EXHIBIT 10
SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT
     THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is
entered into this 29th day of July, 2011 (the “Closing Date”), by and between
SILICON VALLEY BANK (“Bank”) and WIRELESS RONIN TECHNOLOGIES, INC., a Minnesota
corporation (“Borrower”).
RECITALS
     A. Bank and Borrower have entered into that certain Loan and Security
Agreement dated as of March 18, 2010 (as the same may from time to time be
amended, modified, supplemented or restated, the “Loan Agreement”).
     B. Bank has extended credit to Borrower for the purposes permitted in the
Loan Agreement.
     C. Borrower has requested that Bank (i) modify the Tangible Net Worth
covenant and (ii) make certain other revisions to the Loan Agreement as more
fully set forth herein.
     D. Although Bank is under no obligation to do so, Bank is willing to modify
the Tangible Net Worth covenant and amend certain provisions of the Loan
Agreement, but only to the extent, in accordance with the terms and subject to
the conditions described below and in reliance upon the representations and
warranties set forth below.
Agreement
     Now, Therefore, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:
     1. Definitions. Capitalized terms used but not defined in this Amendment,
including its preamble and recitals, shall have the meanings given to them in
the Loan Agreement.
     2. Amendments to Loan Agreement.
          2.1 Section 6.9 (Financial Covenants). Section 6.9(a) of the Loan
Agreement is hereby amended by deleting it in its entirety and replacing it with
the following:
     (a) Tangible Net Worth. Commencing with the month ended July 31, 2011 and
on the last day of each month thereafter, a Tangible Net Worth of at least Four
Million Two Hundred Fifty Thousand Dollars ($4,250,000), plus (i) commencing
with the quarter ending September 30, 2011 and each quarter thereafter,
seventy-five percent (75%) of Borrower’s quarterly Net Income (without reduction
for any losses), plus (ii) seventy-five percent (75%) of all proceeds received
from the issuance of equity and/or the principal amount of all Subordinated Debt
incurred, in each case, after the Supplemental Effective Date.

 

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     Provided there are no outstanding Credit Extensions under the Revolving
Line (including, without limitation, Credit Extensions made pursuant to
Sections 2.1.2, 2.1.3 and 2.1.4 hereof but, specifically excluding the Lease
Letter of Credit), the failure of Borrower to maintain the minimum Tangible Net
Worth set forth above shall not constitute an Event of Default hereunder;
provided that no Credit Extensions (other than the Lease Letter of Credit) shall
be made until Borrower maintains the minimum Tangible Net Worth set forth above,
as determined by Bank, in its sole discretion.
          2.2 Section 13 (Definitions).
     (a) The following terms and their respective definitions set forth in
Section 13.1 of the Loan Agreement are hereby amended by deleting them in their
entirety and replacing them with the following:
          “Borrowing Base” is (a) seventy-five percent (75%) of Eligible
Accounts plus (b) the lesser of (i) fifty percent (50%) of the value of
Borrower’s Eligible Inventory (valued at the lower of cost or wholesale fair
market value) or (ii) Two Hundred Fifty Thousand Dollars ($250,000), in each
case as determined by Bank from Borrower’s most recent Borrowing Base
Certificate; provided, however, that Bank may decrease the foregoing percentages
and/or amounts in its good faith business judgment based on events, conditions,
contingencies, or risks which, as determined by Bank, may adversely affect the
Collateral.
          “Streamline Period” is, on and after the Supplemental Effective Date,
(X) any period in which there are no outstanding Credit Extensions under the
Revolving Line (other than the Lease Letter of Credit) or (Y) for any period in
which there are outstanding Credit Extensions under the Revolving Line (in
addition to the Lease Letter of Credit), the period (i) beginning on the
thirty-first (31st) day in which Borrower has, for each consecutive day in the
immediately-preceding thirty (30) day period, maintained unrestricted cash at
Bank in an amount at all times greater than the outstanding principal amount of
all Credit Extensions under the Revolving Line, as determined by Bank, in its
sole discretion (the “Streamline Balance”); and (ii) ending on the earlier to
occur of (A) the occurrence of a Default or an Event of Default; and (B) the
first day thereafter in which Borrower fails to maintain the Streamline Balance,
as determined by Bank, in its sole discretion. Upon the termination of a
Streamline Period, Borrower must maintain the Streamline Balance each
consecutive day for thirty (30) consecutive days, as determined by Bank, in its
sole discretion, prior to entering into a subsequent Streamline Period. Borrower
shall give Bank prior-written notice of Borrower’s intention to enter into any
such Streamline Period.
     (b) The following term and its respective definition is hereby added in
alphabetical order to Section 13.1 of the Loan Agreement as follows:
          “Supplemental Effective Date” is July 27, 2011.
     3. Compliance Certificate. From and after the Closing Date, Exhibit B of
the Loan Agreement is replaced in its entirety with Exhibit B attached hereto
and all references in the

 

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Loan Agreement to the Compliance Certificate shall be deemed to refer to
Exhibit B attached hereto.
     4. Covenant Violation. Borrower acknowledges that it failed to comply with
Section 6.9(a) of the Loan Agreement for the month ended May 31, 2011. Bank
acknowledges that the foregoing covenant violation shall not constitute Default
or an Event of Default as a result of there being no outstanding Credit
Extensions (other than the Lease Letter of Credit) as of May 31, 2011.
     5. Limitation of Amendments.
          5.1 The amendments set forth in Sections 2 and 3 above, are effective
for the purposes set forth herein and shall be limited precisely as written and
shall not be deemed to (a) be a consent to any amendment, waiver or modification
of any other term or condition of any Loan Document, or (b) otherwise prejudice
any right or remedy which Bank may now have or may have in the future under or
in connection with any Loan Document.
          5.2 This Amendment shall be construed in connection with and as part
of the Loan Documents and all terms, conditions, representations, warranties,
covenants and agreements set forth in the Loan Documents, except as herein
amended, are hereby ratified and confirmed and shall remain in full force and
effect.
          5.3 In addition to those Events of Default specifically enumerated in
the Loan Documents, the failure to comply with the terms of any covenant or
agreement contained herein shall constitute an Event of Default and shall
entitle the Bank to exercise all rights and remedies provided to the Bank under
the terms of any of the other Loan Documents as a result of the occurrence of
the same.
     6. Representations and Warranties. To induce Bank to enter into this
Amendment, Borrower hereby represents and warrants to Bank as follows:
          6.1 Immediately after giving effect to this Amendment (a) the
representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (b) no Event of
Default has occurred and is continuing;
          6.2 Borrower has the power and authority to execute and deliver this
Amendment and to perform its obligations under the Loan Agreement, as amended by
this Amendment;
          6.3 The organizational documents of Borrower delivered to Bank on the
Effective Date and the First Loan Modification Effective Date remain true,
accurate and complete and have not been amended, supplemented or restated and
are and continue to be in full force and effect except to the extent that the
Borrower amended its bylaws effective January 21, 2011, such bylaws having been
filed with the SEC at
http://www.sec.gov/Archives/edgar/data/1356093/000135609311000001/exhibit301212011.htm;

 

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          6.4 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, have been duly authorized;
          6.5 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not and will not contravene (a) any law or regulation
binding on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or other
governmental or public body or authority, or subdivision thereof, binding on
Borrower, or (d) the organizational documents of Borrower;
          6.6 The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by any governmental or public body or authority, or subdivision
thereof, binding on Borrower, except as already has been obtained or made; and
          6.7 This Amendment has been duly executed and delivered by Borrower
and is the binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors’ rights.
     7. Counterparts. This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
     8. Effectiveness. This Amendment shall be deemed effective upon (a) the due
execution and delivery to Bank of this Amendment by each party hereto, and
(b) payment of Bank’s legal fees and expenses in connection with the negotiation
and preparation of this Amendment.
[Signature Page Follows.]

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     In Witness Whereof, the parties hereto have caused this Amendment to be
duly executed and delivered as of the date first written above.

          BANK

SILICON VALLEY BANK
    By:   /s/ Kimberly Stover       Name:   Kimberly Stover      Title:  
Relationship Manager      BORROWER

WIRELESS RONIN TECHNOLOGIES, INC.
    By:   /s/ Darin McAreavey       Name:   Darin McAreavey      Title:   CFO   
 

 

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EXHIBIT B
Compliance Certificate

TO: SILICON VALLEY BANK   Date: _________________ FROM: WIRELESS RONIN
TECHNOLOGIES, INC.    

The undersigned authorized officer of Wireless Ronin Technologies, Inc.
(“Borrower”) certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is
in complete compliance for the period ending with all required covenants except
as noted below, (2) there are no Events of Default, (3) all representations and
warranties in the Agreement are true and correct in all material respects on
this date except as noted below; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed
all required tax returns and reports, and Borrower has timely paid all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by
Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of
the Agreement, and (5) no Liens have been levied or claims made against Borrower
or any of its Subsidiaries, if any, relating to unpaid employee payroll or
benefits of which Borrower has not previously provided written notification to
Bank. Attached are the required documents supporting the certification. The
undersigned certifies that these are prepared in accordance with GAAP
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The undersigned 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. Capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Agreement.
Please indicate compliance status by circling Yes/No under “Complies” column.

          Reporting Covenant   Required   Complies
Monthly financial statements with
Compliance Certificate
  Monthly within 30 days   Yes       No
 
       
Annual financial statement (CPA Audited)
  FYE within 120 days   Yes       No
 
       
10-Q, 10-K, and 8-K
  Within 5 days after filing with SEC    
 
       
A/R & A/P Agings, Inventory reports, Deferred revenue reports and general ledger
  Weekly (Monthly within 15 days during a Streamline Period)   Yes       No
 
       
Transaction Reports
  Weekly (Monthly within 15 days during a Streamline Period) and with each
request for a Credit Extension   Yes       No
 
       
Board Projections
  30 days prior to FYE and as amended   Yes       No

 

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The following Intellectual Property was registered after the Effective Date (if
no registrations, state “None”)

              Financial Covenants   Required   Actual   Complies
Maintain at all times (certified monthly):
           
 
           
Minimum Tangible Net Worth
  $4,250,000 plus (i) commencing with the quarter ending September 30, 2011 and
each quarter thereafter, 75% of Borrower’s quarterly Net Income (without
reduction for any losses), plus (ii) 75% of all proceeds received from the
issuance of equity and/or the principal amount of all Subordinated Debt
incurred, in each case, after the Supplemental Effective Date   $___________  
Yes       No

     The following financial covenant analysis and information set forth in
Schedule 1 attached hereto are true and accurate as of the date of this
Certificate.
     The following are the exceptions with respect to the certification above:
(If no exceptions exist, state “No exceptions to note.”)
     
 
     
 
     
 

                      WIRELESS RONIN TECHNOLOGIES, INC.   BANK USE ONLY  
 
                 
By
      Received by:  
 
 
 
Name:            
 
 AUTHORIZED SIGNER
 
  Title   Date:          
 
         
 
                 
 
      Verified:          
 
       
 
 AUTHORIZED SIGNER
 
                 
 
      Date:          
 
         
 
                          Compliance Status: Yes       No

 

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Schedule 1 to Compliance Certificate
Financial Covenants of Borrower
Dated:                                          
     In the event of a conflict between this Schedule and the Loan Agreement,
the terms of the Loan Agreement shall govern.
I. Tangible Net Worth (Section 6.7(a))
Required: Commencing with the month ended July 31 , 2011 and on the last day of
each month thereafter, a Tangible Net Worth of at least Four Million Two Hundred
Fifty Thousand Dollars ($4,250,000), plus (i) commencing with the quarter ending
September 30, 2011 and each quarter thereafter, seventy-five percent (75%) of
Borrower’s quarterly Net Income (without reduction for any losses), plus
(ii) seventy-five percent (75%) of all proceeds received from the issuance of
equity and/or the principal amount of all Subordinated Debt incurred, in each
case, after the Supplemental Effective Date.
Actual:

                A.    
Aggregate value of total assets of Borrower and its Subsidiaries
  $          
 
           
 
        B.    
Aggregate of goodwill of Borrower and its Subsidiaries
  $          
 
           
 
        C.    
Aggregate value of intangible assets of Borrower and its Subsidiaries
  $          
 
           
 
        D.    
Aggregate value of notes, accounts receivable and other obligations owing to
Borrower from its officers or other Affiliates of Borrower and its Subsidiaries
  $          
 
           
 
        E.    
Aggregate value of any reserves not already deducted from assets
  $          
 
           
 
        F.    
Aggregate value of liabilities that should, under GAAP, be classified as
liabilities on Borrower’s consolidated balance sheet, including all Indebtedness
but excluding all other Subordinated Debt
  $          
 
           
 
        G.    
Value of line A, minus line B, minus line C, minus line D, minus line E, minus
line F)
  $          
 
     

Is line G equal to or greater than the required amount set forth above?

                           No, not in compliance                        Yes, in
compliance      

Provided there are no outstanding Credit Extensions under the Revolving Line
(including, without limitation, Credit Extensions made pursuant to
Sections 2.1.2, 2.1.3 and 2.1.4 hereof but specifically excluding the Lease
Letter of Credit), the failure of Borrower to maintain the minimum Tangible Net
Worth set forth above shall not constitute an Event of Default hereunder;
provided that no Credit Extensions (other than the Lease Letter of Credit) shall
be made until Borrower maintains the minimum Tangible Net Worth set forth above,
as determined by Bank, in its sole discretion.