EXHIBIT 10.30
FIRST AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This First Amendment to Loan and Security Agreement (the "Amendment") is entered
into as of September 29, 2004, by and between COMERICA BANK ("Bank") and
SCIENTIFIC LEARNING CORPORATION ("Borrower").
RECITALS
Borrower and Bank are parties to that certain Loan and Security Agreement
dated as of January 15, 2004 (as amended from time to time, together with any
related agreements, the "Agreement"). Hereinafter, all indebtedness owing by
Borrower to Bank shall be referred to as the "Indebtedness." The parties desire
to amend the Agreement in accordance with the terms of this Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
AGREEMENT
I. INCORPORATION BY REFERENCE. The Recitals and the documents referred to
therein are incorporated herein by this reference. Except as otherwise
noted, the terms not defined herein shall have the meaning set forth in
the Agreement.
II. AMENDMENT TO THE AGREEMENT. Subject to the satisfaction of the conditions
precedent as set forth in Article IV hereof, the Agreement is hereby
amended as set forth below.
A. The definition of "Revolving Maturity Date" in Section 1.1 of the
Agreement is hereby amended and restated to read as follows:
"Revolving Maturity Date" means July 14, 2005.
B. The second paragraph of Section 6.7 of the Agreement is hereby
amended and restated to read as follows:
"Borrower shall maintain its primary operating and investment
accounts with Bank and/or Comerica Securities, Inc., provided,
however that amounts in excess of Five Million Dollars
($5,000,000.00) in the aggregate may be maintained at third party
institutions."
C. The first sentence of Section 6.8 of the Agreement is hereby amended
and restated to read as follows:
"Borrower shall maintain at all times a ratio of unrestricted cash
and cash equivalents maintained at Bank or at Bank's affiliates
covered by control agreements in form and substance satisfactory to
Bank, plus net trade accounts receivable less than 90 days from
invoice date to Current Liabilities less non-refundable deferred
revenues plus (to the extent not already included therein) all
Indebtedness to Bank, of at least 1.25 to 1.00."
AMENDMENT
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D. Bank's addresses for notices set forth in Section 10 of the
Agreement are hereby amended in their entirety to read as follows:
"If to Bank: Comerica Bank
2321 Rosecrans Ave., Suite 5000
El Segundo, CA 90245
Attn: Manager
FAX: (310) 297-2290
With a copy to: Comerica Bank
5 Palo Alto Square, Suite 800
3000 El Camino Real
Palo Alto, CA 94306
Attn: Rod Werner
FAX: (650) 213-1710"
E. A new Section 13 is hereby added to the Agreement to read as
follows:
"13. Reference Provision.
The parties prefer that any dispute between them be resolved
in litigation subject to a Jury Trial Waiver as set forth in the
Loan Documents (defined below), but the availability of that process
is in doubt because of the opinion of the California Court of Appeal
in Grafton Partners LP v. Superior Court, 9 Cal.Rptr.3d 511. This
Reference Provision will be applicable until the California Supreme
Court completes its review of that case, and will continue to be
applicable if either that court or a California Court of Appeal
publishes a decision holding that a pre-dispute Jury Trial Waiver
provision similar to that contained in the Loan Documents is invalid
or unenforceable. Delay in requesting appointment of a referee
pending review of any such decision, or participation in litigation
pending review, will not be deemed a waiver of this Reference
Provision.
Other than (i) nonjudicial foreclosure of security interests
in real or personal property, (ii) the appointment of a receiver or
(iii) the exercise of other provisional remedies (any of which may
be initiated pursuant to applicable law), any controversy, dispute
or claim (each, a "Claim") between the parties arising out of or
relating to this Agreement or any other document, instrument or
agreement between the Bank and the undersigned (collectively in this
Section, the "Loan Documents"), will be resolved by a reference
proceeding in California in accordance with the provisions of
Section 638 et seq. of the California Code of Civil Procedure
("CCP"), or their successor sections, which shall constitute the
exclusive remedy for the resolution of any Claim, including whether
the Claim is subject to the reference proceeding. Except as
otherwise provided in the Loan Documents, venue for the reference
proceeding will be in the Superior Court or Federal District Court
in the County or District where venue is otherwise appropriate under
applicable law (the "Court").
The referee shall be a retired Judge or Justice selected by
mutual written agreement of the parties. If the parties do not
agree, the referee shall be selected by the Presiding Judge of the
Court (or his or her representative). A request for appointment of a
referee may be heard on an ex parte or expedited basis, and the
parties agree that irreparable harm would result if ex parte relief
is not granted. The referee shall be appointed to sit with all the
powers provided by law. Each party shall have one peremptory
challenge pursuant to CCP Section 170.6. Pending appointment of the
referee, the Court has power to issue temporary or provisional
remedies.
AMENDMENT
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The parties agree that time is of the essence in conducting
the reference proceedings. Accordingly, the referee shall be
requested to (a) set the matter for a status and trial-setting
conference within fifteen (15) days after the date of selection of
the referee, (b) if practicable, try all issues of law or fact
within ninety (90) days after the date of the conference and (c)
report a statement of decision within twenty (20) days after the
matter has been submitted for decision. Any decision rendered by the
referee will be final, binding and conclusive, and judgment shall be
entered pursuant to CCP Section 644.
The referee will have power to expand or limit the amount and
duration of discovery. The referee may set or extend discovery
deadlines or cutoffs for good cause, including a party's failure to
provide requested discovery for any reason whatsoever. Unless
otherwise ordered, no party shall be entitled to "priority" in
conducting discovery, depositions may be taken by either party upon
seven (7) days written notice, and all other discovery shall be
responded to within fifteen (15) days after service. All disputes
relating to discovery which cannot be resolved by the parties shall
be submitted to the referee whose decision shall be final and
binding.
Except as expressly set forth in this Agreement, the referee
shall determine the manner in which the reference proceeding is
conducted including the time and place of hearings, the order of
presentation of evidence, and all other questions that arise with
respect to the course of the reference proceeding. All proceedings
and hearings conducted before the referee, except for trial, shall
be conducted without a court reporter, except that when any party so
requests, a court reporter will be used at any hearing conducted
before the referee, and the referee will be provided a courtesy copy
of the transcript. The party making such a request shall have the
obligation to arrange for and pay the court reporter. Subject to the
referee's power to award costs to the prevailing party, the parties
will equally share the cost of the referee and the court reporter at
trial.
The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the
State of California. The rules of evidence applicable to proceedings
at law in the State of California will be applicable to the
reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, provide all temporary or
provisional remedies, enter equitable orders that will be binding on
the parties and rule on any motion which would be authorized in a
trial, including without limitation motions for summary judgment or
summary adjudication . The referee shall issue a decision at the
close of the reference proceeding which disposes of all claims of
the parties that are the subject of the reference. The referee's
decision shall be entered by the Court as a judgment or an order in
the same manner as if the action had been tried by the Court. The
parties reserve the right to appeal from the final judgment or order
or from any appealable decision or order entered by the referee. The
parties reserve the right to findings of fact, conclusions of laws,
a written statement of decision, and the right to move for a new
trial or a different judgment, which new trial, if granted, is also
to be a reference proceeding under this provision.
If the enabling legislation which provides for appointment of
a referee is repealed (and no successor statute is enacted), any
dispute between the parties that would otherwise be determined by
reference procedure will be resolved and determined by arbitration.
The arbitration will be conducted by a retired judge or Justice, in
accordance with the California Arbitration Act Section 1280 through
Section 1294.2 of the CCP as amended from time to time. The
limitations with respect to discovery set forth above shall apply to
any such arbitration proceeding.
THE PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER
THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A
JURY, AND THAT THEY ARE IN EFFECT WAIVING THEIR RIGHT TO TRIAL BY
JURY IN AGREEING TO THIS REFERENCE PROVISION. AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN
CHOICE,
AMENDMENT
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EACH PARTY KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT
AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY DISPUTE
BETWEEN THEM WHICH ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR
THE LOAN DOCUMENTS.
III. LEGAL EFFECT.
A. The Agreement is hereby amended wherever necessary to reflect the
changes described above. Borrower agrees that it has no defenses
against the obligations to pay any amounts under the Indebtedness.
B. Borrower understands and agrees that in modifying the existing
Indebtedness, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Agreement. Except as
expressly modified pursuant to this Amendment, the terms of the
Agreement remain unchanged, and in full force and effect. Bank's
agreement to modifications to the existing Indebtedness pursuant to
this Amendment in no way shall obligate Bank to make any future
modifications to the Indebtedness. Nothing in this Amendment shall
constitute a satisfaction of the Indebtedness. It is the intention
of Bank and Borrower to retain as liable parties, all makers and
endorsers of Agreement, unless the party is expressly released by
Bank in writing. No maker, endorser, or guarantor will be released
by virtue of this Amendment. The terms of this paragraph apply not
only to this Amendment, but also to all subsequent loan modification
requests.
C. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one instrument. This is an integrated Amendment and
supersedes all prior negotiations and agreements regarding the
subject matter hereof. All modifications hereto must be in writing
and signed by the parties.
IV. CONDITIONS PRECEDENT. Except as specifically set forth in this Amendment,
all of the terms and conditions of the Agreement remain in full force and
effect. The effectiveness of this Agreement is conditioned upon receipt by
Bank of this Amendment, and any other documents which Bank may require to
carry out the terms hereof, including but not limited to the following:
A. This Amendment, duly executed by Borrower;
B. Corporation Resolutions and Incumbency Certification, duly executed
by Borrower;
C. A legal fee from the Borrower in the amount of $250; and
AMENDMENT
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D. Such other documents, and completion of such other matters, as Bank
may reasonably deem necessary or appropriate.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first
date above written.
SCIENTIFIC LEARNING CORPORATION
By: /s/ Jane A. Freeman
--------------------------
Title: Chief Financial Officer
COMERICA BANK
By: /s/ Rod Werner
--------------------------
Title: Vice President
AMENDMENT
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