇▇▇▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
PH: (▇▇▇) ▇▇▇-▇▇▇▇
If to GV: GATX Ventures, Inc.
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Contract Administration
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
PH: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
GATX Ventures, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Contract Administration
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
PH: (▇▇▇) ▇▇▇-▇▇▇▇
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If to TCC: Third Coast Capital, a division of DVI Financial Services Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Managing Director
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
PH: (▇▇▇) ▇▇▇-▇▇▇▇
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
12. General Provisions.
12.1 Successors and Assigns. This Agreement shall bind and inure to
the benefit of the respective successors and permitted assigns of each of the
parties; provided that neither this Agreement nor any rights hereunder may be
assigned by Borrower without each Lender's prior written consent, which consent
may be granted or withheld in such Lender's sole discretion. Each Lender shall
have the right without the consent of or notice to Borrower to sell, transfer,
assign, negotiate, or grant participations in all or any part of, or any
interest in such Lender's rights and benefits hereunder. Agent shall have the
right to resign as Agent hereunder without Borrower's consent and pursuant to
the terms of a separate intercreditor agreement entered into between Lenders.
12.2 Time of Essence. Time is of the essence for the performance of
all obligations set forth in this Agreement.
12.3 Severability of Provisions. Each provision of this Agreement
shall be several from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
12.4 Entire Agreement; Construction; Amendments and Waivers.
(a) Entire Agreement. This Agreement and each of the other
Loan Documents dated as of the date hereof, taken together, constitute and
contain the entire agreement among Borrower, Agent and Lenders and supersede any
and all prior agreements, negotiations, correspondence, understandings and
communications between the parties, whether written or oral, respecting the
subject matter hereof. Borrower acknowledges that it is not relying on any
representation or agreement made by any Lender or Agent or any employee,
attorney or agent thereof, other than the specific agreements set forth in this
Agreement and the other Loan Documents.
(b) Construction. This Agreement is the result of negotiations
between and has been reviewed by each of Borrower, Agent and Lenders executing
this Agreement as of the date hereof and their respective counsel; accordingly,
this Agreement shall be deemed to be the product of the parties hereto, and no
ambiguity shall be construed in favor of or against Borrower, Agent or Lenders.
Borrower, Agent and Lenders agree that they intend the literal
32
words of this Agreement and the other Loan Documents and that no parol evidence
shall be necessary or appropriate to establish Borrower's, Agent's or any
Lender's actual intentions.
(c) Amendments and Waivers. Any and all amendments,
modifications, discharges or waivers of, or consents to any departures from any
provision of this Agreement or of any of the other Loan Documents shall not be
effective without the written consent of Borrower, Agent and (i) so long as any
Loan shall be outstanding, Lenders holding in the aggregate at least seventy
percent (70%) of the then outstanding principal amount of the Loans, or (ii) if
no Loan is then outstanding, Lenders whose aggregate Commitments constitute at
least seventy percent (70%) of the aggregate Commitments of all Lenders;
provided that the written consent of each Lender shall be required in the case
of any extension of the Commitment Termination Date, any change to the Repayment
Period applicable to any Loan, any change affecting the interest rate applicable
to any Loan, or any release of any Collateral. Any waiver or consent with
respect to any provision of the Loan Documents shall be effective only in the
specific instance and for the specific purpose for which it was given. No notice
to or demand on Borrower in any case shall entitle Borrower to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, waiver or consent effected in accordance with this Section 12.4
shall be binding upon Agent, each Lender and on Borrower.
12.5 Reliance by Agent and Lenders. All covenants, agreements,
representations and warranties made herein by Borrower shall be deemed to be
material to and to have been relied upon by Lenders, notwithstanding any
investigation by Lenders.
12.6 No Set-Offs by Borrower. All sums payable by Borrower pursuant
to this Agreement or any of the other Loan Documents shall be payable without
notice or demand and shall be payable in United States Dollars without set-off
or reduction of any manner whatsoever.
12.7 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
12.8 Survival. All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any
Obligations or commitment to fund remains outstanding. The obligations of
Borrower to indemnify Lenders with respect to the expenses, damages, losses,
costs and liabilities described in Section 10.3 shall survive until all
applicable statute of limitations periods with respect to actions that may be
brought against Lenders have run.
13. Relationship of Parties. Borrower, Agent and each Lender acknowledge,
understand and agree that the relationship between Borrower, on the one hand,
and Agent and Lenders, on the other, is, and at all times shall remain solely
that of a borrower and lenders. Neither Agent nor any Lender shall under any
circumstances be construed to be partners or joint venturers of Borrower or any
of its Affiliates; nor shall Agent or any Lender under any circumstances be
deemed to be in a fiduciary relationship with Borrower or any of its Affiliates,
or to owe any fiduciary duty to Borrower or any of its Affiliates. Neither Agent
nor any Lender undertakes or assumes any responsibility or duty to Borrower or
any of its Affiliates to select, review, inspect,
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supervise, pass judgment upon or otherwise inform Borrower or any of its
Affiliates of any matter in connection with its or their Property, any
Collateral held by Agent or the operations of Borrower or any of its Affiliates.
Borrower and each of its Affiliates shall rely entirely on their own judgment
with respect to such matters, and any review, inspection, supervision, exercise
of judgment or supply of information undertaken or assumed by Agent or any
Lender in connection with such matters is solely for the protection of Agent or
such Lender and neither Borrower nor any Affiliate is entitled to rely thereon.
14. Confidentiality. All information (other than periodic reports filed by
Borrower with the Securities and Exchange Commission) disclosed by Borrower to
Lenders in writing or through inspection pursuant to this Agreement that a
reasonable person would understand to be confidential shall be considered
confidential. Lenders agree to use the same degree of care to safeguard and
prevent disclosure of such confidential information as Lenders uses with its own
confidential information, but in any event no less than a reasonable degree of
care. Lenders shall not disclose such information to any third party (other than
(i) to another Lender or a Lender's partners, attorneys, governmental
regulators, or auditors, or to a Lender's subsidiaries and affiliates, all
subject to the same confidentiality obligation set forth herein, (ii) to
prospective transferees and purchasers of the Loans; provided that such any such
transferee or purchaser shall have agreed in writing to be bound by the terms of
this Section 14 or substantially similar restrictions, and (iii) as required by
law, regulation, subpoena or other order to be disclosed) and shall use such
information only for purposes of evaluation of its investment in Borrower and
the exercise of Lenders' rights and the enforcement of their remedies under this
Agreement and the other Loan Documents. The obligations of confidentiality shall
not apply to any information that (a) was known to the public prior to
disclosure by Borrower under this Agreement, (b) becomes known to the public
through no fault of Lenders, (c) is disclosed to Lenders by a third party having
a legal right to make such disclosure, or (d) is independently developed by
Lenders. Notwithstanding the foregoing, Lenders' agreement of confidentiality
shall not apply with respect to Collateral to which any Lender has acquired
indefeasible title or, solely to the extent necessary, in connection with any
enforcement or exercise of Lenders' rights and remedies under this Agreement
following an Event of Default, including the enforcement of Agent's security
interest in the Collateral. As used in this Section 14, the term "Lenders" shall
be deemed to include both Lenders and Agent in their respective capacities as
such.
15. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. BORROWER, AGENT
AND EACH LENDER HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS LOCATED IN THE NORTHERN DISTRICT OF CALIFORNIA. BORROWER, AGENT
AND EACH LENDER HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS
OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
EGENERA, INC.,
as Borrower
By: /s/ ▇▇▇▇▇▇ ▇. Sheehon
-------------------------------------
Title: CFO
GATX VENTURES, INC., as Agent and as
a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-------------------------------------
Title: Senior Vice President
THIRD COAST CAPITAL, a division of
DVI Financial Services Inc., as a Lender
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Title: Managing Director
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A Disclosure Schedule
Exhibit B Form of Warrant
Exhibit C Form of Loan Agreement Supplement
Exhibit D Form of Legal Opinion
Exhibit E Form of Landlord Agreement
Exhibit F Form of Service Provider's Consent
Exhibit G Form of Officer's Certificate