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LOAN MODIFICATION AGREEMENT
BETWEEN: SONUS Pharmaceuticals, a Delaware corporation ("Borrower"), whose
address is 00000 - 00xx Xxxxxx X.X., Xxxxx 000, Xxxxxxx, XX 00000
AND: Silicon Valley Bank ("Silicon"), whose address is 0000 Xxxxxx
Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000;
DATE: September 10, 1997
This Loan Modification Agreement is entered into on the above date by
Borrower and Silicon.
1. Background. Borrower entered into a Loan and Security Agreement with
Silicon (as amended from time to time, the "Loan Agreement"). Capitalized terms
used in this Loan Modification Agreement shall, unless otherwise defined in this
Agreement, have the meaning given to such terms in the Loan Agreement.
Silicon and Borrower are entering into this Agreement to state the terms
and conditions of certain modifications to the Loan Agreement and the Schedule,
as amended prior to the date of this Agreement.
2. Modifications to Loan Agreement and Schedule.
2.1 Section 3.7 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"3.7 Financial Condition and Statements. All financial
statements now or in the future delivered to Silicon have been,
and shall be, prepared in conformity with generally accepted
accounting principles and now and in the future shall completely
and accurately reflect the financial condition of the Borrower,
at the times and for the periods therein stated. Since the last
date covered by any such statement, there has been no material
adverse change in the financial condition or business of the
Borrower. The Borrower is now and shall continue to be solvent.
The Borrower shall provide Silicon: (i) within 30 days after the
end of each month, a monthly financial statement (consisting of a
income statement and balance sheet) prepared by the Borrower in
accordance with generally accepted accounting principles; (ii)
within 20 days after the end of each month, an accounts
receivable report and an accounts payable report, in such form as
Silicon shall reasonably specify; (iii) within 30 days after the
end of each month, a Compliance Certificate in such form as
Silicon shall reasonably specify, signed by the Chief Financial
Officer of the Borrower, certifying that throughout such month
the Borrower was
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in full compliance with all terms and conditions of this
Agreement and the Schedule, and providing such other information
as Silicon shall reasonably request; (iv) within 90 days
following the end of the Borrower' fiscal year, complete annual
CPA-audited financial statements, such audit being conducted by
independent certified public accountants reasonably acceptable to
Silicon, together with an unqualified opinion of such
accountants; and (v) within 5 days of the filing date, any 10Q,
10K or 8K filings made by Borrower with the Securities and
Exchange Commission."
2.2 The Schedule to the Loan Agreement is hereby deleted and
replaced by the Amended and Restated Schedule to Loan and Security Agreement
attached to this Agreement.
2.3 Borrower acknowledges and agrees that all Obligations,
including without limitation Borrower's obligation to repay amounts advanced by
Silicon to Borrower on the terms of the Loan Agreement and Schedule as modified
by this Loan Modification Agreement, are secured by all liens and security
interests granted by Borrower to Silicon in the Loan Agreement.
3. Conditions Precedent. This Loan Modification Agreement shall not take
effect until Borrower delivers to Silicon a Certified Resolution of Borrower and
such other documents as Silicon shall reasonably require to give effect to the
term of this Loan Modification Agreement.
4. No Other Modifications. Except as expressly modified by this Loan
Modification Agreement, the terms of the Loan Agreement, as amended prior to the
date of this Loan Modification Agreement, shall remain unchanged and in full
force and effect. Silicon's agreement to modify the Loan Agreement pursuant to
this Loan Modification Agreement shall not obligate Silicon to make any future
modifications to the Loan Agreement or any other loan document. Nothing in this
Loan Modification Agreement shall constitute a satisfaction of any indebtedness
of any Borrower to Silicon. It is the intention of Silicon and Borrower to
retain as liable parties all makers and endorsers of the Loan Agreement or any
other loan document. Except as provided in the Amended and Restated Schedule to
Loan and Security Agreement attached to this Agreement, no maker, endorser, or
guarantor shall be released by virtue of this Loan Modification Agreement. The
terms of this paragraph shall apply not only to this Loan Modification
Agreement, but also to all subsequent loan modification agreements.
5. Representations and Warranties.
5.1 The Borrower represents and warrants to Silicon that the
execution, delivery and performance of this Agreement are within the Borrower's
corporate powers, and have been duly authorized and are not in contravention of
law or the terms of the Borrower's articles of incorporation, bylaws or of any
undertaking to which the Borrower is a party or by which it is bound.
5.2 The Borrower understands and agrees that in entering into
this Agreement, Silicon is relying upon the Borrower's representations,
warranties and agreements as set forth in
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the Loan Agreement and other loan documents. Borrower hereby reaffirms all
representations and warranties in the Loan Agreement, all of which are true as
of the date of this Agreement.
BORROWER:
SONUS PHARMACEUTICALS, INC.
By: /s/ Xxxxxxx Xxxxxxx
-----------------------------
Title: Chief Financial Officer
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SILICON:
SILICON VALLEY BANK
By: /s/ Xxxxx Xxxxxxx
-----------------------------
Title: Vice President
-----------------------------
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AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
Borrower: Sonus Pharmaceuticals, Inc.
Address: 00000 - 00xx Xxxxxx X.X., Xxxxx 000
Xxxxxxx, XX 00000
Date: September 10, 1997
SECURED LINE OF CREDIT
CREDIT LIMIT: An amount not to exceed $5,000,000.
INTEREST RATE: The interest rate applicable to the Secured Line of Credit
shall be a rate equal to the "Prime Rate" in effect from
time to time, plus 1.00% per annum. Interest calculations
shall be made on the basis of a 360-day year and the
actual number of days elapsed. "Prime Rate" means the rate
announced from time to time by Silicon as its "prime
rate"; it is a base rate upon which other rates charged by
Silicon are based, and it is not necessarily the best rate
available at Silicon. The interest rate applicable to the
Obligations shall change on each date there is a change in
the Prime Rate.
COMMITMENT FEE: $12,500, which is fully earned and payable at closing.
(Any Commitment Fee previously paid by the Borrower in
connection with this loan shall be credited against this
Fee.)
MATURITY DATE: August 31, 1998, at which time all unpaid principal and
accrued but unpaid interest shall be due and payable.
PRIOR NAMES OF
BORROWER: See attached Exhibit A
TRADE NAMES OF
BORROWER: See attached Exhibit A
OTHER LOCATIONS
AND ADDRESSES: See attached Exhibit A
MATERIAL ADVERSE
LITIGATION: See attached Exhibit A
OTHER COVENANTS: Borrower shall at all times comply with all of the
following additional covenants:
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BANKING RELATIONSHIP. Borrower shall at all times maintain
their primary banking relationship with Silicon. Borrower
shall not establish any deposit accounts of any type with
any bank or other financial institution other than Silicon
without Silicon's prior written consent, which consent
shall not be unreasonably withheld.
MINIMUM CASH BALANCE. Borrower shall at all times maintain
cash and cash equivalents of not less than $10,000,000
until all Obligations are repaid in full and the Loan
Agreement is terminated.
CONDITIONS TO
CLOSING: Before requesting any advance, the Borrower shall satisfy
each of the following conditions:
1. Loan Documents:
Silicon shall have received the Loan Modification
Agreement and this Amended and Restated Schedule, executed
by the Borrower, and such guaranties and such loan
documents as Silicon shall require, each duly executed and
delivered by the parties thereto.
2. Documents Relations
to Authority, Etc.
Silicon shall have received each of the following in form
and substance satisfactory to it:
(a) Certified Copies of the Articles of Incorporation
and Bylaws of the Borrower;
(b) A Certificate of Good Standing issued by the
Secretary of State of the Borrower's state of
incorporation and such other states as Silicon may
reasonably request with respect to the Borrower;
(c) A certified copy of a Resolution adopted by the
Board of Directors of the Borrower authorizing the
execution, delivery and performance of this
Agreement, and any other documents or certificates
to be executed by the Borrower in connection with
this transaction;
(d) Incumbency Certificates describing the office and
identifying the specimen signatures of the
individuals signing all such loan documents on
behalf of the Borrower; and
(e) The partnership agreement.
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3. Perfection and
Priority of Security:
Silicon shall have received evidence satisfactory to it
that its security interest in the Collateral has been duly
perfected and that such security interest is prior to all
other liens, charges, security interests, encumbrances and
adverse claims in or to the Collateral other than
Permitted Liens, which evidence shall include, without
limitation, a certificate from the Washington Department
of Licensing showing the due filing and first priority of
the UCC Financing Statements to be signed by the Borrower
covering the Collateral.
4. Insurance: Silicon shall have received evidence satisfactory to it
that all insurance required by this Agreement is in full
force and effect, with loss payee designations and
additional insured designations as required by this
Agreement.
5. Other Information:
Silicon shall have received such other statements,
opinions, certificates, documents and information with
respect to matters contemplated by this Agreement as it
may reasonably request, all of which must be acceptable to
Silicon.
Silicon shall have conducted an examination of the
Borrower's books, records, ledgers, journals, and
registers, as Silicon may deem necessary, and shall be
satisfied with the results of such examination in its sole
discretion.
Silicon and the Borrower agree that the terms of this Schedule
supplement the Loan and Security Agreement between Silicon and the Borrower and
agree to be bound by the terms of this Schedule.
BORROWER:
SONUS PHARMACEUTICALS, INC.
By: /s/ Xxxxxxx Xxxxxxx
-----------------------------
Title: Chief Financial Officer
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SILICON:
SILICON VALLEY BANK
By: /s/ Xxxxx Xxxxxxx
-----------------------------
Title: Vice President
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CERTIFIED RESOLUTION AND INCUMBENCY CERTIFICATE
Borrower: Sonus Pharmaceuticals, Inc., a corporation organized under
the laws of the State of Delaware.
Date: September 10, 1997
I, the undersigned, Secretary or Assistant Secretary of the above-named
Borrower, a corporation organized under the laws of the state set forth above
(the "Company"), do hereby certify that the following is a full, true and
correct copy of resolutions duly and regularly adopted by the Board of Directors
of said corporation as required by law, and by the bylaws of said corporation,
and that said resolutions are still in full force and effect and have not been
in any way modified, repealed, rescinded, amended or revoked:
RESOLVED, that the Chief Executive Officer and the Chief Financial
Officer of the Company (the "Authorized Officers") are each hereby
individually authorized and directed to execute and deliver to Silicon
Valley Bank ("Silicon") the Loan and Security Agreement in substantially
the form presented to the Board of Directors and to execute and deliver
to Silicon such other agreements, documents, and instruments as Silicon
may require from time to time and as such Authorized Officer shall in
his or her judgment determine are necessary or appropriate for the
proper fiscal management of the Company, including but not limited to
any renewals, extensions and/or amendments of the foregoing documents.
FURTHER RESOLVED, that each of the Authorized Officers is hereby
authorized and directed from time to time to borrow such sum or sums of
money from Silicon as in the judgment of such Authorized Officer, the
Company may require.
FURTHER RESOLVED, that each of the Authorized Officers is hereby
authorized and directed to grant, transfer, pledge, mortgage, assign, or
otherwise hypothecate to Silicon all property of any and every kind
belonging to this corporation as security for any and all indebtedness
of this corporation to Silicon, whether arising pursuant to this
resolution or otherwise, and including, but not limited to, any
accounts, inventory, equipment, general intangibles, instruments,
documents, chattel paper, notes, money, deposit accounts, furniture,
fixtures, goods, copyrights and other property of every kind; and to
execute and deliver to Silicon any and all grants, transfers, trust
receipts, loan or credit agreements, pledge agreements, mortgages, deeds
of trust, financing statements, security agreements and other
hypothecation agreements as Silicon may require from time-to-time and as
such Authorized Officer shall in his or her judgment determine are
necessary or appropriate for the proper fiscal management of the
Company.
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I also certify that each of the following named individuals is a duly
elected officer of the Company, and holds the office of the Company set
forth opposite his or her name, and do further certify that the signature
written opposite the name and title of such officer is his or her true and
correct signature.
Name Title Signature
---- ----- ---------
Xxxxxx X. Xxxx, M.D., Ph.D. President & CEO /s/ Xxxxxx X. Xxxx
--------------------------------- --------------------- ---------------------------------
Xxxxxxx Xxxxxxx CFO /s/ Xxxxxxx Xxxxxxx
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IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary or
Assistant Secretary on the date set forth above.
/s/ Xxxxxxx Xxxxxxx
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Secretary of Assistant Secretary
