Equipment Loan and Security Agreement - GATX Ventures Inc. and Atheros Communications Inc.
EQUIPMENT LOAN AND SECURITY AGREEMENT
Dated as of September _, 2001
between
GATX VENTURES, INC.
3687 Mt. Diablo Blvd., Suite 200
Lafayette, California 94549
as Lender
and
ATHEROS COMMUNICATIONS, INC.
a Delaware corporation
529 Almanor Avenue
Sunnyvale, CA 94085
as Borrower
CREDIT AMOUNT: $3,000,000
| Repayment Period: | 33 months | Maximum Number of Fundings: | monthly | |||
| Final Payment Percentage: | 6% | Treasury Note Maturity: | 30 months | |||
| Minimum Funding Amount: | $100,000 | Loan Margin: 545 basis points | ||||
Commitment Termination Date: September 30, 2002
Eligible Equipment: New and used manufacturing equipment, computer equipment, office equipment and furnishings, laboratory and test equipment.
The defined terms and information set forth on this cover page are a part of the Equipment Loan and Security Agreement, dated as of the date first written above (this “Agreement”), entered into by and between GATX VENTURES, INC. (“Lender”) and ATHEROS COMMUNICATIONS, INC. (“Borrower”) set forth above. The terms and conditions of this Agreement agreed to between Lender and Borrower are as follows:
1.01. Certain Definitions. Unless otherwise indicated in this Agreement or any other Operative Document, the following terms, when used in this Agreement or any other Operative Document, shall have the following respective meanings:
“Account Collateral” has the meaning given to such term in Section 5.01.
“Account Control Agreement” means an agreement acceptable to Lender which perfects via control Lender’s security interest in the Account Collateral.
“All-in-Rate” means the per annum rate of interest at which the Scheduled Payments and the Final Payment amortize the Loan.
“Business Day” shall mean any day other than a Saturday, Sunday or public holiday under the laws of California or other day on which banking institutions are authorized or obligated to close in California.
“Claim” has the meaning given to that term in Section 10.03.
“Code” means the Uniform Commercial Code as adopted and in effect in the State of California, as amended from time to time, provided that if by reason of mandatory provisions of law, the creation and/or perfection or the effect of perfection or non-perfection of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than California, the term “Code” shall also mean the Uniform Commercial Code as in effect from time to time in such jurisdiction for purposes of the provisions hereof relating to such creation, perfection or effect of perfection or non-perfection.
“Collateral” has the meaning given to that term in Section 5.01(a).
“Commitment Termination Date” shall mean the date specified on the cover page of this Agreement.
“Credit Amount” shall mean the maximum amount that Lender is committed to lend (if the conditions specified in Schedule 3 are satisfied), which amount is set forth following such term on the cover page of this Agreement.
“Default” shall mean any event which with the passing of time or the giving of notice or both would become an Event of Default hereunder.
“Default Rate” shall mean the per annum rate of interest equal to five percent (5%) over the rate at which the Loan Rate and Final Payment amortize the Loan.
“Disclosure Schedule” shall mean Schedule 2 attached hereto.
“Eligible Equipment” shall mean, to the extent acceptable to Lender, Equipment of the types listed following such term on the cover page of this Agreement; provided that Eligible Equipment
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shall not include Equipment placed in service more than 90 days prior to the date of any Loan Terms Schedule; provided further, for the first Loan only (so long as the Funding Date of the first Loan is on or before September 15, 2001) Eligible Equipment shall include Equipment placed in service on or after January 1, 2001.
“Environmental Law” shall mean the Resource Conservation and Recovery Act of 1987, the Comprehensive Environmental Response, Compensation and Liability Act, and any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree (in each case having the force of law) regulating or imposing liability or standards of conduct concerning any Hazardous Material, as now or at any time hereafter in effect.
“Equipment” has the meaning given to that term in Section 5.01(a).
“Equipment Collateral” has the meaning given to such term in Section 5.01.
“Equity Securities” shall mean (a) all common stock, preferred stock, participations, shares, partnership interests or other equity interest in and of Borrower (regardless of how designated and whether or not voting or non-voting) and (b) all warrants, options and other rights to acquire any of the foregoing.
“Event of Default” has the meaning given to that term in Section 9.01.
“Event of Loss” has the meaning given to that term in Section 6.01(e).
“Final Payment” shall mean, with respect to each Loan, a payment (in addition to the regular monthly payment of principal and accrued interest on the Loan) due on the Maturity Date for such Loan equal to the Loan Amount for such Loan at such time multiplied by the Final Payment Percentage.
“Final Payment Percentage” means the percentage set forth following such term on the cover page of this Agreement.
“Funding Date” shall mean any date on which a Loan is made to or on account of Borrower under this Agreement.
“Good Faith Deposit” has the meaning given in Section 2.04(d).
“Hazardous Material” means any hazardous, dangerous or toxic constituent material, pollutant, waste or other substance, whether solid, liquid or gaseous, which is regulated by any federal, state or local governmental authority.
“Indebtedness” shall mean, with respect to Borrower or any Subsidiary, the aggregate amount of, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of
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such Person to pay the deferred purchase price of property or services (excluding trade payables aged less than 180 days), (d) all capital lease obligations of such Person, (e) all obligations or liabilities of others secured by a lien on any asset of such Person, whether or not such obligation or liability is assumed, (f) all obligations or liabilities of others guaranteed by such Person; and (g) any other obligations or liabilities which are required by GAAP to be shown as debt on the balance sheet of such Person. Unless otherwise indicated, the term “Indebtedness” shall include all Indebtedness of Borrower and the Subsidiaries.
“Interim Payment” shall mean, which respect to each Loan, an amount equal to the initial Loan Amount multiplied by the All-in-Rate multiplied by the quotient of (i) the number of days from (and including) the Funding Date of such Loan to (but not including) the first Payment Date with respect to such Loan, divided by (ii) 360.
“Landlord Consent” shall mean a consent in the form of Exhibit B or such other form as Lender may agree to accept.
“Lien” shall mean any voluntary or involuntary security interest, pledge, bailment, lease, mortgage, hypothecation, conditional sales and title retention agreements, charge, claim, encumbrance or other lien in favor of any Person.
“Loan” shall mean each advance by Lender to Borrower under this Agreement.
“Loan Amount” shall mean, as of any date, with respect to each Loan, the original principal amount of such Loan less the aggregate of all Stated Costs of Equipment with respect to which prepayments of such Loan have been made pursuant to Section 6.01(e) hereunder.
“Loan Factor” shall mean, with respect to each Loan, the amount set forth as a percentage with respect to such Loan in the applicable Loan Terms Schedule, calculated using the Loan Rate applicable to such Loan.
“Loan Margin” shall mean the number of basis points set forth following such term on the cover page of this Agreement.
“Loan Rate” shall mean, with respect to each Loan, the per annum rate of interest (based on a year of twelve 30-day months) equal to the sum of (a) the U.S. Treasury note rate of a term equal to the Treasury Note Maturity as quoted in the Wall Street Journal on the date the Loan Terms Schedule for such Loan is prepared, plus (b) the applicable Loan Margin.
“Loan Terms Schedule” shall mean, with respect to each Loan, a schedule in the form of Schedule 1 hereto, duly completed to set forth the terms applicable to such Loan.
“Loan Value” means with respect to each Loan, an amount equal to the sum of all remaining unpaid Scheduled Payments and the Final Payment discounted to the relevant date at a rate of five percent (5%) per annum, but shall not exceed the Loan Amount for such Loan; the “relevant date”
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shall be the Payment Date on which payment of such amount is to be made, or if such date is not a Payment Date, on the Payment Date immediately succeeding such date.
“Maturity Date” shall mean, with respect to each Loan, the earlier of (a) the last Business Day of the Repayment Period applicable to such Loan or (b) the date of acceleration of such Loan by Lender following an Event of Default.
“Maximum Number of Fundings” shall mean the maximum number of fundings under this Agreement specified on the cover page of this Agreement.
“Minimum Funding Amount” shall mean the dollar amount specified on the cover page of this Agreement.
“Obligations” has the meaning given to that term in Section 5.01.
“Operative Documents” shall mean this Agreement, the Warrant, the Landlord Consent(s), the Service Provider’s Consent(s) and all other documents, instruments and agreements (including Loan Terms Schedules) executed and delivered in connection herewith or therewith or in respect of the closing of the transactions contemplated hereby or thereby.
“Payment Date” has the meaning given to that term in Section 2.04(a).
“Permitted Liens” shall mean (a) the Lien created by this Agreement; (b) Liens on the Equipment Collateral for fees, taxes, levies, imposts, duties or other governmental charges of any kind which are not yet delinquent or which are being contested in good faith by appropriate proceedings which suspend the collection thereof (provided, however, that such proceedings do not involve any substantial danger of the sale, forfeiture or loss of any item of Equipment and that Borrower has adequately bonded such Lien or reserves sufficient to discharge such Lien have been provided on the books of Borrower); and (c) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar Liens arising in the ordinary course of business which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings (provided, however, that such appropriate proceedings do not involve any substantial danger of the sale, forfeiture or loss of any item of Collateral and that Borrower has adequately bonded such Lien or reserves sufficient to discharge such Lien have been provided on the books of Borrower).
“Person” shall mean and include an individual, a partnership, a corporation, a business trust, a joint stock company, a limited liability company, an unincorporated association or other entity and any domestic or foreign national, state or local government, any political subdivision thereof, and any department, agency, authority or bureau of any of the foregoing.
“Pledged Account” has the meaning given to that term in Section 5.01.
“Repayment Period” shall mean the period beginning on the first Payment Date and
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continuing for the number of calendar months or quarters set forth following such term on the cover page of this Agreement.
“Scheduled Payments” has the meaning given to that term in Section 2.04(a).
“Service Provider’s Consent” shall mean a consent in the form of Exhibit A or such other form as Lender may agree to accept.
“Soft Costs” Amounts to finance tenant improvements, computer software, equipment specially designed or manufactured for Borrower, sales tax, freight, installation, and any other intangible costs.
“Stated Cost” shall mean, with respect to each item of Equipment one hundred percent (100%) of the purchase price of Eligible Equipment or Soft Cost; provided, however for the first Loan only (so long as the Funding Date of the first Loan is on or before September 15, 2001) Equipment placed in service on or after January 1, 2001 and after 90 days before the Funding Date of the first Loan shall have a Stated Cost of eighty-five percent (85%) of the purchase price of such Equipment.
“Stipulated Loss Value” shall mean, with respect to each item of Equipment, the Loan Value multiplied by the Stated Cost.
“Subsidiary” shall mean any corporation of which a majority of the outstanding capital stock entitled to vote for the election of directors (otherwise than as the result of a default) is owned by Borrower directly or indirectly through Subsidiaries.
“Term” shall mean the period from and after the date hereof until the payment or satisfaction in full of all Obligations under this Agreement and the other Operative Documents.
“Treasury Note Maturity” shall mean the period of months set forth following such term on the cover page of this Agreement.
“Used Equipment” shall mean all Eligible Equipment which is not New Equipment.
“Warrant” shall mean a warrant to purchase securities of Borrower substantially in the form of Exhibit C.
1.02. Headings. Headings in this Agreement and each of the other Operative Documents are for convenience of reference only and are not part of the substance hereof or thereof.
1.03. Plural Terms. All terms defined in this Agreement or any other Operative Document in the singular form shall have comparable meanings when used in the plural form and vice versa.
1.04. Construction. This Agreement is the result of negotiations among, and has been
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reviewed by, Borrower and Lender and their respective counsel. Accordingly, this Agreement shall be deemed to be the product of all parties hereto, and no ambiguity shall be construed in favor of or against Borrower or Lender.
1.05. Entire Agreement. This Agreement, together with the terms set forth in each Loan Terms Schedule and each of the other Operative Documents, taken together, constitute and, contain the entire agreement of Borrower and Lender and, with regard to their respective subject matters, supersede any and all prior agreements, term sheets, negotiations, correspondence, understandings and communications among the parties, whether written or oral, with respect to their respective subject matters. Borrower acknowledges that it is not relying on any representation or agreement made by Lender or any employee, agent or attorney of Lender, other than the specific agreements set forth in this Agreement and the Operative Documents.
1.06. Other Interpretive Provisions. References in this Agreement to “Articles,” “Sections,” “Exhibits,” “Schedules” and “Annexes” are to articles, sections, exhibits, schedules and annexes herein and hereto unless otherwise indicated. References in this Agreement and each of the other Operative Documents to any document, instrument or agreement shall include (a) all exhibits, schedules, annexes and other attachments thereto, (b) all documents, instruments or agreements issued or executed in replacement thereof, and (c) such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement or any other Operative Document shall refer to this Agreement or such other Operative Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Operative Document, as the case may be. The words “include” and “including” and words of similar import when used in this Agreement or any other Operative Document shall not be construed to be limiting or exclusive. Unless otherwise indicated in this Agreement or any other Operative Document, all accounting terms used in this Agreement or any other Operative Document shall be construed, and all accounting and financial computations hereunder or thereunder shall be computed, in accordance with generally accepted accounting principles as in effect in the United States of America from time to time. The terms and conditions set forth in each Loan Terms Schedule are incorporated herein by this reference.
2.01 Credit Facility. On the terms and subject to the conditions hereof and relying upon the representations and warranties herein set forth as and when made or deemed to be made, Lender agrees to lend to Borrower, from time to time (but not to exceed once per calendar month) prior to the Commitment Termination Date, the Loans; provided, however, that the aggregate original principal amount of the Loans shall not exceed the Credit Amount at any time; provided, further, that the aggregate original principal amount of any Loan relating to the financing of Eligible Equipment shall not exceed the aggregate Stated Costs of the items of Eligible Equipment being financed with such Loan; provided, further, that the aggregate principal amount of all Loans relating to Soft Costs shall not exceed thirty percent (30%) of all Loans. If repaid or prepaid, the principal of the Loans may not be re-borrowed.
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2.02. Use of Proceeds; the Loans and the Loan Terms Schedule.
(a) Use of Proceeds. The proceeds of the Loans shall be used solely for the purchase of, or reimbursement to Borrower of the Stated Cost of Eligible Equipment and Soft Costs as set forth in Section 2.01.
(b) The Loans and the Loan Terms Schedule. The obligation of Borrower to repay the aggregate unpaid principal amount of and interest on and to make the Final Payments on the Loans, or to pay the Stipulated Loss Value applicable to each Loan, shall be evidenced by the Loan Terms Schedule.
2.03. Procedure for Making Loans.
(a) Loan Terms Schedule. Whenever Borrower desires that Lender make a Loan, Borrower shall deliver to Lender the requested Funding Date and a list of the Equipment proposed to be financed by such Loan and request that Lender prepare a Loan Terms Schedule for such Loan at least twenty (20) days prior to the requested Funding Date. Lender’s obligation to make the initial Loan shall be subject to the satisfaction of the conditions set forth in Sections 8.01 and 8.02. Lender’s obligation to make each subsequent Loan shall be subject to the satisfaction of the conditions set forth in Section 8.02.
(b) Loan Rate. Each Loan Terms Schedule shall establish the Loan Rate applicable to that Loan. The Loan Rate shall not be subject to change in the absence of manifest error or upon the written agreement of Borrower and Lender. All computations of interest on Loans shall be based on a year of twelve 30-day months. If Borrower pays interest on any Loan which is determined to be in excess of the then legal maximum rate, then that portion of each interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of the applicable Loan.
(c) Loan Factor and Loan Value Calculation. Each Loan Terms Schedule shall establish the Loan Factor and Loan Values with respect to such Loan. The Loan Factor shall be calculated in a manner to fully amortize the Loan over the Repayment Period applicable to such Loan in equal periodic installments. The Loan Factor and Loan Values applicable to each Loan shall be conclusive in the absence of manifest error.
(d) Disbursement. Subject to the receipt by Lender of a Loan Terms Schedule duly executed by Borrower and the satisfaction of the conditions set forth in Sections 8.01 and 8.02 with respect to the initial Loan and the satisfaction of the conditions set forth in Section 8.02 with respect to each subsequent Loan, Lender shall disburse such Loan by wire transfer to Borrower unless otherwise directed in writing by Borrower.
(e) Termination of Commitment to Lend. Notwithstanding anything to the contrary in the Operative Documents, Lender’s obligation to lend the undisbursed portion of the Credit Amount to Borrower hereunder shall terminate on the earlier of (i) the occurrence of any Event of Default
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hereunder and (ii) the Commitment Termination Date.
2.04 Other Payment Terms.
(a) Principal and Interest Payments On Payment Dates. Borrower shall make payments of principal and accrued interest for each Loan (collectively, “Scheduled Payments”), commencing on the date set forth on the Loan Terms Schedule applicable to such Loan and continuing thereafter during the Repayment Period on the first day of each calendar month (each a “Payment Date”), in an amount equal to the Loan Factor multiplied by the Loan Amount for such Loan as of such Payment Date. The first and last Scheduled Payment of each Loan shall be due on the Funding Date. The Loans may not be prepaid except: (i) in the circumstances set forth in Section 6.01(e), (ii) if the Loans are accelerated following the occurrence of an Event of Default or otherwise (other than following an Event of Loss) in which case, Borrower shall immediately pay to Lender the amounts specified in Section 9.02, (iii) as set forth in Section 2.04(h), and (iv) as set forth in Section 7.01(b).
(b) Interim Payment. Unless the Funding Date for a Loan is a Payment Date, Borrower shall pay to Lender the Interim Payment payable with respect to such Loan on the Funding Date of such Loan.
(c) Final Payment. Unless a Loan is prepaid in full in accordance with Section 2.04 (a), on the Maturity Date with respect to such Loan, Borrower shall pay, in addition to any remaining unpaid principal and accrued interest and all other amounts previously due with respect to such Loan, an amount equal to the Final Payment with respect to such Loan.
(d) Good Faith Deposit; Facility Fee.
(i) Borrower has paid a good faith deposit in the amount of Fifteen Thousand Dollars ($15,000) (the “Good Faith Deposit”). The Good Faith Deposit shall be applied first to Lender’s expenses in connection with due diligence and the preparation, negotiation, and documentation of the Agreement and the other Operative Documents and funding of Loans hereunder. (It is agreed that Lender’s in-house legal fee for the negotiation and documentation of the Agreement and the other Operative Documents shall be Four Thousand Dollars ($4,000).) The balance of the Good Faith Deposit shall be applied to the next Scheduled Payment due under each Loan on a pro rata basis following the determination of Lender’s expenses. If a Loan is not made, the remaining balance of the Good Faith Deposit shall be retained by Lender.
(ii) Facility Fee. Borrower shall pay concurrently with its execution and delivery of this Agreement a facility fee in the amount of Fifteen Thousand Dollars ($15,000) (the “Facility Fee”). The Facility Fee shall be retained by Lender and be deemed fully earned upon receipt.
(e) Place and Manner. Borrower shall make all payments due to Lender in lawful money of the United States at the address for payments and in the manner specified in Section 10.05(a).
(f) Date. Whenever any payment due hereunder shall fall due on a day other than a
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Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be.
(g) Default Rate. If either (i) any amounts required to be paid by Borrower under this Agreement or the other Operative Documents (including principal or interest payable on any Loan, any fees or other amounts) remain unpaid after such amounts are due, subject to any applicable grace period, or (ii) an Event of Default has occurred and is continuing, Borrower shall pay interest on the aggregate, outstanding principal balance hereunder from the date due or from the date of the Event of Default, as applicable, until such past due amounts are paid in full or until all Events of Defaults are cured, as applicable, at a per annum rate equal to the Default Rate. All computations of such interest shall be based on a year of twelve 30-day months.
(h) Optional Prepayment. Upon ten (10) Business Days’ prior written notice to Lender, Borrower may, at its option, at any time after March 30, 2003, prepay all, and not less than all, of the Loans in full by paying to Lender an amount equal to (i) all accrued and unpaid Scheduled Payments with respect to each Loan due prior to the date of prepayment; (ii) any accrued and unpaid interest; (iii) the Loan Value of each Loan, and (iv) all other sums, if any, that shall have become due and payable hereunder.
3.01. Representations and Warranties. Except as set forth on Annex C to Schedule No. 1 hereto, Borrower makes the following representations and warranties to Lender as of the date hereof and again on each Funding Date:
(a) Organization and Qualification. Borrower is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and is duly qualified to do business in the state(s) in which the Equipment will be located.
(b) Authority. Borrower has all necessary corporate power, authority and legal right and has obtained all approvals and consents and has given all notices necessary to execute and deliver this Agreement and the other Operative Documents and to perform the terms hereof and thereof. Borrower has all requisite corporate power and authority to own and operate its properties and to carry on its businesses as now conducted.
(c) Conflict with Other Instruments, etc. Neither the execution and delivery of any Operative Document to which Borrower is a party nor the consummation of the transactions therein contemplated nor compliance with the terms, conditions and provisions thereof will conflict with or result in a breach of any of the terms, conditions or provisions of the charter or the bylaws of Borrower or, to its knowledge, any law or any regulation, order, writ, injunction or decree of any court or governmental instrumentality or any material agreement or instrument to which Borrower is a party or by which it or any of its properties is bound or to which it or any of its properties is subject, or constitute a default thereunder or result in the creation or imposition of any Lien, other than Permitted Liens.
(d) Title to Properties. Borrower has good and marketable title to all Equipment which
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constitutes or will constitute Collateral, free and clear of all Liens, other than Permitted Liens.
(e) Authorization, Governmental Approvals, etc. The execution and delivery by Borrower of each Operative Document, the granting of the security interest in the Collateral, the issuance of the Warrant, the issuance of the securities into which the Warrant is exercisable, the issuance of any securities into which the securities issuable upon exercise of the Warrant are convertible, and the performance of the obligations herein and therein contemplated have each been duly authorized by all necessary action on the part of Borrower. No authorization, consent, approval, license or exemption of, and no registration, qualification, designation, declaration or filing with, or notice to, any Person is, was or will be necessary to (i) the valid execution and delivery of any Operative Document to which Borrower is a party, (ii) the performance of Borrower’s obligations under any Operative Document, or (iii) the granting of the security interest in the Collateral. The Operative Documents have been or will be duly executed and delivered and constitute or will constitute legal, valid and binding obligations of Borrower, enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application relating to or affecting the enforcement of creditors’ rights or by general principles of equity.
(f) Litigation. There are no actions, suits, proceedings or investigations pending or, to the knowledge of Borrower, threatened against or affecting Borrower, or the business or any property or asset owned by it, before any court or governmental department, agency or instrumentality which if adversely determined might have a material adverse effect on the financial condition, business or operations of Borrower.
(g) Disclosure. Neither any Operative Document nor any other agreement, document or certificate furnished by Borrower to Lender, including, without limitation, historical financial statements, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. There is no fact known to Borrower which materially adversely affects, or which could in the future materially adversely affect, its ability to perform its obligations under the Operative Documents to which it is a party.
(h) Security Interest. Assuming the proper filing of one or more financing statement(s) identifying the Equipment Collateral with the proper state and/or local authorities, and the execution and delivery of an Account Control Agreement with respect to Account Collateral, the security interests in the Collateral granted to Lender pursuant to this Agreement (i) constitute and will continue to constitute first priority security interests (except to the extent any other Permitted Lien existing on the date of this Agreement may create any priority to Lender’s Lien under this Agreement) and (ii) are and will continue to be superior and prior to the rights of all other creditors of Borrower (except to the extent of such Permitted Liens).
(i) Name; Executive Offices. Borrower’s name, the principal place of business and chief executive office of Borrower, state of incorporation, Tax EIN Number and Corporate Number, and the office where Borrower will keep the Collateral and all records and files regarding the Collateral, is set forth accurately on the cover page of this Agreement or the Disclosure Schedule.
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(j) No Material Adverse Effect. No event has occurred and no condition exists which could reasonably be expected to have a material adverse effect on the financial condition, business or operations of Borrower since December 31, 2000.
4.01. Furnishing Reports. Borrower shall furnish to Lender:
(a) Financial Statements. So long as Borrower is not subject to the reporting requirements of Sections 12 or 15 of the Securities and Exchange Act, as amended, promptly as they are available, unaudited monthly (but in any event within forty-five (45) days of month-end) and audited annual financial statements (but in any event within one hundred twenty (120) days of year-end) of Borrower and such other financial information as Lender may reasonably request from time to time. From and after such time as Borrower becomes a publicly reporting company, promptly as they are available and in any event: (i) at the time of filing of Borrower’s Form 10-K with the Securities and Exchange Commission after the end of each fiscal year of Borrower, the financial statements of Borrower filed with such Form 10-K; and (ii) at the time of filing of Borrower’s Form 10-Q with the Securities and Exchange Commission after the end of each of the first three fiscal quarters of Borrower, the financial statements of Borrower filed with such Form 10-Q.
(b) Notice of Event of Loss. As soon as possible, and in any event within fifteen (15) days thereafter, notice in writing in reasonable detail of any Event of Loss.
(c) Notice of Defaults. As soon as possible, and in any event within five (5) Business Days after the discovery of a Default or Event of Default provide Lender with an officer’s certificate of Borrower setting forth the facts relating to or giving rise to such Default or Event of Default and the action which Borrower proposes to take with respect thereto.
(d) Miscellaneous. Such other information as Lender may reasonably request from time to time in connection with a Funding Date or otherwise.
5.01. Grant of Security Interest.
(a) Grant. Borrower, in order to secure the payment of the principal, interest and Final Payment due with respect to the Loans made pursuant to this Agreement, all other sums due under and in respect hereof and of the other Operative Documents, including fees, charges, expenses and attorneys’ fees and costs and the performance and observance by Borrower of all other terms, conditions, covenants and agreements herein and in the other Operative Documents (all such amounts and obligations being herein sometimes called the “Obligations”), does hereby grant to Lender and its successors and assigns, a security interest in and to the Collateral. Collateral shall mean and include all right, title, interest, claims and demands of Borrower in and to all of the Equipment Collateral and Account Collateral.
The “Equipment Collateral” shall mean all right, title, interest, claims and demands of Borrower in and to each and every item of goods (and embedded computer programs and
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supporting information included within the definition of “goods” under the Code), equipment, fixtures or personal property which is financed with or is designated as collateral for a Loan on and after the date of this Agreement by designating such goods, equipment, fixtures and personal property on Annex A to each Loan Terms Schedule, whether now owned or hereafter acquired, together with all substitutions, renewals or replacements of and additions, improvements, accessions, replacement parts and accumulations to any and all of such goods, equipment, fixtures or personal property (collectively, the “Equipment”), together with all proceeds thereof, including, without limitation, insurance, condemnation, requisition or similar payments, and all proceeds from sales, renewals, releases or other dispositions thereof. Notwithstanding the foregoing, the Equipment Collateral shall not include Soft Costs that consist of any software, license or contract right to the extent that: (a) the grant of a security interest therein is prohibited by applicable law, or (b) the grant of a security interest therein is prohibited by the terms of such software, license or contract right and such prohibition is enforceable by applicable law.
The “Account Collateral” shall mean all right, title, interest, claims and demands of Borrower in and to the deposit account bearing Account Number 8800054866 maintained by Borrower with Silicon Valley Bank (the “Pledged Account”), together with all proceeds, increases and products of the foregoing or replacements thereof or substitutions therefore.
The security interest herein granted shall constitute a first priority security interest upon the proper filing of one or more financing statements identifying the Collateral with the proper state and/or local authorities.
(b) After-Acquired Property. All Equipment which is financed through Loans shall ipso facto, and without any further conveyance, assignment or act on the part of Borrower or Lender, become and be subject to the security interest herein granted as fully and completely as though specifically described herein. The definition of the term “Equipment” shall be deemed amended on each Funding Date to incorporate all property financed with, or which will constitute Collateral for, the Loan advanced on such Funding Date. Any failure to formally amend such definition shall not affect the grant by Borrower to Lender of the security interest in such Collateral pursuant to this Section 5.01. This Agreement and the other documents in connection herewith may be supplemented and amended from time to time, as required by Lender, to reflect the additional Collateral subject to the security interest granted pursuant to this Section 5.01.
5.02. Duration of Security Interest . Subject to Section 5.06 herein, Lender’s security interest in the Collateral shall continue until the payment in full and the satisfaction of all Obligations, whereupon such security interest shall terminate; provided, however, that if any item of Collateral is subject to an Event of Loss, then following the prepayment of the Loan with respect to such item pursuant to Section 6.01(e), Lender shall release its security interest in such item of Collateral. Lender shall execute such further documents and take such further actions as may be necessary to effect the release and/or termination contemplated by this Sections 5.02 and 5.06, including duly executing and delivering termination statements for filing in all relevant jurisdictions.
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5.03. Possession of Equipment Collateral. So long as no Event of Default has occurred and is continuing, Borrower shall remain in full possession, enjoyment and control of the Equipment Collateral (except only as may be otherwise required by Lender for perfection of its security interest therein) and to manage, operate and use the same and each part thereof with the rights and franchises appertaining thereto; provided, however, that the possession, enjoyment, control and use of the Equipment Collateral shall at all times be subject to the observance and performance of the terms of this Agreement.
5.04. Markings on the Collateral. If requested at any time by Lender, Borrower shall place in a conspicuous location on each item of Collateral a notice (to be supplied by Lender) which reads as follows:
“GATX Ventures, Inc., Lienholder”.
Such notice shall not be removed (or if removed or damaged such notice shall be replaced) until the security interest in favor of Lender in such item of Collateral is terminated pursuant to this Agreement.
5.05 Delivery of Additional Documentation Required. Borrower shall from time to time execute and deliver to Lender, at the request of Lender, all financing statements and other documents Lender may reasonably request, in form satisfactory to Lender, to perfect and continue Lender’s perfected security interests in the Collateral and in order to consummate fully all of the transactions contemplated under the Loan Documents.
5.06 Release of Security Interest in Account Collateral. Lender shall release its security interest in the Account Collateral on or after September 30, 2002 if (i) Borrower’s net income, as determined in accordance with GAAP and as shown in the financial statements delivered to Lender pursuant to this Agreement is greater than Zero Dollars ($0.00) for one fiscal quarter, (ii) Borrower demonstrates to the reasonable satisfaction of Lender exercised in good faith that Borrower reasonably expects its net income to be greater than Zero Dollars ($0.00) on a going forward basis, and (iii) no Event of Default has occurred and is continuing.
6.01. Affirmative Covenants.
(a) Payment of Taxes, etc. Borrower shall pay and discharge all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid, might become a Lien upon any of its properties; provided that there shall be no requirement to pay any such tax, assessment, charge, levy or claim (i) which is being contested in good faith and by appropriate proceedings or which presents no risk of seizure, forfeiture, levy or other event which could jeopardize any Collateral and (ii) for which payment in full is bonded or reserved in Borrower’s financial statements.
(b) Inspection Rights. Borrower shall, at any reasonable time and from time to time, permit
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Lender or any of its agents or representatives to inspect the Equipment, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, Borrower and to discuss the affairs, finances and accounts of Borrower with any of its officers or directors relating in each case to Lender’s capacity as lender and secured party hereunder and with respect to the Collateral.
(c) Use; Maintenance. (i) Borrower shall, at its expense, make all necessary site preparations and cause the Equipment Collateral to be operated in accordance with any applicable manufacturer’s manuals or instructions. So long as no Default or Event of Default has occurred and is continuing, Borrower shall have the right to quietly possess and use the Collateral as provided herein without interference by Lender. (ii) Borrower shall, at its expense, maintain the Equipment Collateral in good condition, reasonable wear and tear excepted, and comply in all material respects with all laws, rules and regulations to which the use and operation of the Equipment Collateral may be or become subject. Such obligation shall extend to repair and replacement of any partial loss or damage to the Equipment Collateral, regardless of the cause. If maintenance is mandated by manufacturer, Borrower shall obtain and keep in effect, at all times during the Term maintenance service contracts with suppliers approved by Lender, which approval shall not be unreasonably withheld. All parts furnished in connection with such maintenance or repair shall immediately become part of the Equipment Collateral. All such maintenance, repair and replacement services shall be immediately paid for and discharged by Borrower with the result that no Lien will attach to the Equipment Collateral. All parts or accessories attached to or made part of the Equipment Collateral shall be new, fabricated or rebuilt and in any case shall be consistent with the applicable specifications, if any, prescribed by the manufacturer of the affected Equipment Collateral.
(d) Insurance. Unless such provisions are amended pursuant to the terms of any Loan Terms Schedule:
(i) Borrower shall, obtain and maintain for the Term, at its own expense, (x) “all risk” insurance against loss or damage to the Equipment Collateral, (y) commercial general liability insurance (including contractual liability, products liability and completed operations coverages) reasonably satisfactory to Lender, and (z) such other insurance against such other risks of loss and with such terms, as shall in each case be reasonably satisfactory to or reasonably required by Lender (as to carriers, amounts and otherwise). The amount of the “all risk” insurance shall be the greater of (x) the replacement value of the Equipment Collateral (as new) or (y) the Loan Value of the Loan Amount applicable to each Loan. Such amounts shall be determined to Lender’s reasonable satisfaction as of each anniversary date of this Agreement and the appropriate amount of coverage shall be put in effect on the next succeeding renewal or inception date of such insurance.
(ii) The deductible with respect to “all-risk” insurance required by clause (x) above and product liability insurance required by clause (y) above shall not exceed $25,000; otherwise there shall be no deductible with respect to any insurance required to be maintained hereunder. The amount of commercial general liability insurance (other than products liability coverage and completed operations insurance) required by clause (y) above shall be at least $4,000,000 per occurrence. The amount of the products liability and completed operations insurance required by
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clause (y) above shall be at least $5,000,000 per occurrence. Each “all risk” policy shall: (x) name Lender as sole loss payee with respect to the Equipment, (y) provide for each insurer’s waiver of its right of subrogation against Lender, and (z) provide that such insurance (A) shall not be invalidated by any action of, or breach of warranty by, Borrower of a provision of any of its insurance policies, and (B) shall waive set-off, counterclaim or offset against Lender. Each liability policy shall (w) name Lender as an additional insured and (x) provide that such insurance shall have cross-liability and severability of interest endorsements (which shall not increase the aggregate policy limits of Borrower’s insurance). All insurance policies shall (y) provide that Borrower’s insurance shall be primary without a right of contribution of Lender’s insurance, if any, or any obligation on the part of Lender to pay premiums of Borrower, and (z) shall contain a clause requiring the insurer to give Lender at least 30 days’ prior written notice of its cancellation (other than cancellation for non-payment for which 10 days’ notice shall be sufficient). Borrower shall on or prior to the first Funding Date and prior to each policy renewal, furnish to Lender certificates of insurance or other evidence satisfactory to Lender that such insurance coverage is in effect.
(e) Loss; Damage; Destruction and Seizure. (i) Borrower shall bear the risk of the Equipment Collateral being lost, stolen, destroyed, damaged or seized by a governmental authority for any reason whatsoever at any time until the expiration or termination of the Term. (ii) Except as set forth in Section 6.01(e)(iii), if during the Term any item of Equipment is lost, stolen, destroyed, damaged or seized by a governmental authority for a period equal to at least the remainder of the Term (an “Event of Loss”), then Lender shall receive from the proceeds of insurance maintained pursuant to Section 6.01(d), from any award paid by the seizing governmental authority or, to the extent not received from the proceeds of insurance or award or both, from Borrower, on or before the Payment Date next succeeding such Event of Loss, an amount equal to the sum of (x) all accrued and unpaid Scheduled Payments with respect to such Loan due prior to or on the next such Payment Date, (y) a prepayment in an amount equal to the Stipulated Loss Value of each affected item of Equipment Collateral and (z) all other sums, if any, that shall have become due and payable hereunder with respect to such Loan, including interest at the Default Rate with respect to any past due amounts. On the date of receipt by Lender of the amount specified above with respect to each such item of Equipment Collateral subject to an Event of Loss, the provisions of this Agreement shall terminate as to such Equipment Collateral. Any proceeds of insurance maintained by Borrower pursuant to Section 6.01(d) and received by Borrower shall be paid to Lender promptly upon their receipt by Borrower. If any proceeds of insurance or awards received from governmental authorities are in excess of the amount owed under this Section 6.01(e), Lender shall promptly remit to Borrower the amount in excess of the amount owed to Lender. (iii) So long as no Event of Default has occurred and is continuing, any proceeds of insurance maintained pursuant to Section 6.01(d) received by Lender or Borrower with respect to an item of Equipment Collateral the repair of which is practicable shall, at the election of Borrower, be applied either to the repair or replacement of such Equipment Collateral or, upon Lender’s receipt of evidence of the repair or replacement of the Equipment Collateral reasonably satisfactory to Lender, to the reimbursement of Borrower for the cost of such repair or replacement. All replacement parts and equipment acquired by Borrower in replacement of Equipment Collateral pursuant to this Section 6.01(e)(iii) shall immediately become part of the Equipment Collateral upon acquisition by Borrower. Borrower shall take such actions and provide such documentation as may be reasonably requested by Lender to protect and preserve
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Lender’s first priority security interest and otherwise to avoid any impairment of Lender’s rights under the Operative Documents, in connection with such repair or replacement. In the event that any proceeds of insurance received by Lender are in excess of the amount required to repair and replace Equipment Collateral pursuant to this Section 6.01(e)(iii) and Lender has a first priority security interest in such repaired or replaced Equipment Collateral, then Lender shall promptly remit to Borrower the excess proceeds of insurance that Lender received with respect to such Equipment Collateral.
(f) Equity Investment Right. Borrower shall permit Lender, at Lender’s option, to purchase up to Three Hundred Thousand Dollars ($300,000) of Borrower’s equity securities in Borrower’s next private equity round on the same terms and conditions as the lead investor in such private equity round. Borrower shall give Lender thirty (30) days notice of such round.
(g) Pledged Account. Borrower shall maintain at least Five Hundred Thousand Dollars ($500,000) in the Pledged Account at all times until Lender releases its security interest in the Pledged Account in accordance with Section 5.06, and until such time Borrower: (1) shall not use the Pledged Account as a checking account or otherwise, and (2) covenants that Silicon Valley Bank shall have no applicable right of setoff or other Lien except as set forth in Section 6 of the Account Control Agreement; provided, however, Borrower may withdraw interest accrued on the cash in the Pledged Account or have such interest automatically deposited into another account of Borrower so long as $500,000 is maintained in the Pledged Account pursuant to this Section and Section 5.06. In furtherance of Section 6.01(g)(2) herein, Borrower may request in writing on a quarterly basis that Lender deliver to Borrower an instruction letter that Borrower will deliver to Silicon Valley Bank substantially in the form attached hereto as Exhibit E. So long as no Event of Default has occurred and is continuing, Lender shall deliver such letter to Borrower no later than five (5) business days after receiving such request.
7.01. Negative Covenants. So long as the Loans or other amounts hereunder remain outstanding, Borrower shall not:
(a) Name; Chief Executive Office. During the continuance of this Agreement, change its name, chief executive office or principal place of business without thirty (30) days prior written notice to Lenders.
(b) Extraordinary Transactions; Restructure. (i) Dispose of any material assets or assets in the aggregate material to Borrower or incur any indebtedness not in the ordinary and usual course of Borrower’s business; (ii) make or suffer any material adverse change in Borrower’s financial condition or any material adverse change in Borrower’s operations; (iii) cause, permit, or suffer any material change in Borrower’s ownership by merger or otherwise, provided, however, if Lender does not consent to such transaction (such consent at Lender’s sole discretion) then Borrower may prepay all of the Loans prior to or concurrently with such transaction in the amount set forth in Section 2.04(h); (iv) engage in any business other than the business currently engaged in by Borrower or reasonably related thereto; or (v) suspend operation of Borrower’s business.
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(c) Equipment Collateral Control. Subject to its rights under Section 5, (i) terminate, waive or release any material right with respect to any Equipment Collateral or remove any item of Equipment Collateral from Borrower’s facility located at the address set forth on the cover page of this Agreement or the applicable Loan Terms Schedule, provided however, that Equipment Collateral shall not (A) be located at more than three locations in the United States (other than Collateral that: (1) consists of computer and test equipment in the temporary possession of Borrower’s employees or Borrower’s vendors in the ordinary course of business, (2) is temporarily located elsewhere for thirty (30) days or less, and (3) the aggregate original costs of such Collateral does not exceed $50,000), and (B) be located outside of the United States, or (ii) affix or attach or permit to be affixed or attached to any item of Equipment Collateral any other item of property owned by Borrower or any other lender, lessor or financing party which is not readily identifiable or separable without any damage to such item of Equipment Collateral, without Lender’s prior written consent.
(d) Liens. Create, incur, assume or suffer to exist any Lien of any kind upon the Collateral, whether now owned or hereafter acquired, except Permitted Liens.
(e) Other Dispositions of Collateral. Convey, sell, lease or otherwise dispose of all or any part of the Collateral to any Person, except for Equipment in which Lender shall have released its security interest pursuant to Section 5.02.
8.01. Closing. At the time of execution and delivery of this Agreement, Borrower shall have duly executed and/or delivered to Lender the items set forth in Part I of Schedule 3.
8.02. Other Conditions. The obligation of Lender to make each Loan shall be subject to the execution and/or delivery to Lender of each of the items set forth in Part I of Schedule 3 and the satisfaction of by Borrower of each condition set forth in Part II of Schedule 3.
8.03. Covenant to Deliver. Borrower agrees (not as a condition but as a covenant) to deliver to Lender each item required to be delivered to Lender as a condition to each Loan, if such Loan is advanced. Borrower expressly agrees that the extension of such Loan prior to the receipt by Lender of any such item shall not constitute a waiver by Lender of Borrower’s obligation to deliver such item.
9.01 Events of Default. An “Event of Default” shall mean the occurrence of one or more of the following described events:
(a) Borrower shall (i) default in the payment of principal of, or interest on, or fail to make the Final Payment on any Loan within three (3) Business Days of when the same is due, or (ii) default in the payment of any expense or other amount payable hereunder or thereunder for five (5) Business Days after receipt of written notice from Lender that the same is due; or
(b) any representation or warranty made herein or on a Funding Date by Borrower in any Operative Document, or any certificate or financial statement furnished pursuant to the provisions of
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any Operative Document, shall prove to have been false or misleading in any material respect as of the time made or furnished; or
(c) Borrower shall default in the performance of any covenant, agreement or obligation (other than a covenant, agreement or obligation referred to in Section 9.01(a) or Section 9.01(e)) contained in any Operative Document (other than the Warrant) and Borrower shall fail to cure within thirty (30) days after the occurrence of such default, or
(d) Borrower shall have breached the terms of the Warrant; or.
(e) Borrower fails to maintain the insurance coverage required under Section 6.01(d) or breaches any provision of Section 7.01; or
(f) any Operative Document shall in any material respect ceases to be, or Borrower shall assert that any Operative Document is not, a legal, valid and binding obligation of Borrower enforceable in accordance with its terms; or
(g) one or more events of default exist under any agreements of Borrower which consist of the failure to pay any Indebtedness at maturity in an aggregate amount in excess of one hundred thousand dollars ($100,000) or which result in a right by such third party or parties, whether or not exercised, to accelerate the maturity of the Indebtedness of Borrower in an aggregate amount in excess of one hundred thousand dollars ($100,000) or one or more events of default shall exist under any financing agreement with Lender or any of Lender’s affiliates; or
(h) a material impairment of the prospect of repayment of any portion of the Obligations owing to Lender or a material impairment of the value or priority of Lender’s security interests in the Collateral; or
(i) any material portion of Borrower’s assets is attached, seized, subjected to writ or distress warrant, or is levied upon, or comes into possession of any trustee, receiver or Person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within twenty (20) days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material part of its business affairs, or if a notice of lien, levy, or assessment is filed of record with respect to any of Borrower’s assets by the United States Government, or any department, agency or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within twenty (20) days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contesting by Borrower; or
(j) a proceeding shall have been instituted in a court of competent jurisdiction seeking a decree or order for relief in respect of Borrower in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the appointment of a
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receiver, liquidator, assignee, custodian, trustee (or similar official) of Borrower or for any substantial part of its property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60) consecutive days or such court shall enter a decree or order granting the relief sought in such proceeding; or
(k) Borrower shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian (or other similar official) of Borrower or for any substantial part of its property, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action in furtherance of any of the foregoing.
9.02. Consequences of Event of Default. (a) If an Event of Default specified under clauses (a) through (i) of Section 9.01 shall occur and be continuing, Lender may (i) declare the Loan Value of the Loan Amount of each Loan and all other liabilities of Borrower hereunder and under the other Operative Documents to be immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived, and (ii) terminate its commitment to make Loans hereunder and terminate any commitment to advance money or extend credit to or for the benefit of Borrower pursuant to any other agreement or commitment extended by Lender to Borrower. (b) If an Event of Default specified under clause (j) or (k) of Section 9.01 shall occur, then immediately and without notice (i) the Loan Value of the Loan Amount of each Loan and all other liabilities of Borrower hereunder and under the other Operative Documents shall automatically become due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, and (ii) Lender’s commitment hereunder to make the Loans and any other commitment of Lender to Borrower to advance money or extend credit pursuant to any other agreement or commitment shall be terminated.
9.03. Rights Regarding Collateral. Borrower agrees that when any Event of Default has occurred and is continuing, Lender shall have the rights, options, duties and remedies of a secured party as permitted by law and, in addition to and without limiting the foregoing, Lender may exercise any one or more or all, and in any order, of the remedies herein set forth, including the following: (a) Lender, personally or by agents or attorneys, shall have the right (subject to compliance with any applicable mandatory legal requirements) to require Borrower to assemble the Collateral and make it available to Lender at a place designated by Lender or to take immediate possession of the Collateral, or any portion thereof, and for that purpose may pursue the same wherever it may be found, and may enter any of premises of Borrower, with or without notice, demand, process of law or legal procedure, to the extent permitted by applicable law, and search for, take possession of, remove, keep and store the same, or use and operate or lease the same until sold; (b) Lender may, if at the time such action may be lawful and always subject to compliance with any mandatory legal requirements, either with or without taking possession and either before or after taking possession, without instituting any legal proceedings whatsoever, having first given notice of such sale by registered or certified mail to Borrower once at least ten (10) days prior to the date of
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such sale, and having first given any other notice which may be required by law, sell and dispose of the Collateral, or any part thereof, at a private sale or at public auction, to the highest bidder, in one lot as an entirety or in separate lots, and either for cash or on credit and on such terms as Lender may determine, and at any place (whether or not it be the location of the Collateral or any part thereof) designated in the notice referred to above. To the extent permitted by applicable law, any such sale or sales may be adjourned from time to time by announcement at the time and place appointed for such sale or sales, or for any such adjourned sale or sales, without further published notice, and Borrower, Lender or its successors or assigns as to the Loans, or of any interest therein, may bid and become the purchaser at any such sale; (c) Lender may proceed to protect and enforce this Agreement and the other Operative Documents by suit or suits or proceedings in equity, at law or in bankruptcy, and whether for the specific performance of any covenant or agreement herein contained or in execution or aid of any power herein granted; or for foreclosure hereunder, or for the appointment of a receiver or receivers for any real property security or any part thereof, or for the recovery of judgment for the Obligations or for the enforcement of any other proper, legal or equitable remedy available under applicable law; (d) With respect to any of Borrower’s owned premises, Borrower hereby grants Lender a license to enter into possession of such premises and to occupy the same, without charge, for up to one hundred twenty (120) days in order to exercise any of Lender’s rights or remedies provided herein, at law, in equity, or otherwise; and (e) Lender and its agents and any purchasers at or after foreclosure are hereby granted an irrevocable, perpetual, fully paid, royalty-free license or other right, solely pursuant to the provisions of this Section 9.04; to use, without charge, Borrower’s intellectual property, including without limitation, labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, now or at any time hereafter owned or acquired by Borrower or in which Borrower now or at any time hereafter has any rights; provided, however, that such license shall only be exercisable in connection with the disposition of Collateral upon Lender’s exercise of its remedies hereunder.
9.04. Waiver by Borrower. Upon the occurrence of an Event of Default, to the extent permitted by law, Borrower covenants that it will not at any time insist upon or plead, or in any manner whatsoever claim or take any benefit or advantage of, any stay or extension law now or at any time hereafter in force, nor claim, take nor insist upon any benefit or advantage of or from any law now or hereafter in force providing for the valuation or appraisement of the Collateral or any part thereof prior to any sale or sales thereof to be made pursuant to any provision herein contained, or to the decree, judgment or order of any court of competent jurisdiction; nor, after such sale or sales, claim or exercise any right under any statute now or hereafter made or enacted by any state or otherwise to redeem the property so sold or any part thereof, and, to the full extent legally permitted, except as to rights expressly provided herein, hereby expressly waives for itself and on behalf of each and every Person, except decree or judgment creditors of Borrower, acquiring any interest in or title to the Collateral or any part thereof subsequent to the date of this Agreement, all benefit and advantage of any such law or laws, and covenants that it will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any power herein granted and delegated to Lender, but will suffer and permit the execution of every such power as though no such power, law or laws had been made or enacted.
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9.05. Effect of Sale. Any sale, whether under any power of sale available to Lender or by virtue of judicial proceedings, shall operate to divest all right, title, interest, claim and demand whatsoever, either at law or in equity, of Borrower in and to the property sold, and shall be a perpetual bar, both at law and in equity, against Borrower, its successors and assigns, and against any and all persons claiming the property sold or any part thereof under, by or through Borrower, its successors or assigns.
9.06. Application of Collateral Proceeds. The proceeds and/or avails of the Collateral, or any part thereof, and the proceeds and the avails of any remedy hereunder (as well as any other amounts of any kind held by Lender at the time of, or received by Lender after, the occurrence of an Event of Default hereunder) shall be paid to and applied as follows: (a) First, to the payment of reasonable costs and expenses, including all amounts expended to preserve the value of the Collateral, of foreclosure or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses, liability and advances, including reasonable legal expenses and attorneys’ fees, incurred or made hereunder by Lender; (b) Second, to the payment to Lender of the amount then owing or unpaid on the Loan for Scheduled Payments and the Loan Value of the Loan Amount with respect to each Loan, and in case such proceeds shall be insufficient to pay in full the whole amount so due, owing or unpaid upon the Loans, then first, to the unpaid interest thereon, second, to unpaid principal thereof and third to the remaining balance of the Loan Value of the Loan Amount with respect to each Loan; (c) Third, to the payment of other amounts then payable to Lender under any of the Operative Documents; and (d) Fourth, to the payment of the surplus, if any, to Borrower, its successors and assigns, or to whomsoever may be lawfully entitled to receive the same.
9.07. Reinstatement of Rights. If Lender shall have proceeded to enforce any right under this Agreement or any other Operative Document by foreclosure, sale, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely, then and in every such case (unless otherwise ordered by a court of competent jurisdiction), Lender shall be restored to its former position and rights hereunder with respect to the property subject to the security interest created under this Agreement.
10.01. Modifications, Amendments or Waivers. The provisions of any Operative Document may be modified, amended or waived only by a written instrument signed by the parties thereto.
10.02. No Implied Waivers; Cumulative Remedies; Writing Required. No delay or failure of Lender in exercising any right, power or remedy hereunder shall affect or operate as a waiver thereof; nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power or remedy preclude any further exercise thereof or of any other right, power or remedy. The rights and remedies hereunder of Lender are cumulative and not exclusive of any rights or remedies which it would otherwise have. Any waiver, permit, consent or approval of any kind or character on the part of Lender of any breach or default under this Agreement or any such waiver of any provision or condition of this Agreement must be in writing and shall be effective only in the specified instance and to the extent specifically set forth in such writing.
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10.03. Expenses; Indemnification. Borrower agrees upon demand to pay or reimburse Lender for all liabilities, obligations and reasonable out-of-pocket expenses, including reasonable fees and expenses of counsel for Lender, from time to time arising in connection with the enforcement or collection of sums due under the Operative Documents. Borrower shall indemnify, reimburse and hold Lender, each of Lender’s partners, and each of their respective successors, assigns, agents, officers, directors, shareholders, servants, agents and employees (collectively, the “Indemnified Parties”) harmless from and against all liabilities, losses, damages, actions, suits, demands, claims of any kind and nature (including claims relating to environmental discharge, cleanup or compliance), all costs and expenses whatsoever to the extent they may be incurred or suffered by such indemnified party in connection therewith (including reasonable attorneys’ fees and expenses), fines, penalties (and other charges of applicable governmental authorities), licensing fees relating to any item of Collateral, damage to or loss of use of property (including consequential or special damages to third parties or damages to Borrower’s property), or bodily injury to or death of any person (including any agent or employee of Borrower) (each, a “Claim”), directly or indirectly relating to or arising out of the use of the proceeds of the Loans, including acquisition, use, ownership, operation, possession, control, storage, return or condition of any item of Equipment financed by a Loan or constituting Collateral (regardless of whether such item of Equipment is at the time in the possession of Borrower), the falsity of any representation or warranty of Borrower or Borrower’s failure to comply with the terms of this Agreement or any other Operative Document during the Term. The foregoing indemnity shall cover, without limitation, (i) any Claim in connection with a design or other defect (latent or patent) in any item of Equipment financed by a Loan or constituting Collateral, (ii) any Claim for infringement of any patent, copyright, trademark or other intellectual property right, (iii) any Claim resulting from the presence on or under or the escape, seepage, leakage, spillage, discharge, emission or release of any Hazardous Materials from any item of Equipment financed by a Loan or constituting Collateral, including any Claims asserted or arising under any Environmental Law, or (iv) any Claim for negligence or strict or absolute liability in tort; provided, however, that Borrower shall not indemnify Lender or any Indemnified Party for any liability incurred by Lender or any Indemnified Party as a result of Lender’s or any Indemnified Party’s gross negligence or willful misconduct. Such indemnities shall continue in full force and effect, notwithstanding the expiration or termination of this Agreement. Upon Lender’s written demand, Borrower shall assume and diligently conduct, at its sole cost and expense, the entire defense of Lender, each of its partners, and each of their respective, agents, employees, directors, officers, shareholders, successors and assigns against any indemnified Claim described in this Section 10.03. Borrower shall not settle or compromise any Claim against or involving Lender without first obtaining Lender’s written consent thereto, which consent shall not be unreasonably withheld.
10.04. Waivers. (a) Borrower shall give Lender written notice within one (1) year of any responsible officer of Borrower obtaining knowledge of the occurrence of any claim or cause of action it believes it has, or may seek to assert to allege against Lender whether such claim is based in law or equity, arising under or related to this Agreement or any of the other Operative Documents or to the transactions contemplated hereby or thereby, or any act or omission to act by Lender with respect hereto or thereto, and that if it shall fail to give such notice to Lender with regard to any such
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claim or cause of action, Borrower shall be deemed to have waived, and shall be forever barred from bringing or asserting such claim or cause of action in any suit, action or proceeding in any court or before any governmental agency or authority or any arbitrator. (b) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR ANYWHERE ELSE, BORROWER AGREES THAT IT SHALL NOT SEEK FROM LENDER UNDER ANY THEORY OF LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES
10.05. Notices; Payments. (a) All notices and other communications given to or made upon any party hereto in connection with this Agreement shall be in writing (including telexed, telecopied or telegraphic communication) and mailed (by certified or registered mail), telexed, telegraphed, telecopied, sent by overnight courier or delivered to the respective parties, as follows:
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Borrower: |
Atheros Communications, Inc. 529 Almanor Avenue Sunnyvale, California 94085 Fax: (408) 773-9906 Ph: (408) 773-5200 | |
|
Lender: |
GATX VENTURES, INC. 3687 Mt. Diablo Blvd., Suite 200 Lafayette, California 94549 Attn: Contract Administration Fax: (925) 258-6020 Ph: (925) 258-6000 | |
or in accordance with any subsequent written direction from either party to the other. All such notices and other communications shall, except as otherwise expressly herein provided, be effective when received; or in the case of delivery by messenger or overnight delivery service, when left at the appropriate address.
(b) Unless Lender specifies otherwise in writing, all payments shall be made:
by check to:
|
Bank of America P.O. Box 198592 Atlanta, Georgia 30384-8592 Credit: GATX Capital Corporation |
Or by wire transfer to:
| Bank of America |
24
|
ABA No. 111000012 Dallas, Texas 75202-2911 Credit: GATX Capital Corporation Account No. 3750878673 Reference: Atheros Communications, Inc. Invoice |
10.06. Termination. This Agreement shall terminate on the latest Maturity Date; provided, however, that the termination of this Agreement shall not affect any of the rights and remedies of Lender hereunder (including, without limitation, the security interests granted to Lender), it being understood and agreed that all such rights and remedies shall continue in full force and effect until payment of all amounts owed to Lender under or in connection with the Operative Documents, whether on account of principal, interest, fees or otherwise.
10.07. Severability. If any provision of any Operative Document is held invalid or unenforceable to any extent or in any application, the remainder of such Operative Document and all other Operative Documents, or the application of such provision to different Persons or circumstances or in different jurisdictions, shall not be affected thereby.
10.08. Survival. All representations, warranties, covenants and agreements of Borrower contained herein or made in writing in connection herewith shall survive the execution and delivery of the Operative Documents, the making of Loans hereunder, and the granting of security.
10.09. Governing Law. This Agreement, the other Operative Documents and the rights and obligations of the parties hereto and thereto shall be governed by and construed and enforced in accordance with the laws of the State of California. Any action to enforce this Agreement against Borrower may be brought in California or, with regard to Collateral, may also be brought wherever such Collateral is located.
10.10. Relationship of Parties. Borrower and Lender acknowledge, understand and agree that the relationship between the Borrower and Lender is, and at all time shall remain solely that of a borrower and lender. Lender shall not under any circumstances be construed to be a partner or joint venturer of Borrower or any of its Affiliates; nor shall Lender under any circumstances be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Borrower or any of its Affiliates, or to owe any fiduciary duty to Borrower or any of its Affiliates. Lender does not undertake or assume any responsibility or duty to Borrower or any of its Affiliates to select, review, inspect, supervise, pass judgment upon or otherwise inform the Borrower or any of its Affiliates of any matter in connection with its or their Property, any Collateral held by any Lender or the operations of Borrower or any of its Affiliates. Borrower and each of its Affiliates shall rely entirely on their own judgment with respect to such matters, and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by Lender in connection with such matters is solely for the protection of Lender and neither Borrower nor any Affiliate is entitled to rely thereon.
10.11. Successors and Assigns. This Agreement and the other Operative Documents shall
25
be binding upon and inure to the benefit of Lender, Borrower and their respective successors and permitted assigns, except that Borrower may not assign or transfer its rights hereunder or any interest herein without the prior written consent of Lender. Lender may assign its interests or sell to any other financial entity (a “Participant”) participation interests in Lender’s rights under this Agreement and the other Operative Documents. Lender may disclose the Operative Documents and any other financial or other information relating to Borrower or any Subsidiary to any potential Participant, provided that such Participant agrees to protect the confidentiality of such documents and information using the same measures that it uses to protect its own confidential information.
10.12. Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which, when so executed and delivered, shall be an original, but all such counterparts shall together constitute one and the same instrument.
10.13. Further Assurances; Power of Attorney. Borrower will, at its own expense, from time to time do, execute, acknowledge and deliver all and every further acts, deeds, conveyances, transfers and assurances, and all financing and continuation statements and similar notices, reasonably necessary or proper for the perfection of the security interest being herein provided for in the Collateral, whether now owned or hereafter acquired. Borrower does hereby irrevocably appoint Lender, the true and lawful attorney-in-fact of Borrower with full power of substitution, for it and in its name to execute any UCC financing statements or UCC financing statement amendments as to Collateral in any applicable jurisdiction, and generally to use its name in the exercise of all powers hereby conferred on Lender with full power of substitution. The power and authority hereby given and granted to Lender shall be deemed coupled with an interest and not revocable by any party.
10.14. Power of Attorney Upon Default. Borrower does hereby irrevocably appoint Lender (which appointment is coupled with an interest), the true and lawful attorney-in-fact of Borrower with full power of substitution, for it and in its name (a) to perform (but Lender shall not be obligated to and shall incur no liability to Borrower or any third party for failure to perform) any act which Borrower is obligated by this Agreement to perform, (b) to ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for any and all rents, issues, profits, avails, distributions, income, payment draws and other sums in which a security interest is granted under Section 5.01 with full power to settle, adjust or compromise any claim thereunder as fully as if Lender were Borrower itself, (c) to receive payment of and to endorse the name of Borrower to any items of Collateral (including checks, drafts and other orders for the payment of money) that come into Lender’s possession or under Lender’s control, (d) to make all demands, consents and waivers, or take any other action with respect to, the Collateral, (e) in Lender’s discretion, to file any claim or take any other action or institute proceedings, either in its own name or in the name of Borrower or otherwise, which Lender may reasonably deem necessary or appropriate to protect and preserve the right, title and interest of Lender in and to the Collateral, and (f) to otherwise act with respect thereto as though Lender were the outright owner of the Collateral; provided, however, that the power of attorney herein granted shall be exercisable only upon the occurrence and during the continuation of an Event of Default. Borrower agrees to reimburse Lender upon demand for all reasonable costs and expenses, including attorneys’ fees and expenses, which Lender may incur while acting as
26
Borrower’s attorney in fact hereunder, all of which costs and expenses are included within the Obligations.
10.15. Confidentiality. All information (other than periodic reports filed by Borrower with the Securities and Exchange Commission) disclosed by Borrower to Lender in writing or through inspection pursuant to this Agreement shall be considered confidential. Lender agrees to use the same degree of care to safeguard and prevent disclosure of such confidential information as Lender uses with its own confidential information, but in any event no less than a reasonable degree of care. Lender shall not disclose such information to any third party (other than Lender’s or Lender’s partner’s attorneys and auditors subject to the same confidentiality obligation set forth herein) and shall use such information only for purposes of evaluation of its investment in Borrower and the exercise of Lender’s rights and the enforcement of their remedies under this Agreement and the other Operative Agreements. The obligations of confidentiality shall not apply to any information that (a) was known to the public prior to disclosure by Borrower under this Agreement, (b) becomes known to the public through no fault of Lender, (c) is disclosed to Lender by a third party having a legal right to make such disclosure, or (d) is independently developed by Lender.
27
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Agreement as of the day and year first above written.
| ATHEROS COMMUNICATIONS, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
| GATX VENTURES, INC. | ||
| By: |
/s/ Robert D. Pomeroy, Jr. | |
| Name: |
Robert D. Pomeroy, Jr. | |
| Title: |
Senior Vice President | |
28
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Agreement as of the day and year first above written.
| ATHEROS COMMUNICATIONS, INC. | ||
| By: |
/s/ Richard A. Redelfs | |
| Name: |
Richard A. Redelfs | |
| Title: |
Pres. & CEO | |
| GATX VENTURES, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
29
SCHEDULES
1 Loan Terms Schedule
2 Disclosure Schedule
3 Conditions Precedent
EXHIBITS
A Service Provider’s Consent
B Landlord Consent
C Warrant
D Form of Legal Opinion
E Form of Instruction Letter
30
SCHEDULE 1
LOAN TERMS SCHEDULE NO.
This Loan Terms Schedule No. (this “Schedule”), dated as of , 200 , is part of the Loan and Security Agreement, dated as of September , 2001 (the “Loan Agreement”), between GATX VENTURES, INC. (“Lender”) and ATHEROS COMMUNICATIONS, INC. (“Borrower”) and is incorporated therein by reference. The terms used in this Schedule shall have the meanings given to them in the Loan Agreement unless otherwise defined herein.
| 1. | The following terms are applicable to the Loan described by this Schedule: |
Loan Funding Date: , 200
Initial Loan Amount: $
Loan Rate: %
Loan Factor: %
Original Scheduled Payment Amount*: $
Date of Second Scheduled Payment: , 200
[First and last Scheduled Payment due on Funding Date.]
Number of payments: 33
| 2. | Borrower shall pay to Lender an Interim Payment in the amount of $ . The Interim Payment is due and payable on the Loan Funding Date. |
| 3. | The Final Payment with respect to the Loan described in this Loan Terms Schedule is equal to six percent (6%) of the Loan Amount then in effect, and payable on the Maturity Date of the Loan, , 200 (assuming the Maturity Date is the last Business Day of the Repayment Period applicable to the Loan). |
| 4. | Borrower certifies that the proceeds of the Loan requested hereby will be used for the purposes described in Section 2.02(a) of the Loan Agreement and that the Equipment being financed with or which serves as Collateral for such Loan is listed on Annex A hereto, which Annex A shall automatically be deemed to be included in and amend the definition of “Collateral” and “Equipment Collateral” under the Loan Agreement as if such Annex A were set forth in full therein, and the Loan Agreement is hereby ratified, approved and confirmed. Borrower hereby confirms that it has granted and does further grant to Lender a security interest in such Collateral and Equipment Collateral including the Equipment specifically described on Annex A hereto. |
| * | The amount of each Scheduled Payment will change if the Loan Amount changes. |
| 5. | The Loan proceeds should be disbursed as follows: |
|
Disbursement from Lender: | |||||||
|
Loan Amount | $ | ||||||
|
Less: | |||||||
|
Interim Payment | $ | ||||||
|
First and last payment in Advance | $ | ||||||
|
Net Proceeds due from Lender: | $ | ||||||
| 6. | The proceeds of the Loan should be wire transferred to Borrower as follows: |
|
Bank Name: |
|
Bank Address: |
|
Account No.: |
|
Routing No. (if any): |
|
For Account of: |
|
Attention: |
| 7. | Borrower certifies that (a) the foregoing information is true and correct; (b) except as set forth in the Schedule of Exceptions attached hereto as Annex C, the representations and warranties made by Borrower in Section 3 of the Loan Agreement and in the other Operative Documents are true and correct on the date hereof; (c) Borrower is in compliance with the covenants and the requirements contained in Sections 4, 6 and 7 of the Loan Agreement; and (d) all conditions contained in Section 8 of the Loan Agreement to the making of the Loan described in this Loan Terms Schedule have been satisfied or waived. |
| 8. | This Loan Terms Schedule is being delivered in California. |
| 9. | This Loan Terms Schedule may be executed in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. |
| 9. | All payments with respect to the Loan described on this Schedule shall be made to Lender as set forth in Section 10.05(b) of the Loan Agreement, unless otherwise indicated in a writing signed by Lender. |
This Loan Terms Schedule is hereby duly executed by the parties hereto as of the date first written above.
| GATX VENTURES, INC. | ||
| By | ||
| Name | ||
| Title | ||
| ATHEROS COMMUNICATIONS, INC. | ||
| By | ||
| Name | ||
| Title | ||
Borrower’s address for notices: | |
|
Attention: |
ANNEX A
TO
LOAN TERMS SCHEDULE
The Equipment being financed with or which serves as collateral for the Loan described on the Loan Terms Schedule to which this Annex A is attached is listed below.
Equipment Collateral
ANNEX B
TO
LOAN TERMS SCHEDULE
Loan Values
|
Payment No. | Payment Date | Loan Value* | ||
|
1 | ||||
|
2 | ||||
|
3 | ||||
|
4 | ||||
|
… | ||||
|
32 | ||||
|
33 |
| • | Each Loan Value percentage assumes payment of all Scheduled Payments due on or before the indicated Payment Date. |
ANNEX C
TO
LOAN TERMS SCHEDULE
Schedule of Exceptions
SCHEDULE 2
DISCLOSURE SCHEDULE
The following are exceptions to the representations and warranties of Atheros Communications, Inc. (referred herein as “Atheros” or the “Company”) contained in the Equipment Loan and Security Agreement by and among Atheros and GATX Ventures, Inc. (the “Lender”) (the “Loan Agreement”) and should be considered an integral part of the Loan Agreement. The section numbers in this Disclosure Schedule correspond to the section numbers in the Loan Agreement; provided, however, that any information disclosed in this Loan Agreement under any section number or in any schedule provided by Atheros shall be deemed disclosed and incorporated into any other sections or schedule under the Loan Agreement where such disclosure would be appropriate, whether or not repeated under any section number where such disclosure might be deemed appropriate so long as it is clear from the express language of the disclosure that such disclosure is appropriate under such section where such disclosure has not been repeated. Any terms defined in the Loan Agreement shall have the same meaning when used in this Disclosure Schedule as when used in the Loan Agreement, unless the context otherwise requires. Notwithstanding any materiality qualifications in any of Atheros’ representations or warranties in the Loan Agreement, for administrative ease, certain items have been included herein which are not considered by Atheros to be material to the business, assets, results of operations, prospects or affairs of Atheros. The inclusion of any item hereunder shall not be deemed to be an admission by Atheros that such item is material to the business, assets, results of operations, prospects or affairs of Atheros, nor shall it be deemed an admission of an obligation or liability to any third party.
Section 3.01(e)
The Company does not currently have authorized shares of Series D Preferred Stock to allow the exercise of the Warrant into shares of the Company’s Series D Preferred Stock in accordance with the terms of the Warrant.
Section 3.01(f)
In September 2000, Wi-LAN Inc. (“Wi-LAN”) approached the Company with respect to Wi-LAN’s United States Patent No. 5,282,222 and Canadian Patent No. 2,064,975. Wi-LAN alleges any user or manufacturer of wideband OFDM products, particularly those in compliance with the IEEE 802.11(a) standard should take these patents into account. The Company researched the issues related to Wi-LAN’s offer, including the validity and breadth of the above-mentioned patents’ claims, and has determined no license is needed to commercialize the Atheros products or to implement the IEEE802.11(a) standard. In sum, the Company strongly believes that there is no merit to Wi-LAN’s allegations and no need to license the above-mentioned patents.
Section 3.01(i)
The name of the Company’s Chief Executive Officer is Richard A. Redelfs. The Company’s Tax EIN Number is 77-0485570 and the Company’s Corporate Number is 2897679. The Collateral and all records and files regarding the Collateral will be kept at the Company’s principal headquarters located at 529 Almanor Avenue, Sunnyvale, California 94085.
SCHEDULE 3
CONDITIONS PRECEDENT
PART I:
At the time of execution and delivery of this Agreement, there shall also have been duly executed and delivered to Lender:
| (a) | The Warrant issued to Lender; |
| (b) | Copies, certified by the Secretary, Assistant Secretary or Chief Financial Officer of Borrower as of the closing date, of Borrower’s charter documents and bylaws and of all documents evidencing corporate action taken by Borrower authorizing the execution, delivery and performance of the Operative Documents to which Borrower is a party, including an incumbency certificate, in form and substance satisfactory to Lender and its counsel; |
| (c) | Good standing certificate from Borrower’s state of incorporation and the state in which Borrower’s principal place of business is located, together with certificates of the applicable governmental authorities that Borrower is in compliance with the franchise tax laws of each such state, each dated as of a recent date; |
| (d) | Evidence of the insurance coverage required by Section 6.01(d) of this Agreement; |
| (e) | A legal opinion as to matters covered in Exhibit D, in form and substance satisfactory to Lender and its counsel; |
| (f) | All necessary consents of shareholders and other third parties with respect to the execution, delivery and performance of this Agreement, the Warrant and the other Operative Documents; |
| (g) | Delivery of the Facility Fee; |
| (h) | An Account Control Agreement for the Account Collateral, in the form reasonably satisfactory to Lender; |
| (i) | All other documents as Lender shall have reasonably requested. |
PART II
On or prior to the Funding Date of each Loan, each of the items set forth in Part I of this Schedule 3 shall have been delivered to Lender and the following conditions shall have been satisfied or waived by Lender:
| (a) | Borrower shall have provided to Lender, with respect to the Equipment which is intended to be financed with the proceeds of the Loan to be made on such Funding |
| Date, such invoices, bills of sale, receipts, agreements, cancelled checks, and other documents as Lender shall reasonably request to evidence the ownership by Borrower of, the payment in full of the purchase price of such Equipment, each in form and substance reasonably satisfactory to Lender; and, except with the prior written consent of Lender which shall not be unreasonably withheld, all such Equipment shall be Eligible Equipment and acceptable to Lender as to value and type; |
| (b) | Lender shall have received duly executed Form UCC-1 Financing Statements or other documents and Borrower shall have taken such actions, if any, as Lender shall reasonably determine are necessary or desirable to perfect and protect its security interest in the Collateral; |
| (c) | Borrower shall have provided to Lender such documents, instruments and agreements, including amendments to previously filed financing statements terminating “after acquired property” clauses which encompass the Equipment, as Lender shall reasonably request to evidence the perfection and priority of the security interests granted to Lender pursuant to Section 5; |
| (d) | No Event of Default or Default shall have occurred and be continuing; |
| (e) | A Landlord Consent, from the owner of each building in which Collateral is anticipated to be located; |
| (f) | A Service Provider’s Consent, from each third party service provider at which Collateral is anticipated to be located; |
| (g) | Estoppel Letter in form satisfactory to Lender from any existing lender with blanket lien on equipment that acknowledges that Lender has a first priority security interest in the Collateral and such existing lender terminates its Lien in the Collateral; |
| (h) | Borrower shall have duly executed and delivered to Lender a Loan Terms Schedule prepared by Lender; |
| (i) | In Lender’s sole discretion, there shall not have occurred any material adverse change in the general affairs, management, results of operations, condition (financial or otherwise) or prospects of Borrower, whether or not arising from transactions in the ordinary course of business, and there shall not have occurred since the date first written on the cover page of this Agreement any material adverse deviation by Borrower from the business plan of Borrower presented to and not disapproved by Lender; |
| (j) | The representations and warranties contained in this Agreement and the other Operative Documents to which Borrower is a party, as modified by any Schedule of Exceptions attached to the applicable Loan Terms Schedule as Annex C, shall be true and correct in all material respects as if made on such Funding Date and the items listed on such Schedule of Exceptions shall be reasonably acceptable to Lender; |
| (k) | Each of the Operative Documents remains in full force and effect; |
| (l) | Except with the prior consent of Lender which shall not be unreasonably withheld, (i) the amount of the requested Loan shall not be less than the Minimum Funding Amount; (ii) the amount of the requested Loan when aggregated with the amounts of all Loans previously funded shall not exceed the Credit Amount, and (iii) the funding of the requested Loan when aggregated with the number of previous fundings of Loans shall not exceed the Maximum Number of Fundings; |
| (m) | The Funding Date of the requested Loan shall not be later than the Commitment Termination Date; and |
| (n) | Any other condition set forth in the applicable Loan Terms Schedule. |
EXHIBIT A
SERVICE PROVIDER’S WAIVER AND CONSENT
THIS SERVICE PROVIDER’S WAIVER AND CONSENT (this “Waiver”), dated as of , 200 , is executed by and between (“Service Provider”) and GATX VENTURES, INC. (“Lender”) pursuant to that certain Equipment Loan and Security Agreement dated as of September , 2001 (the “Loan Agreement”) between Lender and ATHEROS COMMUNICATIONS, INC. (“Borrower”).
RECITALS
A. Service provider is the lessee of real property commonly known as the (“Premises”). Service Provider provides certain services to and in connection with such provision of services Service Provider will maintain on the Premises certain equipment (the “Equipment”) which is collateral security for certain loans made by Lender to Borrower.
B. It is a condition to the making of such loans that Borrower deliver to Lender this Service Provider’s Waiver and Consent.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Service Provider and Lender hereby agree as follows:
1. Waiver and Consent. Service Provider hereby consents to the location of the Equipment on the Premises and does irrevocably waive, disclaim and relinquish and assign to Lender any and all rights to impose, receive assert or enforce any lien, encumbrance, charge security interest, ownership interest, claim or demand of any kind against or involving the Equipment, whether arising by common law, statute or consensually. Service Provider further agrees that (a) neither the Equipment nor any item thereof shall become part of, or otherwise be or become a fixture attached to, the Premises, notwithstanding the manner of the Equipment’s annexation, the Equipment’s adaptability to the uses and purposes for which the Premises are used, and the intentions of the party making the annexation; (b) the Equipment (or any item thereof) may be repossessed by Lender; and (c) in connection with such repossession or otherwise, Lender, and any of its agents and employees, may subject to Service Provider’s Rules and Regulations that require among other things, that Lender be accompanied at all times by a representative of Service Provider, enter upon the premises for the purposes of preparing for transport, disassembling, dismantling, loading and/or removing the Equipment (or any item thereof).
2. Miscellaneous. This Waiver and all rights hereby granted to Lender hereunder shall remain in effect so long as there are any obligations owing by Borrower under the Loan Agreement or any present or future agreement between Borrower and Lender which involves the Equipment. All the terms and provisions of this Waiver shall be binding on and inure to the benefit of the respective successors and assigns of Service Provider and Lender. The rights and benefits of this Waiver may be assigned or transferred by Lender or to third parties who may become
a lender directly or indirectly to Borrower. This Waiver shall be governed by and construed in accordance with the laws of the State of California.
IN WITNESS WHEREOF, Service Provider and Lender have executed this Waiver as of the date and year first written above.
|
LENDER: |
SERVICE PROVIDER: | |||||||
|
GATX VENTURES, INC. | ||||||||
| By: | By: | |||||||
| Name: | Name: | |||||||
| Title: | Title: | |||||||
EXHIBIT B
LANDLORD CONSENT
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
GATX Ventures, Inc.
3687 Mount Diablo Blvd., Suite 200
Lafayette, CA 94549
CONSENT TO REMOVAL OF PERSONAL PROPERTY
KNOW ALL PERSONS BY THESE PRESENTS:
(a) The undersigned has an interest as owner and landlord in the following described real property (the “Real Property”):
That certain real property in the County of [ ], State of [ ], described as:
SEE ATTACHMENT 1 ATTACHED HERETO FOR FULL LEGAL DESCRIPTION,
commonly known as [street address].
(b) Atheros Communications, Inc., a Delaware corporation (“Borrower”), has entered into or will enter into an Equipment Loan and Security Agreement with GATX Ventures, Inc. (collectively, “Lender”) dated as of September , 2001 (as amended and supplemented from time to time, the “Loan Agreement”).
(c) Lender, as a condition to entering into the Loan Agreement, requires that the undersigned consent to the removal by Lender of the equipment and other assets covered by the Loan Agreement (hereinafter called “Equipment”) from the Real Property, no matter how it is affixed thereto, and to the other matters set forth below.
NOW, THEREFORE, for good and sufficient consideration, receipt of which is hereby acknowledged, the undersigned consents to the placing of the Equipment on the Real Property, and agrees with Lender as follows:
1. The undersigned waives and releases each and every right which undersigned now has, under laws of the State of [ ] or by virtue of the lease for the Real Property now in effect, to levy or distrain upon for rent, in arrears, in advance or both, or to claim or assert title to the Equipment that is already on said Real Property, or may hereafter be delivered or installed thereon.
2. The Equipment shall be considered to be personal property and shall not be considered part of the Real Property regardless of whether or by what means it is or may become attached or affixed to the Real Property.
3. The undersigned will permit Lender, or its agent or representative, to enter upon the Real
Property for the purpose of exercising any right they may have under the terms of the Loan Agreement or otherwise, including, without limitation, the right to remove the Equipment; provided, however, that if Lender, in removing the Equipment damages any improvements of the undersigned on the Real Property, Lender will, at its expense, cause same to he repaired.
4. This agreement shall be binding upon the heirs, successors and assigns of the undersigned and shall inure to the benefit of Lender and its respective successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed this instrument at , this day of , 2001.
| OWNER/LESSOR | ||
| By: | ||
| Title: | ||
The foregoing Consent must be acknowledged before a Notary Public.
ATTACHMENT 1
LEGAL DESCRIPTION OF PREMISES
[To Be Provided By Tenant]
| State of | ) | |||
| ) | ||||
| County of | ) | |||
On , 200 before me, the undersigned, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature (Seal)
| State of | ) | |||
| ) | ||||
| County of | ) | |||
On , 200 before me, the undersigned, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature (Seal)
EXHIBIT C
WARRANT
EXHIBIT D
ITEMS TO BE COVERED BY OPINION OF BORROWER’S COUNSEL
The opinions hereafter expressed are subject to the following qualifications:
(a) We assume the genuineness of all signatures on original documents, the authenticity and completeness of all documents submitted to us as originals, the conformity to original documents of all copies submitted to us and the due execution and delivery of all documents (except as to due execution and delivery by the Company) where due execution and delivery are a prerequisite to the effectiveness thereof;
(b) We express no opinion as to the effect of applicable bankruptcy, insolvency, reorganization, moratorium or other similar federal or state laws affecting the rights of creditors;
(c) We express no opinion as to the effect of rules of law governing specific performance, injunctive relief or other equitable remedies (regardless of whether any such remedy is considered in a proceeding at law or in equity).
Based on and subject to the foregoing, we are of the opinion that:
1. Borrower is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified and authorized to do business in [all material foreign jurisdictions and where Collateral is located].
2. Borrower has the full corporate power, authority and legal right, and has obtained all necessary approvals, consents and given all notices to execute and deliver the Loan Documents and perform the terms thereof.
3. The Operative Documents have been duly authorized, executed and delivered by Borrower and constitute valid, legal and binding agreements, enforceable against Borrower in accordance with their terms.
4. To our knowledge, there is no action, suit, audit, investigation, proceeding or patent claim pending or threatened against Borrower in any court or before any governmental commission, agency, board or authority which might have a material adverse effect on the business, condition or operations of Borrower or the ability of Borrower to perform its obligations under the Operative Documents.
10. The Shares issuable pursuant to exercise or conversion of the Warrants have been duly authorized and reserved for issuance by Borrower and, when issued in accordance with the terms thereof, will be validly issued, fully paid and nonassessable.
11. The shares of Common Stock issuable upon conversion of the Shares have been duly authorized and reserved and, when issued in accordance with the terms of Borrower’s Certificate of Incorporation, as amended, will be validly issued, fully paid and nonassessable.
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7. The rights, preferences, privileges and restrictions granted to or imposed upon Borrower’s Series B Preferred Stock and the holders thereof are as set forth in Borrower’s Certificate of Incorporation, as amended to the Date of Grant, a true and complete copy of which has been delivered to Lenders.
8. The execution, delivery and performance of the Operative Documents are not, and the issuance of the Shares upon exercise of the Warrants in accordance with the terms thereof will not be, inconsistent with Borrower’s Certificate of Incorporation, as amended, or Bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to Borrower, and do not and will not conflict with or contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other agreement or instrument of which Borrower is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency or other person, except for the filing of notices pursuant to federal and state securities laws, which filings will be effected by the time required thereby.
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EXHIBIT E
[DATE]
Silicon Valley Bank
3003 Tasman Drive
Santa Clara, CA 95054
Attn: Meg Piper
Re: Deposit Account Number 8800054866 (the “Deposit Account”)
Dear Ms. Piper:
Pursuant to the Notice of Exclusive Control dated September , 2001 (the “Notice”) that was delivered to you pursuant to the Deposit Account Control Agreement (the “Control Agreement”), dated September , 2001, by and among Silicon Valley Bank (“Bank”), Atheros Communications, Inc. (“Customer”), and GATX Ventures, Inc. (“Creditor”), Creditor hereby instructs you to deposit all interest earned on the Deposit Account to date into Customer’s deposit account with Bank, account number 3300100813.
Please contact the undersigned at 925-258-6000 with any questions.
Please acknowledge your receipt of this letter by faxing your signature to the undersigned at 925-258-6020.
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GATX Ventures, Inc. | ||
| By: | ||
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Name: | ||
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Title: | ||
Acknowledged and Received:
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Atheros Communications, Inc. |
Silicon Valley Bank | |||||||
| By: | By: | |||||||
| Name: |
Name: | |||||||
| Title: |
Title: | |||||||
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