Loan and Security Agreement [Amendment] - Imperial Bank and NVIDIA Corp.
AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
---------------------------
This Amendment to Loan and Security Agreement is entered into as of
July 30, 1999 (the "Amendment"), by and between IMPERIAL BANK ("Bank") and
NVIDIA CORPORATION ("Borrower").
RECITALS
--------
Borrower and Bank are parties to that certain Loan and Security
Agreement dated as of September 3, 1998, as amended (the "Agreement"). The
parties desire to amend the Agreement in accordance with the terms of this
Amendment.
NOW, THEREFORE, the parties agree as follows:
1. Certain defined terms in Section 1.1 of the Agreement are hereby added
or amended to read as follows:
"Borrowing Base" means an amount equal to eighty percent (80%) of
Eligible Accounts, as determined by Bank with reference to the most recent
Borrowing Base Certificate delivered by Borrower.
"Committed Revolving Line" means a credit extension of up to Ten
Million Dollars ($10,000,000).
"Credit Extension" or "Credit Extensions" means an Advance, a Letter
of Credit or other extension of credit under this Agreement.
"Revolving Maturity Date" means July 29, 2000.
2. Clause (i) of the defined term "Eligible Accounts" is amended to read
as follows
"(i) Accounts with respect to an account debtor,
including Subsidiaries and Affiliates, whose total obligations to
Borrower exceed twenty percent (20%) of all Accounts, to the extent
such obligations exceed the aforementioned percentage, except that the
concentration limit for Accounts owing from each of STB Systems, Inc.,
Diamond Multimedia Systems, Inc., Intel and Creative Labs shall be
fifty percent (50%). Increases to the concentration limit will be
considered for approval by Bank on a case by case basis;"
3. The reference in clause (g) of the defined term "Permitted
Investments" to $200,000 is amended to read "$500,000."
4. Sections 2.1 is amended to read as follows:
2. Loan And Terms Of Payment.
-------------------------
2.1 Credit Extensions.
-----------------
Borrower promises to pay to the order of Bank, in lawful money of the
United States of America, the aggregate unpaid principal amount of all
Credit Extensions made by Bank to Borrower hereunder. Borrower shall also
pay interest on the unpaid principal amount of such Credit Extensions at
rates in accordance with the terms hereof.
1
<PAGE>
2.1.1 Revolving Advances.
------------------
(a) Subject to and upon the terms and conditions of this Agreement,
Borrower may request Advances in an aggregate outstanding amount not to
exceed the lesser of the Committed Revolving Line. At any time the Credit
Extensions exceed Five Million Dollars ($5,000,000), then, subject to and
upon the terms and conditions of this Agreement, Borrower may request
Advances in an aggregate outstanding amount not to exceed the lesser of (i)
the Committed Revolving Line or (ii) the Borrowing Base, minus, in each
case, the face amount of outstanding Letters of Credit, including any drawn
but unreimbursed Letters of Credit and the FX Reserve. Subject to the
terms and conditions of this Agreement, amounts borrowed pursuant to this
Section 2.1.1 may be repaid and reborrowed at any time prior to the
Revolving Maturity Date, at which time all Advances under this Section
2.1.1 shall be immediately due and payable. Borrower may prepay any
Advances without penalty or premium.
(b) Whenever Borrower desires an Advance, Borrower will notify Bank
by facsimile transmission or telephone no later than 3:00 p.m. Pacific
time, on the Business Day that the Advance is to be made. Each such
notification shall be promptly confirmed by a Payment/Advance Form in
substantially the form of Exhibit B hereto. Bank is authorized to make
---------
Advances under this Agreement, based upon instructions received from a
Responsible Officer or a designee of a Responsible Officer, or without
instructions if in Bank's discretion such Advances are necessary to meet
Obligations which have become due and remain unpaid. Bank shall be entitled
to rely on any telephonic notice given by a person who Bank reasonably
believes to be a Responsible Officer or a designee thereof, and Borrower
shall indemnify and hold Bank harmless for any damages or loss suffered by
Bank as a result of such reliance. Bank will credit the amount of Advances
made under this Section 2.1.1 to Borrower's deposit account.
2.1.2 Letters of Credit Sublimit Under the Revolving Facility.
-------------------------------------------------------
(a) Subject to the terms and conditions of this Agreement, Bank
agrees to issue or cause to be issued letters of credit (each a "Letter of
Credit," collectively, the "Letters of Credit") for the account of Borrower
in an aggregate face amount not to exceed the lesser of the following (i)
(A) the lesser of the Committed Revolving Line or the Borrowing Base (when
the Borrowing Base is applicable), minus (B) the sum of the then
outstanding principal balance of the Advances, the Foreign Exchange Reserve
and the face amount of outstanding Letters of Credit, or (ii) Five Million
--
Dollars ($5,000,000). Each such Letter of Credit shall have an expiry date
no later than the Revolving Maturity Date; provided that the expiry date
may be up to 90 days after the Revolving Maturity Date as long as Borrower
secures its reimbursement and other obligations in connection with any
Letter of Credit outstanding after such date with cash on terms reasonably
acceptable to Bank. All such Letters of Credit shall be, in form and
substance, acceptable to Bank in its sole discretion and shall be subject
to the terms and conditions of Bank's form of application and letter of
credit agreement. All amounts actually paid by Bank in respect of a Letter
of Credit shall, when paid, constitute an Advance under this Agreement.
(b) The obligation of Borrower to immediately reimburse Bank for
drawings made under Letters of Credit shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms
of this Agreement and such Letters of Credit, under all circumstances
whatsoever. Borrower shall indemnify, defend, protect, and hold Bank
harmless from any loss, cost, expense or liability, including, without
limitation, reasonable attorneys' fees, arising out of or in connection
with any Letters of Credit.
(c) Borrower may request that Bank issue a Letter of Credit payable
in a currency other than United States Dollars. If a demand for payment is
made under any such Letter of Credit, Bank shall treat such demand as an
advance to Borrower of the equivalent of the amount thereof (plus cable
charges) in United States currency at the then prevailing rate of exchange
in San Francisco, California, for sales of that other currency for cable
transfer to the country of which it is the currency. Upon the issuance of
any Letter of Credit payable in a currency other than United States
Dollars, Bank shall create a reserve under the Committed Revolving Line for
Letters of Credit against fluctuations in currency exchange rates, in an
2
<PAGE>
amount equal to ten percent (10%) of the face amount of such Letter of
Credit. The amount of such reserve may be amended by Bank from time to time
to account for fluctuations in the exchange rate. The availability of funds
under the Committed Revolving Line shall be reduced by the amount of such
reserve for so long as such Letter of Credit remains outstanding.
2.1.3 Foreign Exchange Sublimit. If there is availability under
-------------------------
the Committed Revolving Line, then Borrower may enter in foreign exchange
contracts with the Bank under which Borrower commits to purchase from or
sell to Bank a set amount of foreign currency more than one business day
after the contract date (the "FX Contract") or treat such settlement as an
Advance under the Revolving Committed Line. Bank will subtract 10% of each
outstanding FX Contract (the "FX Reserve") from the foreign exchange
sublimit, which is a maximum of $5,000,000 (the "FX Sublimit"). Bank may
terminate the FX Contracts if an Event of Default occurs. All FX Contracts
shall be subject to Bank's then standard terms and conditions.
5. Section 2.3(a) is hereby amended in its entirety to read as follows:
(a) Interest Rates. Except as set forth in Section 2.3(b), the
--------------
Advances shall bear interest, on the outstanding daily balance thereof, at
a rate equal to the Prime Rate.
6. Section 4.1 is amended to read as follows:
4.1 Springing Lien. Borrower grants Bank a continuing security
--------------
interest in all currently existing and hereafter acquired or arising
Collateral in order to secure prompt repayment of all Obligations and in
order to secure prompt performance by Borrower of its covenants and duties
under the Loan Documents. Except as set forth in the Schedule, such
security interest constitutes a valid, first priority security interest in
the Collateral. Borrower shall from time to time execute and deliver to
Bank, at the request of Bank, all financing statements and other documents
that Bank may reasonably request, in form satisfactory to Bank, to perfect
and continue perfected Bank's security interest in the Collateral.
Notwithstanding any provision of this Section 4.1 to the contrary, the
grant of security interest hereunder shall be effective only until Borrower
settles litigation outstanding against Borrower to Bank's satisfaction.
Upon such settlement, the grant shall not be effective unless or until an
Event of Default occurs, at which time such grant shall automatically be
effective and Bank shall have the right to file with the California
Secretary of State or such other appropriate government office the
financing statement on Form UCC-1 and the Intellectual Property Security
Agreement delivered in connection with this Amendment. Bank shall otherwise
retain such financing statement and Intellectual Property Security
Agreement in its offices.
7. Section 6.3 is hereby amended to read as follows:
6.3. Financial Statements, Reports, Certificates. Borrower shall
-------------------------------------------
deliver to Bank: (a) within five (5) days of filing, copies of all
financial statements and reports sent or made available generally by
Borrower to its security holders or to any holders of Subordinated Debt and
all reports on Form 10-K, 10-Q and 8-K filed with the Securities and
Exchange Commission; (b) promptly upon receipt of notice thereof, a report
of any legal actions pending or threatened against Borrower or any
Subsidiary that could result in damages or costs to Borrower or any
Subsidiary of One Hundred Thousand Dollars ($100,000) or more; and (c) such
budgets, sales projections, operating plans or other financial information
as Bank may reasonably request from time to time.
Within fifteen (15) days after the last day of each month in which the
outstanding Credit Extensions exceed $5,000,000 (and at least seven days
prior to requesting Credit Extensions that would cause the outstanding
Credit Extensions to exceed $5,000,000), Borrower shall deliver to Bank a
Borrowing Base Certificate signed by a Responsible Officer in substantially
the form of Exhibit C hereto, together with aged listings of accounts
---------
receivable and accounts payable.
When there are outstanding Credit Extensions, Borrower shall deliver
to Bank a Compliance
3
<PAGE>
Certificate signed by a Responsible Officer in substantially the form of
Exhibit D within fifty (50) days after the end of each of the first three
---------
fiscal quarters of each fiscal year and within one-hundred twenty (120)
days after the end of each fiscal year. When there are no outstanding
Credit Extensions, Borrower shall deliver to Bank a Compliance Certificate
signed by a Responsible Officer in substantially the form of Exhibit D as a
---------
condition to requesting any Credit Extensions.
Bank shall have a right to audit the Collateral at any time that
outstanding Credit Extensions exceed $5,000,000, provided such audit shall
occur not more than annually as long as an Event of Default has not
occurred and is continuing.
8. Sections 6.8 through 6.10 are hereby amended in their entirety to read
as follows:
6.8 Quick Ratio. Borrower shall maintain, as of the last day of each
-----------
fiscal quarter, a ratio of Quick Assets to Current Liabilities, of not less
than 1.25 to 1.00. In calculating compliance with this Section and Section
6.9, all indirect borrowings not already accounted for on Borrower's
balance sheet shall be deemed a liability. All indirect borrowings already
accounted for on Borrower's balance sheet shall not be deemed a liability.
6.9 Total Liabilities-Tangible Net Worth. Borrower shall maintain,
------------------------------------
as of the last day of each fiscal quarter, a ratio of Total Liabilities to
Tangible Net Worth of not more than 1.0 to 1.0.
6.10 Profitability. Borrower shall have a net income, less any
-------------
capitalized software development costs not already expensed, after taxes,
of at least One Dollar ($1.00) for each fiscal quarter.
9. Section 6.11 is hereby deleted from the Agreement in its entirety.
10. The Borrowing Base Certificate to be delivered after the date of this
Amendment shall be in substantially the form of Exhibit C hereto.
---------
11. The Compliance Certificate to be delivered after the date of this
Amendment shall be in substantially the form of Exhibit D hereto.
---------
12. Unless otherwise defined, all capitalized terms in this Amendment
shall be as defined in the Agreement. Except as amended, the Agreement remains
in full force and effect.
13. Borrower represents and warrants that the representations and
warranties contained in the Agreement are true and correct as of the date of
this Amendment, and that no Event of Default has occurred and is continuing.
14. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one instrument.
15. As a condition to the effectiveness of this Amendment, Bank shall have
received, in form and substance satisfactory to Bank, the following:
(a) this Amendment, duly executed by Borrower;
(b) a non-refundable loan fee of Fifteen Thousand Dollars ($15,000),
plus all Bank Expenses incurred through the date of this Amendment;
(c) Corporate Resolutions to Borrow; and
(d) such other documents, and completion of such other matters, as
Bank may reasonably deem necessary or appropriate.
4
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment
as of the first date above written.
NVIDIA CORPORATION
By:____________________________________
Title:_________________________________
IMPERIAL BANK
By:____________________________________
Title:_________________________________
5
<PAGE>
EXHIBIT B
---------
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., Pacific Time
TO: EMERGING GROWTH INDUSTRIES DATE: _______________________
FAX#: (650) 233-3020 TIME: _______________________
--------------------------------------------------------------------------------
FROM: NVIDIA Corporation
-------------------------------------------------------------------------
CLIENT NAME (BORROWER)
REQUESTED BY:___________________________________________________________________
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:___________________________________________________________
PHONE NUMBER:___________________________________________________________________
FROM ACCOUNT # ________________ ACCOUNT #___________________________________
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
-------------------------- ---------------------
PRINCIPAL INCREASE (ADVANCE) $___________________________________________
PRINCIPAL PAYMENT (ONLY) $___________________________________________
INTEREST PAYMENT (ONLY) $___________________________________________
PRINCIPAL AND INTEREST (PAYMENT) $___________________________________________
OTHER INSTRUCTIONS:_____________________________________________________________
________________________________________________________________________________
All representations and warranties of Borrower stated in the Loan Agreement
are true, correct and complete in all material respects as of the date of the
telephone request for and Advance confirmed by this Payment / Advance Form;
provided, however, that those representations and warranties expressly referring
to another date shall be true, correct and complete in all material respects as
of such date.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BANK USE ONLY
TELEPHONE REQUEST:
-----------------
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
___________________________________ _______________________________________
Authorized Requester Phone #
Authorized Requester Phone #
___________________________________ _______________________________________
___________________________________________________
Authorized Signature (Bank)
--------------------------------------------------------------------------------
6
<PAGE>
EXHIBIT C
BORROWING BASE CERTIFICATE
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Borrower: NVIDIA Corporation
Commitment Amount: $10,000,000 (Applies only when Credit Extensions exceed $5,000,000)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of _______ $__________________
2. Additions (please explain on reverse) $__________________
3. TOTAL ACCOUNTS RECEIVABLE $__________________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $__________________
5. Balance of 20% over 90 day accounts $__________________
6. Concentration Limits $__________________
7. Foreign Accounts $__________________
8. Governmental Accounts $__________________
9. Contra Accounts $__________________
10. Demo Accounts $__________________
11. Intercompany/Employee Accounts $__________________
12. Other (please explain on reverse) $__________________
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $__________________
14. Eligible Accounts (#3 minus #13) $__________________
15. LOAN VALUE OF ACCOUNTS (80% of #14) $__________________
BALANCES
16. Maximum Loan Amount $10,000,000
17. Total Funds Available [Lesser of #15 or #16] $__________________
18. Present balance owing on Line of Credit $__________________
19. Outstanding under Sublimits ( ) $__________________
20. RESERVE POSITION (#17 minus #18 and #19) $__________________
</TABLE>
The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Imperial Bank.
NVIDIA CORPORATION
By: ___________________________________
Authorized Signer
7
<PAGE>
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: IMPERIAL BANK
FROM: NVIDIA CORPORATION
The undersigned authorized officer of NVIDIA Corporation hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending ______________ with all required
covenants except as noted below and (ii) all representations and warranties of
Borrower stated in the Agreement are true and correct in all material respects
as of the date hereof. Attached herewith are the required documents supporting
the above certification. The Officer further certifies that these are prepared
in accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.
Please indicate compliance status by circling Yes/No under "Complies" column.
<TABLE>
<CAPTION>
Reporting Covenant Required Complies
------------------ ------------------------ --------
<S> <C> <C>
10Q, 10K Within 5 days of filing Yes No
Compliance Certificate Quarterly within 50 days Yes No
When Credit Extensions * $5,000,000
-----------------------------------
A/R & A/P Agings Monthly within 20 days Yes No
Borrowing Base Certificate Monthly within 20 days Yes No
Audits Annual Yes No
</TABLE>
If Credit Extensions are less than $5,000,000, A/R, A/P and BBC and any
other required collateral reporting will not be required; provided that
A/R, A/P, and BBC and all other required collateral reporting are provided
one week prior to borrowing.
<TABLE>
<CAPTION>
Financial Covenant Required Actual Complies
------------------ --------- ------ -------
<S> <C> <C>
Maintain on a Quarterly Basis:
Minimum Quick Ratio 1.25:1.00 ____:1.00 Yes No
Maximum Total Liabilities-TNW 1.00:1.00 ____:1.00 Yes No
Profitability $1.00 $________ Yes No
</TABLE>
<TABLE>
<S> <C>
Comments Regarding Exceptions: See Attached. --------------------------------------------------
BANK USE ONLY
Very truly yours,
Received by:_______________________________
______________________________________________ Authorized Signer
Signature
Date:______________________________________
______________________________________________
Title Verified:__________________________________
Authorized Signer
Date:______________________________________
Compliance Status: Yes No
--------------------------------------------------
</TABLE>
* Greater than
8
<PAGE>
CORPORATE RESOLUTIONS TO BORROW
--------------------------------------------------------------------------------
Borrower: NVIDIA CORPORATION
--------------------------------------------------------------------------------
I, the undersigned Secretary or Assistant Secretary of NVIDIA
Corporation (the "Corporation"), HEREBY CERTIFY that the Corporation is
organized and existing under and by virtue of the laws of the state of its
incorporation.
I FURTHER CERTIFY that at a meeting of the Directors of the
Corporation duly called and held, at which a quorum was present and voting, (or
by other duly authorized corporate action in lieu of a meeting), the following
resolutions were adopted.
I FURTHER CERTIFY that attached hereto are true and correct copies of
the Memorandum and Articles, as amended, of the Corporation, each of which is in
full force and effect as of the date hereof.
BE IT RESOLVED, that any one (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
NAMES POSITIONS ACTUAL SIGNATURES
---------------------- ------------------------ ----------------------
______________________ ________________________ ______________________
______________________ ________________________ ______________________
______________________ ________________________ ______________________
______________________ ________________________ ______________________
______________________ ________________________ ______________________
acting for an on behalf of this Corporation and as its act and deed be, and they
hereby are, authorized and empowered:
Borrow Money. To borrow from time to time from Imperial Bank ("Bank"),
on such terms as may be agreed upon between the officers, employees, or agents
and Bank, such sum or sums of money as in their judgment should be borrowed,
without limitation, including such sums as are specified in that certain
Amendment to Loan and Security Agreement dated as of July 30, 1999 (the
"Amendment").
Execute Amendment. To execute and deliver to Bank the Amendment, and
also to execute and deliver to Bank one or more renewals, extensions,
modifications, consolidations, or substitutions therefor.
Grant Security. To grant a security interest to Bank in the Collateral
described in the Amendment, which security interest shall secure all of the
Corporation's Obligations, as described in the Amendment.
Negotiate Items. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation may have an
interest, and either to receive cash for the same or to cause such proceeds to
be
1
<PAGE>
credited to the account of the Corporation with Bank, or to cause such other
disposition of the proceeds derived therefrom as they may deem advisable.
Further Acts. In the case of lines of credit, to designate additional
or alternate individuals as being authorized to request advances thereunder, and
in all cases, to do and perform such other acts and things, to pay any and all
fees and costs, and to execute and deliver such other documents and agreements
as they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to
these resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full force
and effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
I FURTHER CERTIFY that the officers, employees, and agents named above
are duly elected, appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set forth opposite their respective names; that
the foregoing Resolutions now stand of record on the books of the Corporation;
and that the Resolutions are in full force and effect and have not been modified
or revoked in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on July 30, 1999 and
attest that the signatures set opposite the names listed above are their genuine
signatures.
CERTIFIED TO AND ATTESTED BY:
X______________________________________
________________________________________________________________________________
2
<PAGE>
IMPERIAL BANK
Member FDIC
ITEMIZATION OF AMOUNT FINANCED
DISBURSEMENT INSTRUCTIONS
(Revolver)
Name(s): NVIDIA CORPORATION Date: July 30, 1999
$ credited to deposit account No. ________ when Advances are
requested or by wire transfer or cashiers check
Amounts paid to others on your behalf:
$15,000.00 to Imperial Bank for Loan Fee
$ to Bank counsel fees and expenses
$ TOTAL (AMOUNT FINANCED)
Upon consummation of this transaction, this document will
also serve as the authorization for Imperial Bank to disburse the loan proceeds
as stated above.
__________________________________ _________________________________
Signature Signature