EXHIBIT 10.9
SENIOR LOAN AND SECURITY AGREEMENT
THIS SENIOR LOAN AND SECURITY AGREEMENT (this "Security Agreement") is
dated as of September 15, 1994 between Latitude Communications, Inc., a
California corporation ("Borrower") and Phoenix Leasing Incorporated, a
California corporation ("Lender").
RECITALS
A. Borrower desires to borrow from Lender in one or more borrowings an
amount not to exceed $1,000,000 in the aggregate, and Lender desires to loan,
subject to the terms and conditions herein set forth, such amount to Borrower.
Such borrowings shall be evidenced by one or more Senior Secured Promissory
Notes (each, a "Note" and collectively, the "Notes"), in the form attached
hereto.
B. As security for Borrower's obligations to Lender under this Security
Agreement and the Notes, Borrower will grant to Lender hereunder a first
perfected security interest in certain of its equipment, machinery and fixtures,
including but not limited to computers, workstations, furniture, test equipment
and software, whether now owned by Borrower or hereafter acquired, and all
substitutions and replacements of and additions, improvements, accessions and
accumulations to said equipment, machinery and fixtures, together with all
rents, issues, income, profits and proceeds therefrom to the extent of the items
described in Schedule 1 attached to each Note (collectively, the "Collateral").
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
SECTION 1. THE LOANS.
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(a) General Terms. Subject to the terms and conditions of this
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Security Agreement, Lender hereby agrees to make one or more senior secured
loans (each, a "Loan" and collectively, the "Loans") to Borrower, subject to the
following conditions: (i) each Loan shall be evidenced by a Note; (ii) the total
principal amount of the Loans shall not exceed $1,000,000 in the aggregate (the
"Commitment"); (iii) at the time of each Loan, no Event of Default or event
which with the giving of notice or passage of time, or both, could become an
Event of Default shall have occurred and be continuing, as reasonably determined
by Lender, and certified by Borrower; (iv) that in no event shall Lender be
obligated to make a Loan if the value of all Collateral held by it hereunder (as
determined by such proof as Lender shall deem satisfactory, in its sole
discretion) is less than the sum of (x) the proposed Loan and (y) the unpaid
balance of, together with accrued interest thereon, all prior Loans and provided
further that not more than 5% of the Collateral by value shall consist of
software; (v) the amount of each Loan shall be at least $50,000 except for a
final Loan which may be less than $50,000; (vi) Lender shall not be obligated to
make any Loan after September 30, 1995; (vii) for each Loan, Borrower shall
present to Lender a list of proposed Collateral for approval by Lender in its
sole discretion; (viii) for each Loan, Borrower shall have provided Lender with
each of the closing documents described in Exhibit A hereto (which documents
shall be in form and substance acceptable to Lender); (ix) Borrower is
performing according to its business plan referred to as "Section 10: Financial
Analysis, pages 55 through 66, consisting of Tables 10.1 to 10.6" dated April
19, 1994, (the "Business Plan") as may be amended from time to time in form and
substance acceptable to Lender; (x) there shall be no material adverse change in
Borrower's condition financial or otherwise, not contemplated in Borrower's
Business Plan, as reasonably determined by Lender, and Borrower so certifies,
from (yy) the date of the most recent financial statements delivered by Borrower
to Lender to (zz) the date of the proposed Loan; (xi) prior to September 30,
1995, Borrower shall not offer any loan secured by (or leases of) any equipment,
furniture or fixtures to any
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other person or entity other than Lender or the Seller of such equipment,
furniture or fixtures, unless Lender declines to finance such transaction or
Borrower and Lender are unable to agree on the terms of such financing within 10
days after notice from Borrower to Lender; (xii) Borrower shall use the proceeds
of all Loans hereunder for working capital or for the purchase of Collateral;
(xiii) at the time of each Loan, Borrower has reimbursed Lender for all
reasonable UCC filing and search costs and appraisal fees; (xiv) all Collateral
has been marked and labeled by Lender or Lender's agent; and (xv) Lender has
received in form and substance acceptable to Lender: (a) Borrower's interim
financial statements signed by a financial officer of Borrower; and (b) evidence
of Borrower's $7,937,000 cash position as of June 30, 1994.
(b) The Notes. Each Loan shall be evidenced by a Note. Each Note
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shall bear interest and be payable and prepayable at the times and in the manner
provided therein. Following payment of the Indebtedness related to each Note,
Lender shall return such Note, marked "canceled," to Borrower.
SECTION 2. SECURITY INTERESTS.
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(a) Borrower hereby grants to Lender a first security interest in all
Collateral.
(b) This Security Agreement secures (i) the payment of the principal
of and interest on the Notes and all other sums due thereunder and under this
Security Agreement (the "Indebtedness") and (ii) the performance by Borrower of
all of its other covenants now or hereafter existing under the Notes and this
Security Agreement (the "Obligations").
SECTION 3. BORROWER'S REPRESENTATIONS AND WARRANTIES.
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Borrower represents and warrants that (a) it is a corporation in good
standing under the laws of the state of its incorporation, and duly qualified to
do business in each state where necessary to carry on its present business and
operations, including the jurisdiction(s) where the Collateral will be located;
(b) it has full authority to execute and deliver this Security Agreement and the
Notes and perform the terms hereof and thereof, and this Security Agreement and
the Notes have been duly authorized, executed and delivered and constitute valid
and binding obligations of Borrower enforceable in accordance with their terms;
(c) the execution and delivery of this Security Agreement and the Notes will not
contravene any law, regulation or judgment affecting Borrower or result in any
breach of any agreement or other instrument binding on Borrower; (d) no consent
of Borrower's shareholders or holder of any indebtedness, or filing with, or
approval of, any governmental agency or commission, which has not already been
obtained or performed, as appropriate, is a condition to the performance of the
terms of this Security Agreement or the Notes; (e) there is no action or
proceeding pending or threatened against Borrower before any court or
administrative agency which might have a materially adverse effect on the
business, financial condition or operations of Borrower; (f) Borrower owns all
of the Collateral free and clear of all liens, claims and encumbrances, and,
except for this Security Agreement, there is no deed of trust, mortgage,
security agreement or other third party interest against any of the Collateral;
(g) Borrower has good and marketable title to the Collateral; (h) all Collateral
has been received, installed and is ready for use and is satisfactory in all
respects for the purposes of this Security Agreement; (i) the Collateral is, and
will remain at all times under applicable law, removable personal property,
which is free and clear of any lien or encumbrance in favor of Borrower or any
other person other than Lender, notwithstanding the manner in which the
Collateral may be attached to any real property; (j) all credit and financial
information submitted to Lender herewith or at any other time is and will be
true and correct; and (k) the security interest granted to Lender hereunder is a
perfected first security interest.
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SECTION 4. METHOD AND PLACE OF PAYMENT.
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Borrower will pay to Lender, at its office at the address specified in the
Notes, or such other address as Lender shall specify in writing, all amounts
payable to it in respect of the principal of or interest on the Notes, without
any presentation thereof.
SECTION 5. AFFIRMATIVE COVENANTS REGARDING THE COLLATERAL.
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Borrower covenants and agrees that so long as any portion of the
Indebtedness is unpaid and as long as any of the Obligations are outstanding it
will comply with the following covenants:
(a) Location; Inspection. All of the Collateral shall be located at the
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address (the "Collateral Location") shown on the Schedule 1 to each Note and
shall not be moved without Lender's prior written consent. All of the records
regarding the Collateral shall be located at 4001 Burton Drive, Santa Clara,
California 95054. Lender shall have the right to inspect Collateral and records
relating thereto at any reasonable time. Borrower shall be responsible for all
labor, material and freight charges incurred in connection with any removal or
relocation of Collateral which is requested by the Borrower and consented to by
Lender, as well as for any charges due to the installation or moving of the
Collateral. Payments under the Notes and under this Security Agreement shall
continue during any period in which the Collateral is in transit during a
relocation. Lender or its agent shall mark and label Collateral, which labels
(to be provided by Lender) shall state that such Collateral is subject to a
security interest of Lender, and Borrower shall keep such labels on the
Collateral as so labeled.
(b) Collateral Maintenance. (a) General. Borrower will locate or base each
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item of Collateral where designated in a Schedule to each Note and will
reasonably permit Lender to inspect such item of Collateral and its maintenance
records. Borrower will at its sole expense comply with all applicable laws,
rules, regulations, requirements and orders with respect to the use,
maintenance, repair, condition, storage and operation of each item of
Collateral. Except as required herein, Borrower will not make any addition or
improvement to any item of Collateral that is not readily removable without
causing material damage to any item or impairing its original value or utility.
Any addition or improvement that is so required or cannot be so removed will
immediately become the property of Lender. (b) Service and Repair. With respect
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to computer equipment, Borrower has entered into, and will maintain in effect,
Vendor's standard maintenance contract or another contract satisfactory to
Lender for a period equal to the term of each Loan and extensions thereto which
provides for the maintenance of the Collateral in good condition and working
order and repairs and replacement of parts thereof, all in accordance with the
terms of such maintenance contract. Borrower shall have the Collateral certified
for the Vendor's standard maintenance agreement prior to delivery to Lender upon
expiration of this Loan. With respect to any other Collateral, Borrower will at
its sole expense maintain and service and repair any damage to each item of
Collateral in a manner consistent with prudent industry practice and Borrower's
own practice so that such item of Collateral is at all times (i) in the same
condition as when delivered to Borrower, except for ordinary wear and tear, and
(ii) in good operating order for the function intended by its manufacturer's
warranties and recommendations.
(c) Loss or Damage. Borrower assumes the entire risk of loss to the
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Collateral through use, operation or otherwise. Borrower hereby indemnifies and
holds harmless Lender from and against all claims, loss of Loan payments, costs,
damages, and expenses relating to or resulting from any loss, damage or
destruction of the Collateral, any such
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occurrence being hereinafter called a "Casualty Occurrence." Following a
Casualty Occurrence that results in a total loss of an item of Collateral,
Borrower shall, on the first day payment is due on each Note following the
Casualty Occurrence or, if there is no such payment date, thirty (30) days after
such Casualty Occurrence, prepay the principal of the Notes on a pro rata basis
(as provided below) in a total amount equal to the sum of (1) the product of (x)
the aggregate principal balance of the Notes then outstanding times (y) a
fraction, the numerator of which shall be the Collateral Value (defined as the
fair market value as of the date of this Security Agreement as determined by
Lender in good faith) of the Collateral that suffered the Casualty Loss and the
denominator of which shall be the aggregate Collateral Value (as so defined) of
all the Collateral and (2) the amount of prepayment premium payable on such
principal amount as provided for an optional prepayment under the Notes.
Prepayments of principal following a Casualty Occurrence shall be allocated pro
rata to each Note in the percentage that the original principal amount of each
Note bears to the total original principal amount of all Notes. Upon the making
of such payments, Lender shall release such item of Collateral from its lien
hereunder.
Notwithstanding the above, Borrower may replace any item of Collateral
which has suffered a Casualty Occurrence with Collateral acceptable to Lender in
its complete discretion and, in such event, the provisions of the previous
paragraph shall not apply. Borrower's tender of such Collateral shall constitute
a representation and warranty that such Collateral is free of all liens, claims
and encumbrances, and otherwise qualifies as Collateral under this Security
Agreement. Following such tender, Lender shall have a first security interest in
such Collateral.
(d) Insurance. As long as any Indebtedness remains outstanding and as long
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as any Obligations remain unperformed, Borrower at its expense shall keep the
Collateral insured against all risks for the value of the Collateral and in no
event for less than the amount payable following a Casualty Event (as provided
in Section 5(c)). Such insurance shall provide for (a) loss payable endorsement
to Lender or any assignee of Lender, (b) property damage insurance naming Lender
as additional insured and (c) public liability coverage naming Lender as an
additional insured in an amount not less than $5,000,000. Borrower will provide
Lender and any assignee of Lender with a certificate of insurance from the
insurer evidencing Lender's or such assignee's interest in the policy of
insurance. Such insurance shall cover any Casualty Occurrence to any unit of
Collateral. Notwithstanding anything in Section 5(c) or this Section 5(d) to the
contrary, this Security Agreement and Borrower's obligations hereunder shall
remain in full force and effect with respect to any unit of Collateral which is
not subject to a Casualty Occurrence.
SECTION 6. MISCELLANEOUS AFFIRMATIVE COVENANTS.
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Borrower covenants and agrees that so long as any portion of the
Indebtedness is unpaid and as long as any of the Obligations are outstanding it
will:
(a) duly pay all governmental taxes and assessments at the time they
become due and payable;
(b) maintain the Collateral in good repair, working order and
condition, free and clear of all liens and encumbrances (other than Lender's
security interest hereunder);
(c) comply with all applicable material governmental laws, rules and
regulations;
(d) punctually pay amounts due under the Notes and all other sums
owed to Lender under this Security Agreement;
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(e) punctually perform all of the Obligations owed to Lender;
(f) maintain Lender's security interest in the Collateral as a first
and prior perfected security interest;
(g) permit a representative of Lender to inspect the Collateral and
Borrower's books and records at any time (upon reasonable notification) during
regular business hours, such books and records to be maintained in accordance
with generally accepted accounting principles;
(h) furnish Lender with its annual audited financial statements
within ninety (90) days following the end of Borrower's fiscal year, unaudited
quarterly financial statements within thirty (30) days after the end of each
fiscal quarter, and within fifteen (15) days of the end of each month a
financial statement for that month prepared by the Borrower, including all
financial information which would be required to be disclosed in 10-Q, 10-K or
8-K filings with the Securities Exchange Commission if Borrower were required to
make such filings and given to Borrower's Board of Directors, and including an
income statement and balance sheet, all of which shall be certified by an
officer of the Borrower as fairly representing the financial condition and
results of operations of the Borrower and shall be prepared in accordance with
generally accepted accounting principles consistently applied, and such other
information as Lender may reasonably request;
(i) promptly (but in no event more than five (5) days after the
occurrence of such event) notify Lender of the occurrence of any Event of
Default; and
(j) take all steps deemed by Lender reasonable or advisable to
validate or perfect the security interest of Lender in the Collateral.
SECTION 7. NEGATIVE COVENANTS.
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Borrower covenants and agrees that so long as any portion of the
Indebtedness is unpaid and as long as any of the Obligations are unperformed it
will not:
(a) sell all or substantially all of its assets or transfer title to
any of the Collateral to any other entity, whether or not such entity is owned
by Borrower, without Lender's prior written consent;
(b) create, assume or permit to exist any lien on any portion of the
Collateral (other than Lender's security interest hereunder and the liens listed
on Exhibit C attached hereto); or
(c) except as required by Section 5(b) hereof, make any addition or
improvement to any portion of the Collateral that is not readily removable
without causing material damage or impairing its original value or utility.
SECTION 8. INDEMNITIES.
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(a) General. Borrower will protect, indemnify and save harmless
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Lender and any assignees on an after-tax basis from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
(including reasonable attorneys fees and expenses), imposed upon or incurred by
or asserted against Lender or any assignee of Lender by Borrower or any third
party by reason of the occurrence or existence (or
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alleged occurrence or existence) of any act or event relating to or caused by
any portion of the Collateral, or its purchase, acceptance, possession, use,
maintenance or transportation, including without limitation, consequential or
special damages of any kind related thereto, any failure on the part of Borrower
to perform or comply with any of the terms of this Security Agreement or the
Notes, claims for latent or other defects related to the Collateral, claims for
patent, trademark or copyright infringement related to the Collateral and claims
for personal injury, death or property damage related to the Collateral,
including those based on Lender's negligence or strict liability in tort and
excluding only those based on Lender's gross negligence or willful misconduct.
In the event that any action, suit or proceeding is brought against Lender by
reason of any such occurrence, Borrower, upon request of Lender, will, at
Borrower's expense, resist and defend such action, suit or proceeding and will
provide reasonable assistance to Borrower, as requested by Borrower, at
Borrower's expense, including defense by counsel designated by Borrower and
reasonably approved by Lender. Lender will not enter into any settlement without
the consent of Borrower.
(b) Tax Indemnity. Borrower agrees to reimburse Lender (or pay directly
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if instructed by Lender) and any assignee of Lender for, and to indemnify and
hold Lender and any assignee harmless from, all fees (including, but not limited
to, license, documentation, recording and registration fees), and all sales,
use, gross receipts, personal property, occupational, value added or other
taxes,levies, imposts, duties, assessments, charges, or withholdings of any
nature whatsoever, together with any penalties, fines, additions to tax, or
interest thereon (all of the foregoing being hereinafter referred to as
"Impositions"), except same as may be attributable to Lender's income, arising
at any time prior to or during the term of any Notes or of this Security
Agreement, or upon termination or early termination of this Security Agreement
and levied or imposed upon Lender directly or otherwise by any Federal, state or
local government in the United States or by any foreign country or foreign or
international taxing authority upon or with respect to (i) the Collateral, (ii)
the exportation, importation, registration, purchase, ownership, delivery,
leasing, possession, use, operation, storage, maintenance, repair, return, sale,
transfer of title, or other disposition thereof, (iii) the rentals, receipts, or
earnings arising from the Collateral, or any disposition of the rights to such
rentals, receipts, or earnings, (iv) any payment pursuant to this Security
Agreement or the Notes, or (v) this Security Agreement, the Notes or any
transaction or any part hereof or thereof, excluding all taxes on or measured by
Lender's or assignee's net income.
(c) Survivability. Borrower's obligations under this Section 8 shall
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survive the payment in full of all the Indebtedness and the performance of all
Obligations with respect to acts or events occurring or alleged to have occurred
prior to the payment in full of all the Indebtedness and the performance of all
Obligations.
SECTION 9. RELEASE OF LIENS.
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Upon payment of all of the Indebtedness and performance of all of the
Obligations, Lender shall execute UCC termination statements and such other
documents as Borrower shall reasonably require to evidence the release of
Lender's lien relating to the Collateral.
SECTION 10. ASSIGNMENT.
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WITHOUT LENDER'S PRIOR WRITTEN CONSENT, BORROWER SHALL NOT (a) ASSIGN,
TRANSFER, PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS SECURITY AGREEMENT,
ANY COLLATERAL, OR ANY INTEREST THEREIN, (b) LEASE OR LEND COLLATERAL OR PERMIT
IT TO BE USED BY ANYONE OTHER THAN BORROWER OR BORROWER'S EMPLOYEES OR (c) MERGE
INTO, CONSOLIDATE WITH OR CONVEY OR
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TRANSFER ITS PROPERTIES SUBSTANTIALLY AS AN ENTIRETY TO ANY OTHER PERSON OR
ENTITY. Lender may assign any of the Notes, this Security Agreement or its
security interest in any or all Collateral, or any or all of the above, in whole
or in part to one or more assignees or secured parties without notice to
Borrower. If Borrower is given notice of such assignment it agrees to
acknowledge receipt thereof in writing and Borrower shall execute such
additional documentation as Lender's assignee shall reasonably require. Each
such assignee and/or secured party shall have all of the rights, but (except as
provided in Section 9 hereof) none of the obligations, of Lender under this
Agreement, unless such assignee or secured party expressly agrees to assume such
obligations in writing. Borrower shall not assert against any assignee and/or
secured party any defense, counterclaim-or offset that Borrower may have against
Lender. Notwithstanding any such assignment, and providing no Event of Default
has occurred and is continuing, Lender, or its assignees, secured parties, or
their agents or assigns, shall not interfere with Borrower's right to quietly
enjoy use of Collateral subject to the terms and conditions of this Security
Agreement. Subject to the foregoing, the Notes and this Security Agreement shall
inure to the benefit of and are binding upon the successors and assignees of the
parties hereto.
SECTION 11. DEFAULT.
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(a) Events of Default. Any of the following events or conditions shall
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constitute an "Event of Default" hereunder: (i) Borrower's failure to pay any
monies due to Lender hereunder or under any Note beyond the fifth (5th) day
after the same is due; (ii) Borrower's failure to comply with its obligations
under Section 5(d) or Section 10; (iii) any representation or warranty of
Borrower made in this Security Agreement or the Notes or in any other agreement,
statement or certificate furnished to Lender in connection with this Security
Agreement or the Notes shall prove to have been incorrect in any material
respect when made or given; (iv) Borrower's failure to comply with or perform
any term, covenant or condition, of this Security Agreement or any Note or under
any other agreement between Borrower and Lender if such failure to comply or
perform is not cured by Borrower within thirty (30) days of receipt of notice
thereof; (v) seizure of any of the Collateral under legal process; (vi) the
filing by Borrower of a petition for reorganization or liquidation under the
Bankruptcy Code or any amendment thereto or under any other insolvency law
providing for the relief of debtors; (vii) the voluntary making of an assignment
of a substantial portion of its assets by Borrower or by any Guarantor under any
Guaranty executed in connection with this Loan for the benefit of its creditors,
the appointment of a receiver or trustee for Borrower or any Guarantor or for
any of Borrower's or Guarantor's assets, the institution by Borrower or any
Guarantor of any formal or informal proceeding for dissolution, liquidation,
settlement of claims against or winding up of the affairs of Borrower or any
Guarantor; (viii) commencement against Borrower of any case, proceeding or other
action of a nature referred to in clauses (vi) or (vii) above which remains
undismissed, undischarged or unbonded for a period of sixty (60) days; or (ix)
the making by Borrower or by any Guarantor under any Guaranty executed in
connection with this Loan of a transfer of all or substantially all of
Borrower's or Guarantor's assets or inventory not in the ordinary course of
business.
(b) Remedies. If any Event of Default has occurred, Lender may in its sole
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discretion exercise one or more of the following remedies with respect to any or
all of the Collateral: (i) declare all amounts under this Security Agreement and
the Notes immediately due and payable; (ii) proceed by court action to enforce
performance by Borrower of the Notes and this Security Agreement or to recover
all damages and expenses incurred by Lender by reason of an Event of Default;
(iii) without court order or prior demand, enter upon the premises where the
Collateral is located and take immediate possession of and remove it without
liability of Lender to Borrower; (iv) terminate this Security Agreement and sell
the Collateral at public or private sale, or otherwise dispose
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of, hold, use or lease any or all of the Collateral to the extent permitted
under applicable law; or (v) exercise any other right or remedy available to it
under applicable law. If Lender has declared any or all amounts under this
Security Agreement and/or the Notes immediately due and payable, Borrower will
pay immediately to Lender (a) all unpaid principal and interest under the Notes,
(b) as liquidated damages, and not as a penalty, and which the parties agree are
fair and reasonable under the circumstances existing as of the date of this
Security Agreement, the following percentages of unpaid principal under each
Note:
Acceleration Date Percentage of Unpaid Principal
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1st-12th month of such Note 20%
12th-18th month of such Note 15%
19th-24th month of such Note 10%
25th-last month of such Note 5%,
and (c) all other amounts due under this Security Agreement and under the Notes
as of the date of the above-described declaration (all amounts described in
clauses (a), (b) and (c) above shall be referred to as "Lender's Return"). The
net proceeds of any sale or lease of such Collateral will be credited against
Lender's Return. The net proceeds of a sale of the Collateral pursuant to this
Section 11(b) is defined as the sales price of the Collateral less selling
expenses, including, without limitation, costs of remarketing the Collateral and
all refurbishing costs and commissions paid with respect to such remarketing.
The net proceeds of a lease of the Collateral pursuant to this Section 11(b) is
defined as the amount equal to the rental payments due under such lease
(discounted at a rate per annum equal to the discount rate for 13-week Treasury
Bills as of the date on which Lender notifies Borrower that this Security
Agreement is terminated (the "Termination Date") (as such rate is reported in
the Money Rates column in the Wall Street Journal) or the Termination Date or,
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if the Wall Street Journal is not published on such date, the next date after
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the Termination Date that the Wall Street Journal is published (the "Discount
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Rate")) plus the residual value of the Collateral at the end of the basic term
of such lease, as reasonably determined by Lender, and discounted at the
Discount Rate.
Borrower agrees to pay all reasonable out-of-pocket costs of Lender
related to the exercise of its remedies, including, but not limited to, legal
fees and litigation expenses. At Lender's request, Borrower shall assemble the
Collateral and make it available to Lender at such location as Lender may
designate. Borrower waives any right it may have to redeem the Collateral.
Declaration that any or all amounts under this Security Agreement and/or
the Notes are immediately due and payable shall not terminate this Security
Agreement or any of the Notes unless Lender so notifies Borrower in writing. Any
amount required to be paid under this Section shall accrue interest at a rate of
23% per annum, or the highest rate of interest permitted by applicable law,
whichever is less, accruing from the date the amounts are payable hereunder
until such amounts are paid. All such remedies are cumulative and may be
enforced separately or concurrently.
(c) Application of Proceeds. The proceeds of any sale of all or any part of
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the Collateral and the proceeds of any remedy afforded to Lender by this
Security Agreement shall be paid to and applied as follows:
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First, to the payment of reasonable costs and expenses of suit or
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foreclosure, if any, and of the sale, if any, and all reasonable out-of-pocket
costs of Lender related to the exercise of its remedies, including legal fees
and litigation expenses and of all proper expenses, liabilities and advances
incurred or made pursuant to this Security Agreement by Lender or by any holder
of any Note in connection with foreclosure, suit, sale or enforcement of this
Security Agreement or the Notes, and to the payment of all taxes, assessments or
liens superior to Lender's security interest granted by this Security Agreement,
except any taxes, assessments or superior liens subject to which the sale was
made;
Second, to the payment of all other amounts due under this Security
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Agreement and all Notes not described in items Third and Fourth below;
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Third, to pay Lender an amount equal to Lender's Return, to the extent
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not previously paid by Borrower; and
Fourth, to the payment of any surplus to Borrower or to whomever may
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lawfully be entitled to receive it.
(d) Effect of Delay; Waiver; Foreclosure on Collateral. No delay or
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omission of Lender, or of any holder of any Note, in exercising any right or
power arising from any default on the part of Borrower shall prevent Lender or
such holder from exercising that right or power if the default continues. No
waiver of a default, whether full or partial, by Lender or such holder shall be
taken to extend to any subsequent default, or to impair the rights of Lender or
such holder in respect of any damages suffered as a result of the default. The
giving, taking or enforcement of any other or additional security, collateral or
guaranty for the payment or discharge of the Indebtedness and performance of the
Obligations shall in no way operate to prejudice, waive or affect the security
interest created by this Security Agreement or any rights, powers or remedies
exercised hereunder or thereunder. Neither Lender nor such holder shall be
required first to foreclose on the Collateral prior to bringing an action
against Borrower for sums owed to Lender or such holder hereunder or under any
Note.
SECTION 12. LATE PAYMENTS.
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Interest at a rate of 18% per annum, or the highest interest rate
permitted by applicable law, whichever is less, shall be paid by Borrower to
Lender on all amounts owed Lender by Borrower which are not paid when due. If
such amounts have not been received by Lender at Lender's place of business or
by Lender's designated agent by the date such amounts are due under this
Security Agreement or the Notes, Lender shall bill Borrower for such charges.
Borrower acknowledges that invoices for amounts due hereunder or under the Notes
are sent by Lender for Borrower's convenience only. Borrower's non-receipt of an
invoice will not relieve Borrower of its obligation to make payments hereunder
or under the Notes.
SECTION 13. LENDER'S EXPENSES; PAYMENTS BY LENDER.
-------------------------------------
(a) Borrower shall pay Lender all reasonable costs and expenses including,
but not limited to, reasonable attorney's fees and the fees of collection
agencies, incurred by Lender in enforcing any of the terms, conditions or
provisions hereof or the Notes.
(b) If Borrower shall fail to make any payment or perform any act required
hereunder (including, but not limited to, maintenance of any insurance required
by Section 5(d)), then Lender may, but shall not be required to, after such
notice to Borrower as is
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reasonable under the circumstances, make such payment or perform such act with
the same effects as if made or performed by Borrower. Borrower will upon demand
reimburse Lender for all sums paid and all costs and expenses incurred in
connection with the performance of any such act.
SECTION 14. FINANCING STATEMENTS.
--------------------
Borrower will execute all financing statements pursuant to the Uniform
Commercial Code and all such other documents reasonably requested by Lender to
perfect Lender's security interests hereunder. Borrower authorizes Lender to
file financing statements signed only by Lender (where such authorization is
permitted by law) at all places where Lender reasonably deems necessary.
SECTION 15. NATURE OF TRANSACTION.
---------------------
Except as expressly set forth herein, Lender makes no representation
whatsoever, express or implied, concerning the legal character of the
transaction evidenced hereby, for tax or any other purpose.
SECTION 16. SUSPENSION OF LENDER'S OBLIGATIONS.
----------------------------------
The obligations of Lender hereunder will be suspended to the extent that
Lender is hindered or prevented from complying therewith because of labor
disturbances, including but not limited to strikes and lockouts, acts of God,
fires, floods, storms, accidents, industrial unrest, strike, acts of war,
insurrection, riot or civil disorder, any order, decree, law or governmental
regulations or interference, or any cause whatsoever not within the sole and
exclusive control of Lender.
SECTION 17. STOCK WARRANT.
-------------
Borrower agrees that it will issue to Lender upon execution of this Loan a
Warrant in the form of Warrant Agreement attached hereto as Exhibit B. Borrower
and Lender agree that the value of the Warrant hereunder is ten dollars
($10.00).
SECTION 18. COMMITMENT FEE.
--------------
Borrower has paid to Lender a commitment fee ("Fee") of $10,000. The Fee
shall be applied by Lender first to reimburse Lender for all out-of-pocket UCC
search costs and appraisal fees incurred by Lender, and then proportionally to
the first monthly payment for each Note hereunder in the proportion that the
Collateral Value for such Note bears to Lender's entire commitment. However, the
portion of the Fee which is not applied to such monthly payments shall be non-
refundable except if Lender defaults in its obligations pursuant to Section 1.
SECTION 19. MISCELLANEOUS.
-------------
(a) Borrower shall provide Lender with such corporate resolutions,
financial statements, opinions of counsel and other documents as Lender shall
reasonably request from time to time. (b) Borrower represents that the
Collateral hereunder is used solely for business purposes. (c) Time is of the
essence with respect to this Agreement. (d) All notices hereunder shall be in
writing, by registered or certified mail, return receipt requested or by courier
service, and shall be directed, as the case may be, to Lender at 2401 Kerner
Boulevard, San Rafael, California 94901, Attention: Lease Administration and to
Borrower at 4001 Burton Avenue, Santa Clara, California 95054, Attention: Emil
Wang.
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Such notices shall be effective on receipt if delivered personally, five days
after dispatch if mailed and one business day after dispatch if sent by courier
service. (e) Borrower acknowledges that Borrower has read this Security
Agreement and the Notes, understands them and agrees to be bound by their terms
and further agrees that this Security Agreement and the Notes constitute the
entire agreement between Lender and Borrower with respect to the subject matter
hereof and supersede all previous agreements, promises, or representations. (f)
This Security Agreement and the Notes may not be changed, altered or modified
except by an instrument in writing signed by an officer of Lender and Borrower.
(g) Any failure of Lender to require strict performance by Borrower or any
waiver by Lender of any provision herein or in a Note shall not be construed as
a consent or waiver of any other breach of the same or any other provision. (h)
If any provision of this Security Agreement or a Note is held invalid, such
invalidity shall not affect any other provisions hereof or thereof. (i) The
obligations of Borrower to pay the Indebtedness and perform the Obligations
shall survive the expiration or earlier termination of this Security Agreement
or the Notes until all Obligations of Borrower to Lender have been met and all
Liabilities of Borrower to Lender have been paid in full. (j) Borrower will
notify Lender at least 30 days before changing its name, principal place of
business or chief executive office. (k) Borrower will, at its expense, promptly
execute and deliver to Lender such documents and assurances (including financing
statements) and take such further action as Lender may reasonably request in
order to carry out the intent of this Security Agreement and Lender's rights and
remedies.
SECTION 20. JURISDICTION AND WAIVER OF JURY TRIAL.
-------------------------------------
This Security Agreement and the Notes shall be governed by and construed
under the laws of the State of California, excluding principles of conflicts of
laws. It is agreed that exclusive jurisdiction and venue for any legal action
between the parties arising out of or relating to this Security Agreement or a
Note shall be in the Superior Court for Marin County, California, or, in cases
where federal diversity jurisdiction is available, in the United States District
Court for the Northern District of California situated in San Francisco.
BORROWER TO THE EXTENT IT MAY LAWFULLY DO SO, HEREBY WAIVES ITS RIGHT TO TRIAL
BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, ANY
PROMISSORY NOTE, ANY SECURITY DOCUMENTS, OR ANY OTHER AGREEMENTS EXECUTED IN
CONNECTION HEREWITH.
IN WITNESS WHEREOF, Borrower and Lender have caused this Security Agreement to
be executed as of the date and year first above written.
LATITUDE COMMUNICATIONS, INC. PHOENIX LEASING INCORPORATED
- ------------------------------ ----------------------------
BORROWER LENDER
By: /s/ Emil Wang By: /s/ Gray Martinez
----------------------------- -----------------------------
Its: President & CEO Its: S.V.P.
----------------------------- ----------------------------
EXHIBITS AND SCHEDULES:
Exhibit A -- Closing Memorandum
Exhibit B -- Stock Warrant
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AMENDMENT TO
SENIOR LOAN AND SECURITY AGREEMENT
This amendment to Senior Loan and Security Agreement is made and entered into as
of this 22nd day of June, 1995 by and between PHOENIX LEASING INCORPORATED
("LENDER") and LATITUDE COMMUNICATIONS ("BORROWER").
WHEREAS, Lender and Borrower have entered into a Senior Loan and Security
Agreement dated as of September 15, 1994 (the "Security Agreement").
WHEREAS, Lender and Borrower now desire to amend the Security Agreement as
hereinafter set forth:
NOW, THEREFORE, the parties agree as follows:
1) Section 1(vi) of the Security Agreement is herby amended in its
entirety to read as follows:
"Lender shall not be obligated to make any Loan after March 31, 1996."
2) Except as herein specifically amended, all of the terms, covenants and
provisions of the Security Agreement remain in full force and effect.
3) All defined terms used herein shall have the same meaning as in the
Security Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Senior Loan and Security Agreement as of the day and date first above written.
Lender Borrower
PHOENIX LEASING INCORPORATED LATITUDE COMMUNICATIONS
BY: BY /s/ Emil Wang
------------------------------ -------------------------------
TITLE TITLE President & CEO
---------------------------- ----------------------------
AMENDMENT NO. 2 TO
SENIOR LOAN AND SECURITY AGREEMENT
This Amendment No. 2 to Senior Loan and Security Agreement No. L993609
(Amendment No. 2") is made and entered into as of December 26, 1996 by and
between PHOENIX LEASING INCORPORATED ("Lender") and LATITUDE COMMUNICATIONS,
INC. ("Borrower").
WHEREAS, Lender and Borrower have entered into a Senior Loan and Security
Agreement dated as of September 15, 1994 ("the Security Agreement").
WHEREAS, Lender and Borrower now desire to amend the Security Agreement as
hereinafter set forth:
NOW, THEREFORE, the parties agree as follows:
1) Section l(a)(ii) is replaced with the following:
(ii) the total principal amount of the Loans shall not exceed
$2,000,000 in the aggregate (the "Commitment");
2) Section l(a)(iv) is replaced with the following:
(iv) no more than 15% of the utilized Commitment at any funding shall
be used to finance soft costs;
3) Section l(a)(v) is replaced with the following:
(v) the amount of each loan shall be at least $25,000, except for a
final loan which may be less than $50,000;
4) Section l(a)(vi) is replaced with the following:
(vi) Lender shall not be obligated to make any Loan after December 31,
1997;
5) Section 1(a)(ix) is replaced with the following:
(ix) Borrower is performing according to its business plan referred to
as "1997 Plan," dated November 14, 1996, consisting of 4 pages (the
"Business Plan") as may be amended from time to time in form and
substance acceptable to Lender;
6) Section 17 is amended by adding the following to the end thereof:
As of the date of the Amendment, Borrower has paid to Lender an
additional commitment fee of $10,000 which shall be utilized as
described in this Section 17;
7) Except as amended by this Amendment No. 2, the Security Agreement
shall continue in full force and effect as constituted, is ratified by
the parties hereto, and all of the terms, covenants and provisions of
the Security Agreement remain in full force and effect.
8) All defined terms used herein shall have the same meaning as in the
Security Agreement.
9) The Security Agreement as amended by this Amendment No. 2 constitutes
the
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entire agreement between Borrower and Lender with respect to the
subject matter hereof and supersedes all prior and contemporaneous
negotiations, communications, discussions and agreements concerning
such subject matter. Borrower acknowledges and agrees that Lender has
not made any representation, warranty or covenant in connection with
this Amendment No. 2.
10) This Amendment No. 2 is not intended to be, and shall not be construed
to create a novation or accord and satisfaction, and, except as
otherwise provided herein, the Security Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2 to the
Senior Loan and Security Agreement as of the date first above written.
LESSOR BORROWER
PHOENIX LEASING INCORPORATED LATITUDE COMMUNICAITONS, INC.
BY /s/ Jean A. Rodovick BY: /s/ Emil Wang
---------------------------- ------------------------------
TITLE: Jean A. Rodovick TITLE: PRESIDENT & CEO
---------------------------
Contract Administrator
-----------------------
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