Exhibit 10.1
LOAN AND SECURITY AGREEMENT
     THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of the
Effective Date between SILICON VALLEY BANK, a California corporation (“Bank”),
and DOT HILL SYSTEMS CORP., a Delaware corporation (“Borrower”), provides the
terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The
parties agree as follows:
     1 ACCOUNTING AND OTHER TERMS
     Accounting terms not defined in this Agreement shall be construed following
GAAP. Calculations and determinations must be made following GAAP (except for
non-compliance with FAS 123R in monthly reporting). Capitalized terms not
otherwise defined in this Agreement shall have the meanings set forth in
Section 13. All other terms contained in this Agreement, unless otherwise
indicated, shall have the meaning provided by the Code to the extent such terms
are defined therein.
     2 LOAN AND TERMS OF PAYMENT
     2.1 Promise to Pay. Borrower hereby unconditionally promises to pay Bank
the outstanding principal amount of all Credit Extensions and accrued and unpaid
interest thereon as and when due in accordance with this Agreement.
     2.1.1 Revolving Advances.
          (a) Availability. Subject to the terms and conditions of this
Agreement and, while Borrower’s Net Cash is less than $20,000,000, to deduction
of Reserves if reasonably required by Bank, Bank shall make Advances not
exceeding the Availability Amount. Amounts borrowed hereunder may be repaid and,
prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable
terms and conditions precedent herein.
          (b) Termination; Repayment. The Revolving Line terminates on the
Revolving Line Maturity Date, when the principal amount of all Advances, the
unpaid interest thereon, and all other Obligations relating to the Revolving
Line shall be immediately due and payable.
          (c) Early Termination. This Agreement may be terminated prior to the
Revolving Line Maturity Date. If this Agreement is terminated by Borrower for
any reason (i) prior to the first (1st) anniversary of the Effective Date,
Borrower shall pay to Bank a termination fee in an amount equal to eight tenths
of one percent (0.80%) of the Revolving Line, or (ii) after the first (1st)
anniversary of the Effective Date, but prior to the second (2nd) anniversary of
the Effective Date, Borrower shall pay to Bank a termination fee in an amount
equal to four tenths of one percent (0.40%) of the Revolving Line; in either
case, the “Early Termination Fee”. The Early Termination Fee shall be due and
payable on the effective date of such termination and thereafter shall bear
interest at a rate equal to the highest rate applicable to any of the
Obligations.
     2.1.2 Letters of Credit Sublimit.
          (a) As part of the Revolving Line, Bank shall issue or have issued
Letters of Credit for Borrower’s account. Such aggregate amounts utilized
hereunder shall at all times reduce the amount otherwise available for Advances
under the Revolving Line. The aggregate amount available to be used for the
issuance of Letters of Credit may not exceed (i) the lesser of (A) Thirty
Million Dollars ($30,000,000) or (B) the Borrowing Base, minus (ii) the
outstanding principal amount of any Advances (including the face amount of any
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit). If, on the Revolving Line Maturity Date, there are any outstanding
Letters of Credit, then on such date Borrower shall provide to Bank cash
collateral in an amount equal to one hundred five percent (105%) of the face
amount of all such Letters of Credit plus all interest, fees, and costs due or
to become due in connection therewith (as estimated by Bank in its good faith
business judgment), to secure all of the Obligations relating to said Letters of
Credit. All Letters of Credit shall be in form and substance acceptable to Bank
in its sole discretion and shall be subject to the terms and conditions of
Bank’s standard Application and Letter of Credit Agreement (the “Letter of
Credit Application”). Borrower agrees to

 

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execute any further documentation in connection with the Letters of Credit as
Bank may reasonably request. Borrower further agrees to be bound by the
regulations and interpretations of the issuer of any Letters of Credit
guarantied by Bank and opened for Borrower’s account or by Bank’s
interpretations of any Letter of Credit issued by Bank for Borrower’s account,
and Borrower understands and agrees that Bank shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrower’s instructions or those contained in the Letters of Credit or any
modifications, amendments, or supplements thereto.
          (b) The obligation of Borrower to immediately reimburse Bank for
drawings made under Letters of Credit shall be absolute, unconditional, and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, such Letters of Credit, and the Letter of Credit Application.
Such reimbursement obligations may be satisfied in cash or, subject to
availability hereunder, through an Advance at Borrower’s option.
     2.2 Overadvances. If, at any time, the sum of (a) the outstanding principal
amount of any Advances, plus (b) the face amount of any outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit) (such sum being an
“Overadvance”) exceeds the lesser of either the Revolving Line or the Borrowing
Base, Borrower shall immediately pay to Bank in cash such Overadvance. Without
limiting Borrower’s obligation to repay Bank any amount of the Overadvance,
Borrower agrees to pay Bank interest on the outstanding amount of any
Overadvance, on demand, at the Default Rate.
     2.3 Payment of Interest on the Credit Extensions.
          (a) Interest Rate; Advances. Subject to Section 2.3(b), the principal
amount outstanding under the Revolving Line shall accrue interest at a per annum
rate equal to (i) one percentage point (1.00%) above the Prime Rate while
Borrower’s Net Cash is less than Twenty Million Dollars ($20,000,000), or
(ii) the Prime Rate at all other times; which interest shall, in either case, be
payable monthly.
          (b) Default Rate. Immediately upon the occurrence and during the
continuance of an Event of Default, Obligations shall bear interest at a rate
per annum which is three percentage points (3.00%) above the rate that is
otherwise applicable thereto (the “Default Rate”). Payment or acceptance of the
increased interest rate provided in this Section 2.3(b) is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of Bank.
          (c) Adjustment to Interest Rate. Changes to the interest rate of any
Credit Extension based on changes to the Prime Rate shall be effective on the
effective date of any change to the Prime Rate and to the extent of any such
change.
          (d) 360-Day Year. Interest shall be computed on the basis of a 360-day
year for the actual number of days elapsed.
          (e) Debit of Accounts. Bank may debit the Designated Deposit Account
(and any of Borrower’s other deposit accounts while any Event of Default has
occurred and is continuing), for principal and interest payments or any other
amounts Borrower owes Bank when due. These debits shall not constitute a
set-off.
          (f) Payment; Interest Computation; Float Charge. Interest is payable
monthly on the last calendar day of each month. In computing interest on the
Obligations, all payments received after 12:00 p.m. Pacific time on any day
shall be deemed received on the next Business Day. In addition, if Borrower’s
Net Cash is less than Twenty Million Dollars ($20,000,000) at any time, until
Borrower’s Net Cash is greater than Twenty Million Dollars ($20,000,000), Bank
shall be entitled to charge Borrower a “float” charge in an amount equal to two
(2) Business Days interest, at the interest rate applicable to the Advances, on
all payments received by Bank. The float charge for each month shall be payable
on the last day of the month. Bank shall not, however, be required to credit
Borrower’s account for the amount of any item of payment which is unsatisfactory
to Bank in its good faith business judgment, and Bank may charge Borrower’s
Designated Deposit Account for the amount of any item of payment which is
returned to Bank unpaid.

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     2.4 Fees. Borrower shall pay to Bank:
          (a) Commitment Fee. A fully earned, non-refundable commitment fee of
(i) Sixty Thousand Dollars ($60,000), on the Effective Date, (ii) Forty-Five
Thousand Dollars ($45,000) on the first anniversary of the Effective Date, and
(iii) fifteen hundredths of one percent (0.15%) of the Revolving Line on the
second anniversary of the Effective Date;
          (b) Letter of Credit Fee. Bank’s customary fees and expenses for the
issuance or renewal of Letters of Credit, including, without limitation, a
Letter of Credit Fee of one percent (1.00%) per annum of the face amount of each
Letter of Credit issued, upon the issuance, each anniversary of the issuance,
and the renewal of such Letter of Credit by Bank;
          (c) Unused Revolving Line Facility Fee. A fee (the “Unused Revolving
Line Facility Fee”), payable quarterly, in arrears, on a calendar year basis, in
an amount equal to three eighths of one percent (0.375%) per annum of the
average unused portion of the Revolving Line, as determined by Bank. Borrower
shall not be entitled to any credit, rebate or repayment of any Unused Revolving
Line Facility Fee previously earned by Bank pursuant to this Section
notwithstanding any termination of the Agreement, or suspension or termination
of Bank’s obligation to make loans and advances hereunder; provided that such
Unused Revolving Line Facility Fee shall cease to accrue upon termination of
this Agreement;
          (e) Collateral Monitoring Fee. If Borrower’s Net Cash is less than
Twenty Million Dollars ($20,000,000) at any time, until Borrower’s Net Cash is
again greater than or equal to Twenty Million Dollars ($20,000,000), a monthly
collateral monitoring fee of Two Thousand Dollars ($2,000), payable in arrears
on the last day of each month (prorated for any partial month in which such fee
shall be applicable); and
          (d) Bank Expenses. All Bank Expenses (including reasonable attorneys’
fees and expenses, plus expenses, for documentation and negotiation of this
Agreement) incurred through and after the Effective Date, when due.
     2.5 Lockbox; Account Collection Services. No later than sixty (60) days
after the Effective Date and at all time thereafter, Borrower shall direct each
Account Debtor (and each depository institution where proceeds of Accounts are
on deposit) to thereafter remit payments with respect to the Accounts to a
lockbox account with Bank or to wire transfer payments to a cash collateral
account with Bank (collectively, the “Lockbox”). Subject to the repayment
provisions of Section 2.1.1(b), Bank shall sweep all amounts from the Lockbox to
the Designated Deposit Account on a daily (or as soon thereafter as is
practical) basis. Provided however, if Borrower’s Net Cash is less than Twenty
Million Dollars ($20,000,000) at any time, until Borrower’s Net Cash is again
greater than or equal to Twenty Million Dollars ($20,000,000), Bank shall first
apply all amounts from the Lockbox to the outstanding Obligations and any excess
shall be swept into the Designated Deposit Account. This Section does not impose
any affirmative duty on Bank to perform any act other than as specifically set
forth herein. All Accounts and the proceeds thereof are Collateral and upon the
occurrence and during the continuance of an Event of Default or if Borrower’s
Net Cash is less than Twenty Million Dollars ($20,000,000) at any time, until
Borrower’s Net Cash is again greater than or equal to Twenty Million Dollars
($20,000,000), Bank may apply the proceeds of such Accounts to the Obligations
then due and owing.
     2.6 Accordion Feature. At any time after the first anniversary of the
Effective Date, Borrower may request an increase in the Revolving Line to Fifty
Million Dollars ($50,000,000), so long as (i) Bank is able to find a participant
lender acceptable to Bank in its sole discretion to commit the additional Twenty
Million Dollar ($20,000,000) increase, (ii) Borrower demonstrates a minimum
Borrowing Base of Forty Million Dollars ($40,000,000) for the ninety (90) day
period preceding such request, and (iii) Borrower pays to Bank for the benefit
of Bank and any such other lender a fee equal to two-tenths of one percent
(0.20%) of the resulting increase in the Revolving Line.

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     3 CONDITIONS OF LOANS
     3.1 Conditions Precedent to Initial Credit Extension. Bank’s obligation to
make the initial Credit Extension is subject to the condition precedent that
Borrower shall consent to or have delivered, in form and substance satisfactory
to Bank, such documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate, including, without limitation:
          (a) duly executed original signatures to the Loan Documents to which
it is a party;
          (b) duly executed original signatures to the Control Agreements;
          (c) its Operating Documents and a good standing certificate of
Borrower certified by the Secretary of State of the State of Delaware as of a
date no earlier than thirty (30) days prior to the Effective Date;
          (d) duly executed original signatures to the completed Borrowing
Resolutions for Borrower;
          (e) certified copies, dated as of a recent date, of financing
statement searches, as Bank shall request, accompanied by written evidence
(including any UCC termination statements) that the Liens indicated in any such
financing statements either constitute Permitted Liens or have been or, in
connection with the initial Credit Extension, will be terminated or released;
          (f) the Perfection Certificate executed by Borrower;
          (g) evidence satisfactory to Bank that the insurance policies required
by Section 6.5 hereof are in full force and effect, together with appropriate
evidence showing lender loss payable and/or additional insured clauses or
endorsements in favor of Bank;
          (h) the completion of the Initial Audit with results satisfactory to
Bank in its sole and absolute discretion, which Initial Audit shall be completed
by Bank within sixty (60) days following the Effective Date unless the Bank
waives the right to complete the Initial Audit prior to making the initial
Credit Extension; and
          (i) payment of the fees and Bank Expenses then due as specified in
Section 2.4 hereof.
     3.2 Conditions Precedent to all Credit Extensions. Bank’s obligations to
make each Credit Extension, including the initial Credit Extension, is subject
to the following:
          (a) except as otherwise provided in Section 3.4, timely receipt of an
executed Transaction Report;
          (b) the representations and warranties in Section 5 shall be true in
all material respects on the date of the Transaction Report and on the Funding
Date of each Credit Extension; 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, and no Event of Default shall have occurred and be continuing
or result from the Credit Extension. Each Credit Extension is Borrower’s
representation and warranty on that date that the representations and warranties
in Section 5 remain true in all material respects; 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; and
          (c) in Bank’s reasonable discretion, there has not been a Material
Adverse Change.

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     3.3 Covenant to Deliver.
     Borrower agrees to deliver to Bank each item required to be delivered to
Bank under this Agreement as a condition to any Credit Extension. Borrower
expressly agrees that a Credit Extension made prior to the receipt by Bank of
any such item shall not constitute a waiver by Bank of Borrower’s obligation to
deliver such item, and any such Credit Extension in the absence of a required
item shall be made in Bank’s sole discretion.
     3.4 Procedures for Borrowing. Subject to the prior satisfaction of all
other applicable conditions to the making of an Advance set forth in this
Agreement, to obtain an Advance (other than Advances under Sections 2.1.2 or
2.1.3), Borrower shall notify Bank (which notice shall be irrevocable) by
electronic mail, facsimile, or telephone by 12:00 p.m. Pacific time on the
Funding Date of the Advance. Bank shall credit Advances to the Designated
Deposit Account. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become
due. Bank may rely on any telephone notice given by a person whom Bank believes
is a Responsible Officer or designee.
     4 CREATION OF SECURITY INTEREST
     4.1 Grant of Security Interest. Borrower hereby grants Bank, to secure the
payment and performance in full of all of the Obligations, a continuing security
interest in, and pledges to Bank, the Collateral, wherever located, whether now
owned or hereafter acquired or arising, and all proceeds and products thereof.
Borrower represents, warrants, and covenants that the security interest granted
herein is and shall at all times continue to be a first priority perfected
security interest in the Collateral (subject only to Permitted Liens that may
have superior priority to Bank’s Lien under this Agreement).
     If this Agreement is terminated, Bank’s Lien in the Collateral shall
continue until the Obligations (other than inchoate indemnity obligations and
cash collateralized Letters of Credit) are repaid in full in cash. Upon payment
in full in cash of the Obligations (other than inchoate indemnity obligations
and cash collateralized Letters of Credit) and at such time as Bank’s obligation
to make Credit Extensions has terminated, Bank shall, at Borrower’s sole cost
and expense, release its Liens in the Collateral and all rights therein shall
revert to Borrower.
     4.2 Authorization to File Financing Statements. Borrower hereby authorizes
Bank to file financing statements, without notice to Borrower, with all
appropriate jurisdictions to perfect or protect Bank’s interest or rights
hereunder, including a notice that any disposition of the Collateral, by either
Borrower or any other Person, shall be deemed to violate the rights of Bank
under the Code.
     5 REPRESENTATIONS AND WARRANTIES
          Borrower represents and warrants as follows:
     5.1 Due Organization, Authorization; Power and Authority. Borrower is duly
existing and in good standing as a Registered Organization in its jurisdiction
of formation and is qualified and licensed to do business and is in good
standing in any jurisdiction in which the conduct of its business or its
ownership of property requires that it be qualified except where the failure to
do so could not reasonably be expected to have a material adverse effect on
Borrower’s business. In connection with this Agreement, Borrower has delivered
to Bank a completed certificate signed by Borrower, entitled “Perfection
Certificate”. Borrower represents and warrants to Bank that (a) Borrower’s exact
legal name is that indicated on the Perfection Certificate and on the signature
page hereof; (b) Borrower is an organization of the type and is organized in the
jurisdiction set forth in the Perfection Certificate; (c) the Perfection
Certificate accurately sets forth Borrower’s organizational identification
number or accurately states that Borrower has none; (d) the Perfection
Certificate accurately sets forth Borrower’s place of business, or, if more than
one, its chief executive office as well as Borrower’s mailing address (if
different than its chief executive office); (e) Borrower (and each of its
predecessors) has not, in the past five (5) years, changed its jurisdiction of
formation, organizational structure or type, or any organizational number
assigned by its jurisdiction; and (f) all other information set forth on the
Perfection Certificate pertaining to Borrower and each of its Subsidiaries is
accurate and complete (it being understood and agreed that Borrower may from
time to time update

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certain information in the Perfection Certificate after the Effective Date to
the extent permitted by one or more specific provisions in this Agreement). If
Borrower is not now a Registered Organization but later becomes one, Borrower
shall promptly notify Bank of such occurrence and provide Bank with Borrower’s
organizational identification number.
     The execution, delivery and performance by Borrower of the Loan Documents
to which it is a party have been duly authorized, and do not (i) conflict with
any of Borrower’s organizational documents, (ii) contravene, conflict with,
constitute a default under or violate any material Requirement of Law,
(iii) contravene, conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by
which Borrower or any its Subsidiaries or any of their property or assets may be
bound or affected, (iv) require any action by, filing, registration, or
qualification with, or Governmental Approval from, any Governmental Authority
(except such Governmental Approvals which have already been obtained and are in
full force and effect) or (v) constitute an event of default under any material
agreement by which Borrower is bound. Borrower is not in default under any
agreement to which it is a party or by which it is bound in which the default
could reasonably be expected to have a material adverse effect on Borrower’s
business.
     5.2 Collateral. Borrower has good title to, has rights in, and the power to
transfer each item of the Collateral upon which it purports to grant a Lien
hereunder, free and clear of any and all Liens except Permitted Liens. Borrower
has no deposit accounts other than the deposit accounts with Bank, the deposit
accounts, if any, described in the Perfection Certificate delivered to Bank in
connection herewith, or of which Borrower has given Bank notice and taken such
actions as are necessary to give Bank a perfected security interest therein. The
Accounts are bona fide, existing obligations of the Account Debtors.
     5.3 Accounts Receivable; Inventory.
          (a) For each Account with respect to which Advances are requested, on
the date each Advance is requested and made, such Account shall be an Eligible
Account.
          (b) All statements made and all unpaid balances appearing in all
invoices, instruments and other documents evidencing the Eligible Accounts are
and shall be true and correct and all such invoices, instruments and other
documents, and all of Borrower’s Books are genuine and in all respects what they
purport to be. When an Event of Default has occurred and is continuing or while
Borrower’s Net Cash is less than Twenty Million Dollars ($20,000,000), Bank may
notify any Account Debtor owing Borrower money of Bank’s security interest in
such funds and verify the amount of such Eligible Account. All sales and other
transactions underlying or giving rise to each Eligible Account shall comply in
all material respects with all applicable laws and governmental rules and
regulations. Borrower has no knowledge of any actual or imminent Insolvency
Proceeding of any Account Debtor whose accounts are Eligible Accounts in any
Transaction Report. To Borrower’s knowledge, all signatures and endorsements on
all documents, instruments, and agreements relating to all Eligible Accounts are
genuine, and all such documents, instruments and agreements are legally
enforceable in accordance with their terms.
     5.4 Litigation. There are no actions or proceedings pending or, to the
knowledge of the Responsible Officers, threatened in writing by or against
Borrower or any of its Subsidiaries involving more than One Million Dollars
($1,000,000).
     5.5 No Material Deviation in Financial Statements. All consolidated
financial statements for Borrower and any of its Subsidiaries delivered to Bank
fairly present in all material respects Borrower’s consolidated financial
condition and Borrower’s consolidated results of operations. There has not been
any material deterioration in Borrower’s consolidated financial condition since
the date of the most recent financial statements submitted to Bank.
     5.6 Solvency. The fair salable value of Borrower’s assets (including
goodwill minus disposition costs) exceeds the fair value of its liabilities;
Borrower is not left with unreasonably small capital after the transactions in
this Agreement; and Borrower is able to pay its debts (including trade debts) as
they mature.

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     5.7 Regulatory Compliance. Borrower is not an “investment company” or a
company “controlled” by an “investment company” under the Investment Company Act
of 1940, as amended. Borrower is not engaged as one of its important activities
in extending credit for margin stock (under Regulations X, T and U of the
Federal Reserve Board of Governors). Borrower has complied in all material
respects with the Federal Fair Labor Standards Act. Neither Borrower nor any of
its Subsidiaries is a “holding company” or an “affiliate” of a “holding company”
or a “subsidiary company” of a “holding company” as each term is defined and
used in the Public Utility Holding Company Act of 2005. Borrower has not
violated any laws, ordinances or rules, the violation of which could reasonably
be expected to have a material adverse effect on its business. None of
Borrower’s or any of its Subsidiaries’ properties or assets has been used by
Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous
Persons, in disposing, producing, storing, treating, or transporting any
hazardous substance other than legally. Borrower and each of its Subsidiaries
have obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all Governmental
Authorities that are necessary to continue their respective businesses as
currently conducted.
     5.8 Subsidiaries; Investments. Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments.
     5.9 Tax Returns and Payments; Pension Contributions. Borrower 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 that Borrower may defer payment of any contested taxes,
provided that Borrower (a) in good faith contests its obligation to pay the
taxes by appropriate proceedings promptly and diligently instituted and
conducted, (b) notifies Bank in writing of the commencement of, and any material
development in, the proceedings, (c) posts bonds or takes any other steps
required to prevent the governmental authority levying such contested taxes from
obtaining a Lien upon any of the Collateral that is other than a “Permitted
Lien”. Borrower is unaware of any claims or adjustments proposed for any of
Borrower’s prior tax years which could result in additional taxes becoming due
and payable by Borrower. Borrower has paid all amounts necessary to fund all
present pension, profit sharing and deferred compensation plans in accordance
with their terms, and Borrower has not withdrawn from participation in, and has
not permitted partial or complete termination of, or permitted the occurrence of
any other event with respect to, any such plan which could reasonably be
expected to result in any liability of Borrower, including any liability to the
Pension Benefit Guaranty Corporation or its successors or any other governmental
agency.
     5.10 Use of Proceeds. Borrower shall use the proceeds of the Credit
Extensions solely as working capital and to fund its general business
requirements and not for personal, family, household or agricultural purposes.
     5.11 Full Disclosure. No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank, as
of the date such representation, warranty, or other statement was made, taken
together with all such written certificates and written statements given to
Bank, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not viewed as facts and that actual results during the period or
periods covered by such projections and forecasts may differ from the projected
or forecasted results).
     6 AFFIRMATIVE COVENANTS
     Borrower shall do all of the following:
     6.1 Government Compliance.
          (a) Maintain its and all its Subsidiaries’ legal existence and good
standing in their respective jurisdictions of formation and maintain
qualification in each jurisdiction in which the failure to so qualify would
reasonably be expected to have a material adverse effect on Borrower’s business
or operations. Borrower shall comply, and have each Subsidiary comply, with all
laws, ordinances and regulations to which it is subject, noncompliance with
which could reasonably be expected to have a material adverse effect on
Borrower’s business.

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          (b) Obtain all of the Governmental Approvals necessary for the
performance by Borrower of its obligations under the Loan Documents to which it
is a party and the grant of a security interest to Bank in all of the
Collateral. Borrower shall promptly provide copies of any such obtained
Governmental Approvals to Bank.
     6.2 Financial Statements, Reports, Certificates.
          (a) Borrower shall provide Bank with the following:
          (i) within twenty (20) days after the end of each month (and while
Borrower’s Net Cash is less than Twenty Million Dollars ($20,000,000), no less
than weekly) and with each request for an Advance, a Transaction Report (and any
schedules related thereto);
          (ii) within twenty (20) days after the end of each month, (A) monthly
accounts receivable agings, aged by invoice date, (B) monthly accounts payable
agings, aged by invoice date, and outstanding or held check registers, if any,
(C) monthly reconciliations of accounts receivable agings (aged by invoice
date), transaction reports and general ledger, and (D) a report of Borrower’s
Cash balances; and
          (iii) no later than March 31 of each calendar year, (A) annual
operating budgets (including income statements, balance sheets and cash flow
statements, by month) for the upcoming fiscal year of Borrower, and (B) annual
financial projections for the following fiscal year (on a quarterly basis) as
approved by Borrower’s board of directors, together with any related business
forecasts used in the preparation of such annual financial projections.
          (b) within five (5) days after filing, all reports on Form 10-K, 10-Q
and 8-K filed with the Securities and Exchange Commission or a link thereto on
Borrower’s or another website on the Internet, along with a Compliance
Certificate signed by a Responsible Officer, certifying that as of the end of
such quarter, Borrower was in full compliance with all of the terms and
conditions of this Agreement, and setting forth calculations showing compliance
with the financial covenants set forth in this Agreement and such other
information as Bank shall reasonably request, including, without limitation, a
statement that at the end of such month there were no held checks.
          (c) In accordance with Section 6.6, allow Bank to audit Borrower’s
Collateral at Borrower’s expense. Such audits shall be conducted no more often
than twice per year if there are no Advances outstanding (or three times per
year when Advances outstanding) unless an Event of Default has occurred and is
continuing.
     6.3 Accounts Receivable.
          (a) Schedules and Documents Relating to Accounts. Borrower shall
deliver to Bank transaction reports and schedules of collections, as provided in
Section 6.2, on Bank’s standard forms; provided, however, that Borrower’s
failure to execute and deliver the same shall not affect or limit Bank’s Lien
and other rights in all of Borrower’s Accounts, nor shall Bank’s failure to
advance or lend against a specific Account affect or limit Bank’s Lien and other
rights therein. If requested by Bank, Borrower shall furnish Bank with copies
(or, at Bank’s request, originals) of all contracts, orders, invoices, and other
similar documents, and all shipping instructions, delivery receipts, bills of
lading, and other evidence of delivery, for any goods the sale or disposition of
which gave rise to such Accounts. In addition, Borrower shall deliver to Bank,
on its request, the originals of all instruments, chattel paper, security
agreements, guarantees and other documents and property evidencing or securing
any Accounts, in the same form as received, with all necessary indorsements, and
copies of all credit memos.
          (b) Disputes. Borrower shall promptly notify Bank of all disputes or
claims in excess of Three Hundred Thousand Dollars ($300,000) relating to
Accounts. Borrower may forgive (completely or partially), compromise, or settle
any Account for less than payment in full, or agree to do any of the foregoing
so long as (i) Borrower does so in good faith, in a commercially reasonable
manner, in the ordinary course of business, in arm’s-length transactions, and
reports the same to Bank in the regular reports provided to Bank; (ii) no
Default or Event of Default has occurred and is continuing; and (iii) after
taking into account all such discounts, settlements

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and forgiveness, the total outstanding Advances will not exceed the lesser of
the Revolving Line or the Borrowing Base.
          (c) Collection of Accounts. 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 Bank, and Borrower shall immediately deliver all such payments and
proceeds to Bank in their original form, duly endorsed, to be applied to the
Obligations pursuant to the terms of Section 9.4 hereof. As limited by
Section 2.5 hereof, Bank may, in its good faith business judgment, require that
all proceeds of Accounts be deposited by Borrower into a lockbox account, or
such other “blocked account” as Bank may specify, pursuant to a blocked account
agreement in such form as Bank may specify in its good faith business judgment.
          (d) Returns. Provided no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory in excess of Three
Hundred Thousand Dollars ($300,000) to Borrower, Borrower shall promptly
(i) determine the reason for such return, (ii) issue a credit memorandum to the
Account Debtor in the appropriate amount, and (iii) provide a copy of such
credit memorandum to Bank, upon request from Bank. In the event any attempted
return occurs after the occurrence and during the continuance of any Event of
Default, Borrower shall promptly notify Bank of the return of the Inventory.
          (e) Verification. While any Event of Default has occurred and is
continuing, while Borrower’s Net Cash is less than Twenty Million Dollars
($20,000,000) or with the consent of Borrower, Bank may, from time to time,
verify directly with the respective Account Debtors the validity, amount and
other matters relating to the Accounts, either in the name of Borrower or Bank
or such other name as Bank may choose.
          (f) No Liability. Bank shall not be responsible or liable for any
shortage or discrepancy in, damage to, or loss or destruction of, any goods, the
sale or other disposition of which gives rise to an Account, or for any error,
act, omission, or delay of any kind occurring in the settlement, failure to
settle, collection or failure to collect any Account, or for settling any
Account in good faith for less than the full amount thereof, nor shall Bank be
deemed to be responsible for any of Borrower’s obligations under any contract or
agreement giving rise to an Account. Nothing herein shall, however, relieve Bank
from liability for its own gross negligence or willful misconduct.
     6.4 Remittance of Proceeds. Except as otherwise provided or limited by
Section 6.3(c), deliver, in kind, all proceeds arising from the disposition of
any Collateral to Bank in the original form in which received by Borrower not
later than the following Business Day after receipt by Borrower, to be applied
to the Obligations pursuant to the terms of Section 9.4 hereof. Except as
otherwise provided or limited by Section 6.3(c), Borrower agrees that it will
not commingle proceeds of Collateral with any of Borrower’s other funds or
property, but will hold such proceeds separate and apart from such other funds
and property and in an express trust for Bank. Nothing in this Section limits
the restrictions on disposition of Collateral set forth elsewhere in this
Agreement.
     6.5 Taxes; Pensions. Timely file, and require each of its Subsidiaries to
timely file, all required tax returns and reports and timely pay, and require
each of its Subsidiaries to timely file, all foreign, federal, state and local
taxes, assessments, deposits and contributions owed by Borrower and each of its
Subsidiaries, except for deferred payment of any taxes contested pursuant to the
terms of Section 5.9 hereof, and shall deliver to Bank, on demand, appropriate
certificates attesting to such payments, and pay all amounts necessary to fund
all present pension, profit sharing and deferred compensation plans in
accordance with their terms.
     6.6 Access to Collateral; Books and Records. At reasonable times (but no
more frequently than set forth in Section 6.1(c), on two (2) Business Days’
notice (provided no notice is required if an Event of Default has occurred and
is continuing), Bank, or its agents, shall have the right to inspect the
Collateral and the right to audit and copy Borrower’s Books. The foregoing
inspections and audits shall be at Borrower’s expense, and the charge therefor
shall be $750 per person per day (or such higher amount as shall represent
Bank’s then-current standard charge for the same), plus reasonable out-of-pocket
expenses. In the event Borrower and Bank schedule an audit more than five
(5) Business Days in advance, and Borrower cancels or seeks to reschedules the
audit with less than five (5) Business Days written notice to Bank, then
(without limiting any of Bank’s rights or remedies), Borrower

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shall pay Bank a fee of $1,000 plus any out-of-pocket expenses incurred by Bank
to compensate Bank for the anticipated costs and expenses of the cancellation or
rescheduling.
     6.7 Insurance. Keep its business insured for risks and in amounts standard
for companies in Borrower’s industry and location and as Bank may reasonably
request. Insurance policies shall be in a form, with companies, and in amounts
that are satisfactory to Bank. All policies shall provide that the insurer shall
endeavor to give Bank at least twenty (20) days notice before canceling,
amending, or declining to renew its policy. At Bank’s request, Borrower shall
deliver certified copies of policies and evidence of all premium payments. If
Borrower fails to obtain insurance as required under this Section 6.7 or to pay
any amount or furnish any required proof of payment to third persons and Bank,
Bank may make all or part of such payment or obtain such insurance policies
required in this Section 6.7, and take any action under the policies Bank deems
prudent.
     6.8 Operating Accounts.
          (a) No later than sixty (60) days after the Effective Date and at all
time thereafter, maintain its primary and its domestic Subsidiaries’ primary
operating and other deposit accounts with Bank. No later than sixty (60) days
after the Effective Date and at all times thereafter, maintain at least one
securities account with Bank or its Affiliates, which securities account or
securities accounts shall represent at least twenty five percent (25%) of the
dollar value of Borrower’s and such Subsidiaries securities accounts at all
financial institutions.
          (b) Provide Bank five (5) days prior written notice before
establishing any Collateral Account at or with any bank or financial institution
other than Bank or Bank’s Affiliates. For each Collateral Account that Borrower
at any time maintains, Borrower shall cause the applicable bank or financial
institution (other than Bank) at or with which any Collateral Account is
maintained to execute and deliver a Control Agreement or other appropriate
instrument with respect to such Collateral Account to perfect Bank’s Lien in
such Collateral Account in accordance with the terms hereunder. The provisions
of the previous sentence shall not apply to deposit accounts exclusively used
for payroll, payroll taxes and other employee wage and benefit payments to or
for the benefit of Borrower’s employees and identified to Bank by Borrower as
such.
     6.9 Financial Covenants.
          Borrower shall maintain at all times, to be tested as of the last day
of each quarter, unless otherwise noted:
          (a) Minimum Net Worth. A minimum Net Worth of at least Fifty Five
Million Dollars ($55,000,000), increasing by fifty percent (50%) of Net Income,
fifty percent (50%) of issuances of equity after the Effective Date and fifty
percent (50%) of the principal amount of Subordinated Debt.
     6.10 Protection of Intellectual Property Rights. Borrower shall: (a) use
commercially reasonable efforts to protect, defend and maintain the validity and
enforceability of its Intellectual Property; (b) promptly advise Bank in writing
of material infringements of its Intellectual Property; and (c) not allow any
Intellectual Property material to Borrower’s business to be abandoned, forfeited
or dedicated to the public without Bank’s written consent.
     6.11 Litigation Cooperation. From the date hereof and continuing through
the termination of this Agreement, make available to Bank, without expense to
Bank, Borrower and its officers, employees and agents and Borrower’s books and
records, to the extent that Bank may deem them reasonably necessary to prosecute
or defend any third-party suit or proceeding instituted by or against Bank with
respect to any Collateral or relating to Borrower.
     6.12 Further Assurances. Execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank’s Lien in the
Collateral or to effect the purposes of this Agreement.

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     7 NEGATIVE COVENANTS
     Borrower shall not do any of the following without Bank’s prior written
consent:
     7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose of
(collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all
or any part of the Collateral or the Inventory or Intellectual Property of
Borrower or its Subsidiaries, except for Transfers (a) of Inventory in the
ordinary course of business; (b) in connection with Permitted Liens and
Permitted Investments; (c) of non-exclusive licenses for the use of the property
of Borrower or its Subsidiaries in the ordinary course of business,
(d) exclusive licenses and Transfers to NetApp in accordance with Borrower’s
supply agreement with NetApp provided such supply agreement has been provided to
Bank and (e) other exclusive licenses which are limited by specified fields of
use, specific geographic location, or specific, limited periods of time.
     7.2 Changes in Business; Jurisdiction of Formation. Engage in any material
line of business other than those lines of business conducted by Borrower and
its Subsidiaries on the date hereof and any businesses reasonably related,
complementary or incidental thereto or reasonable extensions thereof. Borrower
will not, without prior written notice, change its jurisdiction of formation.
     7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person except where (a) total consideration
including cash and the value of any non-cash consideration, for all such
transactions does not in the aggregate exceed Fifteen Million Dollars
($15,000,000) in any three hundred sixty four (364) day period; (b) no Event of
Default has occurred and is continuing or would exist after giving effect to the
transactions; and (c) Borrower is the surviving legal entity. A Subsidiary may
merge or consolidate into another Subsidiary or into Borrower.
     7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness,
or permit any Subsidiary to do so, other than Permitted Indebtedness.
     7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of the
Collateral or any Inventory or Intellectual Property of Borrower or its
Subsidiaries, or assign or convey any right to receive income, including the
sale of any Accounts, or permit any of its Subsidiaries to do so, except for
Permitted Liens, permit any Collateral not to be subject to the first priority
security interest granted herein, or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Bank) with any
Person which directly or indirectly prohibits or has the effect of prohibiting
Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a
security interest in or upon, or encumbering any of Borrower’s or any
Subsidiary’s Inventory or Intellectual Property, except as is otherwise
permitted in Section 7.1 hereof and the definition of “Permitted Lien” herein.
     7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account
except pursuant to the terms of Section 6.8.(b) hereof.
     7.7 Distributions; Investments. (a) Pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock in
excess of One Million Dollars ($1,000,000) per fiscal year; provided that
(i) Borrower may convert any of its convertible securities into other securities
pursuant to the terms of such convertible securities or otherwise in exchange
thereof, (ii) Borrower may pay dividends solely in common stock; and
(iii) Borrower may repurchase the stock of former employees or consultants
pursuant to stock repurchase agreements so long as an Event of Default does not
exist at the time of such repurchase and would not exist after giving effect to
such repurchase; or (b) directly or indirectly make any Investment other than
Permitted Investments, or permit any of its Subsidiaries to do so.
     7.8 Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower, except
for sales of equity securities and transactions that are in the ordinary course
of Borrower’s business, upon fair and reasonable terms that are no less
favorable to Borrower than would be obtained in an arm’s length transaction with
a non-affiliated Person.

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     7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated
Debt, except under the terms of the subordination, intercreditor, or other
similar agreement to which such Subordinated Debt is subject, or (b) amend any
provision in any document relating to the Subordinated Debt which would increase
the amount thereof or adversely affect the subordination thereof to Obligations
owed to Bank.
     7.10 Compliance. Become an “investment company” or a company controlled by
an “investment company”, under the Investment Company Act of 1940, as amended,
or undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material
adverse effect on Borrower’s business, or permit any of its Subsidiaries to do
so; withdraw or permit any Subsidiary to withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any present pension, profit sharing and deferred compensation
plan which could reasonably be expected to result in any liability of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency.
     8 EVENTS OF DEFAULT
     Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:
     8.1 Payment Default. Borrower fails to (a) make any payment of principal or
interest on any Credit Extension on its due date, or (b) pay any other
Obligations within three (3) Business Days after such Obligations are due and
payable (which three (3) day grace period shall not apply to payments due on the
Revolving Line Maturity Date). During the cure period, the failure to cure the
payment default is not an Event of Default (but no Credit Extension will be made
during the cure period);
     8.2 Covenant Default.
          (a) Borrower fails or neglects to perform any obligation in
Sections 6.2, 6.5, 6.7, 6.8 or 6.9 or violates any covenant in Section 7; or
          (b) Borrower fails or neglects to perform, keep, or observe any other
term, provision, condition, covenant or agreement contained in this Agreement or
any Loan Documents, and as to any default (other than those specified in this
Section 8) under such other term, provision, condition, covenant or agreement
that can be cured, has failed to cure the default within ten (10) days after the
occurrence thereof; provided, however, that if the default cannot by its nature
be cured within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is likely to
be cured within a reasonable time, then Borrower shall have an additional period
(which shall not in any case exceed thirty (30) days) to attempt to cure such
default, and within such reasonable time period the failure to cure the default
shall not be deemed an Event of Default (but no Credit Extensions shall be made
during such cure period). Grace periods provided under this section shall not
apply, among other things, to financial covenants or any other covenants set
forth in subsection (a) above;
     8.3 Material Adverse Change. A Material Adverse Change occurs;
     8.4 Attachment; Levy; Restraint on Business. (a) (i) The service of process
seeking to attach, by trustee or similar process, any funds of Borrower or of
any entity under control of Borrower (including a Subsidiary) on deposit with
Bank or any Bank Affiliate, or (ii) a notice of lien, levy, or assessment is
filed against any of Borrower’s assets by any government agency, and the same
under subclauses (i) and (ii) hereof are not, within twenty (20) days after the
occurrence thereof, discharged or stayed (whether through the posting of a bond
or otherwise); provided, however, no Credit Extensions shall be made during any
ten (10) day cure period; and (b) (i) any material portion of Borrower’s assets
is attached, seized, levied on, or comes into possession of a trustee or
receiver, or (ii) any court order enjoins, restrains, or prevents Borrower from
conducting any part of its business;

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     8.5 Insolvency. (a) Borrower is unable to pay its debts (including trade
debts) as they become due or otherwise becomes insolvent; (b) Borrower begins an
Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower
and not dismissed or stayed within forty five (45) days (but no Credit
Extensions shall be made while of any of the conditions described in clause (a)
exist and/or until any Insolvency Proceeding is dismissed);
     8.6 Other Agreements. There is a default in any agreement to which Borrower
is a party with a third party or parties resulting in a right by such third
party or parties, whether or not exercised, to accelerate the maturity of any
Indebtedness in an amount in excess of One Million Dollars ($1,000,000) or that
could reasonably be expected to have a material adverse effect on Borrower’s
business;
     8.7 Judgments. One or more judgments, orders, or decrees for the payment of
money in an amount, individually or in the aggregate, of at least One Million
Dollars ($1,000,000) or (not covered by independent third-party insurance as to
which liability has been accepted by such insurance carrier) shall be rendered
against Borrower and shall remain unsatisfied, unvacated, or unstayed for a
period of ten (10) days after the entry thereof (provided that no Credit
Extensions will be made prior to the satisfaction, vacation, or stay of such
judgment, order, or decree);
     8.8 Misrepresentations. Borrower or any Person acting for Borrower makes
any representation, warranty, or other statement now or later in this Agreement,
any Loan Document or in any writing delivered to Bank or to induce Bank to enter
this Agreement or any Loan Document, and such representation, warranty, or other
statement is incorrect in any material respect when made;
     8.9 Subordinated Debt. A default or breach occurs under any agreement
between Borrower and any creditor of Borrower that signed a subordination,
intercreditor, or other similar agreement with Bank, or any creditor that has
signed such an agreement with Bank breaches any terms of such agreement; or
     8.10 Governmental Approvals. Any Governmental Approval shall have been
(a) revoked, rescinded, suspended, modified in an adverse manner or not renewed
in the ordinary course for a full term or (b) subject to any decision by a
Governmental Authority that designates a hearing with respect to any
applications for renewal of any of such Governmental Approval or that could
result in the Governmental Authority taking any of the actions described in
clause (a) above, and such decision or such revocation, rescission, suspension,
modification or non-renewal (i) has, or could reasonably be expected to have, a
Material Adverse Change, or (ii) adversely affects the legal qualifications of
Borrower or any of its Subsidiaries to hold such Governmental Approval in any
applicable jurisdiction and such revocation, rescission, suspension,
modification or non-renewal could reasonably be expected to affect the status of
or legal qualifications of Borrower or any of its Subsidiaries to hold any
Governmental Approval in any other jurisdiction.
     9 BANK’S RIGHTS AND REMEDIES
     9.1 Rights and Remedies. While an Event of Default occurs and continues
Bank may, without notice or demand, do any or all of the following:
          (a) declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);
          (b) stop advancing money or extending credit for Borrower’s benefit
under this Agreement or under any other agreement between Borrower and Bank;
          (c) demand that Borrower (i) deposits cash with Bank in an amount
equal to the aggregate amount of any Letters of Credit remaining undrawn, as
collateral security for the repayment of any future drawings under such Letters
of Credit, and Borrower shall forthwith deposit and pay such amounts, and
(ii) pay in advance all Letter of Credit fees scheduled to be paid or payable
over the remaining term of any Letters of Credit;

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          (d) settle or adjust disputes and claims directly with Account Debtors
for amounts on terms and in any order that Bank considers advisable, notify any
Person owing Borrower money of Bank’s security interest in such funds, and
verify the amount of such account;
          (e) make any payments and do any acts it considers necessary or
reasonable to protect the Collateral and/or its security interest in the
Collateral. Borrower shall assemble the Collateral if Bank requests and make it
available as Bank designates. Bank may enter premises where the Collateral is
located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior
to its security interest and pay all expenses incurred. Borrower grants Bank a
license to enter and occupy any of its premises, without charge, to exercise any
of Bank’s rights or remedies;
          (f) apply to the Obligations any (i) balances and deposits of Borrower
it holds, or (ii) any amount held by Bank owing to or for the credit or the
account of Borrower;
          (g) ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral. Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank’s exercise of its rights under this Section, Borrower’s
rights under all licenses and all franchise agreements inure to Bank’s benefit;
          (h) place a “hold” on any account maintained with Bank and/or deliver
a notice of exclusive control, any entitlement order, or other directions or
instructions pursuant to any Control Agreement or similar agreements providing
control of any Collateral;
          (i) demand and receive possession of Borrower’s Books in respect of
the Collateral; and
          (j) exercise all rights and remedies available to Bank under the Loan
Documents or at law or equity, including all remedies provided under the Code
(including disposal of the Collateral pursuant to the terms thereof).
     9.2 Power of Attorney. Borrower hereby irrevocably appoints Bank as its
lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower’s name on any
checks or other forms of payment or security; (b) sign Borrower’s name on any
invoice or bill of lading for any Account or drafts against Account Debtors;
(c) settle and adjust disputes and claims about the Accounts directly with
Account Debtors, for amounts and on terms Bank determines reasonable; (d) make,
settle, and adjust all claims under Borrower’s insurance policies; (e) pay,
contest or settle any Lien, charge, encumbrance, security interest, and adverse
claim in or to the Collateral, or any judgment based thereon, or otherwise take
any action to terminate or discharge the same; and (f) transfer the Collateral
into the name of Bank or a third party as the Code permits. Borrower hereby
appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on any
documents necessary to perfect or continue the perfection of Bank’s security
interest in the Collateral regardless of whether an Event of Default has
occurred until all Obligations (other than inchoate indemnity obligations and
cash collateralized Letters of Credit) have been satisfied in full and Bank is
under no further obligation to make Credit Extensions hereunder. Bank’s
foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights
and powers, coupled with an interest, are irrevocable until all Obligations
(other than inchoate indemnity obligations and cash collateralized Letters of
Credit) have been fully repaid and performed and Bank’s obligation to provide
Credit Extensions terminates.
     9.3 Protective Payments. If Borrower fails to obtain the insurance called
for by Section 6.7 or fails to pay any premium thereon or fails to pay any other
amount which Borrower is obligated to pay under this Agreement or any other Loan
Document, Bank may obtain such insurance or make such payment, and all amounts
so paid by Bank are Bank Expenses and immediately due and payable, bearing
interest at the then highest applicable rate, and secured by the Collateral.
Bank will make reasonable efforts to provide Borrower with notice of Bank
obtaining such insurance at the time it is obtained or within a reasonable time
thereafter. No payments by Bank are deemed an agreement to make similar payments
in the future or Bank’s waiver of any Event of Default.

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     9.4 Application of Payments and Proceeds. Borrower shall have no right to
specify the order or the accounts to which Bank shall allocate or apply any
payments required to be made by Borrower to Bank or otherwise received by Bank
under this Agreement when any such allocation or application is not specified
elsewhere in this Agreement. If an Event of Default has occurred and is
continuing, Bank may apply any funds in its possession, whether from Borrower
account balances, payments, proceeds realized as the result of any collection of
Accounts or other disposition of the Collateral, or otherwise, to the
Obligations in such order as Bank shall determine in its sole discretion. Any
surplus shall be paid to Borrower by credit to the Designated Deposit Account or
to other Persons legally entitled thereto; Borrower shall remain liable to Bank
for any deficiency. If Bank, in its good faith business judgment, directly or
indirectly enters into a deferred payment or other credit transaction with any
purchaser at any sale of Collateral, Bank shall have the option, exercisable at
any time, of either reducing the Obligations by the principal amount of the
purchase price or deferring the reduction of the Obligations until the actual
receipt by Bank of cash therefor.
     9.5 Bank’s Liability for Collateral. So long as Bank complies with
reasonable banking practices regarding the safekeeping of the Collateral in the
possession or under the control of Bank, Bank shall not be liable or responsible
for: (a) the safekeeping of the Collateral; (b) any loss or damage to the
Collateral; (c) any diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other Person. Borrower bears
all risk of loss, damage or destruction of the Collateral.
     9.6 No Waiver; Remedies Cumulative. Bank’s failure, at any time or times,
to require strict performance by Borrower of any provision of this Agreement or
any other Loan Document shall not waive, affect, or diminish any right of Bank
thereafter to demand strict performance and compliance herewith or therewith. No
waiver hereunder shall be effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it is given. Bank’s
rights and remedies under this Agreement and the other Loan Documents are
cumulative. Bank has all rights and remedies provided under the Code, by law, or
in equity. Bank’s exercise of one right or remedy is not an election, and Bank’s
waiver of any Event of Default is not a continuing waiver. Bank’s delay in
exercising any remedy is not a waiver, election, or acquiescence.
     9.7 Demand Waiver. Borrower waives demand, notice of default or dishonor,
notice of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.
     10 NOTICES
     All notices, consents, requests, approvals, demands, or other communication
by any party to this Agreement or any other Loan Document must be in writing and
shall be deemed to have been validly served, given, or delivered: (a) upon the
earlier of actual receipt and three (3) Business Days after deposit in the U.S.
mail, first class, registered or certified mail return receipt requested, with
proper postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated
below. Bank or Borrower may change its mailing or electronic mail address or
facsimile number by giving the other party written notice thereof in accordance
with the terms of this Section 10.

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  If to Borrower:   Dot Hill Systems Corp.    
 
      2200 Faraday Avenue, Suite 100    
 
      Carlsbad, CA 92008    
 
      Attn: Chief Financial Officer    
 
      Fax:                                             
 
      Email:                                             
 
           
 
  If to Bank:   Silicon Valley Bank    
 
      38 Technology Drive, Suite 150    
 
      Irvine, CA 92618    
 
      Attn: Derek Hoyt    
 
      Fax: (949) 789-1930    
 
      Email:  dhoyt@svb.com    

     11 CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE
     California law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Santa Clara County, California; provided,
however, that nothing in this Agreement shall be deemed to operate to preclude
Bank from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to
enforce a judgment or other court order in favor of Bank. Borrower expressly
submits and consents in advance to such jurisdiction in any action or suit
commenced in any such court, and Borrower hereby waives any objection that it
may have based upon lack of personal jurisdiction, improper venue, or forum non
conveniens and hereby consents to the granting of such legal or equitable relief
as is deemed appropriate by such court. Borrower hereby waives personal service
of the summons, complaints, and other process issued in such action or suit and
agrees that service of such summons, complaints, and other process may be made
by registered or certified mail addressed to Borrower at the address set forth
in Section 10 of this Agreement and that service so made shall be deemed
completed upon the earlier to occur of Borrower’s actual receipt thereof or
three (3) days after deposit in the U.S. mails, proper postage prepaid.
     TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH
WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF
OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
     WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial
by jury is not enforceable, the parties hereto agree that any and all disputes
or controversies of any nature between them arising at any time shall be decided
by a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court. The reference proceedings shall be conducted
pursuant to and in accordance with the provisions of California Code of Civil
Procedure §§ 638 through 645.1, inclusive. The private judge shall have the
power, among others, to grant provisional relief, including without limitation,
entering temporary restraining orders, issuing preliminary and permanent
injunctions and appointing receivers. All such proceedings shall be closed to
the public and confidential and all records relating thereto shall be
permanently sealed. If during the course of any dispute, a party desires to seek
provisional relief, but a judge has not been appointed at that point pursuant to
the judicial reference procedures, then such party may apply to the Santa Clara
County, California Superior Court for such relief. The proceeding before the
private judge shall be conducted in the same manner as it would be before a
court under the rules of evidence applicable to judicial proceedings. The
parties shall be entitled to discovery which shall be conducted in the same
manner as it would be before a court under the rules of discovery applicable to
judicial proceedings. The private judge shall oversee discovery and may

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enforce all discovery rules and order applicable to judicial proceedings in the
same manner as a trial court judge. The parties agree that the selected or
appointed private judge shall have the power to decide all issues in the action
or proceeding, whether of fact or of law, and shall report a statement of
decision thereon pursuant to the California Code of Civil Procedure § 644(a).
Nothing in this paragraph shall limit the right of any party at any time to
exercise self-help remedies, foreclose against collateral, or obtain provisional
remedies. The private judge shall also determine all issues relating to the
applicability, interpretation, and enforceability of this paragraph.
     12 GENERAL PROVISIONS
     12.1 Termination Prior to Revolving Line Maturity Date. This Agreement may
be terminated prior to the Revolving Line Maturity Date by Borrower, effective
three (3) Business Days after written notice of termination is given to Bank.
Notwithstanding any such termination, Bank’s lien and security interest in the
Collateral shall continue until Borrower fully satisfies its Obligations. (other
than inchoate indemnity obligations and cash collateralized Letters of Credit).
If such termination is at Borrower’s election, Borrower shall pay to Bank the
Early Termination Fee in accordance with Section 2.1.1(c) hereof.
     12.2 Successors and Assigns. This Agreement binds and is for the benefit of
the successors and permitted assigns of each party. Borrower may not assign this
Agreement or any rights or obligations under it without Bank’s prior written
consent (which may be granted or withheld in Bank’s discretion). Bank has the
right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank’s obligations, rights, and benefits under this Agreement and the other Loan
Documents.
     12.3 Indemnification. Borrower agrees to indemnify, defend and hold Bank
and its directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Bank (each, an “Indemnified Person”) harmless
against: (a) all obligations, demands, claims, and liabilities (collectively,
“Claims”) asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by such Indemnified Person from, following, or arising from
transactions between Bank and Borrower (including reasonable attorneys’ fees and
expenses), except for Claims, losses and/or Bank Expenses directly caused by
such Indemnified Person’s gross negligence or willful misconduct.
     12.4 Time of Essence. Time is of the essence for the performance of all
Obligations in this Agreement.
     12.5 Severability of Provisions. Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.
     12.6 Correction of Loan Documents. Bank may correct patent errors and fill
in any blanks in this Agreement and the other Loan Documents consistent with the
agreement of the parties.
     12.7 Amendments in Writing; Integration. All amendments to this Agreement
must be in writing and signed by both Bank and Borrower. This Agreement and the
Loan Documents represent the entire agreement about this subject matter and
supersede prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
into this Agreement and the Loan Documents.
     12.8 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, constitute
one Agreement.
     12.9 Survival. All covenants, representations and warranties made in this
Agreement continue in full force until this Agreement has terminated pursuant to
its terms and all Obligations (other than inchoate indemnity obligations and any
other obligations which, by their terms, are to survive the termination of this
Agreement) have been satisfied. The obligation of Borrower in Section 12.2 to
indemnify Bank shall survive until the statute of limitations with respect to
such claim or cause of action shall have run.

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     12.10 Confidentiality. In handling any confidential information, Bank shall
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Bank’s
Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any
interest in the Credit Extensions (provided, however, Bank shall use
commercially reasonable efforts to obtain such prospective transferee’s or
purchaser’s agreement to the terms of this provision); (c) as required by law,
regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise
required in connection with Bank’s examination or audit; (e) as Bank considers
appropriate in exercising remedies under the Loan Documents; and (f) to
third-party service providers of Bank so long as such service providers have
executed a confidentiality agreement with Bank with terms no less restrictive
than those contained herein. Confidential information does not include
information that either: (i) is in the public domain or in Bank’s possession
when disclosed to Bank, or becomes part of the public domain after disclosure to
Bank through no fault of Bank; or (ii) is disclosed to Bank by a third party, if
Bank does not know that the third party is prohibited from disclosing the
information.
     Bank may use confidential information for any purpose, including, without
limitation, for the development of client databases, reporting purposes, and
market analysis, so long as Bank does not disclose Borrower’s identity or the
identity of any person associated with Borrower unless otherwise expressly
permitted by this Agreement. The provisions of the immediately preceding
sentence shall survive the termination of this Agreement.
     12.11 Attorneys’ Fees, Costs and Expenses. In any action or proceeding
between Borrower and Bank arising out of or relating to the Loan Documents, the
prevailing party shall be entitled to recover its reasonable attorneys’ fees and
other costs and expenses incurred, in addition to any other relief to which it
may be entitled.
     13 DEFINITIONS
     13.1 Definitions. As used in this Agreement, the following terms have the
following meanings:
     “Account” is any “account” as defined in the Code with such additions to
such term as may hereafter be made, and includes, without limitation, all
accounts receivable and other sums owing to Borrower.
     “Account Debtor” is any “account debtor” as defined in the Code with such
additions to such term as may hereafter be made.
     “Advance” or “Advances” means an advance (or advances) under the Revolving
Line.
     “Affiliate” of any Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person’s senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person’s managers and members.
     “Agreement” is defined in the preamble hereof.
     “Availability Amount” is (a) the lesser of (i) the Revolving Line or
(ii) the amount available under the Borrowing Base minus (b) the amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit), and minus (c) the outstanding principal balance of any Advances.
     “Bank” is defined in the preamble hereof.
     “Bank Expenses” are all audit fees and expenses, costs, and expenses
(including reasonable attorneys’ fees and expenses) for preparing, amending,
negotiating, administering, defending and enforcing the Loan Documents
(including, without limitation, those incurred in connection with appeals or
Insolvency Proceedings) or otherwise incurred with respect to Borrower.
     “Borrower” is defined in the preamble hereof

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     “Borrower’s Books” are all Borrower’s books and records including ledgers,
federal and state tax returns, records regarding Borrower’s assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.
     “Borrowing Base” is eighty five percent (85%) of Eligible Accounts, as
determined by Bank from Borrower’s most recent Transaction Report; provided,
however, that Bank may decrease the foregoing percentage in its good faith
business judgment based on events, conditions, contingencies, or risks which, as
determined by Bank, could reasonably be expected to materially adversely affect
Collateral.
     “Borrowing Resolutions” are, with respect to any Person, those resolutions
substantially in the form attached hereto as Exhibit D.
     “Business Day” is any day that is not a Saturday, Sunday or a day on which
Bank is closed.
     “Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings
Group or Moody’s Investors Service, Inc.; (c) Bank’s certificates of deposit
issued maturing no more than one (1) year after issue; and (d) money market
funds at least ninety-five percent (95%) of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (c) of this
definition.
     “Code” is the Uniform Commercial Code, as the same may, from time to time,
be enacted and in effect in the State of California; provided, that, to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in Article or Division 9 shall
govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, or priority of, or
remedies with respect to, Bank’s Lien on any Collateral is governed by the
Uniform Commercial Code in effect in a jurisdiction other than the State of
California, the term “Code” shall mean the Uniform Commercial Code as enacted
and in effect in such other jurisdiction solely for purposes on the provisions
thereof relating to such attachment, perfection, priority, or remedies and for
purposes of definitions relating to such provisions.
     “Collateral” is any and all properties, rights and assets of Borrower
described on Exhibit A.
     “Collateral Account” is any Deposit Account, Securities Account, or
Commodity Account.
     “Commodity Account” is any “commodity account” as defined in the Code with
such additions to such term as may hereafter be made.
     “Compliance Certificate” is that certain certificate in the form attached
hereto as Exhibit B.
     “Contingent Obligation” is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (a) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (b) any obligations for undrawn letters of credit for the account of
that Person; and (c) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under any guarantee or other support arrangement.
     “Control Agreement” is any control agreement entered into among the
depository institution at which Borrower maintains a Deposit Account or the
securities intermediary or commodity intermediary at which Borrower

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maintains a Securities Account or a Commodity Account, Borrower, and Bank
pursuant to which Bank obtains control (within the meaning of the Code) over
such Deposit Account, Securities Account, or Commodity Account.
     “Credit Extension” is any Advance, Letter of Credit or any other extension
of credit by Bank for Borrower’s benefit.
     “Default Rate” is defined in Section 2.3(b).
     “Deferred Revenue” is all amounts received or invoiced in advance of
performance under contracts and not yet recognized as revenue.
     “Deposit Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made.
     “Designated Deposit Account” is Borrower’s deposit account, account number
                    , maintained with Bank.
     “Dollars,” “dollars” and “$” each mean lawful money of the United States.
     “Effective Date” is the date Bank executes this Agreement as indicated on
the signature page hereof.
     “Eligible Accounts” means Accounts which arise in the ordinary course of
Borrower’s business that meet all Borrower’s representations and warranties in
Section 5.3. Bank reserves the right at any time after the Effective Date, upon
written notice to Borrower, to adjust any of the criteria set forth below and to
establish new criteria in its good faith business judgment. Eligible Accounts
shall not include:
          (a) Accounts that the Account Debtor has not paid within ninety
(90) days of invoice date regardless of invoice payment period terms;
          (b) Accounts owing from an Account Debtor, fifty percent (50%) or more
of whose Accounts have not been paid within ninety (90) days of invoice date;
          (c) Accounts billed in the United States and owing from an Account
Debtor which does not have its principal place of business in the United States
or Canada unless such Accounts are otherwise Eligible Accounts and (i) covered
in full by credit insurance satisfactory to Bank, less any deductible,
(ii) supported by letter(s) of credit acceptable to Bank, (iii) supported by a
guaranty from the Export-Import Bank of the United States, or (iv) that Bank
otherwise approves of in writing;
          (d) Accounts billed and payable outside of the United States unless
the Bank has a first priority, perfected security interest or other enforceable
Lien in such Accounts; notwithstanding the foregoing, otherwise eligible
accounts owing from Fujitsu-Siemens which are billed and payable outside of the
United States may be counted towards the Borrowing Base in an amount not to
exceed Five Million Dollars ($5,000,000);
          (e) Accounts owing from an Account Debtor to the extent that Borrower
is indebted or obligated in any manner to the Account Debtor (as creditor,
lessor, supplier or otherwise — sometimes called “contra” accounts, accounts
payable, customer deposits or credit accounts), with the exception of customary
credits, adjustments and/or discounts given to an Account Debtor by Borrower in
the ordinary course of its business;
          (f) Accounts for which the Account Debtor is Borrower’s Affiliate,
officer, employee, or agent;
          (g) Accounts with credit balances over ninety (90) days from invoice
date;
          (h) Accounts owing from an Account Debtor, including Affiliates, whose
total obligations to Borrower exceed twenty-five (25%) of all Accounts, except
for (i) SUN and NetApp, for which such percentage is

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fifty percent (50%), (ii) Hewlett-Packard for which such percentage is seventy
percent (70%) and (iii) Jabil for which such percentage is forty percent (40%),
for the amounts that exceed that foregoing percentages, unless Bank approves in
writing;
          (i) Accounts owing from an Account Debtor which is a United States
government entity or any department, agency, or instrumentality thereof unless
Borrower has assigned its payment rights to Bank and the assignment has been
acknowledged under the Federal Assignment of Claims Act of 1940, as amended;
          (j) Accounts for demonstration or promotional equipment, or in which
goods are consigned, or sold on a “sale guaranteed”, “sale or return”, “sale on
approval”, or other terms if Account Debtor’s payment may be conditional;
          (k) Accounts owing from an Account Debtor that has not been invoiced
or where goods or services have not yet been rendered to the Account Debtor
(sometimes called memo billings or pre-billings);
          (l) Accounts subject to contractual arrangements between Borrower and
an Account Debtor where payments shall be scheduled or due according to
completion or fulfillment requirements where the Account Debtor has a right of
offset for damages suffered as a result of Borrower’s failure to perform in
accordance with the contract (sometimes called contracts accounts receivable,
progress billings, milestone billings, or fulfillment contracts);
          (m) Accounts owing from an Account Debtor the amount of which may be
subject to withholding based on the Account Debtor’s satisfaction of Borrower’s
complete performance (but only to the extent of the amount withheld; sometimes
called retainage billings);
          (n) Accounts subject to trust provisions, subrogation rights of a
bonding company, or a statutory trust;
          (o) Accounts owing from an Account Debtor that has been invoiced for
goods that have not been shipped to the Account Debtor unless Bank, Borrower,
and the Account Debtor have entered into an agreement acceptable to Bank in its
sole discretion wherein the Account Debtor acknowledges that (i) it has title to
and has ownership of the goods wherever located, (ii) a bona fide sale of the
goods has occurred, and (iii) it owes payment for such goods in accordance with
invoices from Borrower (sometimes called “bill and hold” accounts);
          (p) Accounts owing from an Account Debtor with respect to which
Borrower has received Deferred Revenue (but only to the extent of such Deferred
Revenue);
          (q) Accounts for which the Account Debtor has not been invoiced;
          (r) Accounts that represent non-trade receivables or that are derived
by means other than in the ordinary course of Borrower’s business;
          (s) Accounts for which Borrower has permitted Account Debtor’s payment
to extend beyond 90 days;
          (t) Accounts subject to chargebacks or others payment deductions taken
by an Account Debtor (but only to the extent the chargeback is determined
invalid and subsequently collected by Borrower);
          (u) Accounts in which the Account Debtor disputes liability or makes
any claim (but only up to the disputed or claimed amount), or if the Account
Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out
of business; and
          (v) Accounts for which Bank in its good faith business judgment
determines collection to be doubtful.

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     “Equipment” is all “equipment” as defined in the Code with such additions
to such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.
     “ERISA” is the Employee Retirement Income Security Act of 1974, and its
regulations.
     “Event of Default” is defined in Section 8.
     “Funding Date” is any date on which a Credit Extension is made to or on
account of Borrower which shall be a Business Day.
     “GAAP” is generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other Person as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
     “Governmental Approval” is any consent, authorization, approval, order,
license, franchise, permit, certificate, accreditation, registration, filing or
notice, of, issued by, from or to, or other act by or in respect of, any
Governmental Authority.
     “Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.
     “Indebtedness” is (a) indebtedness for borrowed money or the deferred price
of property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and
(d) Contingent Obligations.
     “Indemnified Person” is defined in Section 12.3.
     “Initial Audit” is Bank’s inspection of Borrower’s Accounts, the Collateral
and Borrower’s Books.
     “Insolvency Proceeding” is any proceeding by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
     “Intellectual Property” is (a) the manufacturing information and technology
needed to produce Borrower ‘s most current version(s) of its RAID Controllers,
including (i) specifications, software, schematics, designs, drawings, or other
materials needed to manufacture the RAID Controllers; and (ii) firmware and
microcode of the RAID stack comprising the storage controller, management
controller, events controllers, software, firmware and microcode and (b) any
other intellectual property which is material to the operation of Borrower’s
core business.
     “Inventory” is all “inventory” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.
     “Investment” is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to any Person.

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     “Letter of Credit” means a standby letter of credit issued by Bank or
another institution based upon an application, guarantee, indemnity or similar
agreement on the part of Bank as set forth in Section 2.1.2.
     “Letter of Credit Application” is defined in Section 2.1.2(a).
     “Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.
     “Loan Documents” are, collectively, this Agreement, the Perfection
Certificate, any note, or notes or guaranties executed by Borrower, and any
other present or future agreement between Borrower and/or for the benefit of
Bank in connection with this Agreement, all as amended, restated, or otherwise
modified.
     “Material Adverse Change” is (a) a material impairment in the perfection or
priority of Bank’s Lien in the Collateral or in the value of such Collateral;
(b) a material adverse change in the business, operations, or condition
(financial or otherwise) of Borrower; (c) a material impairment of the prospect
of repayment of any portion of the Obligations or (d) Bank determines, based
upon information available to it and in its reasonable judgment, that there is a
reasonable likelihood that Borrower shall fail to comply with the financial
covenant in Section 6.9 during the next succeeding financial reporting period.
     “Net Cash” means, at a given time, Borrower’s Cash and Cash Equivalents,
minus all Indebtedness owing from Borrower to Bank; provided however, for so
long as Borrower’s Net Cash held at Bank is greater than Five Million Dollars
($5,000,000) at all times after the Effective Date, measured on a daily basis,
for all other purposes under this Agreement, Net Cash shall be measured on an
average trailing three (3) month basis as of the last calendar day of each of
the prior three (3) calendar months.
     “Net Income” means, as calculated on a consolidated basis for Borrower for
any period as at any date of determination, the net profit (or loss), after
provision for taxes, of Borrower for such period taken as a single accounting
period.
     “Net Worth” means stockholder’s equity as calculated in accordance with
GAAP.
     “Obligations” are Borrower’s obligation to pay when due any debts,
principal, interest, Bank Expenses and other amounts Borrower owes Bank now or
later, whether under this Agreement, the Loan Documents, or otherwise,
including, without limitation, all obligations relating to letters of credit
(including reimbursement obligations for drawn and undrawn letters of credit),
cash management services, and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank, and the performance of Borrower’s
duties under the Loan Documents.
     “Operating Documents” are, for any Person, such Person’s formation
documents, as certified with the Secretary of State of such Person’s state of
formation on a date that is no earlier than 30 days prior to the Effective Date,
and, (a) if such Person is a corporation, its bylaws in current form, (b) if
such Person is a limited liability company, its limited liability company
agreement (or similar agreement), and (c) if such Person is a partnership, its
partnership agreement (or similar agreement), each of the foregoing with all
current amendments or modifications thereto.
     “Overadvance” is defined in Section 2.2.
     “Perfection Certificate” is defined in Section 5.1.
     “Permitted Indebtedness” is:
          (a) Borrower’s Indebtedness to Bank under this Agreement and the other
Loan Documents;
          (b) Indebtedness existing on the Effective Date and shown on the
Perfection Certificate;

- 23 -

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          (c) Subordinated Debt;
          (d) unsecured Indebtedness to trade creditors incurred in the ordinary
course of business;
          (e) Indebtedness incurred as a result of endorsing negotiable
instruments received in the ordinary course of business;
          (f) Indebtedness in an aggregate principal amount not to exceed One
Million Dollars ($1,000,000) secured by Permitted Liens;
          (g) unsecured convertible notes having stated maturities no sooner
than ninety (90) days after the Revolving Line Maturity Date;
          (h) other unsecured Indebtedness not otherwise permitted by
Section 7.4 not exceeding One Million Dollars ($1,000,000) in the aggregate
outstanding at any time; and
          (i) extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (h) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.
     “Permitted Investments” are:
          (a) Investments shown on the Perfection Certificate and existing on
the Effective Date;
          (b) (i) Cash Equivalents, and (ii) any Investments permitted by
Borrower’s investment policy, as amended from time to time, provided that such
investment policy (and any such amendment thereto) has been approved by Bank;
          (c) Investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of Borrower;
          (d) Investments consisting of deposit accounts in which Bank has a
perfected security interest;
          (e) Investments accepted in connection with Transfers permitted by
Section 7.1 or Section 7.3;
          (f) Investments of Subsidiaries in or to other Subsidiaries or
Borrower and Investments by Borrower in Subsidiaries not to exceed Five Million
Dollars ($5,000,000) in the aggregate;
          (g) Investments consisting of (i) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the
purchase of equity securities of Borrower or its Subsidiaries pursuant to
employee stock purchase plans or agreements approved by Borrower’s Board of
Directors;
          (h) Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with, customers or
suppliers arising in the ordinary course of business;
          (i) Investments consisting of notes receivable of, or prepaid
royalties and other credit extensions, to customers and suppliers who are not
Affiliates, in the ordinary course of business; provided that this paragraph
(i) shall not apply to Investments of Borrower in any Subsidiary;

- 24 -

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          (j) Joint ventures or strategic alliances in the ordinary course of
Borrower’s business consisting of the licensing of technology, the development
of technology or the providing of technical support, provided that any cash
Investments by Borrower do not exceed Two Million Five Hundred Thousand Dollars
($2,500,000) in the aggregate in any fiscal year; and
          (k) Other Investments not otherwise permitted hereunder not exceeding
One Million Dollars ($1,000,000) in the aggregate outstanding at any time.
     “Permitted Liens” are:
          (a) Liens existing on the Effective Date and shown on the Perfection
Certificate or arising under this Agreement and the other Loan Documents;
          (b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, provided that no notice of
any such Lien has been filed or recorded under the Internal Revenue Code of
1986, as amended, and the Treasury Regulations adopted thereunder;
          (c) purchase money Liens (i) on Equipment acquired or held by Borrower
incurred for financing the acquisition of the Equipment securing no more than
One Million Dollars ($1,000,000) in the aggregate amount outstanding, or
(ii) existing on Equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the Equipment;
          (d) Liens of carriers, warehousemen, suppliers, or other Persons that
are possessory in nature arising in the ordinary course of business so long as
such Liens attach only to Inventory, securing liabilities in the aggregate
amount not to exceed One Million Dollars ($1,000,000) and which are not
delinquent or remain payable without penalty or which are being contested in
good faith and by appropriate proceedings which proceedings have the effect of
preventing the forfeiture or sale of the property subject thereto;
          (e) Liens to secure payment of workers’ compensation, employment
insurance, old-age pensions, social security and other like obligations incurred
in the ordinary course of business (other than Liens imposed by ERISA);
          (f) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase;
          (g) leases or subleases of real property granted in the ordinary
course of business, and leases, subleases, non-exclusive licenses or sublicenses
of property (other than real property or Intellectual Property) granted in the
ordinary course of Borrower’s business, if the leases, subleases, licenses and
sublicenses do not prohibit granting Bank a security interest;
          (h) non-exclusive license of Intellectual Property granted to third
parties in the ordinary course of business;
          (i) Liens arising from attachments or judgments, orders, or decrees in
circumstances not constituting an Event of Default under Sections 8.4 and 8.7;
and
          (j) Liens in favor of other financial institutions arising in
connection with Borrower’s deposit and/or securities accounts held at such
institutions, provided that Bank has a perfected security interest in the
amounts held in such deposit and/or securities accounts.
     “Person” is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

- 25 -

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     “Prime Rate” is Bank’s most recently announced “prime rate,” even if it is
not Bank’s lowest rate.
     “Registered Organization” is any “registered organization” as defined in
the Code with such additions to such term as may hereafter be made
     “Requirement of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
     “Reserves” means, as of any date of determination, such amounts as Bank may
from time to time establish and revise in its good faith business judgment,
reducing the amount of Advances and other financial accommodations which would
otherwise be available to Borrower (a) to reflect events, conditions,
contingencies or risks which, as determined by Bank in its good faith business
judgment, do or could reasonably be expected to adversely affect (i) the
Collateral or any other property which is security for the Obligations or its
value (including without limitation any increase in delinquencies of Accounts),
(ii) the assets, business or prospects of Borrower or any Guarantor, or
(iii) the security interests and other rights of Bank in the Collateral
(including the enforceability, perfection and priority thereof); or (b) to
reflect Bank’s good faith belief that any collateral report or financial
information furnished by or on behalf of Borrower to Bank is or may have been
incomplete, inaccurate or misleading in any material respect; or (c) in respect
of any state of facts which Bank determines in good faith constitutes an Event
of Default or could reasonably be expected to, with notice or passage of time or
both, constitute an Event of Default.
     “Responsible Officer” is any of the Chief Executive Officer, President,
Chief Financial Officer and Controller of Borrower.
     “Revolving Line” is an Advance or Advances in an amount equal to Thirty
Million Dollars ($30,000,000), subject to Section 2.6.
     “Revolving Line Maturity Date” is the date three (3) years after the
Effective Date.
     “Securities Account” is any “securities account” as defined in the Code
with such additions to such term as may hereafter be made.
     “Subordinated Debt” is indebtedness incurred by Borrower subordinated to
all of Borrower’s now or hereafter indebtedness to Bank (pursuant to a
subordination, intercreditor, or other similar agreement in form and substance
satisfactory to Bank entered into between Bank and the other creditor), on terms
acceptable to Bank.
     “Subsidiary” means, with respect to any Person, any Person of which more
than fifty percent (50%) of the voting stock or other equity interests (in the
case of Persons other than corporations) is owned or controlled directly or
indirectly by such Person or one or more of Affiliates of such Person.
     “Transaction Report” is that certain report of transactions and schedule of
collections in the form attached hereto as Exhibit C.
     “Transfer” is defined in Section 7.1.
     “Unused Revolving Line Facility Fee” is defined in Section 2.4(c).
[Signature page follows.]

- 26 -

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the Effective Date.

         
BORROWER:
   
 
        DOT HILL SYSTEMS CORP.    
 
       
By
/s/ Hanif I. Jamal 
   
 
   
 
       
Name: 
  Hanif I. Jamal     
 
 
   
 
       
Title:
  Senior Vice President Chief Financial Officer, and Treasurer     
 
 
   
 
       
BANK:
       
 
        SILICON VALLEY BANK    
 
       
By
/s/ Derek Hoyt 
   
 
   
 
       
Name: 
  Derek Hoyt     
 
 
   
 
       
Title:
  Deal Team Leader     
 
 
   

Effective Date: July 21, 2008

 

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EXHIBIT A — COLLATERAL DESCRIPTION
The Collateral consists of all of Borrower’s right, title and interest in and to
the following personal property:
     All Accounts (including health-care receivables), contract rights or rights
to payment of money, cash, Cash Equivalents, Deposit Accounts, Commodities
Accounts and Securities Accounts whether now owned or hereafter acquired,
wherever located; and
     all Borrower’s Books, instruments (including any promissory notes), chattel
paper (whether tangible or electronic) and supporting obligations relating to
the foregoing, and any and all claims, rights and interests in any of the above
and all substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of
any or all of the foregoing.
     Pursuant to the terms of a certain negative pledge arrangement with Bank,
Borrower has agreed not to encumber any of its Inventory or Intellectual
Property (except for Permitted Liens), and any claims for damage by way of any
past, present, or future infringement of any of the foregoing, without Bank’s
prior written consent.
     All defined terms above shall have the meanings ascribed to such terms in
that certain Loan and Security Agreement between Borrower and Silicon Valley
Bank dated as of July 21, 2008, as may be amended from time to time.

 

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Exhibit B — Loan Payment/Advance Request Form
Deadline for same day processing is Noon P.S.T.

             
Fax To:
  Date:        
 
     
 
   

LOAN PAYMENT:

                                  DOT HILL SYSTEMS CORP.    
 
                   
From Account #
          To Account #        
 
 
(Deposit Account #)        
 
(Loan Account #)    

                     
Principal $
          and/or Interest $        
 
       
 
   

                          Authorized Signature:           Phone Number:        
Print Name/Title:
 
 
       
 
   
 
               

Loan Advance:
Complete Outgoing Wire Request section below if all or a portion of the funds
from this loan advance are for an outgoing wire.

                     
From Account #
          To Account #        
 
 
(Loan Account #)        
 
(Deposit Account #)    

         
Amount of Advance $
       
 
 
 
   

All Borrower’s representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
request for an advance; 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:

                          Authorized Signature:           Phone Number:        
 
 
 
       
 
   
Print Name/Title:
                       
 
               

Outgoing Wire Request:
Complete only if all or a portion of funds from the loan advance above is to be
wired.
Deadline for same day processing is noon, P.S.T.

                     
Beneficiary Name: 
          Amount of Wire: $         
Beneficiary Bank:
 
      Account Number:
 
   
City and State:
 
       
 
   
 
               

                     
Beneficiary Bank Transit (ABA) #:
          Beneficiary Bank Code (Swift, Sort, Chip, etc.):        
 
 
      (For International Wire Only)
 
   

                     
Intermediary Bank:
          Transit (ABA) #:        
For Further Credit to: 
 
       
 
     
 
   
 
                   
Special Instruction:
                     
 
   

By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).

                     
Authorized Signature:
          2nd Signature (if required):        
 
     
 
   

                     
Print Name/Title:
          Print Name/Title:        
Telephone #:
 
      Telephone #:
 
   
 
     
 
   

1

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EXHIBIT C
Transaction Report
[EXCEL spreadsheet to be provided separately from lending officer.]

 

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EXHIBIT D
BORROWING RESOLUTIONS
(SVB LOGO) [a42685a4268501.gif]
CORPORATE BORROWING CERTIFICATE

Borrower: DOT HILL SYSTEMS CORP.
Bank:           Silicon Valley Bank   Date: July 21, 2008

I hereby certify as follows, as of the date set forth above:
1. I am the Secretary, Assistant Secretary or other officer of the Borrower. My
title is as set forth below.
2. Borrower’s exact legal name is set forth above. Borrower is a corporation
existing under the laws of the State of
                                                             .
           [print name of state]
3. Attached hereto are true, correct and complete copies of Borrower’s
Certificate of Incorporation (including amendments), as filed with the Secretary
of State of the state in which Borrower is incorporated as set forth in
paragraph 2 above. Such Certificate of Incorporation have not been amended,
annulled, rescinded, revoked or supplemented, and remain in full force and
effect as of the date hereof.
4. The following resolutions were duly and validly adopted by Borrower’s Board
of Directors at a duly held meeting of such directors (or pursuant to a
unanimous written consent or other authorized corporate action). Such
resolutions are in full force and effect as of the date hereof and have not been
in any way modified, repealed, rescinded, amended or revoked, and Bank may rely
on them until Bank receives written notice of revocation from Borrower.
Resolved, that any one of the following officers or employees of Borrower, whose
names, titles and signatures are below, may act on behalf of Borrower:

                          Authorized to             Add or Remove Name   Title  
Signature   Signatories
 
           
 
          o
 
           
 
           
 
          o
 
           
 
           
 
          o
 
           
 
           
 
          o
 
           

Resolved Further, that any one of the persons designated above with a checked
box beside his or her name may, from time to time, add or remove any individuals
to and from the above list of persons authorized to act on behalf of Borrower.
Resolved Further, that such individuals may, on behalf of Borrower:
Borrow Money. Borrow money from Silicon Valley Bank (“Bank”).

 

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Execute Loan Documents. Execute any loan documents Bank requires.
Grant Security. Grant Bank a security interest in any of Borrower’s assets.
Negotiate Items. Negotiate or discount all drafts, trade acceptances, promissory
notes, or other indebtedness in which Borrower has an interest and receive cash
or otherwise use the proceeds.
Letters of Credit. Apply for letters of credit from Bank.
Further Acts. Designate other individuals to request advances, pay fees and
costs and execute other documents or agreements (including documents or
agreement that waive Borrowers right to a jury trial) they believe to be
necessary to effectuate such resolutions.
Resolved Further, that all acts authorized by the above resolutions and any
prior acts relating thereto are ratified.
5. The persons listed above are Borrower’s officers or employees with their
titles and signatures shown next to their names.

             
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

     *** If the Secretary, Assistant Secretary or other certifying officer
executing above is designated by the resolutions set forth in paragraph 4 as one
of the authorized signing officers, this Certificate must also be signed by a
second authorized officer or director of Borrower.
     I, the                                          of Borrower, hereby certify
as to paragraphs 1 through 5 above, as of the date set forth above.
[print title]

             
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

 

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EXHIBIT E — COMPLIANCE CERTIFICATE

             
TO: SILICON VALLEY BANK
  Date:        
FROM: DOT HILL SYSTEMS CORP.
     
 
   

     The undersigned authorized officer of DOT HILL SYSTEMS CORP. (“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 5.12 of the Agreement, and (5) no
Liens have been levied or claims made against Borrower or any of its
Subsidiaries 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 or as
permitted in the Agreement. 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
Transaction Report
  Weekly if Net Cash is less than $20,000,000 and with each Advance   Yes   No
 
       
10-Q, 10-K and 8-K
  Within 5 days after filing with SEC   Yes   No
 
       
Compliance Certificate
  With 10-Q or 10-K   Yes   No
 
       
Cash Balance report, A/R & A/P Agings
  Monthly within 20 days   Yes   No
 
       
Annual Board of Director-approved projections
  March 31 of each year   Yes   No

              Financial Covenant   Required   Actual   Complies
Maintain on a Quarterly Basis:
           
Minimum Net Worth
  $                    *   $                       Yes   No

 
*  ($55,000,000) increasing quarterly by fifty percent (50%) of Net Income and
monthly by fifty percent (50%) of issuances of equity after the Effective Date
and the principal amount of Subordinated Debt.
     The following are the exceptions with respect to the certification above:
(If no exceptions exist, state “No exceptions to note.”)
 
 

                      DOT HILL SYSTEMS CORP.       BANK USE ONLY    
 
                    By:           Received by:    
 
 
 
         
 
   
Name:
              authorized signer    
 
 
 
               
Title:
          Date:        
 
 
 
     
 
   
 
          Verified:        
 
             
 
   
 
              authorized signer    
 
                   
 
          Date:        
 
         
 
   

 

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Compliance Status:           Yes     No