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Exhibit 10.9
LOAN AND SECURITY AGREEMENT
LIMELIGHT NETWORKS, INC.
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TABLE OF CONTENTS
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Page
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1
ACCOUNTING AND OTHER TERMS
......................................... 4
2 LOAN AND
TERMS OF PAYMENT ..........................................
4
2.1
Promise to
Pay .............................................. 4
2.2
Termination of Commitment to Lend ...........................
5
2.3
Overadvances ................................................
5
2.4
Interest
Rate, Payments ..................................... 6
2.5
Authority
to Debit Accounts ................................. 6
2.6
Fees
........................................................
6
3
CONDITIONS OF LOANS
................................................ 6
3.1
Conditions
Precedent to Initial Credit Extension ............ 6
3.2
Conditions
Precedent to all Credit Extensions ............... 7
4 CREATION
OF SECURITY INTEREST ......................................
7
4.1
Grant of
Security Interest .................................. 7
4.2
Authorization to File .......................................
7
5
REPRESENTATIONS AND WARRANTIES
..................................... 7
5.1
Due
Organization and Authorization ..........................
7
5.2
Collateral
.................................................. 8
5.3
Litigation
.................................................. 8
5.4
No
Material Adverse Change in Financial Statements ..........
8
5.5
Solvency
.................................................... 8
5.6
Regulatory
Compliance ....................................... 8
5.7
Investments in Subsidiaries .................................
9
5.8
Full
Disclosure .............................................
9
6
AFFIRMATIVE CONVENANTS
............................................. 9
6.1
Government
Compliance ....................................... 9
6.2
Financial
Statements, Reports, Certificates ................. 9
6.3
Inventory;
Returns .......................................... 10
6.4
Taxes
.......................................................
10
6.5
Insurance
................................................... 10
6.6
Primary
Accounts ............................................ 10
6.7
Financial
Covenants ......................................... 10
6.8
Registration of Intellectual Property Rights ................
11
6.9 Further Assurances
.......................................... 11
7 NEGATIVE
CONVENANTS ................................................
11
7.1
Dispositions ................................................
12
7.2
Changes in
Business, Ownership, Management or Locations ..... 12
7.3
Mergers or
Acquisitions ..................................... 12
7.4
Indebtedness ................................................
12
7.5
Encumbrance .................................................
12
7.6
Distributions; Investments ..................................
12
7.7
Transactions with Affiliates ................................
13
7.8
Subordinated Debt ...........................................
13
7.9
Compliance
.................................................. 13
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8 EVENTS
OF DEFAULT ..................................................
13
8.1
Payment
Default ............................................. 13
8.2
Covenant
Default ............................................ 13
8.3
Material
Adverse Change ..................................... 13
8.4
Attachment
.................................................. 14
8.5
Insolvency
.................................................. 14
8.6
Other
Agreements ............................................
14
8.7
Judgments
................................................... 14
8.8
Misrepresentations ..........................................
14
8.9
Guaranty
.................................................... 14
9 BANK'S
RIGHTS AND REMEDIES .........................................
14
9.1
Rights and
Remedies ......................................... 14
9.2
Power of
Attorney ........................................... 15
9.3
Bank
Expenses ...............................................
15
9.4
Bank's
Liability for Collateral ............................. 15
9.5
Remedies
Cumulative ......................................... 16
9.6
Demand
Waiver ............................................... 16
10 NOTICES
............................................................
16
11 CHOICE OF
LAW, VENUE AND JURY TRIAL WAIVER .........................
16
12 GENERAL
PROVISIONS .................................................
16
12.1
Successors and
Assigns ...................................... 16
12.2
Indemnification
............................................. 17
12.3
Time of Essence
............................................. 17
12.4
Severability of
Provision ................................... 17
12.5
Amendments in
Writing, Integration .......................... 17
12.6
Counterparts
................................................ 17
12.7
Survival
.................................................... 17
12.8
Confidentiality
............................................. 17
12.9
Attorneys' Fees,
Costs and Expenses ......................... 17
13 DEFINITIONS
........................................................
18
13.1
Definitions
................................................. 18
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THIS
LOAN AND SECURITY AGREEMENT dated April 15, 2005 but effective as
of
the Effective Date, between SILICON VALLEY BANK, a California
chartered bank
with its principal place of business at 3003 Tasman Drive, Santa
Clara,
California 95054 and with a loan production office located at 14300
Northsight
Boulevard, Suite 203, Scottsdale, Arizona 85260 ("Bank") and
LIMELIGHT NETWORKS,
INC., a Delaware corporation with its principal place of business
at 2220 W.
14th Street, Tempe, AZ 85281 ("Borrower") provides the terms on
which Bank will
lend to Borrower and Borrower will repay Bank. The parties agree as
follows:
1
ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement will be construed
following
GAAP. Calculations and determinations must be made following GAAP.
The term
"financial statements" includes the notes and schedules. The terms
"including"
and "includes" always mean "including (or includes) without
limitation," in this
or any Loan Document. Capitalized terms in this Agreement shall
have the
meanings set forth in Section 13, if not otherwise defined
herein.
2 LOAN AND
TERMS Of PAYMENT
2.1 PROMISE TO
PAY.
Borrower promises to pay Bank the unpaid principal amount of all
Credit
Extensions and interest on the unpaid principal amount of the
Credit Extensions.
2.1.1 REVOLVING ADVANCES.
(a)
Bank will make Advances not exceeding (i) the lesser of (A) the
Committed Revolving Line or (B) the Borrowing Base, minus (ii) the
amount of all
outstanding Letters of Credit (including drawn but unreimbursed
Letters of
Credit), and minus (iii) the amount of utilized Cash Management
Services covered
under the Cash Management Services Sublimit. Amounts borrowed under
this Section
may be repaid and reborrowed during the term of this Agreement.
(b)
To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 12:00 p.m. Pacific time on the Business Day the
Advance is to be
made. Borrower must promptly confirm the notification by delivering
to Bank the
Payment/Advance Form attached as Exhibit B. Bank will credit
Advances to
Borrower's deposit account. Bank may make Advances under this
Agreement based on
instructions from a Responsible Officer or his or her designee or
without
instructions if the Advances are necessary to meet Obligations
which have become
due. Bank may rely on any telephone notice given by a person whom
Bank believes
is a Responsible Officer or designee. Borrower will indemnify Bank
for any loss
Bank suffers due to such reliance.
(c)
The Committed Revolving Line terminates on the Revolving Maturity
Date,
when all Advances are immediately payable.
2.1.2 EQUIPMENT FACILITY.
(a)
Through March 31, 2006 (the "Equipment Availability End Date"),
Bank
will make advances ("Equipment Advance" and, collectively,
"Equipment Advances")
not exceeding the Committed Equipment Line. The Equipment Advances
may only be
used to finance or refinance Equipment purchased on or after 90
days before the
date of each Equipment Advance and may not exceed 100% of the
equipment invoice
excluding taxes, shipping, warranty charges, freight discounts and
installation
expense. Soft costs may constitute up to $500,000 of the aggregate
Equipment
Advances. Each Equipment Advance must be for a minimum of $100,000.
The number
of Equipment Advances is limited to 1 per month. Notwithstanding
the foregoing,
upon the Effective Date an Equipment Advance in the amount of
$750,000 shall be
advanced for
<PAGE>
Equipment purchases, provided that the amount of such Equipment
Advance does not
exceed 100% of Borrower's net book value of fixed assets and that
invoices for
at least $250,000 of Equipment dated within 150 days prior the date
of such
Equipment Advance are provided to Bank on or prior thereto.
(b)
Each Equipment Advance shall immediately amortize and be payable in
36
equal monthly payments of principal and interest beginning 30 days
following
such Equipment Advance and continuing on the same day of each month
thereafter.
The final payment due on the applicable Equipment Maturity Date
shall include
all outstanding principal and all accrued unpaid interest.
Equipment Advances
when repaid may not be re-borrowed.
(c)
To obtain an Equipment Advance, Borrower must notify Bank (the
notice
is irrevocable) by facsimile no later than 12:00 p.m. Pacific time
one Business
Day before the day on which the Equipment Advance is to be made.
The notice in
the form of Exhibit B (Payment/Advance Form) must be signed by a
Responsible
Officer or designee and include a copy of invoices for the
Equipment being
financed and such additional information as Bank may request;
provided, however,
copies of invoices related to the initial Equipment Advance made on
the
Effective Date shall not be required.
2.1.3 LETTERS OF CREDIT SUBLIMIT.
Bank
will issue or have issued Letters of Credit for Borrower's account
not
exceeding (i) the lesser of the Committed Revolving Line or the
Borrowing Base
minus (ii) the outstanding principal balance of the Advances and
minus the Cash
Management Sublimit; however, the face amount of outstanding
Letters of Credit
(including drawn but unreimbursed Letters of Credit) may not exceed
$500,000.
Borrower's Letter of Credit reimbursement obligation will be
secured by
unencumbered cash on terms acceptable to Bank at any time upon the
Revolving
Maturity Date if the term of this Agreement is not extended by
Bank. Borrower
agrees to execute any further documentation in connection with the
Letters of
Credit as Bank may reasonably request.
2.1.4 CASH MANAGEMENT SERVICES SUBLIMIT.
Borrower may use up to $500,000 (the "Cash Management Services
Sublimit")
for Bank's Cash Management Services, which may include merchant
services, direct
deposit of payroll, business credit card, and check cashing
services identified
in various cash management services agreements related to such
services (the
"Cash Management Services"). All amounts Bank pays for any Cash
Management
Services will be treated as Advances under the Committed Revolving
Line.
2.2 TERMINATION OF
COMMITMENT TO LEND.
Bank's obligation to lend the undisbursed portion of the
Obligations will
terminate if, in Bank's sole discretion, there has been a material
adverse
change in the general affairs, management, results of operation or
condition
(financial or otherwise) of Borrower or in the prospect of
repayment of the
Obligations, or there has been any material adverse deviation by
Borrower from
the most recent business plan of Borrower presented to and accepted
by Bank
prior to the execution of this Agreement.
2.3 OVERADVANCES.
If
Borrower's Obligations under Section 2.1.1, 2.1.3, and 2.1.4 exceed
the
lesser of either (i) the Committed Revolving Line or (ii) the
Borrowing Base,
Borrower must promptly pay Bank the excess.
<PAGE>
2.4 INTEREST RATE,
PAYMENTS.
(a)
Interest Rate. Advances accrue interest on the outstanding
principal
balance at a per annum rate equal to the greater of either (i) 0.75
percentage
points above the Prime Rate or (ii) 6.00%. Equipment Advances
accrue interest on
the outstanding principal balance at a per annum rate equal to the
Basic Rate.
After an Event of Default, Obligations accrue interest at 5 percent
above the
rate effective immediately before the Event of Default. The
interest rate
increases or decreases when the Prime Rate changes. Interest is
computed on a
360 day year for the actual number of days elapsed.
(b)
Payments. Interest due on the Committed Revolving Line is
payable
monthly on the same day of each month as the day on which the
Effective Date
occurs. Payments received after 12:00 noon Pacific time are
considered received
at the opening of business on the next Business Day. When a payment
is due on a
day that is not a Business Day, the payment is due the next
Business Day and
additional interest shall accrue. If any change in the law
increases Bank's
expenses or decreases its return from the Equipment Advances,
Borrower will pay
Bank upon request the amount of such increase or decrease.
2.5 AUTHORITY TO DEBIT
ACCOUNTS.
Bank
may debit any of Borrower's deposit accounts including Account
Number
3300467946 for principal and interest payments owing or any other
amounts
Borrower owes Bank when due. Bank will notify Borrower when it
debits Borrower's
accounts. These debits are not a set-off.
2.6 FEES. Borrower
will pay:
(a)
Facility Fee. A fully earned, non-refundable Facility Fee of
$20,000
for the Committed Revolving Line, due on the Effective Date, and
the deposit
previously received by Bank in the same amount shall be applied
against such
Fee;
(b)
Bank Expenses. All Bank Expenses (including reasonable attorneys'
fees
and reasonable expenses) incurred through and after the date of
this Agreement,
payable when due; and
(c)
Early Termination Fees. A fully earned, non-refundable early
termination fee of one percent (1%) of the Committed Revolving Line
(currently
$10,000) shall be due upon voluntary or involuntary payment in full
of
Borrower's Obligations under the Committed Revolving Line and
termination of the
Committed Revolving Line prior to the Revolving Maturity Date; and
a fully
earned, non-refundable early termination fee of one percent (1%) of
the
outstanding principal balance of all Equipment Advances shall be
due upon
voluntary or involuntary payment in full of Borrower's Obligations
under the
Committed Equipment Line prior to the relevant Equipment Maturity
Dates and
termination of Bank's obligation to lend the undisbursed portion of
such
Obligations under the Committed Equipment Line; provided that no
such early
termination fees shall be payable if Bank agrees to refinance
and/or redocument
this Agreement in another lending division of Bank (in Bank's sole
discretion)
prior to the relevant Maturity Dates.
3
CONDITIONS OF LOANS
3.1 CONDITIONS
PRECEDENT TO INITIAL CREDIT EXTENSION.
Bank's obligation to make the initial Credit Extension is subject
to the
condition precedent that it receive the agreements, documents and
fees it
reasonably requires.
<PAGE>
3.2 CONDITIONS
PRECEDENT TO ALL CREDIT EXTENSIONS.
Bank's obligations to make each Credit Extension, including the
initial
Credit Extension, is subject to the following:
(a)
timely receipt of any Payment/Advance Form; and
(b)
the representations and warranties in Section 5 must be materially
true
on the date of the Payment/Advance Form and on the effective date
of each Credit
Extension and no Event of Default may have occurred and be
continuing, or result
from the Credit Extension. Each Credit Extension is Borrower's
representation
and warranty on that date that the representations and warranties
of Section 5
remain true.
4 CREATION
OF SECURITY INTEREST
4.1 GRANT OF SECURITY
INTEREST.
Borrower grants Bank a continuing security interest in all
presently
existing and later acquired Collateral to secure all Obligations
and performance
of each of Borrower's duties under the Loan Documents. Except for
Permitted
Liens, any security interest will be a first priority security
interest in the
Collateral. Bank may place a "hold" on any deposit account pledged
as
Collateral. If this Agreement is terminated, Bank's lien and
security interest
in the Collateral will continue until Borrower fully satisfies its
Obligations.
If Borrower shall at any time, acquire a commercial tort claim,
Borrower shall
promptly notify Bank in a writing signed by Borrower of the brief
details
thereof and grant to Bank in such writing a security interest
therein and in the
proceeds thereof, all upon the terms of this Agreement, with such
writing to be
in form and substance reasonably satisfactory to Bank.
4.2 AUTHORIZATION TO
FILE.
Borrower authorizes Bank to file financing statements without
notice to
Borrower, with all appropriate jurisdictions, as Bank deems
appropriate, in
order to perfect or protect Bank's interest in the Collateral.
5
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION
AND AUTHORIZATION.
Borrower and each Subsidiary is duly existing and in good standing
in its
state of formation and qualified and licensed to do business in,
and in good
standing in, any state in which the conduct of its business or its
ownership of
property requires that it be qualified, except where the failure to
do so could
not reasonably be expected to cause a Material Adverse Change.
Borrower has not
changed its state of formation or its organizational structure or
type or any
organizational number (if any) assigned by its jurisdiction of
formation.
The
execution, delivery and performance of the Loan Documents have
been
duly authorized, and do not conflict with Borrower's formation
documents, nor
constitute an event of default under any material agreement by
which Borrower is
bound. Borrower is not in default under any agreement to which or
by which it is
bound in which the default could reasonably be expected to cause a
Material
Adverse Change.
<PAGE>
5.2 COLLATERAL.
Borrower has good title to the Collateral, free of Liens except
Permitted
Liens or Borrower has Rights to each asset that is Collateral.
Borrower has no
other deposit account, other than the deposit accounts described in
the
Schedule. The Accounts are bona fide, existing obligations, and the
service or
property has been performed or delivered to the account debtor or
its agent for
immediate shipment to and unconditional acceptance by the account
debtor. Except
as described in the Schedule the Collateral is not in the
possession of any
third party bailee (such as at a warehouse). In the event that
Borrower, after
the date hereof, intends to store with or otherwise deliver any of
the
Collateral to such a bailee, then Borrower will receive the prior
written
consent of Bank and such bailee must acknowledge in writing that
the bailee is
holding such Collateral for the benefit of Bank. Borrower has no
notice of any
actual or imminent Insolvency Proceeding of any account debtor
whose accounts
are an Eligible Account in any Borrowing Base Certificate. All
Inventory is in
all material respects of good and marketable quality, free from
material
defects. Borrower is the sole owner of the intellectual Property,
except for
non-exclusive licenses granted to its customers in the ordinary
course of
business. Each Patent is valid and enforceable and no part of the
Intellectual
Property has been judged invalid or unenforceable, in whole or in
part, and no
claim has been made that any part of the Intellectual Property
violates the
rights of any third party, except to the extent such claim could
not reasonably
be expected to cause a Material Adverse Change.
5.3 LITIGATION.
Except as shown in the Schedule, there are no actions or
proceedings
pending or, to the knowledge of Borrower's Responsible Officers,
threatened by
or against Borrower or any Subsidiary in which a likely adverse
decision could
reasonably be expected to cause a Material Adverse Change.
5.4 NO MATERIAL
ADVERSE CHANGE IN FINANCIAL STATEMENTS.
All consolidated
financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects
Borrower's
consolidated financial condition and Borrower's consolidated
results of
operations. There has not been any material deterioration in
Borrower's
consolidated financial condition since the date of the most recent
financial
statements submitted to Bank.
5.5 SOLVENCY.
The
fair salable value of Borrower's assets (including goodwill
minus
disposition costs) exceeds the fair value of its liabilities; the
Borrower is
not left with unreasonably small capital after the transactions in
this
Agreement; and Borrower is able to pay its debts (including trade
debts) as they
mature.
5.6 REGULATORY
COMPLIANCE.
Borrower is not an "investment company" or a company "controlled"
by an
"investment company" under the investment Company Act. Borrower is
not engaged
as one of its important activities in extending credit for margin
stock (under
Regulations T and U of the Federal Reserve Board of Governors).
Borrower has
complied in all material respects with the Federal Fair Labor
Standards Act.
Borrower has not violated any laws, ordinances or rules, the
violation of which
could reasonably be expected to cause a Material Adverse Change.
None of
Borrower's or any Subsidiary's properties or assets has been used
by Borrower or
any Subsidiary or, to the best of Borrower's knowledge, by previous
Persons, in
disposing, producing, storing, treating, or transporting any
hazardous substance
other than legally. Borrower and each Subsidiary has timely filed
all required
tax returns and paid, or made adequate provision to pay, all
material taxes,
except those being contested in good faith with adequate reserves
under GAAP.
Borrower
<PAGE>
and each Subsidiary has obtained all consents, approvals and
authorizations of,
made all declarations or filings with, and given all notices to,
all government
authorities that are necessary to continue its business as
currently conducted,
except where the failure to do so could not reasonably be expected
to cause a
Material Adverse Change.
5.7 INVESTMENTS IN
SUBSIDIARIES.
Borrower does not own any stock, partnership interest or other
equity
securities except for Permitted investments.
5.8 FULL
DISCLOSURE.
No
written representation, warranty or other statement of Borrower in
any
certificate or written statement given to Bank (taken together with
all such
written certificates and written statements to Bank) contains any
untrue
statement of a material fact or omits to state a material fact
necessary to make
the statements contained in the certificates or statements not
misleading. It
being recognized by Bank that the projections and forecasts
provided by Borrower
in good faith and based upon reasonable assumptions are not viewed
as facts and
that actual results during the period or periods covered by such
projections and
forecasts may differ from the projected and forecasted results.
6
AFFIRMATIVE COVENANTS
Borrower will do all of the following for so long as Bank has an
obligation
to lend, or there are outstanding Obligations:
6.1 GOVERNMENT
COMPLIANCE.
Borrower will maintain its and all Subsidiaries' legal existence
and good
standing in its jurisdiction of formation and maintain
qualification in each
jurisdiction in which the failure to so qualify would reasonably be
expected to
cause a material adverse effect on Borrower's business or
operations. Borrower
will comply, and have each Subsidiary comply, with all laws,
ordinances and
regulations to which it is subject, the noncompliance with which
could
reasonably be expected to have a material adverse effect on
Borrower's business
or operations or would reasonably be expected to cause a Material
Adverse
Change.
6.2 FINANCIAL
STATEMENTS, REPORTS, CERTIFICATES.
(a)
Borrower will deliver to Bank: (i) as soon as available, but no
later
than 20 days after the last day of each month, a company prepared
consolidated
balance sheet and income statement covering Borrower's consolidated
operations
during the period certified by a Responsible Officer and in a form
acceptable to
Bank; (ii) as soon as available, but no later than 120 days after
the last day
of Borrower's fiscal year, audited consolidated financial
statements prepared
under GAAP, consistently applied, together with an unqualified
opinion on the
financial statements from an independent certified public
accounting firm
reasonably acceptable to Bank; (iii) within 5 days of filing,
copies of all
statements, reports and notices made available to Borrower's
security holders or
to any holders of Subordinated Debt and all reports on Form 10-K,
10-Q and 8-K,
if any, filed with the Securities and Exchange Commission; (iv) a
prompt report
of any legal actions pending or threatened against Borrower or any
Subsidiary
that could result in damages or costs to Borrower or any Subsidiary
of $100,000
or more; (v) budgets, sales projections, operating plans or other
financial
information Bank reasonably requests; (vi) prompt notice of any
material change
in the composition of the intellectual Property, including any
subsequent
ownership right of Borrower in or to any Copyright, Patent or
Trademark not
shown in any intellectual property security agreement between
Borrower and Bank
or knowledge of an event that materially adversely affects the
value of the
intellectual Property; and (vii) as soon as
<PAGE>
available but no later than 30 days prior to each fiscal year end,
Borrower's
financial projections for the following year on a monthly
basis.
(b)
Within 20 days after the last day of each month, Borrower will
deliver
to Bank a Borrowing Base Certificate signed by a Responsible
Officer in the form
of Exhibit C, with aged listings of accounts receivable and
accounts payable.
(c)
Within 20 days after the last day of each month, Borrower will
deliver
to Bank with the monthly financial statements a Compliance
Certificate signed by
a Responsible Officer in the form of Exhibit D.
(d)
Borrower will allow Bank to audit Borrower's Collateral at
Borrower's
expense. Such audits will be conducted no more often than annually
unless an
Event of Default has occurred and is continuing.
6.3 INVENTORY;
RETURNS.
Borrower will keep all Inventory in good and marketable condition,
free
from material defects. Returns and allowances between Borrower and
its account
debtors will follow Borrower's customary practices as they exist at
execution of
this Agreement. Borrower must promptly notify Bank of all returns,
recoveries,
disputes and claims, that involve more than $50,000.
6.4 TAXES.
Borrower will make, and cause each Subsidiary to make, timely
payment of
all material federal, state, and local taxes or assessments and
will deliver to
Bank, on demand, appropriate certificates attesting to the
payment.
6.5 INSURANCE.
Borrower will keep its business and the Collateral insured for
risks and in
amounts, as Bank may reasonably request. Insurance policies will be
in a form,
with companies, and in amounts that are satisfactory to Bank in
Bank's
reasonable discretion. All property policies will have a lender's
loss payable
endorsement showing Bank as an additional loss payee and all
liability policies
will show the Bank as an additional insured and provide that the
insurer must
give Bank at least 20 days notice before canceling its policy. At
Bank's
request, Borrower will deliver certified copies of policies and
evidence of all
premium payments. Proceeds payable under any policy will, at Bank's
option, be
payable to Bank on account of the Obligations.
6.6 PRIMARY
ACCOUNTS.
Borrower will maintain its primary operating and investment
accounts with
Bank. As to any deposit accounts and investment accounts maintained
with
institutions not related to Bank, in which the aggregate balances
exceed 10% of
Borrower's cash, Borrower shall cause such institutions to enter
into a control
agreement in form acceptable to Bank in its good faith business
judgment in
order to perfect Bank's first priority security interest in said
deposit
accounts and investment accounts.
6.7 FINANCIAL
COVENANTS.
Borrower will maintain as of the last day of each month:
<PAGE>
(i) QUICK RATIO (ADJUSTED). A ratio of Quick Assets to Current
Liabilities (excluding investor/related party debt) of at least
1.00 to 1.00
until October 31, 2005 and thereafter at least 1.25 to 1.00.
(ii) DEBT SERVICE COVERAGE RATIO. A ratio of Borrower's (a)
consolidated earnings before interest expense, income taxes,
depreciation,
amortization of intangible assets and other non-cash charges made
to Borrower's
income (all a determined by GAAP) minus unfunded capital
expenditures for the
preceeding three-month period to (b) current maturities of long
term debt due
Bank plus interest expense paid Bank during the preceeding
three-month period of
at least 2.00 to 1.00, measured monthly on a rolling 3 month
basis.
6.8 REGISTRATION OF
INTELLECTUAL PROPERTY RIGHTS.
Borrower shall not register any Copyrights or Mask Works with the
United
States Copyright Office unless it: (i) has given at least fifteen
(15) days'
prior notice to Bank of its intent to register such Copyrights or
Mask Works and
has provided Bank with a copy of the application it intends to file
with the
United States Copyright Office (excluding exhibits thereto); (ii)
executes a
security agreement or such other documents as Bank may reasonably
request in
order to maintain the perfection and priority of Bank's security
interest in the
Copyrights proposed to be registered with the United States
Copyright Office;
and (iii) records such security documents with the United States
Copyright
Office contemporaneously with filing the Copyright application(s)
with the
United States Copyright Office. Borrower shall promptly provide to
Bank a copy
of the Copyright application(s) filed with the United States
Copyright Office,
together with evidence of the recording of the security documents
necessary for
Bank So maintain the perfection and priority of its security
interest in such
Copyrights or Mask Works. Borrower shall provide written notice to
Bank of any
application filed by Borrower in the United States Patent Trademark
Office for a
patent or to register a trademark or service mark within 30 days of
any such
filing.
Borrower will (i) protect, defend and maintain the validity and
enforceability of the Intellectual Property and promptly advise
Bank in writing
of material infringements and (ii) not allow any Intellectual
Property to be
abandoned, forfeited or dedicated to the public without Bank's
written consent.
6.9 FURTHER
ASSURANCES.
(a)
Borrower will execute any further instruments and take further
action
as Bank reasonably requests to perfect or continue Bank's security
interest in
the Collateral or to effect the purposes of this Agreement.
(b)
Borrower will cause each Subsidiary to guaranty the
Obligations.
(c)
Within 60 days following the Effective Date, Borrower will deliver
to
Bank Consents to Removal of Personal Property (or such other form
of landlord's
waiver as may be acceptable to Bank in its sole discretion) from
the owners of
Borrower's Tempe, Arizona headquarters, and from the owners of the
premises at
such locations as Bank may specify where Equinix, Global Crossing
and Switch and
Data are lessees, renters or otherwise have possession of
Borrower's assets.
7 NEGATIVE
COVENANTS
<PAGE>
For
so long as Bank has an obligation to lend or there are any
outstanding
Obligations, Borrower shall not, without Bank's prior written
consent (which
shall be a matter of its good faith business judgment), do any of
the following:
7.1 DISPOSITIONS.
Convey, sell, lease, transfer or otherwise dispose of
(collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or
any part of
its business or property, except for Transfers (i) of Inventory in
the ordinary
course of business; (ii) of non-exclusive licenses and similar
arrangements for
the use of the property of Borrower or its Subsidiaries In the
ordinary course
of business; or (iii) of worn-out or obsolete Equipment.
7.2 CHANGES IN
BUSINESS, OWNERSHIP, MANAGEMENT OR LOCATIONS OF COLLATERAL.
Engage in or permit any of its Subsidiaries to engage in any
business other
than the businesses currently engaged in by Borrower or reasonably
related
thereto or have a material change in its ownership or management of
greater than
25% (other than by the sale of Borrower's equity securities in a
public offering
or to venture capital investors so long as Borrower identifies the
venture
capital investors prior to the closing of the investment). Borrower
will not,
without at least 30 days prior written notice, relocate its chief
executive
office, change its state of formation (including reincorporation),
change its
organizational number or name or add any new offices or business
locations (such
as warehouses) in which Borrower maintains or stores over $5,000 in
Collateral.
7.3 MERGERS OR
ACQUISITIONS.
Merge or consolidate, or permit any of its Subsidiaries to merge
or
consolidate, with any other Person, or acquire, or permit any of
its
Subsidiaries to acquire, all or substantially all of the capital
stock or
property of another Person, except, as long as no Event of Default
has occurred
and is continuing or would result from such action during the term
of this
Agreement, (i) where such transaction would not require more than
15% of
Borrower's cash or 25% of Borrower's stock, and (ii) a Subsidiary
may merge or
consolidate into another Subsidiary or into Borrower.
7.4 INDEBTEDNESS.
Create, incur, assume, or be liable for any indebtedness, or permit
any
Subsidiary to do so, other than Permitted Indebtedness.
7.5 ENCUMBRANCE.
Create, incur, or allow any Lien on any of its property, or assign
or
convey any right to receive income, including the sale of any
Accounts, or
permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit
any Collateral not to be subject to the first priority security
interest granted
here, subject to Permitted Liens.
7.6 DISTRIBUTIONS;
INVESTMENTS.
Directly or indirectly acquire or own any Person, or make any
investment in
any Person, other than Permitted Investments, or permit any of its
Subsidiaries
to do so; or pay any dividends or make any distribution or payment
with respect
to, or redeem, retire or purchase, any capital stock, except that
Borrower may
make repurchases of stock in Borrower from former employees or
directors of
Borrower or its Subsidiaries under the terms of applicable
repurchase agreements
in an aggregate amount not to exceed $100,000 in any fiscal year,
provided that
no Event of Default has occurred and is continuing or would exist
after giving
effect to any such repurchase.
<PAGE>
7.7 TRANSACTIONS WITH
AFFILIATES.
Directly or indirectly enter into or permit to exist any
material
transaction with any Affiliate of Borrower except for transactions
that are in
the ordinary course of Borrower's business, upon fair and
reasonable terms that
are no less favorable to Borrower than would be obtained in an
arm's length
transaction with a nonaffiliated Person.
7.8 SUBORDINATED
DEBT.
Make
or permit any payment on any Subordinated Debt, except under the
terms
of the Subordinated Debt, or amend any provision in any document
relating to the
Subordinated Debt without Bank's prior written consent.
7.9 COMPLIANCE.
Become an "investment company" or a company controlled by an
"investment
company," under the Investment Company Act of 1940 or undertake as
one of its
important activities extending credit to purchase or carry margin
stock, or use
the proceeds of any Credit Extension for that purpose; fail to meet
the minimum
funding requirements of ERISA, permit a Reportable Event or
Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the
Federal Fair
Labor Standards Act or violate any other law or regulation, if the
violation
could reasonably be expected to have a material adverse effect on
Borrower's
business or operations or would reasonably be expected to cause a
Material
Adverse Change, or permit any of its Subsidiaries to do so.
8 EVENTS
OF DEFAULT
Any
one of the following is an Event of Default;
8.1 PAYMENT
DEFAULT.
If
Borrower fails to pay any of the Obligations within 3 days after
their
due date, however, during such period no Credit Extensions will be
made;
8.2 COVENANT
DEFAULT.
(a)
If Borrower fails to perform any obligation under Sections 6.2 or
6.7
or violates any of the covenants contained in Section 7 of this
Agreement, or
(b)
If Borrower fails or neglects to perform, keep, or observe any
other
material term, provision, condition, covenant, or agreement
contained in this
Agreement, in any of the Loan Documents, or in any other present or
future
agreement between Borrower and Bank and as to any default under
such other term,
provision, condition, covenant or agreement that can be cured, has
failed to
cure such default within ten (10) days after the occurrence
thereof; provided,
however, that if the default cannot by its nature be cured within
the ten (10)
day period or cannot after diligent attempts by Borrower be cured
within such
ten (10) day period, and such default is likely to be cured within
a reasonable
time, then Borrower shall have an additional reasonable period
(which shall not
in any case exceed thirty (30) days) to attempt to cure such
default, and within
such reasonable time period the failure to have cured such default
shall not be
deemed an Event of Default (provided that no Credit Extensions will
be made
during such cure period);
8.3 MATERIAL ADVERSE
CHANGE.
If
there (i) occurs a material adverse change in the business,
operations,
or financial condition of the Borrower, or (ii) is a material
impairment of the
prospect of repayment of any
<PAGE>
portion of the Obligations; or (iii) is a material impairment of
the value or
priority of Bank's security interests in the Collateral (the
foregoing being
defined as a "Material Adverse Change").
8.4 ATTACHMENT.
If
any material portion of Borrower's assets is attached, seized,
levied
on, or comes into possession of a trustee or receiver and the
attachment,
seizure or levy is not removed in 10 days, or if Borrower is
enjoined,
restrained, or prevented by court order from conducting a material
part of its
business or if a judgment or other claim becomes a Lien on a
material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is
filed against
any of Borrower's assets, by any government agency and not paid
within 10 days
after Borrower receives notice. These are not Events of Default if
stayed or if
a bond is posted pending contest by Borrower (but no Credit
Extensions will be
made during the cure period);
8.5 INSOLVENCY.
If
Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower
and not
dismissed or stayed within 45 days (but no Credit Extensions will
be made before
any Insolvency Proceeding is dismissed);
8.6 OTHER
AGREEMENTS.
If
there is a default in any agreement between Borrower and a third
party
that gives the third party the right to accelerate any Indebtedness
exceeding
$100,000 or that could cause a Material Adverse Change;
8.7 JUDGMENTS.
If a
money judgment(s) in the aggregate of at least $100,000 is
rendered
against Borrower and is unsatisfied and unstayed for 10 days (but
no Credit
Extensions will be made before the judgment is stayed or
satisfied);
8.8
MISREPRESENTATIONS.
If
Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any
warranty or
representation in this Agreement or in any writing delivered to
Bank or to
induce Bank to enter this Agreement or any Loan Document; or
8.9 GUARANTY.
Any
guaranty of any Obligations ceases for any reason to be in full
force
or any Guarantor does not perform any obligation under any guaranty
of the
Obligations, or any material misrepresentation or material
misstatement exists
now or later in any warranty or representation in any guaranty of
the
Obligations or in any certificate delivered to Bank in connection
with the
guaranty, or any circumstance described in Sections 8.4, 8.5 or 8.7
occurs to
any Guarantor.
9 BANK'S
RIGHTS AND REMEDIES
9.1 RIGHTS AND
REMEDIES.
When
an Event of Default occurs and continues Bank may, without notice
or
demand, do any or all of the following:
(a)
Declare all Obligations immediately due and payable (but if an
Event of
Default described in Section 8.5 occurs all Obligations are
immediately due and
payable without any action by Bank);
<PAGE>
(b)
Stop advancing money or extending credit for Borrower's benefit
under
this Agreement or under any other agreement between Borrower and
Bank;
(c)
Settle or adjust disputes and claims directly with account debtors
for
amounts, on terms and in any order that Bank considers advisable;
notify any
Person owing Borrower money of Bank's security interest in the
funds and verify
the amount of the Account. Borrower must collect all payments in
trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank
in the form
received from the account debtor, with proper endorsements for
deposit;
(d)
Make any payments and do any commercially reasonable acts it
considers
necessary or reasonable to protect its security interest in the
Collateral.
Borrower will assemble the Collateral if Bank requires and make it
available as
Bank designates. Bank may enter premises where the Collateral is
located, take
and maintain possession of any part of the Collateral, and pay,
purchase,
contest, or compromise any Lien which appears to be prior or
superior to its
security interest and pay all expenses incurred. Borrower grants
Bank a license
to enter and occupy any of its premises, without charge, to
exercise any of
Bank's rights or remedies;
(e) Place a "hold" on
any account maintained with Bank and deliver a notice
of exclusive control, any entitlement order, or other directions or
instructions
pursuant to any control agreement or similar agreements providing
control of any
Collateral;
(f) Apply to the
Obligations any (i) balances and deposits of Borrower it
holds, or (ii) any amount held by Bank owing to or for the credit
or the account
of Borrower;
(g)
Ship, reclaim, recover, store, finish, maintain, repair, prepare
for
sale, advertise for sale, and sell the Collateral. Bank is granted
a
non-exclusive, royalty-free license or other right to use, without
charge,
Borrower's labels, Patents, Copyrights, Mask Works, rights of use
of any name,
trade secrets, trade names, Trademarks, service marks, and
advertising matter,
or any similar property as it pertains to the Collateral, in
completing
production of, advertising for sale, and selling any Collateral
and, in
connection with Bank's exercise of its rights under this Section,
Borrower's
rights under all licenses and all franchise agreements inure to
Bank's benefit;
and
(h)
Dispose of the Collateral according to the Code.
9.2 POWER OF
ATTORNEY.
Effective only when an Event of Default occurs and continues,
Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse
Borrower's name
on any checks or other forms of payment or security; (ii) sign
Borrower's name
on any invoice or bill of lading for any Account or drafts against
account
debtors, (iii) make, settle, and adjust all claims under Borrower's
insurance
policies; (iv) settle and adjust disputes and claims about the
Accounts directly
with account debtors, for amounts and on terms Bank determines
reasonable; and
(v) transfer the Collateral into the name of Bank or a third party
as the Code
permits. Bank may exercise the power of attorney to sign Borrower's
name on any
documents necessary to perfect or continue the perfection of any
security
interest regardless of whether an Event of Default has occurred.
Bank's
appointment as Borrower's attorney in fact, and all of Bank's
rights and powers,
coupled with an interest, are irrevocable until all Obligations
have been fully
repaid and performed and Bank's obligation to provide Credit
Extensions
terminates.
9.3 BANK EXPENSES.
If
Borrower fails to pay any amount or furnish any required proof
of
payment to third persons, Bank may make all or part of the payment
or obtain
insurance policies required in Section 6.5, and take any
commercially reasonable
action under the policies Bank deems prudent. Any amounts paid by
Bank are Bank
Expenses and immediately due and payable,
<PAGE>
bearing interest at the then applicable rate and secured by the
Collateral. No
payments by Bank are deemed an agreement to make similar payments
in the future
or Bank's waiver of any Event of Default.
9.4 BANK'S LIABILITY
FOR COLLATERAL.
If
Bank complies with reasonable banking practices and Section 9-207
of the
Code, it is not liable for: (a) the safekeeping of the Collateral;
(b) any loss
or damage to the Collateral; (c) any diminution in the value of the
Collateral;
or (d) any act or default of any carrier, warehouseman, bailee, or
other person.
Except as provided above, Borrower bears all risk of loss, damage
or destruction
of the Collateral.
9.5 REMEDIES
CUMULATIVE.
Bank's rights and remedies under this Agreement, the Loan
Documents, and
all other agreements are cumulative. Bank has all rights and
remedies provided
under the Code, by law, or in equity. Bank's exercise of one right
or remedy is
not an election, and Bank's waiver of any Event of Default is not a
continuing
waiver. Bank's delay is not a waiver, election, or acquiescence. No
waiver is
effective unless signed by Bank and then is only effective for the
specific
instance and purpose for which it was given.
9.6 DEMAND WAIVER.
Except as otherwise provided in this Agreement, Borrower waives
demand,
notice of default or dishonor, notice of payment and nonpayment,
notice of any
default, nonpayment at maturity, release, compromise, settlement,
extension, or
renewal of accounts, documents, instruments, chattel paper, and
guarantees held
by Bank on which Borrower is liable.
10 NOTICES
All
notices or demands by any party about this Agreement or any
other
related agreement must be in writing and be personally delivered or
sent by an
overnight delivery service, by certified mail, postage prepaid,
return receipt
requested, or by facsimile to the addresses set forth at the
beginning of this
Agreement. A party may change its notice address by giving the
other party
written notice.
11 CHOICE OF
LAW, VENUE AND JURY TRIAL WAIVER
Arizona law governs the Loan Documents without regard to principles
of
conflicts of law. Borrower and Bank each submit to the exclusive
jurisdiction of
the State and Federal courts in Maricopa County, Arizona.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY
CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY
CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL
PROVISIONS
12.1 SUCCESSORS AND ASSIGNS.
This
Agreement binds and is for the benefit of the successors and
permitted
assigns of each party. Borrower may not assign this Agreement or
any rights
under it without Bank's prior written consent which may be granted
or withheld
in Bank's discretion. Bank has the right,
<PAGE>
without the consent of or notice to Borrower, to sell, transfer,
negotiate, or
grant participation in all or any part of, or any interest in,
Bank's
obligations, rights and benefits under this Agreement.
12.2 INDEMNIFICATION.
Borrower will indemnify, defend and hold harmless Bank and its
officers,
employees, and agents against: (a) all obligations, demands,
claims, and
liabilities asserted by any other party in connection with the
transactions
contemplated by the Loan Documents; and (b) all losses or Bank
Expenses
incurred, or paid by Bank from, following, or consequential to
transactions
between Bank and Borrower (including reasonable attorneys fees and
expenses),
except for losses caused by Bank's gross negligence or willful
misconduct.
12.3 TIME OF ESSENCE.
Time
is of the essence for the performance of all obligations in
this
Agreement.
12.4 SEVERABILITY OF PROVISION.
Each
provision of this Agreement is severable from every other provision
in
determining the enforceability of any provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION.
All
amendments to this Agreement must be in writing and signed by
Borrower
and Bank. This Agreement represents the entire agreement about this
subject
matter, and supersedes prior negotiations or agreements. All prior
agreements,
understandings, representations, warranties, and negotiations
between the
parties about the subject matter of this Agreement merge into this
Agreement and
the Loan Documents.
12.6 COUNTERPARTS.
This
Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when
executed and
delivered, are an original, and all taken together, constitute one
Agreement.
12.7 SURVIVAL.
All
covenants, representations and warranties made in this
Agreement
continue in full force while any Obligations remain outstanding.
The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until
all statutes of
limitations for actions that may be brought against Bank have
run.
12.8 CONFIDENTIALITY.
In
handling any confidential information, Bank will exercise the
same
degree of care that it exercises for its own proprietary
information, but
disclosure of information may be made (i) to Bank's subsidiaries or
affiliates
in connection with their business with Borrower, (ii) to
prospective transferees
or purchasers of any interest in the loans (provided, however, Bank
shall use
commercially reasonable efforts in obtaining such prospective
transferee or
purchasers agreement of the terms of this provision), (iii) as
required by law,
regulation, subpoena, or other order, (iv) as required in
connection with Bank's
examination or audit and (v) as Bank considers reasonably
appropriate exercising
remedies under this Agreement. Confidential information does not
include
information that either: (a) is in the public domain or in Bank's
possession
when disclosed to Bank, or becomes part of the public domain after
disclosure to
Bank; or (b) is disclosed to Bank by a third party, if Bank does
not know that
the third party is prohibited from disclosing the information.
<PAGE>
12.9 ATTORNEYS' FEES, COSTS AND EXPENSES.
In
any action or proceeding between Borrower and Bank arising out of
the
Loan Documents, the prevailing party will be entitled to recover
its reasonable
attorneys' fees and other reasonable costs and expenses incurred,
in addition to
any other relief to which it may be entitled.
13
DEFINITIONS
13.1 DEFINITIONS.
In
this Agreement:
"ACCOUNTS" are all existing and later arising accounts, contract
rights,
and other obligations owed Borrower in connection with its sale or
lease of
goods (including licensing software and other technology) or
provision of
services, all credit insurance, guaranties, other security and all
merchandise
returned or reclaimed by Borrower and Borrower's Books relating to
any of the
foregoing, as such definition may be amended from time to time
according to the
Code.
"ADVANCE" or "ADVANCES" is a loan advance (or advances) under the
Committed
Revolving Line.
"AFFILIATE" of a Person is a Person that owns or controls directly
or
indirectly the Person, any Person that controls or is controlled by
or is under
common control with the Person, and each of that Person's senior
executive
officers, directors, partners and, for any Person that is a limited
liability
company, that Person's managers and members.
"BANK EXPENSES" are all reasonable audit fees and expenses and
reasonable
costs and expenses (including reasonable attorneys' fees and
expenses) for
preparing, negotiating, administering, defending and enforcing the
Loan
Documents (including appeals or insolvency Proceedings).
"BASIC RATE" is, as of the date of the Equipment Advance, the per
annum
rate of interest (based on a year of 360 days) equal to the sum of
(a) the U.S.
Treasury note yield to maturity for a term equal to 36 months as
quoted in The
Wall Street Journal on the day of the Equipment Advance, plus (b)
4.25%.
"BORROWER'S BOOKS" are all Borrower's books and records including
ledgers,
records regarding Borrower's assets or liabilities, the Collateral,
business
operations or financial condition and all computer programs or
discs or any
equipment containing the information.
"BORROWING BASE" is 80% of Eligible Accounts, as determined by Bank
from
Borrower's most recent Borrowing Base Certificate; provided,
however, that Bank
may lower the percentage of the Borrowing Base after performing an
audit of
Borrower's Collateral.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day
on which
the Bank is closed.
"CASH MANAGEMENT SERVICES" are defined in Section 2.1.4.
"CODE" is the Arizona Uniform Commercial Code, as applicable.
"COLLATERAL" is the property described on Exhibit A.
"COMMITTED EQUIPMENT LINE" is a Credit Extension of up to
$2,750,000.
<PAGE>
"COMMITTED REVOLVING LINE" is an Advance of up to $1,000,000.
"COMMITMENT TERMINATION DATE" is March 31, 2006.
"CONTINGENT OBLIGATION" is, for any Person, any direct or
indirect
liability, contingent or not, of that Person for (i) any
indebtedness, lease,
dividend, letter of credit or other obligation of another such as
an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or
sold with
recourse by that Person, or for which that Person is directly or
indirectly
liable; (ii) any obligations for undrawn letters of credit for the
account of
that Person; and (iii) all obligations from any interest rate,
currency or
commodity swap agreement, interest rate cap or collar agreement, or
other
agreement or arrangement designated to protect a Person against
fluctuation in
interest rates, currency exchange rates or commodity prices; but
"Contingent
Obligation" does not include endorsements in the ordinary course of
business.
The amount of a Contingent Obligation is the stated or determined
amount of the
primary obligation for which the Contingent Obligation is made or,
if not
determinable, the maximum reasonably anticipated liability for it
determined by
the Person in good faith; but the amount may not exceed the maximum
of the
obligations under the guarantee or other support arrangement.
"COPYRIGHTS" are all copyright rights, applications or
registrations and
like protections in each work or authorship or derivative work,
whether
published or not (whether or not it is a trade secret) now or later
existing,
created, acquired or held.
"CREDIT EXTENSION" is each Advance, Equipment Advance, Letter of
Credit, or
any other extension of credit by Bank for Borrower's benefit.
"CURRENT ASSETS" are amounts that under GAAP should be included on
that
date as current assets on Borrower's consolidated balance
sheet.
"CURRENT LIABILITIES" are the aggregate amount of Borrower's
Total
liabilities which mature within one (1) year.
"EFFECTIVE DATE" is the date Bank executes this Agreement.
"ELIGIBLE ACCOUNTS" are Accounts in the ordinary course of
Borrower's
business that meet all Borrower's representations and warranties in
Section 5;
but Bank may in its reasonable discretion change eligibility
standards by giving
Borrower notice. Unless Bank agrees otherwise in writing, Eligible
Accounts will
not include:
(a)
Accounts that the account debtor has not paid within 90 days of
invoice
date;
(b)
Accounts for an account debtor, 50% or more of whose Accounts have
not
been
paid within 90 days of invoice date;
(c)
Credit balances over 90 days from invoice date;
(d)
Accounts for an account debtor, including Affiliates, whose
total
obligations to Borrower exceed 25% of all Accounts, for the amounts
that
exceed that percentage, unless the Bank approves in writing;
(e)
Accounts for which the account debtor does not have its principal
place
of
business in the United States, except for Accounts which are
otherwise
Eligible and where the account debtor has its principal place of
business
in
the United Kingdom limited to an aggregate amount of $125,000;
(f)
Accounts for which the account debtor is a federal government
entity or
any
department, agency, or instrumentality, except for Accounts of
the
United States if the
<PAGE>
payee has assigned its payment rights to Bank and the assignment
has been
acknowledged under the Assignment of Claims Act of 1940 (31 U.S.C.
3727);
(g)
Accounts for which Borrower owes the account debtor, but only up to
the
amount owed (sometimes called "contra" accounts, accounts payable,
customer
deposits or credit accounts);
(h)
Accounts for demonstration or promotional equipment, or in which
goods
are
consigned, sales guaranteed, sale or return, sale on approval, bill
and
hold, or other terms if account debtor's payment may be
conditional;
(i)
Accounts for which the account debtor is Borrower's Affiliate,
officer,
employee, or agent;
(j)
Accounts in which the account debtor disputes liability or makes
any
claim and Bank believes there may be a basis for dispute (but only
up to
the
disputed or claimed amount), or if the Account Debtor is subject to
an
Insolvency Proceeding, or becomes insolvent, or goes out of
business;
(k)
Accounts for which Bank reasonably determines collection to be
doubtful.
"EQUIPMENT" is all present and future machinery, equipment,
tenant
improvements, furniture, fixtures, vehicles, tools, parts and
attachments in
which Borrower has any interest.
"EQUIPMENT ADVANCE" is defined in Section 2.1.2.
"EQUIPMENT AVAILABILITY END DATE" is defined in Section 2.1.2.
"EQUIPMENT MATURITY DATE" is a date 36 months after each Equipment
Advance,
but no later than March 31, 2009 as to the last Equipment
Advance.
"ERISA" is the Employment Retirement Income Security Act of 1974,
and its
regulations.
"GAAP" is generally accepted accounting principles.
"GUARANTOR" is any present or future guarantor of the
Obligations,
including any present or future Subsidiary of Borrower.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the
deferred price
of property or services, such as reimbursement and other
obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes,
bonds,
debentures or similar instruments, (c) capital lease obligations
and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person
under the
United States Bankruptcy Code, or any other bankruptcy or
insolvency law,
including assignments for the benefit of creditors, compositions,
extensions
generally with its creditors, or proceedings seeking
reorganization,
arrangement, or other relief.
"INTELLECTUAL PROPERTY" is all of Borrower's:
(a)
Copyrights, Trademarks, Patents, and Mask Works including
amendments,
renewals, extensions, and all licenses or other rights to use and
all license
fees and royalties from the use;
(b)
Any trade secrets and any intellectual property rights in
computer
software and computer software products now or later existing,
created,
acquired or held;
<PAGE>
(c)
All design rights which may be available to Borrower now or
later
created, acquired or held;
(d)
Any claims for damages (past, present or future) for infringement
of
any of the rights above, with the right, but not the obligation, to
sue and
collect damages for use or infringement of the intellectual
property rights
above;
All
proceeds and products of the foregoing, including all
insurance,
indemnity or warranty payments.
"INVENTORY" is present and future inventory in which Borrower has
any
interest, including merchandise, raw materials, parts, supplies,
packing and
shipping materials, work in process and finished products intended
for sale or
lease or to be furnished under a contract of service, of every kind
and
description now or later owned by or in the custody or possession,
actual or
constructive, of Borrower, including inventory temporarily out of
its custody or
possession or in transit and including returns on any accounts or
other proceeds
(including insurance proceeds) from the sale or disposition of any
of the
foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock,
partnership
interest or other securities) any Person, or any loan, advance or
capital
contribution to any Person.
"LETTER OF CREDIT" is defined in Section 2.1.3.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge,
security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or
notes or
guaranties executed by Borrower or any Guarantor, and any other
present or
future agreement between Borrower and/or for the benefit of Bank in
connection
with this Agreement, all as amended, extended or restated.
"MASK WORKS" are all mask works or similar rights available for
the
protection of semiconductor chips, now owned or later acquired.
"MATERIAL ADVERSE CHANGE" is defined in Section 8.3.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and
other
amounts Borrower owes Bank now or later, including cash management
services,
letters of credit and foreign exchange contracts, if any and
including interest
accruing after insolvency Proceedings begin and debts, liabilities,
or
obligations of Borrower assigned to Bank.
"PATENTS" are patents, patent applications and like protections,
including
Improvements, divisions, continuations, renewals, reissues,
extensions and
continuations-in-part of the same.
"PERMITTED INDEBTEDNESS" IS:
(a)
Borrower's
indebtedness to Bank under this Agreement or any other Loan
Document;
(b)
indebtedness existing
on the Effective Date and shown on the Schedule;
(c)
Subordinated Debt;
(d)
indebtedness to trade
creditors incurred in the ordinary course of
business; and
(e)
indebtedness secured
by Permitted Liens.
<PAGE>
"PERMITTED INVESTMENTS" are:
(a)
Investments shown on the Schedule and existing on the Effective
Date;
and
(b)
(i) marketable direct obligations issued or unconditionally
guaranteed
by the United States or its agency or any State maturing within 1
year from its
acquisition, (ii) commercial paper maturing no more than 1 year
after its
creation and having the highest rating from either Standard &
Poor's Corporation
or Moody's Investors Service, Inc., and (iii) Bank's certificates
of deposit
issued maturing no more than 1 year after issue.
"PERMITTED LIENS" are:
(a)
Liens existing on the Effective Date and shown on the Schedule
or
arising under this Agreement or other Loan Documents;
(b)
Liens for taxes, fees, assessments or other government charges
or
levies, either not delinquent or being contested in good faith and
for which
Borrower maintains adequate reserves on its Books, if they have no
priority when
not paid over any of Bank's security interests;
(c)
Purchase money Liens (i) on Equipment acquired or held by Borrower
or
its Subsidiaries incurred for financing the acquisition of the
Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined
to the
property and improvements and the proceeds of the equipment;
(d)
Licenses or sublicenses granted in the ordinary course of
Borrower's
business and any interest or title of a licensor or under any
license or
sublicense, if the licenses and sublicenses permit granting Bank a
security
interest;
(e)
Leases or subleases granted in the ordinary course of
Borrower's
business, including in connection with Borrower's leased premises
or leased
property;
(f)
Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any
extension,
renewal or replacement Lien must be limited to the property
encumbered by the
existing Lien and the principal amount of the indebtedness may not
increase.
"PERSON" is any individual, sole proprietorship, partnership,
limited
liability company, joint venture, company association, trust,
unincorporated
organization, association, corporation, institution, public benefit
corporation,
firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even
if it is
not Bank's lowest rate.
"QUICK ASSETS" is, on any date until three months after the
Effective Date,
Borrower's consolidated, unrestricted cash and cash equivalents,
plus all
Accounts; and, after three months after the Effective Date,
Borrower's
consolidated, unrestricted cash and cash equivalents held at Bank,
plus all
Accounts.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer,
the
President, the Chief Financial Officer and the Controller of
Borrower.
"REVOLVING MATURITY DATE" is the date 364 days from the Effective
Date.
<PAGE>
"RIGHTS", as applied to the Collateral, means the Borrower's rights
and
interests in, and powers with respect to, that Collateral, whatever
the nature
of those rights, interests and powers and, in any event, including
Borrower's
power to transfer rights in such Collateral to Bank.
"SCHEDULE" is any
attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's
indebtedness owed to Bank and which is reflected in a written
agreement in a
manner and form acceptable to Bank and approved by Bank in
writing.
"SUBSIDIARY" is for any Person, any other business entity of which
more
than 50% of the voting stock or other equity interests is owned or
controlled,
directly or indirectly, by the Person or one or more Affiliates of
the Person.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets
of
Borrower and its Subsidiaries minus, (i) any amounts attributable
to (a)
goodwill, (b) intangible items such as unamortized debt discount
and expense,
patents, trade and service marks and names, copyrights and research
and
development expenses except prepaid expenses, and (c) reserves not
already
deducted from assets, and (ii) Total Liabilities.
"TOTAL LIABILITIES" is on any day, obligations that should, under
GAAP, be
classified as liabilities on Borrower's consolidated balance sheet,
including
all Indebtedness, and current portion Subordinated Debt allowed to
be paid, but
excluding all other Subordinated Debt.
"TRADEMARKS" are trademark and servicemark rights, registered or
not,
applications to register and registrations and like protections,
and the entire
goodwill of the business of Assignor connected with the
trademarks.
BORROWER:
LIMELIGHT NETWORKS, INC.
By: /s/ William H. Rinehart
---------------------------------
Title: President & CEO
BANK:
SILICON VALLEY BANK
By: /s/ Travis D. Wood
---------------------------------
Title: VICE PRESIDENT
Effective Date: 4/15/05
<PAGE>
EXHIBIT A
The
Collateral consists of all of Borrower's right, title and interest
in
and to the following whether owned now or hereafter arising and
whether the
Borrower has rights now or hereafter has rights therein and
wherever located:
All
goods and equipment now owned or hereafter acquired, including,
without
limitation, all machinery, fixtures, vehicles (including motor
vehicles and
trailers), and any interest in any of the foregoing, and all
attachments,
accessories, accessions, replacements, substitutions, additions,
and
improvements to any of the foregoing, wherever located;
All
inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies,
packing and
shipping materials, work in process and finished products including
such
inventory as is temporarily out of Borrower's custody or possession
or in
transit and including any returns upon any accounts or other
proceeds, including
insurance proceeds, resulting from the sale or disposition of any
of the
foregoing and any documents of title representing any of the
above;
All
contract rights and general intangibles (as such definitions may
be
amended from time to time according to the Code), now owned or
hereafter
acquired, including, without limitation, goodwill, trademarks,
servicemarks,
trade styles, trade names, patents, patent applications, leases,
license
agreements, franchise agreements, blueprints, drawings, purchase
orders,
customer lists, route lists, infringements, claims, computer
programs, computer
discs, computer tapes, literature, reports, catalogs, design
rights, income tax
refunds, payments of insurance and rights to payment of any
kind,;
All
now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing
to Borrower
arising out of the sale or lease of goods, the licensing of
technology or the
rendering of services by Borrower (as such definitions may be
amended from time
to time according to the Code) whether or not earned by
performance, and any and
all credit insurance, insurance (including refund) claims and
proceeds,
guaranties, and other security therefor, as well as all merchandise
returned to
or reclaimed by Borrower;
All
documents, cash, deposit accounts, securities, securities
entitlements,
securities accounts, investment property, financial assets, letters
of credit,
letter of credit rights, certificates of deposit, instruments and
chattel paper
and electronic chattel paper now owned or hereafter acquired and
Borrower's
Books relating to the foregoing;
All
copyright rights, copyright applications, copyright registrations
and
like protections in each work of authorship and derivative work
thereof, whether
published or unpublished, now owned or hereafter acquired; all
trade secret
rights, including all rights to unpatented inventions, know-how,
operating
manuals, license rights and agreements and confidential
information, now owned
or hereafter acquired; all mask work or similar rights available
for the
protection of semiconductor chips, now owned or hereafter acquired;
all claims
for damages by way of any past, present and future infringement of
any of the
foregoing; and
All
Borrower's Books relating to the foregoing and any and all
claims,
rights and interests in any of the above and all substitutions for,
additions
and accessions to and proceeds thereof.
<PAGE>
EXHIBIT B
LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 12:00 P.S.T.
FAX TO: _________
DATE: _______________
- LOAN
PAYMENT:
LIMELIGHT NETWORKS, INC. (Borrower)
From
Account #_______________________ To Account
#_____________________
(Deposit Account #)
(Loan Account #)
Principal $___________________ and/or interest
$___________________________
All
Borrower's representation and warranties in the Loan and
Security
Agreement are true, correct and complete in all material respects
up to and
including the date of the transfer request for a loan payment, but
those
representations and warranties expressly referring to another date
shall be
true, correct and complete in all material respects as of that
date:
AUTHORIZED SIGNATURE:
Phone Number:
---------------------
-----------------
- LOAN
ADVANCE:
COMPLETE OUTGOING WIRE REQUEST SECTION BELOW IF ALL OR A PORTION OF
THE
FUNDS FROM THIS LOAN
ADVANCE ARE FOR AN OUTGOING WIRE.
From
Account #_______________________ To Account
#_____________________
(Loan Account #)
(Deposit Account #)
Amount of Advance $__________________
All
Borrower's representation and warranties in the Loan and
Security
Agreement are tr
