Loan and Security Agreement [Amendment No. 3] - Silicon Valley Bank, Viseon Inc., Henry S. Mellon and Exim Corp.
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THIRD AMENDMENT
TO
LOAN AND SECURITY AGREEMENT, EXECUTED ON OR ABOUT DECEMBER 5,
2001, BETWEEN SILICON VALLEY BANK AND VISEON, INC
AMONG
HENRY S. MELLON and EXIM CORPORATION
successors in interest to Silicon Valley Bank
and
VISEON, INC.
Dated as of June 30, 2003
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THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT is entered into as
of the 30th day of June 2003 (this "Agreement"), by and among VISEON, INC.
f/k/a/ RSI SYSTEMS, INC., a Nevada corporation ("Borrower"), and HENRY S. MELLON
and EXIM CORPORATION, (herein collectively referred to as "Assignees" or
"Lender") being the assignees and successors in interest to the rights and
obligations of Silicon Valley Bank pursuant to that certain loan and security
agreement executed by and between Borrower and Silicon Valley Bank on or about
December 5, 2001.
RECITALS
WHEREAS, on or about the 5th day of December 2001, Borrower entered
into that certain Loan and Security Agreement with Silicon Valley Bank, as
amended by that certain First Amendment to Loan and Security Agreement dated as
of March 26, 2002, and further amended by that certain Second Amendment to Loan
and Security Agreement dated as of June 22, 2002 (as so amended and including
all exhibits and schedules thereto the "Existing Loan Agreement"); and
WHEREAS, on or about the 26th day of June 2003, Silicon Valley Bank
entered into that certain Assignment of Note and Liens with ELIN Corporation
whereby it sold and assigned the Existing Loan Agreement to ELIN Corporation
intact with all exhibits and schedules thereto and all ancillary agreements
entered into in accordance therewith, specifically including the Security
Agreement and Financing Statement; and
WHEREAS, on or about the 30th day of June 2003, ELIN Corporation
entered into that certain Assignment of Note and Liens with the Assignees
whereby it sold and assigned to the Assignees the Existing Loan Agreement intact
with all exhibits and schedules thereto and all agreements entered into in
furtherance of the transactions contemplated thereby and in accordance
therewith, specifically including that certain Security Agreement and Financing
Statement of even date therewith; and
WHEREAS, in connection with the purchase of the Existing Loan Agreement
the Assignees became the holders of a security interest in substantially all of
the assets of Borrower (the Collateral") pursuant to the terms of the Security
Agreement and Financing Statement originally executed in favor of Silicon Valley
Bank; and
WHEREAS, Pursuant to the Existing Loan Agreement, among other things,
Silicon Valley Bank provided Borrower with a commitment to make Revolving Loans
(as defined in the Existing Loan Agreement the "Existing Revolving Loans"); and
WHEREAS, it is the desire of the Assignees and Borrower to amend the
terms of the Existing Loan Agreement, on the terms and subject to the conditions
set forth herein to, among other things, (i) re-designate the Existing Revolving
Loans as a Term Loan, (ii) extended the term of the Existing Loan Agreement
(iii) make certain other modifications to the Existing Loan Agreement, and (iv)
ratify and reaffirm the Security Agreement and Financing Statement in favor of
the Assignees.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt, and adequacy of which are hereby acknowledged by all
parties hereto, Borrower and Lender agree to amend and restate the Existing Loan
Agreement as follows:
1. ACKNOWLEDGEMENT OF EXISTING OBLIGATIONS
1.1 Acknowledgements of obligations under Existing Loan Agreement. Borrower
hereby acknowledges and agrees that Silicon Valley Bank provided Borrower with
the Existing Loans under the Existing Loan Agreement. The Existing Loans consist
of the Existing Revolving Loans, which have an outstanding principal balance as
of the date hereof of $376,997.82 (the "Existing Obligations"). Borrower further
acknowledges and agrees that the Existing Obligations remain unpaid, constitute
valid and existing debt obligations of Borrower, that Borrower has no defenses
to its obligation to pay the Existing Obligations and that Borrower has no right
to any offset or other deduction from the Existing Obligations.
1.2 Acknowledgement of assignment of Existing Obligations to ELIN.
Borrower hereby acknowledges and agrees that on or about the 26th day of June
2003, Silicon Valley Bank entered into that certain Assignment of Note and Liens
with ELIN Corporation whereby it sold and assigned the Existing Loan Agreement
to ELIN Corporation intact with all exhibits and schedules thereto and all
ancillary agreements entered into in accordance therewith, specifically
including the Security Agreement and Financing Statement. Borrower further
acknowledges and agrees that as of the effective date thereof the Existing
Obligations were validly assigned to ELIN, constituted valid and existing debt
obligations of Borrower, that Borrower has no defenses to its obligation to pay
the Existing Obligations and that Borrower has no right to any offset or other
deduction from the Existing Obligations.
1.3 Acknowledgement of Assignment of Existing Obligations to Lender.
Borrower hereby acknowledges and agrees that on or about the 30th day of June
2003, ELIN Corporation entered into that certain Assignment of Note and Liens
with the Assignees whereby it sold and assigned the Existing Loan Agreement
intact with all exhibits and schedules thereto and all ancillary agreements
entered into in accordance therewith, specifically including the Security
Agreement and Financing Statement to the Assignees and Borrower acknowledges and
agrees that as of the effective date thereof the Existing Obligations were
validly assigned to Lender. Borrower further acknowledges and agrees that
Existing Obligations constitute valid and existing debt obligations of Borrower
to Lender, that Borrower has no defenses to its obligation to pay the Existing
Obligations and that Borrower has no right to any offset or other deduction from
the Existing Obligations.
1.4 Acknowledgement of validity and continuation of Security Interest.
Borrower hereby acknowledges and agrees that in connection with the purchase of
the Existing Loan Agreement the Lender became the holders of a security interest
in substantially all of the assets of Borrower (the Collateral") pursuant to the
terms of the Security Agreement and Financing Statement originally executed in
favor of Silicon Valley Bank, which security interest is valid as of the date
hereof in favor of Lender. Borrower further acknowledges and agrees that the
security interest in the Collateral held by Lender is a first lien priority
security interest in substantially all of the assets of Borrower, specifically
including, without limitation, all intellectual property owned by Borrower or
necessary to the conduct of Borrower's business.
2. RE-DESIGNATION OF EXISTING OBLIGATIONS AS TERM LOAN
2.1 Re-Designation of Existing Obligations as a Term Loan. Borrower acknowledges
and agrees that, in connection with the execution hereof: (i) the Existing
Obligations shall, irrevocably and automatically and without any action required
by Borrower or Lender, be deemed to have been borrowed as a Term Loan and (ii)
Lender shall be deemed to have made an additional term loan to Borrower in the
principal amount of $8779.26, as set forth in Section 3 hereinbelow, which
amount shall be added to the outstanding principal balance of the Term Loan as
of the date hereof. Accordingly, on and as of the execution hereof, the
aggregate principal balance of the Term Loan due and owing to Lender is
$386,706.46 and shall be evidenced by the Term Notes.
2.2 Termination of Certain Credit Facilities. Borrower acknowledges and agrees
that, on and as of the execution hereof, Lender shall not be obligated to make
any Revolving Loans or have any Revolving Loan Commitment (as defined in the
Existing Loan Agreement), it being understood that, notwithstanding anything to
the contrary, all such obligations shall have been terminated on and as of the
execution hereof without any liability or obligation to Lender.
3. ADVANCE OF ADDITIONAL FUNDS
3.1 Loan Origination Fee. As partial consideration of the agreement by Lender to
extend the maturity date and modify the terms of the Existing Obligations as set
forth in the Term Notes, Borrower has agreed to pay Lender a fee equal to one
percentage point of the Existing Obligations. Borrower has requested that Lender
advance Borrower such funds as necessary to pay the Loan Origination Fee. In
accordance therewith, the sum of $3,779.26 shall be deemed to have been borrowed
from Lender by Borrower on the date of the execution hereof to pay the Loan
Origination Fee in full, and such amount shall be added to and constitute a
portion of the amounts outstanding under the Term Loan as evidenced by the Term
Notes, and the Term Notes shall be deemed to evidence in part the additional
borrowed funds used to pay the Loan Origination Fee.
3.2 Reimbursement for Legal Fees and Other Costs. As partial consideration of
the agreement by Lender to extend the maturity date and modify the terms of the
Existing Obligations as set forth in the Term Notes, Borrower has agreed to pay
to Lender the sum of $5,000 to offset the cost of legal fees and associated
costs incurred by Lender in the negotiation, preparation and review of the
transactions contemplated hereby and the documents executed in furtherance
hereof. Borrower has requested that Lender advance such funds to Borrower. In
accordance therewith, the sum of $5,000 shall be deemed to have been borrowed
from Lender by Borrower on the date of the execution hereof to Lender the sum of
$5,000 to offset the cost of legal fees and associated costs incurred by Lender
in full, and such amount shall be added to and constitute a portion of the
amounts outstanding under the Term Loan as evidenced by the Term Notes, and the
Term Notes shall be deemed to evidence in part the additional borrowed funds
used to pay the Loan Origination Fee.
4. EXECUTION OF TERM NOTES
4.1 Term Notes. The Term Loan shall be evidenced by, and repayable in accordance
with the terms of the Term Notes and this Agreement. The Term Notes shall
represent the obligation of Borrower to pay the Term Loan, together with
interest, fees and other amounts due thereon, as prescribed therein. In
connection therewith, Borrower is executing two separate notes, one in favor of
each of the Assignees in the amount of one half of the Term Loan. Borrower shall
pay principal, interest, fees, and all other amounts due on the Existing
Obligations and the additional funds advanced by Lender pursuant to the terms of
the Term Notes without setoff, counterclaim or any deduction whatsoever.
4.2 Term Loan Maturity. On the maturity date as set forth in the Term Notes,
Borrower shall repay the Term Loan including all accrued and unpaid interest
thereon together with all other amounts due and owing pursuant to the Existing
Loan Agreement, as amended, modified and restated by this Agreement and all
other obligations of Borrower to Lender related thereto, if not sooner paid in
full.
4.3 Calculation and Payment of Interest.
(a) Interest Rate. So long as no Event of Default shall have
occurred and be continuing, interest shall accrue on the
outstanding principal balance of the Term Loan at the rate of
twelve percent (12%) per annum as set forth in the Term Notes.
(b) Default Rate. Upon the occurrence and during the continuance
of an Event of Default, in addition to the rights, powers and
remedies available to Lender, interest on all outstanding
amounts due pursuant to the Term Loan shall accrue and be
payable at the Default Rate of eighteen percent (18%) per
annum without the necessity of any action by Lender. Interest
accruing at the Default Rate shall be payable to Lender on
demand. Lender shall not be required to accelerate the
maturity of the Term Loan or exercise any other rights or
remedies under any loan document, in order to charge the
Default Rate.
(c) Maximum Rate. In no event shall the aggregate of all
interest on the Term Loan charged or collected pursuant to the
terms of this Agreement or pursuant to the Term Notes exceed
the highest rate permissible under any law that a court of
competent jurisdiction shall, in a final determination, deem
applicable. In the event that such a court determines that
Lender has charged or received interest under this Agreement
or the Term Notes in excess of the highest applicable rate,
the rate in effect under this Agreement and the Term Notes
shall automatically be reduced to the maximum rate permitted
by Applicable Law and Lender shall promptly apply such excess
to reduce the principal balance of the Term Loan, or if the
principal balance of the Term Loan has been paid in full,
Lender shall promptly apply such excess to reduce any other
obligations of Borrower to Lender, and if all such obligations
have been paid in full, then Lender shall refund to Borrower
any interest received by Lender in excess of the maximum
lawful rate.
4.4 Prepayment. If Borrower elects to prepay all or any portion of the principal
balance of either Term Note, it shall furnish written notice to both Assignees
with respect to each voluntary prepayment not less than ninety (90) days prior
to the date of prepayment. Such notice shall set forth the Term Note to be
prepaid, the specific date of prepayment and the principal amount of such Term
Note to be prepaid on such date. Such notice, once given, shall be irrevocable.
Notice of prepayment having been given as aforesaid, Borrower shall make a
prepayment to Lender on such prepayment date in an amount equal to the principal
amount to be prepaid, together with all accrued and unpaid interest on the
then-outstanding principal balance of such Term Note through the date of
prepayment; provided that Borrower shall also reimburse Lender at such time for
any reasonable direct loss or out-of-pocket expense incurred by Lender in
connection with such prepayment.
4.5 All Obligations to Constitute One Obligation. All obligations payable to
Lender pursuant to, in consideration of or related to the Term Loan and the Term
Notes constitute one general obligation of Borrower and shall be secured by
Lenders' liens upon all of the Collateral, and by all other Liens previously,
now, or at any time in the future granted by Borrower to Lender.
5. ADDITIONAL CONSIDERATION
5.1 Issuance of Warrants. As partial consideration of the agreement by Lender to
extend the maturity date and modify the terms of the Existing Obligations as set
forth in the Term Notes, Borrower has agreed to issue Lender warrants
(hereinafter the "Warrant") to purchase from Borrower One Million Two Hundred
Eighty Nine Thousand Twenty (1,289,020) shares of duly authorized, validly
issued, fully paid and nonassessable Common Stock, par value $0.01 per share, of
the Borrower (the "Restricted Stock") at the purchase price per share of Thirty
Cents ($0.30), exercisable at any time or from time to time prior to 5:00 p.m.
Central Standard time, on June 30, 2008 (the "Expiration Date"), all subject to
the terms, conditions and adjustments set forth in the Warrant. Additionally
Borrower has agreed to execute and deliver to Lender a Registration Rights
Agreement setting forth the terms and conditions pursuant to which Borrower has
agreed to file a registration statement regarding the Restricted Stock. In
accordance therewith, and as partial consideration hereof, Borrower shall
concurrently herewith issue and deliver to each Assignee a warrant to purchase,
at the purchase price per share of Thirty Cents ($0.30), Six Hundred Forty Four
Thousand Five Hundred Ten (644,510) shares of duly authorized, validly issued,
fully paid and nonassessable Common Stock of Viseon, Inc., par value $0.01 per
share, valid from the date hereof expiring at 5:00 p.m. Central Standard time,
on June 30, 2008, together with a registration rights agreement regarding the
shares to be acquired pursuant thereto.
6. MISCELLANEOUS.
6.1 Modification and Continuing Validity of Existing Loan Agreement. Without
further action by any party, effective upon the execution hereof this Agreement
amends and restates in its entirety the Existing Loan Agreement to the extent
that the two are inconsistent. However, the execution and delivery of this
Agreement shall not excuse, or constitute a waiver of, any Defaults or Events of
Default under the Existing Loan Agreement, it being understood that this
Agreement is not a termination of the Existing Loan Agreement, but is a
modification (and, as modified, a continuation) of the Existing Loan Agreement.
All remaining terms of the Existing Loan Agreement not addressed or amended
hereby shall remain in full force and effect as if this Agreement had never been
executed. Effective on and concurrent with the execution hereof, Borrower
acknowledges and agrees that the Existing Loan Agreement, as amended and
restated hereby, is reaffirmed in all respects. The principal balance and all
amounts in respect of interest, fees, and other amounts payable to or for the
account of Lender shall be calculated in accordance with the provisions of (i)
the Existing Loan Agreement with respect to any period (or portion of any
period) ending on or prior to the date of the execution hereof and (ii) this
Agreement with respect to any period (or portion of any period) commencing on or
after the date of the execution hereof. Notwithstanding the foregoing or
anything to the contrary herein contained, nothing herein shall be deemed to
limit or terminate any of Lender's rights under the Existing Loan Agreement.
6.2 Conflict of Terms. Except as otherwise provided in the applicable provisions
of this Agreement, if any provision contained in this Agreement or the Existing
Loan Agreement is in conflict with, or inconsistent with, any provision in the
Term Notes, the provision contained in the Term Notes shall govern and control.
6.3 Entire Agreement. The Existing Loan Agreement as amended by this Agreement
and the Term Notes constitute the complete agreement between the parties with
respect to the subject matter hereof and thereof, supersede all prior
agreements, commitments, understandings, or inducements (either oral or written,
expressed or implied) and may not be modified, altered, or amended except by a
written agreement signed by Lender and Borrower as applicable. Each party to
this Agreement acknowledges that no representations, inducements, or agreements,
oral or otherwise, have been made by any party, or anyone acting on behalf of
such party, which are not embodied herein, and no other agreement, statement or
promise not contained in either the Existing Loan Agreement as amended by this
Agreement or the Term Notes shall be valid or binding. The parties hereto have
had an opportunity to consult with their respective attorneys concerning the
meaning and the import of this Agreement and each has read this Agreement, as
signified by their signatures below, and is executing the same for the purposes
and consideration herein expressed.
6.4 No Waiver. Neither Lender's failure, at any time or times, to require strict
performance by Borrower of any provision of the Term Notes, nor Lender's failure
to exercise, nor any delay in exercising, any right, power, or privilege under
this Agreement or the Existing Loan Agreement shall (a) waive, affect, or
diminish any right of Lender thereafter to demand strict compliance and
performance therewith or (b) operate as a waiver thereof. Any suspension or
waiver of a Default, Event of Default, or other provision under the Term Notes
or the Existing Loan Agreement as amended by this Agreement must be in writing
signed by Lender to be effective and shall not suspend, waive, or affect any
other Default or Event of Default, whether the same is prior or subsequent
thereto and whether of the same or of a different type, and shall not be
construed as a bar to any right or remedy that Lender would otherwise have had
on any future occasion.
6.5 Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be deemed to have been received (a) upon
hand delivery (receipt acknowledged) or facsimile (with transmission
confirmation report) at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered on a
business day after during normal business hours where such notice is to be
received); or (b) on the business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
If to LENDER:
A: HENRY S. MELLON
4 Driftwood Landing
Gulfstream, Florida 33483
B: EXIM CORPORATION
Exim Corporation
1855 North Meadow Circle
Lowry Crossing, Texas 75069
If to BORROWER:
VISEON, INC.
2620 S. Maryland Parkway, #309
Las Vegas, Nevada 89109
Facsimile: 972-818-7343
Any party may be given notice in accordance with this Section by any
other party at another address or person for receipt of notices, if such party
so designates such other person or address in writing in accordance with this
Paragraph.
6.6 Successors and Assigns. The Existing Loan Agreement as amended by this
Agreement and the Term Notes shall be binding upon, and shall inure to the
benefit of, Borrower, Lender and their respective successors and permitted
assigns, except as otherwise provided herein or therein. Borrower shall not
assign, transfer, hypothecate, or otherwise convey its rights, benefits,
obligations, or duties under the Existing Loan Agreement as amended by this
Agreement or the Term Notes without the prior written consent of Lender. Any
such purported assignment, transfer, hypothecation, or other conveyance by
Borrower without the prior express written consent of Lender shall be void. The
terms and provisions of the Existing Loan Agreement as amended by this
Agreement, the Term Notes and the other documents and agreements executed in
furtherance thereof are for the purpose of defining the relative rights and
obligations of Borrower and Lender with respect to the transactions contemplated
hereby and thereby, and there shall be no third party beneficiaries of any of
the terms and provisions of any of such agreements or documents. Lender reserves
the right at any time to create and sell in its entirety or a participation in
any portion of the Term Loan, the Term Notes and the Existing Loan Agreement as
amended by this Agreement and to sell, transfer or assign any or all of its
right, title or interest in and to the same, and Borrower consents to Lender's
sale of any participations in, at any time or times, the Term Loan, the Term
Notes and the Existing Loan Agreement as amended by this Agreement or of any
portion thereof or interest therein, including Lender's rights, title,
interests, remedies, powers, or duties thereunder, whether evidenced by a
writing or not, and to the sale, assignment and transfer of any or all of its
right, title or interest in and to the Term Loan, the Term Notes and the
Existing Loan Agreement as amended by this Agreement.
6.7 Presumption against Scrivener. No provision of this Agreement shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party's
having or being deemed to have structured, drafted or dictated such provision.
6.8 Law Governing Agreement. This Agreement is made and entered into and is to
be at least partially performed in Clark County, Nevada. It shall be
interpreted, construed and enforced and its construction and performance shall
be governed by the laws of the State of Nevada applicable to agreements made and
to be performed entirely within such State without regard to principles of
conflicts of laws, except to the extent that federal law may apply.
5.8. Partial Invalidity. Each part of this Agreement is intended to be
separate. If any term, covenant, condition or provision hereof is illegal or
invalid or unenforceable for any reason whatsoever, such illegality, invalidity
or unenforceability shall not affect the legality, validity or enforceability of
the remaining parts of this Agreement and all such remaining parts hereto shall
not be impaired or invalidated in any way, but shall be legal, valid and
enforceable and have full force and effect as if the illegal, invalid,
unenforceable part has not been included.
5.9 Variations in Pronouns. Wherever the context shall so require, all
words herein in the male gender shall be deemed to include the female or neuter
gender and vice versa, all singular words shall include the plural, and all
plural words shall include the singular. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
5.10. Execution and Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed to be an original, and all of which taken together shall constitute but
one and the same instrument. Delivery of an executed counterpart of a signature
page to this Agreement to any other Loan Document by facsimile transmission
shall be effective as delivery of a manually executed counterpart thereof.
5.11 Headings. The headings used in this Agreement are for
administrative purposes only and do not constitute substantive matter to be
considered in construing the terms and shall not affect the interpretation of
this Agreement. All references herein to Sections, Paragraphs, subsections, and
clauses, shall be deemed references to such parts of this Agreement, unless the
context shall otherwise require. A reference to an article or section will mean
an article or section in this Agreement, unless otherwise explicitly set forth.
The titles and headings in this Agreement are for reference purposes only and
will not in any manner limit the construction of this Agreement. For the
purposes of such construction, this Agreement will be considered as a whole. The
terms "including" and "include" as used in this Agreement will be deemed to
include the phrase "without limitation."
5.12 Attorney's Fees and Costs. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs, and necessary
disbursements from the offending party, in addition to any other relief to which
it may be entitled.
5.13 Further Assurances. At any time and from time to time after the
date hereof, at the request of Lender, and without further consideration,
Borrower will execute and deliver such other and further instruments and
documents, and take such other action as Lender may reasonably deem necessary,
convenient or desirable in order to more effectively assist Lender in exercising
its rights with respect hereto, and realizing the benefits created by this
Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of June 30, 2003, as evidenced by their respective signatures below.
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BORROWER:
VISEON, INC.
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By: John Harris
Its: President
LENDER:
EXIM CORPORATION
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By: Dr. Alexander Hamilton
Its: President
HENRY S. MELLON
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