EXHIBIT 4.3
SILICON VALLEY BANK
LOAN AND SECURITY AGREEMENT
BORROWER: INKTOMI CORPORATION
ADDRESS: 0000 XXXX 0XX XXXXXX
XXXXXX XXXX, XXXXXXXXXX 00000
DATE: SEPTEMBER 30, 2002
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK ("Silicon"), whose address is 0000 Xxxxxx Xxxxx, Xxxxx
Xxxxx, Xxxxxxxxxx 00000 and the borrower(s) named above (jointly and severally,
the "Borrower"), whose chief executive office is located at the above address
("Borrower's Address"). The Schedule to this Agreement (the "Schedule") shall
for all purposes be deemed to be a part of this Agreement, and the same is an
integral part of this Agreement. (Definitions of certain terms used in this
Agreement are set forth in Section 8 below.) As set forth in the Amendment to
Loan Documents of even date between Silicon and the Borrower, this Loan
Agreement (together with the Exim Agreement referred to in the Schedule) amends
and restates in its entirety the Amended and Restated Loan and Security
Agreement dated February 16, 2001 between Silicon and Borrower (the "Prior Loan
Agreement").
1. LOANS.
1.1 LOANS. Silicon will make loans to Borrower (the "Loans"), in amounts
determined by Silicon in its good faith business judgment, up to the amounts
(the "Credit Limit") shown on the Schedule, provided no Default or Event of
Default has occurred and is continuing, and subject to deduction of Reserves for
accrued interest and such other Reserves as Silicon deems proper from time to
time in its good faith business judgment.
1.2 INTEREST. All Loans hereunder shall bear interest at the rate shown on
the Schedule, except where expressly set forth to the contrary in this
Agreement, and all other monetary Obligations hereunder shall bear interest at
the highest of the rates applicable to the Loans. Interest shall be payable
monthly, on the last day of the month. Interest may, in Silicon's discretion, be
charged to Borrower's loan account, and the same shall thereafter bear interest
at the same rate as the other Revolving Loans. Silicon may, in its discretion,
charge interest to Borrower's Deposit Accounts maintained with Silicon.
1.3 OVERADVANCES. If at any time or for any reason the total of all
outstanding Loans and all other monetary Obligations hereunder exceeds the
Credit Limit (an "Overadvance"), Borrower shall immediately pay the amount of
the excess to Silicon, without notice or demand. Without limiting Borrower's
obligation to repay to Silicon the amount of any Overadvance, Borrower agrees to
pay Silicon interest on the outstanding amount of any Overadvance, on demand, at
the Default Rate.
1.4 FEES. Borrower shall pay Silicon the fees shown on the Schedule, which
are in addition to all interest and other sums payable to Silicon and are not
refundable.
1.5 LOAN REQUESTS. To obtain a Loan, Borrower shall make a request to Silicon
by facsimile or telephone. Loan requests received after 12:00 Noon will not be
considered by Silicon until the next Business Day. Silicon may rely on any
telephone request for a Loan given by a person whom Silicon believes is an
authorized representative of Borrower, and Borrower will indemnify Silicon for
any loss Silicon suffers as a result of that reliance.
1.6 LETTERS OF CREDIT. [Not Applicable]
2. SECURITY INTEREST. To secure the payment and performance of all of the
Obligations when due, Borrower hereby grants to Silicon a security interest in
all of the following (collectively, the "Collateral"): all right, title and
interest of Borrower in and to all of the following, whether now owned or
hereafter arising or acquired and wherever located: all Accounts; all Inventory;
all Equipment; all Deposit Accounts; all General Intangibles (including without
limitation all Intellectual Property); all Investment Property; all Other
Property; and any and all claims, rights and interests in any of the above, and
all guaranties and security for any of the above, and all substitutions and
replacements for, additions, accessions,
-1-
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
attachments, accessories, and improvements to, and proceeds (including proceeds
of any insurance policies, proceeds of proceeds and claims against third
parties) of, any and all of the above, and all Borrower's books relating to any
and all of the above.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.
In order to induce Silicon to enter into this Agreement and to make Loans,
Borrower represents and warrants to Silicon as follows, and Borrower covenants
that the following representations will continue to be true, and that Borrower
will at all times comply with all of the following covenants, throughout the
term of this Agreement and until all Obligations have been paid and performed in
full:
3.1 CORPORATE EXISTENCE AND AUTHORITY. Borrower is and will continue to be,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Borrower is and will continue to be qualified
and licensed to do business in all jurisdictions in which any failure to do so
would result in a Material Adverse Change. The execution, delivery and
performance by Borrower of this Agreement, and all other documents contemplated
hereby (i) have been duly and validly authorized, (ii) are enforceable against
Borrower in accordance with their terms (except as enforcement may be limited by
equitable principles and by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to creditors' rights generally), and (iii) do not
violate Borrower's articles or certificate of incorporation, or Borrower's
by-laws, or any law or any material agreement or instrument which is binding
upon Borrower or its property, and (iv) do not constitute grounds for
acceleration of any material indebtedness or obligation under any agreement or
instrument which is binding upon Borrower or its property.
3.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed in the Representations are
all prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give Silicon 30 days' prior written notice before changing its
name or doing business under any other name. Borrower has complied, and will in
the future comply, in all material respects, with all laws relating to the
conduct of business under a fictitious business name, except where the failure
to so comply would not reasonably be expected to result in a Material Adverse
Change.
3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in the
heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth in the Representations. Borrower will give Silicon at least 30 days
prior written notice before opening any additional place of business, changing
its chief executive office, or moving any of the Collateral to a location other
than Borrower's Address or one of the locations set forth in the
Representations, except that Borrower may maintain sales offices in the ordinary
course of business at which not more than a total of $10,000 fair market value
of Equipment is located.
3.4 TITLE TO COLLATERAL; PERFECTION; PERMITTED LIENS.
(a) Borrower is now, and will at all times in the future be, the sole owner
of all the Collateral, except for items of Equipment which are leased to
Borrower. The Collateral now is and will remain free and clear of any and all
liens, charges, security interests, encumbrances and adverse claims, except for
Permitted Liens and except for the adverse claims asserted in the litigation
referred to in Schedule 2 hereto. Silicon now has, and will continue to have, a
first-priority perfected and enforceable security interest in all of the
Collateral, subject only to the Permitted Liens, and Borrower will at all times
defend Silicon and the Collateral against all claims of others.
(b) Borrower has set forth in the Representations all of Borrower's Deposit
Accounts, and Borrower will give Silicon five Business Days advance written
notice before establishing any new Deposit Accounts and will cause the
institution where any such new Deposit Account is maintained to execute and
deliver to Silicon a control agreement in form sufficient to perfect Silicon's
security interest in the Deposit Account and otherwise satisfactory to Silicon
in its good faith business judgment. Nothing herein limits any requirements
which may be set forth in the Schedule as to where Deposit Accounts will be
maintained.
(c) In the event that Borrower shall at any time after the date hereof have
any commercial tort claims against others, which it is asserting or intends to
assert, and in which the potential recovery exceeds $100,000, Borrower shall
promptly notify Silicon thereof in writing and provide Silicon with such
information regarding the same as Silicon shall request (unless providing such
information would waive the Borrower's attorney-client privilege). Such
notification to Silicon shall constitute a grant of a security interest in the
commercial tort claim and all proceeds thereof to Silicon, and Borrower shall
execute and deliver all such documents and take all such actions as Silicon
shall request in connection therewith.
(d) None of the Collateral now is or will be affixed to any real property
in such a manner, or with such intent, as to become a fixture. Borrower is not
and will not become a lessee under any real property lease pursuant to which the
lessor may obtain any rights in any of the Collateral and no such lease now
prohibits, restrains, impairs or will prohibit, restrain or impair Borrower's
right to remove any Collateral from the leased premises. Whenever any Collateral
is located upon
-2-
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
premises in which any third party has an interest, Borrower shall, whenever
requested by Silicon, use commercially reasonable efforts to cause such third
party to execute and deliver to Silicon, in form acceptable to Silicon, such
waivers and subordinations as Silicon shall specify in its good faith business
judgment. Borrower will keep in full force and effect, and will comply with all
material terms of, any lease of real property where any of the Collateral now or
in the future may be located.
3.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the Collateral in good
working condition (ordinary wear and tear excepted), and Borrower will not use
the Collateral for any unlawful purpose. Borrower will immediately advise
Silicon in writing of any material loss or damage to the Collateral.
3.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with GAAP.
3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial statements now
or in the future delivered to Silicon have been, and will be, prepared in
conformity with GAAP and now and in the future will fairly present the results
of operations and financial condition of Borrower, in accordance with GAAP, at
the times and for the periods therein stated. Between the last date covered by
any such statement provided to Silicon and the date hereof, there has been no
Material Adverse Change.
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely
filed, and will timely file, all required tax returns and reports, and Borrower
has timely paid, and will timely pay, all foreign, federal, state and local
taxes, assessments, deposits and contributions now or in the future owed by
Borrower. Borrower may, however, defer payment of any contested taxes, provided
that Borrower (i) in good faith contests Borrower's obligation to pay the taxes
by appropriate proceedings promptly and diligently instituted and conducted,
(ii) notifies Silicon in writing of the commencement of, and any material
development in, the proceedings, and (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a lien upon any of the
Collateral. Borrower is unaware of any claims or adjustments proposed for any of
Borrower's prior tax years which could result in additional taxes becoming due
and payable by Borrower. Borrower has paid, and shall continue to pay all
amounts necessary to fund all present and future pension, profit sharing and
deferred compensation plans in accordance with their terms, and Borrower has not
and will not withdraw from participation in, permit partial or complete
termination of, or permit the occurrence of any other event with respect to, any
such plan which could reasonably be expected to result in any liability of
Borrower, including any liability to the Pension Benefit Guaranty Corporation or
its successors or any other governmental agency.
3.9 COMPLIANCE WITH LAW. Borrower has, to the best of its knowledge,
complied, and will comply, in all material respects, with all provisions of all
foreign, federal, state and local laws and regulations applicable to Borrower,
including, but not limited to, those relating to Borrower's ownership of real or
personal property, the conduct and licensing of Borrower's business, and all
environmental matters.
3.10 LITIGATION. There is no claim, suit, litigation, proceeding or
investigation pending or (to best of Borrower's knowledge) threatened against or
affecting Borrower in any court or before any governmental agency (or any basis
therefor known to Borrower) which could reasonably be expected to result, either
separately or in the aggregate, in any Material Adverse Change. Certain
litigation against the Borrower is listed on Schedule 2 hereto, but the same is
not expected to result in any Material Adverse Change. Borrower will promptly
inform Silicon in writing of any claim, proceeding, litigation or investigation
in the future threatened or instituted against Borrower involving any single
claim of $250,000 or more, or involving $500,000 or more in the aggregate.
3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes. Borrower is not purchasing or carrying any "margin
stock" (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan will be used to purchase
or carry any "margin stock" or to extend credit to others for the purpose of
purchasing or carrying any "margin stock."
4. ACCOUNTS.
4.1 REPRESENTATIONS RELATING TO ACCOUNTS. Borrower represents and warrants to
Silicon as follows: Each Account with respect to which Loans are requested by
Borrower shall, on the date each Loan is requested and made, (i) represent an
undisputed bona fide existing unconditional obligation of the Account Debtor
created by the sale, delivery, and acceptance of goods or the rendition of
services, or the non-exclusive licensing of Intellectual Property, in the
ordinary course of Borrower's business, and (ii) meet the Minimum Eligibility
Requirements set forth in Section 8 below.
4.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE. Borrower
represents and warrants to Silicon as follows: All statements made and all
unpaid balances appearing in all invoices, instruments and other documents
evidencing the Accounts are and shall be true and correct and all such invoices,
instruments and other documents and all of Borrower's
-3-
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
books and records are and shall be genuine and in all respects what they purport
to be. All sales and other transactions underlying or giving rise to each
Account shall comply in all material respects with all applicable laws and
governmental rules and regulations. To the best of Borrower's knowledge, all
signatures and endorsements on all documents, instruments, and agreements
relating to all Accounts are and shall be genuine, and all such documents,
instruments and agreements are and shall be legally enforceable in accordance
with their terms.
4.3 SCHEDULES AND DOCUMENTS RELATING TO ACCOUNTS. Borrower shall deliver to
Silicon transaction reports and schedules of collections, as provided in the
Schedule, on Silicon's standard forms; provided, however, that Borrower's
failure to execute and deliver the same shall not affect or limit Silicon's
security interest and other rights in all of Borrower's Accounts, nor shall
Silicon's failure to advance or lend against a specific Account affect or limit
Silicon's security interest and other rights therein. If requested by Silicon,
Borrower shall furnish Silicon with copies (or, at Silicon's request, originals)
of all contracts, orders, invoices, and other similar documents, and all
shipping instructions, delivery receipts, bills of lading, and other evidence of
delivery, for any goods the sale or disposition of which gave rise to such
Accounts, and Borrower warrants the genuineness of all of the foregoing.
Borrower shall also furnish to Silicon an aged accounts receivable trial balance
as provided in the Schedule. In addition, Borrower shall deliver to Silicon, on
its request, the originals of all instruments, chattel paper, security
agreements, guarantees and other documents and property evidencing or securing
any Accounts, in the same form as received, with all necessary endorsements, and
copies of all credit memos.
4.4 LOCKBOX. Borrower has previously entered into a lockbox agreement with
Silicon (the "Lockbox Agreement"), and the Lockbox Agreement shall continue in
full force and effect throughout the term of this Agreement and so long as any
Obligations remain unpaid. Borrower shall continue to direct all Account Debtors
to make all payments on all Accounts to the account established pursuant to the
Lockbox Agreement. If, for any reason, Borrower shall receive payment of any
Accounts, Borrower shall hold all of the same in trust for Silicon, and Borrower
shall deliver all such payments and proceeds to the lockbox established by the
Lockbox Agreement, within one business day after receipt of the same, in their
original form, duly endorsed, to be applied to the Obligations in such order as
Silicon shall determine.
4.5. REMITTANCE OF PROCEEDS. All proceeds arising from the disposition of any
Collateral shall be delivered, in kind, by Borrower to Silicon in the original
form in which received by Borrower not later than the following Business Day
after receipt by Borrower, to be applied to the Obligations in such order as
Silicon shall determine; provided that, if no Default or Event of Default has
occurred and is continuing, Borrower shall not be obligated to remit to Silicon
the proceeds of the sale of worn out or obsolete Equipment disposed of by
Borrower in good faith in an arm's length transaction for an aggregate purchase
price of $25,000 or less (for all such transactions in any fiscal year).
Borrower agrees that it will not commingle proceeds of Collateral with any of
Borrower's other funds or property, but will hold such proceeds separate and
apart from such other funds and property and in an express trust for Silicon.
Nothing in this Section limits the restrictions on disposition of Collateral set
forth elsewhere in this Agreement.
4.6 DISPUTES. Borrower shall notify Silicon promptly of all disputes or
claims relating to Accounts. Borrower shall not forgive (completely or
partially), compromise or settle any Account for less than payment in full, or
agree to do any of the foregoing, except that Borrower may do so, provided that:
(i) Borrower does so in good faith, in a commercially reasonable manner, in the
ordinary course of business, and in arm's length transactions, which are
reported to Silicon on the regular reports provided to Silicon; (ii) no Default
or Event of Default has occurred and is continuing; and (iii) taking into
account all such discounts, settlements and forgiveness, the total outstanding
Loans will not exceed the Credit Limit.
4.7 RETURNS. Provided no Event of Default has occurred and is continuing, if
any Account Debtor returns any Inventory to Borrower, Borrower shall promptly
determine the reason for such return and promptly issue a credit memorandum to
the Account Debtor in the appropriate amount. In the event any attempted return
occurs after the occurrence and during the continuance of any Event of Default,
Borrower shall hold the returned Inventory in trust for Silicon, and immediately
notify Silicon of the return of the Inventory.
4.8 VERIFICATION. Silicon may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Accounts, by means of mail, telephone or otherwise, either in the name of
Borrower or Silicon or such other name as Silicon may choose.
4.9 NO LIABILITY. Silicon shall not be responsible or liable for any shortage
or discrepancy in, damage to, or loss or destruction of, any goods, the sale or
other disposition of which gives rise to an Account, or for any error, act,
omission, or delay of any kind occurring in the settlement, failure to settle,
collection or failure to collect any Account, or for settling any Account in
good faith for less than the full amount thereof, nor shall Silicon be deemed to
be responsible for any of Borrower's obligations under any contract or agreement
giving rise to an Account. Nothing herein shall, however, relieve Silicon from
liability for its own gross negligence or willful misconduct.
-4-
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
5. ADDITIONAL DUTIES OF BORROWER.
5.1 FINANCIAL AND OTHER COVENANTS. Borrower shall at all times comply with
the financial and other covenants set forth in the Schedule.
5.2 INSURANCE. Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Silicon, in such form and amounts as Silicon
may reasonably require and that are customary and in accordance with standard
practices for Borrower's industry and locations, and Borrower shall provide
evidence of such insurance to Silicon. All such insurance policies shall name
Silicon as an additional loss payee, and shall contain a lenders loss payee
endorsement in form reasonably acceptable to Silicon. Upon receipt of the
proceeds of any such insurance relating to Collateral or any business
interruption insurance, Silicon shall apply such proceeds in reduction of the
Obligations as Silicon shall determine in its good faith business judgment,
except that, provided no Default or Event of Default has occurred and is
continuing, Silicon shall release to Borrower insurance proceeds with respect to
Equipment totaling less than $100,000, which shall be utilized by Borrower for
the replacement of the Equipment with respect to which the insurance proceeds
were paid. Silicon may require reasonable assurance that the insurance proceeds
so released will be so used. If Borrower fails to provide or pay for any
insurance, Silicon may, but is not obligated to, obtain the same at Borrower's
expense. Borrower shall promptly deliver to Silicon copies of all material
reports made to insurance companies.
5.3 REPORTS. Borrower, at its expense, shall provide Silicon with the written
reports set forth in the Schedule, and such other written reports with respect
to Borrower (including budgets, sales projections, operating plans and other
financial documentation), as Silicon shall from time to time specify in its good
faith business judgment.
5.4 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on one
Business Day's notice, Silicon, or its agents, shall have the right to inspect
the Collateral, and the right to audit and copy Borrower's books and records.
The parties contemplate that such audits will be performed no more frequently
than quarterly, but nothing herein restricts Silicon's right to conduct such
audits more frequently if (i) Silicon believes that it is advisable to do so in
Silicon's good faith business judgment, or (ii) Silicon believes in good faith
that an event of default or an event which, with notice or passage of time or
both would constitute an event of default, has occurred and is continuing.
Silicon shall take reasonable steps to keep confidential all information
obtained in any such inspection or audit, but Silicon shall have the right to
disclose any such information to its auditors, regulatory agencies, and
attorneys, and pursuant to any subpoena or other legal process provided that, in
the case of any such subpoena or legal process, Silicon shall provide prompt
written notice of the same to Borrower, if reasonably practical to do so, in
order to enable Borrower to obtain a protective order, if it wishes to do so.
The foregoing inspections and audits shall be at Borrower's expense and the
charge therefor shall be $750 per person per day (or such higher amount as shall
represent Silicon's then current standard charge for the same), plus reasonable
out-of-pocket expenses. In the event Borrower and Silicon schedule an audit more
than 10 days in advance, and Borrower seeks to reschedules the audit with less
than 10 days written notice to Silicon, then (without limiting any of Silicon's
rights or remedies), Borrower shall pay Silicon a cancellation fee of $1,000
plus any out-of-pocket expenses incurred by Silicon, to compensate Silicon for
the anticipated costs and expenses of the cancellation.
5.5 NEGATIVE COVENANTS. Except as may be permitted in the Schedule, Borrower
shall not, without Silicon's prior written consent (which shall be a matter of
its good faith business judgment), do any of the following: (i) merge or
consolidate with another corporation or entity except for a merger of a
wholly-owned subsidiary of Borrower into Borrower in a merger in which Borrower
is the surviving corporation or a merger of two or more wholly-owned
subsidiaries of Borrower; (ii) acquire any assets, except in the ordinary course
of business; (iii) enter into any other transaction outside the ordinary course
of business; (iv) sell or transfer any Collateral, except for the sale of
finished Inventory in the ordinary course of Borrower's business, and except for
the sale of obsolete or unneeded Equipment in the ordinary course of business;
(v) store any Inventory or other Collateral with any warehouseman or other third
party; (vi) sell any Inventory on a sale-or-return, guaranteed sale,
consignment, or other contingent basis; (vii) make any loans of any money or
other assets; (viii) incur any debts, outside the ordinary course of business,
which would result in a Material Adverse Change; (ix) guarantee or otherwise
become liable with respect to the obligations of another party or entity; (x)
pay or declare any dividends on Borrower's stock (except for dividends payable
solely in stock of Borrower); (xi) redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of Borrower's stock; (xii) make any change
in Borrower's capital structure which would result in a Material Adverse Change;
or (xiii) engage, directly or indirectly, in any business other than the
businesses currently engaged in by Borrower or reasonably related thereto; (xiv)
dissolve or elect to dissolve or (xv) transfer any money, assets or other
property to any of its subsidiaries outside the ordinary course of business, or
permit its subsidiaries to hold more than a combined total of more than 10% of
all cash, cash equivalents and marketable securities of Borrower and all its
subsidiaries. Borrower shall, at all times, retain not less than 90% of the
total amount of all cash, cash equivalents and marketable securities of Borrower
and all of its subsidiaries. Transactions permitted by the foregoing provisions
of this Section are only permitted if no Default or Event of Default would occur
as a result of such transaction.
-5-
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
5.6 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or relating to
Borrower, Borrower shall, without expense to Silicon, make available Borrower
and its officers, employees and agents and Borrower's books and records, to the
extent that Silicon may deem them reasonably necessary in order to prosecute or
defend any such suit or proceeding.
5.7 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by
Silicon, to execute all documents and take all actions, as Silicon, may, in its
good faith business judgment, deem necessary or useful in order to perfect and
maintain Silicon's perfected first-priority security interest in the Collateral
(subject to Permitted Liens), and in order to fully consummate the transactions
contemplated by this Agreement.
6. TERM OF REVOLVING LOAN FACILITY AND TERM OF AGREEMENT.
6.1 TERM OF REVOLVING LOAN FACILITY. The period during which Revolving
Loans (as defined in the Schedule) will be made (the "Revolving Loan Period")
shall be from the date of this Agreement to the Revolving Loan Maturity Date set
forth in the Schedule, unless sooner terminated in accordance with the terms of
this Agreement. On and after the Revolving Loan Maturity Date or any earlier
termination of this Agreement, no further Revolving Loans will be made. On the
Revolving Loan Maturity Date or on any earlier termination of this Agreement,
Borrower shall pay in full all outstanding Revolving Loans and any accrued and
unpaid interest thereon.
6.2 EARLY TERMINATION OF REVOLVING LOAN FACILITY AT BORROWER'S OPTION. The
Revolving Loan Period may be terminated prior to the Revolving Loan Maturity
Date by Borrower, effective three business days after written notice of
termination is given by Borrower to Silicon.
6.3 TERM OF AGREEMENT. The term of this Agreement shall be from the date of
this Agreement to the later of the following (the "Maturity Date"): (i) the
termination of the Revolving Loan Period, or (ii) the date the last installment
of principal on the Term Loans is due. On the Maturity Date or on any earlier
termination of this Agreement Borrower shall pay in full all Loans and all other
outstanding Obligations, and notwithstanding any termination of this Agreement
all of Silicon's security interests and all of Silicon's other rights and
remedies shall continue in full force and effect until payment and performance
in full of all Obligations.
6.4 EARLY TERMINATION OF AGREEMENT. This Agreement may be terminated prior
to the Maturity Date as follows: (i) by Borrower, effective three business days
after written notice of termination is given to Silicon; or (ii) by Silicon at
any time after the occurrence of an Event of Default, without notice, effective
immediately.
6.5 TERMINATION FEE. If the Revolving Loan Period is terminated by Borrower
under Section 6.2, or if this Agreement is terminated by Borrower or by Silicon
under Section 6.4, then Borrower shall pay to Silicon a termination fee Borrower
shall pay to Silicon a termination fee in an amount equal to one percent (1.0%)
of the Maximum Revolving Credit Limit. The termination fee shall be due and
payable on the effective date of termination and thereafter shall bear interest
at a rate equal to the highest rate applicable to any of the Obligations..
6.6 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
outstanding Loans and other Obligations, whether evidenced by installment notes
or otherwise, and whether or not all or any part of such Obligations are
otherwise then due and payable. Without limiting the generality of the
foregoing, if on the Maturity Date, or on any earlier effective date of
termination, there are any outstanding Letters of Credit issued by Silicon or
issued by another institution based upon an application, guarantee, indemnity or
similar agreement on the part of Silicon, then on such date Borrower shall
provide to Silicon restricted pledged funds in an amount equal to 105% of the
face amount of all such Letters of Credit plus all interest, fees and cost due
or to become due in connection therewith (as estimated by Silicon in its good
faith business judgment), to secure all of the Obligations relating to said
Letters of Credit, pursuant to Silicon's then standard form cash pledge
agreement. Notwithstanding any termination of this Agreement, all of Silicon's
security interests in all of the Collateral and all of the terms and provisions
of this Agreement shall continue in full force and effect until all Obligations
have been paid and performed in full; provided that Silicon may, in its sole
discretion, refuse to make any further Loans after termination. No termination
shall in any way affect or impair any right or remedy of Silicon, nor shall any
such termination relieve Borrower of any Obligation to Silicon, until all of the
Obligations have been paid and performed in full. Upon payment and performance
in full of all the Obligations and termination of this Agreement,
-6-
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
Silicon shall promptly terminate its financing statements with respect to the
Borrower and deliver to Borrower such other documents as may be required to
fully terminate Silicon's security interests.
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Default" under this Agreement, and Borrower shall give
Silicon immediate written notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to Silicon by Borrower or any
of Borrower's officers, employees or agents, now or in the future, shall be
untrue or misleading in a material respect when made or deemed to be made; or
(b) Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation; or (c) the total Loans and other Obligations
outstanding at any time shall exceed the Credit Limit; or (d) Borrower shall
fail to comply with any of the financial covenants set forth in the Schedule, or
shall fail to perform any other non-monetary Obligation which by its nature
cannot be cured, or shall fail to permit Silicon to conduct an inspection or
audit as specified in Section 5.4 hereof; or (e) Borrower shall fail to perform
any other non-monetary Obligation, which failure is not cured within five
Business Days after the date due; or (f) any levy, assessment, attachment,
seizure, lien or encumbrance (other than a Permitted Lien) is made on all or any
part of the Collateral which is not cured within 10 days after the occurrence of
the same; or (g) any default or event of default occurs under any obligation
secured by a Permitted Lien, which is not cured within any applicable cure
period or waived in writing by the holder of the Permitted Lien; or (h) Borrower
breaches any material contract or obligation, which has resulted or may
reasonably be expected to result in a Material Adverse Change; or (i)
Dissolution, termination of existence, insolvency or business failure of
Borrower; or appointment of a receiver, trustee or custodian, for all or any
part of the property of, assignment for the benefit of creditors by, or the
commencement of any proceeding by Borrower under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect; or (j) the
commencement of any proceeding against Borrower or any guarantor of any of the
Obligations under any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect, which is not cured by the
dismissal thereof within 30 days after the date commenced; or (k) revocation or
termination of, or limitation or denial of liability upon, any guaranty of the
Obligations or any attempt to do any of the foregoing, or commencement of
proceedings by any guarantor of any of the Obligations under any bankruptcy or
insolvency law; or (l) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all of
the Obligations, or any attempt to do any of the foregoing, or commencement of
proceedings by or against any such third party under any bankruptcy or
insolvency law; or (m) Borrower makes any payment on account of any indebtedness
or obligation which has been subordinated to the Obligations other than as
permitted in the applicable subordination agreement, or if any Person who has
subordinated such indebtedness or obligations terminates or in any way limits
his subordination agreement; or (n) one Person or group of affiliated Persons
shall acquire more than 35% of the outstanding shares of stock of Borrower in
one or more transactions, or there shall be a change in the controlling
ownership of Borrower; or (o) Borrower shall generally not pay its debts as they
become due, or Borrower shall conceal, remove or transfer any part of its
property, with intent to hinder, delay or defraud its creditors, or make or
suffer any transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or (p) a Material Adverse
Change shall occur. Silicon may cease making any Loans hereunder during any of
the above cure periods, and thereafter if an Event of Default has occurred and
is continuing.
7.2 REMEDIES. Upon the occurrence and during the continuance of any Event of
Default, and at any time thereafter, Silicon, at its option, and without notice
or demand of any kind (all of which are hereby expressly waived by Borrower),
may do any one or more of the following: (a) Cease making Loans or otherwise
extending credit to Borrower under this Agreement or any other Loan Document;
(b) Accelerate and declare all or any part of the Obligations to be immediately
due, payable, and performable, notwithstanding any deferred or installment
payments allowed by any instrument evidencing or relating to any Obligation; (c)
Take possession of any or all of the Collateral wherever it may be found, and
for that purpose Borrower hereby authorizes Silicon without judicial process to
enter onto any of Borrower's premises without interference to search for, take
possession of, keep, store, or remove any of the Collateral, and remain on the
premises or cause a custodian to remain on the premises in exclusive control
thereof, without charge for so long as Silicon deems it necessary, in its good
faith business judgment, in order to complete the enforcement of its rights
under this Agreement or any other agreement; provided, however, that should
Silicon seek to take possession of any of the Collateral by court process,
Borrower hereby irrevocably waives: (i) any bond and any surety or security
relating thereto required by any statute, court rule or otherwise as an incident
to such possession; (ii) any demand for possession prior to the commencement of
any suit or action to recover possession thereof; and (iii) any requirement that
Silicon retain possession of, and not dispose of, any such Collateral until
after trial or final judgment; (d) Require Borrower to assemble any or all of
the Collateral and make it available to Silicon at places designated by Silicon
which are reasonably convenient to Silicon and Borrower, and to remove the
Collateral to such locations as Silicon may deem advisable; (e) Complete the
processing, manufacturing or repair of any Collateral prior to a disposition
thereof and,
-7-
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
for such purpose and for the purpose of removal, Silicon shall have the right to
use Borrower's premises, vehicles, hoists, lifts, cranes, and other Equipment
and all other property without charge; (f) Sell, lease or otherwise dispose of
any of the Collateral, in its condition at the time Silicon obtains possession
of it or after further manufacturing, processing or repair, at one or more
public and/or private sales, in lots or in bulk, for cash, exchange or other
property, or on credit, and to adjourn any such sale from time to time without
notice other than oral announcement at the time scheduled for sale. Silicon
shall have the right to conduct such disposition on Borrower's premises without
charge, for such time or times as Silicon deems reasonable, or on Silicon's
premises, or elsewhere and the Collateral need not be located at the place of
disposition. Silicon may directly or through any affiliated company purchase or
lease any Collateral at any such public disposition, and if permissible under
applicable law, at any private disposition. Any sale or other disposition of
Collateral shall not relieve Borrower of any liability Borrower may have if any
Collateral is defective as to title or physical condition or otherwise at the
time of sale; (g) Demand payment of, and collect any Accounts and General
Intangibles comprising Collateral and, in connection therewith, Borrower
irrevocably authorizes Silicon to endorse or sign Borrower's name on all
collections, receipts, instruments and other documents, to take possession of
and open mail addressed to Borrower and remove therefrom payments made with
respect to any item of the Collateral or proceeds thereof, and, in Silicon's
good faith business judgment, to grant extensions of time to pay, compromise
claims and settle Accounts and the like for less than face value; (h) Offset
against any sums in any of Borrower's general, special or other Deposit Accounts
with Silicon against any or all of the Obligations; and (i) Demand and receive
possession of any of Borrower's federal and state income tax returns and the
books and records utilized in the preparation thereof or referring thereto. All
reasonable attorneys' fees, expenses, costs, liabilities and obligations
incurred by Silicon with respect to the foregoing shall be added to and become
part of the Obligations, shall be due on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of the Obligations.
Without limiting any of Silicon's rights and remedies, from and after the
occurrence and during the continuance of any Event of Default, the interest rate
applicable to the Obligations shall be increased by an additional four percent
per annum (the "Default Rate").
7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and Silicon
agree that among other methods a sale or other disposition (collectively,
"sale") of any Collateral which complies with the following standards will
conclusively be deemed to be commercially reasonable: (i) Notice of the sale is
given to Borrower at least ten days prior to the sale, and, in the case of a
public sale, notice of the sale is published at least five days before the sale
in a newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price in
cash or by cashier's check or wire transfer is required; (vi) With respect to
any sale of any of the Collateral, Silicon may (but is not obligated to) direct
any prospective purchaser to ascertain directly from Borrower any and all
information concerning the same. Silicon shall be free to employ other methods
of noticing and selling the Collateral, in its discretion, if they are
commercially reasonable.
7.4 POWER OF ATTORNEY. Upon the occurrence and during the continuance of any
Event of Default, without limiting Silicon's other rights and remedies, Borrower
grants to Silicon an irrevocable power of attorney coupled with an interest,
authorizing and permitting Silicon (acting through any of its employees,
attorneys or agents) at any time, at its option, but without obligation, with or
without notice to Borrower, and at Borrower's expense, to do any or all of the
following, in Borrower's name or otherwise, but Silicon agrees that if it
exercises any right hereunder, it will do so in good faith and in a commercially
reasonable manner: (a) Execute on behalf of Borrower any documents that Silicon
may, in its good faith business judgment, deem advisable in order to perfect and
maintain Silicon's security interest in the Collateral, or in order to exercise
a right of Borrower or Silicon, or in order to fully consummate all the
transactions contemplated under this Agreement, and all other Loan Documents;
(b) Execute on behalf of Borrower, any invoices relating to any Account, any
draft against any Account Debtor and any notice to any Account Debtor, any proof
of claim in bankruptcy, any Notice of Lien, claim of mechanic's, materialman's
or other lien, or assignment or satisfaction of mechanic's, materialman's or
other lien; (c) Take control in any manner of any cash or non-cash items of
payment or proceeds of Collateral; endorse the name of Borrower upon any
instruments, or documents, evidence of payment or Collateral that may come into
Silicon's possession; (d) Endorse all checks and other forms of remittances
received by Silicon; (e) Pay, contest or settle any lien, charge, encumbrance,
security interest and adverse claim in or to any of the Collateral, or any
judgment based thereon, or otherwise take any action to terminate or discharge
the same; (f) Grant extensions of time to pay, compromise claims and settle
Accounts and General Intangibles for less than face value and execute all
releases and other documents in connection therewith; (g) Pay any sums required
on account of Borrower's taxes or to secure the release of any liens therefor,
or both; (h) Settle and adjust, and give releases of, any insurance claim that
relates to any of the Collateral and obtain payment therefor; (i) Instruct any
third party having custody or control of any books or records belonging to, or
relating to, Borrower to give Silicon the same rights of access and other rights
with respect thereto as Silicon has under this Agreement; and (j) Take any
action or pay any sum required of Borrower pursuant to this Agreement and any
other Loan Documents. Any and all reasonable sums paid and any and all
reasonable costs, expenses, liabilities, obligations and attorneys' fees
incurred by Silicon
-8-
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
with respect to the foregoing shall be added to and become part of the
Obligations, shall be payable on demand, and shall bear interest at a rate equal
to the highest interest rate applicable to any of the Obligations. In no event
shall Silicon's rights under the foregoing power of attorney or any of Silicon's
other rights under this Agreement be deemed to indicate that Silicon is in
control of the business, management or properties of Borrower.
7.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any sale
of the Collateral shall be applied by Silicon first to the reasonable costs,
expenses, liabilities, obligations and attorneys' fees incurred by Silicon in
the exercise of its rights under this Agreement, second to the interest due upon
any of the Obligations, and third to the principal of the Obligations, in such
order as Silicon shall determine in its sole discretion. Any surplus shall be
paid to Borrower or other persons legally entitled thereto; Borrower shall
remain liable to Silicon for any deficiency. If, Silicon, in its good faith
business judgment, directly or indirectly enters into a deferred payment or
other credit transaction with any purchaser at any sale of Collateral, Silicon
shall have the option, exercisable at any time, in its good faith business
judgment, of either reducing the Obligations by the principal amount of purchase
price or deferring the reduction of the Obligations until the actual receipt by
Silicon of the cash therefor.
7.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth in
this Agreement, Silicon shall have all the other rights and remedies accorded a
secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between Silicon and Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by
Silicon of one or more of its rights or remedies shall not be deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Silicon to exercise any rights
or remedies shall not operate as a waiver thereof, but all rights and remedies
shall continue in full force and effect until all of the Obligations have been
fully paid and performed.
8. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"Account Debtor" means the obligor on an Account.
"Accounts" means all present and future "accounts" as defined in the
California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation
all accounts receivable and other sums owing to Borrower.
"Affiliate" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.
"Business Day" means a day on which Silicon is open for business.
"Code" means the Uniform Commercial Code as adopted and in effect in the
State of California from time to time.
"Collateral" has the meaning set forth in Section 2 above.
"continuing" and "during the continuance of" when used with reference to a
Default or Event of Default means that the Default or Event of Default has
occurred and has not been either waived in writing by Silicon or cured within
any applicable cure period.
"Default" means any event which with notice or passage of time or both, would
constitute an Event of Default.
"Default Rate" has the meaning set forth in Section 7.2 above.
"Deposit Accounts" means all present and future "deposit accounts" as defined
in the California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation
all general and special bank accounts, demand accounts, checking accounts,
savings accounts and certificates of deposit.
"Eligible Accounts" means Accounts and General Intangibles arising in the
ordinary course of Borrower's business from the sale of goods or the rendition
of services, or the non-exclusive licensing of Intellectual Property, which
Silicon, in its good faith business judgment, shall deem eligible for borrowing.
Without limiting the fact that the determination of which Accounts are eligible
for borrowing is a matter of Silicon's good faith business judgment, the
following (the "Minimum Eligibility Requirements") are the minimum requirements
for a Account to be an Eligible Account: (i) the Account must not be outstanding
for more than 90 days from its invoice date (the "Eligibility Period"), (ii) the
Account must not represent progress xxxxxxxx, or be due under a fulfillment or
requirements contract with the Account Debtor, (iii) the Account must not be
subject to any contingencies (including Accounts arising from sales on
consignment, guaranteed sale or other terms pursuant to which payment by the
Account Debtor may be conditional), (iv) the Account must not be owing from an
Account Debtor with whom Borrower has any dispute (whether or not relating to
the particular Account), (v) the Account must not be owing from an Affiliate of
Borrower, (vi) the Account must not be owing from an Account Debtor which is
subject to any
-9-
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
insolvency or bankruptcy proceeding, or whose financial condition is not
acceptable to Silicon, or which, fails or goes out of a material portion of its
business, (vii) the Account must not be owing from the United States or any
department, agency or instrumentality thereof (unless there has been compliance,
to Silicon's satisfaction, with the United States Assignment of Claims Act),
(viii) the Account must not be owing from an Account Debtor located outside the
United States or Canada (unless pre-approved by Silicon in its discretion in
writing, or backed by a letter of credit satisfactory to Silicon, or FCIA
insured satisfactory to Silicon), (ix) the Account must not be owing from an
Account Debtor to whom Borrower is or may be liable for goods purchased from
such Account Debtor or otherwise (but, in such case, the Account will be deemed
not eligible only to the extent of any amounts owed by Borrower to such Account
Debtor). Accounts owing from one Account Debtor will not be deemed Eligible
Accounts to the extent they exceed 25% of the total Accounts outstanding. In
addition, if more than 50% of the Accounts owing from an Account Debtor are
outstanding for a period longer than their Eligibility Period (without regard to
unapplied credits) or are otherwise not eligible Accounts, then all Accounts
owing from that Account Debtor will be deemed ineligible for borrowing. Silicon
may, from time to time, in its good faith business judgment, revise the Minimum
Eligibility Requirements, upon written notice to Borrower. Without limiting any
of the foregoing, commencing January 2, 2003, Accounts related to Borrower's
discontinued Content Networking Division will not be Eligible Accounts, even if
they meet the Minimum Eligibility Requirements. Without limiting the generality
of the foregoing, Accounts which represent deferred revenue of Borrower are not
Eligible Accounts. However, notwithstanding the foregoing, Silicon will permit
up to $1,000,000 of Accounts which represent deferred revenue to be Eligible
Accounts (if they meet the other requirements for Eligible Accounts), if and so
long as Borrower complies with the Minimum Cash Requirement set forth in Section
5.3 of the Schedule. If at any time and for any reason Borrower fails to comply
with the Minimum Cash Requirement, no Accounts which represent deferred revenue
of Borrower will be deemed Eligible Accounts.
"Equipment" means all present and future "equipment" as defined in the
California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation
all machinery, fixtures, goods, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing.
"Event of Default" means any of the events set forth in Section 7.1 of this
Agreement.
"GAAP" means generally accepted accounting principles consistently applied.
"General Intangibles" means all present and future "general intangibles" as
defined in the California Uniform Commercial Code in effect on the date hereof
with such additions to such term as may hereafter be made, and includes without
limitation all Intellectual Property, payment intangibles, royalties, contract
rights, goodwill, franchise agreements, purchase orders, customer lists, route
lists, telephone numbers, domain names, claims, income tax refunds, security and
other deposits, options to purchase or sell real or personal property, rights in
all litigation presently or hereafter pending (whether in contract, tort or
otherwise), insurance policies (including without limitation key man, property
damage, and business interruption insurance), payments of insurance and rights
to payment of any kind.
"good faith business judgment" means honesty in fact and good faith (as
defined in Section 1201 of the Code) in the exercise of Silicon's business
judgment.
"including" means including (but not limited to).
"Intellectual Property" means all present and future (a) copyrights,
copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work thereof, whether
published or unpublished, (b) trade secret rights, including all rights to
unpatented inventions and know-how, and confidential information; (c) mask work
or similar rights available for the protection of semiconductor chips; (d)
patents, patent applications and like protections including without limitation
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same; (e) trademarks, servicemarks, trade styles,
and trade names, whether or not any of the foregoing are registered, and all
applications to register and registrations of the same and like protections, and
the entire goodwill of the business of Borrower connected with and symbolized by
any such trademarks; (f) computer software and computer software products; (g)
designs and design rights; (h) technology; (i) all claims for damages by way of
past, present and future infringement of any of the rights included above; (j)
all licenses or other rights to use any property or rights of a type described
above.
"Inventory" means all present and future "inventory" as defined in the
California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation
all merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products, including without limitation such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returned goods and any documents of title representing
any of the above.
"Investment Property" means all present and future investment property,
securities, stocks, bonds, debentures, debt securities, partnership interests,
limited liability company interests, options, security entitlements, securities
accounts, commodity contracts, commodity accounts, and all financial assets held
in any securities account or otherwise, and all options
-10-
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
and warrants to purchase any of the foregoing, wherever located, and all other
securities of every kind, whether certificated or uncertificated.
"Loan Documents" means, collectively, this Agreement, the Representations,
and all other present and future documents, instruments and agreements between
Silicon and Borrower, including, but not limited to those relating to this
Agreement, and all amendments and modifications thereto and replacements
therefor.
"Material Adverse Change" means any of the following: (i) a material adverse
change in the business, operations, or financial or other condition of the
Borrower, or (ii) a material impairment of the prospect of repayment of any
portion of the Obligations; or (iii) a material impairment of the value or
priority of Silicon's security interests in the Collateral.
"Obligations" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Silicon, whether evidenced by this Agreement or any
note or other instrument or document, or otherwise, whether arising from an
extension of credit, opening of a letter of credit, banker's acceptance, loan,
guaranty, indemnification or otherwise, whether direct or indirect (including,
without limitation, those acquired by assignment and any participation by
Silicon in Borrower's debts owing to others), absolute or contingent, due or to
become due, including, without limitation, all interest, charges, expenses,
fees, attorney's fees, expert witness fees, audit fees, letter of credit fees,
collateral monitoring fees, closing fees, facility fees, termination fees,
minimum interest charges and any other sums chargeable to Borrower under this
Agreement or under any other Loan Documents.
"Other Property" means the following as defined in the California Uniform
Commercial Code in effect on the date hereof with such additions to such term as
may hereafter be made, and all rights relating thereto: all present and future
"commercial tort claims" (including without limitation any commercial tort
claims identified in the Representations), "documents", "instruments",
"promissory notes", "chattel paper", "letters of credit", "letter-of-credit
rights", "fixtures", "farm products" and "money"; and all other goods and
personal property of every kind, tangible and intangible, whether or not
governed by the California Uniform Commercial Code.
"Permitted Liens" means the following: (i) purchase money security interests
in specific items of Equipment; (ii) leases of specific items of Equipment;
(iii) liens for taxes not yet payable; (iv) additional security interests and
liens consented to in writing by Silicon, which consent may be withheld in its
good faith business judgment; (v) security interests being terminated
substantially concurrently with this Agreement; (vi) liens of materialmen,
mechanics, warehousemen, carriers, or other similar liens arising in the
ordinary course of business and securing obligations which are not delinquent;
(vii) liens incurred in connection with the extension, renewal or refinancing of
the indebtedness secured by liens of the type described above in clauses (i) or
(ii) above, provided that any extension, renewal or replacement lien is limited
to the property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; (viii)
Liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods. Silicon will have
the right to require, as a condition to its consent under subparagraph (iv)
above, that the holder of the additional security interest or lien sign an
intercreditor agreement on Silicon's then standard form, acknowledge that the
security interest is subordinate to the security interest in favor of Silicon,
and agree not to take any action to enforce its subordinate security interest so
long as any Obligations remain outstanding, and that Borrower agree that any
uncured default in any obligation secured by the subordinate security interest
shall also constitute an Event of Default under this Agreement.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"Representations" means the written Representations and Warranties provided
by Borrower to Silicon referred to in the Schedule.
"Reserves" means, as of any date of determination, such amounts as Silicon
may from time to time establish and revise in its good faith business judgment,
reducing the amount of Loans, Letters of Credit and other financial
accommodations which would otherwise be available to Borrower under the lending
formula(s) provided in the Schedule: (a) to reflect events, conditions,
contingencies or risks which, as determined by Silicon in its good faith
business judgment, do or may adversely affect (i) the Collateral or any other
property which is security for the Obligations or its value (including without
limitation any increase in delinquencies of Accounts), (ii) the assets, business
or prospects of Borrower or any Guarantor, or (iii) the security interests and
other rights of Silicon in the Collateral (including the enforceability,
perfection and priority thereof); or (b) to reflect Silicon's good faith belief
that any collateral report or financial information furnished by or on behalf of
Borrower or any Guarantor to Silicon is or may have been incomplete, inaccurate
or misleading in any material respect; or (c) in respect of any state of facts
which Silicon determines in good faith constitutes an Event of Default or may,
with notice or passage of time or both, constitute an Event of Default.
Other Terms. All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in accordance with GAAP,
consistently applied. All other terms contained in this Agreement, unless
otherwise indicated, shall have the meanings provided by the Code, to the extent
such terms are defined therein.
-11-
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
9. GENERAL PROVISIONS.
9.1 INTEREST COMPUTATION. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by Silicon (including
proceeds of Accounts and payment of the Obligations in full) shall be deemed
applied by Silicon on account of the Obligations three Business Days after
receipt by Silicon of immediately available funds, and, for purposes of the
foregoing, any such funds received after 12:00 Noon on any day shall be deemed
received on the next Business Day. Silicon shall not, however, be required to
credit Borrower's account for the amount of any item of payment which is
unsatisfactory to Silicon in its good faith business judgment, and Silicon may
charge Borrower's loan account for the amount of any item of payment which is
returned to Silicon unpaid.
9.2 APPLICATION OF PAYMENTS. All payments with respect to the Obligations may
be applied, and in Silicon's good faith business judgment reversed and
re-applied, to the Obligations, in such order and manner as Silicon shall
determine in its good faith business judgment.
9.3 CHARGES TO ACCOUNTS. Silicon may, in its discretion, require that
Borrower pay monetary Obligations in cash to Silicon, or charge them to
Borrower's Loan account, in which event they will bear interest at the same rate
applicable to the Loans. Silicon may also, in its discretion, charge any
monetary Obligations to Borrower's Deposit Accounts maintained with Silicon.
9.4 MONTHLY ACCOUNTINGS. Silicon shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Silicon), unless Borrower
notifies Silicon in writing to the contrary within 60 days after such account is
rendered, describing the nature of any alleged errors or omissions.
9.5 NOTICES. All notices to be given under this Agreement shall be in writing
and shall be given either personally or by reputable private delivery service or
by regular first-class mail, or certified mail return receipt requested,
addressed to Silicon or Borrower at the addresses shown in the heading to this
Agreement, or at any other address designated in writing by one party to the
other party. Notices to Silicon shall be directed to the Commercial Finance
Division, to the attention of the Division Manager or the Division Credit
Manager. All notices shall be deemed to have been given upon delivery in the
case of notices personally delivered, or at the expiration of one Business Day
following delivery to the private delivery service, or two Business Days
following the deposit thereof in the United States mail, with postage prepaid.
9.6 SEVERABILITY. Should any provision of this Agreement be held by any court
of competent jurisdiction to be void or unenforceable, such defect shall not
affect the remainder of this Agreement, which shall continue in full force and
effect.
9.7 INTEGRATION. This Agreement and such other written agreements, documents
and instruments as may be executed in connection herewith are the final, entire
and complete agreement between Borrower and Silicon and supersede all prior and
contemporaneous negotiations and oral representations and agreements, all of
which are merged and integrated in this Agreement. There are no oral
understandings, representations or agreements between the parties which are not
set forth in this Agreement or in other written agreements signed by the parties
in connection herewith.
9.8 WAIVERS; INDEMNITY. The failure of Silicon at any time or times to
require Borrower to strictly comply with any of the provisions of this Agreement
or any other Loan Document shall not waive or diminish any right of Silicon
later to demand and receive strict compliance therewith. Any waiver of any
default shall not waive or affect any other default, whether prior or
subsequent, and whether or not similar. None of the provisions of this Agreement
or any other Loan Document shall be deemed to have been waived by any act or
knowledge of Silicon or its agents or employees, but only by a specific written
waiver signed by an authorized officer of Silicon and delivered to Borrower.
Borrower waives the benefit of all statutes of limitations relating to any of
the Obligations or this Agreement or any other Loan Document, and Borrower
waives demand, protest, notice of protest and notice of default or dishonor,
notice of payment and nonpayment, release, compromise, settlement, extension or
renewal of any commercial paper, instrument, account, General Intangible,
document or guaranty at any time held by Silicon on which Borrower is or may in
any way be liable, and notice of any action taken by Silicon, unless expressly
required by this Agreement. Borrower hereby agrees to indemnify Silicon and its
affiliates, subsidiaries, parent, directors, officers, employees, agents, and
attorneys, and to hold them harmless from and against any and all claims, debts,
liabilities, demands, obligations, actions, causes of action, penalties, costs
and expenses (including reasonable attorneys' fees), of every kind, which they
may sustain or incur based upon or arising out of any of the Obligations, or any
relationship or agreement between Silicon and Borrower, or any other matter,
relating to Borrower or the Obligations; provided that this indemnity shall not
extend to damages proximately caused by the indemnitee's own gross negligence or
willful misconduct. Notwithstanding any provision in this Agreement to the
contrary, the indemnity agreement set forth in this Section shall survive any
termination of this Agreement and shall for all purposes continue in full force
and effect.
9.9 NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Silicon shall be liable for any claims, demands, losses or
damages, of any
-12-
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
kind whatsoever, made, claimed, incurred or suffered by Borrower or any other
party through the ordinary negligence of Silicon, or any of its directors,
officers, employees, agents, attorneys or any other Person affiliated with or
representing Silicon, but nothing herein shall relieve Silicon from liability
for its own gross negligence or willful misconduct.
9.10 AMENDMENT. The terms and provisions of this Agreement may not be waived
or amended, except in a writing executed by Borrower and a duly authorized
officer of Silicon.
9.11 TIME OF ESSENCE. Time is of the essence in the performance by Borrower
of each and every obligation under this Agreement.
9.12 ATTORNEYS FEES AND COSTS. Borrower shall reimburse Silicon for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by Silicon, pursuant to,
or in connection with, or relating to this Agreement (whether or not a lawsuit
is filed), including, but not limited to, any reasonable attorneys' fees and
costs Silicon incurs in order to do the following: prepare and negotiate this
Agreement and all present and future documents relating to this Agreement;
obtain legal advice in connection with this Agreement or Borrower; enforce, or
seek to enforce, any of its rights; prosecute actions against, or defend actions
by, Account Debtors; commence, intervene in, or defend any action or proceeding;
initiate any complaint to be relieved of the automatic stay in bankruptcy; file
or prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; examine, audit, copy, and inspect any of the Collateral or any of
Borrower's books and records; protect, obtain possession of, lease, dispose of,
or otherwise enforce Silicon's security interest in, the Collateral; and
otherwise represent Silicon in any litigation relating to Borrower. In
satisfying Borrower's obligation hereunder to reimburse Silicon for attorneys
fees, Borrower may, for convenience, issue checks directly to Silicon's
attorneys, Levy, Small & Xxxxxx, but Borrower acknowledges and agrees that Levy,
Small & Xxxxxx is representing only Silicon and not Borrower in connection with
this Agreement. If either Silicon or Borrower files any lawsuit against the
other predicated on a breach of this Agreement, the prevailing party in such
action shall be entitled to recover its reasonable costs and attorneys' fees,
including (but not limited to) reasonable attorneys' fees and costs incurred in
the enforcement of, execution upon or defense of any order, decree, award or
judgment. All attorneys' fees and costs to which Silicon may be entitled
pursuant to this Paragraph shall immediately become part of Borrower's
Obligations, shall be due on demand, and shall bear interest at a rate equal to
the highest interest rate applicable to any of the Obligations.
9.13 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors, assigns, heirs,
beneficiaries and representatives of Borrower and Silicon; provided, however,
that Borrower may not assign or transfer any of its rights under this Agreement
without the prior written consent of Silicon, and any prohibited assignment
shall be void. No consent by Silicon to any assignment shall release Borrower
from its liability for the Obligations.
9.14 JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.
9.15 LIMITATION OF ACTIONS. Any claim or cause of action by Borrower against
Silicon, its directors, officers, employees, agents, accountants or attorneys,
based upon, arising from, or relating to this Loan Agreement, or any other Loan
Document, or any other transaction contemplated hereby or thereby or relating
hereto or thereto, or any other matter, cause or thing whatsoever, occurred,
done, omitted or suffered to be done by Silicon, its directors, officers,
employees, agents, accountants or attorneys, shall be barred unless asserted by
Borrower by the commencement of an action or proceeding in a court of competent
jurisdiction by the filing of a complaint within two years after the first act,
occurrence or omission upon which such claim or cause of action, or any part
thereof, is based, and the service of a summons and complaint on an officer of
Silicon, or on any other person authorized to accept service on behalf of
Silicon, within thirty (30) days thereafter. Borrower agrees that such two-year
period is a reasonable and sufficient time for Borrower to investigate and act
upon any such claim or cause of action. The two-year period provided herein
shall not be waived, tolled, or extended except by the written consent of
Silicon in its sole discretion. This provision shall survive any termination of
this Loan Agreement or any other Loan Document.
9.16 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used in
this Agreement for convenience. Borrower and Silicon acknowledge that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement. This Agreement has
been fully reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Agreement shall be construed strictly
against Silicon or Borrower under any rule of construction or otherwise.
9.17 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and
transactions hereunder and all rights and obligations of Silicon and Borrower
shall be governed by the laws of the State of California. As a material part of
the
-13-
SILICON VALLEY BANK LOAN AND SECURITY AGREEMENT
consideration to Silicon to enter into this Agreement, Borrower (i) agrees
that all actions and proceedings relating directly or indirectly to this
Agreement shall, at Silicon's option, be litigated in courts located within
California, and that the exclusive venue therefor shall be Santa Xxxxx County;
(ii) consents to the jurisdiction and venue of any such court and consents to
service of process in any such action or proceeding by personal delivery or any
other method permitted by law; and (iii) waives any and all rights Borrower may
have to object to the jurisdiction of any such court, or to transfer or change
the venue of any such action or proceeding.
9.18 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND SILICON EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR BORROWER, IN
ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
BORROWER: SILICON:
INKTOMI CORPORATION SILICON VALLEY BANK
BY_______________________________ BY_______________________________
PRESIDENT OR VICE PRESIDENT TITLE_____________________________
Form: -3 (3/7/02)
Version -6
-14-
SILICON VALLEY BANK
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: INKTOMI CORPORATION
ADDRESS: 0000 XXXX 0XX XXXXXX
XXXXXX XXXX, XXXXXXXXXX 00000
DATE: SEPTEMBER 30, 2002
This Schedule forms an integral part of the Loan and Security Agreement between
Silicon Valley Bank and the above-borrower of even date.
1. CREDIT LIMIT
(Section 1.1): An amount not to exceed the sum of the Loans
under Sections (a), (b) and (c) below:
(a) Revolving Loans. Loans (the "Revolving
Loans") in an amount up to the lesser
of: (i) $5,000,000 at any one time
outstanding (the "Maximum Revolving
Credit Limit"); or (ii) 75% (the
"Advance Rate") of the amount of
Borrower's Eligible Accounts (as defined
in Section 8 above).
Silicon may, from time to time, modify
the Advance Rate, in its good faith
business judgment, upon notice to the
Borrower, based on changes in collection
experience with respect to Accounts or
other issues or factors relating to the
Accounts or other Collateral.
Notwithstanding any provision of this
Agreement to the contrary, in no event,
at any time, shall the total outstanding
Revolving Loans plus the total
outstanding Exim Loans (as defined
below) plus the total unpaid principal
balance of that certain Secured
Promissory Note in the original
principal amount of $1,700,000 of even
date being made by the Borrower to the
order of Silicon (the "$1.7 Million
Note") exceed the Maximum Revolving
Credit Limit.
(b) Equipment Loan No. 1. An Equipment Loan
("Equipment Loan No. 1") in the amount
of $5,500,000.
The principal amount of Equipment Loan
No. 1 shall be repaid in monthly
installments of $166,667 each,
commencing on October
-1-
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
1, 2002 and continuing on the same day
of each month thereafter until June 1,
2005, on which date the entire unpaid
principal balance plus any accrued and
unpaid interest shall be due and
payable.
Equipment Loan No. 1 is and shall
continue to be secured at all times by
the pledge by Borrower to Silicon of
cash and cash equivalents in an amount
not less than 100% of the unpaid
principal balance of Equipment Loan No.
1, which cash and cash equivalents shall
be restricted and not be subject to
withdrawal.
(c) Equipment Loan No. 2. An Equipment Loan
("Equipment Loan No. 2") in the amount
of $3,750,000.
The principal amount of Equipment Loan
No. 2 shall be repaid as follows:
$750,000 on October 1, 2002, plus
$208,333.33 per month commencing on
October 1, 2002 and continuing on the
first day of each month thereafter until
December 1, 2003, on which date the
entire unpaid principal balance plus any
accrued and unpaid interest shall be due
and payable.
(Equipment Loan No. 1 and Equipment Loan No.
2 are sometimes referred to herein
collectively as the "Term Loans").
EXIM AGREEMENT;
CROSS-COLLATERALIZATION;
CROSS-DEFAULT: Silicon and the Borrower are parties to that
certain Loan and Security Agreement (Exim
Program) of even date (the "Exim
Agreement"). Both this Agreement and the
Exim Agreement shall continue in full force
and effect, and all rights and remedies
under this Agreement and the Exim Agreement
are cumulative. The term "Obligations" as
used in this Agreement and in the Exim
Agreement shall include without limitation
the obligation to pay when due all Loans
made pursuant to this Agreement (the
"Non-Exim Loans") and all interest thereon
and the obligation to pay when due all Loans
made pursuant to the Exim Agreement (the
"Exim Loans") and all interest thereon.
Without limiting the generality of the
foregoing, all "Collateral" as defined in
this Agreement and as defined in the Exim
Agreement shall secure all Exim Loans and
all Non-Exim Loans and all interest thereon,
and all other Obligations. Any Event of
Default under this Agreement shall also
constitute an Event of Default under the
Exim Agreement, and any Event of Default
under the Exim Agreement shall also
constitute an Event of Default under this
Agreement. In the event Silicon assigns its
rights under the Exim Agreement and/or under
any Note evidencing Exim Loans and/or its
rights under this Agreement and/or under any
Note evidencing Non-Exim Loans, to any third
party, including without limitation the
Export-Import Bank of the United States
("Exim Bank"), whether before or after the
occurrence of any Event of Default, Silicon
shall have the right (but not any
obligation), in its sole
-2-
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
discretion, to allocate and apportion
Collateral to the Agreement and/or Note
assigned and to specify the priorities of
the respective security interests in such
Collateral between itself and the assignee,
all without notice to or consent of the
Borrower.
2. INTEREST.
INTEREST RATE (Section 1.2):
Revolving Loans shall bear interest at a
rate equal to the "Prime Rate" in effect
from time to time, plus 3% per annum.
Equipment Loan No. 1 shall bear interest at
a rate equal to the "Prime Rate" in effect
from time to time.
Equipment Loan No. 2 shall bear interest at
a rate equal to the "Prime Rate" in effect
from time to time.
Interest shall be calculated on the basis of
a 360-day year for 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.
3. FEES (Section 1.4):
Loan Fee: $40,000, payable concurrently herewith.
Collateral Monitoring Fee: $1,250, per month, payable in arrears
(prorated for any partial month at the
beginning and at termination of this
Agreement).
Unused Line Fee: In the event, in any calendar month (or
portion thereof at the beginning and end of
the term hereof), the average total daily
principal balance of the Revolving Loans
outstanding during the month under this
Agreement plus the Exim Loans outstanding
during the month plus the average unpaid
principal balance of the $1.7 Million Note
outstanding during the month is less than
the amount of the Maximum Revolving Credit
Limit, Borrower shall pay Silicon an unused
line fee in an
-3-
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
amount equal to 0.5% per annum on the
difference between the amount of the Maximum
Revolving Credit Limit and the average daily
principal balance of the Revolving Loans and
Exim Loans and the $1.7 Million Note
outstanding during the month, computed on
the basis of a 360-day year, which unused
line fee shall be computed and paid monthly,
in arrears, on the first day of the
following month.
The foregoing fees are in addition to all interest and all other fees
(including without limitation fees under the Exim Agreement as defined
below).
4. REVOLVING LOAN
MATURITY DATE
(Section 6.1): One year from the date of this Agreement.
5. FINANCIAL COVENANTS:
Borrower shall comply with each of the
following covenants. Compliance shall be
determined as of the end of each month,
except as otherwise specifically provided
below:
5.1 MINIMUM TANGIBLE NET WORTH:
Borrower shall maintain a Tangible Net Worth
of not less than the following amounts as of
the end of each month during the following
periods:
Date hereof to and including March 31, 2003 $25,000,000
April 1, 2003 to and including September 30, 2003 $13,000,000
5.2 MAXIMUM NET LOSS:
Borrower not incur a net loss in excess of
the following amounts during the following
periods (the "Maximum Net Loss
Requirement"):
PERIOD NET LOSS
------ --------
Three months ended September 30, 2002 $137,000,000
Three months ended December 31, 2002 $10,300,000
Three months ended March 31, 2003 $7,600,000
Three months ended June 30, 2003 $4,700,000
Three months ended September 30, 2003 $1,300,000
5.3 MINIMUM CASH:
-4-
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
Borrower shall, as of the end of each month,
have unrestricted cash of not less than
$27,500,000 (the "Minimum Cash
Requirement").
5.4 DEFINITIONS. For purposes of the foregoing financial
covenants, the following term shall have the
following meaning:
"Tangible Net Worth" shall mean the excess
of total assets over total liabilities,
determined in accordance with GAAP, with the
following adjustments:
(A) there shall be excluded from assets:
(i) notes, accounts receivable and other
obligations owing to Borrower from its
officers, employees or other Affiliates,
(ii) minority investments in other
entities, and (ii) all goodwill and
other assets which would be classified
as intangible assets under GAAP,
including without limitation goodwill,
licenses, patents, trademarks, trade
names, copyrights, capitalized software
and organizational costs, licenses and
franchises
(B) there shall be excluded from
liabilities: all indebtedness which is
subordinated to the Obligations under a
subordination agreement in form
specified by Silicon or by language in
the instrument evidencing the
indebtedness which Silicon agrees in
writing is acceptable to Silicon in its
good faith business judgment.
5.5 RESTRICTED PLEDGED FUNDS. In the event there is a breach of the
Maximum Net Loss Requirement or the Minimum
Cash Requirement, the same shall not
constitute an Event of Default hereunder,
provided that Borrower shall meet the
following (the "Restricted Pledged Funds
Requirements"): within five Business Days
after the date said breach occurs, Borrower
shall deposit with Silicon cash or cash
equivalents in an amount equal to the unpaid
principal balance of Equipment Loan No. 2,
which cash and cash equivalents shall be
restricted and not be subject to withdrawal,
and within said period execute and deliver
all such pledge and other agreements with
respect thereto as Silicon shall specify in
its good faith business judgment, pledging
the same to secure all of the Obligations,
which pledge shall continue in effect so
long as any portion of Equipment Loan No. 2
remains outstanding.
After and so long as the Restricted Pledged
Funds Requirements are met, the Borrower
shall not be required to comply with the
Maximum Net Loss Requirement or the Minimum
Cash Requirement. However, even if the
Restricted Pledged Funds Requirements are
met, if the Borrower fails to meet the
Minimum Cash Requirement, then (as provided
in the definition of "Eligible Accounts" in
Section 8 above) no Accounts which represent
deferred revenue of Borrower will be deemed
"Eligible Accounts".
-5-
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
The Restricted Pledged Funds
Requirements are in addition to the
existing pledge of cash or cash
equivalents by Borrower to Silicon, in
an amount equal to outstanding principal
balance of Equipment Loan No. 1, which
pledge shall continue in full force and
effect so long as Equipment Loan No. 1
is outstanding.
Nothing herein limits the security
interest of Silicon in all of the
Collateral (including without limitation
all Deposit Accounts).
6. REPORTING.
(Section 5.3):
Borrower shall provide Silicon with the
following, in form satisfactory to Silicon:
1. Weekly transaction reports and schedules
of collections and borrowing base
certificate, on Silicon's standard form.
2. Monthly accounts receivable agings, aged
by invoice date, and deferred revenue
report, .within fifteen days after the
end of each month.
3. Monthly accounts payable agings, aged by
invoice date, and outstanding or held
check registers, if any, and accrued
liabilities report, within fifteen days
after the end of each month.
4. Monthly reconciliations of accounts
receivable agings (aged by invoice
date), transaction reports, and general
ledger, within fifteen days after the
end of each month.
5. Monthly unaudited consolidated financial
statements and a consolidating balance
sheet, as soon as available, and in any
event within thirty days after the end
of each month.
6. Monthly Compliance Certificates, within
thirty days after the end of each month,
in such form as Silicon shall reasonably
specify, signed by the Chief Financial
Officer of Borrower, certifying that as
of the end of such month Borrower was in
full compliance with all of the terms
and conditions of this Agreement, and
setting forth calculations showing
compliance with the financial covenants
set forth in this Agreement and such
other information as Silicon shall
reasonably request, including, without
limitation, a statement that at the end
of such month there were no held checks.
7. Copies of all 10-K, 10-Q and other
reports filed with the Securities
Exchange Commission within 10 days after
the date submitted to the Securities
Exchange Commission.
-6-
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
8. Quarterly unaudited consolidated and
consolidating financial statements, as
soon as available, and in any event
within 30 days after the end of each
fiscal quarter of Borrower.
9. Within 10 days of request by Silicon,
operating budgets (including income
statements, balance sheets and cash flow
statements, by month) for such period as
Silicon shall specify.
10. Annual consolidated financial
statements, as soon as available, and in
any event within 90 days following the
end of Borrower's fiscal year, certified
by, and with an unqualified opinion of,
independent certified public accountants
acceptable to Silicon.
7. BORROWER INFORMATION:
Borrower represents and warrants that the
information set forth in the Representations
and Warranties of the Borrower dated
September 20, 2002, previously submitted to
Silicon (the "Representations") is true and
correct as of the date hereof.
8. ADDITIONAL PROVISIONS
(1) BANKING RELATIONSHIP. Borrower shall at
all times maintain its primary banking
relationship with Silicon. Without
limiting the generality of the
foregoing, Borrower shall, at all times,
maintain not less than 85% of its total
cash, cash equivalents and investments
on deposit with Silicon. As to any
Deposit Accounts and investment accounts
maintained with other institutions,
Borrower shall cause such institutions,
within 30 days after the date of this
Agreement, to enter into a control
agreement in form acceptable to Silicon
in its good faith business judgment in
order to perfect Silicon's
first-priority security interest in said
Deposit Accounts and investment
accounts.
(2) SUBORDINATION OF INSIDE DEBT. All
present and future indebtedness of
Borrower to its officers, directors and
shareholders ("Inside Debt") shall, at
all times, be subordinated to the
Obligations pursuant to a subordination
agreement on Silicon's standard form.
Borrower represents and warrants that
there is no Inside Debt presently
outstanding. Prior to incurring any
Inside Debt in the future, Borrower
shall cause the person to whom such
Inside Debt will be owed to execute and
deliver to Silicon a subordination
agreement on Silicon's standard form.
-7-
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
(3) SUBSIDIARIES. Borrower represents and
warrants that it has no United States
subsidiaries except for the following
companies (the "Domestic Subs"):
ENTITY LEGAL NAME STATE OF INCORPORATION
----------------- ----------------------
Inktomi Corporation DE
C2B Technologies, Inc. DE
Impulse!Buy Network, Inc CA
WebSpective Software DE
Ultraseek Corporation CA
FastForward Networks, Inc. DE
eScene Networks, Inc. DE
Quiver Inc. DE
Borrower represents and warrants that
the Domestic Subs are and throughout the
term of this Agreement and while any
Obligations are outstanding continue to
be, shell companies which do not conduct
business and do not have any assets
(except that WebSpective Software,
FastForward Networks, Inc., eScene
Networks, Inc., and Quiver Inc. hold
certain Intellectual Property). Borrower
shall cause the Domestic Subs to execute
and deliver to Silicon continuing
guaranties with respect to the
Obligations on Silicon's standard form,
and security agreements granting Silicon
first-priority security interests in all
of their assets to secure said
guaranties, and Borrower shall cause
said guaranties and security agreements
to continue in full force and effect
throughout the term of this Agreement
and while any Obligations are
outstanding.
(4) LOCATIONS. Borrower represents and
warrants that it does not maintain
locations in the United States, where
Collateral is located, other than in the
States of California, Texas, Virginia,
New York and Colorado, and that the
total value of the tangible Collateral
in the States of Texas, Virginia, New
York and Colorado does not exceed
$250,000.
-8-
SILICON VALLEY BANK SCHEDULE TO LOAN AND SECURITY AGREEMENT
Borrower: Silicon:
INKTOMI CORPORATION SILICON VALLEY BANK
By_______________________________ By_______________________________
President or Vice President Title____________________________
Form: -3 (3/7/02)
Version -6
-9-
