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
ENCISION INC., a Colorado 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.
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 TO DEDUCTION OF RESERVES, BANK WILL MAKE ADVANCES TO BORROWER UP
TO AN AMOUNT NOT TO EXCEED THE LESSER OF: (A) THE REVOLVING LINE; OR (B) THE
BORROWING BASE.
AMOUNTS BORROWED UNDER THE REVOLVING LINE 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.
2.1.2
CASH MANAGEMENT SERVICES.
BORROWER MAY USE UP TO $300,000 (THE
"CASH MANAGEMENT SERVICES SUBLIMIT") OF THE REVOLVING LINE FOR BANK'S CASH
MANAGEMENT SERVICES WHICH MAY INCLUDE MERCHANT SERVICES, DIRECT DEPOSIT OF
PAYROLL, BUSINESS CREDIT CARD, AND CHECK CASHING SERVICES IDENTIFIED IN BANK'S
VARIOUS CASH MANAGEMENT SERVICES AGREEMENTS (COLLECTIVELY, THE "CASH MANAGEMENT
SERVICES").
ANY AMOUNTS BANK PAYS ON BEHALF OF BORROWER OR ANY AMOUNTS THAT ARE
NOT PAID BY BORROWER FOR ANY CASH MANAGEMENT SERVICES WILL BE TREATED AS
ADVANCES UNDER THE REVOLVING LINE AND WILL ACCRUE INTEREST AT THE INTEREST RATE
APPLICABLE TO ADVANCES.
2.2
OVERADVANCES.
IF AT ANY TIME OR FOR ANY REASON THE TOTAL OF ALL
OUTSTANDING ADVANCES AND ALL OTHER MONETARY OBLIGATIONS EXCEEDS THE LESSER
OF: (A) THE REVOLVING LINE; OR (B) THE BORROWING BASE (AN "OVERADVANCE"),
BORROWER SHALL IMMEDIATELY PAY THE AMOUNT OF THE EXCESS TO BANK, WITHOUT NOTICE
OR DEMAND.
WITHOUT LIMITING BORROWER'S OBLIGATION TO REPAY TO BANK THE AMOUNT
OF ANY 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 AMOUNTS
OUTSTANDING UNDER THE REVOLVING LINE SHALL ACCRUE INTEREST AT A PER ANNUM RATE
EQUAL TO ONE AND ONE-QUARTER OF ONE PERCENT (1.25%) ABOVE THE PRIME RATE, WHICH
INTEREST SHALL BE PAYABLE MONTHLY.