EXHIBIT 10.1
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AMENDED AND RESTATED LOAN AGREEMENT
June 30, 1999
among
CORVIS CORPORATION,
as "Borrower",
and
VENTURE LENDING & LEASING II, INC.,
as "Agent"
and
VENTURE LENDING & LEASING II, INC.,
and other Lenders signatory hereto,
as "Lenders"
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AMENDED AND RESTATED LOAN AGREEMENT
This Amended and Restated Loan Agreement (this "Agreement") is
executed July 23, 1999, effective as of June 30, 1999, by and among Corvis
Corporation, a Delaware corporation ("Borrower"), Venture Lending & Leasing II,
Inc., a Maryland corporation, in its capacity as Agent for the Lenders ("Agent")
and as a Lender (sometimes individually "VLL"), and the commercial lenders from
time to time signatory hereto (individually, a "Lender" and collectively, the
"Lenders").
Recitals
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A. Borrower has requested that Lenders make available a secured term
loan facility to provide acquisition financing for equipment at specified
business premises to be developed by Borrower, and a secured term loan facility
for general working capital purposes.
B. Lenders are willing to make such facilities available to Borrower
on the terms and conditions set forth in this Agreement, which amends and
restates in its entirety that certain Loan Agreement dated as of June 30, 1999,
initially executed by Borrower and VLL.
Accordingly, the parties agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 Definitions. The definitions appearing in this Agreement shall be
applicable to both the singular and plural forms of the defined terms:
"Account" means a right to payment for goods sold or leased by Borrower or for
services rendered by Borrower, which right is not evidenced by an instrument or
chattel paper, whether or not earned by performance.
"Affiliate" means any Person which directly or indirectly controls, is
controlled by, or is under common control with Borrower. "Control," "controlled
by" and "under common control with" mean direct or indirect possession of the
power to direct or cause the direction of management or policies (whether
through ownership of voting securities, by contract or otherwise); provided,
that control shall be conclusively presumed when any Person or affiliated group
directly or indirectly owns thirty-five percent (35%) or more of the securities
having ordinary voting power for the election of directors of a corporation.
"Agent" shall have the meaning assigned to such term in the preamble hereto.
"Agreement" means this Loan Agreement, as each may be amended or supplemented
from time to time.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.
(S)101, et seq.), as amended.
"Basic Interest" means the fixed rate of interest payable on the outstanding
balance of each Loan at the applicable Designated Rate.
"Borrowing Base" means, as of any date of determination, the lesser of (i) the
difference between (A) the aggregate Commitments of the Lenders, and (B) the
aggregate original principal amount of all Equipment Loans made on or before
such date of determination, and (ii) an amount equal to the sum of (A) 75% of
Borrower's cash and Cash Equivalents, (B) 80% of Eligible Accounts, and (C) 65%
of Eligible Inventory.
"Borrowing Date" means the Business Day on which the proceeds of a Loan are
disbursed by Lenders.
"Borrowing Request" means a written request from Borrower in substantially the
form of Exhibit "C", hereto, requesting the funding of one or more Loans on a
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particular Borrowing Date.
"Business Day" means any day other than a Saturday, Sunday or other day on which
commercial banks in New York City or San Francisco are authorized or required by
law to close.
"Cash Equivalents" means, as of any date of determination, the following assets
or rights of Borrower: (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government having maturities of
not more than 12 months from the date of acquisition; (ii) domestic certificates
of deposit and time deposits having maturities of not more than 12 months from
the date of acquisition, and overnight bank deposits, in each case issued by a
commercial bank organized under the laws of the United States or any state
thereof which at the time of acquisition are rated A-1 or better by Standard &
Poor's Corporation (or equivalent), and not subject to any offset rights in
favor of such bank arising from any banking relationship with such bank; and
(iii) the aggregate amount of equity that existing shareholders of Borrower have
agreed to contribute to Borrower's capital pursuant to binding, unconditional
written commitments which may be called by Borrower, at its sole option, at any
time and from time to time, all as satisfactorily evidenced to the Majority
Lenders at the request of Agent from time to time.
"Cleanup Laws" shall mean any federal, state or local statute or regulation
relating to hazardous or toxic wastes or substances or the removal thereof.
"Closing Date" means the date of this Agreement.
"Collateral" means all Borrower's Accounts, Deposit Accounts, Equipment,
Fixtures, General Intangibles, Goods, Inventory, Rights to Payment, Investment
Property and securities now owned or hereafter acquired or arising (but
excluding Intellectual Property) wherever located, and whether held by Borrower
or any third party, and all royalties, proceeds and products thereof, including
all insurance and condemnation proceeds ("Proceeds"), and all monies now or at
any time hereafter in the possession or under the control of Lenders or a bailee
or affiliate of Lenders, including any cash in any cash collateral or other
account, and all Records.
"Commitment" means, with respect to any Lender, the commitment of such Lender to
make Loans to Borrower in an aggregate principal amount at any one time
outstanding up to but not
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exceeding the amount set forth opposite such Lender's name on Exhibit "A"
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hereto, as the same may be amended from time to time, under the caption
"Commitment".
"Default" means an event which with the giving of notice, passage of time, or
both would constitute an Event of Default.
"Default Rate" is defined in Section 2.14.
"Deposit Accounts" means all Borrower's demand, time, savings, passbook or
similar accounts maintained with a financial institution or credit union.
"Designated Rate" means eight and one-half of one percent (8.50%) per annum.
"Eligible Accounts" means Accounts which meet each of the following
requirements: arise in the ordinary course of Borrower's business; upon which
Borrower's right to payment is absolute and not contingent on the fulfillment of
any conditions; against which there has not been asserted any defense, offset or
discount; are owned free and clear of Liens by Borrower except in favor of
Lenders and the Permitted Lien in favor of Comdisco, Inc., and to the extent
permitted under Section 2.16(c) in favor of any institutional lender under such
provision; and are not more than 90 days past due; provided, however, that the
fact that an account debtor may assert an offset or defense against payment of
one Account or a portion of an Account shall not, by itself, render ineligible
other Accounts or any remaining undisputed portion of such Account from such
account debtor.
"Eligible Collateral" means and shall include (i) all of Borrower's cash and
Cash Equivalents; (ii) Eligible Accounts; and (iii) Eligible Inventory.
"Eligible Inventory" means Inventory as reflected on Borrower's financial
statements in accordance with GAAP which meets all of the following
requirements: is located in a state within the continental United States in
which a UCC-1 in favor of Agent covering Inventory is on file and in effect; is
owned by Borrower free and clear of all Liens except in favor of Agent or in
favor of Comdisco Inc. so long as such Lien is subject to an Intercreditor
Agreement satisfactory to Majority Lenders providing for pari passu rights in
such collateral; in the reasonable judgment of Majority Lenders is not obsolete,
unsalable, damaged or unfit for further processing; and for which Borrower has
received a purchase order from a non-affiliated purchaser calling for shipment
to such purchaser within 120 days and which Borrower reasonably expects to be
able to ship within such 120-day period.
"Environmental Laws" means all 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, or safety matters.
"Equipment" means all of Borrower's equipment now owned or hereafter acquired,
including but not limited to machinery, machine parts, furniture, furnishings
and all tangible personal property used in the business of Borrower and all such
property which is or is to become fixtures on real property, and all
improvements, replacements, accessions and additions thereto, wherever located,
and all proceeds thereof arising from the sale, lease, rental or other use or
disposition of
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any such property, including all rights to payment with respect to insurance or
condemnation, returned premiums, or any cause of action relating to any of the
foregoing.
"Equipment Loan" means any Loan requested by Borrower and funded by a Lender to
finance Borrower's acquisition or carrying of specific items of Equipment.
"Event of Default" means any event described in Section 7.1.
"Fixtures" means all items of personal property of Borrower that are so related
to the real property upon which they are located that an interest in them arises
under real property law, and improvements, replacements, parts, accessions and
additions thereto, and substitutions therefor.
"Funding Amount" means the amount of the Loan to be made by each respective
Lender on the Borrowing Date (net of any payments of interest and/or principal
required to be paid by the Borrower on the Borrowing Date under the terms of
this Agreement).
"Funding Date" is defined in Section 2.5.
"GAAP" means generally accepted accounting principles and practices consistent
with those principles and practices promulgated or adopted by the Financial
Accounting Standards Board and the Board of the American Institute of Certified
Public Accountants, their respective predecessors and successors. Each
accounting term used but not otherwise expressly defined herein shall have the
meaning given it by GAAP.
"General Intangibles" means all personal property of Borrower, other than Goods,
not otherwise defined as Collateral, including without limitation all interests
or claims in insurance policies; licenses, permits, franchises and like
privileges or rights issued by any governmental or regulatory authority; income
tax refunds; customer lists; claims and causes of action (whether in contract,
tort or otherwise), judgments and all guaranty claims, leasehold interests in
personal property, security interests or other security held by or guaranteed to
the Borrower to secure the payment by an account debtor of any of the Accounts.
"Goods" means all money and other personal property of Borrower, other than
General Intangibles, not otherwise defined as Collateral.
"Indebtedness" of any Person means at any date, without duplication and without
regard to whether matured or unmatured, absolute or contingent: (i) all
obligations of such Person for borrowed money; (ii) all obligations of such
Person evidenced by bonds, debentures, notes, or other similar instruments;
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business; (iv) all obligations of such Person as lessee under capital
leases; (v) all obligations of such Person to reimburse or prepay any bank or
other Person in respect of amounts paid under a letter of credit, banker's
acceptance, or similar instrument, whether drawn or undrawn; (vi) all
obligations of such Person to purchase securities which arise out of or in
connection with the sale of the same or substantially similar securities; (vii)
all obligations of such Person to purchase, redeem, exchange, convert or
otherwise acquire for value any capital stock of such Person or any warrants,
rights or options to acquire such capital stock, now or hereafter outstanding,
except to the extent that such obligations remain performable solely at the
option of such Person; (viii) all
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obligations to repurchase assets previously sold (including any obligation to
repurchase any accounts or chattel paper under any factoring, receivables
purchase, or similar arrangement); (ix) obligations of such Person under
interest rate swap, cap, collar or similar hedging arrangements; and (x) all
obligations of others of any type described in clause (i) through clause (ix)
above guaranteed by such Person.
"Insolvency Proceeding" means (a) any case, action or proceeding before any
court or other governmental authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors, undertaken under U.S. Federal, state or foreign law, including the
Bankruptcy Code.
"Intellectual Property" means all of Borrower's literary property, trade names,
trade name rights, trade secrets, Trademarks, Trademark rights, copyrights,
Patents, and all applications and licenses therefor, and licenses from third
parties to use similar rights and properties of such third licensors.
"Inventory" means all Borrower's raw materials, advertising, packaging and
shipping materials, work in process, finished goods and goods held for sale or
lease or furnished under contracts of service, and all returned and repossessed
goods, and all goods covered by documents of title, including warehouse
receipts, bills of lading and all other documents of every type covering all or
any part of the Collateral.
"Investment Property" has the meaning ascribed to it in Section 9115 of the UCC.
"Lenders" shall have the meaning assigned to such term in the preamble hereto.
As of the date of this Agreement VLLI is the sole Lender. Other institutions
may become Lenders by becoming signatories to this Agreement with the prior
written consent of Borrower.
"Lien" means any voluntary or involuntary security interest, mortgage, pledge,
claim, charge, encumbrance, title retention agreement, or third party interest,
covering all or any part of the property of Borrower or any other Person.
"Loan" means an extension of credit by a Lender under Article 2 of this
Agreement, and may be an Equipment Loan or a Working Capital Loan.
"Loan Documents" means, individually and collectively, this Agreement, each
Note, and any other security or pledge agreement(s), the Warrants issued by
Borrower in connection with this Agreement, and all other contracts,
instruments, addenda and documents executed in connection with this Agreement or
the extensions of credit which are the subject of this Agreement.
"Majority Lenders" shall mean, at any time while no Loans are outstanding
hereunder, Lenders having at least 66-2/3% of the aggregate Commitments and, at
any time while Loans are out-standing, Lenders holding at least 66-2/3% of the
outstanding aggregate principal amount of the Loans.
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"Material Adverse Effect" or "Material Adverse Change" means (a) a material
adverse change in, or a material adverse effect upon, the operations, business,
properties, or condition (financial or otherwise) of Borrower; (b) a material
impairment of the ability of Borrower to perform under any Loan Document; or (c)
a material adverse effect upon the legality, validity, binding effect or
enforceability against Borrower of any Loan Document.
"Maturity Date" means, with regard to a Loan, the earlier of (i) its maturity by
reason of acceleration, or (ii) its stated maturity date; and is the date on
which payment of all outstanding principal, accrued interest, and the Terminal
Payment with respect to such Loan is due.
"Note" means a promissory note substantially in the form attached hereto as
Exhibit "B", with appropriate modifications as noted on such form, executed by
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Borrower evidencing each Loan.
"Obligations" means all debts, obligations and liabilities of Borrower to
Lenders, and the Agent currently existing or now or hereafter made, incurred or
created under, pursuant to or in connection with this Agreement, whether
voluntary or involuntary and however arising or evidenced, whether direct or
acquired by Lenders by assignment or succession, whether due or not due,
absolute or contingent, liquidated or unliquidated, determined or undetermined,
and whether Borrower may be liable individually or jointly, or whether recovery
upon such debt may be or become barred by any statute of limitations or
otherwise unenforceable; and all renewals, extensions and modifications thereof;
and all attorneys' fees and costs incurred by the Agent or the Lenders in
connection with the collection and enforcement thereof as provided for in any
Loan Document.
"Patent License" means any written agreement now or hereafter in existence
granting to Borrower any right to make, use, sell or practice any invention on
which a Patent is in existence.
"Patents" means all of the following: (i) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including, without limitation, registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any state thereof or any other country or any political
subdivision thereof, and (ii) all reissues, divisions, continuations,
continuations-in-part, renewals or extensions thereof.
"Permitted Lien" means:
(a) Involuntary Liens which, individually or in the aggregate, would not
have a Material Adverse Effect and which in any event individually would not
exceed the Threshold Amount;
(b) Liens for current taxes or other governmental or regulatory assessments
which are not delinquent, or which are contested in good faith by the
appropriate procedures and for which appropriate reserves are maintained;
(c) security interests on any property held or acquired by Borrower in the
ordinary course of business securing Indebtedness incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such property;
provided, that such Lien attaches solely to the
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property acquired with such Indebtedness and that the principal amount of such
Indebtedness does not exceed one hundred percent (100%) of the cost of such
property; and further provided, that such property is not equipment with respect
to which a Loan has been made hereunder;
(d) Liens in favor of Agent for the benefit of the Lenders;
(e) bankers' liens, rights of setoff and similar Liens incurred on deposits
made in the ordinary course of business;
(f) materialmen's, mechanics', repairmen's, employees' or other like Liens
arising in the ordinary course of business and which are not delinquent for more
than 45 days or are being contested in good faith by appropriate proceedings;
(g) any judgment, attachment or similar Lien, unless the judgment it
secures has not been discharged or execution thereof effectively stayed and
bonded against pending appeal within 30 days of the entry thereof; and
(h) Liens which have been approved by the Agent Lenders in writing prior to
the Closing Date, including Liens in favor of Comdisco, Inc. to secure aggregate
indebtedness to Comdisco, Inc. not to exceed $8,000,000 and provided that
Comdisco, Inc. shall have entered into an intercreditor agreement in form and
substance satisfactory to Agent and the Lenders providing for the Liens of
Comdisco, Inc. to be pari passu with those of Agent and the Lenders; and Liens
which are permitted under Section 2.16(c).
"Person" means any individual or entity.
"Pro Rata" means, as to any Lender at any time, the percentage equivalent at
such time of (i) such Lender's aggregate unpaid principal amount of Loans,
divided by (ii) the combined aggregate unpaid principal amount of all Loans of
all Lenders.
"Qualified Public Offering" means the closing of a firmly underwritten public
offering of Borrower's common stock with aggregate proceeds of not less than
$20,000,000 (prior to underwriting expenses and commissions).
"Records" means all Borrower's computer programs, software, hardware, source
codes and data processing information, all written documents, books, invoices,
ledger sheets, financial information and statements, and all other writings
concerning or evidencing Collateral .
"Related Person" means any Affiliate of Borrower, or any officer, employee,
director or equity security holder of Borrower or any Affiliate.
"Rights to Payment" means all Borrower's accounts, instruments, contract rights,
documents, chattel paper and all other rights to payment, including, without
limitation, the Accounts, all negotiable certificates of deposit and all rights
to payment under contract or any commercial or standby letter of credit.
"Security Agreement" means that certain Security Agreement of even date herewith
between the Borrower and the Agent for the benefit of the Lenders in the form of
Exhibit "F" hereto.
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"Security Documents" means the Security Agreement and any and all collateral
assignments, chattel mortgages, financing statements, amendments to any of the
foregoing and other documents from time to time executed or filed to create,
perfect or maintain the perfection of the Lenders' Liens on the Collateral.
"Terminal Payment" means, (i) with respect to each Equipment Loan, an amount
payable on the Maturity Date of such Loan in an amount equal to fifteen percent
(15.00%) of the original principal amount of such Loan, and (ii) with respect to
each Working Capital Loan, an amount payable on the Maturity Date of such Loan
in an amount equal to fourteen percent (14%) of the original principal amount of
such Loan.
"Termination Date" means the earlier of (a) the date Lenders may terminate
making Loans or extending other credit pursuant to the rights of the Lenders
under Article 7 of the Agreement, or (b) June 30, 2000.
"Threshold Amount" means One Hundred Thousand Dollars ($100,000.00).
"Total Commitment" means the aggregate Commitments of the Lenders to make Loans
hereunder.
"Trademark License" means any written agreement now or hereafter in existence
granting to Borrower any right to use any Trademark.
"Trademarks" means all of the following: (i) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, service marks, logos, other source or business identifiers, prints and
labels on which any of the foregoing have appeared or will appear, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof or any other
country or any political subdivision thereof, and (ii) all reissues, divisions,
continuations, continuations-in-part, renewals or extensions thereof.
"UCC" means the Uniform Commercial Code as enacted in the applicable
jurisdiction, in effect on the Closing Date and as amended from time to time.
"Working Capital Loan" means any Loan requested by Borrower and funded by a
Lender for general working capital purposes of Borrower, and not to finance the
acquisition or carrying of specific items of Equipment.
"Year 2000 Compliant" shall mean with regard to any entity, that all computers
and embedded microchips in non-computing devices utilized by, and material to
the business, operations or financial condition of, such entity are able to
interpret and manipulate date on and involving all calendar dates correctly and
without causing any abnormal ending scenario, including in relation to dates in
and after the Year 2000.
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ARTICLE 2 - THE COMMITMENTS AND LOANS
2.1 The Commitments.
(a) Working Capital Facility. Subject to the terms and conditions of this
Agreement, each of the Lenders hereby severally agrees to make Working Capital
Loans to Borrower from time to time from the Closing Date and to and including
the Termination Date in aggregate original principal amount up to but not
exceeding the lesser of (i) such Lender's pro rata share of the Borrowing Base
(based on the proportion that such Lender's Commitment, as then in effect, bears
to the aggregate Commitments of all Lenders), and (ii) the then unfunded portion
of such Lender's Commitment.
(b) Equipment Loan Facility. Subject to the terms and conditions of this
Agreement, each of the Lenders agrees to make Equipment Loans to Borrower from
time to time from the Closing Date and to and including the Termination Date in
aggregate original principal amount up to but not exceeding the lesser of (i)
the then unfunded portion of such Lender's Commitment, and (ii) such Lender's
pro rata share (based on the proportion that such Lender's Commitment, as then
in effect, bears to the aggregate Commitments of all Lenders) of an amount equal
to 100% of the amount paid or payable by Borrower to a manufacturer, vendor or
dealer who is not an Affiliate of Borrower for each item of Equipment being
financed with the proceeds of such Loan as shown on an invoice therefor
(excluding any commissions and any portion of the amount invoiced which relates
to servicing of the Equipment, delivery charges or sales taxes payable upon
acquisition).
(c) Nature of Commitments; Borrowing Base Limitation. No Commitment is a
revolving credit commitment, and Borrower does not have the right to repay and
reborrow hereunder. In no event shall any Lender be obligated to make Loans to
Borrower which, in the aggregate, exceed the Commitment of such Lender. If at
any time the aggregate outstanding amount of Working Capital Loans exceeds the
aggregate Commitments of all Lenders or the Borrowing Base (an "Excess Amount"),
Borrower shall immediately either prepay Working Capital Loans by such Excess
Amount, without premium or penalty, and/or provide such additional Eligible
Collateral as is necessary to bring Borrower into compliance; provided, however,
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that if as of the date that any Compliance Certificate certifying the Borrowing
Base is delivered, or is to have been delivered, an Excess Amount exists and is
less than twenty percent (20%) of the Borrowing Base, then Borrower shall have
sixty (60) days from such date within which to prepay Working Capital Loans or
to provide additional Eligible Collateral to eliminate such Excess Amount.
2.2 Notes Evidencing Loans; Repayment. Each Loan made by each Lender
shall be evidenced by separate promissory notes of the Borrower made payable to
each individual Lender, in the form of Exhibit "B". Each Note shall be dated as
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of the Borrowing Date, shall be payable to the order of such Lender in the total
principal amount of the Loan, and shall otherwise be duly completed. Principal
and interest of each Loan shall be payable at the times and in the manner set
forth in the Note. Notwithstanding anything to the contrary in Section 2.10
hereof or in the form of Note attached hereto as Exhibit "B", the parties agree
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that, for any loan funded prior to July 31, 1999, payments of interest only
shall be made in advance on the applicable Borrowing Date at the rate of
fourteen percent (14%) per annum, that such Loan shall be
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refinanced, without prepayment premium, by a new Loan from the Lenders on or
about August 1, 1999 (the actual date of the making of such new Loan being the
"Refunding Date"), and that monthly amortization payments on such Loan, based on
the Designated Rate, shall commence in advance on the Refunding Date, as more
particularly provided in the form of Note.
2.3 Procedures for Borrowing.
(a) Whenever the Borrower desires to borrow under this Agreement, the Borrower
shall give the Agent written notice of such proposal, stating the total amount
requested, in substantially the form of Borrowing Request attached hereto as
Exhibit "C". The total amount of the borrowing shall be allocated Pro Rata
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among the Lenders, to be advanced as separate Loans in the aggregate amount
requested. If the Borrowing Request is for Equipment Loans, Borrower shall
submit with the Borrowing Request such schedules, invoices, purchase orders and
other documents descriptive of the Equipment as Agent may request, and the Agent
shall provide such documentation to the Lenders by overnight mail, deliverable
on the Business Day following delivery by the Borrower of such documentation.
If the Borrowing Request is for Working Capital Loans, the Borrowing Request
shall be accompanied by a Borrowing Base Certificate as of the date submitted.
No Borrowing Request shall request that Lenders fund less than $1,000,000 in
aggregate Working Capital Loans and/or $500,000 in aggregate Equipment Loans,
unless the remaining Total Commitment is less than such minimum amounts, in
which case the Borrowing Request shall be for the remaining Total Commitment.
Each Borrowing Request shall be irrevocable and shall be effective only if
received by the Agent not later than 10:00 a.m. San Francisco time on the date
that is at least five (5) Business Days prior to the date of the proposed
borrowing. If any such Borrowing Request is by facsimile transmission, it shall
be confirmed in a writing sent by the Borrower to the Agent on the next Business
Day.
(b) Promptly upon receipt of a Borrowing Request, but not later than one (1)
Business Day after receipt of the Borrowing Request and the related
documentation, the Agent shall calculate each Lender's Funding Amount, and
notify each Lender telephonically of the Borrowing Request and such Lender's
Funding Amount, and shall transmit copies of the Borrowing Request and the
Funding Amounts by facsimile to each Lender.
(c) If any Lender believes in good faith that a Default or Event of Default
has occurred and is then continuing and on that basis determines that it will
not advance its Funding Amount to Borrower on the Funding Date, it shall notify
the Agent, each other Lender and the Borrower of such determination promptly but
in no event later than 4:00 p.m. on the Business Day that is two (2) Business
Days prior to the Funding Date (a "Suspension Notice"). If a Suspension Notice
is given, each other Lender may, at its sole election, suspend its Commitment
and refrain from advancing its own Funding Amount to Borrower, and each of the
Lenders and Borrower agree promptly to meet and confer in good faith about the
basis for the Suspension Notice.
2.4 Required Borrowing Documentation. The Borrower, on or prior to the
Funding Date stated in a Borrowing Request, which shall be a date that is not
less than five (5) Business Days after receipt by Agent of the Borrowing
Request, and as of the date of the making of any related Loan, shall have
satisfied all applicable conditions precedent to such borrowing contained in
this Agreement and the Security Agreement, including delivery to each Lender of
executed
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original Notes evidencing such Loan, and delivery to the Agent under the
Security Agreement of all applicable UCC financing statements covering any
Equipment being financed with the proceeds of such Loan. Without limiting the
generality of the foregoing, not later than 1:00 p.m. on the Business Day that
is two (2) Business Days prior to the Funding Date, Borrower shall have executed
and delivered to Agent an original Note for each Lender for its Loan to be
advanced, and any UCC-1 financing statements, amendments, releases or
termination statements that may be required by Agent. Such promissory notes and
UCC statements, if any, shall have been prepared by Agent promptly following
receipt of the related Borrowing Request. Agent shall cause each Lender's
original executed promissory note and copies of any such UCC statements relating
to the Loan to be delivered to such Lender by the close of business on the
Business Day that is two (2) Business Days prior to the Funding Date, if
requested by such Lender to facilitate the funding of its Loan.
2.5 Disbursement of Loan Proceeds. Not later than 1:00 p.m., San
Francisco time, on the date specified in the Borrowing Request for each
borrowing (the "Funding Date"), each Lender shall transfer to the Borrower's
account #003933903417 (the "Account") at Bank of America N.T.&S.A. (formerly
NationsBank), Baltimore, MD, by wire transfer to ABA #▇▇▇▇▇▇▇▇▇ for credit to
the Account of Corvis Corporation, or otherwise, but in any event in immediately
available funds, its respective Funding Amount.
2.6 Time and Method of Payments.
(a) Not later than one Business Day after receipt of the Borrowing Request,
the Agent shall prepare and distribute to each of the Lenders and the Borrower
an amortization schedule showing the principal amount of each Lender's Loan that
is to be advanced to the Borrower's account on the Funding Date and the
regularly scheduled, monthly installment amount to be paid by the Borrower in
respect of each Lender's Loan made on such Funding Date. Each Lender shall be
responsible for verifying such amounts; however, the Agent's calculation shall
be presumed correct unless rebutted by the Lender or the Borrower. Agent shall
not be liable for any error in calculating a Lender's Loan installment amount.
If at any time or from time to time a Lender desires to enforce any right under
this Agreement to collect late charges and/or interest at the Default Rate, it
shall promptly notify Borrower and Agent, and appropriate adjustment shall be
made to the loan schedule to reflect any changes in the monthly installment
payable by Borrower in respect of such Lender's Loan(s).
(b) All payments of principal, interest, fees and other amounts (including
indemnities) payable by the Borrower hereunder shall be made, in immediately
available funds not later than 1:00 p.m., San Francisco time, on the date on
which such payment shall become due (the "Payment Date"), by disbursement to
each Lender of its respective share of such payment on each Payment Date to the
address of such Lender for payments shown on Exhibit "A" hereto and, if
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indicated on such Exhibit, by wire transfer to such Lender's account according
to the instructions shown on such Exhibit opposite such Lender's name. Any
payment received by the Agent or any Lender hereunder for the account of any
other Lender shall be paid promptly to such Lender, in like funds, for the Loan
in respect of which such payment is made.
2.7 Several Obligations. Except as otherwise provided in Section 2.3(c)
following a Suspension Notice, the failure of any Lender to make any Loan to be
made by it on the date
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specified therefor shall not relieve the other Lenders of their respective
obligations to make their Loans on such date; but in no event shall any Lender
be responsible for the failure of the other Lenders to make Loans to be made by
such other Lenders. In the case of Equipment Loans requested by Borrower to be
funded on a particular Funding Date, if one or more Lenders does not advance its
Equipment Loan (because of a Suspension Notice or otherwise), then: (i) if
Borrower has provided equipment collateral sufficient to support the entire
amount of Equipment Loans originally requested in the related Borrowing Request,
then the amount of the excess collateral coverage resulting from the failure of
one or more Lenders to make their respective Equipment Loans shall be available
to Borrower as support for subsequent Equipment Loan requests; and (ii) the
non-funding Lenders shall not be entitled to share in any proceeds realized from
such items of equipment collateral unless and only to the extent that such
non-funding Lenders later make the Equipment Loans previously requested by
Borrower and not funded by such Lenders, subject to the provisions of any
intercreditor or other agreement among the Lenders..
2.8 Pro Rata Treatment Among Lenders. Except as otherwise provided
herein: (i) each borrowing from the Lenders under Section 2.1 hereof will be
made by them in proportion to their respective Commitments; (ii) each scheduled
payment of principal and Basic Interest on the Loans, if timely paid by Borrower
and any voluntary prepayments of principal, shall be paid to the Lenders
according to the amortization schedule provided for in each Lender's Note
evidencing such Loans (in the event such scheduled payment is less than the
aggregate amount due to be paid to all Lenders under their Notes, but prior to
any acceleration of the Notes, such payment shall be allocated ratably among the
Lenders in proportion to the regular installment amounts provided in the Notes);
and (iii) all Terminal Payments shall be allocated Pro Rata among the Lenders.
If any payment under clause (ii) or (iii) of this Section is not paid ratably
among the Lenders, whether as a result of the Borrower's failure to make a
particular payment to one or more Lenders while paying other Lenders, or
otherwise, then each Lender that has actually received a payment in excess of
its ratable share shall promptly purchase from each Lender who received no
payment or payment less than its ratable share a participation in the Loans held
by such Lender in such amount, and make such other adjustments from time to time
as shall be equitable, to the end that all Lenders shall share in such payments
pro rata in the aforesaid manner. If prior to all Loans and other obligations
of Borrower to the Lenders having been paid in full, any action to realize upon
the Collateral is taken following default by the Borrower, then proceeds of
Collateral and any other payments or distributions received on account of the
Loans shall be distributed Pro Rata among all of the Lenders.
2.9 Sharing of Payments and Set-Off Among Lenders. The Borrower hereby
agrees that, in addition to (and without limitation of) any right of set-off,
banker's lien or counterclaim a Lender may otherwise have, each Lender shall be
entitled, at its option, to offset balances held by it at any of its offices
against any principal of or interest on any of its Loans hereunder, or any fee
payable to it, that is not paid when due (regardless of whether such balances
are then due to the Borrower), in which case it shall promptly notify the
Borrower and the other Lenders thereof, provided that its failure to give such
notice shall not affect the validity thereof. If a Lender shall effect payment
of any principal of or interest on Loans held by it under this Agreement through
the exercise of any right of set-off, banker's lien, counterclaim or similar
right, it shall promptly purchase from the other Lenders participations in the
Loans held by the other Lenders in such amounts, and make such other adjustments
from time to time as shall be
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equitable, to the end that all the Lenders shall share the benefit of such
payment pro rata in accordance with the unpaid principal and interest on the
Loans held by each of them. To such end, all the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or
other-wise) if such payment is rescinded or must otherwise be restored. The
Borrower agrees that any Lender so purchasing a participation in the Loans held
by the other Lenders may exercise all rights of set-off, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans in the amount of such participation.
Nothing contained herein shall require any Lender to exercise any such right or
shall affect the right of any Lender to exercise and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Borrower.
2.10 Interest. Except as provided in Sections 2.2 and 2.13, Basic
Interest on the outstanding principal balance of the each Loan shall accrue
daily at the Designated Rate from the Borrowing Date until the Maturity Date.
2.11 Terminal Payment. Borrower shall pay the Terminal Payment with
respect to each Loan on the Maturity Date of such Loan, unless such Loan is
prepaid in accordance with Section 2.20.
2.12 Interest Rate Calculation. Basic Interest, along with charges and
fees under this Agreement and any Loan Document, shall be calculated for actual
days elapsed on the basis of a 360-day year, which results in higher interest,
charge or fee payments than if a 365-day year were used. In no event shall
Borrower be obligated to pay any Lender interest, charges or fees at a rate in
excess of the highest rate permitted by applicable law from time to time in
effect.
2.13 Default Interest. Any unpaid payments of principal or interest or
the Terminal Payment with respect to any Loan shall bear interest from their
respective maturities, whether scheduled or accelerated, at the Designated Rate
for such Loan plus five percent (5.00%) per annum, until paid in full, whether
before or after judgment (the "Default Rate"). Borrower shall pay such interest
on demand.
2.14 Late Charges. If Borrower is late in making any payment of principal
or interest or Terminal Payment under this Agreement by more than fifteen (15)
days, Borrower agrees to pay a late charge of five percent (5%) of the
installment due, but not less than fifty dollars ($50.00) for any one such
delinquent payment. This late charge may be charged by Lenders for the purpose
of defraying the expenses incidental to the handling of such delinquent amounts.
Borrower acknowledges that such late charge represents a reasonable sum
considering all of the circumstances existing on the date of this Agreement and
represents a fair and reasonable estimate of the costs that will be sustained by
Lenders due to the failure of Borrower to make timely payments. Borrower further
agrees that proof of actual damages would be costly and inconvenient. Such late
charge shall be paid without prejudice to the right of Lenders to collect any
other amounts provided to be paid or to declare a default under this Agreement
or any of the other Loan Documents or from exercising any other rights and
remedies of Lenders.
2.15 Lenders' Records. Principal, Basic Interest, Terminal Payments and
all other sums owed under any Loan Document shall be evidenced by entries in
records maintained by Lenders for such purpose. Each payment on and any other
credits with respect to principal,
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Basic Interest, Terminal Payments and all other sums outstanding under any Loan
Document shall be evidenced by entries in such records. Absent manifest error,
Lenders' records shall be conclusive evidence thereof.
2.16 Grant of Security Interests.
(a) General Loan and Collateral Agreement. As collateral security for the
payment and performance of any and all sums owing under the Loan Documents, the
Borrower hereby grants to the Agent for the benefit of the Lenders and the Agent
and to each Lender in its capacity as a Lender hereunder, a lien on and security
interest in any and all deposits or other sums at any time credited by or due
from the Agent or such Lender to the Borrower, whether in regular or special
depository accounts or otherwise, and any and all monies, securities and other
property of the Borrower, and the proceeds thereof, now or hereafter held or
received by or in transit to the Agent or such Lender from or for the Borrower,
whether for safekeeping, custody, pledge, transmission, collection or otherwise,
and any such deposits, sums, monies, securities and other property, may at any
time after the occurrence of any Event of Default be set-off, appropriated and
applied by the Agent or such Lender against any of the Obligations whether or
not such Obligations are then due or are secured by any collateral, or, if they
are so secured, whether or not such collateral held by the Agent or any Lender
is considered to be adequate.
(b) Additional Collateral Security. In addition to the collateral described
in Section 2.16(a) hereof, payment of the Obligations shall also secured by a
perfected security interest in all Collateral, as defined herein and in the
Security Documents executed in connection herewith, whether now owned or
hereafter acquired, as provided in the Security Documents.
(c) Subordination of Liens. So long as no Event of Default has occurred and
is then continuing, once Borrower has achieved net income (as determined in
accordance with GAAP) of at least $1,000,000.00 per month in each of any three
consecutive months after the Closing Date, Lenders agree that Agent shall
subordinate the priority of its Lien on Accounts to a Lien in favor of a
commercial bank or other institutional lender providing a working capital loan
facility to Borrower secured by Accounts on customary and reasonably commercial
terms, provided that such subordination of lien priority shall be conditioned
upon the maximum amount of indebtedness outstanding under such additional
working capital facility, when added to the aggregate amount of Working Capital
Loans outstanding, not exceeding at any time an amount equal to one hundred
percent (100%) of the aggregate amount of Eligible Accounts, Eligible Inventory,
cash on hand and Cash Equivalents. Any such release or subordination of Liens
shall be in writing pursuant to an agreement in form and substance satisfactory
to the Agent, and all costs and expenses of the Agent in connection with the
matters described in this Section 2.16(c) shall be paid by Borrower on demand.
2.17 Right to Inspect. Agent and each of the Lenders (through any of their
officers, employees, or agents) shall have the right, upon reasonable prior
notice if no Event of Default shall have occurred and be continuing, from time
to time during Borrower's usual business hours, to inspect Borrower's Books and
to make copies thereof and to check, test, and appraise the Collateral in order
to verify Borrower's financial condition or the amount, condition of, or any
other matter relating to, the Collateral.
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2.18 Issuance of Warrants. As additional consideration for the making of
their respective Commitments, each of the Lenders (with the exception of Private
Equity Finance Ltd., as hereinafter provided) shall receive, upon the execution
of this Agreement and as a condition to its initial Loan, a warrant instrument
in the form attached hereto as Exhibit "G" (each, a "Warrant"), exercisable for
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that number of shares of Series E convertible Preferred Stock of Borrower equal
to the quotient of (a) the product of the Lender's Commitment amount and 12.5%,
and (b) $9.147. As additional consideration for the making of its Commitment,
Private Equity Finance Ltd. shall receive, upon the execution of this Agreement
and as a condition to its initial Loan, a Warrant exercisable for that the
number of shares of Series E Preferred Stock of Borrower equal to the quotient
of (a) the product of its Commitment amount and 9.00%, and (b) $9.147. The
Warrants issued under this Agreement shall be exercisable at any time and from
time to time through June 30, 2004; and shall include piggyback registration
rights, anti-dilution and "net issuance" provisions reasonably satisfactory to
Agent and its counsel.
2.19 Commitment Fees. As of the date hereof, VLL is the sole Lender under
this Agreement. The Borrower and VLL intend that one or more additional Lenders
may issue Commitments to Borrower and become parties to this Agreement, and that
in such event, VLL in its capacity as agent for the Lenders will be performing
services in the administration of the Loans and the Collateral for the benefit
of the Lenders. Prior to the execution of this Agreement, Borrower has paid to
VLL a fee of $50,000.00 for the issuance by VLL of its Commitment. Borrower
agrees to pay to each subsequent Lender a fee equal to one-half of one percent
(0.50%) of its Commitment at the time such Commitment is given to Borrower. Such
commitment fees are non-refundable except as expressly set forth herein. If any
Lender wrongfully fails to fund its initial Loan hereunder, such Lender shall
refund to Borrower the commitment fee previously paid to such Lender. Each
Lender further agrees that with respect to each Loan advanced, on the Borrowing
Date applicable to such Loan, such Lender shall credit against the payments due
from Borrower on such date in respect of such Loan an amount equal to the
product of (i) one-half of one percent (0.50%) of such Lender's Commitment
amount, and (ii) a fraction the numerator of which is the principal amount of
such Loan and the denominator of which is such Lender's Commitment amount, until
the aggregate amount of such credits equals but does not exceed the amount in
clause (i).
2.20 Voluntary Prepayment of Loans. No Loan may be voluntarily prepaid
except as provided in this paragraph. Borrower may prepay any Loan, in whole
but not in part, at any time subject the limitations and requirements of this
Section. Each prepayment must be accompanied by payment of: (i) a premium
equal to the percentage of the original principal amount of the Loan being
prepaid shown in the table below for the corresponding period after the
Borrowing Date applicable to such Loan in which such prepayment occurs; (ii)
accrued Basic Interest to the date of such prepayment; and (iii) the Terminal
Payment for such Loan multiplied by a fraction (a) the numerator of which is
the number of days such Loan was outstanding through the date of such
prepayment, and (b) the denominator of which is the number of days such Loan
would have been outstanding had it been paid at its stated Maturity Date.
Month after applicable Borrowing Date in Percentage of Original Principal Amount of Loan
which Prepayment Occurs Being Prepaid
First through sixth 7.00%
Seventh through twelfth 6.00%
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Thirteenth through eighteenth 5.00%
Nineteenth through twenty-fourth 4.00%
Twenty-fifth through thirtieth 3.00%
Thirty-first through thirty-sixth 2.00%
Thirty-seventh through forty-second 1.00%
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that, except as set forth in any schedule
of exceptions executed by the parties, as of the Closing Date and each Borrowing
Date:
3.1 Due Organization. Borrower is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction of its
incorporation, and is duly qualified to conduct business and is in good standing
in each other jurisdiction in which its business is conducted or its properties
are located, except where the failure to be so qualified would not reasonably be
expected to have a Material Adverse Effect.
3.2 Authorization, Validity and Enforceability. The execution, delivery
and performance of all Loan Documents executed by Borrower are within Borrower's
powers, have been duly authorized, and are not in conflict with Borrower's
articles or certificate of incorporation or by-laws, or the terms of any charter
or other organizational document of Borrower, as amended from time to time; and
all such Loan Documents constitute valid and binding obligations of Borrower,
enforceable in accordance with their terms (except as may be limited by
bankruptcy, insolvency and similar laws affecting the enforcement of creditors'
rights in general, and subject to general principles of equity). Borrower is
not in default under any agreement to which it is a party or by which it is
bound, which default could have a Material Adverse Effect.
3.3 Compliance with Applicable Laws. Borrower has complied with all
licensing, permit and fictitious name requirements necessary to lawfully conduct
the business in which it is engaged, and to any sales, leases or the furnishing
of services by Borrower, including without limitation those requiring consumer
or other disclosures, the noncompliance with which would have a Material Adverse
Effect.
3.4 Copyrights, Patents, Trademarks and Licenses.
(a) To Borrower's knowledge, Borrower owns or is licensed or otherwise has the
right to use all of the patents, trademarks, service marks, trade names,
copyrights, contractual franchises, authorizations and other similar rights that
are reasonably necessary for the operation of its business, without conflict
with the rights of any other Person.
(b) To Borrower's knowledge, no slogan or other advertising device, product,
process, method, substance, part or other material employed by Borrower
infringes upon any rights held by any other Person.
(c) Except as noted on Schedule 3.6, no claim or litigation regarding any of
the foregoing is pending or, to Borrower's knowledge, threatened, and to
Borrower's knowledge no
16
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or proposed which, in either case, could
reasonably be expected to have a Material Adverse Effect.
3.5 No Conflict. The execution, delivery, and performance by Borrower
of all Loan Documents are not in conflict with any law, rule, regulation, order
or directive of which Borrower is aware, or any indenture, agreement, or
undertaking to which Borrower is a party or by which Borrower may be bound or
affected.
3.6 No Litigation, Claims or Proceedings. There is no litigation, tax
claim, proceeding or dispute pending, or, to the knowledge of Borrower,
threatened against or affecting Borrower or its property, except as noted on
Schedule 3.6 hereto
3.7 Correctness of Financial Statements. Borrower's financial
statements which have been delivered to Lenders fairly and accurately reflect
Borrower's financial condition as of the latest date of such financial
statements; and, since that date there has been no Material Adverse Change.
3.8 No Subsidiaries. Except as noted on Schedule 3.8 hereto, Borrower
is not a majority owner of or in a control relationship with any other business
entity.
3.9 Environmental Matters. Borrower is in compliance with Environmental
Laws which are applicable to its business, except to the extent a failure to be
in such compliance could not reasonably be expected to have a Material Adverse
Effect on Borrower's operations, properties or financial condition.
3.10 No Event of Default. No Default or Event of Default has occurred
and is continuing.
3.11 Bona Fide Eligible Accounts. The Eligible Accounts are bona fide
existing obligations. The property giving rise to such Eligible Accounts has
been delivered to the account debtor or to the account debtor's agent for
immediate shipment to and acceptance by the account debtor. Borrower has not
received notice of actual or imminent Insolvency Proceeding of any account
debtor that is included in any Borrowing Base Certificate as an Eligible
Account.
3.12 Regulatory Compliance. Borrower has met the minimum funding
requirements of ERISA with respect to any employee benefit plans subject to
ERISA. No event has occurred resulting from Borrower's failure to comply with
ERISA that is reasonably likely to result in Borrower's incurring any liability
that could have a Material Adverse Effect. Borrower is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940. Borrower is not engaged principally, or
as one of the important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulations T and U of the Board of Governors of the Federal Reserve System).
Borrower has complied with all the provisions of the Federal Fair Labor
Standards Act. Borrower has not violated any statutes, laws, ordinances or
rules applicable to it, violation of which could have a Material Adverse Effect.
17
3.13 Full Disclosure. None of the representations or warranties made by
Borrower in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of Borrower
in connection with the Loan Documents (including disclosure materials delivered
by or on behalf of Borrower to Lenders prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
3.14 Year 2000 Compliant.
(a) Borrower has (i) undertaken a review and assessment of all source code
and software developed by Borrower material to its business and operations that
could be adversely affected by the failure of Borrower to be Year 2000 Compliant
on a timely basis, (ii) developed a detailed plan and timeline for become Year
2000 Compliant, and (iii) to date, implemented that plan in accordance with that
timetable in all material respects. Borrower reasonably anticipates that it
will be Year 2000 Compliant on a timely basis.
(b) Borrower has no knowledge or reason to believe that any of its key
suppliers, vendors and customers will not be on a timely basis Year 2000
Compliant in all material respects. For purposes hereof, "key suppliers,
vendors and customers" refers to those suppliers, vendors and customers of
Borrower the business failure of which would with reasonable probability result
in a material adverse change in the business, properties, condition (financial
or otherwise) or prospects of Borrower.
ARTICLE 4 - CONDITIONS PRECEDENT
4.1 Conditions to First Loan. The obligation of each Lender to make its
first Loan hereunder is, in addition to the conditions precedent specified in
Section 4.2, subject to the fulfillment of the following conditions and to the
receipt by the Agent of the documents described below, duly executed and in form
and substance satisfactory to the Agent and the Lenders and their respective
counsel:
(a) Resolutions. A certified copy of the resolutions of the Board of
Directors of Borrower authorizing the execution, delivery and performance by
Borrower of the Loan Documents.
(b) Incumbency and Signatures. A certificate of the secretary of Borrower
certifying the names of the officer or officers of Borrower authorized to sign
the Loan Documents, together with a sample of the true signature of each such
officer.
(c) Legal Opinion. The opinion of legal counsel for Borrower as to such
matters as Lenders may reasonably request, including the matters covered by
Sections 3.1 and 3.2 and that the issuance of the Warrants does not conflict
with any agreement by which Borrower is bound.
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(d) Certificate and Bylaws. Certified copies of the Certificate of
Incorporation and Bylaws of Borrower, as amended through the Closing Date to
include the authorization and rights, preferences and privileges of the Series E
Preferred Stock of Borrower.
(e) Schedules for This Agreement. All schedules completed and attached
hereto, and disclosing such information as is acceptable to Lenders.
(f) Financing Statements. Filing copies (or other evidenced of filing
satisfactory to Agent, Lenders and their counsel) of such UCC financing
statements, collateral assignments and termination statements, with respect to
the Collateral as Agent shall request.
(g) Lien Searches. UCC lien, judgment, bankruptcy and tax lien searches of
Borrower from such jurisdictions or offices as the Agent may reasonably request,
all as of a date reasonably satisfactory to Agent, Lenders and their respective
counsel.
(h) Good Standing Certificate. A certificate of status or good standing of
Borrower as of a date acceptable to the Agent from the jurisdiction of
Borrower's organization and any foreign jurisdictions where Borrower is or
should be qualified to do business.
(i) Warrants. Warrants issued by Borrower to Lenders exercisable for such
number, type and class of shares of Borrower's capital stock, and for an initial
exercise price as is specified in Section 2.19.
(j) Security Agreement. Borrower shall have executed and delivered to the
Agent the Security Agreement, in form and substance satisfactory to the Agent
and the Lenders.
(k) Insurance Certificates. Borrower shall have delivered to Agent the
insurance certificates referred to in Section 5.5.
(l) Payment of Fees. Borrower shall have paid all fees and expenses then due
to the Agent and the Lenders, and shall have paid to VLL a fee for arranging
this credit facility, as set forth in a separate letter between Borrower and
VLL.
4.2 Conditions to All Loans. The obligation of each Lender to make its
initial Loans and each subsequent Loan is subject to the following further
conditions precedent that:
(a) No Default. No Default or Event of Default has occurred and is continuing
or will result from the making of any such Loan, and the representations and
warranties of Borrower contained in Article 3 of this Agreement are true and
correct as of the Borrowing Date of such Loan.
(b) No Material Adverse Change. No Material Adverse Change shall have
occurred since the date of the most recent financial statements submitted to
Lenders.
(c) Borrowing Request. Borrower shall have delivered to Agent a Borrowing
Request for such Loan and all other requested supporting documentation, all in
form satisfactory to the Agent. In the case of Equipment Loans, copies of
invoices and cancelled checks or other evidence of payment thereof must also be
submitted.
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(d) Note. Borrower shall have delivered to Agent for each Lender an executed
Note evidencing such Lender's Loan, in form and substance satisfactory to
Lenders.
(e) Supplemental Lien Filings. Borrower shall have executed and delivered
such amendments or supplements to the this Agreement and such financing
statements as Lenders may reasonably request in connection with the proposed
Loan, in order to create or perfect or to maintain the perfection of the Agent's
Lien on the Collateral.
(f) VCOC Limitation. VLL shall not be obligated to make any Loan under its
Commitment if at the time of or after giving effect to the proposed Loan VLL
would no longer qualify as: (A) a "venture capital operating company" under
U.S. Department of Labor Regulations Section 2510.3-101(d), Title 29 of the Code
of Federal Regulations, as amended; and (B) a "business development company"
under the provisions of federal Investment Company Act of 1940, as amended; and
(C) a "regulated investment company" under the provisions of the Internal
Revenue Code of 1986, as amended (together, the "Qualifications"). VLL shall at
all times use its best efforts to continue to satisfy each of the
Qualifications.
ARTICLE 5 - AFFIRMATIVE COVENANTS
During the term of this Agreement and until its payment and performance of
all Obligations, Borrower will:
5.1 Notice to Lenders. Promptly give written notice to Agent and each
Lender of:
(a) Any litigation or administrative or regulatory proceeding affecting
Borrower where the amount claimed against Borrower is at the Threshold Amount or
more, or where the granting of the relief requested could have a Material
Adverse Effect.
(b) Any substantial dispute which may exist between Borrower or any
governmental or regulatory authority.
(c) The occurrence of any Default or any Event of Default.
(d) Any change in the location of any of Borrower's places of business or
Collateral at least thirty (30) days in advance of such change, or of the
establishment of any new, or the discontinuance of any existing, place of
business.
(e) Any material dispute or default by Borrower or any other party under any
joint venture, partnering, distribution, cross-licensing, strategic alliance,
collaborative research or manufacturing, license or similar agreement which
could reasonably be expected to have a Material Adverse Effect.
(f) Any other matter which has resulted or which Borrower reasonably expects
will result in a Material Adverse Change.
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5.2 Financial Statements. Deliver to Agent, in form and detail
satisfactory to Majority Lenders the following financial information, which
Borrower warrants shall be accurate and complete in all material respects:
(a) Monthly Financial Statements. As soon as available but no later than
thirty (30) days after the end of each month, Borrower's balance sheet as of the
end of such period, and Borrower's income statement for such period and for that
portion of Borrower's financial reporting year ending with such period, prepared
and attested by a responsible financial officer of Borrower as being complete
and correct and fairly presenting Borrower's financial condition and the results
of Borrower's operations. After a Qualified Public Offering, the foregoing
interim financial statements shall be delivered no later than sixty (60) days
after each fiscal quarter and for the quarter-annual fiscal period then ended.
(b) Year-End Financial Statements. As soon as available but no later than
ninety (90) days after and as of the end of each financial reporting year, a
complete copy of Borrower's audit report, which shall include balance sheet,
income statement, statement of changes in equity and statement of cash flows for
such year, prepared and certified by an independent certified public accountant
selected by Borrower and satisfactory to the Majority Lenders (the
"Accountant"). The Accountant's certification shall not be qualified or limited
due to a restricted or limited examination by the Accountant of any material
portion of Borrower's records or otherwise.
(c) Compliance Certificates. Simultaneously with the delivery of each set of
financial statements referred to in paragraphs (a) and (b) above and within
thirty (30) days after the end of each month, a certificate of the chief
financial officer or other executive officer of Borrower substantially in the
form of Exhibit "D", hereto, (i) setting forth in reasonable detail any
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calculations required to establish whether Borrower is in compliance with any
financial covenants or tests set forth in this Agreement, and (ii) stating
whether any Default or Event of Default exists on the date of such certificate,
and if so, setting forth the details thereof and the action which Borrower is
taking or proposes to take with respect thereto.
(d) Borrowing Base Certificates. Simultaneously with the delivery of each
Borrowing Request for Working Capital Loans, and with the delivery of each set
of financial statements referred to in paragraphs (a) and (b) above and within
thirty (30) days after the end of each month, a Borrowing Base Certificate
signed by the chief financial officer or other executive officer of Borrower in
substantially the form of Exhibit "E", hereto, together with an aging report of
-----------
accounts receivable and accounts payable. The Borrowing Base Certificate
delivered in connection with the year-end Financial Statements shall further be
accompanied by a complete listing of accounts receivable.
(e) Government Required Reports; Press Releases. Promptly after sending,
issuing, making available, or filing, copies of all statements released to any
news media for publication, all reports, proxy statements, and financial
statements that Borrower sends or makes available to its stockholders, and, not
later than five (5) days after actual filing or the date such filing was first
due, all registration statements and reports that Borrower files or is required
to file with the Securities and Exchange Commission, or any other governmental
or regulatory authority.
21
(f) Audits. Lenders shall have a right to audit Borrower's Accounts and other
Collateral and books and records at the Borrower's expense twice per year, or
more often if an Event of Default has occurred and is continuing. Borrower
shall cooperate reasonably with Lenders to carry out such audits.
(g) Other Information. Such other statements, lists of property and accounts,
budgets, forecasts, reports, or other information as Lenders may from time to
time reasonably request, upon seven (7) days notice.
5.3 Managerial Assistance from VLL. Permit (without liability to any
other Lender) VLL to participate in and attempt to influence the conduct of
management of Borrower through the exercise, at reasonable times, of management
rights, including:
(a) Permit VLL to make available to Borrower, at no cost or other obligation
to Borrower, significant managerial assistance either in the form of: (i)
consulting arrangements with VLL or any of its officers, directors, employees or
affiliates, (ii) Borrower's allowing VLL to provide recommendations of
prospective candidates for election to Borrower's Board of Directors, or (iii)
VLL, at Borrower's request, seeking the services of third-party consultants to
aid Borrower with respect to its management and operations;
(b) Permit VLL to make available, without any cost or other obligation being
assumed by Borrower, consulting and advisory services to officers of Borrower
regarding Borrower's equipment acquisition and financing plans, and such other
matters affecting the business, financial condition and prospects of Borrower as
VLL shall reasonably deem relevant; and
(c) If VLL reasonably believes that financial or other developments affecting
Borrower have impaired or are likely to impair Borrower's ability to perform its
obligations under this Agreement, permit VLL reasonable access (meaning at least
twice per calendar year) to Borrower's management and/or Board of Directors and
opportunity to present VLL's views with respect to such developments.
5.4 Existence. Maintain and preserve Borrower's existence, present form
of business, and all rights and privileges necessary or desirable in the normal
course of its business; and keep all Borrower's property in good working order
and condition, ordinary wear and tear excepted.
5.5 Insurance. Obtain and keep in force insurance in such amounts and
types as is usual in the type of business conducted by Borrower, but not less
than $2 million per occurrence for commercial general liability coverage, and
not less than the greater of full replacement cost of all property or the loan
balances due Lenders, with insurance carriers having a policyholder rating of
not less than "A" and financial category rating of Class VII in "Best's
Insurance Guide," at the time of issuance, unless otherwise approved by Majority
Lenders. Such insurance policies must be in form and substance reasonably
satisfactory to Majority Lenders, and shall list Lenders as additional insureds
or Agent as a loss payee, as applicable, on endorsement(s) in form reasonably
acceptable to Majority Lenders. Borrower shall furnish to Lenders certificates
of
22
insurance and such endorsements, and upon the Agent's request, copies of any or
all such policies. The certificates shall include 30 days' notice of
cancellation.
5.6 Accounting Records. Maintain adequate books, accounts and records,
and prepare all financial statements in accordance with GAAP, and in compliance
with the regulations of any governmental or regulatory authority having
jurisdiction over Borrower or Borrower's business; and permit employees or
agents of the Agent or any Lender at such reasonable times as Agent or any
Lender may request (upon at least seven (7) calendar days notice, unless an
Event of Default has occurred and is continuing), at Borrower's expense, to
inspect Borrower's properties, and to examine, and make copies and memoranda of
Borrower's books, accounts and records.
5.7 Compliance With Laws. Comply with all laws (including Environmental
Laws), rules, regulations applicable to, and all orders and directives of any
governmental or regulatory authority having jurisdiction over, Borrower or
Borrower's business, and with all material agreements to which Borrower is a
party, except where the failure to so comply would not have a Material Adverse
Effect.
5.8 Taxes and Other Liabilities. Pay all Borrower's obligations when
due; pay all taxes and other governmental or regulatory assessments before
delinquency or before any penalty attaches thereto, except as may be contested
in good faith by the appropriate procedures and for which Borrower shall
maintain appropriate reserves; and timely file all required tax returns.
5.9 Absence of Liens on Intellectual Property. Borrower represents,
warrants and covenants that all Intellectual Property (as defined herein)
presently owned and hereafter arising or acquired by Borrower are and shall
remain owned by Borrower free of any Liens or other rights of third parties
other than licensees of Borrower in the ordinary course of Borrower's business.
5.10 Use of Proceeds. The proceeds of each Equipment Loan shall be used
only to finance Borrower's acquisition or carrying of specific items of computer
equipment, equipment used by Borrower in its research and development and
manufacturing activities, and general purpose office equipment approved by
Agent. The proceeds of each Working Capital Loan shall be used by Borrower for
general working capital purposes.
5.11 Asset Transfers to Subsidiaries. Borrower shall not sell, convey,
lease, lend, transfer or otherwise dispose (each, a "Transfer") of any of its
cash or cash equivalents or any of its assets other than licensing of inventions
in the ordinary course of business, to subsidiaries; provided that Borrower may
Transfer up to $500,000.00 of its cash or cash equivalents in aggregate during
any fiscal year of Borrower so long as after giving effect to such Transfer no
Event of Default shall have occurred.
5.12 Location of Collateral; Corporate Name. Borrower represents and
warrants that as of the Closing Date and each Borrowing Date its chief executive
office, Equipment and Records are located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and that Borrower
23
does not maintain offices or operate its business at any other locations; except
that Borrower has other offices and maintains Equipment at the following other
locations:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Borrower has not conducted business under any name or tradename other than
its full corporate name, and the name "Nova Telecommunications."
5.13 Indemnity (Environmental Matters). Indemnify the Agent and each of
the Lenders against any liability, loss, cost, damage, or expense (including,
without limitation, reasonable attorneys' fees) arising from (i) the imposition
or recording of a lien by any local, state, or federal government or
governmental agency or authority pursuant to any Cleanup Laws; (ii) claims of
any private parties regarding violations of Cleanup Laws; and (iii) costs and
expenses (including, without limitation, reasonable attorneys' fees and fees
incidental to the securing of repayment of such costs and expenses) incurred by
the Agent or any Lender in connection with compliance by the Agent or any Lender
with any statute, regulation or order issued pursuant to any Cleanup Laws by any
local, state or federal government or governmental agency or authority.
5.14 Minimum Free Cash Balances. From and after the first Borrowing Date
as of which the aggregate original principal amount of all Loans theretofore
have been funded by Lenders exceeds $25,000,000.00, maintain at all times at
least $15,000,000.00 of cash and Cash Equivalents on hand and free of all Liens,
except those in favor of the Agent and Comdisco, Inc.
ARTICLE 6 - NEGATIVE COVENANTS
During the term of this Agreement and until the payment and performance of
all Obligations, Borrower will not (without Majority Lenders' prior written
consent which shall not be unreasonably withheld):
6.1 Indebtedness. Be indebted for borrowed money, the deferred purchase
price of property, or leases which would be capitalized in accordance with GAAP;
or become liable as a surety, guarantor, accommodation party or otherwise for or
upon the obligation of any other Person, except:
(a) Indebtedness incurred for the acquisition of supplies, equipment or
inventory on normal trade credit; and other indebtedness incurred pursuant to
one or more transactions permitted under Section 6.5;
(b) Indebtedness secured by security interests covered by clause (c) of the
definition of Permitted Lien;
(c) Indebtedness of Borrower under this Agreement; and
(d) Any Indebtedness approved in writing by Majority Lenders.
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6.2 Liens. Create, incur, assume or permit to exist any Lien, or grant
any other Person a negative pledge, on any of Borrower's property, except
Permitted Liens. Borrower and Lenders agree that this covenant is not intended
to constitute a lien, deed of trust, equitable mortgage, or security interest of
any kind on any of Borrower's real property, and this Agreement shall not be
recorded or recordable. Notwithstanding the foregoing, however, violation of
this covenant by Borrower shall constitute an Event of Default.
6.3 Additional Permitted Liens on Certain Collateral. Notwithstanding
anything to the contrary contained in the Loan Agreement or any other Loan
Document, Lenders acknowledge and consent to Borrower's prior grant of Liens, if
any, in favor of the entities listed on Schedule 1 hereto (each such Lien being
an additional "Permitted Lien").
6.4 Dividends. Except after a Qualified Public Offering, pay any
dividends or purchase, redeem or otherwise acquire or make any other
distribution with respect to any of Borrower's capital stock, except (a)
dividends or other distributions solely of capital stock of Borrower, and (b)
repurchases of stock from employees upon termination of employment under reverse
vesting or similar repurchase plans.
6.5 Changes/Mergers. Liquidate or dissolve, or enter into any consolidation,
merger, partnership, joint venture or other combination except for joint
------
ventures, strategic alliances, licensing and similar arrangements customary in
Borrower's industry for businesses in the development stage of Borrower and
which do not require Borrower to assume or otherwise become liable for the
obligations of any third party not directly related to or arising out of such
arrangement or, without the prior written consent of Majority Lenders, require
Borrower to transfer ownership of assets to such joint venture or other entity;
prepay any subordinated debt, debt for borrowed money, or debt secured by any
Permitted Lien, or enter into or modify any agreement as a result of which the
terms of payment of any such debt are accelerated.
6.6 Sales of Assets. Sell, transfer, lease or otherwise dispose of any
of Borrower's assets except for fair consideration and in the ordinary course of
its business.
6.7 Loans/Investments. Make or suffer to exist any loans, guaranties,
advances, or investments, except:
(a) Accounts receivable in the ordinary course of Borrower's business;
(b) Investments in domestic certificates of deposit issued by, and other
domestic investments with, financial institutions organized under the laws of
the United States or a state thereof, having One Hundred Million Dollars
($100,000,000) in capital and a rating of at least "investment grade" or "A" by
▇▇▇▇▇'▇ or any successor rating agency;"
(c) Investments in marketable obligations of the United States of America and
in open market commercial paper given the highest credit rating by a national
credit agency and maturing not more than one year from the creation thereof;
(d) Temporary advances to officers or employees of Borrower to cover
incidental expenses to be incurred in the ordinary course of business, except as
noted on Schedule 6.7 attached hereto.
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25
(e) Investments in the subsidiaries shown on Schedule 3.8 as of the date
------------
hereof.
6.8 Transactions With Related Persons. Directly or indirectly enter into
any transaction with or for the benefit of a Related Person on terms more
favorable to the Related Person than would have been obtainable in an "arms'
length" dealing.
6.9 Change in Business. Engage in any business, or permit any of its
subsidiaries to engage in any business, other than the businesses engaged in by
Borrower and any such subsidiaries as of the Closing Date.
6.10 Compliance. Become an "investment company" controlled by an
"investment company," within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose.
Fail to meet the minimum funding requirements of ERISA, permit a Reportable
Event or Prohibited Transaction, as defined in ERISA, to occur, fail to comply
with the Federal Fair Labor Standards Act or violate any law or regulation,
which violation could have a Material Adverse Effect or a material adverse
effect on the Collateral or the priority of the Agent's Lien on the Collateral,
or permit any of its subsidiaries to do any of the foregoing.
ARTICLE 7 - EVENTS OF DEFAULT
7.1 Events of Default. The occurrence of any of the following shall
constitute an "Event of Default":
(a) Borrower shall fail to pay any principal, interest or Terminal Payment
under this Agreement, or fail to pay any fees or other charges when due under
any Loan Document, and such failure continues for five (5) Business Days or more
after the same first becomes due; or an Event of Default as defined in any other
Loan Document shall have occurred.
(b) Any representation or warranty made, or financial statement, certificate
or other document provided, by Borrower under any Loan Document shall prove to
have been false or misleading in any material respect when made or deemed made
herein.
(c) Borrower shall fail to pay its debts generally as they become due or shall
commence any Insolvency Proceeding with respect to itself; an involuntary
Insolvency Proceeding shall be filed against Borrower, or a custodian, receiver,
trustee, assignee for the benefit of creditors, or other similar official, shall
be appointed to take possession, custody or control of the properties of
Borrower, and such involuntary Insolvency Proceeding, petition or appointment is
acquiesced to by Borrower or is not dismissed within sixty (60) days; or the
dissolution or termination of the business of Borrower.
(d) Borrower shall be in default beyond any applicable period of grace or cure
under any other agreement involving the borrowing of money, the purchase of
property, the advance of credit or any other monetary liability of any kind to
Lenders or to any Person which results in the acceleration of payment of such
obligation in an amount in excess of the Threshold Amount.
26
(e) Any governmental or regulatory authority shall take any judicial or
administrative action, or any defined benefit pension plan maintained by
Borrower shall have any unfunded liabilities, any of which, in the reasonable
judgment of Majority Lenders, might have a Material Adverse Effect.
(f) Any sale, transfer or other disposition of all or a substantial or
material part of the assets of Borrower, including without limitation to any
trust or similar entity, shall occur, unless in accordance with Sections 6.5 or
6.6 of this Agreement.
(g) Any final judgment(s) singly or in the aggregate in excess of the
Threshold Amount shall be entered against Borrower which remain unsatisfied,
unvacated or unstayed pending appeal for ten (10) or more days after entry
thereof.
(h) Any Person or two or more Persons who are not shareholders of Borrower as
of the Closing Date acting in concert shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission) of
thirty-five percent (35%) or more of the outstanding shares of voting stock of
Borrower.
(i) Borrower shall fail to perform or observe any covenant contained in
Article 6 of this Agreement and the breach of such covenant, if susceptible of
cure, is not cured within 10 days .
(j) Borrower shall fail to perform or observe any covenant contained in this
Agreement or any other Loan Document (other than a covenant which is dealt with
specifically elsewhere in this Article 7) and the breach of such covenant is not
cured within 30 days after the sooner to occur of Borrower's receipt of notice
of such breach from Agent or any Lender or the date on which such breach first
becomes known to any officer of Borrower; provided, however that if such breach
is not capable of being cured within such 30-day period and Borrower timely
notifies Agent and Lenders of such fact and Borrower diligently pursues such
cure, then the cure period shall be extended to the date requested in Borrower's
notice but in no event more than 90 days from the initial breach; provided,
further, that such additional 60-day opportunity to cure shall not apply in the
case of any failure to perform or observe any covenant which has been the
subject of a prior failure within the preceding 180 days or which is a willful
and knowing breach by Borrower.
ARTICLE 8 - LENDERS' RIGHTS AND REMEDIES
8.1 Rights and Remedies. Upon the occurrence and during the continuance of
an Event of Default, each Lender's obligation to make any additional Loans shall
be terminated and each Lender may, at its election, without notice of its
election and without demand, do any one or more of the following, all of which
are authorized by Borrower:
(a) With the consent of the Majority Lenders, declare all sums of Basic
Interest and principal, all Terminal Payments, and any Obligations and other
amounts owing under any Loan Documents immediately due and payable without
notice of default, presentment or demand for payment, protest or notice of
nonpayment or dishonor or any other notices or demands (provided that upon the
occurrence of an Event of Default all sums of Basic Interest and principal, all
27
Terminal Payments, and any Obligations and other amounts owing under any Loan
Documents shall become immediately due and payable without any action by
Lender);
(b) Terminate any obligation of Lenders to advance money or extend credit to
or for the benefit of Borrower under this Agreement or under any other agreement
between Borrower and Lenders;
(c) Without notice to Borrower, place an administrative hold on any and all
(i) balances and deposits of Borrower held by Lenders, or (ii) indebtedness at
any time owing to or for the credit or the account of Borrower held by Lenders;
(d) With the consent of the Majority Lenders, but without notice to Borrower,
set off and apply to the Obligations any and all (i) balances and deposits of
Borrower held by Lenders, or (ii) indebtedness at any time owing to or for the
credit or the account of Borrower held by Lenders; and
(e) Give Agent, at the direction of Majority Lenders, the right to exercise
any other right or remedy of Agent and/or any Lender provided by any Security
Document or other contract or applicable law, including without limitation all
rights and remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, Agent shall have the right after the occurrence of
an Event of Default to notify account debtors or other parties obligated on
Accounts of the Agent's security interest in such Accounts and to direct the
payment thereof to the Agent.
8.2 Enforcement of Lien Rights.
(a) At the direction of the Majority Lenders, the Agent shall proceed with the
enforcement of Lenders' rights against the Collateral for the benefit of Lenders
under the Loan Documents. Any repossession, sale or distribution of proceeds of
Collateral shall be accomplished as required by this Agreement, the other Loan
Documents and applicable law. Agent is authorized to exercise all rights and
remedies of the Lenders under the Loan Documents, provided that, absent exigent
circumstances where action is determined by Agent to be necessary to protect
Collateral, the Agent shall not proceed to enforce Lenders' rights and remedies
against the Collateral or Borrower by foreclosure, judicial action or the like
("Enforcement Action"), unless and until directed to do so by the Majority
Lenders. Unless the Agent shall request further guidance or consents, any
direction by the Majority Lenders to begin Enforcement Action shall state only
that the Agent shall begin enforcement, and shall not specify the manner in
which enforcement should proceed. Once the Agent receives an enforcement
direction from the Majority Lenders, all decisions as to how to proceed to
enforce the Lenders' rights and remedies, including, without limitation, the
methods and timing of proceeding, may be made by the Agent in its good faith
business judgment, with such consultation with Lenders as Agent in its sole
discretion deems reasonable under the circumstances. Notwithstanding the
foregoing, if the Agent shall request the consent of the Lenders as to any
specific enforcement action, and the Lenders shall not unanimously agree, in
writing, whether such action should or should not be taken, then the Agent may
(i) rely upon the decision of the Majority Lenders, or (ii) in its discretion,
refrain from taking such action, unless the Majority Lenders agree to indemnify
Agent expressly with respect to the specific enforcement action proposed to be
taken.
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In the event of one or more foreclosure sales, Agent shall have the right to
credit bid on behalf of all Lenders in respect of their Loans and all other
Obligations of Borrower under the Loan Documents.
(b) Except through the Agent, no Lender shall collect, take possession of,
foreclose upon, or exercise any rights or remedies with respect to the
Collateral or Borrower, judicially or non-judicially, in order to satisfy or
collect any Obligations or attempt to do any of the foregoing.
(c) If Collateral is acquired by the Agent by foreclosure sale or otherwise,
at the option of the Agent, title may be taken in the name of the Agent or in
the name of a corporation affiliated with the Agent or other nominee designated
by the Agent, in any case, for the ratable benefit of the Lenders subject to the
terms of this Agreement. Although the Agent shall consult with the Lenders as
to the general operation and disposition of any Collateral for which title has
been acquired through foreclosure or otherwise, the consent of the Lenders shall
not be required for matters and decisions by the Agent relating to the
management, operation, or repair of the Collateral so acquired.
(d) The costs of repossession, sale, possession and management (including,
without limitation, any costs of holding any Collateral the title to which is
acquired by the Agent on behalf of the Lenders), and distribution shall be borne
Pro Rata by Lenders until repaid by Borrower. Each Lender shall reimburse the
Agent for its Pro Rata share of all such costs promptly upon demand. Without
limiting any obligations of one Lender to reimburse the Agent as contained
herein, in the event of Borrower's failure to pay taxes, assessments, insurance
premiums, claims against the Collateral or any other amount required to be paid
by Borrower pursuant to any Loan Documents, the Agent may (but shall not be
obligated to) advance amounts necessary to pay the same, and each Lender agrees
to reimburse the Agent promptly upon demand for its Pro Rata share of any such
payments, provided Agent has advanced such amounts with the approval of the
Majority Lenders.
8.3 Additional Agreements Regarding Collateral.
(a) Notwithstanding any contrary priority which may be established by (a) the
filing dates of any financing statements in favor of Agent or any Lender alone,
(b) the recording dates of any other security perfection documents, or (c)
possession of any of the Collateral by Agent or any Lender, the parties agree
that as among the Lenders, the Lien of each Lender in the Collateral shall be of
equal rank and priority to the other Lender's Liens in the same Collateral, and
the Lien of each Lender in the Collateral shall be deemed an undivided Pro Rata
security interest in all items of Collateral, all as more particularly provided
in the Security Agreement. The equality in priority and pari passu nature of
the Lenders' Liens are applicable irrespective of: the time or order of
attachment or perfection of security interests; the time or order of filing of
any Security Documents; or the time of giving or failure to give notice of the
acquisition or expected acquisition of purchase money or other security
interests.
(b) Agent is acting for the Lenders for purposes of convenience in reviewing
and approving Collateral and in enforcing the rights and remedies of the Lenders
arising after an Event of Default and, although Agent shall have the right, it
shall have no obligation (except as set forth in Article 9 below) to inspect or
monitor any Collateral or to determine whether any
29
Default or Event of Default has occurred under the Loan Documents. The Agent
shall not be responsible for the performance or observance of any term, covenant
or condition on the part of Borrower under the Loan Documents. Each Lender shall
undertake such inspections or other monitoring of the Collateral and Borrower's
observance of the terms of such documents as such Lender deems appropriate for
its own purposes, and agrees that it shall not be relying upon the Agent for the
same. Notwithstanding the foregoing limitations on the obligations of Agent with
respect to the Collateral, Agent shall take such steps on behalf of the Lenders
to perfect initially the Lenders' Lien on Collateral as are customarily taken by
commercial lenders on loans and collateral of the type and amounts which are the
subject of this Agreement, including the filing of one or more financing
statements against Borrower from time to time in appropriate jurisdictions
describing the Collateral.
(c) If any Lender obtains possession of any Collateral, such Lender shall hold
such Collateral in trust for the Pro Rata benefit of all Lenders, and shall
deliver possession of such Collateral to the Agent as soon as practicable. Each
Lender agrees to cooperate with each other Lender and the Agent in its efforts
to realize upon Collateral and to exercise the rights of Lenders under the
Security Documents, including the execution of such instruments, powers of
attorney or other documents as Agent may require to perform in such capacity.
(d) Each of the Lenders and the Agent agrees that any time it receives or
otherwise is in possession of any Collateral, whether through foreclosure,
bankruptcy, insolvency proceedings or otherwise, such Collateral and any
proceeds thereof shall be received or held by such Lender or the Agent as a
bailee for the other Lenders for purposes of: maintaining the perfection of each
other party's security interests in such Collateral; Pro Rata distribution among
the Lenders; and application to their respective claims against Borrower as
provided herein and in any other Loan Document.
ARTICLE 9 - THE AGENT
9.1 Appointment, Powers and Immunities. Each Lender hereby irrevocably
appoints and authorizes Agent to act as its agent hereunder, under the Security
Documents and the other Loan Documents with such powers as are specifically
delegated to the Agent by the terms of this Agreement, the Security Documents
and the other Loan Documents together with such other powers as are reasonably
incidental thereto. The Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement, the Security Documents and the
other Loan Documents and shall not be a trustee for any Lender. The Agent shall
not be responsible to the Lenders for any recitals, statements, representations
or warranties contained in this Agreement, the Security Documents, or the other
Loan Documents, or in any certificate or other document referred to or provided
for in, or received by any of them under, this Agreement, the Security Documents
or the other Loan Documents, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, the Security
Documents, the other Loan Documents, or any other document referred to or
provided for herein or therein, or for the collectibility of the Loans or for
the validity, effectiveness or value of any interest or security covered by the
Security Documents or for the value of any Collateral or for the validity or
effectiveness of any assignment, mortgage, pledge, security agreement, financing
statement, document or instrument, or for any failure by the Borrower to perform
any of its obligations
30
hereunder or under the other Loan Documents. Agent may employ agents and
attorneys-in-fact and shall not be answerable, except as to money or securities
received by it or its authorized agents, for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. Neither
Agent nor any of its directors, officers, employees or agents shall be liable or
responsible for any action taken or omitted to be taken by it or them hereunder,
under the Security Documents or the other Loan Documents or in connection
herewith or therewith, except for its or their own gross negligence, willful
misconduct, or breach of this Agreement.
9.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, facsimile transmission, or email) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper person or
persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not
expressly provided for by this Agreement, the Security Documents or the other
Loan Documents, Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder, under the Security Documents or the other
Loan Documents in accordance with instructions signed by the Majority Lenders,
and such instructions of the Majority Lenders and any action taken or failure to
act pursuant thereto shall be binding on all of the Lenders.
9.3 Knowledge of Default; Cross Defaults. Agent shall not be deemed to
have knowledge of the occurrence of a default or event of default, however
defined in any Loan Document, unless Agent has received notice from a Lender or
the Borrower specifying such default or event of default and stating that such
notice is a "Notice of Default". In the event that Agent receives such a notice
of the occurrence of a default or event of default, Agent shall give notice
thereof to the Lenders. The occurrence of an Event of Default under this
Agreement shall constitute an Event of Default under each other Loan Document.
Upon becoming aware of the occurrence of an Event of Default under this
Agreement, a Lender shall give notice thereof to all Lenders.
9.4 Rights as a Lender. With respect to its Commitment and the Loans
made by it, Agent in its capacity as a Lender hereunder shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not acting as an Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include Agent in its individual
capacity.
9.5 Indemnification. The Lenders shall indemnify Agent ratably in
accordance with the aggregate principal amount of the Loans made by the Lenders
(or, if no Loans are at the time outstanding, ratably in accordance with their
respective Commitments), for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever that may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement, the Security Documents or any of the other Loan Documents or any
other documents contemplated by or referred to herein or therein or the
transactions contemplated by or referred to herein or therein or the
transactions contemplated hereby and thereby (but excluding, unless a default or
event of default has occurred and is continuing, normal administrative costs and
expenses incident to the performance of its agency duties hereunder or under the
Security Documents) or the enforcement of any of the terms hereof or of the
Security Documents, or of any such other documents,
31
provided that no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence, breach of this Agreement, or willful
misconduct of the party to be indemnified.
9.6 Failure to Act. Except for action expressly required of an Agent
hereunder or under the Security Documents, Agent shall in all cases be fully
justified in failing or refusing to act hereunder or thereunder unless it shall
be indemnified to its satisfaction by the Lenders against any and all liability,
cost and expense that may be incurred by it by reason of taking or continuing to
take any such action.
9.7 Resignation or Removal of Agent. If at any time Agent deems it
advisable, in its sole discretion, it may submit to each of the Lenders a
written notification of its resignation as Agent under this Agreement and the
Security Documents, such resignation to be effective on the thirtieth (30th) day
after the date of such notice. Agent may be removed at any time, with or
without cause, by vote of the Majority Lenders. Upon any such resignation or
removal, the Majority Lenders shall have the right to appoint a successor Agent
from among the Lenders. If no successor Agent shall have been so appointed by
the Majority Lenders and accepted such appointment within 30 days after the
retiring Agent's giving of notice of resignation, then the retiring Agent may,
on behalf of Lenders, appoint a successor Agent, which successor Agent shall be
either an existing Lender or a commercial bank organized under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $100,000,000, and which successor Agent (if not also a
Lender), if no event of default on the part of Borrower shall have occurred and
be continuing, shall be reasonably satisfactory to Borrower. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
Borrower and the Lenders shall execute such documents as shall be necessary to
effect such appointment. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 9.7 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
9.8 Credit Decision. Each Lender acknowledges that none of Agent or the
other Lenders has made any representation or warranty to it, and that no act by
Agent or one Lender hereinafter taken, including any review of the affairs of
Borrower, shall be deemed to constitute any representation or warranty by the
Agent or such Lender to any other Lender. Each Lender represents to the other
Lenders that it has, independently and without reliance upon any other Lender
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower, and
all applicable bank, lending, interest rate and securities regulatory laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to Borrower thereunder. Each
Lender also represents that it will, independently and without reliance upon any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of Borrower. Except for any notices, reports and
other documents expressly herein required to be furnished to other Lenders by a
Lender, such Lender
32
shall not have any duty or responsibility to provide such other Lenders with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of Borrower which
may come into the possession of any of such Lender.
9.9 Lenders' Representations Regarding IRS Withholding; Delivery of Tax
Forms. To the extent Agent may hold from time to time payments for the
account of the Lenders, each Lender represents and agrees as follows:
(a) Lender represents and warrants that it is entitled to receive any payments
under the Loan Documents to which it is a party without the withholding of any
tax, and will furnish to the Agent such forms, certifications, statements and
other documents as Agent may request from time to time to evidence such Lender's
exemption from the withholding of any tax imposed by any jurisdiction or to
enable Agent to comply with any applicable laws or regulations relating thereto.
(b) Without limiting the effect of the foregoing, if Lender is not created or
organized under the laws of the United States or any state thereof, Lender
further represents and warrants (i) that it is engaged in the conduct of a
business within the United States and that the payments made hereunder are or
are reasonably expected to be effectively connected with the conduct of that
trade or business and are or will be includible in its gross income; or (ii) if
Lender is not engaged in a U.S. trade or business with which such payments are
effectively connected, that Lender is entitled to the benefits of a tax
convention which exempts the income from U.S. withholding tax and that it has
satisfied all requirements to qualify for the exemption from tax.
(c) Lender agrees that it will, immediately upon the request of Agent, furnish
to Agent Form 4224 or Form 1001 of the Internal Revenue Service, or such other
forms, certifications, statements or documents, duly executed and completed by
Lender as evidence of Lender's exemption from the withholding of U.S. tax with
respect thereto. If Lender determines that, as a result of any change in
applicable law, regulation, or treaty or in any official application or
interpretation thereof, it ceases to qualify for exemption from any tax imposed
by any jurisdiction with respect to payments made hereunder, Lender shall
promptly notify Agent of such fact and Agent may, but shall not be required to
withhold the amount of any such applicable tax from amounts paid to Lender
hereunder. Agent shall not be obligated to make any payments hereunder to
Lender in respect of Lender's Loan until Lender shall have furnished to Agent
the requested form, certification, statement or document and may withhold the
amount of such applicable tax from amounts paid to Lender hereunder.
(d) Lender shall reimburse, indemnify and hold Agent harmless for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed upon, incurred by or asserted against Agent due to its reliance upon the
representation hereby made that Lender is exempt from withholding of tax.
Unless Agent receives written notice to the contrary, Lender shall be deemed to
have made the representations contained in this Section 9.10 and in each
subsequent tax year of Lender.
33
ARTICLE 10 - GENERAL PROVISIONS
10.1 Notices. Any notice given by any party under any Loan Document shall
be in writing and personally delivered, sent by overnight courier, or United
States mail, postage prepaid, or sent by facsimile or other authenticated
message, charges prepaid, to the other party's or parties' addresses shown on
Exhibit "A". Each party may change the address or facsimile number to which
-----------
notices, requests and other communications are to be sent by giving written
notice of such change to each other party. Notice given by hand delivery shall
be deemed received on the date delivered; if sent by overnight courier, on the
next business day after delivery to the courier service; if by first class mail,
on the third business day after deposit in the U.S. Mail; and if by facsimile,
on the date of transmission.
10.2 Binding Effect. The Loan Documents shall be binding upon and inure
to the benefit of Borrower, Agent and Lenders and their respective successors
and assigns; provided, however, that Borrower may not assign or transfer
Borrower's rights or obligations under any Loan Document without the prior
written consent of all Lenders, unless Borrower remains primarily liable for any
obligations so assigned or delegated in which case the prior written consent of
the Majority Lenders shall be required for such assignment. Each Lender
reserves the right to sell, assign, transfer, negotiate or grant participations
in all or any part of, or any interest in, such Lender's rights and obligations
under the Loan Documents; provided, that no Lender shall delegate or transfer
any of its obligations or duties hereunder for any reason (except as collateral
security for a Lender's own obligations for borrowed money), without the prior
written approval of the Majority Lenders, which will not be unreasonably
withheld, and without the prior written approval of the Borrower which will not
be unreasonably withheld (any such withholding being deemed unreasonable if
evidence of the ability of the assignee to perform the assigning Lender's
financial obligations under this Agreement has been provided to Borrower);
notwithstanding the foregoing, VLL may assign to ▇▇▇▇▇▇ Financial or its
affiliate up to $3,000,000 of VLL's Commitment without need for the consent of
the other Lenders or Borrower. Upon the acceptance of an assignment of all or a
portion of a Lender's Commitment and execution of this Agreement, the assignee
shall be a party to this Agreement and have the rights and obligations of a
Lender hereunder to the extent that such rights and obligations have been
assigned by the assignor Lender, and such assignor Lender shall, to such extent,
relinquish its rights and be released from its obligations under this Agreement.
In connection with any of the foregoing, Lenders may disclose all documents and
information which Lenders now or hereafter may have relating to the Loans,
Borrower, or its business; provided that any person who receives such
information shall have agreed in writing in advance to maintain the
confidentiality of such information on terms reasonably acceptable to Borrower.
Each Lender agrees that if the assignee of any Lender is a creditor of such
Lender to whom such Lender has granted a security interest in this Agreement,
then following the occurrence of an event of default (however defined) under or
with respect to the indebtedness held by such assignee or the occurrence of an
event which with the giving of notice or the passage of time or both would
constitute such an event of default, all rights (but not the obligations) of the
assignor Lender under this Agreement shall thereafter be exercisable solely by
such assignee except to the extent such assignee may otherwise consent in
writing.
10.3 No Waiver. Without the written consent of each Lender affected
thereby (and the Agent if expressly required in this Agreement or any of the
Loan Documents), no amendment,
34
modification or waiver of any provision of this Agreement or any of the other
Loan Documents shall be effective if the result of which would be to (i) extend
the Commitment Termination Date, (ii) extend the maturity date of, or otherwise
forgive or waive default in payment of, any payment of principal or interest due
from the Borrower under the Notes, (iii) change the rate of interest applicable
to any Loan, (iv) release the Lien on any material portion of the Collateral
granted under any of the Security Documents except as and to the extent
expressly contemplated under the Security Agreement, (v) change any provision of
this Agreement, or any of the Security Documents which, by its terms, requires
the consent of all Lenders, (vi) reduce the percentage specified in the
definition of Majority Lenders, or (vii) change the Commitment set forth on
Exhibit "A" hereto with respect to any Lender or increase the percentages
-----------
specified in the definition of Borrowing Base. No provision of Section 9 shall
be amended or otherwise modified without the written consent of the Agent. Each
Lender agrees that if the assignee of any Lender is a creditor of such Lender to
whom such Lender has granted a security interest in this Agreement, then
following the occurrence of an event of default (however defined) under or with
respect to the indebtedness held by such assignee or the occurrence of an event
which with the giving of notice or the passage of time or both would constitute
such an event of default, the written consent of such assignee, rather than of
such assignor Lender, shall be required for any modification or amendment to
this Agreement. Any waiver, consent or approval by Lenders of any Event of
Default or breach of any provision, condition, or covenant of any Loan Document
must be in writing and shall be effective only to the extent set forth in
writing. No waiver of any breach or default shall be deemed a waiver of any
later breach or default of the same or any other provision of any Loan Document.
No failure or delay on the part of Agent or any Lender in exercising any power,
right, or privilege under any Loan Document shall operate as a waiver thereof,
and no single or partial exercise of any such power, right, or privilege shall
preclude any further exercise thereof or the exercise of any other power, right
or privilege. Lenders have the right at their sole option to continue to accept
interest and/or principal payments due under the Loan Documents after default,
and such acceptance shall not constitute a waiver of such default, if a payment
default under Section 7.1(a), or an extension of the Maturity Date unless all
Lenders agree otherwise in writing, and in the case of other defaults unless the
Majority Lenders agree otherwise in writing.
10.4 Rights Cumulative. All rights and remedies existing under the Loan
Documents are cumulative to, and not exclusive of, any other rights or remedies
available under contract or applicable law.
10.5 Unenforceable Provisions. Any provision of any Loan Document
executed by Borrower which is prohibited or unenforceable in any jurisdiction,
shall be so only as to such jurisdiction and only to the extent of such
prohibition or unenforceability, but all the remaining provisions of any such
Loan Document shall remain valid and enforceable.
10.6 Accounting Terms. Except as otherwise provided in this Agreement,
accounting terms and financial covenants and information shall be determined and
prepared in accordance with GAAP.
35
10.7 Indemnification; Exculpation.
(a) Borrower shall pay and protect, defend and indemnify Agent, each Lender
and their respective employees, officers, directors, shareholders, affiliates,
correspondents, agents and representatives (collectively "Indemnitees") against,
and hold each Indemnitee harmless from, all claims, actions, proceedings,
liabilities, damages, losses, expenses (including, without limitation,
attorneys' fees and costs) and other amounts incurred by such Indemnitee,
arising from (i) the matters contemplated by this Agreement or any other Loan
Documents or (ii) any contention that Borrower has failed to comply with any
law, rule, regulation, order or directive applicable to Borrower's business;
provided, however, that this indemnification shall not apply to any of the
foregoing incurred solely as the result of such Indemnitee's negligence or
willful misconduct.
(b) Lenders shall indemnify Borrower ratably in accordance with the aggregate
principal amount of Loans made by the Lenders (or if no Loans are then
outstanding, ratably in accordance with their respective Commitments) against,
and hold Borrower harmless from, all claims, actions, proceedings, liabilities,
damages, losses, expenses (including, without limitation, attorneys' fees and
costs) and other amounts incurred by Borrower arising from any contention that
one or more of the Lenders has failed to comply with any law, rule, regulation,
order or directive applicable to Lenders' business; provided, however, that this
indemnification shall not apply to any of the foregoing incurred solely as the
result of the gross negligence or willful misconduct of Borrower or any of its
officers, directors or agents.
(c) The indemnification in paragraphs (a) and (b) shall survive the payment
and satisfaction of all of Borrower's Obligations to the Lenders.
10.8 Reimbursement. Borrower shall reimburse Agent and the Lenders for
all costs and expenses, including without limitation reasonable attorneys' fees
and disbursements expended or incurred by Agent and the Lenders in any
arbitration, mediation, judicial reference, legal action or otherwise in
connection with (a) the preparation and negotiation of the Loan Documents, but
not to exceed $25,000.00 in aggregate, (b) the amendment and enforcement of the
Loan Documents, including without limitation during any workout, attempted
workout, and/or in connection with the rendering of legal advice as to Agent and
Lenders' rights, remedies and obligations under the Loan Documents, (c)
collecting any sum which becomes due Lenders under any Loan Document, (d) any
audits, in accordance with Section 5.2(f) of this Agreement, (e) any proceeding
for declaratory relief, any counterclaim to any proceeding, or any appeal, or
(f) the protection, preservation or enforcement of any rights of Agent and the
Lenders. For the purposes of this section, attorneys' fees shall include,
without limitation, fees incurred in connection with the following: (1)
contempt proceedings; (2) discovery; (3) any motion, proceeding or other
activity of any kind in connection with an Insolvency Proceeding; (4)
garnishment, levy, and debtor and third party examinations; and (5) post-
judgment motions and proceedings of any kind, including without limitation any
activity taken to collect or enforce any judgment. All of the foregoing costs
and expenses shall be payable upon demand by Agent, and if not paid within
forty-five (45) days of presentation of invoices shall bear interest at the
highest applicable Default Rate. Borrower shall have all rights afforded under
Section 1717 of the California Civil Code, including rights to recover its
attorneys' fees and costs as a prevailing party in any action on or under this
Agreement.
36
10.9 Time of Essence. Time is of the essence for the performance of all
obligations set forth in this Agreement.
10.10 Execution in Counterparts. This Agreement may be executed in any
number of counterparts which, when taken together, shall constitute but one
agreement.
10.11 Entire Agreement. The Loan Documents are intended by the parties as
the final expression of their agreement and therefore contain the entire
agreement between the parties and supersede all prior understandings or
agreements concerning the subject matter hereof. This Agreement may be amended
only in a writing signed by Borrower, Agent and Lenders.
10.12 Interest Adjustment.
Notwithstanding anything to the contrary contained in this Agreement or
any Note, the rate of interest payable on any Note shall never exceed the
maximum rate of interest permitted under applicable law. If at any time the
rate of interest otherwise prescribed herein shall exceed such maximum rate, and
such prescribed rate is thereafter below such maximum rate, the prescribed rate
shall be increased to the maximum rate for such period of time as is required so
that the total amount of interest received by the obligee under such Note is
that which would have been received by such obligee except for the operation of
the first sentence of this Section 11.13.
10.13 Governing Law and Jurisdiction.
(a) THIS AGREEMENT AND THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE
UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF BORROWER, AGENT AND LENDERS CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH OF BORROWER, AGENT AND LENDERS IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. BORROWER, AGENT AND LENDERS EACH
WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
10.14 Waiver of Jury Trial. BORROWER, AGENT AND LENDERS EACH WAIVES ITS
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF
37
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. BORROWER, AGENT AND LENDERS EACH AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING
THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL
BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEMS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
10.15 Relationship of Parties. Neither the making of their respective
Commitments to Borrower, the execution of this Agreement, the Loan Agreements or
the other Loan Documents, nor any agreement to share any proceeds or Collateral,
nor any Lender acting as Agent is intended to be, nor shall it be construed to
be, the formation of a partnership or joint venture among the Lenders or the
creation of any express, implied or constructive trust relationship among them.
Lenders agree that no Lender is acting as a trustee for the others.
10.16 Counterparts. This Agreement may be executed in any number of
counterparts and by facsimile with the same effect as if the parties had all
signed the same document in ink. All counterparts shall be construed together
and shall constitute one agreement.
38
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BORROWER: CORVIS CORPORATION
--------
By: ______________________________
Name: ______________________________
Title: ______________________________
LENDERS: VENTURE LENDING & LEASING II, INC.,
------- as a Lender and in its capacity as Agent
By: ______________________________
Name: ______________________________
Title: ______________________________
MMC/GATX PARTNERSHIP NO. 1
By: GATX Capital Corporation, its General Partner
By: ______________________________
Name: ______________________________
Title: ______________________________
THIRD COAST CAPITAL
By: ______________________________
Name: ______________________________
Title: ______________________________
PRIVATE EQUITY FINANCE, LTD.
By: ______________________________
Name: ______________________________
Title: ______________________________
FINOVA CAPITAL CORPORATION
By: ______________________________
Name: ______________________________
Title: ______________________________
39
LINC CAPITAL, INC.
By: ______________________________
Name: ______________________________
Title: ______________________________
LIGHTHOUSE CAPITAL PARTNERS III. L.P.
By: ______________________________
By: ______________________________
Name: ______________________________
Title: ______________________________
COMDISCO, INC.
By: ______________________________
Name: ______________________________
Title: ______________________________
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: ______________________________
Name: ______________________________
Title: ______________________________
40
Exhibit "A"
Addresses; Commitments; Wire Instructions for Payments
---------------------------------------------------------------------------------------------------------------
Name of Lender and Address for Notices Wire Transfer Instructions (or address) for Commitments
Payments
---------------------------------------------------------------------------------------------------------------
Venture Lending & Leasing II, Inc. Bank Name: Investors Bank & Trust $10,000,000
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ABA Routing No.: ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Bank Address:
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Account No. ▇▇▇▇▇▇▇
▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ F/C Client Funds #56930395
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------
MMC/GATX Partnership No. 1 Bank Name: NationsBank $ 3,500,000
c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Company Bank Address: ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ABA Routing No.: ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Account No. ▇▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Reference: Corvis Invoice #_______
email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
---------------------------------------------------------------------------------------------------------------
Private Equity Finance Ltd. Banupon a certificate from the office of the
▇.▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ dated July ▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Center 1999 k Name: Bank ▇. ▇▇▇▇▇▇▇▇ & Co. ▇▇
▇▇▇▇ Bay Road Bank Address: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇-▇▇▇▇
British West Indies Zurich, Switzerland
Fax: ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇ SWIFT Code: ▇▇▇▇▇▇▇▇
email: ▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇ Account: PEHFIN CAY
Beneficiary: Private Equity Holding Finance Ltd.,
Grand Cayman
Reference: Corvis Invoice #___
---------------------------------------------------------------------------------------------------------------
Third Coast Capital Bank Name: Fleet Bank, N.A. $ 5,000,000
Attn: Director of Operations Bank Address: New York, NY
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ABA Routing No.: 021 200 339
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Account No. ▇▇▇▇-▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Account Name: DVI Financial Services / Third
email for administrative contact, ▇▇▇▇ Coast Capital
Tarinelli: ▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Reference: Corvis Invoice #___
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
FINOVA Capital Corporation Bank Name: Citibank, N.A. $ 5,000,000
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank Address: New York, NY
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ABA Routing No.: ▇▇▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Account No. ▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ For the account of Finova Capital Corporation
Reference:
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------
LINC Capital, Inc. Bank Name: Fleet Bank, N.A. $ 2,000,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, 10/th/ Floor Bank Address:
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ABA Routing No.: ▇▇▇-▇▇▇-▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇ Account No. ▇▇▇▇-▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Reference: Corvis Invoice #___
email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
---------------------------------------------------------------------------------------------------------------
Lighthouse Capital Partners III, L.P. Bank Name: Imperial Bank $ 5,000,000
c/o Lighthouse Capital Partners Bank Address: Santa ▇▇▇▇▇ Valley Regional Office
▇▇▇ ▇▇▇▇▇'▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ABA Routing No.: ▇▇▇▇▇▇▇▇▇
Suite 260 Account No. ▇▇-▇▇▇-▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Credit to Lighthouse Capital Partners III, L.P.
Attn: Director of Operations
Fax: ▇▇▇-▇▇▇-▇▇▇▇
email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
---------------------------------------------------------------------------------------------------------------
Transamerica Business Credit Corporation Bank Name: The First National Bank of Chicago $ 3,000,000
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ Bank Address: One First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ IL 60670
Fax: ▇▇▇-▇▇▇-▇▇▇▇ ABA Routing No.: ▇▇▇-▇▇▇-▇▇▇
Account No.: 55-75427
Reference: Corvis Invoice #___
---------------------------------------------------------------------------------------------------------------
Comdisco, Inc. Bank Name: Bank of America $ 1,000,000
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ Bank Address: ▇▇▇ ▇▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ABA Routing No.:
Attn: Venture Group 071000039
Administrative contact: Account No. 81882-00644
Vika Tonga Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Comdisco Ventures
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇. ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Total Commitments $39,500,000
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Borrower's Address for Notices:
Corvis Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
---------------------------------------------------------------------------------------------------------------
Exhibit "B"
[Note No. X-XXX]
FORM OF PROMISSORY NOTE
$____________________ ____________________, 199_
San Jose, California
The undersigned ("Borrower") promises to pay to the order of [Insert
--------
Lender's Name] , a __________ corporation ("Lender") at its office at
----------------
_____________________, or at such other place as Lender may designate in
writing, in lawful money of the United States of America, the principal sum of
______________________________ Dollars ($__________), with Basic Interest
thereon from the date hereof until maturity, whether scheduled or accelerated,
at a fixed rate per annum of eight and one-half of one percent (8.50%), and a
Terminal Payment in the sum of [14% of face amount if a Working Capital Loan,
------------------------------------------------
or 15% of face amount if an Equipment Loan] Dollars ($__________) payable on
---------------------------------------------
the Maturity Date.
This Note is issued pursuant to the Amended and Restated Loan Agreement
dated as of June 30, 1999 (the "Loan Agreement"), among Borrower, Lender and
other lending parties, which Loan Agreement shall govern the rights and
obligations of Borrower with respect to all obligations hereunder. Each
capitalized term not otherwise defined herein shall have the meaning set forth
in the Loan Agreement. The Loan Agreement contains provisions for the
acceleration of the maturity of this Note upon the happening of certain stated
events.
Principal of and interest on this Note shall be payable as follows:
On the Borrowing Date, Borrower shall pay (i) Basic Interest, in advance,
on the outstanding principal balance of this Note at the Designated Rate for the
period from the Borrowing Date through [the last day of the same month] ;
---------------------------------------
and (ii) a first (1st) amortization installment of principal and Basic Interest
in the amount of _________________, in advance for the month of [ first full
-----------
month after Borrowing Date ] and (iii) [a thirty-sixth (36/th/), if a Working
----------------------------
Capital Loan, or a forty-second (42/nd/) if an Equipment Loan] amortization
installment of principal and Basic Interest in the amount of
$__________________, in advance for the month of [date of last regular
-----------------------
amortization payment] .
-----------------------
Commencing on the first day of the second full month after the Borrowing
Date, and continuing on the first day of each consecutive month thereafter,
principal and Basic Interest shall be payable, in advance, in [thirty-three
------------
(33), if a Working Capital Loan, or thirty-nine (39), if an Equipment Loan],
--------------------------------------------------------------------------
equal consecutive installments of _________________________________ Dollars
($__________) each, with a [34/th/ or 40/th/] installment equal to the entire
----------------
unpaid principal balance and accrued Basic Interest on _______________, 200__.
The Terminal Payment amount, if any, shall be payable on [one month later]
----------------------
, 200__.
Any unpaid payments of principal or interest on this Note shall bear
interest from their respective maturities, whether scheduled or accelerated, at
a rate per annum equal to the Default Rate. Borrower shall pay such interest on
demand.
Interest, charges and fees shall be calculated for actual days elapsed on
the basis of a 360-day year, which results in higher interest, charge or fee
payments than if a 365-day year were used. In no event shall Borrower be
obligated to pay interest, charges or fees at a rate in excess of the highest
rate permitted by applicable law from time to time in effect.
If Borrower is late in making any payment under this Note by more than
fifteen (15) days, Borrower agrees to pay a "late charge" of five percent (5%)
of the installment due, but not less than fifty dollars ($50.00) for any one
such delinquent payment. This late charge may be charged by Lender for the
purpose of defraying the expenses incidental to the handling of such delinquent
amounts. Borrower acknowledges that such late charge represents a reasonable
sum considering all of the circumstances existing on the date of this Note and
represents a fair and reasonable estimate of the costs that will be sustained by
Lender due to the failure of Borrower to make timely payments. Borrower further
agrees that proof of actual damages would be costly and inconvenient. Such late
charge shall be paid without prejudice to the right of Lender to collect any
other amounts provided to be paid or to declare a default under this Note or any
of the other Loan Documents or from exercising any other rights and remedies of
Lender.
Lender is hereby authorized by Borrower to endorse on Lender's books and
records the Loan made by Lender under this Note and the amount of each payment
or prepayment of principal of such Loan received by Lender; it being understood,
however, that failure to make any such endorsement (or any errors in notation)
shall not affect the obligations of Borrower with respect to the Loan made
hereunder, and payments of principal by Borrower shall be credited to Borrower
notwithstanding the failure to make a notation (or any errors in notation)
thereof on such books and records.
Borrower promises to pay Lender all costs and expenses of collection of
this Note and to pay all reasonable attorneys' fees incurred in such collection
or in any suit or action to collect this Note or in any appeal thereof.
Borrower waives presentment, demand, protest, notice of protest, notice of
dishonor, notice of nonpayment, and any and all other notices and demands in
connection with the delivery, acceptance, performance, default or enforcement of
this Note, as well as any applicable statute of limitations. No delay by Lender
in exercising any power or right hereunder shall operate as a waiver of any
power or right. Time is of the essence as to all obligations hereunder.
This Note shall be governed by, and construed in accordance with, the laws
of the State of California.
CORVIS CORPORATION
By: ______________________________
Name: ______________________________
Its:_________________________________
Exhibit "C"
FORM OF BORROWING REQUEST
[Date]
Venture Lending & Leasing II, Inc., as Agent
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Corvis Corporation
------------------
Gentlemen:
Reference is made to the Amended and Restated Loan Agreement dated as of
June 30, 1999 (as amended from time to time, the "Loan Agreement", the
capitalized terms used herein as defined therein), among Corvis Corporation (the
"Company"), you and the Lenders.
The undersigned is the _____________________ of the Company, and hereby
requests on behalf of the Company a Loan under the Loan Agreement, and in that
connection certifies as follows:
1. The type of the proposed Loan is [an Equipment Loan][a Working Capital
Loan]. The amount of the proposed Loan is ___________________________ and
__/100 Dollars ($______________). The Borrowing Date of the proposed Loan is
___________ __, 199_.
2. [If an Equipment Loan] The amount of the Equipment Loan does not
exceed 100% of the invoice amounts of all Equipment being financed with the
proceeds of such Loan, as provided in Section 2.1(b) of the Loan Agreement.
[If a Working Capital Loan] The Company is currently in compliance
with, and after giving effect to the proposed Loan will be, in compliance with
the Borrowing Base.
3. As of this date, no Default or Event of Default has occurred and is
continuing, or will result from the making of the proposed Loan, the
representations and warranties of the Company contained in Article 3 of the Loan
Agreement are true and correct, and the conditions precedent described in
Article 4 of the Loan Agreement have been met.
4. No Material Adverse Change has occurred since the date of the most
recent financial statements submitted to you by the Company.
[5. Any other applicable representations or conditions]
The Company shall notify you promptly before the funding of the Loan if any
of the matters to which I have certified above shall not be true and correct on
the Borrowing Date.
Very truly yours,
______________________________
Name:_________________________
Title: * _____________________
-----------------------
* Must be executed by Borrower's Chief Financial Officer or other executive
officer.
Exhibit "D"
COMPLIANCE CERTIFICATE
Venture Lending & Leasing II, Inc., as Agent
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Corvis Corporation
------------------
Gentlemen:
Reference is made to the Amended and Restated Loan Agreement dated as of
June 30, 1999 (as the same has been and may be amended from time to time, the
"Loan Agreement", the capitalized terms used herein as defined therein), among
Corvis Corporation (the "Company"), you and the Lenders.
The undersigned authorized representative of the Company hereby certifies
that in accordance with the terms and conditions of the Loan Agreement, the
Company is in complete compliance for the financial reporting period ending
___________ with all required financial reporting and financial tests under the
Loan Agreement, except as noted below. Attached herewith are the required
documents supporting the foregoing certification. The undersigned further
certifies that the accompanying financial statements have been prepared in
accordance with Generally Accepted Accounting Principles, and are consistent
from one period to the next, except as explained below.
Indicate compliance status by circling Yes/No under "Complies"
REPORTING REQUIREMENT REQUIRED COMPLIES
Interim Financial Statements Monthly within 30 days YES / NO
Audited Financial Statements FYE within 90 days YES / NO
FINANCIAL COVENANTS REQUIRED COMPLIES
Calculation of Value of Eligible
Inventory, Eligible Accounts and
Aging and Reconciliation of
Accounts Receivable * Monthly within 30 days YES / NO
Customer Listing FYE within 90 days YES / NO
Minimum Monthly Profits Monthly within 30 days YES / NO
Minimum Free Cash and At least $15 MM at all YES/NO
Cash Equivalents times after $25 MM of
Loans funded
REQUIRED EXPLANATIONS:
_______________________________________________________________________________
_______________________________________________________________________________
Very Truly Yours,
____________________________________
Name: _____________________________
Title: _____________________________ **
-----------------
* Attach information sufficient to identify each account debtor by name,
address and contact person, and amount outstanding.
** Must be executed by Borrower's Chief Financial Officer or other executive
officer.
Exhibit "E"
BORROWING BASE CERTIFICATE
Borrower: Corvis Corporation Lender: Venture Lending & Leasing II, Inc.
and Group Lenders
ACCOUNTS RECEIVABLE
1. Accounts Book Value as of _______________ ______________$
2. Additions (please explain on reverse) ______________$
3. Total Accounts ______________$
Accounts receivable deductions (without duplication):
4. Amounts over 90 days due ______________$
5. Other deductions (please explain on reverse) ______________$
6. Total Accounts deductions ______________$
7. Total Eligible Accounts (line #3 minus line #6) ______________$
8. 80% of line #7 ______________$
CASH
9. Cash on Hand [and if being submitted with a Borrowing
Request, the amount of the proposed Loan] ______________$
10. Cash Equivalents ______________$
11. 75% of Total of lines #9 and #10
ELIGIBLE INVENTORY
12. Inventory Value as of __________ ______________$
[see attached listing of amounts on eligible purchase orders]
13. 65% of line #12 ______________$
BORROWING BASE
14. Borrowing Base (total of Lines #8, #11 and #13) ______________$
15. Is Line 14 equal to or greater than 100% of Line 19?
Yes ___ (In compliance)
No ___ (Not in compliance)
BALANCES AND AVAILABILITY
16. Total of Commitments ____________$
17. Aggregate Original Amount of Prior Working Capital Loans ______________$
18. Aggregate Original Amount of Prior Equipment Loans ______________$
19. Present balance owing to Lenders on all Working Capital Loans ______________$
20. Remaining Availability for Equipment Loans
(line #16, minus lines #17 and #18) ______________$
21. Remaining Availability for Working Capital Loans
(lesser of: line #14 minus line #19; or
line #16 minus lines #17 and #18 ) ______________$
[If Lien on Accounts has been subordinated pursuant to Section 2.16]
22. Amount Outstanding Under Other Working Capital Loan Facility _____________$
23. 100% of Lines 7, 9, 10 and 12 _____________$
24. Does Line 23 exceed total of Lines 19 and 22? Yes ___ (In compliance)
No ___ (Not in compliance)
The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan Agreement
among the undersigned, Venture Lending & Leasing II, Inc., as Agent, and the
Lenders party thereto.
COMMENTS:
________________________________________________________________________________
By: ___________________________
Authorized Signer
Exhibit "F"
Form of Security Agreement
Exhibit "G"
Form of Warrant
EXHIBIT TO FINANCING STATEMENT
against
CORVIS CORPORATION ("Debtor")
in favor of
VENTURE LENDING & LEASING II, INC., as Agent ("Secured Party")
___________________________________________________
Item 4 continued:
All of the following personal property of Debtor now owned or hereafter
acquired or arising (defined herein as the "Collateral"):
All Debtor's Accounts, Deposit Accounts, Equipment, Fixtures, General
Intangibles, Goods, Inventory, Rights to Payment, Investment Property and
securities now owned or hereafter acquired (but excluding Intellectual
Property), wherever located, and whether held by Debtor or any third party, and
all royalties, proceeds and products thereof, including all insurance and
condemnation proceeds ("Proceeds"), and all monies now or at any time hereafter
in the possession or under the control of Secured Party or a bailee or affiliate
of Secured Party, including any cash collateral in any cash collateral or other
account, and all Records.
"Account" means a right to payment for goods sold or leased by Debtor or
for services rendered by Debtor, which right is not evidenced by an instrument
or chattel paper, whether or not earned by performance.
"Deposit Accounts" means all Debtor's demand, time, savings, passbook or
similar accounts maintained with a financial institution or credit union, other
than accounts evidenced by a negotiable certificate of deposit.
"Equipment" means all of Debtor's equipment now owned or hereafter
acquired, including but not limited to machinery, machine parts, furniture,
furnishings and all tangible personal property used in the business of Debtor
and all such property which is or is to become fixtures on real property, and
all improvements, replacements, accessions and additions thereto, wherever
located, and all proceeds thereof arising from the sale, lease, rental or other
use or disposition of any such property, including all rights to payment with
respect to insurance or condemnation, returned premiums, or any cause of action
relating to any of the foregoing.
"Fixtures" means all items of personal property of Debtor that are so
related to the real property upon which they are located that an interest in
them arises under real property law, and improvements, replacements, parts,
accessions and additions thereto, and substitutions therefor.
"General Intangibles" means all personal property of Debtor, other than
Goods, not otherwise defined as Collateral, including without limitation all
interests or claims in insurance policies; licenses, permits, franchises and
like privileges or rights issued by any governmental or regulatory authority;
income tax refunds; customer lists; claims and causes of action (whether in
contract, tort or otherwise), judgments and all guaranty
claims, co-op memberships, leasehold interests in personal property, security
interests or other security held by or guaranteed to the Debtor to secure the
payment by an account debtor of any of the Accounts.
"Intellectual Property" means all of Borrower's literary property, trade
names, trade name rights, Trademarks, Trademark rights, copyrights, Patents, and
all applications and licenses therefor;
"Goods" means all money and other personal property of Debtor, other than
General Intangibles, not otherwise defined as Collateral.
"Inventory" means all Debtor's raw materials, advertising, packaging and
shipping materials, work in process, finished goods and goods held for sale or
lease or furnished under contracts of service, and all returned and repossessed
goods, and all goods covered by documents of title, including warehouse
receipts, bills of lading and all other documents of every type covering all or
any part of the Collateral.
"Investment Property" has the meaning ascribed to it in Section 9115 of the
California Uniform Commercial Code.
"Patents" means all of the following: (i) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including, without limitation, registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any state thereof or any other country or any political
subdivision thereof, and (ii) all reissues, divisions, continuations,
continuations-in-part, renewals or extensions thereof.
"Records" means all Debtor's computer programs, software, hardware, source
codes and data processing information, all written documents, books, invoices,
ledger sheets, financial information and statements, and all other writings
concerning or evidencing Collateral .
"Rights to Payment" means all Debtor's accounts, instruments, contract
rights, documents, chattel paper and all other rights to payment, including,
without limitation, the Accounts, all negotiable certificates of deposit and all
rights to payment under any contract or any commercial or standby letter of
credit.
"Trademarks" means all of the following: (i) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, service marks, logos, other source or business identifiers, prints and
labels on which any of the foregoing have appeared or will appear, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all goodwill of business symbolized by any of the foregoing, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state thereof or any other country or
any political subdivision thereof, and (ii) all reissues, divisions,
continuations, continuations-in-part, renewals or extensions thereof.
AMENDMENT NO. 1
TO
AMENDED AND RESTATED LOAN AGREEMENT
This Amendment No. 1 to Amended and Restated Loan Agreement (this
"Amendment") is dated as of August 31, 1999, by and among Corvis Corporation
("Borrower"), and Venture Lending & Leasing II, Inc., in its capacity as Agent
for the Lenders ("Agent") and as a Lender (individually "VLL") and the lenders
listed on the signature page hereto ("Lenders").
Recitals
--------
A. Lenders, Agent and Borrower are parties to an Amended and Restated
Loan Agreement dated as of June 30, 1999 (as amended, modified and supplemented
from time to time, the "Loan Agreement").
B. The parties hereto wish to amend the Loan Agreement to reflect the
fact that prior to the first Borrowing Date under the Loan Agreement, VLL
increased its Commitment under the Loan Agreement from $10,000,000 to
$10,500,000, which increased the Total Commitment from $39,500,000 to
$40,000,000.
C. On or about the date of this Amendment, VLL will also assign Two
Million Five Hundred Thousand Dollars ($2,500,000) of its Commitment to ▇▇▇▇▇▇
Financial, Inc. ("▇▇▇▇▇▇") as contemplated under Section 10.2 of the Loan
Agreement. The parties hereto also wish to amend the Loan Agreement to reflect
that assignment and to clarify certain of its provisions.
D. Each capitalized term used but not otherwise defined herein shall have
the meaning ascribed thereto in the Loan Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Article I
Amendments to Loan Agreement
----------------------------
This Amendment shall be deemed to be an amendment to the Loan Agreement and
shall not be construed in any way as a replacement or substitution therefor.
All of the terms and conditions of, and terms defined in, this Amendment are
hereby incorporated by reference into the Loan Agreement as if such terms and
provisions were set forth in full therein.
1.1 Exhibit "A" to the Loan Agreement is deleted in its entirety and
replaced with the attached Exhibit "A".
1.2 The definition of "Default Rate" in Section 1.1 of the Loan Agreement,
entitled "Definitions," is amended and restated as follows: "'Default Rate' is
defined in Section 2.13."
1.3 The phrase "and the" is added to the first sentence of Subsection (h)
of the definition of "Permitted Liens" after the phrase "by the Agent" and
before the phrase "Lenders in writing prior to the Closing Date".
1.4 The words "release or" in the final sentence of Section 2.16(c) of the
Loan Agreement are hereby deleted.
1.5 The third sentence of Section 9.1 of the Loan Agreement is amended by
adding the words "other party's" after the phrase "[t]he Agent shall not be
responsible to the Lenders for any" and before the phrase "recitals, statements,
representations, or warranties".
1.6 Section 9.3 of the Loan Agreement is hereby amended by adding the
phrase "Except to the extent that it has knowledge in its role as a Lender,"
before the first sentence of that section.
1.7 Section 10.7(b) of the Loan Agreement is amended and restated as
follows:
"Each Lender shall indemnify Borrower against, and hold Borrower harmless
from, all claims, actions, proceedings, liabilities, damages, losses,
expenses (including, without limitation, attorneys' fees and costs) and
other amounts incurred by Borrower arising from the failure of such Lender
to comply with any law, rule, regulation, order or directive applicable to
such Lender's business; provided, however, that this indemnification shall
not apply to any of the foregoing incurred solely as the result of the
gross negligence or willful misconduct of Borrower or any of its officers,
directors or agents. The foregoing provision shall have no effect on any
rights to contribution, subrogation, or any other legal or equitable rights
that any Lender may have with respect to any other Lender."
Article II
Miscellaneous
-------------
2.1 Upon surrender by VLL of its original Warrant for 136,657 shares of
Borrower's Series E Preferred Stock issued pursuant to Section 2.18 of the Loan
Agreement based on VLL's original Commitment of $10,000,000, the Borrower shall
reissue to VLL a replacement Warrant for 109,325 shares of Series E Preferred
Stock, and shall issue to ▇▇▇▇▇▇ a warrant for 34,164 shares of Series E
Preferred Stock.
2.2 Upon surrender of the original Note made by Borrower in favor of VLL
for $3,937,500, the Borrower shall reissue to VLL a replacement Note in the
amount of $3,000,000 and shall issue to ▇▇▇▇▇▇ a Note in the amount of $937,000.
2.3 The Loan Agreement, the other Loan Documents and all agreements,
instruments and documents executed and delivered in connection with any of the
foregoing shall each be deemed to be amended hereby to the extend necessary, if
any, to give effect to the provisions of
this Amendment. Except as so amended hereby, the Loan Agreement and the other
Loan Documents shall remain in full force and effect in accordance with their
respective terms.
IN WITNESS WHEREOF, Borrower, Agent and Lenders have executed this
Amendment as of the date set forth in the preamble hereto.
BORROWER: CORVIS CORPORATION
--------
By: ______________________________
Name: ______________________________
Title: ______________________________
LENDERS: VENTURE LENDING & LEASING II, INC.,
------- as a Lender and in its capacity as Agent
By: ______________________________
Name: ______________________________
Title: ______________________________
MMC/GATX PARTNERSHIP NO. 1
By: GATX Capital Corporation, its General Partner
By: ____________________________
Name: ______________________________
Title: ______________________________
THIRD COAST CAPITAL
a division of DVI Financial Services, Inc.
By: ______________________________
Name: ______________________________
Title: ______________________________
PRIVATE EQUITY FINANCE, LTD.
By: ______________________________
Name: ______________________________
Title: ______________________________
FINOVA CAPITAL CORPORATION
By: ______________________________
Name: ______________________________
Title: ______________________________
LINC CAPITAL, INC.
By: ______________________________
Name: ______________________________
Title: ______________________________
LIGHTHOUSE CAPITAL PARTNERS III. L.P.
By: ______________________________
By: ______________________________
Name: ______________________________
Title: ______________________________
COMDISCO, INC.
By: ______________________________
Name: ______________________________
Title: ______________________________
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: ______________________________
Name: ______________________________
Title: ______________________________
▇▇▇▇▇▇ FINANCIAL, INC.
By: ______________________________
Name: ______________________________
Title: ______________________________
Exhibit "A"
Addresses; Commitments; Wire Instructions for Payments
-----------------------------------------------------------------------------------------------
Name of Lender and Address for Notices Wire Transfer Instructions (or address) Commitments
for Payments
-----------------------------------------------------------------------------------------------
Venture Lending & Leasing II, Inc. Bank Name: Investors Bank & Trust $8,000,000
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ABA Routing No.: ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Bank Address:
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Account No. ▇▇▇▇▇▇▇
▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ F/C Client Funds #56930395
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
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MMC/GATX Partnership No. 1 Bank Name: NationsBank $3,500,000
c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Company Bank Address: ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ABA Routing No.: ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Account No. ▇▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Reference: Corvis Invoice #_______
email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
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Private Equity Finance Ltd. Bank Name: Bank ▇. ▇▇▇▇▇▇▇▇ & Co. AG $5,000,000
▇.▇. ▇▇▇ ▇▇▇▇▇ SMB Bank Address: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇
Grand Pavilion Commerce Center ▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Grand Cayman, Cayman Islands SWIFT Code: ▇▇▇▇▇▇▇▇
British West Indies Account: PEHFIN CAY
Fax: ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇ Beneficiary: Private Equity Holding
email: ▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇ Finance Ltd., Grand Cayman
---------------- Reference: Corvis Invoice #___
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Third Coast Capital, a division of Bank Name: Fleet Bank, N.A. $5,000,000
DVI Financial Services, Inc. Bank Address: New York, NY
Attn: Director of Operations ABA Routing No.: 021 200 339
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ Account No. ▇▇▇▇-▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Account Name: DVI Financial Services/
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Third Coast Capital
email for administrative contact, Reference: Corvis Invoice #___
▇▇▇▇ ▇▇▇▇▇▇▇▇▇:
▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
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1
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FINOVA Capital Corporation Bank Name: Citibank, N.A. $ 5,000,000
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank Address: New York, NY
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ABA Routing No.: ▇▇▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Account No. ▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ For the account of Finova Capital
Corporation
Reference:
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
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LINC Capital, Inc. Bank Name: Fleet Bank, N.A. $ 2,000,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, 10/th/ Floor Bank Address:
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ABA Routing No.: ▇▇▇-▇▇▇-▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇ Account No. ▇▇▇▇-▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Reference: Corvis Invoice #___
email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
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Lighthouse Capital Partners III, L.P. Bank Name: Imperial Bank $ 5,000,000
c/o Lighthouse Capital Partners Bank Address: Santa ▇▇▇▇▇ Valley
▇▇▇ ▇▇▇▇▇'▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ABA Routing No.: ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Account No. ▇▇-▇▇▇-▇▇▇
Attn: Director of Operations Credit to Lighthouse Capital Partners
Fax: ▇▇▇-▇▇▇-▇▇▇▇ III, L.P.
email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
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Transamerica Business Credit Bank Name: The First National Bank of $ 3,000,000
Corporation Chicago
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ Bank Address: One First National Plaza,
Farmington, CT 06032-2571 ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ ABA Routing No.: ▇▇▇-▇▇▇-▇▇▇
Account No.: 55-75427
Reference: Corvis Invoice #___
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Comdisco, Inc. Bank Name: Bank of America $ 1,000,000
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ Bank Address: ▇▇▇ ▇▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ IL
Attn: Venture Group ABA Routing No.:
Administrative contact: 071000039
Vika Tonga Account No. 81882-00644
Comdisco Ventures Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇. ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
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2
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▇▇▇▇▇▇ Financial, Inc. Bank Name: ______________________ $ 2,500,000
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ Bank Address:_____________________
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ _________________________________
Fax: ▇▇▇-▇▇▇-▇▇▇▇ ABA Routing No.: _________________
Account No.: _________________
Reference: Corvis Invoice #___
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Total Commitments $40,000,000
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Borrower's Address for Notices:
Corvis Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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3
AMENDMENT NO. 2
TO
AMENDED AND RESTATED LOAN AGREEMENT
This Amendment No. 2 to Amended and Restated Loan Agreement (this
"Amendment") is dated as of March __, 2000, by and among Corvis Corporation
("Borrower"), and Venture Lending & Leasing II, Inc., in its capacity as Agent
for the Lenders ("Agent") and as a Lender (individually "VLL") and the lenders
listed on the signature page hereto ("Lenders").
Recitals
--------
A. Lenders, Agent and Borrower are parties to an Amended and Restated
Loan Agreement dated as of June 30, 1999 (as amended, modified and supplemented
from time to time, the "Loan Agreement").
B. The parties hereto wish to amend the Loan Agreement to permit Borrower
to incur or issue up to $10,000,000.00 of additional indebtedness.
C. Each capitalized term used but not otherwise defined herein shall have
the meaning ascribed thereto in the Loan Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Article I
Amendments to Loan Agreement
----------------------------
This Amendment shall be deemed to be an amendment to the Loan Agreement and
shall not be construed in any way as a replacement or substitution therefor.
All of the terms and conditions of, and terms defined in, this Amendment are
hereby incorporated by reference into the Loan Agreement as if such terms and
provisions were set forth in full therein.
1.1 Section 6.1 of the Loan Agreement is amended by adding a new clause
(e) at the end thereof as follows: "Up to $10,000,000.00 of Indebtedness in
addition to Indebtedness permitted under clauses (a) through (d) above.
Article II
Miscellaneous
-------------
2.1 The Loan Agreement, the other Loan Documents and all agreements,
instruments and documents executed and delivered in connection with any of the
foregoing shall each be deemed to be amended hereby to the extend necessary, if
any, to give effect to the provisions of this Amendment. Except as so amended
hereby, the Loan
1
Agreement and the other Loan Documents shall remain in full force and effect in
accordance with their respective terms.
IN WITNESS WHEREOF, Borrower, Agent and the undersigned Lenders, who
constitute Majority Lenders, have executed this Amendment as of the date set
forth in the preamble hereto.
BORROWER: CORVIS CORPORATION
--------
By: ______________________________
Name: ____________________________
Title: ___________________________
LENDERS: VENTURE LENDING & LEASING II, INC.,
------- as a Lender and in its capacity as Agent
By: ______________________________
Name: ____________________________
Title: ___________________________
MMC/GATX PARTNERSHIP NO. 1
By: GATX Capital Corporation, its General Partner
By: ______________________________
Name: ____________________________
Title: ___________________________
THIRD COAST CAPITAL
a division of DVI Financial Services, Inc.
By: ______________________________
Name: ____________________________
Title: ___________________________
PRIVATE EQUITY FINANCE, LTD.
By: ______________________________
Name: ____________________________
Title: ___________________________
2
FINOVA CAPITAL CORPORATION
By: ______________________________
Name: ____________________________
Title: ___________________________
LINC CAPITAL, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
LIGHTHOUSE CAPITAL PARTNERS III. L.P.
By: ______________________________
By: ______________________________
Name: ____________________________
Title: ___________________________
COMDISCO, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: ______________________________
Name: ____________________________
Title: ___________________________
▇▇▇▇▇▇ FINANCIAL, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
3