Loan and Security Agreement - Silicon Valley Bank and Limelight Networks Inc.
LOAN AND SECURITY AGREEMENT
LIMELIGHT NETWORKS, INC.
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TABLE OF CONTENTS
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1 ACCOUNTING AND OTHER TERMS ......................................... 4
2 LOAN AND TERMS OF PAYMENT .......................................... 4
2.1 Promise to Pay .............................................. 4
2.2 Termination of Commitment to Lend ........................... 5
2.3 Overadvances ................................................ 5
2.4 Interest Rate, Payments ..................................... 6
2.5 Authority to Debit Accounts ................................. 6
2.6 Fees ........................................................ 6
3 CONDITIONS OF LOANS ................................................ 6
3.1 Conditions Precedent to Initial Credit Extension ............ 6
3.2 Conditions Precedent to all Credit Extensions ............... 7
4 CREATION OF SECURITY INTEREST ...................................... 7
4.1 Grant of Security Interest .................................. 7
4.2 Authorization to File ....................................... 7
5 REPRESENTATIONS AND WARRANTIES ..................................... 7
5.1 Due Organization and Authorization .......................... 7
5.2 Collateral .................................................. 8
5.3 Litigation .................................................. 8
5.4 No Material Adverse Change in Financial Statements .......... 8
5.5 Solvency .................................................... 8
5.6 Regulatory Compliance ....................................... 8
5.7 Investments in Subsidiaries ................................. 9
5.8 Full Disclosure ............................................. 9
6 AFFIRMATIVE CONVENANTS ............................................. 9
6.1 Government Compliance ....................................... 9
6.2 Financial Statements, Reports, Certificates ................. 9
6.3 Inventory; Returns .......................................... 10
6.4 Taxes ....................................................... 10
6.5 Insurance ................................................... 10
6.6 Primary Accounts ............................................ 10
6.7 Financial Covenants ......................................... 10
6.8 Registration of Intellectual Property Rights ................ 11
6.9 Further Assurances .......................................... 11
7 NEGATIVE CONVENANTS ................................................ 11
7.1 Dispositions ................................................ 12
7.2 Changes in Business, Ownership, Management or Locations ..... 12
7.3 Mergers or Acquisitions ..................................... 12
7.4 Indebtedness ................................................ 12
7.5 Encumbrance ................................................. 12
7.6 Distributions; Investments .................................. 12
7.7 Transactions with Affiliates ................................ 13
7.8 Subordinated Debt ........................................... 13
7.9 Compliance .................................................. 13
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8 EVENTS OF DEFAULT .................................................. 13
8.1 Payment Default ............................................. 13
8.2 Covenant Default ............................................ 13
8.3 Material Adverse Change ..................................... 13
8.4 Attachment .................................................. 14
8.5 Insolvency .................................................. 14
8.6 Other Agreements ............................................ 14
8.7 Judgments ................................................... 14
8.8 Misrepresentations .......................................... 14
8.9 Guaranty .................................................... 14
9 BANK'S RIGHTS AND REMEDIES ......................................... 14
9.1 Rights and Remedies ......................................... 14
9.2 Power of Attorney ........................................... 15
9.3 Bank Expenses ............................................... 15
9.4 Bank's Liability for Collateral ............................. 15
9.5 Remedies Cumulative ......................................... 16
9.6 Demand Waiver ............................................... 16
10 NOTICES ............................................................ 16
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER ......................... 16
12 GENERAL PROVISIONS ................................................. 16
12.1 Successors and Assigns ...................................... 16
12.2 Indemnification ............................................. 17
12.3 Time of Essence ............................................. 17
12.4 Severability of Provision ................................... 17
12.5 Amendments in Writing, Integration .......................... 17
12.6 Counterparts ................................................ 17
12.7 Survival .................................................... 17
12.8 Confidentiality ............................................. 17
12.9 Attorneys' Fees, Costs and Expenses ......................... 17
13 DEFINITIONS ........................................................ 18
13.1 Definitions ................................................. 18
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THIS LOAN AND SECURITY AGREEMENT dated April 15, 2005 but effective as of
the Effective Date, between SILICON VALLEY BANK, a California chartered bank
with its principal place of business at 3003 Tasman Drive, Santa Clara,
California 95054 and with a loan production office located at 14300 Northsight
Boulevard, Suite 203, Scottsdale, Arizona 85260 ("Bank") and LIMELIGHT NETWORKS,
INC., a Delaware corporation with its principal place of business at 2220 W.
14th Street, Tempe, AZ 85281 ("Borrower") provides the terms on which Bank will
lend to Borrower and Borrower will repay Bank. The parties agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement will be construed following
GAAP. Calculations and determinations must be made following GAAP. The term
"financial statements" includes the notes and schedules. The terms "including"
and "includes" always mean "including (or includes) without limitation," in this
or any Loan Document. Capitalized terms in this Agreement shall have the
meanings set forth in Section 13, if not otherwise defined herein.
2 LOAN AND TERMS Of PAYMENT
2.1 PROMISE TO PAY.
Borrower promises to pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.
2.1.1 REVOLVING ADVANCES.
(a) Bank will make Advances not exceeding (i) the lesser of (A) the
Committed Revolving Line or (B) the Borrowing Base, minus (ii) the amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit), and minus (iii) the amount of utilized Cash Management Services covered
under the Cash Management Services Sublimit. Amounts borrowed under this Section
may be repaid and reborrowed during the term of this Agreement.
(b) To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 12:00 p.m. Pacific time on the Business Day the Advance is to be
made. Borrower must promptly confirm the notification by delivering to Bank the
Payment/Advance Form attached as Exhibit B. Bank will credit Advances to
Borrower's deposit account. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become
due. Bank may rely on any telephone notice given by a person whom Bank believes
is a Responsible Officer or designee. Borrower will indemnify Bank for any loss
Bank suffers due to such reliance.
(c) The Committed Revolving Line terminates on the Revolving Maturity Date,
when all Advances are immediately payable.
2.1.2 EQUIPMENT FACILITY.
(a) Through March 31, 2006 (the "Equipment Availability End Date"), Bank
will make advances ("Equipment Advance" and, collectively, "Equipment Advances")
not exceeding the Committed Equipment Line. The Equipment Advances may only be
used to finance or refinance Equipment purchased on or after 90 days before the
date of each Equipment Advance and may not exceed 100% of the equipment invoice
excluding taxes, shipping, warranty charges, freight discounts and installation
expense. Soft costs may constitute up to $500,000 of the aggregate Equipment
Advances. Each Equipment Advance must be for a minimum of $100,000. The number
of Equipment Advances is limited to 1 per month. Notwithstanding the foregoing,
upon the Effective Date an Equipment Advance in the amount of $750,000 shall be
advanced for
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Equipment purchases, provided that the amount of such Equipment Advance does not
exceed 100% of Borrower's net book value of fixed assets and that invoices for
at least $250,000 of Equipment dated within 150 days prior the date of such
Equipment Advance are provided to Bank on or prior thereto.
(b) Each Equipment Advance shall immediately amortize and be payable in 36
equal monthly payments of principal and interest beginning 30 days following
such Equipment Advance and continuing on the same day of each month thereafter.
The final payment due on the applicable Equipment Maturity Date shall include
all outstanding principal and all accrued unpaid interest. Equipment Advances
when repaid may not be re-borrowed.
(c) To obtain an Equipment Advance, Borrower must notify Bank (the notice
is irrevocable) by facsimile no later than 12:00 p.m. Pacific time one Business
Day before the day on which the Equipment Advance is to be made. The notice in
the form of Exhibit B (Payment/Advance Form) must be signed by a Responsible
Officer or designee and include a copy of invoices for the Equipment being
financed and such additional information as Bank may request; provided, however,
copies of invoices related to the initial Equipment Advance made on the
Effective Date shall not be required.
2.1.3 LETTERS OF CREDIT SUBLIMIT.
Bank will issue or have issued Letters of Credit for Borrower's account not
exceeding (i) the lesser of the Committed Revolving Line or the Borrowing Base
minus (ii) the outstanding principal balance of the Advances and minus the Cash
Management Sublimit; however, the face amount of outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) may not exceed $500,000.
Borrower's Letter of Credit reimbursement obligation will be secured by
unencumbered cash on terms acceptable to Bank at any time upon the Revolving
Maturity Date if the term of this Agreement is not extended by Bank. Borrower
agrees to execute any further documentation in connection with the Letters of
Credit as Bank may reasonably request.
2.1.4 CASH MANAGEMENT SERVICES SUBLIMIT.
Borrower may use up to $500,000 (the "Cash Management Services Sublimit")
for Bank's Cash Management Services, which may include merchant services, direct
deposit of payroll, business credit card, and check cashing services identified
in various cash management services agreements related to such services (the
"Cash Management Services"). All amounts Bank pays for any Cash Management
Services will be treated as Advances under the Committed Revolving Line.
2.2 TERMINATION OF COMMITMENT TO LEND.
Bank's obligation to lend the undisbursed portion of the Obligations will
terminate if, in Bank's sole discretion, there has been a material adverse
change in the general affairs, management, results of operation or condition
(financial or otherwise) of Borrower or in the prospect of repayment of the
Obligations, or there has been any material adverse deviation by Borrower from
the most recent business plan of Borrower presented to and accepted by Bank
prior to the execution of this Agreement.
2.3 OVERADVANCES.
If Borrower's Obligations under Section 2.1.1, 2.1.3, and 2.1.4 exceed the
lesser of either (i) the Committed Revolving Line or (ii) the Borrowing Base,
Borrower must promptly pay Bank the excess.
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2.4 INTEREST RATE, PAYMENTS.
(a) Interest Rate. Advances accrue interest on the outstanding principal
balance at a per annum rate equal to the greater of either (i) 0.75 percentage
points above the Prime Rate or (ii) 6.00%. Equipment Advances accrue interest on
the outstanding principal balance at a per annum rate equal to the Basic Rate.
After an Event of Default, Obligations accrue interest at 5 percent above the
rate effective immediately before the Event of Default. The interest rate
increases or decreases when the Prime Rate changes. Interest is computed on a
360 day year for the actual number of days elapsed.
(b) Payments. Interest due on the Committed Revolving Line is payable
monthly on the same day of each month as the day on which the Effective Date
occurs. Payments received after 12:00 noon Pacific time are considered received
at the opening of business on the next Business Day. When a payment is due on a
day that is not a Business Day, the payment is due the next Business Day and
additional interest shall accrue. If any change in the law increases Bank's
expenses or decreases its return from the Equipment Advances, Borrower will pay
Bank upon request the amount of such increase or decrease.
2.5 AUTHORITY TO DEBIT ACCOUNTS.
Bank may debit any of Borrower's deposit accounts including Account Number
3300467946 for principal and interest payments owing or any other amounts
Borrower owes Bank when due. Bank will notify Borrower when it debits Borrower's
accounts. These debits are not a set-off.
2.6 FEES. Borrower will pay:
(a) Facility Fee. A fully earned, non-refundable Facility Fee of $20,000
for the Committed Revolving Line, due on the Effective Date, and the deposit
previously received by Bank in the same amount shall be applied against such
Fee;
(b) Bank Expenses. All Bank Expenses (including reasonable attorneys' fees
and reasonable expenses) incurred through and after the date of this Agreement,
payable when due; and
(c) Early Termination Fees. A fully earned, non-refundable early
termination fee of one percent (1%) of the Committed Revolving Line (currently
$10,000) shall be due upon voluntary or involuntary payment in full of
Borrower's Obligations under the Committed Revolving Line and termination of the
Committed Revolving Line prior to the Revolving Maturity Date; and a fully
earned, non-refundable early termination fee of one percent (1%) of the
outstanding principal balance of all Equipment Advances shall be due upon
voluntary or involuntary payment in full of Borrower's Obligations under the
Committed Equipment Line prior to the relevant Equipment Maturity Dates and
termination of Bank's obligation to lend the undisbursed portion of such
Obligations under the Committed Equipment Line; provided that no such early
termination fees shall be payable if Bank agrees to refinance and/or redocument
this Agreement in another lending division of Bank (in Bank's sole discretion)
prior to the relevant Maturity Dates.
3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.
Bank's obligation to make the initial Credit Extension is subject to the
condition precedent that it receive the agreements, documents and fees it
reasonably requires.
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3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.
Bank's obligations to make each Credit Extension, including the initial
Credit Extension, is subject to the following:
(a) timely receipt of any Payment/Advance Form; and
(b) the representations and warranties in Section 5 must be materially true
on the date of the Payment/Advance Form and on the effective date of each Credit
Extension and no Event of Default may have occurred and be continuing, or result
from the Credit Extension. Each Credit Extension is Borrower's representation
and warranty on that date that the representations and warranties of Section 5
remain true.
4 CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST.
Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank may place a "hold" on any deposit account pledged as
Collateral. If this Agreement is terminated, Bank's lien and security interest
in the Collateral will continue until Borrower fully satisfies its Obligations.
If Borrower shall at any time, acquire a commercial tort claim, Borrower shall
promptly notify Bank in a writing signed by Borrower of the brief details
thereof and grant to Bank in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance reasonably satisfactory to Bank.
4.2 AUTHORIZATION TO FILE.
Borrower authorizes Bank to file financing statements without notice to
Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in
order to perfect or protect Bank's interest in the Collateral.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION.
Borrower and each Subsidiary is duly existing and in good standing in its
state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified, except where the failure to do so could
not reasonably be expected to cause a Material Adverse Change. Borrower has not
changed its state of formation or its organizational structure or type or any
organizational number (if any) assigned by its jurisdiction of formation.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the default could reasonably be expected to cause a Material
Adverse Change.
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5.2 COLLATERAL.
Borrower has good title to the Collateral, free of Liens except Permitted
Liens or Borrower has Rights to each asset that is Collateral. Borrower has no
other deposit account, other than the deposit accounts described in the
Schedule. The Accounts are bona fide, existing obligations, and the service or
property has been performed or delivered to the account debtor or its agent for
immediate shipment to and unconditional acceptance by the account debtor. Except
as described in the Schedule the Collateral is not in the possession of any
third party bailee (such as at a warehouse). In the event that Borrower, after
the date hereof, intends to store with or otherwise deliver any of the
Collateral to such a bailee, then Borrower will receive the prior written
consent of Bank and such bailee must acknowledge in writing that the bailee is
holding such Collateral for the benefit of Bank. Borrower has no notice of any
actual or imminent Insolvency Proceeding of any account debtor whose accounts
are an Eligible Account in any Borrowing Base Certificate. All Inventory is in
all material respects of good and marketable quality, free from material
defects. Borrower is the sole owner of the intellectual Property, except for
non-exclusive licenses granted to its customers in the ordinary course of
business. Each Patent is valid and enforceable and no part of the Intellectual
Property has been judged invalid or unenforceable, in whole or in part, and no
claim has been made that any part of the Intellectual Property violates the
rights of any third party, except to the extent such claim could not reasonably
be expected to cause a Material Adverse Change.
5.3 LITIGATION.
Except as shown in the Schedule, there are no actions or proceedings
pending or, to the knowledge of Borrower's Responsible Officers, threatened by
or against Borrower or any Subsidiary in which a likely adverse decision could
reasonably be expected to cause a Material Adverse Change.
5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.
All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations. There has not been any material deterioration in Borrower's
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.
5.5 SOLVENCY.
The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.
5.6 REGULATORY COMPLIANCE.
Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors). Borrower has
complied in all material respects with the Federal Fair Labor Standards Act.
Borrower has not violated any laws, ordinances or rules, the violation of which
could reasonably be expected to cause a Material Adverse Change. None of
Borrower's or any Subsidiary's properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary has timely filed all required
tax returns and paid, or made adequate provision to pay, all material taxes,
except those being contested in good faith with adequate reserves under GAAP.
Borrower
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and each Subsidiary has obtained all consents, approvals and authorizations of,
made all declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently conducted,
except where the failure to do so could not reasonably be expected to cause a
Material Adverse Change.
5.7 INVESTMENTS IN SUBSIDIARIES.
Borrower does not own any stock, partnership interest or other equity
securities except for Permitted investments.
5.8 FULL DISCLOSURE.
No written representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank (taken together with all such
written certificates and written statements to Bank) contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained in the certificates or statements not misleading. It
being recognized by Bank that the projections and forecasts provided by Borrower
in good faith and based upon reasonable assumptions are not viewed as facts and
that actual results during the period or periods covered by such projections and
forecasts may differ from the projected and forecasted results.
6 AFFIRMATIVE COVENANTS
Borrower will do all of the following for so long as Bank has an obligation
to lend, or there are outstanding Obligations:
6.1 GOVERNMENT COMPLIANCE.
Borrower will maintain its and all Subsidiaries' legal existence and good
standing in its jurisdiction of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
cause a material adverse effect on Borrower's business or operations. Borrower
will comply, and have each Subsidiary comply, with all laws, ordinances and
regulations to which it is subject, the noncompliance with which could
reasonably be expected to have a material adverse effect on Borrower's business
or operations or would reasonably be expected to cause a Material Adverse
Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower will deliver to Bank: (i) as soon as available, but no later
than 20 days after the last day of each month, a company prepared consolidated
balance sheet and income statement covering Borrower's consolidated operations
during the period certified by a Responsible Officer and in a form acceptable to
Bank; (ii) as soon as available, but no later than 120 days after the last day
of Borrower's fiscal year, audited consolidated financial statements prepared
under GAAP, consistently applied, together with an unqualified opinion on the
financial statements from an independent certified public accounting firm
reasonably acceptable to Bank; (iii) within 5 days of filing, copies of all
statements, reports and notices made available to Borrower's security holders or
to any holders of Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K,
if any, filed with the Securities and Exchange Commission; (iv) a prompt report
of any legal actions pending or threatened against Borrower or any Subsidiary
that could result in damages or costs to Borrower or any Subsidiary of $100,000
or more; (v) budgets, sales projections, operating plans or other financial
information Bank reasonably requests; (vi) prompt notice of any material change
in the composition of the intellectual Property, including any subsequent
ownership right of Borrower in or to any Copyright, Patent or Trademark not
shown in any intellectual property security agreement between Borrower and Bank
or knowledge of an event that materially adversely affects the value of the
intellectual Property; and (vii) as soon as
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available but no later than 30 days prior to each fiscal year end, Borrower's
financial projections for the following year on a monthly basis.
(b) Within 20 days after the last day of each month, Borrower will deliver
to Bank a Borrowing Base Certificate signed by a Responsible Officer in the form
of Exhibit C, with aged listings of accounts receivable and accounts payable.
(c) Within 20 days after the last day of each month, Borrower will deliver
to Bank with the monthly financial statements a Compliance Certificate signed by
a Responsible Officer in the form of Exhibit D.
(d) Borrower will allow Bank to audit Borrower's Collateral at Borrower's
expense. Such audits will be conducted no more often than annually unless an
Event of Default has occurred and is continuing.
6.3 INVENTORY; RETURNS.
Borrower will keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary practices as they exist at execution of
this Agreement. Borrower must promptly notify Bank of all returns, recoveries,
disputes and claims, that involve more than $50,000.
6.4 TAXES.
Borrower will make, and cause each Subsidiary to make, timely payment of
all material federal, state, and local taxes or assessments and will deliver to
Bank, on demand, appropriate certificates attesting to the payment.
6.5 INSURANCE.
Borrower will keep its business and the Collateral insured for risks and in
amounts, as Bank may reasonably request. Insurance policies will be in a form,
with companies, and in amounts that are satisfactory to Bank in Bank's
reasonable discretion. All property policies will have a lender's loss payable
endorsement showing Bank as an additional loss payee and all liability policies
will show the Bank as an additional insured and provide that the insurer must
give Bank at least 20 days notice before canceling its policy. At Bank's
request, Borrower will deliver certified copies of policies and evidence of all
premium payments. Proceeds payable under any policy will, at Bank's option, be
payable to Bank on account of the Obligations.
6.6 PRIMARY ACCOUNTS.
Borrower will maintain its primary operating and investment accounts with
Bank. As to any deposit accounts and investment accounts maintained with
institutions not related to Bank, in which the aggregate balances exceed 10% of
Borrower's cash, Borrower shall cause such institutions to enter into a control
agreement in form acceptable to Bank in its good faith business judgment in
order to perfect Bank's first priority security interest in said deposit
accounts and investment accounts.
6.7 FINANCIAL COVENANTS.
Borrower will maintain as of the last day of each month:
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(i) QUICK RATIO (ADJUSTED). A ratio of Quick Assets to Current
Liabilities (excluding investor/related party debt) of at least 1.00 to 1.00
until October 31, 2005 and thereafter at least 1.25 to 1.00.
(ii) DEBT SERVICE COVERAGE RATIO. A ratio of Borrower's (a)
consolidated earnings before interest expense, income taxes, depreciation,
amortization of intangible assets and other non-cash charges made to Borrower's
income (all a determined by GAAP) minus unfunded capital expenditures for the
preceeding three-month period to (b) current maturities of long term debt due
Bank plus interest expense paid Bank during the preceeding three-month period of
at least 2.00 to 1.00, measured monthly on a rolling 3 month basis.
6.8 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.
Borrower shall not register any Copyrights or Mask Works with the United
States Copyright Office unless it: (i) has given at least fifteen (15) days'
prior notice to Bank of its intent to register such Copyrights or Mask Works and
has provided Bank with a copy of the application it intends to file with the
United States Copyright Office (excluding exhibits thereto); (ii) executes a
security agreement or such other documents as Bank may reasonably request in
order to maintain the perfection and priority of Bank's security interest in the
Copyrights proposed to be registered with the United States Copyright Office;
and (iii) records such security documents with the United States Copyright
Office contemporaneously with filing the Copyright application(s) with the
United States Copyright Office. Borrower shall promptly provide to Bank a copy
of the Copyright application(s) filed with the United States Copyright Office,
together with evidence of the recording of the security documents necessary for
Bank So maintain the perfection and priority of its security interest in such
Copyrights or Mask Works. Borrower shall provide written notice to Bank of any
application filed by Borrower in the United States Patent Trademark Office for a
patent or to register a trademark or service mark within 30 days of any such
filing.
Borrower will (i) protect, defend and maintain the validity and
enforceability of the Intellectual Property and promptly advise Bank in writing
of material infringements and (ii) not allow any Intellectual Property to be
abandoned, forfeited or dedicated to the public without Bank's written consent.
6.9 FURTHER ASSURANCES.
(a) Borrower will execute any further instruments and take further action
as Bank reasonably requests to perfect or continue Bank's security interest in
the Collateral or to effect the purposes of this Agreement.
(b) Borrower will cause each Subsidiary to guaranty the Obligations.
(c) Within 60 days following the Effective Date, Borrower will deliver to
Bank Consents to Removal of Personal Property (or such other form of landlord's
waiver as may be acceptable to Bank in its sole discretion) from the owners of
Borrower's Tempe, Arizona headquarters, and from the owners of the premises at
such locations as Bank may specify where Equinix, Global Crossing and Switch and
Data are lessees, renters or otherwise have possession of Borrower's assets.
7 NEGATIVE COVENANTS
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For so long as Bank has an obligation to lend or there are any outstanding
Obligations, Borrower shall not, without Bank's prior written consent (which
shall be a matter of its good faith business judgment), do any of the following:
7.1 DISPOSITIONS.
Convey, sell, lease, transfer or otherwise dispose of (collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, except for Transfers (i) of Inventory in the ordinary
course of business; (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries In the ordinary course
of business; or (iii) of worn-out or obsolete Equipment.
7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR LOCATIONS OF COLLATERAL.
Engage in or permit any of its Subsidiaries to engage in any business other
than the businesses currently engaged in by Borrower or reasonably related
thereto or have a material change in its ownership or management of greater than
25% (other than by the sale of Borrower's equity securities in a public offering
or to venture capital investors so long as Borrower identifies the venture
capital investors prior to the closing of the investment). Borrower will not,
without at least 30 days prior written notice, relocate its chief executive
office, change its state of formation (including reincorporation), change its
organizational number or name or add any new offices or business locations (such
as warehouses) in which Borrower maintains or stores over $5,000 in Collateral.
7.3 MERGERS OR ACQUISITIONS.
Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except, as long as no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement, (i) where such transaction would not require more than 15% of
Borrower's cash or 25% of Borrower's stock, and (ii) a Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.
7.4 INDEBTEDNESS.
Create, incur, assume, or be liable for any indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.
7.5 ENCUMBRANCE.
Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
here, subject to Permitted Liens.
7.6 DISTRIBUTIONS; INVESTMENTS.
Directly or indirectly acquire or own any Person, or make any investment in
any Person, other than Permitted Investments, or permit any of its Subsidiaries
to do so; or pay any dividends or make any distribution or payment with respect
to, or redeem, retire or purchase, any capital stock, except that Borrower may
make repurchases of stock in Borrower from former employees or directors of
Borrower or its Subsidiaries under the terms of applicable repurchase agreements
in an aggregate amount not to exceed $100,000 in any fiscal year, provided that
no Event of Default has occurred and is continuing or would exist after giving
effect to any such repurchase.
<PAGE>
7.7 TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter into or permit to exist any material
transaction with any Affiliate of Borrower except for transactions that are in
the ordinary course of Borrower's business, upon fair and reasonable terms that
are no less favorable to Borrower than would be obtained in an arm's length
transaction with a nonaffiliated Person.
7.8 SUBORDINATED DEBT.
Make or permit any payment on any Subordinated Debt, except under the terms
of the Subordinated Debt, or amend any provision in any document relating to the
Subordinated Debt without Bank's prior written consent.
7.9 COMPLIANCE.
Become an "investment company" or a company controlled by an "investment
company," under the Investment Company Act of 1940 or undertake as one of its
important activities extending credit to purchase or carry margin stock, or use
the proceeds of any Credit Extension for that purpose; fail to meet the minimum
funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair
Labor Standards Act or violate any other law or regulation, if the violation
could reasonably be expected to have a material adverse effect on Borrower's
business or operations or would reasonably be expected to cause a Material
Adverse Change, or permit any of its Subsidiaries to do so.
8 EVENTS OF DEFAULT
Any one of the following is an Event of Default;
8.1 PAYMENT DEFAULT.
If Borrower fails to pay any of the Obligations within 3 days after their
due date, however, during such period no Credit Extensions will be made;
8.2 COVENANT DEFAULT.
(a) If Borrower fails to perform any obligation under Sections 6.2 or 6.7
or violates any of the covenants contained in Section 7 of this Agreement, or
(b) If Borrower fails or neglects to perform, keep, or observe any other
material term, provision, condition, covenant, or agreement contained in this
Agreement, in any of the Loan Documents, or in any other present or future
agreement between Borrower and Bank and as to any default under such other term,
provision, condition, covenant or agreement that can be cured, has failed to
cure such default within ten (10) days after the occurrence thereof; provided,
however, that if the default cannot by its nature be cured within the ten (10)
day period or cannot after diligent attempts by Borrower be cured within such
ten (10) day period, and such default is likely to be cured within a reasonable
time, then Borrower shall have an additional reasonable period (which shall not
in any case exceed thirty (30) days) to attempt to cure such default, and within
such reasonable time period the failure to have cured such default shall not be
deemed an Event of Default (provided that no Credit Extensions will be made
during such cure period);
8.3 MATERIAL ADVERSE CHANGE.
If there (i) occurs a material adverse change in the business, operations,
or financial condition of the Borrower, or (ii) is a material impairment of the
prospect of repayment of any
<PAGE>
portion of the Obligations; or (iii) is a material impairment of the value or
priority of Bank's security interests in the Collateral (the foregoing being
defined as a "Material Adverse Change").
8.4 ATTACHMENT.
If any material portion of Borrower's assets is attached, seized, levied
on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower's assets, by any government agency and not paid within 10 days
after Borrower receives notice. These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Credit Extensions will be
made during the cure period);
8.5 INSOLVENCY.
If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 45 days (but no Credit Extensions will be made before
any Insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS.
If there is a default in any agreement between Borrower and a third party
that gives the third party the right to accelerate any Indebtedness exceeding
$100,000 or that could cause a Material Adverse Change;
8.7 JUDGMENTS.
If a money judgment(s) in the aggregate of at least $100,000 is rendered
against Borrower and is unsatisfied and unstayed for 10 days (but no Credit
Extensions will be made before the judgment is stayed or satisfied);
8.8 MISREPRESENTATIONS.
If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document; or
8.9 GUARANTY.
Any guaranty of any Obligations ceases for any reason to be in full force
or any Guarantor does not perform any obligation under any guaranty of the
Obligations, or any material misrepresentation or material misstatement exists
now or later in any warranty or representation in any guaranty of the
Obligations or in any certificate delivered to Bank in connection with the
guaranty, or any circumstance described in Sections 8.4, 8.5 or 8.7 occurs to
any Guarantor.
9 BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES.
When an Event of Default occurs and continues Bank may, without notice or
demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an Event of
Default described in Section 8.5 occurs all Obligations are immediately due and
payable without any action by Bank);
<PAGE>
(b) Stop advancing money or extending credit for Borrower's benefit under
this Agreement or under any other agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account debtors for
amounts, on terms and in any order that Bank considers advisable; notify any
Person owing Borrower money of Bank's security interest in the funds and verify
the amount of the Account. Borrower must collect all payments in trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank in the form
received from the account debtor, with proper endorsements for deposit;
(d) Make any payments and do any commercially reasonable acts it considers
necessary or reasonable to protect its security interest in the Collateral.
Borrower will assemble the Collateral if Bank requires and make it available as
Bank designates. Bank may enter premises where the Collateral is located, take
and maintain possession of any part of the Collateral, and pay, purchase,
contest, or compromise any Lien which appears to be prior or superior to its
security interest and pay all expenses incurred. Borrower grants Bank a license
to enter and occupy any of its premises, without charge, to exercise any of
Bank's rights or remedies;
(e) Place a "hold" on any account maintained with Bank and deliver a notice
of exclusive control, any entitlement order, or other directions or instructions
pursuant to any control agreement or similar agreements providing control of any
Collateral;
(f) Apply to the Obligations any (i) balances and deposits of Borrower it
holds, or (ii) any amount held by Bank owing to or for the credit or the account
of Borrower;
(g) Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral. Bank is granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower's labels, Patents, Copyrights, Mask Works, rights of use of any name,
trade secrets, trade names, Trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section, Borrower's
rights under all licenses and all franchise agreements inure to Bank's benefit;
and
(h) Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY.
Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or bill of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Credit Extensions
terminates.
9.3 BANK EXPENSES.
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons, Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any commercially reasonable
action under the policies Bank deems prudent. Any amounts paid by Bank are Bank
Expenses and immediately due and payable,
<PAGE>
bearing interest at the then applicable rate and secured by the Collateral. No
payments by Bank are deemed an agreement to make similar payments in the future
or Bank's waiver of any Event of Default.
9.4 BANK'S LIABILITY FOR COLLATERAL.
If Bank complies with reasonable banking practices and Section 9-207 of the
Code, it is not liable for: (a) the safekeeping of the Collateral; (b) any loss
or damage to the Collateral; (c) any diminution in the value of the Collateral;
or (d) any act or default of any carrier, warehouseman, bailee, or other person.
Except as provided above, Borrower bears all risk of loss, damage or destruction
of the Collateral.
9.5 REMEDIES CUMULATIVE.
Bank's rights and remedies under this Agreement, the Loan Documents, and
all other agreements are cumulative. Bank has all rights and remedies provided
under the Code, by law, or in equity. Bank's exercise of one right or remedy is
not an election, and Bank's waiver of any Event of Default is not a continuing
waiver. Bank's delay is not a waiver, election, or acquiescence. No waiver is
effective unless signed by Bank and then is only effective for the specific
instance and purpose for which it was given.
9.6 DEMAND WAIVER.
Except as otherwise provided in this Agreement, Borrower waives demand,
notice of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guarantees held
by Bank on which Borrower is liable.
10 NOTICES
All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by facsimile to the addresses set forth at the beginning of this
Agreement. A party may change its notice address by giving the other party
written notice.
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
Arizona law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Maricopa County, Arizona.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS.
This Agreement binds and is for the benefit of the successors and permitted
assigns of each party. Borrower may not assign this Agreement or any rights
under it without Bank's prior written consent which may be granted or withheld
in Bank's discretion. Bank has the right,
<PAGE>
without the consent of or notice to Borrower, to sell, transfer, negotiate, or
grant participation in all or any part of, or any interest in, Bank's
obligations, rights and benefits under this Agreement.
12.2 INDEMNIFICATION.
Borrower will indemnify, defend and hold harmless Bank and its officers,
employees, and agents against: (a) all obligations, demands, claims, and
liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE.
Time is of the essence for the performance of all obligations in this
Agreement.
12.4 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other provision in
determining the enforceability of any provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing and signed by Borrower
and Bank. This Agreement represents the entire agreement about this subject
matter, and supersedes prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement merge into this Agreement and
the Loan Documents.
12.6 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.
12.7 SURVIVAL.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.
12.8 CONFIDENTIALITY.
In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates
in connection with their business with Borrower, (ii) to prospective transferees
or purchasers of any interest in the loans (provided, however, Bank shall use
commercially reasonable efforts in obtaining such prospective transferee or
purchasers agreement of the terms of this provision), (iii) as required by law,
regulation, subpoena, or other order, (iv) as required in connection with Bank's
examination or audit and (v) as Bank considers reasonably appropriate exercising
remedies under this Agreement. Confidential information does not include
information that either: (a) is in the public domain or in Bank's possession
when disclosed to Bank, or becomes part of the public domain after disclosure to
Bank; or (b) is disclosed to Bank by a third party, if Bank does not know that
the third party is prohibited from disclosing the information.
<PAGE>
12.9 ATTORNEYS' FEES, COSTS AND EXPENSES.
In any action or proceeding between Borrower and Bank arising out of the
Loan Documents, the prevailing party will be entitled to recover its reasonable
attorneys' fees and other reasonable costs and expenses incurred, in addition to
any other relief to which it may be entitled.
13 DEFINITIONS
13.1 DEFINITIONS.
In this Agreement:
"ACCOUNTS" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its sale or lease of
goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing, as such definition may be amended from time to time according to the
Code.
"ADVANCE" or "ADVANCES" is a loan advance (or advances) under the Committed
Revolving Line.
"AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"BANK EXPENSES" are all reasonable audit fees and expenses and reasonable
costs and expenses (including reasonable attorneys' fees and expenses) for
preparing, negotiating, administering, defending and enforcing the Loan
Documents (including appeals or insolvency Proceedings).
"BASIC RATE" is, as of the date of the Equipment Advance, the per annum
rate of interest (based on a year of 360 days) equal to the sum of (a) the U.S.
Treasury note yield to maturity for a term equal to 36 months as quoted in The
Wall Street Journal on the day of the Equipment Advance, plus (b) 4.25%.
"BORROWER'S BOOKS" are all Borrower's books and records including ledgers,
records regarding Borrower's assets or liabilities, the Collateral, business
operations or financial condition and all computer programs or discs or any
equipment containing the information.
"BORROWING BASE" is 80% of Eligible Accounts, as determined by Bank from
Borrower's most recent Borrowing Base Certificate; provided, however, that Bank
may lower the percentage of the Borrowing Base after performing an audit of
Borrower's Collateral.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on which
the Bank is closed.
"CASH MANAGEMENT SERVICES" are defined in Section 2.1.4.
"CODE" is the Arizona Uniform Commercial Code, as applicable.
"COLLATERAL" is the property described on Exhibit A.
"COMMITTED EQUIPMENT LINE" is a Credit Extension of up to $2,750,000.
<PAGE>
"COMMITTED REVOLVING LINE" is an Advance of up to $1,000,000.
"COMMITMENT TERMINATION DATE" is March 31, 2006.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"COPYRIGHTS" are all copyright rights, applications or registrations and
like protections in each work or authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.
"CREDIT EXTENSION" is each Advance, Equipment Advance, Letter of Credit, or
any other extension of credit by Bank for Borrower's benefit.
"CURRENT ASSETS" are amounts that under GAAP should be included on that
date as current assets on Borrower's consolidated balance sheet.
"CURRENT LIABILITIES" are the aggregate amount of Borrower's Total
liabilities which mature within one (1) year.
"EFFECTIVE DATE" is the date Bank executes this Agreement.
"ELIGIBLE ACCOUNTS" are Accounts in the ordinary course of Borrower's
business that meet all Borrower's representations and warranties in Section 5;
but Bank may in its reasonable discretion change eligibility standards by giving
Borrower notice. Unless Bank agrees otherwise in writing, Eligible Accounts will
not include:
(a) Accounts that the account debtor has not paid within 90 days of invoice
date;
(b) Accounts for an account debtor, 50% or more of whose Accounts have not
been paid within 90 days of invoice date;
(c) Credit balances over 90 days from invoice date;
(d) Accounts for an account debtor, including Affiliates, whose total
obligations to Borrower exceed 25% of all Accounts, for the amounts that
exceed that percentage, unless the Bank approves in writing;
(e) Accounts for which the account debtor does not have its principal place
of business in the United States, except for Accounts which are otherwise
Eligible and where the account debtor has its principal place of business
in the United Kingdom limited to an aggregate amount of $125,000;
(f) Accounts for which the account debtor is a federal government entity or
any department, agency, or instrumentality, except for Accounts of the
United States if the
<PAGE>
payee has assigned its payment rights to Bank and the assignment has been
acknowledged under the Assignment of Claims Act of 1940 (31 U.S.C. 3727);
(g) Accounts for which Borrower owes the account debtor, but only up to the
amount owed (sometimes called "contra" accounts, accounts payable, customer
deposits or credit accounts);
(h) Accounts for demonstration or promotional equipment, or in which goods
are consigned, sales guaranteed, sale or return, sale on approval, bill and
hold, or other terms if account debtor's payment may be conditional;
(i) Accounts for which the account debtor is Borrower's Affiliate, officer,
employee, or agent;
(j) Accounts in which the account debtor disputes liability or makes any
claim and Bank believes there may be a basis for dispute (but only up to
the disputed or claimed amount), or if the Account Debtor is subject to an
Insolvency Proceeding, or becomes insolvent, or goes out of business;
(k) Accounts for which Bank reasonably determines collection to be
doubtful.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"EQUIPMENT ADVANCE" is defined in Section 2.1.2.
"EQUIPMENT AVAILABILITY END DATE" is defined in Section 2.1.2.
"EQUIPMENT MATURITY DATE" is a date 36 months after each Equipment Advance,
but no later than March 31, 2009 as to the last Equipment Advance.
"ERISA" is the Employment Retirement Income Security Act of 1974, and its
regulations.
"GAAP" is generally accepted accounting principles.
"GUARANTOR" is any present or future guarantor of the Obligations,
including any present or future Subsidiary of Borrower.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred price
of property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INTELLECTUAL PROPERTY" is all of Borrower's:
(a) Copyrights, Trademarks, Patents, and Mask Works including amendments,
renewals, extensions, and all licenses or other rights to use and all license
fees and royalties from the use;
(b) Any trade secrets and any intellectual property rights in computer
software and computer software products now or later existing, created,
acquired or held;
<PAGE>
(c) All design rights which may be available to Borrower now or later
created, acquired or held;
(d) Any claims for damages (past, present or future) for infringement of
any of the rights above, with the right, but not the obligation, to sue and
collect damages for use or infringement of the intellectual property rights
above;
All proceeds and products of the foregoing, including all insurance,
indemnity or warranty payments.
"INVENTORY" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.
"LETTER OF CREDIT" is defined in Section 2.1.3.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes or
guaranties executed by Borrower or any Guarantor, and any other present or
future agreement between Borrower and/or for the benefit of Bank in connection
with this Agreement, all as amended, extended or restated.
"MASK WORKS" are all mask works or similar rights available for the
protection of semiconductor chips, now owned or later acquired.
"MATERIAL ADVERSE CHANGE" is defined in Section 8.3.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including cash management services,
letters of credit and foreign exchange contracts, if any and including interest
accruing after insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.
"PATENTS" are patents, patent applications and like protections, including
Improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same.
"PERMITTED INDEBTEDNESS" IS:
(a) Borrower's indebtedness to Bank under this Agreement or any other Loan
Document;
(b) indebtedness existing on the Effective Date and shown on the Schedule;
(c) Subordinated Debt;
(d) indebtedness to trade creditors incurred in the ordinary course of
business; and
(e) indebtedness secured by Permitted Liens.
<PAGE>
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Effective Date;
and
(b) (i) marketable direct obligations issued or unconditionally guaranteed
by the United States or its agency or any State maturing within 1 year from its
acquisition, (ii) commercial paper maturing no more than 1 year after its
creation and having the highest rating from either Standard & Poor's Corporation
or Moody's Investors Service, Inc., and (iii) Bank's certificates of deposit
issued maturing no more than 1 year after issue.
"PERMITTED LIENS" are:
(a) Liens existing on the Effective Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority when
not paid over any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower or
its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the equipment;
(d) Licenses or sublicenses granted in the ordinary course of Borrower's
business and any interest or title of a licensor or under any license or
sublicense, if the licenses and sublicenses permit granting Bank a security
interest;
(e) Leases or subleases granted in the ordinary course of Borrower's
business, including in connection with Borrower's leased premises or leased
property;
(f) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it is
not Bank's lowest rate.
"QUICK ASSETS" is, on any date until three months after the Effective Date,
Borrower's consolidated, unrestricted cash and cash equivalents, plus all
Accounts; and, after three months after the Effective Date, Borrower's
consolidated, unrestricted cash and cash equivalents held at Bank, plus all
Accounts.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.
"REVOLVING MATURITY DATE" is the date 364 days from the Effective Date.
<PAGE>
"RIGHTS", as applied to the Collateral, means the Borrower's rights and
interests in, and powers with respect to, that Collateral, whatever the nature
of those rights, interests and powers and, in any event, including Borrower's
power to transfer rights in such Collateral to Bank.
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to Borrower's
indebtedness owed to Bank and which is reflected in a written agreement in a
manner and form acceptable to Bank and approved by Bank in writing.
"SUBSIDIARY" is for any Person, any other business entity of which more
than 50% of the voting stock or other equity interests is owned or controlled,
directly or indirectly, by the Person or one or more Affiliates of the Person.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus, (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
patents, trade and service marks and names, copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities.
"TOTAL LIABILITIES" is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.
"TRADEMARKS" are trademark and servicemark rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Assignor connected with the trademarks.
BORROWER:
LIMELIGHT NETWORKS, INC.
By: /s/ William H. Rinehart
---------------------------------
Title: President & CEO
BANK:
SILICON VALLEY BANK
By: /s/ Travis D. Wood
---------------------------------
Title: VICE PRESIDENT
Effective Date: 4/15/05
<PAGE>
EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest in
and to the following whether owned now or hereafter arising and whether the
Borrower has rights now or hereafter has rights therein and wherever located:
All goods and equipment now owned or hereafter acquired, including, without
limitation, all machinery, fixtures, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
All contract rights and general intangibles (as such definitions may be
amended from time to time according to the Code), now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind,;
All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower (as such definitions may be amended from time
to time according to the Code) whether or not earned by performance, and any and
all credit insurance, insurance (including refund) claims and proceeds,
guaranties, and other security therefor, as well as all merchandise returned to
or reclaimed by Borrower;
All documents, cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, financial assets, letters of credit,
letter of credit rights, certificates of deposit, instruments and chattel paper
and electronic chattel paper now owned or hereafter acquired and Borrower's
Books relating to the foregoing;
All copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired; all claims
for damages by way of any past, present and future infringement of any of the
foregoing; and
All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.
<PAGE>
EXHIBIT B
LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 12:00 P.S.T.
FAX TO: _________ DATE: _______________
- LOAN PAYMENT:
LIMELIGHT NETWORKS, INC. (Borrower)
From Account #_______________________ To Account #_____________________
(Deposit Account #) (Loan Account #)
Principal $___________________ and/or interest $___________________________
All Borrower's representation and warranties in the Loan and Security
Agreement are true, correct and complete in all material respects up to and
including the date of the transfer request for a loan payment, but those
representations and warranties expressly referring to another date shall be
true, correct and complete in all material respects as of that date:
AUTHORIZED SIGNATURE: Phone Number:
--------------------- -----------------
- LOAN ADVANCE:
COMPLETE OUTGOING WIRE REQUEST SECTION BELOW IF ALL OR A PORTION OF THE
FUNDS FROM THIS LOAN ADVANCE ARE FOR AN OUTGOING WIRE.
From Account #_______________________ To Account #_____________________
(Loan Account #) (Deposit Account #)
Amount of Advance $__________________
All Borrower's representation and warranties in the Loan and Security
Agreement are true, correct and complete in all material respects up to and
including the date of the transfer request for an advance, but those
representations and warranties expressly referring to another date shall
be true, correct and complete in all material respects as of that date:
AUTHORIZED SIGNATURE: _____________________ Phone Number: _________________
OUTGOING WIRE REQUEST
COMPLETE ONLY IF ALL OR A PORTION OF FUNDS FROM THE LOAN ADVANCE ABOVE ARE
TO BE WIRED.
Deadline for same day processing is 12:00 pm, P.S.T.
Beneficiary Name: ____________________ Amount of Wire: $________________
Beneficiary Bank: ____________________ Account Number: _________________
City and State: ____________________________
Beneficiary Bank Transit Beneficiary Bank Code (Swift,
(ABA) #: _____________ Sort, Chip, etc.): ________
(FOR INTERNATIONAL WIRE ONLY)
Intermediary Bank: __________________ Transit (ABA) #: ________________
For Further Credit to: ____________________________________________________
Special instruction: ______________________________________________________
By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer
service(s), which agreements(s) were previously received and executed by
me (us).
Authorized Signature: 2nd Signature (If Required):
----------- ----------
Print Name/Title: Print Name/Title:
--------------- ---------------------
Telephone # Telephone #
---------------------- ----------------------------
<PAGE>
Schedule to Loan and Security Agreement
The exact correct corporate name of Borrower is (attach a copy of the formation
documents, e.g., articles, partnership agreement): _____________________________
Borrower's State of formation: __________________
Borrower has operated under only the following other names (if none, so state):
________________________________________________________________________________
All other address at which the Borrower does business are as follows (attach
additional sheets if necessary and include all warehouse addresses):
________________________________________________________________________________
Borrower has deposit accounts and/or investment accounts located only at the
following institutions:
________________________________________________________________________________
List Acct. Numbers: ____________________________________________________________
Liens existing on the Effective Date and disclosed to and accepted by Bank in
writing:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Investments existing on the Effective Date and disclosed to and accepted by Bank
in writing:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
SUBORDINATED DEBT:
Indebtedness on the Effective Date and disclosed to and consented to by Bank in
writing:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
The following is a list of the Borrower's copyrights (including copyrights of
software) which are registered with the United States Copyright Office. (Please
include name of the copyright and registration number and attach a copy of the
registration):
________________________________________________________________________________
________________________________________________________________________________
The following is a list of all software which the Borrower sells, distributes or
licenses to others, which is not registered with the United States Copyright
Office. (Please include versions which are not registered:
________________________________________________________________________________
The following is a list of all of the Borrower's patents which are registered
with the United States Patent Office. (Please include name of the patent and
registration number and attach a copy of the registration.):
________________________________________________________________________________
________________________________________________________________________________
The following is a list of all of the Borrower's patents which are pending with
the United States Patent Office. (Please include name of the patent and a copy
of the application.):
________________________________________________________________________________
<PAGE>
The following is a list of all of the Borrower's registered trademarks. (Please
include name of the trademark and a copy of the registration.):
________________________________________________________________________________
Borrower is not subject to litigation which would have a material adverse effect
on the Borrower's financial condition, except the following (attach additional
comments, if needed):
________________________________________________________________________________
________________________________________________________________________________
Tax ID Number _________________________________
Organizational Number, if any: ________________
<PAGE>
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower LIMELIGHT NETWORKS, INC. Bank: Silicon Valley Bank
14300 Northsight
Boulevard, Suite 203,
Scottsdale, Arizona
85260
Commitment Amount: $1,000,000
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of
_______________________ $___________
2. Additions (please explain on reverse) $___________
3. TOTAL ACCOUNTS RECEIVABLE $___________
ACCOUNTS RECEIVABLE DEDUCTIONS (without
duplication)
4. Amounts over 90 days due $___________
5. Balance of 50% over 90 day accounts $___________
6. Credit balances over 90 days $___________
7. Concentration Limits $___________
8. Foreign Accounts** $___________
9. Federal Governmental Accounts $___________
10. Contra Accounts $___________
11. Promotion or Demo Accounts $___________
12. Intercompany/Employee Accounts $___________
13. Other (please explain on reverse) $___________
14. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $___________
15. Eligible Accounts (#3 minus #14) $___________
16. LOAN VALUE OF ACCOUNTS (80% of #15) $___________
** except for up to $125,000 from UK eligibles
BALANCES
17. Maximum Loan Amount $___________
18. Total Funds Available [Lesser of #17 or #16] $___________
19. Present balance owing on Line of Credit $___________
20. Outstanding under Sublimits (LC or CM) $___________
21. RESERVE POSITION (#18 minus #19 and #20) $___________
The undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the
undersigned and Silicon Valley Bank.
COMMENTS:
LIMELIGHT NETWORKS, INC.
By:
---------------------------------
Authorized Signer
<PAGE>
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
14300 Northsight Boulevard, Suite 203
Scottsdale, Arizona 85260
FROM: LIMELIGHT NETWORKS, INC.
The undersigned Responsible Officer of LIMELIGHT NETWORKS, INC.
("Borrower") certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending _____________________________ with
all required covenants except as noted below and (ii) all representations and
warranties in the Agreement are true and correct in all material respects on
this date. In addition, the undersigned certifies that Borrower, and each
Subsidiary, has timely filed all required tax returns and paid, or made adequate
provision to pay, all material taxes, except those being contested in good faith
with adequate reserves under GAAP. Attached are the required documents
supporting the certification. The Officer certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) consistently
applied from one period to the next except as explained in an accompanying
letter or footnotes. The Responsible Officer acknowledges that no borrowings may
be requested at any time or date of determination that Borrower is not in
compliance with any of the terms of the Agreement, and that compliance is
determined not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Monthly financial statements + CC Monthly within 20 days Yes No
Annual (Audited) FYE within 120 days Yes No
A/R & A/P Agings Monthly within 20 days Yes No
A/R Audit Initial and Annual Yes No
Borrowing Base Certificate Monthly within 20 days Yes No
Annual financial projections 30 days prior to FYE Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------- -------- ------ --------
Maintain on a Monthly Basis:
Minimum Quick Ratio (Adjusted) 1.00:1.00 to 10/31/05 _____:1.00 Yes No
1.25:1.00 thereafter
Minimum Debt Service Coverage Ratio 2.00:1.00 _____:1.00 Yes No
Have there been updates to Borrower's intellectual property? Yes/No
Borrower only has deposit accounts located at the following institutions:
______________________________.
<PAGE>
COMMENTS REGARDING EXCEPTIONS: See Attached.
BANK USE ONLY
Received by:
---------------------------
Sincerely, AUTHORIZED SIGNER
Date:
----------------------------------
LIMELIGHT NETWORKS, INC.
Verified:
------------------------------
AUTHORIZED SIGNER
Date:
------------------------------------- ----------------------------------
SIGNATURE
------------------------------------- Compliance Status: Yes No
TITLE
-------------------------------------
DATE
<PAGE>
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of July 21, 2005, by and
between SILICON VALLEY BANK, a California - chartered bank with its principal
place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a
loan production office at 14300 Northsight Blvd., Suite 203, Scottsdale, AZ
85260 ("Bank") and LIMELIGHT NETWORKS, INC., a Delaware corporation with its
principal place of business at 2220 W. 14th Street, Tempe, AZ 85281
("Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Bank, Borrower is or may be indebted to Bank pursuant to,
among other documents, a Loan and Security Agreement, dated April 15, 2005, as
it may be amended from time to time (the "Loan Agreement"). The Loan Agreement
provided for, among other things, a Committed Revolving Line in the original
principal amount of One Million Dollars ($1,000,000) and a Committed Equipment
Line in the original principal amount of Two Million Seven Hundred Fifty
Thousand Dollars ($2,750,000). Defined terms used but not otherwise defined
herein shall have the same meanings as set forth in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."
2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured by the
Collateral, as described in the Loan Agreement and in the Intellectual Property
Security Agreement. Hereinafter, the above-described security documents,
together with all other documents securing repayment of the Indebtedness shall
be referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Loan Agreement.
1. Subsection (i) of Section 6.7 of the Loan Agreement entitled
"Financial Covenants" is amended to read as follows:
Borrower will maintain as of the last day of each month:
(i) QUICK RATIO (ADJUSTED). A ratio of Quick Assets to
Current Liabilities (excluding investor/related party debt)
of at least 1.00 to 1.00 until April 30, 2006 and thereafter
at least 1.25 to 1.00.
2. The following term in Section 13.1 entitled "Definitions" is hereby
amended to read:
"COMMITTED EQUIPMENT LINE" is a Credit Extension of up to
$4,750,000 of which $2,637,675.26 is available as of July 21,
2005.
B. Consent to Transaction.
Borrower has notified Bank of Borrower's request to prepay existing
Subordinated Debt owing to the Raciborski Family Foundation and to
Ridgeline Capital, LLC which Subordinated Debt is subject to those certain
Intercreditor and Subordination Agreements dated as of April 15, 2005 with
such creditors (the "Transaction"). Borrower has requested that Bank
consent to the Transaction for purposes of Section 7.8 of the Loan
Agreement, which might otherwise constitute a default under the Loan
Agreement if Bank does not provide its consent, and for purposes of such
Intercreditor and Subordination Agreements. Bank's consent to the
Transaction is specifically conditioned upon Borrower raising new
Subordinated Debt (under an agreement satisfactory to Bank) from Partners
for Growth, L.P., a Delaware limited partnership, in a minimum aggregate
amount equal to, and the proceeds of which will be applied to, the
Subordinated Debt
<PAGE>
being prepaid to the Raciborski Family Foundation and to Ridgeline Capital,
LLC. This Loan Modification Agreement will serve as Bank's consent to the
Transaction solely for the purposes of Section 7.8 of the Loan Agreement.
Bank's consent: (1) shall not limit or impair the Bank's right to demand
strict performance of this covenant as set forth in the Loan Agreement
following consummation of the Transaction; and (2) shall not limit or
impair the Bank's right to demand strict performance of all other covenants
and provisions set forth in the Loan Agreement, at all times
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE AND EXPENSES. Borrower shall pay to Bank a fee in the
amount of Ten Thousand and No/100 Dollars ($10,000.00) (the "Loan Fee") plus all
of Bank's reasonable out-of-pocket expenses in connection with this Loan
Modification Agreement.
6. NO DEFENSES. Borrower agrees that, as of the date hereof, it has no defenses
against the obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Indebtedness, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank's agreement to modifications to the existing Indebtedness and the consent
to the Transaction pursuant to this Loan Modification Agreement in no way shall
obligate Bank to make any future consents, waivers or modifications to the
Indebtedness. Nothing in this Loan Modification Agreement shall constitute a
satisfaction of the Indebtedness. It is the intention of Bank and Borrower to
retain as liable parties all makers and endorsers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. Unless expressly
released herein, no maker, endorser, or guarantor will be released by virtue of
this Loan Modification Agreement. The terms of this paragraph apply not only to
this Loan Modification Agreement, but also to all subsequent loan modification
agreements.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon receipt by Bank of (a) the Loan Fee, and (b) a fully executed
counterpart hereof.
This Loan Modification Agreement is executed as of the date first written
above.
BORROWER: BANK:
LIMELIGHT NETWORK, INC. SILICON VALLEY BANK
By: /s/ William H. Rinehart By: /s/ Travis D. Wood
--------------------------------- ------------------------------------
Name: William H. Rinehart Name: TRAVIS D. WOOD
Title: President & CEO Title: VICE PRESIDENT
<PAGE>
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of August 15, 2005, by and
between SILICON VALLEY BANK, a California - chartered bank with its principal
place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a
loan production office at 14300 Northsight Blvd., Suite 203, Scottsdale, AZ
85260 ("Bank") and LIMELIGHT NETWORKS, INC., a Delaware corporation with its
principal place of business at 2220 W. 14th Street, Tempe, AZ 85281
("Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Bank, Borrower is or may be indebted to Bank pursuant to,
among other documents, a Loan and Security Agreement, dated April 15, 2005, as
it may be amended from time to time (the "Loan Agreement"). The Loan Agreement
provided for, among other things, a Committed Revolving Line in the original
principal amount of One Million Dollars ($1,000,000) and a Committed Equipment
Line in the original principal amount of Two Million Seven Hundred Fifty
Thousand Dollars ($2,750,000) which was changed to $4,750,000 as of July 21,
2005. Defined terms used but not otherwise defined herein shall have the same
meanings as set forth in the Loan Agreement. Hereinafter, all indebtedness owing
by Borrower to Bank shall be referred to as the "Indebtedness."
2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured by the
Collateral, as described in the Loan Agreement and in the intellectual Property
Security Agreement. Hereinafter, the above-described security documents,
together with all other documents securing repayment of the Indebtedness shall
be referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Loan Agreement.
1. Section 6.7 of the Loan Agreement entitled "Financial Covenants"
is amended to read as follows:
6.7 FINANCIAL COVENANTS.
Borrower will maintain as of the last day of each month:
(i) QUICK RATIO (ADJUSTED). A ratio of Quick Assets to Current
Liabilities (excluding investor/related party debt) of at least
0.90 to 1.00 until October 31, 2005 and thereafter of at least
1.00 to 1.00 until April 30, 2006 and thereafter of at least 1.25
to 1.00.
(i) DEBT SERVICE COVERAGE RATIO. A ratio of Borrower's (a)
consolidated earnings before interest expense, income taxes,
depreciation, amortization of intangible assets and other
non-cash charges made to Borrower's income (all a determined by
GAAP) minus unfunded capital expenditures for the preceding
three-month period to (b) the principal and interest payments on
debt due Bank paid and payable to Bank during the preceding
three-month period of at least 2.50 to 1.00 until October 31,
2005 and thereafter of at least 2.00 to 1.00, measured monthly on
a rolling 3 month basis.
2. Exhibit D attached hereto shall be substituted for that attached
to the Loan Agreement.
<PAGE>
B. Waiver of Financial Covenant Default.
Bank hereby waives Borrower's existing default under the Loan
Agreement by virtue of Borrower's failure to comply with the monthly
Quick Ratio (Adjusted) financial covenant as of June 30, 2005. Bank's
waiver of Borrower's compliance with this covenant shall apply only to
the foregoing period. Accordingly, for the month ending July 31, 2005,
Borrower shall be in compliance with this covenant.
Bank's agreement to waive the above-described default (1) in no way
shall be deemed an agreement by the Bank to waive Borrower's
compliance with the above-described covenant as of all other dates and
(2) shall not limit or impair the Bank's right to demand strict
performance of this covenant as of all other dates and (3) shall not
limit or impair the Bank's right to demand strict performance of all
other covenants as of any date.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE AND EXPENSES. Borrower shall pay to Bank a fee in the
amount of One Thousand Five Hundred and No/100 Dollars ($1,500.00) (the "Loan
Fee") plus all of Bank's reasonable out-of-pocket expenses in connection with
this Loan Modification Agreement.
6. NO DEFENSES. Borrower agrees that, as of the date hereof, it has no defenses
against the obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing indebtedness, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank's agreement to modifications to the existing Indebtedness and the waiver
contained in this Loan Modification Agreement in no way shall obligate Bank to
make any future consents, waivers or modifications to the indebtedness. Nothing
in this Loan Modification Agreement shall constitute a satisfaction of the
indebtedness. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. Unless expressly released herein, no
maker, endorser, or guarantor will be released by virtue of this Loan
Modification Agreement. The terms of this paragraph apply not only to this Loan
Modification Agreement, but also to all subsequent loan modification agreements.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon receipt by Bank of (a) the Loan Fee, and (b) a fully executed
counterpart hereof.
This Loan Modification Agreement is executed as of the date first written
above.
BORROWER: BANK:
LIMELIGHT NETWORK, INC. SILICON VALLEY BANK
By: /s/ William H. Rinehart By: /s/ Travis D. Wood
--------------------------------- ------------------------------------
Name: William H. Rinehart Name: TRAVIS D. WOOD
Title: President & CEO Title: VICE PRESIDENT
<PAGE>
THIRD AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT to Loan and Security Agreement (this "Amendment") is
entered into this 27th day of October, 2005, by and between Silicon Valley Bank
("Bank") and LIMELIGHT NETWORKS, INC., a Delaware corporation ("Borrower") whose
address is 2220 West 14th Street, Tempe, AZ 85281.
RECITALS
A. Bank and Borrower have entered into that certain Loan and Security
Agreement dated as of April 15, 2005, as amended (as the same may from time to
time be further amended, modified, supplemented or restated, the "Loan
Agreement").
B. Bank has extended credit to Borrower for the purposes permitted in the
Loan Agreement.
C. Borrower has requested that Bank amend the Loan Agreement to provide
additional equipment term loan financing.
D. Bank has agreed to so amend certain provisions of the Loan Agreement,
but only to the extent, in accordance with the terms, subject to the conditions
and in reliance upon the representations and warranties set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:
1. DEFINITIONS. Capitalized terms used but not defined in this Amendment
shall have the meanings given to them in the Loan Agreement.
2. AMENDMENTS TO LOAN AGREEMENT.
2.1 SECTION 2.1.5 (EQUIPMENT 2 FACILITY). A new Section 2.1.5 is added
to the Loan Agreement as follows:
2.1.5 Equipment 2 Facility.
(a) Through September 30, 2006 (the "Equipment 2 Availability End
Date"), Bank will make advances (each an "Equipment 2 Advance" and,
collectively, "Equipment 2 Advances") not exceeding the Committed Equipment
2 Line. The Equipment 2 Advances may only be used to finance or refinance
Equipment purchased on or after 90 days before the date of each Equipment 2
Advance and may not exceed 100% of the equipment invoice excluding taxes,
shipping, warranty charges, freight discounts and installation expense.
Soft costs
1
<PAGE>
may constitute up to $500.000 of the aggregate Equipment 2 Advances. Each
Equipment 2 Advance must be for a minimum of $100,000. The number of
Equipment 2 Advances is limited to 1 per month.
(b) Each Equipment 2 Advance made prior to 07/01/2006 shall amortize
and be payable in 24 equal monthly payments of principal and interest
beginning 07/31/2006 and continuing on the last day of each month
thereafter. Until the first equal monthly payment of principal and interest
is due on each Equipment 2 Advance made prior to 07/01/2006, interest only
shall be payable monthly beginning on the last day of the month in which
the Equipment 2 Advance is made and continuing on the last day of each
month thereafter. Each Equipment 2 Advance made on or after 07/01/2006
shall amortize and be payable in 24 equal monthly payments of principal and
interest beginning 30 days following such Equipment 2 Advance and
continuing on the same day of each month thereafter. The final payment due
on the applicable Equipment 2 Maturity Date shall include all outstanding
principal and all accrued unpaid interest. Equipment 2 Advances when repaid
may not be re-borrowed.
(c) To obtain an Equipment 2 Advance, Borrower must notify Bank (the
notice is irrevocable) by facsimile no later than 12:00 p.m. Pacific time
one Business Day before the day on which the Equipment 2 Advance is to be
made. The notice in the form of Exhibit B (Payment/Advance Form) must be
signed by a Responsible Officer or designee and include a copy of invoices
for the Equipment being financed and such additional information as Bank
may reasonably request.
2.2 SECTION 2.4 (INTEREST RATE, PAYMENTS). The second sentence of
subsection (a) of Section 2.4 is amended in its entirety and replaced with the
following:
Equipment Advances and Equipment 2 Advances accrue interest on the
outstanding principal balance at a per annum rate equal to the Basic Rate.
The last sentence of subsection (b) of Section 2.4 is amended in its entirety
and replaced with the following:
If any change in the law increases Bank's expenses or decreases its return
from the Equipment Advances or the Equipment 2 Advances, Borrower will pay
Bank upon request the amount of such increase or decrease.
2.3 SECTION 2.6 (FEES). Subsection (c) entitled "Early Termination
Fees" of Section 2.6 is amended by adding the following clause (beginning in the
third line from the end immediately before the words "provided that"):
and a fully earned, non-refundable early termination fee of one percent
(1%) of the outstanding principal balance of all Equipment 2 Advances shall
be due upon voluntary or involuntary payment in full of Borrower's
Obligations under the
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Committed Equipment 2 Line prior to the relevant Equipment 2 Maturity Dates
and termination of Bank's obligation to lend the undisbursed portion of
such Obligations under the Committed Equipment 2 Line;
2.4 SECTION 13 (DEFINITIONS). The following terms and their respective
definitions set forth in SECTION 13.1 are amended in their entirety and replaced
with the following:
"BASIC RATE" is, as of the date of the relevant Equipment Advance or
Equipment 2 Advance, the per annum rate of interest (based on a year of 360
days) equal to the sum of (a) the U.S. Treasury note yield to maturity for
a term equal to 36 months as quoted in The Wall Street Journal on the day
of the Equipment Advance, plus (b) 4.25%; provided that, for any Equipment
2 Advance made on or after July 1, 2006, it is, as of the date of the
relevant Equipment 2 Advance, the per annum rate of interest (based on a
year of 360 days) equal to the sum of (a) the U.S. Treasury note yield to
maturity for a term equal to 24 months as quoted in The Wall Street Journal
on the day of the Equipment Advance, plus (b) 4.25%.
"CREDIT EXTENSION" is each Advance, Equipment Advance, Equipment 2
Advance, Letter of Credit, or any other extension of credit by Bank for
Borrower's benefit.
2.5 SECTION 13 (DEFINITIONS). The following terms and their respective
definitions set forth in SECTION 13.1 are added and inserted in their
appropriate places:
"COMMITTED EQUIPMENT 2 LINE" is a Credit Extension of up to
$2,500,000.
"EQUIPMENT 2 ADVANCE" is defined in Section 2.1.5.
"EQUIPMENT 2 AVAILABILITY END DATE" is defined in Section 2.1.5.
"EQUIPMENT 2 MATURITY DATE" is June 30, 2008 for any Equipment 2
Advance made prior to July 1, 2006; and for each Equipment 2 Advance made
on or after July 1, 2006, it is the date 24 months after each such
Equipment 2 Advance, but no later than September 30, 2008 as to the last
Equipment 2 Advance.
3. LIMITATION OF AMENDMENTS.
3.1 The amendments set forth in SECTION 2, above, are effective for
the purposes set forth herein and shall be limited precisely as written and
shall not be deemed to (a) be a consent to any amendment, waiver or modification
of any other term or condition of any Loan Document, or (b) otherwise prejudice
any right or remedy which
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Bank may now have or may have in the future under or in connection with any Loan
Document.
3.2 This Amendment shall be construed in connection with and as part
of the Loan Documents and all terms, conditions, representations, warranties,
covenants and agreements set forth in the Loan Documents, except as herein
amended, are hereby ratified and confirmed and shall remain in full force and
effect.
4. REPRESENTATIONS AND WARRANTIES. To induce Bank to enter into this
Amendment, Borrower hereby represents and warrants to Bank as follows:
4.1 Immediately after giving effect to this Amendment (a) the
representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (b) to Borrower's
knowledge no Event of Default has occurred and is continuing;
4.2 Borrower has the power and authority to execute and deliver this
Amendment and to perform its obligations under the Loan Agreement, as amended by
this Amendment;
4.3 The organizational documents of Borrower delivered to Bank on the
Effective Date remain true, accurate and complete and have not been amended,
supplemented or restated and are and continue to be in full force and effect;
4.4 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, have been duly authorized;
4.5 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not and will not contravene (a) any law or regulation
binding on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or other
governmental or public body or authority, or subdivision thereof, binding on
Borrower, or (d) the organizational documents of Borrower;
4.6 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by any governmental or public body or authority, or subdivision
thereof, binding on either Borrower, except as already has been obtained or
made; and
4.7 This Amendment has been duly executed and delivered by Borrower
and is the binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as such enforceability may be limited by
bankruptcy,
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insolvency, reorganization, liquidation, moratorium or other similar laws of
general application and equitable principles relating to or affecting creditors'
rights.
5. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
6. EFFECTIVENESS. This Amendment shall be deemed effective upon (a) the due
execution and delivery to Bank of this Amendment by each party hereto, (b)
Borrower's payment of a fee in an amount equal to $12,500.00, (c) Bank's receipt
of an Acknowledgment of Amendment and Reaffirmation of Guaranty substantially in
the form attached hereto as Schedule 1, duly executed and delivered by each
Guarantor, and (d) Bank's receipt of an additional Warrant issued by Borrower
entitling Bank to purchase 171,875 shares of common stock of Borrower at an
exercise price of $0.40 per share, with such Warrant to be on the same terms as
the Warrant for 83,333 shares issued by Borrower to Bank and dated with an Issue
Date of August 31, 2005.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the date first written above.
BANK BORROWER
SILICON VALLEY BANK LIMELIGHT NETWORKS, INC.
By: /s/ Travis D. Wood By: /s/ William H. Rinehart
--------------------------------- ------------------------------------
Name: TRAVIS D. WOOD Name: William H. Rinehart
Title: VICE PRESIDENT Title: President & CEO
5
<PAGE>
FOURTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT to Loan and Security Agreement (this "Amendment") is
entered into this 24th day of February, 2006, by and between Silicon Valley Bank
("Bank") and LIMELIGHT NETWORKS, INC., a Delaware corporation ("Borrower") whose
address is 2220 West 14th Street, Tempe, AZ 85281.
RECITALS
A. Bank and Borrower have entered into that certain Loan and Security
Agreement dated as of April 15, 2005, as amended (as the same may from time to
time be further amended, modified, supplemented or restated, the "Loan
Agreement").
B. Bank has extended credit to Borrower for the purposes permitted in the
Loan Agreement.
C. Borrower has requested that Bank further amend the Loan Agreement to
increase and extend the Committed Revolving Line and to provide additional
equipment term loan financing beyond that which was provided by the Third
Amendment to Loan and Security Agreement dated October 27, 2005.
D. Bank has agreed to so amend certain provisions of the Loan Agreement,
but only to the extent, in accordance with the terms, subject to the conditions
and in reliance upon the representations and warranties set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:
1. DEFINITIONS. Capitalized terms used but not defined in this Amendment
shall have the meanings given to them in the Loan Agreement.
2. AMENDMENTS TO LOAN AGREEMENT.
2.1 SECTION 2.1.6 (EQUIPMENT 3 FACILITY). A new Section 2.1.6 is added
to the Loan Agreement as follows:
2.1.6 Equipment 3 Facility.
(a) Through September 30, 2006 (the "Equipment 3 Availability End
Date") but subject to subsection (c) of this Section 2.1.6 below, Bank will
make advances (each an "Equipment 3 Advance" and, collectively, "Equipment
3 Advances") not exceeding the Committed Equipment 3 Line. The Equipment 3
Advances may only be used to finance or refinance Equipment purchased on or
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after 90 days before the date of each Equipment 3 Advance and may not
exceed 100% of the equipment invoice excluding taxes, shipping, warranty
charges, freight discounts and installation expense. Soft costs may
constitute up to $500,000 of the aggregate Equipment 3 Advances. Each
Equipment 3 Advance must be for a minimum of $100,000. The number of
Equipment 3 Advances is limited to 1 per month.
(b) Each Equipment 3 Advance made prior to 09/30/2006 shall amortize
and be payable in 24 equal monthly payments of principal and interest
beginning 10/31/2006 and continuing on the last day of each month
thereafter. Until the first equal monthly payment of principal and interest
is due on each Equipment 3 Advance made prior to 09/30/2006, interest only
shall be payable monthly beginning on the last day of the month in which
the Equipment 3 Advance is made and continuing on the last day of each
month thereafter. Each Equipment 3 Advance made on 09/30/2006 shall
amortize and be payable in 24 equal monthly payments of principal and
interest beginning 10/31/2006 and continuing on the same day of each month
thereafter. The final payment due on the applicable Equipment 3 Maturity
Date shall include all outstanding principal and all accrued unpaid
interest. Equipment 3 Advances when repaid may not be re-borrowed.
(c) Bank has no obligation to make any Equipment 3 Advance until
Borrower has reported EBITDA of not less than $1,500,000 for the months of
January and February, 2006, combined, as reflected in the monthly financial
statements delivered to Bank pursuant to Section 6.2 hereof. As used herein
"EBITDA" means consolidated earnings before interest expense, income taxes,
depreciation, amortization of intangible assets and other non-cash charges
made to Borrower's income (all a determined by GAAP).
(d) To obtain an Equipment 3 Advance, Borrower must notify Bank (the
notice is irrevocable) by facsimile no later than 12:00 p.m. Pacific time
one Business Day before the day on which the Equipment 3 Advance is to be
made. The notice in the form of Exhibit B (Payment/Advance Form) must be
signed by a Responsible Officer or designee and include a copy of invoices
for the Equipment being financed and such additional information as Bank
may reasonably request.
2.2 SECTION 2.4 (INTEREST RATE, PAYMENTS). The second sentence of
subsection (a) of Section 2.4 is amended in its entirety and replaced with the
following:
Equipment Advances and Equipment 2 Advances and Equipment 3 Advances accrue
interest on the outstanding principal balance at a per annum rate equal to
the Basic Rate.
The last sentence of subsection (b) of Section 2.4 is amended in its entirety
and replaced with the following:
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<PAGE>
If any change in the law increases Bank's expenses or decreases its return
from the Equipment Advances or the Equipment 2 Advances or the Equipment 3
Advances, Borrower will pay Bank upon request the amount of such increase
or decrease.
2.3 SECTION 2.6 (FEES). Subsection (c) entitled "Early Termination
Fees" of Section 2.6 is amended by adding the following clause (beginning
immediately before the words "provided that"):
and a fully earned, non-refundable early termination fee of one percent
(1%) of the outstanding principal balance of all Equipment 3 Advances shall
be due upon voluntary or involuntary payment in full of Borrower's
Obligations under the Committed Equipment 3 Line prior to the relevant
Equipment 3 Maturity Dates and termination of Bank's obligation to lend the
undisbursed portion of such Obligations under the Committed Equipment 3
Line;
2.4 SECTION 13 (DEFINITIONS). The following terms and their respective
definitions set forth in SECTION 13.1 are amended in their entirety and replaced
with the following:
"BASIC RATE" is, as of the date of the relevant Equipment Advance or
Equipment 2 Advance or Equipment 3 Advance, the per annum rate of interest
(based on a year of 360 days) equal to the sum of (a) the U.S. Treasury
note yield to maturity for a term equal to 36 months as quoted in The Wall
Street Journal on the day of the Equipment Advance, plus (b) 4.25%;
provided, that, for any Equipment 3 Advance made on September 30, 2006, it
is, as of the date of any such Equipment 3 Advance, the per annum rate of
interest (based on a year of 360 days) equal to the sum of (a) the U.S.
Treasury note yield to maturity for a term equal to 24 months as quoted in
The Wall Street Journal on the day of the Equipment Advance, plus (b)
4.25%.
"COMMITTED REVOLVING LINE" is an Advance of up to $1,500,000.
"CREDIT EXTENSION" is each Advance, Equipment Advance, Equipment 2
Advance, Equipment 3 Advance, Letter of Credit, or any other extension of
credit by Bank for Borrower's benefit.
"REVOLVING MATURITY DATE" is April 13, 2007.
2.5 SECTION 13 (DEFINITIONS). The following terms and their respective
definitions set forth in SECTION 13.1 are added and inserted in their
appropriate places:
"COMMITTED EQUIPMENT 3 LINE" is a Credit Extension of up to
$2,500,000.
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"EQUIPMENT 3 ADVANCE" is defined in Section 2.1.6.
"EQUIPMENT 3 AVAILABILITY END DATE" is defined in Section 2.1.6.
"EQUIPMENT 3 MATURITY DATE" is September 30, 2008 for any Equipment 3
Advance made on or prior to September 30, 2006.
3. LIMITATION OF AMENDMENTS.
3.1 The amendments set forth in SECTION 2, above, are effective for
the purposes set forth herein and shall be limited precisely as written and
shall not be deemed to (a) be a consent to any amendment, waiver or modification
of any other term or condition of any Loan Document, or (b) otherwise prejudice
any right or remedy which Bank may now have or may have in the future under or
in connection with any Loan Document.
3.2 This Amendment shall be construed in connection with and as part
of the Loan Documents and all terms, conditions, representations, warranties,
covenants and agreements set forth in the Loan Documents, except as herein
amended, are hereby ratified and confirmed and shall remain in full force and
effect.
4. REPRESENTATIONS AND WARRANTIES. To induce Bank to enter into this
Amendment, Borrower hereby represents and warrants to Bank as follows:
4.1 Immediately after giving effect to this Amendment (a) the
representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (b) to Borrower's
knowledge no Event of Default has occurred and is continuing;
4.2 Borrower has the power and authority to execute and deliver this
Amendment and to perform its obligations under the Loan Agreement, as amended by
this Amendment;
4.3 The organizational documents of Borrower delivered to Bank on the
Effective Date remain true, accurate and complete and have not been amended,
supplemented or restated and are and continue to be in full force and effect;
4.4 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, have been duly authorized;
4.5 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not and will not contravene (a) any law or regulation
binding on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or other
governmental or public body or
4
<PAGE>
authority, or subdivision thereof, binding on Borrower, or (d) the
organizational documents of Borrower;
4.6 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by any governmental or public body or authority, or subdivision
thereof, binding on either Borrower, except as already has been obtained or
made; and
4.7 This Amendment has been duly executed and delivered by Borrower
and is the binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors' rights.
5. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
6. EFFECTIVENESS. This Amendment shall be deemed effective upon (a) the due
execution and delivery to Bank of this Amendment by each party hereto, (b)
Borrower's payment of a fee in an amount equal to $15,000, (c) Bank's receipt
of an Acknowledgment of Amendment and Reaffirmation of Guaranty substantially
in the form attached hereto as Schedule 1, duly executed and delivered by each
Guarantor, and (d) Bank's receipt of an additional Warrant issued by Borrower
entitling Bank to purchase 171,875 shares of common stock of Borrower at an
exercise price of $0.40 per share, with such Warrant to be on the same terms as
the Warrant for 171,875 shares issued by Borrower to Bank and dated with an
Issue Date of October 20, 2005.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the date first written above.
BANK BORROWER
SILICON VALLEY BANK LIMELIGHT NETWORKS, INC.
By: /s/ TRAVIS D WOOD By: /s/ William H Rinehart
--------------------------------- ------------------------------------
Name: TRAVIS D WOOD Name: William H Rinehart
Title: VICE PRESIDENT Title: President & CEO
5
<PAGE>
FIFTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
THIS FIFTH AMENDMENT to Loan and Security Agreement (this "Amendment") is
entered into this 10 day of November, 2006, by and between SILICON VALLEY BANK
("Bank") and LIMELIGHT NETWORKS, INC., a Delaware corporation ("Borrower") whose
address is 2220 West 14th Street, Tempe, AZ 85281.
RECITALS
A. Bank and Borrower have entered into that certain Loan and Security
Agreement dated as of April 15, 2005, as amended (as the same may from time to
time be further amended, modified, supplemented or restated, the "Loan
Agreement").
B. Bank has extended credit to Borrower for the purposes permitted in the
Loan Agreement.
C. Borrower has requested that Bank further amend the Loan Agreement to
increase and extend the Committed Revolving Line to support working capital
requirements and to refinance existing debt to Bank and to provide additional
equipment term loan financing beyond that which was provided by the original
Loan Agreement, the Third Amendment to Loan and Security Agreement dated October
27, 2005 and the Fourth Amendment to Loan and Security Agreement dated February
24, 2006, to finance new and used equipment and related software.
D. Bank has agreed to so amend certain provisions of the Loan Agreement,
but only to the extent, in accordance with the terms, subject to the conditions
and in reliance upon the representations and warranties set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:
1. DEFINITIONS. Capitalized terms used but not defined in this Amendment
shall have the meanings given to them in the Loan Agreement.
2. AMENDMENTS TO LOAN AGREEMENT.
2.1 Section 2.1.1 (Revolving Advances) and Section 2.1.2 (Equipment
Facility). Sections 2.1.1 and 2.1.2 are amended entirely and replaced with the
following:
2.1.1 Revolving Advances
(a) (I) Bank will make Revolving Advances up to an aggregate amount of
$1,000,000 and (II) thereafter Bank will make Revolving Advances (that exceed
$1,000,000 in the aggregate) up to an aggregate amount not exceeding (i) the
lesser of (A) S4,000,000, or (B) the Borrowing Base, minus (ii) the amount of
all outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit), and minus (iii) the amount of utilized Cash Management Services covered
under the Cash Management Services Sublimit. Amounts borrowed under this Section
may be repaid and reborrowed during the term of this Agreement.
(b) To obtain a Revolving Advance, Borrower must notify Bank as
provided in Section 3.4(a).
<PAGE>
(c) The Committed Revolving Line terminates on the Revolving Maturity
Date, when all Revolving Advances are immediately payable. Interest on the
Committed Revolving Line is payable monthly.
2.1.2 Equipment Facility.
(a) Until the close of business December 31, 2008, Bank will make
advances (each an "Equipment Advance" and, collectively, "Equipment Advances")
not exceeding the Committed Equipment Line. The Equipment Advances may only be
used to finance or refinance Eligible Equipment purchased on or after 90 days
before the date of each Equipment Advance and may not exceed 100% of the
equipment invoices including the following soft costs ("Soft Costs") relating to
such Equipment being financed by such Equipment Advance: taxes, shipping,
warranty charges, freight discounts and installation expense. Soft Costs may
constitute up to $2,500,000 of the aggregate Equipment Advances. Each Equipment
Advance (except the final Equipment Advance) must be for a minimum of $3,000,000
and the number of Equipment Advances is limited to eight (8). Notwithstanding
the foregoing, (i) upon or promptly after the date the Fifth Amendment to Loan
and Security Agreement relating to this Agreement becomes effective (the "Fifth
Effective Date"), one Equipment Advance in the amount of the then existing debt
to Bank for the equipment loans made by Bank to Borrower prior to such Fifth
Effective Date (approximately $7,500,000) (the "Repayment Advance") shall be
advanced hereunder and (ii) one Equipment Advance in the aggregate amount of
Eligible Equipment purchases made since June 1, 2006 and up to the Fifth
Effective Date shall be advanced hereunder on or before November 30, 2006,
provided that invoices for such Eligible Equipment dated within 150 days prior
the date of such Equipment Advance are provided to Bank on or prior to the date
of such Equipment Advance.
(b) Each Equipment Advance shall bear interest payable monthly
commencing 30 days following such Equipment Advance until the date which is six
(6) months following such Equipment Advance, and such Equipment Advance shall
then amortize and be payable in 54 consecutive, equal monthly payments of
principal plus accrued interest beginning on the date six months following such
Equipment Advance and continuing on the same day of each month thereafter. The
final payment due on the applicable Equipment Maturity Date shall include all
outstanding principal and all accrued unpaid interest. After repayment, no
Equipment Advances may be re-borrowed.
(c) To obtain an Equipment Advance, Borrower must notify Bank as
provided in Section 3.4(a) and include a copy of invoices for the Equipment
being financed, except in the case of the Repayment Advance, and such
additional information as Bank may reasonably request.
2.2 Section 2.1.3 (Letters of Credit Sublimit) and Section 2.1.4 (Cash
Management Services Sublimit). Sections 2.1.3 and 2.1.4 are each amended by
changing the dollar amount of "$500,000" in each place where it appears to the
dollar amount of "$1,000,000"; and by changing the term "Advances" in each place
where it appears to the term "Revolving Advances".
2.3 Section 2.1.5 (Equipment 2 Facility) and Section 2.1.6 (Equipment
3 Facility). Sections 2.1.5 and 2.1.6 are deleted entirely.
2.4 Section 2.3 (Overadvances) and Section 2.4 (Interest Rate,
Payments). Sections 2.3 and 2.4 are amended entirely and replaced with the
following:
2.3 General Provisions Relating to the Advances; Overadvances.
(a) Each Advance shall, at Borrower's option in accordance with the terms
of this Agreement, be either in the form of a Prime Rate Advance or a LIBOR
Advance; provided that in no event shall Borrower maintain at any time LIBOR
Advances having more than one Interest Period per Advance. Borrower shall pay
interest accrued on the Advances at the rates and in the manner set forth in
Section 2.4{b).
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(b) If Borrower's Obligations for Revolving Advances made under Section
2.1.1(a)(II) and under Sections 2.1.3, and 2.1.4 exceed the lesser of either (i)
$4,000,000 or (ii) the Borrowing Base, Borrower must promptly pay Bank the
excess.
2.4 Payment of Interest on the Credit Extensions.
(a) Computation of Interest. Interest on the Credit Extensions and all fees
payable hereunder shall be computed on the basis of a 360-day year and the
actual number of days elapsed in the period during which such interest accrues.
In computing interest on any Credit Extension, the date of the making of such
Credit Extension shall be included and the date of payment shall be excluded;
provided, however, that if any Credit Extension is repaid on the same day on
which it is made, such day shall be included in computing interest on such
Credit Extension.
(b) Advances. Each Advance shall bear interest on the outstanding principal
amount thereof from the date when made, continued or converted until paid in
full at a rate per annum equal to the Prime Rate plus the Prime Rate Margin or
the LIBOR Rate plus the LIBOR Rate Margin, as the case may be. On and after the
expiration of any Interest Period applicable to any LIBOR Advance outstanding on
the date of occurrence of an Event of Default or acceleration of the
Obligations, the Effective Amount of such LIBOR Advance shall, during the
continuance of such Event of Default or after acceleration, bear interest at a
rate per annum equal to the Prime Rate plus five percent (5.00%). Pursuant to
the terms hereof, interest on each Advance shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any prepayment
of any Advance pursuant to this Agreement for the portion of any Advance so
prepaid and upon payment (including prepayment) in full thereof. All accrued but
unpaid interest on the Advances shall be due and payable on the applicable
maturity date.
(c) Default Interest. Except as otherwise provided in Section 2.4(b), after
an Event of Default, Obligations shall bear interest five percent (5.00%) above
the rate effective immediately before the Event of Default (the "DEFAULT RATE").
Payment or acceptance of the increased interest provided in this Section 2.4(c)
is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of Bank.
(d) Prime Rate Advances. Each change in the interest rate of the Prime Rate
Advances based on changes in the Prime Rate shall be effective on the effective
date of such change and to the extent of such change. Bank shall use its best
efforts to give Borrower prompt notice of any such change in the Prime Rate;
provided, however, that any failure by Bank to provide Borrower with notice
hereunder shall not affect Bank's right to make changes in the interest rate of
the Prime Rate Advances based on changes in the Prime Rate.
(e) LIBOR Advances. The interest rate applicable to each LIBOR Advance
shall be determined in accordance with Section 3.4(a) hereunder. Subject to
Sections 3.6 and 3.7, such rate shall apply during the entire Interest Period
applicable to such LIBOR Advance, and interest calculated thereon shall be
payable on the Interest Payment Date applicable to such LIBOR Advance.
2.5 Section 2.6 (Fees). Subsection (c) entitled "Early Termination
Fees" of Section 2.6 is amended entirely and replaced with the following:
(c) Early Termination Fees. A fully earned, non-refundable early
termination fee of three-fourths of one percent (0.75%) of the outstanding
principal balance of all Equipment Advances shall be due upon voluntary or
involuntary payment in full of Borrower's Obligations under the Committed
Equipment Line prior to the relevant Equipment Maturity Dates and termination of
Bank's obligation to lend the undisbursed portion of such Obligations under the
Committed Equipment Line if such payment and termination is made on or prior to
the first anniversary of the Fifth Effective Date, and a fee of one-half of one
percent (0.50%) of the outstanding principal balance of all Equipment Advances
if such payment and
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termination is made on or prior to the second anniversary of the Fifth Effective
Date; provided that no such early termination fees shall be payable if Bank
agrees to refinance and/or redocument this Agreement in another lending division
of Bank (in Bank's sole discretion) prior to the relevant Maturity Dates or if
such payment and termination is made as a direct result of an initial public
offering of Borrower's equity securities.
And a new subsection (d) entitled "Unused Revolving Line Facility Fee" is added
to Section 2.6 as follows:
(d) Unused Revolving Line Facility Fee. A fee (the "Unused Revolving Line
Facility Fee"), payable quarterly, in arrears, by the 15th day of the month
following each calendar quarter, in an amount equal to one-fourth of one percent
(0.25%) per annum of the average unused portion of the Revolving Line, as
determined by Bank. Borrower shall not be entitled to any credit, rebate or
repayment of any Unused Revolving Line Facility Fee previously earned by Bank
pursuant to this Section notwithstanding any termination of the Agreement or the
suspension or termination of Bank's obligation to make loans and advances
hereunder.
2.6 Section 3.2 (Conditions Precedent to All Credit Extensions).
Section 3.2 is amended entirely and replaced with the following and the
following Sections 3.3, 3.4, 3.5, 3.6 and 3.7 are added to the Agreement:
3.2 Conditions Precedent to all Credit Extensions. Bank's obligations to
make each Credit Extension, including the initial Credit Extension, is subject
to the following:
(a) timely receipt of a Notice of Borrowing and/or Payment/Advance Form, as
applicable; and
(b) the representations and warranties in Section 5 shall be true in all
material respects on the date of the Notice of Borrowing or Payment/Advance
Form, as applicable, and on the effective date of each Credit Extension;
provided, however, that such materiality qualifier shall not be applicable to
any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, and no
Event of Default shall have occurred and be continuing or result from the Credit
Extension. Each Credit Extension is Borrower's representation and warranty on
that date that the representations and warranties in Section 5 remain true in
all material respects; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date.
3.3 Covenant to Deliver. Borrower agrees to deliver to Bank each item
required to be delivered to Bank under this Agreement as a condition to any
Credit Extension. Borrower expressly agrees that the extension of a Credit
Extension prior to the receipt by Bank of any such item shall not constitute a
waiver by Bank of Borrower's obligation to deliver such item, and any such
extension in the absence of a required item shall be in Bank's sole discretion.
3.4 Procedure for the Borrowing of Advances.
(a) Subject to the prior satisfaction of all other applicable conditions to
the making of an Advance set forth in this Agreement, each Advance shall be made
upon Borrower's irrevocable written notice delivered to Bank in the form of a
Notice of Borrowing and, if applicable, a Payment/Advance Form, each executed
by a Responsible Officer of Borrower or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become
due. Bank may rely on any telephone notice given by a person whom Bank believes
is a Responsible Officer or designee. Borrower will indemnify Bank for any loss
Bank suffers due to such reliance. Such Notice of Borrowing must be received by
Bank prior to 11:00 a.m. Pacific time, (i) at least three (3) Business Days
prior to the requested
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Funding Date, in the case of LIB0R Advances, and (ii) at least one (1) Business
Day prior to the requested Funding Date, in the case of Prime Rate Advances,
specifying:
(1) the amount of the Advance, which, if a LIB0R Advance is requested,
shall be in an aggregate minimum principal amount of $1,000,000 or in any
integral multiple of $1,000,000 in excess thereof;
(2) the requested Funding Date:
(3) whether the Advance is to be comprised of LIBOR Advances or Prime
Rate Advances; and
(4) the duration of the Interest Period applicable to any such LIBOR
Advances included in such notice; provided that if the Notice of Borrowing shall
fail to specify the duration of the Interest Period for any Advance comprised of
LIBOR Advances, such Interest Period shall be one (1) month.
(b) The proceeds of all such Advances will then be made available to
Borrower on the Funding Date by Bank by transfer to the Designated Deposit
Account and, subsequently, by wire transfer to such other account as Borrower
may instruct in the Notice of Borrowing. No Advances shall be deemed made to
Borrower, and no interest shall accrue on any such Advance, until the related
funds have been deposited in the Designated Deposit Account.
3.5 Conversion and Continuation Elections.
(a) So long as (i) no Event of Default or Default exists; (ii) Borrower
shall not have sent any notice of termination of this Agreement; and (iii)
Borrower shall have complied with such customary procedures as Bank has
established from time to time for Borrower's requests for LIBOR Advances,
Borrower may, upon irrevocable written notice to Bank:
(1) elect to convert on any Business Day, Prime Rate Advances in an
amount equal to $1,000,000 or any integral multiple of $1,000,000 in excess
thereof into LIBOR Advances;
(2) elect to continue on any Interest Payment Date any LIBOR Advances
maturing on such Interest Payment Date (or any part thereof in an amount equal
to $1,000,000 or any integral multiple of $1,000,000 in excess thereof);
provided, that if the aggregate amount of LIBOR Advances shall have been
reduced, by payment, prepayment, or conversion of part thereof, to be less than
$1,000,000, such LIBOR Advances shall automatically convert into Prime Rate
Advances, and on and after such date the right of Borrower to continue such
Advances as, and convert such Advances into, LIBOR Advances shall terminate; or
(3) elect to convert on any Interest Payment Date any LIBOR Advances
maturing on such Interest Payment Date (or any part thereof in an amount equal
to $1,000,000 or any integral multiple of $1,000,000 in excess thereof) into
Prime Rate Advances.
(b) Borrower shall deliver a Notice of Conversion/Continuation in
accordance with Section 10, entitled Notices, to be received by Bank prior to
11:00 a.m. Pacific time at least (i) three (3) Business Days in advance of the
Conversion Date or Continuation Date, if any Advances are to be converted into
or continued as LIBOR Advances; and (ii) one (1) Business Day in advance of the
Conversion Date, if any Advances are to be converted into Prime Rate Advances,
in each case specifying the:
(1) proposed Conversion Date or Continuation Date;
(2) aggregate amount of the Advances to be converted or continued
which, if any Advances are to be converted into or continued as LIBOR Advances,
shall be in an aggregate minimum principal amount of $1,000,000 or in any
integral multiple of $1,000,000 in excess thereof;
(3) nature of the proposed conversion or continuation; and
(4) duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to any LIBOR
Advances, Borrower shall have timely failed to select a new Interest Period to
be applicable to such LIBOR Advances, Borrower shall be deemed to have elected
to convert such LIBOR Advances into Prime Rate Advances.
(d) Any LIBOR Advances shall, at Bank's option, convert into Prime Rate
Advances in the event that (i) an Event of Default or Default shall exist, or
(ii) the aggregate principal amount of the Prime Rate Advances which have been
previously converted to LIBOR Advances, or the aggregate principal
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amount of existing LIBOR Advances continued, as the case may be, at the
beginning of an Interest Period shall at any time during such Interest Period
exceed the Revolving Line. Borrower agrees to pay Bank, upon demand by Bank (or
Bank may, at its option, charge the Designated Deposit Account or any other
account Borrower maintains with Bank) any amounts required to compensate Bank
for any loss (including loss of anticipated profits), cost, or expense incurred
by Bank, as a result of the conversion of LIBOR Advances to Prime Rate Advances
pursuant to any of the foregoing.
(e) Notwithstanding anything to the contrary contained herein, Bank shall
not be required to purchase United States Dollar deposits in the London
interbank market or other applicable LIBOR market to fund any LIBOR Advances,
but the provisions hereof shall be deemed to apply as if Bank had purchased such
deposits to fund the LIBOR Advances.
3.6 Special Provisions Governing LIBOR Advances. Notwithstanding any other
provision of this Agreement to the contrary, the following provisions shall
govern with respect to LIBOR Advances as to the matters covered:
(a) Determination of Applicable Interest Rate. As soon as practicable on
each Interest Rate Determination Date, Bank shall determine (which determination
shall, absent manifest error in calculation, be final, conclusive and binding
upon all parties) the interest rate that shall apply to the LIBOR Advances for
which an interest rate is then being determined for the applicable Interest
Period and shall promptly give notice thereof (in writing or by telephone
confirmed in writing) to Borrower.
(b) Inability to Determine Applicable Interest Rate. In the event that Bank
shall have determined (which determination shall be final and conclusive and
binding upon all parties hereto), on any Interest Rate Determination Date with
respect to any LIBOR Advance, that by reason of circumstances affecting the
London interbank market adequate and fair means do not exist for ascertaining
the interest rate applicable to such Advance on the basis provided for in the
definition of LIBOR, Bank shall on such date give notice (by facsimile or by
telephone confirmed in writing) to Borrower of such determination, whereupon (i)
no Advances may be made as, or converted to, LIBOR Advances until such time as
Bank notifies Borrower that the circumstances giving rise to such notice no
longer exist, and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by Borrower with respect to Advances in respect of
which such determination was made shall be deemed to be rescinded by Borrower.
(c) Compensation for Breakage or Non-Commencement of Interest Periods.
Borrower shall compensate Bank, upon written request by Bank (which request
shall set forth the manner and method of computing such compensation), for all
reasonable losses, expenses and liabilities, if any (including any interest paid
by Bank to lenders of funds borrowed by it to make or carry its LIBOR Advances
and any loss, expense or liability incurred by Bank in connection with the
liquidation or re-employment of such funds) such that Bank may incur: (i) if for
any reason (other than a default by Bank or due to any failure of Bank to fund
LIBOR Advances due to impracticability or illegality under Sections 3.7(d) and
3.7(e)) a borrowing or a conversion to or continuation of any LIBOR Advance does
not occur on a date specified in a Notice of Borrowing or a Notice of
Conversion/Continuation, as the case may be, or (ii) if any principal payment
or any conversion of any of its LIBOR Advances occurs on a date prior to the
last day of an Interest Period applicable to that Advance.
(d) Assumptions Concerning Funding of LIBOR Advances. Calculation of all
amounts payable to Bank under this Section 3.6 and under Section 3.4 shall be
made as though Bank had actually funded each of its relevant LIBOR Advances
through the purchase of a Eurodollar deposit bearing interest at the rate
obtained pursuant to the definition of LIBOR Rate in an amount equal to the
amount of such LIBOR Advance and having a maturity comparable to the relevant
Interest Period; provided, however, that Bank may fund each of its LIBOR
Advances in any manner it sees fit and the foregoing assumptions shall be
utilized only for the purposes of calculating amounts payable under this Section
3.6 and under Section 3.4.
(e) LIBOR Advances After Default. After the occurrence and during the
continuance of an Event of Default, (i) Borrower may not elect to have an
Advance be made or continued as, or converted to,
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a LIBOR Advance after the expiration of any Interest Period then in effect for
such Advance and (ii) subject to the provisions of Section 3.6(c), any Notice of
Conversion/Continuation given by Borrower with respect to a requested
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Borrower and be deemed a request to convert or continue Advances
referred to therein as Prime Rate Advances.
3.7 Additional Requirements/Provisions Regarding LIBOR Advances.
(a) If for any reason (including voluntary or mandatory prepayment or
acceleration), Bank receives all or part of the principal amount of a LIBOR
Advance prior to the last day of the Interest Period for such Advance, Borrower
shall immediately notify Borrower's account officer at Bank and, on demand by
Bank, pay Bank the amount (if any) by which (i) the additional interest which
would have been payable on the amount so received had it not been, received
until the last day of such Interest Period exceeds (ii) the interest which would
have been recoverable by Bank by placing the amount so received on deposit in
the certificate of deposit markets, the offshore currency markets, or United
States Treasury investment products, as the case may be, for a period starting
on the date on which it was so received and ending on the last day of such
Interest Period at the interest rate determined by Bank in its reasonable
discretion. Bank's determination as to such amount shall be conclusive absent
manifest error.
(b) Borrower shall pay Bank, upon demand by Bank, from time to time such
amounts as Bank may determine to be necessary to compensate it for any costs
incurred by Bank that Bank determines are attributable to its making or
maintaining of any amount receivable by Bank hereunder in respect of any
Advances relating thereto (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), in each case resulting from
any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to Bank under
this Agreement in respect of any Advances (other than changes which affect taxes
measured by or imposed on the overall net income of Bank by the jurisdiction in
which Bank has its principal office);
(ii) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with, or other liabilities of Bank (including any Advances or any
deposits referred to in the definition of LIBOR); or
(iii) imposes any other condition affecting this Agreement (or any of
such extensions of credit or liabilities).
Bank will notify Borrower of any event occurring after the Closing Date which
will entitle Bank to compensation pursuant to this Section 3.7 as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation. Bank will furnish Borrower with a statement setting forth the
basis and amount of each request by Bank for compensation under this Section
3.7. Determinations and allocations by Bank for purposes of this Section 3.7 of
the effect of any Regulatory Change on its costs of maintaining its obligations
to make Advances, of making or maintaining Advances, or on amounts receivable by
it in respect of Advances, and of the additional amounts required to compensate
Bank in respect of any Additional Costs, shall be conclusive absent manifest
error.
(c) If Bank shall determine that the adoption or implementation of any
applicable law, rule, regulation, or treaty regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its
applicable lending office) with any respect or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank, or comparable agency, has or would have the effect of reducing the rate of
return on capital of Bank or any person or entity controlling Bank (a "Parent")
as a consequence of its obligations hereunder to a level below that which Bank
(or its Parent) could have achieved but for such adoption, change, or compliance
(taking into consideration policies with respect to capital adequacy) by an
amount deemed by Bank to be material, then from time to time, within fifteen
(15) days after demand by Bank, Borrower shall pay to Bank such additional
amount or amounts as will compensate Bank for such reduction. A statement of
Bank claiming compensation under this Section 3.7(c) and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive
absent manifest error.
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(d) If, at any time, Bank, in its sole and absolute discretion, determines
that (i) the amount of LIBOR Advances for periods equal to the corresponding
Interest Periods are not available to Bank in the offshore currency interbank
markets, or (ii) LIBOR does not accurately reflect the cost to Bank of lending
the LIBOR Advances, then Bank shall promptly give notice thereof to Borrower.
Upon the giving of such notice, Bank's obligation to make the LIBOR Advances
shall terminate; provided, however, Advances shall not terminate if Bank and
Borrower agree in writing to a different interest rate applicable to LIBOR
Advances.
(e) If it shall become unlawful for Bank to continue to fund or maintain
any LIBOR Advances, or to perform its obligations hereunder, upon demand by
Bank, Borrower shall prepay the Advances in full with accrued interest thereon
and all other amounts payable by Borrower hereunder (including, without
limitation, any amount payable in connection with such prepayment pursuant to
Section 3.7(a)). Notwithstanding the foregoing, to the extent a determination by
Bank as described above relates to a LIBOR Advance then being requested by
Borrower pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Borrower shall have the option, subject to the
provisions of Section 3.6(c), to (i) rescind such Notice of Borrowing or Notice
of Conversion/Continuation by giving notice (by facsimile or by telephone
confirmed in writing) to Bank of such rescission on the date on which Bank gives
notice of its determination as described above, or (ii) modify such Notice of
Borrowing or Notice of Conversion/Continuation to obtain a Prime Rate Advance or
to have outstanding Advances converted into or continued as Prime Rate Advances
by giving notice (by facsimile or by telephone confirmed in writing) to Bank of
such modification on the date on which Bank gives notice of its determination as
described above.
2.7 Section 6.2 (Financial Statements, Reports, Certificates),
Subsection (b) of Section 6.2 is amended entirely and replaced with the
following:
(b) Within 20 days after the last day of each month, Borrower will deliver
to Bank aged listings of accounts receivable and accounts payable, and, after
outstanding Revolving Advances exceed $1,000,000, within 20 days after the last
day of each month and at the time of any request for a Revolving Advance,
Borrower will deliver to Bank a Borrowing Base Certificate signed by a
Responsible Officer in the form of Exhibit C.
2.8 Section 6.7 (Financial Covenants). Section 6.7 is amended entirely
and replaced with the following:
6.7 Financial Covenants. Commencing as of November 30, 2006, Borrower will
maintain as of the last day of each month:
(i) Minimum Adjusted Quick Ratio. A ratio of Quick Assets to Current
Liabilities of at least 1.50 to 1.00.
(ii) Minimum Fixed Charge Coverage Ratio. A ratio of Borrower's (a)
consolidated earnings before interest expense, income taxes, depreciation,
amortization of intangible assets and other non-cash charges made to Borrower's
income (all as determined by GAAP) minus unfunded capital expenditures and minus
cash taxes for the preceding nine-month period to (b) current maturities of long
term debt plus interest expense paid or payable during the preceding nine-month
period of at least 1.50 to 1.00, measured monthly on a rolling 9 month basis.
(iii) Minimum Tangible Net Worth. A Tangible Net Worth of at least
$30,000,000, increasing by 50% of quarterly Net Income each fiscal quarter.
2.9 Section 13 (Definitions). The following terms and their respective
definitions set forth in Section 13.1 are amended in their entirety and replaced
with the following:
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"Advance" is a Revolving Advance or an Equipment Advance, or both
Revolving Advances and Equipment Advances, collectively, as the context
requires.
"Business Day" is any day other than a Saturday, Sunday or other day
on which banking institutions in the State of California are authorized or
required by law or other governmental action to close, except that if any
determination of a "Business Day" shall relate to a LIBOR Advance, the term
"Business Day" shall also mean a day on which dealings are carried on in
the London interbank market.
"Committed Equipment Line" is an Equipment Advance or Equipment
Advances in an aggregate maximum amount of up to $25,000,000.
"Committed Revolving Line" is a Revolving Advance or Revolving
Advances in an aggregate maximum amount of up to $5,000,000.
"Credit Extension" is each Revolving Advance, Equipment Advance,
Letter of Credit, or any other extension of credit by Bank for Borrower's
benefit.
"Equipment Maturity Date" is the earliest of (a) the date sixty (60)
months after the respective Equipment Advance or (b) the date of
acceleration after the occurrence and continuance of an Event of Default.
"Quick Assets" is, on any date, Borrower's consolidated, unrestricted
cash and cash equivalents held at Bank, plus all Accounts.
"Revolving Maturity Date" is the earliest of (a) October 31, 2009 [the
third (3rd) anniversary of the Fifth Effective Date] or (b) the date of
acceleration after the occurrence and continuance of an Event of Default.
"Schedule" is any attached schedule of exceptions or Perfection
Certificate delivered to Bank.
The definition of "Eligible Accounts" set forth in Section 13.1 is amended by
changing the dollar amount of "$125,000" set forth in subpart (e) of said
definition to the dollar amount of "$400,000"
The following terms and their respective definitions are deleted from Section
13.1 in their entirety:
Basic Rate, Committed Equipment 2 Line, Committed Equipment 3 Line, Equipment
Availability End Date, Equipment 2 Advance, Equipment 2 Availability End Date,
Equipment 2 Maturity Date, Equipment 3 Advance, Equipment 3 Availability End
Date, and Equipment 3 Maturity Date.
The following terms and their respective definitions set forth below are added
to Section 13.1 and inserted in their appropriate alphabetical order:
"Continuation Date" means any date on which Borrower elects to
continue a LIBOR Advance into another Interest Period.
"Conversion Date" means any date on which Borrower elects to convert a
Prime Rate Advance to a LIBOR Advance or a LIBOR Advance to a Prime Rate
Advance.
"Default Rate" is defined in Section 2.4(c).
"Designated Deposit Account" is Borrower's deposit account, Account
Number 3300467946, maintained with Bank.
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"EBITDA" is Borrower's consolidated earnings before interest expense,
income taxes, depreciation, amortization of intangible assets and other
non-cash charges made to Borrower's income (all a determined by GAAP).
"Effective Amount" means with respect to any Advances on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowing and prepayments or repayments thereof occurring on such date.
"Eligible Equipment" is (a) new or used general purpose computer
equipment, office equipment, test and laboratory equipment, and
furnishings, subject to the limitations set forth herein, and (b) leasehold
improvements, intangible property such as computer software and software
licenses, equipment specifically designed or manufactured for Borrower,
other intangible property, limited use property and other similar property
and soft costs approved by Bank, including taxes, shipping, warranty
charges, freight discounts and installation expenses, all of which complies
with all of Borrower's representations and warranties to Bank and which is
acceptable to Bank in all respects and in which Bank has a first priority
Lien.
"Fifth Effective Date" is defined in Section 2.1.2(a).
"Funded Debt" is, on any date, Borrower's consolidated Indebtedness.
"Funding Date" is any date on which a Credit Extension is made to or
on account of Borrower which shall be a Business Day.
"Interest Payment Date" means, with respect to any LIBOR Advance, the
last day of each Interest Period applicable to such LIBOR Advance and, with
respect to Prime Rate Advances, the last day of each month (or, if the last
day of the month does not fall on a Business Day, then on the first
Business Day following such date), and each date a Prime Rate Advance is
converted into a LIBOR Advance to the extent of the amount converted to a
LIBOR Advance.
"Interest Period" means, as to any LIBOR Advance, the period
commencing on the date of such LIBOR Advance, or on the
conversion/continuation date on which the LIBOR Advance is converted into
or continued as a LIBOR Advance, and ending on the date that is one (1),
two (2) or three (3) months thereafter, in each case as Borrower may elect
in the applicable Notice of Borrowing or Notice of Conversion/Continuation;
provided, however, that (a) no Interest Period with respect to any LIBOR
Advance shall end later than the Revolving Maturity Date or any applicable
Equipment Maturity Date, (b) the last day of an Interest Period shall be
determined in accordance with the practices of the LIBOR interbank market
as from time to time in effect, (c) if any Interest Period would otherwise
end on a day that is not a Business Day, that Interest Period shall be
extended to the following Business Day unless, in the case of a LIBOR
Advance, the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period
shall end on the preceding Business Day, (d) any Interest Period pertaining
to a LIBOR Advance that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period, and
(e) interest shall accrue from and include the first Business Day of an
Interest Period but exclude the last Business Day of such Interest Period.
"Interest Rate Determination Date" means each date for calculating the
LIBOR for purposes of determining the interest rate in respect of an
Interest Period. The Interest Rate Determination Date shall be the second
Business Day prior to the first day of the related Interest Period for a
LIBOR Advance.
"LIBOR Rate" means, for each Interest Period in respect of LIBOR
Advances comprising part of the same Advance or Advances, an interest rate
per annum (rounded upward to
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the nearest 1/16th of one percent (0.0625%)) equal to LIBOR for such
Interest Period divided by one (1) minus the Reserve Requirement for such
Interest Period.
"LIBOR Rate Margin" is, at any date of determination, the applicable
interest rate factor set forth in the column entitled "LIBOR Margin" in the
applicable table below set opposite the corresponding ratio or range of
ratios in the column entitled "Funded Debt to Trailing 12-Month EBITDA" in
the tables identified below for Revolving Advances or Equipment Advances,
as applicable, in which Borrower's then current ratio of Funded Debt to
Trailing 12-Month EBITDA would fall:
For Revolving Advances:
Pricing Funded Debt to LIBOR Prime
Level Trailing 12-Month EBITDA Margin Margin
------- ------------------------ ------ ------
I < 1.50x 2.00% 0.00%
II > or = 1.50x and < 2.00x 2.25% 0.50%
III > or = 2.00x and < 2.50x 2.50% 0.75%
IV > or = 2.50x and < 3.00x 2.75% 1.00%
V > or = 3.00x 3.00% 1.25%
For Equipment Advances:
Pricing Funded Debt to LIBOR Prime
Level Trailing 12-Month EBITDA Margin Margin
------- ------------------------ ------ ------
I < 1.50x 2 25% 0.25%
II > or = 1.50x and < 2.00x 2.50% 0.75%
III > or = 2.00x and < 2.50x 2.75% 1.00%
IV > or = 2.50x and < 3.00x 3.00% 1.25%
V > or = 3.00x 3.25% 1.50%
"LIBOR" means, for any Interest Rate Determination Date with respect
to an Interest Period for any Advance to be made as, continued as or
converted into a LIBOR Advance, the rate of interest per annum determined
by Bank to be the per annum rate of interest at which deposits in United
States Dollars are offered to Bank in the London interbank market (rounded
upward, if necessary, to the nearest 1/100th of one percent (0.01%)) in
which Bank customarily participates at 11:00 a.m. (local time in such
interbank market) two (2) Business Days prior to the first day of such
Interest Period for a period approximately equal to such Interest Period
and in an amount approximately equal to the amount of such Advance.
"LIBOR Advance" means an Advance that bears interest based on the
LIBOR Rate.
"Net Income" means, as calculated on a consolidated basis for Borrower
and its Subsidiaries for any period as at any date of determination, the
net profit (or loss), after provision for taxes, of Borrower and its
Subsidiaries for such period taken as a single accounting period.
"Notice of Borrowing" means a notice given by Borrower to Bank in
accordance with Section 3.4(a), substantially in the form of Exhibit E
attached, with appropriate insertions.
"Notice of Conversion/Continuation" means a notice given by Borrower
to Bank in accordance with Section 3.5, substantially in the form of
Exhibit F. attached, with appropriate insertions.
"Payment/Advance Form" is a Loan Payment/Advance Request Form in the
form attached as Exhibit B.
"Prime Rate Advance" means an Advance that bears interest based on the
Prime Rate.
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"Prime Rate Margin" is, at any date of determination, the applicable
interest rate factor set forth in the column entitled "Prime Margin" in the
applicable table below set opposite the corresponding ratio or range of
ratios in the column entitled "Funded Debt to Trailing 12-Month EBITDA" in
the tables identified below for Revolving Advances or Equipment Advances,
as applicable, in which Borrower's then current ratio of Funded Debt to
Trailing 12-Month EBITDA would fail:
For Revolving Advances:
Pricing Funded Debt to LIBOR Prime
Level trailing 12-Month EBITDA Margin Margin
------- ------------------------ ------ ------
I < 1.50x 2.00% 0.00%
II > or = 1.50x and < 2.00x 2.25% 0.50%
III > or = 2.00x and < 2.50x 2.50% 0.75%
IV > or = 2.50x and < 3.00x 2.75% 1.00%
V > or = 3.00x 3.00% 1.25%
For Equipment Advances:
Pricing Funded Debt to LIBOR Prime
Level trailing 12-Month EBITDA Margin Margin
------- ------------------------ ------ ------
I < 1.50x 2 25% 0.25%
II > or = 1.50x and < 2.00x 2.50% 0.75%
III > or = 2.00x and < 2.50x 2.75% 1.00%
IV > or = 2.50x and < 3.00x 3.00% 1.25%
V > or = 3.00x 3.25% 1.50%
"Regulatory Change" means, with respect to Bank, any change on or
after the date of this Agreement in United States federal, state, or
foreign laws or regulations, including Regulation D, or the adoption or
making on or after such date of any interpretations, directives, or
requests applying to a class of lenders including Bank, of or under any
United States federal or state, or any foreign laws or regulations (whether
or not having the force of law) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.
"Reserve Requirement" means, for any Interest Period, the average
maximum rate at which reserves (including any marginal, supplemental, or
emergency reserves) are required to be maintained during such Interest
Period under Regulation D against "Eurocurrency liabilities" (as such term
is used in Regulation D) by member banks of the Federal Reserve System.
Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by Bank by reason of
any Regulatory Change against (a) any category of liabilities which
includes deposits by reference to which the LIBOR Rate is to be determined
as provided in the definition of LIBOR or (b) any category of extensions of
credit or other assets which include Advances.
"Trailing 12-Month EBITDA" is, at any date of determination,
Borrower's EBITDA, as of the most recent month end, for the most recent
twelve (12) consecutive months.
2.9A Exhibits C and D attached to the Loan Agreement are amended
entirely and replaced with Exhibits C and D attached hereto and Exhibits E
and F attached hereto are added to the Loan Agreement.
12
<PAGE>
3. LIMITATION OF AMENDMENTS.
3.1 The amendments set forth in SECTION 2, above, are effective for
the purposes set forth herein and shall be limited precisely as written and
shall not be deemed to (a) be a consent to any amendment, waiver or modification
of any other term or condition of any Loan Document, or (b) otherwise prejudice
any right or remedy which Bank may now have or may have in the future under or
in connection with any Loan Document.
3.2 This Amendment shall be construed in connection with and as part
of the Loan Documents and all terms, conditions, representations, warranties,
covenants and agreements set forth in the Loan Documents, except as herein
amended, are hereby ratified and confirmed and shall remain in full force and
effect.
4. REPRESENTATIONS AND WARRANTIES. To induce Bank to enter into this
Amendment, Borrower hereby represents and warrants to Bank as follows:
4.1 Immediately after giving effect to this Amendment (a) the
representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (b) to Borrower's
knowledge no Event of Default has occurred and is continuing;
4.2 Borrower has the power and authority to execute and deliver this
Amendment and to perform its obligations under the Loan Agreement, as amended by
this Amendment;
4.3 The organizational documents of Borrower delivered to Bank on the
Effective Date remain true, accurate and complete and have not been amended,
supplemented or restated and are and continue to be in full force and effect;
4.4 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, have been duly authorized;
4.5 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not and will not contravene (a) any law or regulation
binding on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or other
governmental or public body or authority, or subdivision thereof, binding on
Borrower, or (d) the organizational documents of Borrower;
4.6 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by any governmental or public body or authority, or subdivision
thereof, binding on either Borrower, except as already has been obtained or
made; and
4.7 This Amendment has been duly executed and delivered by Borrower
and is the binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors' rights.
5. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
13
<PAGE>
6. EFFECTIVENESS. This Amendment shall be deemed effective upon (a) the due
execution and delivery to Bank of this Amendment by each party hereto, (b)
Borrower's payment to Bank of a fee in an amount equal to $112,500.00, and (c)
Bank's receipt of (i) an Acknowledgment of Amendment and Reaffirmation of
Guaranty substantially in the form attached hereto as Schedule 1, duly executed
and delivered by each Guarantor, (ii) a Perfection Certificate on Bank's form
therefore, (iii) an Addendum to Intellectual Property Security Agreement, and
(iv) the proceeds of the Repayment Advance being made under Section 2.1.2(a) as
amended by this Amendment.
7. GOVERNING LAW. This Amendment and the rights and obligations of the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Arizona.
8. MISCELLANEOUS. All of the provisions in Sections 10, 11 and 12 of the
Loan Agreement which are not already included in this Amendment are incorporated
in this Amendment by this reference as if fully set forth herein, except that
the references in the Loan Agreement to the term "this Agreement" and words of
similar import shall mean this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the date first written above.
BANK: BORROWER:
SILICON VALLEY BANK LIMELIGHT NETWORKS, INC.
By: /s/ Travis D. Wood By: /s/ William H. Rinehart
--------------------------------- ------------------------------------
Name: TRAVIS D. WOOD Name: William H. Rinehart
Title: VICE PRESIDENT Title: President & CEO
14
<PAGE>
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower LIMELIGHT NETWORKS, INC. Bank: Silicon Valley Bank
14300 Northsight
Boulevard, Suite 203,
Scottsdale, Arizona
85260
Commitment Revolving Line: $5,000,000
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of __________ $___________
2. Additions (please explain on reverse) $___________
3. TOTAL ACCOUNTS RECEIVABLE $___________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $___________
5. Balance of 50% over 90 day accounts $___________
6. Credit balances over 90 days $___________
7. Concentration Limits $___________
8. Foreign Accounts** $___________
9. Federal Governmental Accounts $___________
10. Contra Accounts $___________
11. Promotion or Demo Accounts $___________
12. Intercompany/Employee Accounts $___________
13. Other (please explain on reverse) $___________
14. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $___________
15. Eligible Accounts (#3 minus #14) $___________
16. LOAN VALUE OF ACCOUNTS (80% of #15) $___________
** except for up to $400,000 from UK eligibles
BALANCES
17. Maximum Loan Amount $ 4,000,000
18. Total Funds Available [Lesser of #17 or #16] $___________
19. Present balance owing on Line of Credit minus $1,000,000 $___________
20. Outstanding under Sublimits (LC or CM) $___________
21. RESERVE POSITION (#18 minus #19 and #20) $___________
The undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the
undersigned and Silicon Valley Bank.
COMMENTS: BANK USE ONLY
LIMELIGHT NETWORKS, INC. Rec'd by:
------------------------------
Auth. Signer
By: Date:
--------------------------------- ----------------------------------
Authorized Signer
Verified:
------------------------------
Auth. Signer
Date:
----------------------------------
<PAGE>
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
14300 Northsight Boulevard, Suite 203
Scottsdale, Arizona 85260
FROM: LIMELIGHT NETWORKS, INC.
The undersigned Responsible Officer of LIMELIGHT NETWORKS, INC.
("Borrower") certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending _______ with all required covenants
except as noted below and (ii) all representations and warranties in the
Agreement are true and correct in all material respects on this date. In
addition, the undersigned certifies that Borrower, and each Subsidiary, has
timely filed all required tax returns and paid, or made adequate provision to
pay, all material taxes, except those being contested in good faith with
adequate reserves under GAAP. Attached are the required documents supporting the
certification. The Officer certifies that these are prepared in accordance with
Generally Accepted Accounting Principles (GAAP) consistently applied from one
period to the next except as explained in an accompanying letter or footnotes.
The Responsible Officer acknowledges that no borrowings may be requested at any
time or date of determination that Borrower is not in compliance with any of the
terms of the Agreement, and that compliance is determined not just at the date
this certificate is delivered.
Please Indicate compliance status by circling Yes/No under "Complies" column.
Reporting Covenant Required Complies
------------------ -------- --------
Monthly financial statements + CC Monthly within 20 days Yes No
Annual (Audited) FYE within 120 days Yes No
A/R & A/P Agings Monthly within 20 days Yes No
A/R Audit Initial and Annual Yes No
Borrowing Base Certificate Monthly within 20 days* Yes No
Annual financial projections 30 days prior to FYE Yes No
* after Revolving Advances exceed $1,000,000
Financial Covenant Required Actual Complies
------------------ -------- ------ --------
Maintain on a Monthly Basis:
Minimum (Adjusted Quick Ratio) 1.50:1.00 ____:1.00 Yes No
Minimum Fixed Charge Coverage Ratio 1.50:1.00 ____:1.00 Yes No
Minimum Tangible Net Worth $30,000,000 $_________ Yes No
+ 50% of
Qtrly NI ea
FQ
For interest rate margin purposes:
Ratio of Funded Debt to Training 12-Month EBITDA, as of end of month is:
_______:1.00
Have there been updates to Borrower's intellectual property? Yes/No
Borrower only has deposit accounts located at the following institutions:
______________________________.
<PAGE>
Comments Regarding Exceptions: See Attached.
Sincerely, BANK USE ONLY
LIMELIGHT NETWORKS, INC.
Received by:
---------------------------
---------------------------------- AUTHORIZED SIGNER
SIGNATURE Date:
----------------------------------
----------------------------------
TITLE
Verified:
---------------------------------- ------------------------------
DATE AUTHORIZED SIGNER
Date:
----------------------------------
Compliance Status: Yes
3
<PAGE>
EXHIBIT E
FORM OF NOTICE OF BORROWING
LIMELIGHT NETWORKS, INC.
Date: _______________________
TO: SILICON VALLEY BANK
3003 Tasman Drive
Santa Clara, CA 95054
Attention: Corporate Services Department
RE: Loan and Security Agreement dated as of April 15, 2005 (as amended,
modified, supplemented or restated from time to time, the "Loan Agreement"), by
and between Limelight Networks, Inc. ("Borrower") and Silicon Valley Bank (the
"Bank")
Ladies and Gentlemen:
The undersigned refers to the Loan Agreement, the terms defined therein and
used herein as so defined, and hereby gives you notice irrevocably, pursuant to
Section 3.4(a) of the Loan Agreement, of the borrowing of an Advance.
1. The Funding Date, which shall be a Business Day, of the requested borrowing
is __________________.
2. The aggregate amount of the requested borrowing is $_________________.
3. The requested Advance shall consist of $_______________ of Prime Rate
Advances and $_______________________ of LIBOR Advances.
4. The duration of the interest Period for the LIBOR Advances included in the
requested Advance shall be ________ months.
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the proposed Advance before and
after giving effect thereto, and to the application of the proceeds therefrom,
as applicable:
(a) all representations and warranties of Borrower contained in the Loan
Agreement are true, accurate and complete in all material respects as of the
date hereof; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date;
(b) no Default or Event of Default has occurred and is continuing, or would
result from such proposed Advance; and
(c) if the requested Advance is to be a Revolving Advance, such Revolving
Advance will not cause the aggregate principal amount of the outstanding
Revolving Advances exceeding $1,000,000 to exceed, as of the designated Funding
Date, (i) the lesser of (A) $4,000,000 or (B) the Borrowing Base minus (ii) the
amount of all outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit), and minus (iii) the aggregate outstanding Revolving Advances
(including any amounts used for Cash Management Services) exceeding $1,000,000.
BORROWER LIMELIGHT NETWORKS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
For internal Bank use only
LIBOR Pricing Date LIBOR LIBOR Variance Maturity Date
------------------ ----- -------------- -------------
___%
<PAGE>
EXHIBIT F
FORM OF NOTICE OF CONVERSION/CONTINUATION
LIMELIGHT NETWORKS, INC.
Date __________________
TO: SILICON VALLEY BANK
3003 Tasman Drive
Santa Clara, CA 95054
Attention: Corporate Services Department
RE: Loan and Security Agreement dated as of April 15, 2005 (as amended,
modified, supplemented or restated from time to time, the "Loan Agreement"), by
and between Limelight Networks, Inc. ("Borrower") and Silicon Valley Bank (the
"Bank")
Ladies and Gentlemen:
The undersigned refers to the Loan Agreement, the terms defined therein
being used herein as therein defined, and hereby gives you notice irrevocably,
pursuant to Section 3.5 of the Loan Agreement, of the [conversion]
[continuation] of the Advances specified herein, that:
1. The date of the [conversion] [continuation] is _______________, 20___.
2. The aggregate amount of the proposed Advances to be [converted] is $_______
_______________or [continued] is $______________________.
3. The Advances are to be [converted into] [continued as] [LIBOR] [Prime Rate]
Advances.
4. The duration of the Interest Period for the LIBOR Advances included in the
[conversion] [continuation] shall be_____months.
The undersigned, on behalf of Borrower, hereby certifies that the following
statements are true on the date hereof, and will be true on the date of the
proposed [conversion] [continuation], before and after giving effect thereto and
to the application of the proceeds therefrom:
(a) all representations and warranties of Borrower stated in the Loan
Agreement are true, accurate and complete in all material respects as of the
date hereof; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date; and
(b) no Default or Event of Default has occurred and is continuing, or would
result from such proposed [conversion] [continuation].
BORROWER LIMELIGHT NETWORKS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
For internal Bank use only
LIBOR Pricing Date LIBOR LIBOR Variance Maturity Date
------------------ ----- -------------- -------------
___%
<PAGE>
SCHEDULE 1
ACKNOWLEDGMENT OF AMENDMENT
AND
REAFFIRMATION OF GUARANTY
Section 1. Guarantor hereby acknowledges and confirms that it has reviewed
and approved the terms and conditions of the Fifth Amendment to Loan and
Security Agreement dated as of even date herewith (the "Amendment").
Section 2. Guarantor hereby consents to the Amendment and agrees that the
Unconditional Guaranty of Guarantor dated April 15, 2005 relating to the
Obligations of Borrower under the Loan Agreement shall continue in full force
and effect, shall be valid and enforceable and shall not be impaired or
otherwise affected by the execution of the Amendment or any other document or
instrument delivered in connection herewith.
Section 3. Guarantor represents and warrants that, after giving effect to
the Amendment, all representations and warranties contained in the Guaranty are
true, accurate and complete as if made the date hereof.
Dated as of___________, 2006
GUARANTOR [INSERT NAME]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
6