EXHIBIT 10.30
SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement (the "AGREEMENT") is entered
into effective as of January 31, 2002 by and between TRIPATH IMAGING, INC.
("Borrower"), whose address is 1111 Huffman Mill Road, Burlington, North
Carolina 27215, and SILICON VALLEY BANK ("BANK"), whose address is 3003 Tasman
Drive, Santa Clara, California 95054.
1. DESCRIPTION OF EXISTING INDEBTEDNESS. Among other indebtedness which
may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to,
among other documents, a Loan and Security Agreement, dated as of January 31,
2000, as amended by that certain First Loan Modification Agreement dated as of
January 31, 2001 (collectively, the "LOAN AGREEMENT"). The Loan Agreement
provides for, among other things, a committed line of credit in the original
principal amount of Five Million Dollars ($5,000,000). Hereinafter, all
indebtedness owing by Borrower to Bank shall be referred to as the
"INDEBTEDNESS."
2. DESCRIPTION OF CHANGE IN TERMS OF LOAN AGREEMENT.
(a) Section 1.1 of the Loan Agreement is hereby amended by adding the
following new definitions:
"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.
(b) Section 1.1 of the Loan Agreement is hereby amended by deleting
from the definition of "Eligible Accounts" clauses (b) and (c) with respect to
such definition and substituting in lieu thereof the following clauses (b) and
(c):
"(b) Accounts with respect to an account debtor, including Affiliates,
whose total obligations to Borrower exceed twenty-five percent (25%) of
all Accounts;
(c) Intentionally deleted."
(c) Section 1.1 of the Loan Agreement is hereby amended by deleting the
definition of "Maturity Date" and by substituting in lieu thereof the following
new definition of such term:
"MATURITY DATE" shall mean January 30, 2003.
(d) Section 2.1.1 of the Loan Agreement is hereby amended by deleting
Section 2.1.1 of the Loan Agreement and substituting in lieu thereof the
following:
"2.1.1. Subject to and upon the terms and conditions of this Agreement,
Bank agrees to make Advances to Borrower in an aggregate outstanding amount not
to exceed the Committed Revolving Line; provided, however, that, at any time
that the ratio of Borrower's cash, cash
equivalents, short term investments and accounts receivable to Borrower's
Current Liabilities, less current deferred revenue, is not at least 2.50 to
1.00, then Bank agrees to make Advances to Borrower in an aggregate outstanding
amount not to exceed the Borrowing Base and shall have no obligation to make any
Advances to Borrower in an aggregate outstanding amount in excess of the
Borrowing Base. Borrower may apply up to $500,000 of the Advances to support the
issuance of letters of credit, business credit cards and other cash management
services (the "Reserved Amount"). Subject to the terms and conditions of this
Agreement, amounts borrowed pursuant to this Section 2.1 may be repaid and
reborrowed at any time during the term of this Agreement."
(e) The second paragraph of Section 6.3 of the Loan Agreement is hereby
amended by deleting the second paragraph of Section 6.3 of the Loan Agreement
and substituting in lieu thereof the following:
"Within twenty (20) days after the last day of each calendar
month in which an Advance is outstanding, Borrower shall provide to
Bank a Borrowing Base Certificate in the form attached hereto as
Exhibit C, which Borrowing Base Certificate shall include aged listings
of all accounts receivable and accounts payable of Borrower."
(f) The third paragraph of Section 6.3 of the Loan Agreement is hereby
amended by deleting the third paragraph of Section 6.3 of the Loan Agreement and
substituting in lieu thereof the following:
"Borrower shall deliver to Bank with the monthly and annual
financial statements referenced in Section 6.3(a) above a Compliance
Certificate signed by a Responsible Officer in substantially the form
attached hereto as Exhibit D."
(g) The fourth paragraph of Section 6.3 of the Loan Agreement is hereby
amended by deleting the fourth paragraph of Section 6.3 of the Loan Agreement
and substituting in lieu thereof the following:
"Bank shall have the right from time to time hereafter to
audit the business of the Borrower at Borrower's sole expense, with the
first audit to be performed prior to the initial Advance; provided,
that such audits shall be conducted no more often than annually, unless
an Event of Default has occurred and its continuing."
(h) Section 6.8 of the Loan Agreement is hereby amended by deleting
Section 6.8 of the Loan Agreement and substituting in lieu thereof the
following:
"Borrower on a monthly basis shall maintain, as of the last
day of each calendar month, a ratio of cash, cash equivalents, short
term investments and accounts receivable to Current Liabilities, less
current deferred revenue, of at least 1.50 to 1.00."
(i) Section 6.9 of the Loan Agreement is hereby amended by deleting
Section 6.9 of the Loan Agreement in its entirety and inserting the following in
lieu thereof:
"6.9 Intentionally deleted."
(j) Section 6 of the Loan Agreement is hereby amended by adding a new
Section 6.11 to the Loan Agreement as follows:
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"6.11 Tangible Net Worth. Borrower shall maintain, as
of the last day of each calendar month, a Tangible Net Worth
of at least $28,000,000.00."
(k) Exhibits C and D attached to the Loan Agreement are hereby amended
by deleting Exhibit D attached to the Loan Agreement and substituting in lieu
thereof Exhibits C and D attached hereto.
(l) The Schedule attached to the Loan Agreement is hereby amended by
substituting in lieu thereof the Schedule attached hereto.
3. CONSISTENT CHANGES. The Loan Agreement is hereby amended wherever
necessary to reflect the changes described above.
4. BANK EXPENSES. Without limiting the Borrower's obligations under the
Loan Agreement, Borrower agrees to pay (i) a Facility Fee equal to (x)
one-quarter percent (1/4%) of the Committed Revolving Line (i.e., Twelve
Thousand Five Hundred Dollars ($12,500.00)), which shall be fully earned and
non-refundable when paid, and (y) one-sixteenth percent (1/16%) of the unused
portion of Committed Revolving Line, calculated as of the last day of the
calendar quarter immediately preceding each relevant payment date described
below, which shall be payable in arrears quarterly beginning on the first (1st)
day of the fiscal quarter immediately following the date hereof (i.e., April 1,
2002) and continuing on the first (1st) day of each fiscal quarter thereafter
during the term of the Loan Agreement (i.e., July 1, 2002, October 1, 2002, and
January 1, 2003), and (ii) on demand all of the Bank's reasonable attorney's
fees and expenses and all other reasonable out-of-pocket costs incurred by the
Bank in connection with its evaluation, negotiation, documentation or
consummation of this Second Loan Modification Agreement and the transactions
contemplated hereby.
5. NO DEFENSES OF BORROWER. Borrower agrees that it has no defenses
against the obligations to pay any amounts under the Indebtedness.
6. CONTINUING VALIDITY. Borrower understands and agrees that in
modifying the existing Indebtedness, Bank is relying upon Borrower's
representations, warranties, and agreements, as set forth in that certain Loan
Agreement and the Intellectual Property Security Agreement, dated as of January
31, 2000, by and between Borrower and Bank (the "BORROWER IP SECURITY
AGREEMENT") and upon representations, warranties and agreements made and agreed
to by Autocyte North Carolina, LLC ("AUTOCYTE"), as set forth in that certain
Autocyte Guaranty and the Intellectual Property Security Agreement, dated as of
January 31, 2000, by and between Autocyte and Bank (the "AUTOCYTE IP SECURITY
AGREEMENT"). Except as expressly modified pursuant to this Second Loan
Modification Agreement, the terms of the Loan Agreement, the Borrower IP
Security Agreement, the Autocyte Guaranty and the Autocyte IP Security Agreement
remain unchanged and in full force and effect and, except as expressly provided
in Schedule I attached hereto, each of Borrower and Autocyte represents and
warrants to Bank that the representations and warranties included in the Loan
Agreement, the Borrower IP Security Agreement, the Autocyte Guaranty and the
Autocyte IP Security Agreement are true and correct as of the date hereof.
Bank's agreement to modifications to the existing Indebtedness pursuant to this
Second Loan Modification Agreement in no way shall obligate Bank to make any
future modifications to the Indebtedness. Nothing in this Second Loan
Modification Agreement 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 Loan Agreement and the Guaranties, unless the party is expressly
released by Bank in writing. No maker, endorser, or guarantor will be released
by virtue of this Second Loan
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Modification Agreement. The terms of this paragraph apply not only to this
Second Loan Modification Agreement, but also to all subsequent loan modification
agreements entered into between Borrower and Bank.
7. CONDITIONS. The effectiveness of this Second Loan Modification
Agreement is conditioned upon the following:
(a) Bank's receipt of this Second Loan Modification duly executed by
Borrower and Autocyte;
(b) Subordination of any and all existing notes payable of Borrower,
upon terms and conditions satisfactory to Bank in Bank's sole discretion;
provided, that monthly payments or principal and interest may be made by
Borrower under such notes payable so long as no Event of Default has occurred or
is continuing under the Loan Agreement.
(c) Applicable recordation cover sheets for filing with the United
States Patent and Trademark Office and the United States Copyright Office;
(d) Borrower's payment of the Bank's fees and expenses pursuant to
Section 4 of this Second Loan Modification Agreement;
(e) Autocyte shall have consented to the modifications of the
Indebtedness pursuant to this Second Loan Modification Agreement by signing one
or more counterparts of this Second Loan Modification Agreement in the
appropriate space indicated below and returning the same to Bank; and
(f) Such other documents, and completion of other matters, as Bank may
reasonably deem necessary or appropriate.
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[Signature page follows]
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This Second Loan Modification Agreement is executed as of the year and
date first written above.
BORROWER: BANK:
TRIPATH IMAGING, INC. SILICON VALLEY BANK
By: /s/ James Everhart By: /s/ Andrew Rico
--------------------------------- -------------------------------
Name: James Everhart Name: Andrew Rico
--------------------------------- -----------------------------
Title: Director of Finance and Treasurer Title: Vice President
--------------------------------- -----------------------------
The undersigned Guarantor hereby consents to the modifications to the
Indebtedness pursuant to this Second Loan Modification Agreement, hereby
ratifies all the provisions of the Guaranty and confirms that all provisions of
such document are in full force and effect.
GUARANTOR:
AUTOCYTE NORTH CAROLINA, LLC
By: /s/ James Everhart
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Name: James Everhart
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Title:
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SCHEDULE I
Schedule I to Second Loan Modification Agreement, dated as of January
31, 2002, by and among Silicon Valley Bank, TriPath Imaging, Inc., and Autocyte
North Carolina, LLC.
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EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: TriPath Imaging, Inc. Lender: Silicon Valley Bank
Commitment Amount: $5,000,000
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of $
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2. Additions (please explain on reverse) $
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3. TOTAL ACCOUNTS RECEIVABLE $
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ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $
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5. Balance of 50% over 90 day accounts $
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6. Concentration Limits $
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7. Foreign Accounts $
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8. Governmental Accounts $
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9. Contra Accounts $
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10. Promotion or Demo Accounts $
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11. Intercompany/Employee Accounts $
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12. Other (please explain on reverse) $
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13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $
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14. Eligible Accounts (#3 minus #13) $
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15. LOAN VALUE OF ACCOUNTS (80% of #14) $
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BALANCES
16. Maximum Loan Amount $
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17. Total Funds Available (Lesser of #15 or #16) $
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18. Present balance owing on Line of Credit $
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19. Outstanding under Sublimits ( ) $
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20. RESERVE POSITION (#17 minus #18 and #19) $
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The undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the
undersigned and Silicon Valley Bank.
COMMENTS:
TRIPATH IMAGING, INC.
By:
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Authorized Signer
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EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: TriPath Imaging, Inc.
The undersigned authorized officer (the "Officer") of TriPath Imaging, Inc.,
certifies that under the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the "Agreement"), (i) Borrower is in complete
compliance for the period ending _______________ with all required covenants
except as noted below and (ii) all representations and warranties in the
Agreement are true and correct in all material respects on this date. Attached
are the required documents supporting the certification. The Officer certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) consistently applied from one period to the next except, with
respect to the audited annual financial statements, as explained in an
accompanying letter or footnotes. The Officer acknowledges that no borrowings
may be requested at any time or date of determination that Borrower is not in
compliance with any of the terms of the Agreement, and that compliance is
determined not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
- ------------------ -------- --------
Monthly financial statements (with Compliance Monthly within 30 days Yes No
Certificate)
Annual financial statements (with Compliance FYE within 90 days Yes No
Certificate) (CPA Audited)
SEC filings, including 10Q and 10K Within 5 days of filing with SEC Yes No
Borrowing Base Certificate, A/R Aging* Monthly within 20 days Yes No
A/R Audit Annually Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
- ------------------ -------- ------ --------
Minimum Adjusted Quick Ratio At least 1.5 to 1.0 ____ to 1.0 Yes No
Minimum Tangible Net Worth At least $28,000,000 $_____________ Yes No
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* Required only if an Advance is outstanding.
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
SIGNATURE, TITLE AND DATE
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BANK USE ONLY
Received by:
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AUTHORIZED SIGNER
Date:
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Verified:
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AUTHORIZED SIGNER
Date:
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Compliance Status: Yes No
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