Exhibit 10.1
FIRST AMENDMENT
TO
LOAN AND SECURITY
AGREEMENT
THIS FIRST AMENDMENT to Loan
and Security Agreement (this “Amendment”) is entered
into this 30 day of July, 2009, by and between Silicon Valley Bank
(“Bank”) and DOT HILL SYSTEMS CORP., a Delaware
corporation (“Borrower”) whose address is 2200 Faraday
Avenue, Suite 100, Carlsbad, CA 92008.
R ECITALS
A. Bank and Borrower have entered into that certain
Loan and Security Agreement dated as of July 21, 2008 (as the
same may from time to time be amended, modified, supplemented or
restated, the “Loan Agreement”).
B. Bank has extended credit to Borrower for the
purposes permitted in the Loan Agreement.
C. Borrower has requested that Bank amend the Loan
Agreement to (i) revise the financial covenants, and
(ii) make certain other revisions to the Loan Agreement as
more fully set forth herein.
D. Bank has agreed to so amend certain provisions
of the Loan Agreement, but only to the extent, in accordance with
the terms, subject to the conditions and in reliance upon the
representations and warranties set forth below.
A GREEMENT
N OW ,
T HEREFORE
, in consideration of the foregoing recitals and
other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
1. Definitions. Capitalized terms used but
not defined in this Amendment shall have the meanings given to them
in the Loan Agreement.
2. Amendments to Loan
Agreement.
2.1 Section 2.1.3 (Cash
Management Services Sublimit). New Section 2.1.3 is added as
follows:
“2.1.3 Borrower may use the
Revolving Line for Bank’s cash management services, which may
include merchant services, direct deposit of payroll, business
credit card, and check cashing services identified in Bank’s
various cash management services agreements (collectively, the
“ Cash Management Services ”), in an aggregate
amount not to exceed the lesser of (A) Three Hundred Thousand
Dollars ($300,000) or (B) the lesser of Revolving Line or the
Borrowing Base, minus the sum of all outstanding principal amounts
of any Advances, minus the face amount of any outstanding Letters
of Credit (including drawn but unreimbursed Letters of Credit). Any
amounts Bank pays on behalf of Borrower for any Cash Management
Services will be treated as Advances under the Revolving Line and
will accrue interest at the interest rate applicable to
Advances.”
2.2 Section 2.2 (Overadvances) .
Section 2.2 is amended in its entirety and replaced with the
following:
“2.2
Overadvances . If, at any
time, the sum of (a) the outstanding principal amount of any
Advances (including any amounts used for Cash Management Services),
plus (b) the face amount of any outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) (such sum
being an “ Overadvance ”) exceeds the lesser of
either the Revolving Line or the Borrowing Base, Borrower shall
immediately pay to Bank in cash such Overadvance. Without limiting
Borrower’s obligation to repay Bank any amount of the
Overadvance, Borrower agrees to pay Bank interest on the
outstanding amount of any Overadvance, on demand, at the Default
Rate.”
2.3 Section 2.4 (Fees) .
Section 2.4(c) is amended in its entirety and replaced with
the following:
“(c) Unused Revolving Line
Facility Fee . A fee (the “ Unused Revolving Line
Facility Fee ”), payable quarterly, in arrears, on a
calendar year basis, in an amount equal to three eighths of one
percent (0.375%) per annum of the average unused portion of the
Revolving Line, as determined by Bank. The unused portion of the
Revolving Line, for the purposes of this calculation, shall include
amounts reserved for products provided in connection with Cash
Management Services. Borrower shall not be entitled to any credit,
rebate or repayment of any Unused Revolving Line Facility Fee
previously earned by Bank pursuant to this Section notwithstanding
any termination of the Agreement, or suspension or termination of
Bank’s obligation to make loans and advances hereunder;
provided that such Unused Revolving Line Facility Fee shall cease
to accrue upon termination of this Agreement.”
2.4 Section 6.9 (Financial Covenants) .
Section 6.9(a) is amended in its entirety and replaced with
the following:
“(a) Minimum Net Worth
. A minimum Net Worth of at least Fifty Million Dollars
($50,000,000), increasing by fifty percent (50%) of Net
Income, fifty percent (50%) of issuances of equity after July
1, 2009 and fifty percent (50%) of the princip
