Document:

exv10w1

 

Exhibit 10.1

Silicon Valley Bank

Amendment to Loan Agreement

	 	 	 
	Borrower:

	 	I-Flow Corporation
	Dated as of:

	 	April 30, 2005

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

     The Parties agree to amend the Amended and Restated Loan and Security Agreement between them,
having an effective date of May 8, 2003 (as amended from time to time being referred to herein as
the “Loan Agreement”), as follows, effective as of the date hereof. (Capitalized terms used but
not defined in this Amendment, shall have the meanings set forth in the Loan Agreement.)

     1. Revised Sections 2.1, 2.1.1, 2.1.2, 2.1.3, and 2.1.4. Sections 2.1, 2.1.1, 2.1.2, 2.1.3
and 2.1.4 of the Loan Agreement are hereby amended and restated in its entirety to read as follows:

“2.1 Promise to Pay. Borrower promises to pay Bank the unpaid principal amount of all
Credit Extensions and interest on the unpaid principal amount of the Credit Extensions
in accordance with the terms and conditions hereof.

2.1.1 Revolving Advances.

     (a) Bank will make Revolving Advances not exceeding the Committed Revolving Line
minus all amounts for services utilized under the Cash Management Services Sublimit,
minus the amount of all outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit), and minus the FX Reserve. Amounts borrowed under this Section may
be repaid and reborrowed during the term of this Agreement.

     (b) To obtain a Revolving Advance, Borrower must notify Bank by facsimile or
telephone by 12:00 p.m. Pacific time on the Business Day the Revolving Advance is
proposed to be made. Borrower must promptly confirm the notification by delivering to
Bank the Payment/Advance Form, in the form attached hereto as Exhibit B. Bank will
credit Revolving Advances to Borrower’s deposit account. Bank may make Revolving
Advances under this Agreement based on instructions from a Responsible Officer or his or
her designee or without instructions if any such Revolving Advances are necessary to
meet Obligations which have become due. Bank may rely on any telephonic notice given by
a person whom Bank believes is a Responsible Officer or such Person’s designee, and
Borrower hereby indemnifies Bank for any loss Bank suffers due to any such reliance.

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	Silicon Valley Bank
	 	Amendment to Loan Agreement

     (c) The Committed Revolving Line terminates on the Revolving Maturity Date, when
all Revolving Advances and related Obligations are immediately payable.

2.1.2 Letters of Credit Sublimit.

     Bank will issue or have issued Letters of Credit for Borrower’s account not
exceeding Committed Revolving Line minus the outstanding principal balance of the
Revolving Advances minus the Cash Management Sublimit, and minus the FX Reserve;
however, the face amount of outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit) may not exceed $1,500,000. Each Letter of Credit will
have an expiry date of no later than 180 days after the Revolving Maturity Date, but
Borrower’s reimbursement obligation will be secured by cash on terms acceptable to Bank
at any time after 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.

2.1.3 Foreign Exchange Sublimit.

     If there is availability under the Committed Revolving Line for the making of
Revolving Advances, then Borrower may enter in foreign exchange forward contracts with
the Bank under which Borrower commits to purchase from or sell to Bank a set amount of
foreign currency more than one business day after the contract date (the “FX Forward
Contract”). Bank will subtract 10% of each outstanding FX Forward Contract from the
foreign exchange sublimit which is a maximum of $1,500,000 (the “FX Reserve”). The
total FX Forward Contracts at any one time may not exceed 10 times the amount of the FX
Reserve. Bank may terminate the FX Forward Contracts if an Event of Default occurs.

2.1.4 Cash Management Services Sublimit.

     Borrower may use up to $1,500,000 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”). Such aggregate amounts utilized under
the Cash Management Services Sublimit will at all times reduce the amount otherwise
available to be borrowed under the Committed Revolving Line for Revolving Advances. 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 Revolving Advances under the Committed
Revolving Line and will accrue interest at the rate for Revolving Advances. “

     2. Revised Section 6.2. Section 6.2 of the Loan Agreement is hereby amended in its entirety
to read as follows:

“6.2 Financial Statements, Reports, Certificates.

     (a) Borrower will deliver to Bank: (i) as soon as available, but no later than five
days after the earlier to occur of the date each of the Reports 10-Q and 10-K of I–Flow
Corporation is filed or required to be filed with the Securities and Exchange
Commission, each of such 10-Q and 10-K Reports and all other documents and information
filed in connection therewith; (ii) a prompt report of any legal actions pending or
threatened against Borrower or any Subsidiary that could result in

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	Silicon Valley Bank
	 	Amendment to Loan Agreement

damages or costs to Borrower or any Subsidiary of $250,000 or more, on a joint basis for
all such entities; (iii) budgets, sales projections, operating plans or other financial
information Bank reasonably requests; and (iv) prompt notice of any material change in
the composition of the Intellectual Property or knowledge of an event that materially
adversely affects the value of the Intellectual Property.

     (b) Concurrently with the delivery of the financial reports set forth in clause (a)(i)
above, Borrower will deliver to Bank a Compliance Certificate signed by a Responsible
Officer in the form of Exhibit D hereto.

     (c) Borrower shall allow Bank to audit Borrower’s Collateral at Borrower’s expense.
Such audits will not be conducted unless a Default or an Event of Default has occurred
and is continuing.”

     3. Revised Section 6.7. Section 6.7 of the Loan Agreement is hereby amended in its entirety
to read as follows:

“6.7 Financial Covenants.

Borrower will maintain at all times during the effectiveness of this Agreement on a
consolidated basis for I-Flow Corporation and tested quarterly during the term hereof
unless otherwise indicated below:

(i) Quick Ratio. A ratio of Quick Assets to Modified Current Liabilities of at least
1.50 to 1.00.

(ii) Adjusted Net Loss. Borrower will not incur an adjusted net loss in excess of
$7,000,000 for the quarter ending March 31, 2005, $5,500,000 for the quarter ending June
30, 2005; $4,000,000 for the quarter ending September 30, 2005; $2,500,000 for the
quarter ending December 31, 2005; and $1,000,000 for the quarter ending March 31, 2006.
As used herein the term adjusted net loss shall mean net loss for the applicable quarter
end period excluding the effects of non-cash charges related to stock compensation
expenses, all as determined in accordance with GAAP, consistently applied.”

     4. Modified Definitions. The defined terms “Committed Revolving Line” and “Quick Assets” as
set forth in Section 13.1 of the Loan Agreement are hereby amended to read respectively as follows:

“‘Committed Revolving Line’ is the revolving credit facility extended by Bank hereunder
to Borrower and relating to an aggregate amount of Revolving Advances of up to Ten
Million Dollars ($10,000,000).

‘Quick Assets’ shall mean as of any date of determination, the Borrower’s
consolidated, unrestricted cash, unrestricted cash equivalents, short term investments
and net trade accounts receivable of Borrower.”

     5. Deleted Definitions. The defined terms “Borrowing Base” and “Eligible Accounts” shall be
deemed no longer in force or effect.

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	Silicon Valley Bank
	 	Amendment to Loan Agreement

     6. Modified Revolving Maturity Date. The Revolving Maturity Date as set forth in Section 13.1
of the Loan Agreement is hereby modified to be “April 29, 2006.”

     7. Waiver. Prior to the effectiveness of this Amendment, Borrower was not in compliance with
the covenants set forth in then effective Section 6.2(b) regarding the delivery of monthly
borrowing base certificates together with aged listings of accounts receivable and accounts payable
and such other matters set forth in such section as then effective for the periods of January,
February and March 2005. Bank hereby waives any and all Events of Default arising from Borrower’s
non-compliance with the foregoing.

     8. Fee. In consideration for Bank entering into this Amendment, Borrower shall concurrently
pay Bank a fee in the amount of $25,000, which shall be non-refundable and in addition to all
interest and other fees payable to Bank under the Loan Documents.

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

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

	 	 	 
	Borrower:

	 	Bank:
	 
	 	 
	I-Flow Corporation

	 	SILICON VALLEY BANK
	 
	 	 
	By /s/ James R. Talevich

	 	By /s/ Ryan Incorvaia
	 

	 	 
	Chief Financial Officer

	 	Vice President

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Exhibit 10.13

     FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

     This First Amendment to Amended and Restated Loan and Security Agreement (this “Amendment”) is
entered into as of March 11, 2005, by and between COMERICA BANK (“Bank”) and PACIFIC TITLE AND ARTS
STUDIO, INC. (“Borrower”).

RECITALS

     Borrower and Bank are parties to that certain Amended and Restated Loan and Security Agreement
dated as of January 31, 2005 (the “Agreement”). The parties desire to amend the Agreement in
accordance with the terms of this Amendment.

     NOW, THEREFORE, the parties agree as follows:

     1. Section 2.3(a)(i) of the Agreement is hereby amended and restated in its entirety to read
as follows:

     “Advances. Except as set forth in Section 2.3(b), the Advances shall bear interest,
on the outstanding daily balance thereof, at a rate equal to one percent (1.00%) above the Prime
Rate.”

     2. No course of dealing on the part of Bank or its officers, nor any failure or delay in the
exercise of any right by Bank, shall operate as a waiver thereof, and any single or partial
exercise of any such right shall not preclude any later exercise of any such right. Bank’s failure
at any time to require strict performance by a Borrower of any provision shall not affect any right
of Bank thereafter to demand strict compliance and performance. Any suspension or waiver of a
right must be in writing signed by an officer of Bank.

     3. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as
defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and
effect in accordance with its respective terms and hereby is ratified and confirmed in all
respects. Except as expressly set forth herein, the execution, delivery, and performance of this
Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of
Bank under the Agreement, as in effect prior to the date hereof.

     4. Borrower represents and warrants that the Representations and Warranties contained in the
Agreement are true and correct as of the date of this Amendment, and that no Event of Default has
occurred and is continuing.

     5. As a condition to the effectiveness of this Amendment, Bank shall have received, in form
and substance satisfactory to Bank, the following:

               (a) this Amendment, duly executed by Borrower;

               (b) all reasonable Bank Expenses incurred through the date of this Amendment, which may be
debited from any of Borrower’s accounts; and

               (c) such other documents, and completion of such other matters, as Bank may reasonably deem
necessary or appropriate.

     6. This Amendment may be executed in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one instrument.

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Exhibit 10.13

     IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above
written.

    	 	 
	 	PACIFIC
            TITLE AND ARTS STUDIO, INC.

	 	 

	 	By:
/s/ Greg
            Hunter

	 	 

	 	Title:
            Vice President and Chief Financial Officer

	 	 

	 	COMERICA
            BANK

	 	 

	 	By:
/s/ James
            Ligman

	 	 

	 	Title:
            Assistant Vice President

[Signature Page to Amendment to Loan & Security Agreement]

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