Document:

Third Amendment to Loan and Security Agreement

    Exhibit
      10.1

     

    THIRD
      AMENDMENT

    TO

    LOAN
      AND
      SECURITY AGREEMENT

    

    This
      Third Amendment to Loan and Security Agreement (the “Amendment”) is entered into
      as of January 10, 2007, by and between COMERICA BANK (“Bank”) and VITALSTREAM
      HOLDINGS, INC., VITALSTREAM, INC. and VITALSTREAM BROADCASTING CORPORATION
      (each
      a “Borrower” and collectively, the “Borrowers”).

    

    RECITALS

    

    Borrowers
      and Bank are parties to that certain Loan and Security Agreement dated as of
      October 7, 2004 (as amended from time to time, including without limitation
      by
      that certain First Amendment to Loan and Security Agreement dated as of December
      31, 2005, and that certain Second Amendment to Loan and Security Agreement
      dated
      as of July 17, 2006, together with any related agreements, the “Agreement”).
      Hereinafter, all indebtedness owing by Borrowers to Bank shall be referred
      to as
      the “Indebtedness.” The parties desire to amend the Agreement in accordance with
      the terms of this Amendment.

    

    NOW,
      THEREFORE, for good and valuable consideration, the receipt and sufficiency
      of
      which are hereby acknowledged, the parties agree as follows:

    

    AGREEMENT

    

    
      	I.	
              Incorporation
                by Reference. The
                Recitals and the documents referred to therein are incorporated herein
                by
                this reference. Except as otherwise noted, the terms not defined
                herein
                shall have the meaning set forth in the
                Agreement.

            

    

     

    
      	II.	
              Amendment
                to the Agreement. Subject
                to the satisfaction of the conditions precedent as set forth in Article
                IV
                hereof, the Agreement is hereby amended as set forth
                below.

            

    

     

    
      	 	
              A.

            	
              The
                following defined term in Section 1.1 of the Agreement is hereby
                amended
                and restated in its entirety to read as
                follows:

            

    

    

    “Revolving
      Maturity Date” means June 30, 2007.

    

    
      	
            	B.	
              Bank’s
                contact person set forth in Section 10 of the Agreement is hereby
                changed
                from “James Ligman” to “Gary
                Reagan”.

            

    

    

    
      	 	
              C.

            	
              Section
                11 of the Agreement is hereby amended and restated in its entirety
                to read
                as follows: “

            

    

     

    
      	
            	11.	
              CHOICE
                OF LAW AND VENUE; JURY TRIAL
                WAIVER.

            

    

     

    This
      Agreement shall be governed by, and construed in accordance with, the internal
      laws of the State of California, without regard to principles of conflicts
      of
      law. Jurisdiction shall lie in the State of California. THE UNDERSIGNED
      ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT
      IT
      MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW,
      EACH
      PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL
      OF ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT
      OF ALL PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION
      ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT
      OR
      AGREEMENT BETWEEN THE UNDERSIGNED PARTIES.”

     

    
      
        AMENDMENT
PAGE
          1 OF 4

         

      

      
         

        
          

        

      

      
         

      

       

      
        	
              	D.	
                Section
                  12 of the Agreement is hereby amended and restated in its entirety
                  to read
                  as follows:

              

      

    

     

    
      	
            	“12.	
              REFERENCE
                PROVISION.

            

    

     

    12.1
      In
      the
      event the Jury Trial Waiver set forth above is not enforceable, the parties
      elect to proceed under this Judicial Reference Provision.

     

    12.2
      With
      the
      exception of the items specified in Section 12.3, below, any controversy,
      dispute or claim (each, a “Claim”) between the parties arising out of or
      relating to this Agreement or any other document, instrument or agreement
      between the undersigned parties (collectively in this Section, the “Loan
      Documents”), will be resolved by a reference proceeding in California in
      accordance with the provisions of Sections 638 et seq. of the California Code
      of
      Civil Procedure (“CCP”), or their successor sections, which shall constitute the
      exclusive remedy for the resolution of any Claim, including whether the Claim
      is
      subject to the reference proceeding. Except as otherwise provided in the Loan
      Documents, venue for the reference proceeding will be in the Superior Court
      in
      the County where the real property involved in the action, if any, is located
      or
      in a County where venue is otherwise appropriate under applicable law (the
      “Court”).

     

    12.3
      The
      matters that shall not be subject to a reference are the following: (i)
      nonjudicial foreclosure of any security interests in real or personal property,
      (ii) exercise of selfhelp remedies (including, without limitation, set-off),
      (iii) appointment of a receiver and (iv) temporary, provisional or ancillary
      remedies (including, without limitation, writs of attachment, writs of
      possession, temporary restraining orders or preliminary injunctions). This
      Agreement does not limit the right of any party to exercise or oppose any of
      the
      rights and remedies described in clauses (i) and (ii) or to seek or oppose
      from
      a court of competent jurisdiction any of the items described in clauses (iii)
      and (iv). The exercise of, or opposition to, any of those items does not waive
      the right of any party to a reference pursuant to this Agreement.

     

    12.4
      The
      referee shall be a retired Judge or Justice selected by mutual written agreement
      of the parties. If the parties do not agree within ten (10) days of a written
      request to do so by any party, then, upon request of any party, the referee
      shall be selected by the Presiding Judge of the Court (or his or her
      representative). A request for appointment of a referee may be heard on an
      ex
      parte or expedited basis, and the parties agree that irreparable harm would
      result if ex parte relief is not granted.

     

    12.5
      The
      parties agree that time is of the essence in conducting the reference
      proceedings. Accordingly, the referee shall be requested, subject to change
      in
      the time periods specified herein for good cause shown, to (i) set the matter
      for a status and trial-setting conference within fifteen (15) days after the
      date of selection of the referee, (ii) if practicable, try all issues of law
      or
      fact within one hundred twenty (120) days after the date of the conference
      and
      (iii) report a statement of decision within twenty (20) days after the matter
      has been submitted for decision.

     

    12.6
      The
      referee will have power to expand or limit the amount and duration of discovery.
      The referee may set or extend discovery deadlines or cutoffs for good cause,
      including a party’s failure to provide requested discovery for any reason
      whatsoever. Unless otherwise ordered based upon good cause shown, no party
      shall
      be entitled to “priority” in conducting discovery, depositions may be taken by
      either party upon seven (7) days written notice, and all other discovery shall
      be responded to within fifteen (15) days after service. All disputes relating
      to
      discovery which cannot be resolved by the parties shall be submitted to the
      referee whose decision shall be final and binding.

     

    
      
        AMENDMENT
PAGE
          2 OF 4

         

      

      
         

        
          

        

      

      
         

      

    

    12.7
      Except
      as
      expressly set forth in this Agreement, the referee shall determine the manner
      in
      which the reference proceeding is conducted including the time and place of
      hearings, the order of presentation of evidence, and all other questions that
      arise with respect to the course of the reference proceeding. All proceedings
      and hearings conducted before the referee, except for trial, shall be conducted
      without a court reporter, except that when any party so requests, a court
      reporter will be used at any hearing conducted before the referee, and the
      referee will be provided a courtesy copy of the transcript. The party making
      such a request shall have the obligation to arrange for and pay the court
      reporter. Subject to the referee’s power to award costs to the prevailing party,
      the parties will equally share the cost of the referee and the court reporter
      at
      trial.

     

    12.8
      The
      referee shall be required to determine all issues in accordance with existing
      case law and the statutory laws of the State of California. The rules of
      evidence applicable to proceedings at law in the State of California will be
      applicable to the reference proceeding. The referee shall be empowered to enter
      equitable as well as legal relief, enter equitable orders that will be binding
      on the parties and rule on any motion which would be authorized in a court
      proceeding, including without limitation motions for summary judgment or summary
      adjudication. The referee shall issue a decision at the close of the reference
      proceeding which disposes of all claims of the parties that are the subject
      of
      the reference. Pursuant to CCP § 644, such decision shall be entered by the
      Court as a judgment or an order in the same manner as if the action had been
      tried by the Court and any such decision will be final, binding and conclusive.
      The parties reserve the right to appeal from the final judgment or order or
      from
      any appealable decision or order entered by the referee. The parties reserve
      the
      right to findings of fact, conclusions of laws, a written statement of decision,
      and the right to move for a new trial or a different judgment, which new trial,
      if granted, is also to be a reference proceeding under this
      provision.

     

    12.9
      If
      the
      enabling legislation which provides for appointment of a referee is repealed
      (and no successor statute is enacted), any dispute between the parties that
      would otherwise be determined by reference procedure will be resolved and
      determined by arbitration. The arbitration will be conducted by a retired judge
      or Justice, in accordance with the California Arbitration
      Act §1280 through §1294.2 of the CCP as amended from time to time. The
      limitations
      with
      respect to discovery set forth above shall apply to any such arbitration
      proceeding.

     

    12.10
      THE
      PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED
      UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY.
      AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF
      ITS,
      HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL
      BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO
      ANY
      CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY
      WAY
      RELATED TO, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.”

     

    
      	III.	
              Legal
                Effect.

            

    

    

    
      	
            	A.	
              The
                Agreement is hereby amended wherever necessary to reflect the changes
                described above.
                Each Borrower understands and agrees that in modifying the existing
                Indebtedness, Bank is relying upon such Borrower’s representations,
                warranties, and agreements, as set forth in the Agreement. Except
                as
                expressly modified pursuant to this Amendment, the terms of the Agreement
                remain unchanged, and in full force and effect. Bank’s agreement to
                modifications to the existing Indebtedness pursuant to this Amendment
                in
                no way shall obligate Bank to make any future modifications to the
                Indebtedness. Nothing in this Amendment shall constitute a satisfaction
                of
                the Indebtedness. It is the intention of Bank and Borrowers to retain
                as
                liable parties, all makers and endorsers of Agreement, unless the
                party is
                expressly released by Bank in writing. No maker, endorser, or guarantor
                will be released by virtue of this Amendment. The terms of this paragraph
                apply not only to this Amendment, but also to all subsequent loan
                modification requests.

            

    

     

    

    
      
        AMENDMENT
PAGE
          3 OF 4

         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
            	B.	
              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.
                This
                is an integrated Amendment and supersedes all prior negotiations
                and
                agreements regarding the subject matter hereof. All modifications
                hereto
                must be in writing and signed by the
                parties.

            

    

    

    
      	IV.	
              Conditions
                Precedent. Except
                as specifically set forth in this Amendment, all of the terms and
                conditions of the Agreement remain in full force and effect. The
                effectiveness of this Agreement is conditioned upon receipt by Bank
                of
                this Amendment, and any other documents which Bank may require to
                carry
                out the terms hereof, including but not limited to the
                following:

            

    

    

    
      	
            	A.	
              This
                Amendment, duly executed by
                Borrowers;

            

    

    

    
      	
            	B.	
              Corporation
                Resolutions and Incumbency Certification, duly executed by
                Borrowers;

            

    

    

    
      	
            	C.	
              A
                commitment fee from the Borrowers in the amount of
                $5,000;

            

    

    

    
      	
            	D.	
              A
                legal fee from the Borrowers in the amount of $250;
                and

            

    

    

    
      	 	
              E.

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

            

    

    

    

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

    

    
      	
              VITALSTREAM
                HOLDINGS, INC.

            	
              VITALSTREAM
                BROADCASTING
                CORPORATION

            
	 	 
	
              By:
                Philip
                N. Kaplan

            	
              By:
                Philip N. Kaplan

            
	
              Title:
                President and COO

            	
              Title:
                President and COO

            
	 	 
	 	 
	
              VITALSTREAM,
                INC.

            	
              COMERICA
                BANK

            
	 	 
	
              By:
                Philip N. Kaplan

            	
              By:
                Gary
                D. Reagan

            
	
              Title:
                President and COO

            	
              Title:
                Senior Vice President

            

    

    

    

    AMENDMENT
PAGE
      4 OF
      4<PAGE>

                                                                    EXHIBIT 10.1

                            ASSET PURCHASE AGREEMENT

                                  BY AND AMONG

                             HINES NURSERIES, INC.,

                              KW MOHAWK VALLEY LLC,

                               621 EAST MAPLE LLC,

                                DANVILLE PA LLC,

                                  KW UTICA LLC,

                                KW NEWARK LLC AND

                                 KW DANVILLE LLC

                                   DATED AS OF

                                 JANUARY 9, 2007

<PAGE>

                            ASSET PURCHASE AGREEMENT

                  This Asset Purchase Agreement (this "AGREEMENT") is made and
entered into as of January 9, 2007 (the "EFFECTIVE DATE"), by and among Hines
Nurseries, Inc., a California corporation ("SELLER"), and KW Mohawk Valley LLC
("MOHAWK"), 621 East Maple LLC ("621"), Danville PA LLC ("PA"), KW Utica LLC
("UTICA"), KW Newark LLC ("NEWARK") and KW Danville LLC ("DANVILLE"), each a New
York limited liability company. Mohawk, 621, PA, Utica, Newark and Danville are
collectively referred to herein as "BUYER."

                                    RECITALS
                                    --------

                  A. Seller owns certain real property located in the Village of
Newark, County of Wayne, State of New York, and more particularly described in
EXHIBIT A attached hereto and incorporated herein by this reference (the "NEWARK
PROPERTY").

                  B. Seller owns certain real property located in the City of
Utica, County of Oneida, State of New York, and more particularly described in
EXHIBIT B attached hereto and incorporated herein by this reference (the "UTICA
PROPERTY," and together with the Newark Property, the "FEE PROPERTIES").

                  C. Seller is currently a hold over tenant under that certain
Lease Agreement (the "PRIOR LEASE") dated May 6, 1981, as amended with PPL
Generation, LLC, as landlord ("PPL"), for the premises located in Danville,
Pennsylvania and more particularly described in the Prior Lease (the "LEASED
PROPERTY," and collectively with the Fee Properties, the "PROPERTY").

                  D. Subject to the terms and conditions set forth in this
Agreement, Buyer desires to purchase from Seller, and Seller desires to sell,
assign, transfer and deliver to Buyer, all of Seller's right, title and interest
in and to (i) the Newark Property; (ii) the Utica Property; and (iii) the
potting machinery, office furnishings and equipment, inventory, racks, other
assets and greenhouses, as further described below.

                  NOW, THEREFORE, in consideration of the mutual promises set
forth herein and intending to be bound hereby, the parties hereby agree as
follows:

                                    AGREEMENT
                                    ---------

         1. PURCHASE AND SALE OF ASSETS AT THE CLOSING.

                  1.1 PURCHASED ASSETS. Subject to the terms and conditions set
forth in this Agreement, at the Closing (as defined herein), Buyer agrees to
purchase from Seller, and Seller agrees to sell, assign, transfer and deliver to
Buyer all of Seller's right, title and interest in and to (i) the potting
machinery, office furnishings and office equipment, inventory, racks, other
assets and greenhouses described below and listed on Schedules 1.1(a), 1.1(b),
1.1(c), 1.1(d), 1.1(e) and 1.1(f) hereto (collectively, the "OPERATING ASSETS")
as follows: (A) those Operating Assets located at the Newark Property shall be
purchased by Newark; (B) those Operating Assets located at the Utica Property
shall be purchased by Utica; and (C) those Operating Assets located at the
Leased Property shall be purchased by Danville; (ii) the Newark Property, which
shall be purchased by 621; and (iii) the Utica Property, which shall be
purchased by Mohawk. The Operating Assets and the Fee Properties shall be
collectively referred to herein as the "PURCHASED ASSETS."

                                      -1-
<PAGE>

                           (a) POTTING MACHINERY. The potting machinery listed
and described on SCHEDULE 1.1(A) (the "POTTING Machinery").

                           (b) OFFICE FURNISHINGS AND OFFICE EQUIPMENT. The
office furnishings and office equipment listed and described on SCHEDULE 1.1(B)
(the "OFFICE EQUIPMENT").

                           (c) INVENTORY. Subject to the next sentence, all
inventory items and related materials and supplies (each an "INVENTORY ITEM")
listed and described on SCHEDULE 1.1(C) and located on the Property at the
Closing (the "INVENTORY"). Buyer acknowledges that Inventory Items and other
products may be sold by Seller for Seller's benefit in the ordinary course of
Seller's business up to and through the close of business on the Closing Date
(defined below) and that neither such items which have been sold up to and
through the close of business on the Closing Date nor the resulting accounts
receivable are being sold to Buyer hereunder. For purposes of this Agreement,
the terms "Inventory" and "Purchased Assets" shall not include any Inventory
Items or other products sold by Seller in the ordinary course of Seller's
business up to and through the close of business on the Closing Date.

                           (d) RACKS. The racks listed and described on SCHEDULE
1.1(D) (the "INITIAL RACKS").

                           (e) OTHER ASSETS. All other assets listed and
described on SCHEDULE 1.1(E) (the "OTHER ASSETS").

                           (f) GREENHOUSES. The greenhouses located on the
Leased Property and listed and described on SCHEDULE 1.1(F) (the "GREENHOUSES").

                  1.2 EXCLUDED ASSETS. Seller shall not sell, assign, transfer
or convey to Buyer, and Buyer shall not purchase from Seller, any inventory,
property, item or asset of Seller other than those described or listed in
Section 1.1 and described or listed on Schedules 1.1(a), 1.1(b), 1.1(c), 1.1(d),
1.1(e) and 1.1(f), including, without limitation, any accounts receivable of
Seller (the "EXCLUDED ASSETS").

                  1.3 ASSUMED LIABILITIES.

                                      -2-
<PAGE>

                           (a) Subject to the terms and conditions of this
Agreement, at the Closing, Seller shall assign (to the extent assignable) all of
its rights, and Buyer shall assume and agree to pay, perform or otherwise
discharge as the same shall become due in accordance with their respective
terms, all liabilities and obligations of Seller arising from or relating to the
contracts, agreements and unfulfilled purchase orders listed on SCHEDULE 1.3 to
the extent such liabilities and obligations arise on or after the Closing Date
(the "ASSUMED LIABILITIES"); and

                           (b) Except for the Assumed Liabilities, Buyer shall
not assume any liabilities or obligations of Seller.

                  1.4 CONSENTS TO ASSIGNMENTS; Notwithstanding anything in this
Agreement, the Assignment and Assumption Agreement (as defined below) or any
bill of sale to the contrary, to the extent that any of the Assumed Liabilities
is not capable of being sold, assigned, transferred or conveyed without the
approval, consent or waiver of the other party thereto, or any third person, or
if such sale, assignment transfer or conveyance or attempted assignment,
transfer or conveyance would constitute a breach thereof or a violation of any
law, decree, order, regulation or other governmental edict, neither this
Agreement nor the Assignment and Assumption Agreement nor any bill of sale shall
constitute a sale, assignment, transfer or conveyance thereof, or an attempted
assignment, transfer or conveyance thereof. After the Closing, until any Assumed
Liability has been validly and effectively assigned to Buyer, Seller shall hold
such Assumed Liability for the benefit of Buyer and Buyer shall be entitled to
receive all benefits under such Assumed Liability (the "Interests") and Buyer
shall be solely and unconditionally responsible for all liabilities and
obligations arising in connection with or related to such Interests and pay,
perform and otherwise discharge the same as they will become due to the extent
such liabilities or obligations arise on or after the Closing Date.

                                      -3-
<PAGE>

         2. PURCHASE PRICE; PAYMENT TERMS.

                  2.1 PURCHASE PRICE. The aggregate purchase price (the
"PURCHASE PRICE") shall be an amount equal to the sum of:

         (a) Land, Greenhouses, Potting Machinery and Office Equipment,
Furniture

           Danville
              Buildings, Greenhouses and Other Improvements to
              Real Property                                         $ 1,837,428
              Potting Machinery and Office Equipment                $   210,870
              Furniture                                             $    14,405

           Newark
              Land                                                  $   100,000
               Buildings, Greenhouses and Other Improvements to
              Real Property                                         $   708,890
              Potting Machinery and Office Equipment                $   129,300
              Furniture                                             $     1,810

           Utica
              Land                                                  $   100,000
              Buildings, Greenhouses and Other Improvements to
              Real Property                                         $ 1,406,807
              Potting Machinery and Office Equipment                $   180,900
              Furniture                                             $     8,293
                                                         Subtotal   $ 4,698,703

         (b) Plus the following

           Initial Racks                                            $   557,750
           Other Assets                                             $   300,000
           Closing Inventory Value (as defined below)               $ 1,193,427
           Less Credit for Leighow Contract                         $   (41,412)
                                                         Subtotal   $ 2,009,765

                                                            Total   $ 6,708,468

                  2.2 DEPOSIT. On the Effective Date, Buyer shall deposit by
cashier's check or wire transfer of immediately available federal funds into the
Escrow provided for in Section 3 the sum of Two Hundred Twenty Five Thousand and
00/100 Dollars ($225,000.00) (the "DEPOSIT"). Escrow Holder (as defined below)
shall, without any requirement for further instructions, immediately release the
Deposit to Seller, which funds shall become non-refundable in all instances
other than a termination of this Agreement due to Seller's default hereunder.
The Deposit will be credited against the Purchase Price. If requested by Buyer,
prior to any disbursement to Seller hereunder, the Deposit shall be deposited by
Escrow Holder into an interest-bearing account selected by Buyer. The interest
earned on the Deposit prior to disbursement of the Deposit to Seller shall, at

                                      -4-
<PAGE>

the time of Closing, be paid to Seller and credited against the Purchase Price
or, in the event that this Agreement is terminated, the interest on the Deposit
shall be paid to Buyer, unless such termination is a result of Buyer's default
under the terms hereof in which case the interest on the Deposit shall be
released to Seller. Buyer shall not be entitled to any interest on the Deposit
from and after its disbursement hereunder to Seller. In addition to all of
Seller's rights and remedies under this Agreement and applicable law, Seller
shall have the right to terminate this Agreement if for any reason Buyer shall
fail to make the Deposit required to be made by Buyer when due hereunder.

                  2.3 PAYMENT OF PURCHASE PRICE. At the Closing, Buyer shall pay
the Purchase Price less the Deposit released to Seller pursuant to Section 2.2
above into Escrow (as defined below) by wire transfer in immediately available
funds.

                  2.4 SALES, USE AND TRANSFER TAXES. Buyer and Seller agree that
any and all excise, deed, documentary, stamp or transfer tax and similar
conveyance taxes or charges payable in connection with the transfer of the Fee
Properties shall be paid by Seller (expressly excluding any mortgage taxes)

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