SILICON VALLEY BANK
AMENDMENT TO LOAN AND SECURITY AGREEMENT
BORROWER: SYNC RESEARCH, INC.
ADDRESS: 7 STUDEBAKER
XXXXXX, XXXXXXXXXX 00000
DATED AS OF: JUNE 10, 1997
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON VALLEY
BANK ("Silicon") and the borrower named above (the "Borrower").
The Parties agree to amend the Loan and Security Agreement between them,
dated September 18, 1991, as amended by that Extension Agreement dated August 3,
1992, by that Amendment to Loan Agreement dated October 20, 1992, by that
Amendment to Loan Agreement dated August 23, 1993, by that Amendment to Loan
Agreement dated February 10, 1994, by that Amendment to Loan Agreement dated
July 18, 1994, by that Amendment to Loan Agreement dated September 20, 1994, by
that Amendment to Loan and Security Agreement dated August 31, 1995, by that
Amendment to Loan and Security Agreement (the "October 1995 Amendment") dated
October 5, 1995, by that Amendment to Loan Agreement dated July 3, 1996, and by
that Amendment to Loan Agreement dated October 6, 1996 (the "Loan Agreement"),
as follows. (Capitalized terms used but not defined in this Agreement, shall
have the meanings set forth in the Loan Agreement.)
1. REVISED ADVANCE RATE. The first paragraph of the "Credit Limit
(Section 1.1)" set forth in the Schedule to Loan Agreement is hereby amended to
read as follows:
CREDIT LIMIT
(Section 1.1): An amount not to exceed $5,000,000 at any one time
outstanding; PROVIDED, HOWEVER, that upon a Post-IPO
Default (as defined in Section 2.2 of the Loan
Agreement as set forth in the Amendment to Loan and
Security Agreement dated October 5, 1995 between
Silicon and Borrower), the Credit Limit shall be an
amount not to exceed the lesser of: (i) $5,000,000 at
any one time outstanding; or (ii) 70% of the Net Amount
of Borrower's accounts, which Silicon in its discretion
deems eligible for borrowing. "Net Amount" of an
account means the gross amount of the account, minus
all applicable sales, use, excise and other similar
taxes and minus all discounts, credits and allowances
of any nature granted or claimed.
The remainder of the "Credit Limit (Section 1.1)" remains unchanged.
-1-
2. REVISED TANGIBLE NET WORTH FINANCIAL COVENANT. The Tangible Net Worth
Financial Covenant set forth under "Financial Covenants (Section 4.1)" in the
Schedule to Loan Agreement is hereby amended in its entirety to read as follows:
TANGIBLE NET WORTH: Borrower shall maintain a tangible net worth of
not less than $34,000,000, provided that tangible
net worth shall be computed excluding loans by the
Borrower to its officers.
3. DELETION OF PROFITABILITY FINANCIAL COVENANT. The Profitability
Financial Covenant set forth under "Financial Covenants (Section 4.1)" in the
Schedule to Loan Agreement which currently reads as follows:
PROFITABILITY: Borrower shall not incur a loss (after taxes) for the
fiscal year ending December 31, 1997.
is hereby deleted.
4. FEE. Borrower shall pay to Silicon a facility fee in the amount of
$250 concurrently, which shall be in addition to all interest and all other
amounts payable under the Loan Agreement, and which shall not be refundable.
5. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
6. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written documents and agreements between Silicon and the Borrower set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect
to the subject hereof. Except as herein expressly amended, all of the terms and
provisions of the Loan Agreement, as so amended, and all other documents and
agreements between Silicon and the Borrower shall continue in full force and
effect and the same are hereby ratified and confirmed.
BORROWER: SILICON:
SYNC RESEARCH, INC. SILICON VALLEY BANK
BY_______________________________ BY_______________________________
PRESIDENT OR VICE PRESIDENT TITLE__________________________
BY_______________________________
SECRETARY OR ASS'T SECRETARY
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SILICON VALLEY BANK
AMENDMENT TO LOAN AND SECURITY AGREEMENT
BORROWER: SYNC RESEARCH, INC.
ADDRESS: 7 STUDEBAKER
XXXXXX, XXXXXXXXXX 00000
DATED AS OF: OCTOBER 6, 1996
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON VALLEY
BANK ("Silicon") and the borrower named above (the "Borrower").
The Parties agree to amend the Loan and Security Agreement between them,
dated September 18, 1991, as amended by that Extension Agreement dated August 3,
1992, by that Amendment to Loan Agreement dated October 20, 1992, by that
Amendment to Loan Agreement dated August 23, 1993, by that Amendment to Loan
Agreement dated February 10, 1994, by that Amendment to Loan Agreement dated
July 18, 1994, by that Amendment to Loan Agreement dated September 20, 1994, by
that Amendment to Loan and Security Agreement dated August 31, 1995, by that
Amendment to Loan and Security Agreement (the "October 1995 Amendment") dated
October 5, 1995, and by that Amendment to Loan Agreement dated July 3, 1996 (the
"Loan Agreement"), as follows. (Capitalized terms used but not defined in this
Agreement, shall have the meanings set forth in the Loan Agreement.)
1. REVISED SCHEDULE. The Schedule to Loan Agreement is hereby replaced
in its entirety with the Schedule to Loan Agreement as attached hereto.
2. FEE. Borrower shall pay to Silicon a facility fee in the amount of
$25,000 concurrently, which shall be in addition to all interest and all other
amounts payable under the Loan Agreement, and which shall not be refundable.
3. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
4. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written documents and agreements between Silicon and the Borrower set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect
to the subject hereof. Except as herein expressly amended, all of the terms and
provisions of the Loan Agreement, as so amended, and all other documents and
agreements
-1-
between Silicon and the Borrower shall continue in full force and effect and the
same are hereby ratified and confirmed.
BORROWER: SILICON:
SYNC RESEARCH, INC. SILICON VALLEY BANK
BY_______________________________ BY_______________________________
PRESIDENT OR VICE PRESIDENT TITLE__________________________
BY_______________________________
SECRETARY OR ASS'T SECRETARY
-2-
SILICON VALLEY BANK
AMENDED SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: SYNC RESEARCH, INC.
ADDRESS: 7 STUDEBAKER
XXXXXX, XXXXXXXXXX 00000
DATED AS OF: OCTOBER 6, 1996
CREDIT LIMIT
(Section 1.1): An amount not to exceed $5,000,000 at any one time
outstanding; PROVIDED, HOWEVER, that upon a Post-IPO
Default (as defined in Section 2.2 of the Loan
Agreement as set forth in the Amendment to Loan and
Security Agreement dated October 5, 1995 between
Silicon and Borrower), the Credit Limit shall be an
amount not to exceed the lesser of: (i) $5,000,000 at
any one time outstanding; or (ii) 80% of the Net Amount
of Borrower's accounts, which Silicon in its discretion
deems eligible for borrowing. "Net Amount" of an
account means the gross amount of the account, minus
all applicable sales, use, excise and other similar
taxes and minus all discounts, credits and allowances
of any nature granted or claimed.
Without limiting the fact that the determination of
which accounts are eligible for borrowing is a matter
of Silicon's discretion, the following will not be
deemed eligible for borrowing: accounts outstanding
for more than 90 days from the invoice date, accounts
subject to any contingencies, accounts owing from any
government agency (unless Borrower completes such
assignment of claims documentation and other
documentation that Silicon determines is necessary or
desirable to perfect and protect the interest of
Silicon therein), accounts owing from an account debtor
outside the United States (unless pre-approved by
Silicon in its discretion, or backed by a letter of
credit satisfactory to Silicon, or FCIA insured
satisfactory to Silicon), accounts owing from one
account debtor to the extent they exceed 25% of the
total eligible accounts outstanding*, accounts owing
from an affiliate of Borrower**, and accounts owing
from an account debtor to whom Borrower is or may be
liable for goods purchased from such account debtor or
otherwise. In addition, if more than 50% of the
accounts owing from an account debtor are outstanding
more than 90 days from the invoice date or are
otherwise not eligible accounts, then all accounts
owing from that account debtor will be deemed
ineligible for borrowing.
*PROVIDED THAT ACCOUNTS OWING FROM AT&T, IBM, 3 COM,
AND RACAL-DATACOM SHALL BE DEEMED INELIGIBLE TO THE
EXTENT ANY
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SUCH ACCOUNTS EXCEED 40% OF THE TOTAL ELIGIBLE ACCOUNTS
OUTSTANDING
** (OTHER THAN 3 COM)
Silicon, in its reasonable discretion, will from time
to time during the term of this Agreement issue letters
of credit for the account of the Borrower ("Letters of
Credit"), in an aggregate amount at any one time
outstanding not to exceed $500,000, upon the request of
the Borrower, provided that, on the date the Letters of
Credit are to be issued, Borrower has available to it
Accounts Loans in an amount equal to or greater than
the face amount of the Letters of Credit to be issued.
Prior to the issuance of any Letters of Credit,
Borrower shall execute and deliver to Silicon
Applications for Letters of Credit and such other
documentation as Silicon shall specify (the "Letter of
Credit Documentation"). Fees for the Letters of Credit
shall be as provided in the Letter of Credit
Documentation. Letters of Credit may have a maturity
date up to twelve months beyond the Maturity Date in
effect from time to time, provided that 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
cash collateral in an amount equal to the face amount
of all such letters of credit plus all interest, fees
and cost due or to become due in connection therewith,
to secure all of the Obligations relating to said
letters of credit, pursuant to Silicon's then standard
form cash pledge agreement.
The Credit Limit set forth above and the Loans
available under this Agreement at any time shall be
reduced by the face amount of Letters of Credit from
time to time outstanding.
INTEREST RATE
(Section 1.2): A rate equal to the "Prime Rate" in effect from time to
time, per annum, 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.
FACILITY FEE
(Section 1.3): As per the Amendment to Loan Agreement of even date.
MATURITY DATE
(Section 5.1): OCTOBER 5, 1997
PRIOR NAMES OF BORROWER
(Section 3.2): FALLON & ASSOCIATES, SPECTRUM COMMUNICATIONS, INC.
TRADE NAMES OF BORROWER
(Section 3.2): SYNCVIEW, INTERNETWORKING SNA
OTHER LOCATIONS AND
-2-
ADDRESSES (Section 3.3): 0000 XX. XXXXX XXXXXX, XXXXX 0000, XXX XXXXX, XX
00000;
000 XXXXXXXX XXXX, X.X. XXX 00, XXXXXXX XXXXXX, XX
00000;
00 XXX XXXXXX, XXXXXX, XX 00000;
0000 XXXXXX XXXXX XXXXXX, XXXXXXX, XX 00000;
0000 XXXXXXXXXX XX., XXXXX 000, XXXXXXX, XX 00000;
0000 XXXXXXXXXX XXXX XXXX. #000, XXXXXXXXXXX, XX
00000;
0000 XXXXXXXX XXX., XX. XXXXXXXXXXX, XX 00000;
0000 XXXXX XXXXX, XXXXXX, XX 00000;
000 XXXXXXXX XXXXX, XXXXX 000, XXXXX, XX 00000;
00000 XXXXXXX XXXXXX XXXXX #000, XXXXXX, XX 00000;
THE XXX XXXXX XXXXX, XXX XXXXXXX XXXXXXX, XXXXXXXXX,
XXXXXXX XX0 0XX
MATERIAL ADVERSE
LITIGATION
(Section 3.10): NONE
NEGATIVE COVENANTS-
EXCEPTIONS
(Section 4.6): Without Silicon's prior written consent, Borrower may
do the following, provided that, after giving effect
thereto, no Event of Default has occurred and no event
has occurred which, with notice or passage of time or
both, would constitute an Event of Default, and
provided that the following are done in compliance with
all applicable laws, rules and regulations: (i)
repurchase shares of Borrower's stock pursuant to any
employee stock purchase or benefit plan, provided that
the total amount paid by Borrower for such stock does
not exceed $250,000 in any fiscal year.
FINANCIAL COVENANTS
(Section 4.1): Borrower shall comply with all of the following
covenants. Compliance shall be determined as of the
end of each fiscal quarter, except as otherwise
specifically provided below:
QUICK ASSET RATIO: Borrower shall maintain a ratio of "Quick Assets" to
current liabilities of not less than 5.0 to 1.
TANGIBLE NET WORTH: Borrower shall maintain a tangible net worth of not
less than $45,000,000, provided that tangible net worth
shall be computed excluding loans by the Borrower to
its officers.
DEBT TO TANGIBLE
NET WORTH RATIO: Borrower shall maintain a ratio of total liabilities
to tangible net worth of not more than .40 to 1.
PROFITABILITY: Borrower shall not incur a loss (after taxes) for the
fiscal year ending December 31, 1997.
DEFINITIONS: "Current assets," and "current liabilities" shall have
the meanings ascribed to them in accordance with
generally accepted accounting principles.
"Tangible net worth" means the excess of total assets
over total liabilities, determined in accordance with
generally accepted accounting principles, excluding
however all assets which would be
-3-
classified as intangible assets under generally
accepted accounting principles, including without
limitation goodwill, licenses, patents, trademarks,
trade names, copyrights, and franchises.
"Quick Assets" means cash on hand or on deposit in
banks, readily marketable securities issued by the
United States, readily marketable commercial paper
rated "A-1" by Standard & Poor's Corporation (or a
similar rating by a similar rating organization),
certificates of deposit and banker's acceptances, and
accounts receivable (net of allowance for doubtful
accounts).
SUBORDINATED DEBT: "Liabilities" for purposes of the foregoing covenants
do not include indebtedness which is subordinated to
the indebtedness to Silicon under a subordination
agreement in form specified by Silicon or by language
in the instrument evidencing the indebtedness which is
acceptable to Silicon.
OTHER COVENANTS
(Section 4.1): Borrower shall at all times comply with all of the
following additional covenants:
1. BANKING RELATIONSHIP. Borrower shall at all times
maintain its primary banking relationship with Silicon.
2. MONTHLY BORROWING BASE CERTIFICATE AND LISTING.
After the occurrence of a Post-IPO Default, within 20
days after the end of each month thereafter (including
any month in which the Post-IPO Default occurs),
Borrower shall provide Silicon with a Borrowing Base
Certificate in such form as Silicon shall specify, and
an aged listing of Borrower's accounts receivable and
accounts payable.
3. INDEBTEDNESS. Without limiting any of the
foregoing terms or provisions of this Agreement,
Borrower shall not in the future incur indebtedness for
borrowed money, except for (i) indebtedness to Silicon,
and (ii) indebtedness incurred in the future for the
purchase price of or lease of equipment in an aggregate
amount not exceeding $300,000 at any time outstanding.
4. [RESERVED.]
5. NEGATIVE PLEDGE. Borrower shall not grant a
security interest in any of its present or future
Collateral, other than for specific liens on capital
equipment relating to obligations incurred pursuant to
paragraph 3 above and a lien in favor of Silicon.
6. AGREEMENT TO TERMINATE SECURITY INTEREST UPON IPO;
POST-IPO DEFAULT UCCS; ETC. Due to the completion of
the IPO Consummation, Silicon has agreed to terminate
its security interest in the Collateral.
Notwithstanding the foregoing, upon the occurrence of a
Post-IPO Default, Borrower agrees that Borrower shall
be deemed to have granted to Silicon a security
interest in the Collateral as set forth in Section 2.2
hereof at such time, and that Borrower agrees to
execute and deliver to Silicon forthwith such UCC
financing statements, instruments and other
documentation as Silicon determines is necessary or
desirable in connection therewith in order to perfect
and otherwise protect its security interest in the
Collateral.
-4-
BORROWER:
SYNC RESEARCH, INC.
BY_______________________________
RESIDENT OR VICE PRESIDENT
BY_______________________________
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY_______________________________
TITLE____________________________
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SILICON VALLEY BANK
AMENDMENT TO LOAN AND SECURITY AGREEMENT
BORROWER: SYNC RESEARCH, INC.
ADDRESS: 7 STUDEBAKER
XXXXXX, XXXXXXXXXX 00000
DATE: JULY 3, 1996
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON VALLEY
BANK ("Silicon") and the borrower named above (the "Borrower").
The Parties agree to amend the Loan and Security Agreement between them,
dated September 18, 1991, as amended by that Extension Agreement dated August 3,
1992, by that Amendment to Loan Agreement dated October 20, 1992, by that
Amendment to Loan Agreement dated August 23, 1993, by that Amendment to Loan
Agreement dated February 10, 1994, by that Amendment to Loan Agreement dated
July 18, 1994, by that Amendment to Loan Agreement dated September 20, 1994, by
that Amendment to Loan and Security Agreement dated August 31, 1995, and by that
Amendment to Loan and Security Agreement dated October 5, 1995 (the "Loan
Agreement"), as follows. (Capitalized terms used but not defined in this
Agreement, shall have the meanings set forth in the Loan Agreement.)
1. REVISED SCHEDULE. The Schedule to Loan Agreement is hereby replaced
in its entirety with the Schedule to Loan Agreement as attached hereto.
2. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
3. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written documents and agreements between Silicon and the Borrower set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect
to the subject hereof. Except as herein expressly amended, all of the terms and
provisions of the Loan Agreement, as so amended, and all other documents and
agreements
-1-
between Silicon and the Borrower shall continue in full force and effect and the
same are hereby ratified and confirmed.
BORROWER: SILICON:
SYNC RESEARCH, INC. SILICON VALLEY BANK
BY_______________________________ BY_______________________________
PRESIDENT OR VICE PRESIDENT TITLE__________________________
BY_______________________________
SECRETARY OR ASS'T SECRETARY
-2-
SILICON VALLEY BANK
AMENDED SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: SYNC RESEARCH, INC.
ADDRESS: 7 STUDEBAKER
XXXXXX, XXXXXXXXXX 00000
DATE: JULY 3, 1996
CREDIT LIMIT
(Section 1.1): An amount not to exceed $3,000,000 at any one time
outstanding; PROVIDED, HOWEVER, that upon a Post-IPO
Default, the Credit Limit shall be an amount not to
exceed the lesser of: (i) $3,000,000 at any one time
outstanding; or (ii) 80% of the Net Amount of
Borrower's accounts, which Silicon in its discretion
deems eligible for borrowing. "Net Amount" of an
account means the gross amount of the account, minus
all applicable sales, use, excise and other similar
taxes and minus all discounts, credits and allowances
of any nature granted or claimed.
Without limiting the fact that the determination of
which accounts are eligible for borrowing is a matter
of Silicon's discretion, the following will not be
deemed eligible for borrowing: accounts outstanding
for more than 90 days from the invoice date, accounts
subject to any contingencies, accounts owing from any
government agency (unless Borrower completes such
assignment of claims documentation and other
documentation that Silicon determines is necessary or
desirable to perfect and protect the interest of
Silicon therein), accounts owing from an account debtor
outside the United States (unless pre-approved by
Silicon in its discretion, or backed by a letter of
credit satisfactory to Silicon, or FCIA insured
satisfactory to Silicon), accounts owing from one
account debtor to the extent they exceed 25% of the
total eligible accounts outstanding*, accounts owing
from an affiliate of Borrower**, and accounts owing
from an account debtor to whom Borrower is or may be
liable for goods purchased from such account debtor or
otherwise. In addition, if more than 50% of the
accounts owing from an account debtor are outstanding
more than 90 days from the invoice date or are
otherwise not eligible accounts, then all accounts
owing from that account debtor will be deemed
ineligible for borrowing.
*PROVIDED THAT ACCOUNTS OWING FROM AT&T, IBM, 3 COM,
AND RACAL-DATACOM SHALL BE DEEMED INELIGIBLE TO THE
EXTENT ANY SUCH ACCOUNTS EXCEED 40% OF THE TOTAL
ELIGIBLE ACCOUNTS OUTSTANDING
-1-
** (other than 3 COM)
Silicon, in its reasonable discretion, will from time
to time during the term of this Agreement issue letters
of credit for the account of the Borrower ("Letters of
Credit"), in an aggregate amount at any one time
outstanding not to exceed $500,000, upon the request of
the Borrower, provided that, on the date the Letters of
Credit are to be issued, Borrower has available to it
Accounts Loans in an amount equal to or greater than
the face amount of the Letters of Credit to be issued.
Prior to the issuance of any Letters of Credit,
Borrower shall execute and deliver to Silicon
Applications for Letters of Credit and such other
documentation as Silicon shall specify (the "Letter of
Credit Documentation"). Fees for the Letters of Credit
shall be as provided in the Letter of Credit
Documentation. Letters of Credit may have a maturity
date up to twelve months beyond the Maturity Date in
effect from time to time, provided that 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
cash collateral in an amount equal to the face amount
of all such letters of credit plus all interest, fees
and cost due or to become due in connection therewith,
to secure all of the Obligations relating to said
letters of credit, pursuant to Silicon's then standard
form cash pledge agreement.
The Credit Limit set forth above and the Loans
available under this Agreement at any time shall be
reduced by the face amount of Letters of Credit from
time to time outstanding.
INTEREST RATE
(Section 1.2): A rate equal to the "Prime Rate" in effect from time to
time, plus .50% per annum, 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.
FACILITY FEE
(Section 1.3): As per the Amendment to Loan Agreement of even date.
MATURITY DATE
(Section 5.1): OCTOBER 5, 1996
PRIOR NAMES OF BORROWER
(Section 3.2): FALLON & ASSOCIATES, SPECTRUM COMMUNICATIONS, INC.
TRADE NAMES OF BORROWER
(Section 3.2): SYNCVIEW, INTERNETWORKING SNA
OTHER LOCATIONS AND
-2-
ADDRESSES (Section 3.3): 0000 XX. XXXXX XXXXXX, XXXXX 0000, XXX XXXXX, XX
00000;
000 XXXXXXXX XXXX, X.X. XXX 00, XXXXXXX XXXXXX, XX
00000;
00 XXX XXXXXX, XXXXXX, XX 00000;
0000 XXXXXX XXXXX XXXXXX, XXXXXXX, XX 00000;
0000 XXXXXXXXXX XX., XXXXX 000, XXXXXXX, XX 00000;
0000 XXXXXXXXXX XXXX XXXX. #000, XXXXXXXXXXX, XX
00000;
0000 XXXXXXXX XXX., XX. XXXXXXXXXXX, XX 00000;
0000 XXXXX XXXXX, XXXXXX, XX 00000;
000 XXXXXXXX XXXXX, XXXXX 000, XXXXX, XX 00000;
00000 XXXXXXX XXXXXX XXXXX #000, XXXXXX, XX 00000;
THE XXX XXXXX XXXXX, XXX XXXXXXX XXXXXXX, XXXXXXXXX,
XXXXXXX XX0 0XX
MATERIAL ADVERSE
LITIGATION
(Section 3.10): NONE
NEGATIVE COVENANTS-
EXCEPTIONS
(Section 4.6): Without Silicon's prior written consent, Borrower may
do the following, provided that, after giving effect
thereto, no Event of Default has occurred and no event
has occurred which, with notice or passage of time or
both, would constitute an Event of Default, and
provided that the following are done in compliance with
all applicable laws, rules and regulations: (i)
repurchase shares of Borrower's stock pursuant to any
employee stock purchase or benefit plan, provided that
the total amount paid by Borrower for such stock does
not exceed $250,000 in any fiscal year.
FINANCIAL COVENANTS
(Section 4.1): Borrower shall comply with all of the following
covenants. Compliance shall be determined as of the
end of each fiscal quarter commencing with the quarter
ending March 31, 1996, except as otherwise specifically
provided below:
QUICK ASSET RATIO: Borrower shall maintain a ratio of "Quick Assets" to
current liabilities of not less than 6.0 to 1.
TANGIBLE NET WORTH: Borrower shall maintain a tangible net worth of not
less than $50,000,000, provided that tangible net worth
shall be computed excluding loans by the Borrower to
its officers.
DEBT TO TANGIBLE
NET WORTH RATIO: Borrower shall maintain a ratio of total liabilities to
tangible net worth of not more than .40 to 1.
PROFITABILITY Borrower shall not incur a loss (after taxes) for the
fiscal year ending December 31, 1996.
DEFINITIONS: "Current assets," and "current liabilities" shall have
the meanings ascribed to them in accordance with
generally accepted accounting principles.
"Tangible net worth" means the excess of total assets
over total liabilities, determined in accordance with
generally accepted accounting principles, excluding
however all assets which would be
-3-
classified as intangible assets under generally
accepted accounting principles, including without
limitation goodwill, licenses, patents, trademarks,
trade names, copyrights, and franchises.
"Quick Assets" means cash on hand or on deposit in
banks, readily marketable securities issued by the
United States, readily marketable commercial paper
rated "A-1" by Standard & Poor's Corporation (or a
similar rating by a similar rating organization),
certificates of deposit and banker's acceptances, and
accounts receivable (net of allowance for doubtful
accounts).
SUBORDINATED DEBT: "Liabilities" for purposes of the foregoing covenants
do not include indebtedness which is subordinated to
the indebtedness to Silicon under a subordination
agreement in form specified by Silicon or by language
in the instrument evidencing the indebtedness which is
acceptable to Silicon.
OTHER COVENANTS
(Section 4.1): Borrower shall at all times comply with all of the
following additional covenants:
1. BANKING RELATIONSHIP. Borrower shall at all times
maintain its primary banking relationship with Silicon.
2. MONTHLY BORROWING BASE CERTIFICATE AND LISTING.
After the occurrence of a Post-IPO Default, within 20
days after the end of each month thereafter (including
any month in which the Post-IPO Default occurs),
Borrower shall provide Silicon with a Borrowing Base
Certificate in such form as Silicon shall specify, and
an aged listing of Borrower's accounts receivable and
accounts payable.
3. INDEBTEDNESS. Without limiting any of the
foregoing terms or provisions of this Agreement,
Borrower shall not in the future incur indebtedness for
borrowed money, except for (i) indebtedness to Silicon,
and (ii) indebtedness incurred in the future for the
purchase price of or lease of equipment in an aggregate
amount not exceeding $300,000 at any time outstanding.
4. ANNUAL CLEAN UP PERIOD. Borrower agrees that
during the term of October 6, 1995 through October 5,
1996 there shall be a 30 day period within which no
Obligations shall be outstanding other than with
respect to any possible Letters of Credit that may be
outstanding.
5. NEGATIVE PLEDGE. Borrower shall not grant a
security interest in any of its present or future
Collateral, other than for specific liens on capital
equipment relating to obligations incurred pursuant to
paragraph 3 above and a lien in favor of Silicon.
6. AGREEMENT TO TERMINATE SECURITY INTEREST UPON IPO;
POST-IPO DEFAULT UCCS; ETC. Due to the completion of
the IPO Consummation, Silicon agrees to terminate its
security interest in the Collateral. Notwithstanding
the foregoing, upon the occurrence of a Post-IPO
Default, Borrower agrees that Borrower shall be deemed
to have granted to Silicon a security interest in the
Collateral as set forth in Section 2.2 hereof at such
time, and that Borrower agrees to execute and deliver
to Silicon forthwith such UCC financing statements,
instruments and other documentation as Silicon
determines is
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necessary or desirable in connection therewith in order
to perfect and otherwise protect such security interest
in the Collateral.
BORROWER:
SYNC RESEARCH, INC.
BY_______________________________
PRESIDENT OR VICE PRESIDENT
BY_______________________________
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY_______________________________
TITLE____________________________
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