Document:

xcom-ex102_7.htm

Exhibit 10.2

 

Amendment to 

Subordination Agreement

(Debt and Security Interest)

 

 

		
	
Borrowers:
	
Xtera Communications, Inc.

	
 
	
Azea Networks, Inc

	
 
	
Neovus, Inc.

	
 
	
Xtera Asia Holdings, LLC

 

 

		
	
Creditors:
	
New Enterprise Associates 9, Limited Partnership

	
 
	
New Enterprise Associates 10, Limited Partnership

	
 
	
ARCH Venture Fund VI, L.P.

	
 
	
Jon R. Hopper

	

	
 

Date:September 30, 2016

This Amendment to Subordination Agreement (this “Amendment”) is executed, jointly and severally, by the above-named Creditors (collectively referred to herein as “Creditor”) and PACIFIC WESTERN BANK (“Bank”) (successor-in-interest by merger to SQUARE 1 BANK), whose address is 406 Blackwell Street, Suite 240, Durham, North Carolina 27701, with respect to the above-named Borrowers (collectively referred to herein as “Borrower” or “the Borrower”).  Creditor and Bank are parties to a certain Subordination Agreement, dated September 13, 2106 (as amended, restated, supplemented, or otherwise modified from time to time, the “Subordination Agreement”).  Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Subordination Agreement.

The parties hereto agree to amend the Subordination Agreement as follows, effective as of the date hereof, unless otherwise indicated below, subject to the terms and conditions set forth below. 

 

1.  Payments in the Event of a Sale or Liquidation of Borrower’s Assets.   That portion of Section 4 of the Subordination Agreement which currently reads:

“Bank agrees that, in the event of a sale or liquidation of Borrower’s assets, from the first proceeds received by Bank and to the extent loaned to Borrower by Creditor and used by Borrower as permitted under the terms of the Seventh Amendment to Loan Agreement, dated on or about the date hereof, and within five Business Days of Bank’s receipt of such proceeds in good funds, Bank shall pay to Creditor the following amounts of Subordinated Debt:

	
 
	
(a)
	
up to $500,000 for Borrower’s Payroll Expenses and Non-Budgeted Non-Payroll Expenses incurred and paid during the period of September 1 through September 15, 2016 (the ‘September 1-15 Combined Non-Budgeted Expenses’);
	
 

	
 
	
(b)
	
up to the sum of the following (collectively, the ‘September 16-30 Combined Non-Budgeted Expenses’): (i) $500,000 for Borrower’s Payroll Expenses incurred and paid 
	
 

Exhibit 10.2

 

	
 
		
during the period of September 16 through September 30, 2016 (the ‘September 16-30 Payroll Expenses’) and Borrower’s Non-Budgeted Non-Payroll Expenses incurred and paid during the period of September 16 through September 30, 2016, plus (ii) the difference between $500,000 and the amount of September 1-15 Combined Non-Budgeted Expenses actually incurred and paid; and 
	
 

	
 
	
(c)
	
up to $500,000 for Budgeted Non-Payroll Expenses paid during the period of September 16 through September 30, 2016.
	
 

Notwithstanding the foregoing, upon the Bank transmitting to Creditor and copying to Borrower, by e-mail which shall be deemed received by Creditor and Borrower when transmitted by Bank, a written notice of Bank's termination of its payment obligations hereunder, which Bank may send in its sole and absolute discretion, Bank shall only be obligated to pay (i) New Lender Indebtedness properly incurred pursuant hereto prior to Creditor's receipt of such notice, and (ii) any September 16-30 Payroll Expenses incurred during the three Business Days following the giving of such notice.”

is hereby amended to read:

“Bank agrees that, in the event of a sale or liquidation of Borrower’s assets, from the first proceeds received by Bank and to the extent loaned to Borrower by Creditor and used by Borrower as permitted under the terms of the Seventh Amendment to Loan Agreement, dated on or about the date hereof, and within five Business Days of Bank’s receipt of such proceeds in good funds, Bank shall pay to Creditor the following amount of Subordinated Debt:

	
 
	
(a)
	
$1,200,000; plus
	
 

	
 
	
(b)
	
the amount of October 2016 New Lender Indebtedness outstanding, if any.”
	
 

2.  General.  The parties hereto hereby ratify and confirm the continuing validity, enforceability and effectiveness of the Subordination Agreement, and all terms and provisions thereof, as amended herein.  Without limiting the generality of the foregoing, the provisions of Section 14 (titled “Governing Law; Jurisdiction; Venue; Arbitration”) and Section 15 (titled “Mutual Waiver of Jury Trial”) shall apply equally to this Amendment, and the same are incorporated herein by this reference.

[Signatures on Next Page]

 

Pacific Western BankAmendment to Subordination Agreement

 

Creditor:

	
 
	
 
	
New Enterprise Associates 9, Limited Partnership

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
NEA Partners 9, Limited Partnership

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Louis S. Citron

	
 
	
 
	
 Title
	
Chief Legal Officer/Attorney-in-fact

	
 
	
 
	
 
	
 

 

Creditor:

	
 
	
 
	
New Enterprise Associates 10, Limited Partnership

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
NEA Partners 10, Limited Partnership

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Louis S. Citron

	
 
	
 
	
 Title
	
Chief Legal Officer/Attorney-in-fact

	
 
	
 
	
 
	
 

 

Creditor:

	
 
	
 
	
ARCH Venture Fund VI, L.P.

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
ARCH Venture Partners VI, L.P.

	
 
	
 
	
 
	
Its General Partner

	
 
	
 
	
By:
	
ARCH Venture Partners VI, LLC

	
 
	
 
	
 
	
 Its General Partner

	
 
	
 
	
By:
	
/s/  Clint Bybee

	
 
	
 
	
 
	
Managing Director

	
 
	
 
	
 
	
 

 

Creditor:

	
 
	
 
	
 

	
 
	
 
	
 
	
/s/ Jon Hopper

	
 
	
 
	
 
	
Jon Hopper, an individual

	
 
	
 
	
 
	
 

 

 

 

Pacific Western BankAmendment to Subordination Agreement

 

CONSENT AND AGREEMENT OF BORROWER

The undersigned Borrower hereby approves of, agrees to and consents to all of the terms and provisions of the foregoing Amendment to Subordination Agreement and agrees to be bound thereby, and further agrees that any default or event of default by the Borrower under any present or future instrument or agreement between the Borrower and Creditor shall constitute an immediate default and event of default under all present and future instruments and agreements between the Borrower and Bank.  The Borrower further agrees that, at any time and from time to time, the foregoing Amendment to Subordination Agreement may be altered, modified or amended by Bank and Creditor without notice to or the consent of the Borrower.

 

Borrower:

	
 
	
 
	
XTERA COMMUNICATIONS, INC.

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Joseph R. Chinnici

	
 
	
 
	
 
	
Joseph R. Chinnici

	
 
	
 
	
 
	
Chief Financial Officer 

Borrower:

	
 
	
 
	
AZEA NETWORKS, INC.

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Joseph R. Chinnici

	
 
	
 
	
 
	
Joseph R. Chinnici

	
 
	
 
	
 
	
Chief Financial Officer 

 

Borrower:

	
 
	
 
	
NEOVUS, INC.

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Joseph R. Chinnici

	
 
	
 
	
 
	
Joseph R. Chinnici

	
 
	
 
	
 
	
Chief Financial Officer 

 

Borrower:

	
 
	
 
	
XTERA ASIA HOLDINGS, LLC

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Joseph R. Chinnici

	
 
	
 
	
 
	
Joseph R. Chinnici

	
 
	
 
	
 
	
Chief Financial Officer 

 

 

Accepted:

Bank:

	
 
	
 
	
Pacific Western Bank

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Victor DeMarco

	
 
	
 
	
 
	
Victor DeMarco

	
 
	
 
	
 
	
SVPxcom-ex103_31.htm

Exhibit 10.3

LIMITED WAIVER AND TWELFTH amendment of VENTURE LOAN AND SECURITY AGREEMENT 

This TWELFTH AMENDMENT OF VENTURE LOAN AND SECURITY AGREEMENT (this “Agreement”), effective and dated as of September 30, 2016, is entered into by and between Xtera Communications, Inc., a Delaware corporation (“Xtera” or “Borrower”) and Horizon Technology Finance Corporation, a Delaware corporation (“Lender”).

RECITALS

A.Xtera and Lender are parties to a certain Venture Loan and Security Agreement dated as of May 10, 2011, as amended from time to time (as amended, the “Loan Agreement”) pursuant to which Lender, among other things, has (i) provided certain loans to Xtera as evidenced by (1) a certain Fourth Amended and Restated Secured Promissory Note (Loan A) executed by Xtera in favor of Lender, fourth amended and restated as of May 31, 2016, in the principal amount of Five Million Nine Hundred Eighteen Thousand Three Hundred Seventy-Seven and 53/100 Dollars ($5,918,377.53) (the “Loan A Note”) and (2) a certain Fourth Amended and Restated Secured Promissory Note (Loan B) executed by Xtera in favor of Lender, fourth amended and restated as of May 31, 2016, in the principal amount of One Million Six Hundred Forty-Four Thousand Five Hundred Seventy and 43/100 Dollars ($1,644,570.43) (the “Loan B Note” and together with the Loan A Note, the “Notes”), and (ii) been granted a security interest in all assets of Xtera, including Intellectual Property (as defined in the Loan Agreement).

B.Xtera has now requested that Lender amend the Loan Agreement to permit Borrower to incur additional Indebtedness, to revise the repayment schedule with respect to the Notes and to waive an Event of Default thereunder.

C.Lender is willing to grant such requests, but only to the extent, and in accordance with the terms, and subject to the conditions, set forth herein.

agreement

NOW, THEREFORE, in consideration of the above recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Co-Borrowers and Lender hereby agree as follows:

	
1.
	
Definitions; Interpretation.  Unless otherwise defined herein, all capitalized terms used herein and defined in the Loan Agreement shall have the respective meanings given to those terms in the Loan Agreement.  Other rules of construction set forth in the Loan Agreement, to the extent not inconsistent with this Agreement, apply to this Agreement and are hereby incorporated by reference.

	
2.
	
Limited Waiver. Borrower acknowledges and agrees that (i) Borrower is in default under its Loan and Security Agreement with Pacific Western Bank (the “Specified Default”) and (ii) the Specified Default constitutes an Event of Default under Section 8.7 of the Loan Agreement. Subject to the Condition Precedent, Lender hereby agrees to waive the Specified Default. Such waiver does not constitute any of the following: (i) a waiver of any other term 

 

 

		
or provision of any of the Loan Documents; or (ii) an agreement to waive in the future any other term or provision of any of the Loan Documents. 

	
3.
	
Amendments to Loan Agreement. 

	
 
	
(a)
	
Borrower and Lender hereby agree that definition of “Loan A Maturity Date” in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

““Loan A Maturity Date” means November 1, 2016, or if earlier, the date of acceleration of all Obligations outstanding with respect to Loan A following an Event of Default or the date of prepayment, whichever is applicable.”

	
 
	
(b)
	
Borrower and Lender hereby agree that definition of “Loan B Maturity Date” in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

““Loan B Maturity Date” means November 1, 2016, or if earlier, the date of acceleration of all Obligations outstanding with respect to Loan B following an Event of Default or the date of prepayment, whichever is applicable.”

	
 
	
(c)
	
Borrower and Lender hereby agree that subsection (f) of the definition of Permitted Indebtedness in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“(i) Indebtedness arising during the month of September 2016, to a group of Persons (collectively, the “New Lenders”) in an aggregate principal amount not to exceed One Million Two Hundred Thousand Dollars ($1,200,000) (the “New Lender Indebtedness”), provided that prior to Borrower incurring any New Lender Indebtedness, Lender and the New Lenders shall have entered into a subordination or similar agreement, acknowledged and agreed to by Borrower, containing terms and conditions acceptable to Lender; and

(ii) Indebtedness arising on or after October 1, 2016, to the New Lenders (the ‘October 2016 New Lender Indebtedness’), in an aggregate principal amount not to exceed $500,000 (the ‘October 2016 New Lender Indebtedness Limit’), provided, however, that: (A) prior to Borrower incurring any October 2016 New Lender Indebtedness, Lender and the New Lenders shall have entered into an subordination or similar agreement, acknowledged and agreed to by Borrower, containing terms and conditions acceptable to Lender; (B) in the event that, prior to the New Lenders loaning Borrower $200,000 of the October 2016 New Lender Indebtedness Borrower receives proceeds of the Account owed to Borrower by the Defense Information Systems Agency and Padtec S/A (the “Designated Accounts”), in the sum of $271,833, then (i) the October 2016 New Lender Indebtedness Limit shall be and become $200,000, and (ii) Borrower shall be entitled to retain such proceeds received; and (C) in the event that, subsequent to the New Lenders loaning Borrower $200,000 of the October 2016 New Lender Indebtedness, Borrower receives proceeds of the Designated Account, then (i) the 

 

 

October 2016 New Lender Indebtedness Limit shall be and become the amount of the October 2016 New Lender Indebtedness which is outstanding at the time of such receipt, and (ii) Borrower shall be entitled to retain the difference of (x) $500,000, less (y) the amount of the October 2016 New Lender Indebtedness which is outstanding at the time of such receipt.”

	
4.
	
Amendment to Notes. The Notes are each amended as follows:

	
 
	
(a)
	
The date “September 1, 2016” appearing in the third (3rd) full paragraph on page 3 of each of Notes is deleted and replaced with “October 1, 2016”.

	
 
	
(b)
	
Each instance of the date “October 1, 2016” appearing in the fourth (4th) and fifth (5th) full paragraphs on page 3 of each of the Notes is deleted and replaced with “November 1, 2016”.  

	
5.
	
Conditions to Effectiveness. Lender’s consent and agreement contained herein is expressly conditioned on (i) the Borrower executing and delivering to Lender an executed copy of this Agreement and (ii) the Borrower delivering to Lender a fully executed version of the Limited Waiver and Eighth Amendment to Loan Agreement among Borrower, Azea Networks, Inc., Neovus, Inc., Xtera Asia Holdings, LLC and Pacific Western Bank. 

	
6.
	
Effect of Agreement.  On and after the date hereof, each reference to the Loan Agreement in the Loan Agreement or in any other document shall mean the Loan Agreement as amended by this Agreement.  Except as expressly provided hereunder, the execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power, or remedy of Lender, nor constitute a waiver of any provision of the Loan Agreement.  Except to the limited extent expressly provided herein, nothing contained herein shall, or shall be construed to (nor shall the Borrower ever argue to the contrary) (i) modify the Loan Agreement or any other Loan Document (ii) modify, waive, impair, or affect any of the covenants, agreements, terms, and conditions thereof, or (iii) waive the due keeping, observance and/or performance thereof, each of which is hereby ratified and confirmed by the Borrower.  Except as expressly amended herein, the Loan Agreement remains in full force and effect.

	
7.
	
Headings.  Headings in this Agreement are for convenience of reference only and are not part of the substance hereof.

	
8.
	
Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut without reference to conflicts of law rules.

	
9.
	
Counterparts.  This Agreement may be executed in any number of counterparts, including by electronic or facsimile transmission, each of which when so delivered shall be deemed an original, but all such counterparts taken together shall constitute but one and the same instrument.

	
10.
	
Integration.  This Agreement and the Loan Documents constitute and contain the entire agreement of Borrower and Lender with respect to their respective subject matters, and supersede any and all prior agreements, correspondence and communications.

 

 

[Remainder of page intentionally blank. Signature page follows]

 

 

 

 

IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be executed as of the day and year first above written.

 

BORROWER:

 

	
 
	
 
	
XTERA COMMUNICATIONS, INC.

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Joseph R. Chinnici

	
 
	
 
	
 
	
Chief Financial Officer 

 

 

LENDER:

 

	
 
	
 
	
Horizon Technology Finance Corporation 

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Robert Pomeroy Jr.

	
 
	
 
	
 Title:
	
CEO

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