Exhibit 10.15

 

Limited Waiver and Amendment to Loan Documents entered into between Silicon
Valley Bank and Netopia, Inc.

 

Silicon Valley Bank

 

Limited Waiver and

Amendment to Loan Documents

 

Borrower: Netopia, Inc.

Date:     June 12, 2003

 

THIS LIMITED WAIVER AND AMENDMENT TO LOAN DOCUMENTS is entered into between
Silicon Valley Bank (“Silicon”) and the borrower named above (“Borrower”).

 

The Parties agree to amend the Loan and Security Agreement between them, dated
June 27, 2002 (as otherwise amended, if at all, the “Loan Agreement”), as
follows, effective as of the date hereof. (Capitalized terms used but not
defined in this Amendment, shall have the meanings set forth in the Loan
Agreement.)

 

1. Waiver of Financial Covenant Default. Borrower has advised Silicon that
Borrower has failed to comply with the Minimum Tangible Net Worth Financial
Covenant set forth in Section 5 of the Schedule to Loan and Security Agreement
entitled “5. FINANCIAL COVENANTS (Section 5.1)” for the reporting period ending
April 30, 2003 (the “Covenant Default”). Silicon and Borrower agree that the
Borrower’s Covenant Default is hereby waived retroactive to April 1, 2003. It is
understood by the parties hereto, however, that such waiver does not constitute
a waiver of any other provision or term of the Loan Agreement or any related
document, nor an agreement to waive in the future this covenant or any other
provision or term of the Loan Agreement or any related document.

 

2. Collection of Accounts. Section 4.4 of the Loan Agreement is hereby amended
to read as follows: which presently reads as follows:

 

4.4 Collection of Accounts.

 

  (a)   Borrower shall have the right to collect all Accounts, unless and until
a Default or an Event of Default has occurred and is continuing. Whether or not
an Event of Default has occurred and is continuing, Borrower shall hold all
payments on, and proceeds of, Accounts in trust for Silicon, and Borrower shall
immediately deposit all such payments and proceeds, in the form received and
duly endorsed, into a collateral account maintained with Silicon (the “Cash
Collateral Account”).

 

  (b)  

As long any Revolving Loan remains outstanding, Borrower shall provide Silicon
with a transaction report and borrowing base report at least weekly. Following
receipt by Silicon of the transaction report and borrowing base report from
Borrower, the following shall occur: (i) the first $3,000,000 of payments on,
and proceeds of, Accounts received after the transaction report will be remitted
to Borrower (payments on, and proceeds of, Accounts received in excess of
$3,000,000 will be maintained in the Cash Collateral Account); (ii) if there is
an Overadvance, Borrower shall immediately pay to Silicon, from its separate
funds, the amount of the Overadvance and Silicon is hereby authorized to charge
said amount to Borrower’s operating account; and (iii) if the amount in the
Borrower’s operating account is not sufficient to pay the Overadvance, after
Borrower has paid said amount to Silicon (or Silicon has charged said amount to
Borrower’s operating account), Silicon shall apply from the Cash Collateral

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Account an amount sufficient to repay the remaining portion of the Overadvance
and thereafter Silicon will remit any balance in the Cash Collateral Account to
the Borrower.

 

  (c)   Notwithstanding the foregoing provisions of this Section 4.4, if at any
time there is more than $3,000,000 in the Cash Collateral Account, Borrower
shall either (i) immediately pay to Silicon, from its separate funds, an amount
equal to the excess, which shall be applied to the Obligations in such order as
Silicon shall determine, or (ii) within one Business Day provide Silicon with a
current transaction report and borrowing base and repay to Silicon the amount of
any Overadvance. If Borrower does not take either of the actions in clause (i)
or (ii) above within said time periods, Silicon may apply from the Cash
Collateral Account the amount therein in excess of $3,000,000, to the
Obligations in such order as Silicon shall determine. Silicon may, in its good
faith business judgment, require that all proceeds of Collateral be deposited by
Borrower into a lockbox account, or such other ‘blocked account’ as Silicon may
specify, pursuant to a blocked account agreement in such form as Silicon may
specify in its good faith business judgment.

 

3. Modified Audit Fees. That certain sentence in Section 5.4 of the Loan
Agreement that currently reads as follows:

 

The foregoing inspections and audits shall be at Borrower’s expense and the
charge therefor shall be $500 per person per day (or such higher amount as shall
represent Silicon’s then current standard charge for the same), plus reasonable
out of pocket expenses.

 

is hereby amended to read as follows:

 

The foregoing inspections and audits shall be at Borrower’s expense and the
charge therefor shall be $500 per person per day (or such higher amount as shall
represent Silicon’s then current standard charge for the same), plus reasonable
out of pocket expenses; provided, however, commencing June 27, 2004, the charge
therefor shall be $750 per person per day (or such higher amount as shall
represent Silicon’s then current standard charge for the same), plus reasonable
out of pocket expenses.

 

4. Modified Maturity Date. The Maturity Date set forth in Section 4 of the
Schedule to Loan and Security Agreement is hereby amended to read as follows:

 

4. MATURITY DATE

(Section 6.1):    June 27, 2005.

 

5. Modified Financial Covenants. Section 5 of the Schedule to Loan and Security
Agreement is hereby amended to read as follows:

 

5. FINANCIAL COVENANTS

 

(Section 5.1):   

Borrower shall comply with each of the following
covenants. Compliance shall be determined as of the
end of each month, except as otherwise specifically
provided below:

Adjusted

         

Quick Ratio:

        Borrower shall maintain an Adjusted Quick Ratio of not less than the
following:           For the month ending April 30, 2003 and each month ending
thereafter (unless reset as provided for below): 1.25 to 1.

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        On or before June 27, 2004, the Adjusted Quick Ratio
Financial Covenant will be reset for the compliance
periods subsequent to June 27, 2004 by Silicon based
on Borrower’s projected financial statements for such
periods, such projected financial statements to have
been approved by the Borrower’s Board of Directors
and accepted jointly by Borrower and Silicon in their
respective discretion.

Minimum Tangible

       

Net Worth:

      Borrower shall maintain a Tangible Net Worth of not less than the
following         For each of the months ending April 30, 2003 and May 31, 2003:
$20,000,000.         For the month ending June 30, 2003 and each month
thereafter (unless reset as provided for below): $20,000,000 plus 50% of the
Borrower’s net income in each fiscal quarter ending after the date hereof
(commencing with the fiscal quarter ending June 30, 2003). Increases in the
Minimum Tangible Net Worth Covenant based on net income shall be effective on
the last day of the fiscal quarter in which said net income is realized, and
shall continue effective thereafter. In no event shall the Minimum Tangible Net
Worth Covenant be decreased. On or before June 27, 2004, the Minimum Tangible
Net Worth Financial Covenant will be reset for the compliance periods subsequent
to June 27, 2004 by Silicon based on Borrower’s projected financial statements
for such periods, such projected financial statements to have been approved by
the Borrower’s Board of Directors and accepted jointly by Borrower and Silicon
in their respective discretion.

Minimum Cash

       

On Hand:

      Borrower shall at all times maintain a minimum of unrestricted cash (and
cash equivalents) in accounts maintained at Silicon in an amount of not less
than $3,000,000.

Definitions.

      For purposes of the foregoing financial covenants, the following terms
shall have the following meanings:         “Adjusted Quick Ratio” shall mean the
ratio of (i) Borrower’s unrestricted cash maintained at Silicon plus cash
equivalents maintained at Silicon plus Receivables and investments made on
behalf of the Borrower through Silicon’s Investment Product Services Division
(“ISP Division”) to (ii) Borrower’s current liabilities plus the outstanding
principal amount of any Obligations less deferred revenues. “Current assets”,
“current liabilities” and “liabilities” shall have the meaning ascribed thereto
by GAAP. “Tangible Net Worth” shall mean the excess of total assets over total
liabilities, determined in accordance with GAAP, with the following adjustments:
       

(A) there shall be excluded from assets: (i) notes, accounts receivable and
other obligations owing to Borrower from its officers or other

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Affiliates, and (ii) all assets which would be classified as intangible assets
under GAAP, including without limitation goodwill, licenses, patents,
trademarks, trade names, copyrights, capitalized software and organizational
costs, licenses and franchises

(B) there shall be excluded from liabilities: all indebtedness which is
subordinated to the Obligations under a subordination agreement in form
specified by Silicon or by language in the instrument evidencing the
indebtedness which Silicon agrees in writing is acceptable to Silicon in its
good faith business judgment.

 

 

6. Modified Covenant Regarding Deposit Accounts. Notwithstanding anything to the
contrary in Subclause (1) of Section 8 of the Schedule to Loan and Security
Agreement, Silicon hereby consents to the maintenance by Borrower of up to
$250,000 (the “Maximum Deposit”) in the aggregate at any one time, exclusive of
deposits with respect to Borrower’s payroll compensation, in one or more of
Borrower’s Deposit Accounts with Wells Fargo Bank without having to cause Wells
Fargo Bank to execute and deliver in favor of Silicon the required control
agreement(s) in respect thereof. It is understood by Borrower, however, that
such consent does not constitute a waiver of any failure of Borrower to comply
with Section 8(1) of the Schedule to Loan and Security Agreement in respect of
such Deposit Accounts if the aggregate balance maintained on deposit therein
exceeds the Maximum Deposit, or in respect of any other Deposit Accounts, or any
other provision or term of the Loan Agreement or any other Loan Document, nor an
agreement to waive compliance, in the future, with Section 8(1) of the Schedule
to Loan and Security Agreement in respect of such Deposit Accounts if the
aggregate balance maintained on deposit therein exceeds the Maximum Deposit, or
in respect of any other Deposit Accounts, or any other provision or term of the
Loan Agreement, or any other Loan Document.

 

7. Modified Covenant Regarding Copyright Filings. Subclause (4) of Section 8 of
the Schedule to Loan and Security Agreement is hereby amended to read as
follows:

 

(4) Intellectual Property. Borrower (nor its subsidiaries Starnet Technologies,
Inc., Serus Acquisition Corporation, Weborder, Inc. and Cayman Systems, Inc.,
such subsidiaries being collectively referred to herein as the “Guarantors”) has
no present maskworks, software, computer programs and other works of authorship
registered with the United States Copyright Office. Borrower covenants and
agrees that it shall not register any maskworks, software, computer programs or
other works of authorship subject to United States copyright protection with the
United States Copyright Office without first complying with the following: (i)
providing Silicon with at least 15 days prior written notice thereof, (ii)
providing Silicon with a copy of the application for any such registration and
(iii) executing and filing such other instruments, and taking such further
actions as Silicon may reasonably request from time to time to perfect or
continue the perfection of Silicon’s interest in the Collateral, including
without limitation the filing with the United States Copyright Office,
simultaneously with the filing by Borrower of the application for any such
registration, of a copy of that certain Intellectual Property Security Agreement
between Borrower and Silicon and dated June 27, 2002 (or, in the case of the
Guarantors, that certain Intellectual Property Security Agreement between
Guarantors and Silicon and dated June 27, 2002) or a Supplement thereto in form
acceptable to Silicon identifying the maskworks, software, computer programs or
other works of authorship being registered and confirming the grant of a
security interest therein in favor of Silicon.

 

8. Fee. In consideration for Silicon entering into this Amendment, Borrower
shall pay Silicon a fee in the aggregate amount of $133,000 due and payable as
follows: (i) $70,000 on June 27, 2003 and (ii) $63,000 on June 27, 2004. Such
fee shall be non-refundable and in addition to all interest and other fees
payable to Silicon under the Loan Documents. Silicon is authorized to charge
said fee to Borrower’s loan account.

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9. Representations True. Borrower represents and warrants to Silicon that all
representations and warranties set forth in the Loan Agreement, as amended
hereby, are true and correct.

 

[remainder of page intentionally left blank; Section 10 and signatures
immediately follow]

 

10. General Provisions. This Amendment, the Loan Agreement, any prior written
amendments to the Loan Agreement signed by Silicon and Borrower, and the other
written documents and agreements between Silicon and Borrower set forth in full
all of the representations and agreements of the parties with respect to the
subject matter hereof and supersede all prior discussions, representations,
agreements and understandings between the parties with respect to the subject
hereof. Except as herein expressly amended, all of the terms and provisions of
the Loan Agreement, and all other documents and agreements between Silicon and
Borrower shall continue in full force and effect and the same are hereby
ratified and confirmed.

 

Borrower:

 

NETOPIA, INC.

     

Silicon:

 

SILICON VALLEY BANK

By  

 

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      By  

 

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        President or Vice President       Title  

 

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By  

 

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                    Secretary or Ass’t Secretary            

 

CONSENT

 

THE UNDERSIGNED ACKNOWLEDGES THAT HIS CONSENT TO THE FOREGOING AGREEMENT IS NOT
REQUIRED, BUT THE UNDERSIGNED NEVERTHELESS DOES HEREBY CONSENT TO THE FOREGOING
AGREEMENT AND TO THE DOCUMENTS AND AGREEMENTS REFERRED TO THEREIN AND TO ALL
FUTURE MODIFICATIONS AND AMENDMENTS THERETO, AND ANY TERMINATION THEREOF, AND TO
ANY AND ALL OTHER PRESENT AND FUTURE DOCUMENTS AND AGREEMENTS BETWEEN OR AMONG
THE FOREGOING PARTIES. NOTHING HEREIN SHALL IN ANY WAY LIMIT ANY OF THE TERMS OR
PROVISIONS OF THE CONTINUING GUARANTY OF THE UNDERSIGNED, ALL OF WHICH ARE
HEREBY RATIFIED AND AFFIRMED.

 

STARNET TECHNOLOGIES, INC.       SERUS ACQUISITION CORPORATION By  

 

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      By  

 

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Title  

 

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      Title  

 

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WEBORDER, INC.       CAYMAN SYSTEMS, INC. By  

 

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      By  

 

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Title  

 

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      Title  

 

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