exv10w40



 






EXHIBIT 10.40




FIRST AMENDMENT

TO

LOAN AND SECURITY AGREEMENT




     THIS
FIRST AMENDMENT to Loan and Security Agreement (this “Amendment”) is entered into this
16th day of December, 2005, by and between SiliconValley Bank (“Bank”) and Xata Corporation, a
Minnesota corporation (“Borrower”) whose address is 151 E. Cliff Road, Suite 10, Burnsville, MN
55337.



Recitals




     A. Bank and Borrower have entered into that certain Loan and SecurityAgreement dated as
of December 17, 2004 (as the same may from time to time be further amended, modified, supplemented
or restated, the “Loan Agreement”).



     B. Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.



     C. Borrower has requested that Bank amend the Loan Agreement to (1) reset the Quick Ratio
(Adjusted) financial covenant, (2) incorporate a cash management services sublimit and letters of
credit sublimit, (3) increase the amount of the Committed Revolving Line, and (4) make certain
other revisions to the Loan Agreement as more fully set forth herein.



     D. Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the
extent, in accordance with the terms, subject to the conditions and in reliance upon the
representations and warranties set forth below.



Agreement




     Now, THEREFORE, in consideration of the foregoing recitals and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be
legally bound, the parties hereto agree as follows:



     1. Definitions. Capitalized terms used but not defined in this Amendment shall have the
meanings given to them in the Loan Agreement.



     2. Amendments to Loan Agreement.



          2.1 Section 2.1.1 (Revolving Advances). Section 2.1.1 (a) is amended in its entirety and
replaced with the following:





     (a) Bank will make Advances not exceeding (i) the lesser of (A) the Committed
Revolving Line or (B) the Borrowing Base, minus (ii) the amount of all outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit), minus
(iii) the Cash Management Services Sublimit. Amounts borrowed under this Section
may be repaid and reborrowed during the term of this Agreement



 









 





          2.2 Section 2.1.2 (Letter of Credit Sublimit). Section 2.1.2 entitled “Letters of Credit
Sublimit” is hereby incorporated to read as follows:





     Bank will issue or have issued Letters of Credit for Borrower’s account not
exceeding (i) the lesser of the Committed Revolving Line or the Borrowing Base
minus (ii) the outstanding principal balance of the Advances; however, the face
amount of outstanding Letters of Credit (including drawn but unreimbursed Letters
of Credit) may not exceed $500,000. Borrower’s Letter of Credit reimbursement
obligation will be secured by unencumbered cash on terms acceptable to Bank at any
time upon the Revolving Maturity Date if the term of this Agreement is not
extended by Bank. Borrower agrees to execute any further documentation in
connection with the Letters of Credit as Bank may reasonably request.



          2.3 Section 2.1.3 (Cash Management Services Sublimit). Section 2.1.3 entitled “Cash
Management Services Sublimit” is hereby incorporated to read as follows:





     Borrower may use up to $500,000 for Bank’s cash management services, which
may include merchant services, direct deposit of payroll, business credit card,
and check cashing services identified in various cash management services
agreements related to such services (the “Cash Management Services Sublimit”). All
amounts Bank pays for any Cash Management Services Sublimit will be treated as
Advances under the Committed Revolving Line.



          2.4 Section 2.2 (Overadvances). Section 2.2 is hereby amended in it entirety and replaced
with the following:





     If Borrower’s Obligations under Sections 2.1.1, 2.1.2 and 2.1.3 exceed the
lesser of either (i) the Committed Revolving Line or (ii) the Borrowing Base,
Borrower must immediately pay Bank the excess.



          2.5 Section 2.3 (Interest Rate, Payments). Section 2.3(a) is hereby amended in its
entirety and replaced with the following:





     (a) Interest Rate. Advances accrue interest on the outstanding principal
balance at a per annum rate equal to the Prime Rate; provided, however, if
Borrower submits a Compliance Certificate to Bank indicating that Borrower’s Quick
Ratio (Adjusted) financial covenant has dropped below 1.50 to 1.00 (the “AQR
Trigger”), then effective as of the first day of the month following Bank’s
receipt of the Compliance Certificate, Advances will accrue interest on the
outstanding principal balance at a per annum rate equal to the Prime Rate plus one
half of one percentage point (0.50%). If Borrower is late in submitting its
Compliance Certificate to Bank and the AQR Trigger is below 1.50 to 1.00, then the
interest rate



 









 







change will be effective retroactively to the first of the month following the
date the Compliance Certificate is due to Bank. If Borrower is late in
submitting its Compliance Certificate to Bank and Borrower’s AQR Trigger is
above 1.50 to 1.00, then the interest rate change will be effective five (5)
Business Days after Bank’s receipt of the Compliance Certificate. After an Event
of Default, Obligations accrue interest at 5 percent above the rate effective
immediately before the Event of Default. The interest rate increases or
decreases when the Prime Rate changes. Interest is computed on a 360 day year
fro the actual number of days elapsed.



          2.6 Section 2.4 (Fees). Section 2.4(a) and Section 2.4(c) are hereby amended in their
entirety and replaced with the following:





     (a) Unused Line Fee. A commitment fee equal to 0.50 of 1 percent per annum
of the average unused portion of the Committed Revolving Line is payable to Bank
in quarterly installments on the 5th day of each month following each fiscal
quarter.




     (c) Early Termination Fee. If Borrower terminates the Committed Revolving
Line prior to December 15, 2006, a fully earned, non- refundable early
termination fee equal to 1% of the Committed Revolving Line; or if Borrower
terminates the Committed Revolving Line prior to December 15, 2007, a fully
earned, non-refundable early termination fee equal to 0.50% of the Committed
Revolving Line



          2.7 Section 2.4 (Fees). Section 2.4(d) is hereby incorporated to read as follows:





     (d) Collateral Handling Fee. A collateral handling fee of $750 shall be payable to
Bank on the last day of each month.



          2.8 Section 6.2 (Financial Statements, Reports, Certificates). Section 6.2(e) is hereby
incorporated to read as follows:





     (e) Prior to Borrower’s fiscal year end, Borrower will deliver to Bank Borrower’s
Board of Director approved projection report for the following fiscal year.



          2.9 Section 6.7 (Financial Covenants). Section 6.7 is hereby amended in its
entirety and replaced with the following:





     Borrower will maintain as of the last day of each month:




     Quick Ratio (Adjusted). A ratio of Borrower’s unrestricted cash and cash
equivalents held at Bank plus Accounts to Current Liabilities
minus Deferred Revenue of at least 1.00 to 1.00.




 










 






          2.10 Section 13 (Definitions). The following terms and their respective definitions
set forth in Section 13.1 are amended and/or incorporated in their entirety and replaced with
the following:





     “Borrowing Base” is (i) 75% of Eligible Accounts, plus (ii) 50%
of Borrower’s unrestricted cash, plus (iii) the lesser of 25% of the value of
Borrower’s Eligible Inventory (valued at the lower of cost or wholesale
fair market value) or $750,000 but at no time greater than 25% of the
aggregate Eligible Accounts, as determined by Bank from Borrower’s
most recent Borrowing Base Certificate; provided,
however, that Bank
may lower the percentage of the Borrowing Base after performing an audit
of Borrower’s Collateral.




     “Cash Management Services Sublimit” is defined in Section 2.1.3.




     “Committed Revolving Line” is an Advance or Advances in an aggregate
amount of up to $5,000,000.




     Sub-letter (d) of the defined term “Eligible Accounts”:




     (d) Accounts for an account debtor, including Affiliates, whose
total obligations to Borrower exceed 25% of all Accounts, for the amounts
that exceed that percentage, unless the Bank approves in writing except for
those certain Accounts on a case by case basis, for which the percentage
may be up to 60%;




     “Eligible Inventory” is Borrower’s Inventory located at its principal
place of business (or any location permitted under Section 7.2) that complies
with representations and warranties in Section 5.2, but may not include used,
returned, obsolete, consigned, work in progress, demonstrative or custom
inventory, supplies, packing or shipping materials, but may include raw
materials.




     “Letters of Credit” means a standby letter of credit issued by Bank or
another financial institution based upon an application, guarantee, indemnity
or similar agreement on the part of Bank as set forth in Section 2.1.2.




     “Revolving Maturity Date” is December 15, 2007.



     3. Limitation of Amendments.



          3.1
The amendments set forth in Section 2, above, are effective for the purposes set forth
herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to
any amendment, waiver or modification of any other term or condition of any Loan Document, or
(b) otherwise prejudice any right or remedy which





 









 







Bank may now have or may have in the future under or in connection with any Loan Document.




          3.2 This Amendment shall be construed in connection with and as part of the Loan Documents
and all terms, conditions, representations, warranties, covenants and agreements set forth in the
Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in
full force and effect.




     4. Representations and Warranties. To induce Bank to enter into this Amendment,
Borrower hereby represents and warrants to Bank as follows:



          4.1 Immediately after giving effect to this Amendment (a) the
representations and warranties contained in the Loan Documents are true, accurate and
complete in all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they are true and
correct as of such date), and (b) no Event of Default has occurred and is continuing;




          4.2 Borrower has the power and authority to execute and deliver this
Amendment and to perform its obligations under the Loan Agreement, as amended by
this Amendment;




          4.3 The organizational documents of Borrower delivered to Bank on
December 17, 2004 remain true, accurate and complete and have not been amended,
supplemented or restated and are and continue to be in full force and effect;




          4.4 The execution and delivery by Borrower of this Amendment and
the performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, have been duly authorized;




          4.5 The execution and delivery by Borrower of this Amendment and
the performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not and will not contravene (a) any law or regulation binding on
or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower,
(c) any order, judgment or decree of any court or other governmental or public body or
authority, or subdivision thereof, binding on Borrower, or (d) the organizational
documents of Borrower;




          4.6 The execution and delivery by Borrower of this Amendment and
the performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not require any order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by any governmental
or public body or authority, or subdivision thereof, binding on either Borrower, except as
already has been obtained or made; and




          4.7 This Amendment has been duly executed and delivered by
Borrower and is the binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as such enforceability may be limited by bankruptcy,





 










 





insolvency, reorganization, liquidation, moratorium or other similar laws of general
application and equitable principles relating to or affecting creditors’ rights.




     5. Counterparts. This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.



     6. Effectiveness. This Amendment shall be deemed effective upon the due
execution and delivery to Bank of this Amendment by each party hereto.



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



	 	 	 	 	 	 	 	 	 
	BANK

	 	 	 	 	 	BORROWER
	 
	 	 	 	 	 	 	 	 
	Silicon Valley Bank	 	 	 	Xata Corporation
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 	 	 


	Name:

	 	 	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 
	 

	 
	 	 	 	 	 





 









 






EXHIBIT D

COMPLIANCE CERTIFICATE




	 	 	 
	TO:

	 	SILICON VALLEY BANK
	 
	 	 
	FROM:

	 	XATA CORPORATION






     The undersigned authorized officer of Xata Corporation (“Borrower”) certifies that under the
terms and conditions of the Loan and Security Agreement between Borrower and Bank (the
“Agreement”), (i) Borrower is
in complete compliance for the period ending                                          with all required covenants except as noted
below and (ii) all representations and warranties in the Agreement are true and correct in all
material respects on this date. In addition, the undersigned authorized officer of Borrower
certifies that Borrower and each Subsidiary has timely filed all required tax returns and paid, or
made adequate provision to pay, all material taxes, except those being contested in good faith
with adequate reserves under GAAP. Attached are the required documents supporting the
certification. The Officer certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) consistently applied from one period to the next except as explained
in an accompanying letter or footnotes. The Officer acknowledges that no borrowings may be
requested at any time or date of determination that Borrower is not in compliance with any of the
terms of the Agreement, and that compliance is determined not just at the date this certificate is
delivered.



Please indicate compliance status by circling Yes/No under “Complies” column.




	 	 	 	 	 	 	 
	Reporting Covenant	 	Required	 	Complies
	Monthly financial statements + CC

	 	Monthly within 30 days
	 	Yes
	 	No
	Annual (Audited)

	 	FYE within 120 days
	 	Yes
	 	No
	A/R & A/P Agings

	 	Monthly within 30 days
	 	Yes
	 	No
	Borrowing Base Certificate

	 	Monthly within 30 days
	 	Yes
	 	No
	Board Approval Projections

	 	Prior to fiscal year end
	 	Yes
	 	No






	 	 	 	 	 	 	 	 	 
	Financial Covenant	 	Required	 	Actual	 	Complies
	Maintain on a monthly basis:
	 	 	 	 	 	 	 	 
	  Minimum Quick Ratio (Adjusted)

	 	1.00:1.00*
	 	                     :1.00
	 	Yes
	 	No








 




			
	*	 	A ratio of Borrower’s unrestricted cash and cash equivalents held at Bank plus Accounts to
Current Liabilities minus Deferred Revenue of at least 1.00 to 1.00.





Borrower only has deposit accounts located at the following institutions:                                         .




Has Borrower filed any new Trademark, Patent or Copyright applications?                                 Yes/No




(If “yes”, please list below and complete the attached Addendum to Intellectual Property Security
Agreement)




Trademarks:                                                                                 




Patents:                                                                                 




Copyrights:                                                                                 
















 







	 	 	 
	Comments
Regarding Exceptions: See Attached.
	 	 
	 
	 	 
	Sincerely,
	 	 
	 
	 	 
	Xata Corporation
	 	 
	 
	 	 
	 

signature 

	 	 
	 
	 	 
	 

title 

	 	 
	 
	 	 
	 

date 

	 	 










	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	BANK
USE ONLY
  	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	Received By:
	 	 	 	 	 	 	 
	 	 

	 	 

AUTHORIZED SIGNER
	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	Date:
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	Verified:
	 	 	 	 	 	 	 
	 	 

	 	 	 	 	 	 	 
	 	 

	 	AUTHORIZED SIGNER	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	Date:
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	Compliance
Status:
	 	 	Yes     	No 	 	 	
	 	 	 	 	 





















 






EXHIBIT C

BORROWING BASE CERTIFICATE 

COLLATERAL SCHEDULE




	 	 	 	 	 	 	 
	 
	Borrower:

	 	Xata Corporation
	 	Bank:
	 	Silicon Valley Bank
	 

	 	151 E. Cliff Road, Suite 10
	 	 	 	3003 Tasman Drive
	 

	 	Burnsville, MN 55337
	 	 	 	Santa Clara, CA 95054






	 	 	 	 	 	 	 
	Commitment Amount: $5,000,000
	 
	ACCOUNTS RECEIVABLE
	1.	 	Accounts Receivable Book Value as of       
	 	 	 	$                    
	2.	 	Additions (please explain on reverse)
	 	 	 	$                    
	3.	 	TOTAL ACCOUNTS RECEIVABLE
	 	 	 	$                    
	 	 	 
	 	 	 	 
	ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
	4.	 	Amounts over 90 days due
	 	 	 	 
	5.	 	Balance of 50% over 90 day accounts
	 	$                    	 	 
	6.	 	Credit Balances over 90 days
	 	$                    	 	 
	7.	 	Excess 25% Concentration Limit*
	 	$                    	 	 
	8.	 	Foreign Accounts
	 	$                    	 	 
	9.	 	Governmental Accounts
	 	$                    	 	 
	10.	 	Contra Accounts
	 	$                    	 	 
	11.	 	Promotion or Demo Accounts
	 	$                    	 	 
	12.	 	Intercompany/Employee Accounts
	 	$                    	 	 
	13.	 	Other (please explain on reverse)
	 	$                    	 	 
	14.	 	TOTAL ACCOUNTS RECEIVABLE DEDUCTION
	 	 	 	$                    
	15.	 	Eligible Accounts (#3 minus # 14)
	 	 	 	$                    
	16.	 	LOAN VALUE OF ACCOUNTS (75% of #15 + 50% of unrestricted cash)	 	$                    
	*60% on a case by case basis
	 	 	 
	 	 	 	 
	INVENTORY
	17.	 	Inventory Value as of            
	 	$                    	 	 
	 	 	 
	 	 	 	 
	INVENTORY DEDUCTIONS
	18.	 	Obsolete Inventory
	 	$                    	 	 
	19.	 	Any Demo Inventory
	 	$                    	 	 
	20.	 	Inventory sold on consignment
	 	$                    	 	 
	21.	 	Inventory with offsetting claims
	 	$                    	 	 
	22.	 	Work in process
	 	$                    	 	 
	23.	 	Other (please explain on reverse)
	 	$                    	 	 
	24.	 	TOTAL INVENTORY DEDUCTIONS
	 	 	 	$                    
	25.	 	Eligible Inventory (# 17 minus #24)
	 	 	 	$                    
	26.	 	LOAN VALUE OF INVENTORY (lesser of 25% of #25 or $750,000,
not to exceed 25% of #15)	 	$                    
	 	 	 
	 	 	 	 
	BALANCES
	27.	 	Maximum Loan Amount
	 	 	 	$                    
	28.	 	Total Funds Available Lesser of #27 or [#16 plus 26]	 	$                    
	29.	 	Present balance owing on Line of Credit
	 	$                    	 	 
	30.	 	Outstanding under Sublimits (LC)
	 	$                    	 	 
	31.	 	RESERVE POSITION (#28 minus #29 and #30)
	 	 	 	$                    

















 





The undersigned represents and warrants that the foregoing is true, complete and correct, and
that the information reflected in this Borrowing Base Certificate complies with the representations
and warranties set forth in the Loan and Security Agreement between the undersigned and Silicon
Valley Bank.




COMMENTS:




XATA CORPORATION





	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

     Authorized Singer
	 	 











	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	BANK USE ONLY
  	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	Rec’d By:
	 	 	 	 	 	 	 
	 	 

	 	 

Auth. Singer
	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	Date:
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	Verified:
	 	 	 	 	 	 	 
	 	 

	 	 	 	 	 	 	 
	 	 

	 	Auth. Singer	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	Date: