Document:

exv10w1

 

Exhibit 10.1

FIRST AMENDMENT TO THIRD AMENDED AND 

RESTATED CREDIT AGREEMENT 

THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (“Amendment”), dated
effective as of March 30, 2005, is made and entered into by and among ACTIVANT SOLUTIONS INC., a
Delaware corporation formerly known as Cooperative Computing, Inc. (the “Borrower”),
ACTIVANT SOLUTIONS HOLDINGS INC., a Delaware corporation formerly known as Cooperative Computing
Holding Company, Inc. (the “Guarantor”), THE FINANCIAL INSTITUTIONS WHICH ARE PARTIES TO
THE CREDIT AGREEMENT (as hereinafter defined), as amended by this Amendment (each, together with
its successors and assigns, a “Lender” and collectively, the “Lenders”), and
JPMORGAN CHASE BANK, N.A., a national banking association formerly known as JPMorgan Chase Bank, as
administrative agent for the Lenders (in such capacity, together with its successors in such
capacity, the “Administrative Agent”).

RECITALS:

     WHEREAS, the Borrower, Guarantor, the Administrative Agent and certain Lenders are parties to
a Third Amended and Restated Credit Agreement dated as of July 27, 2003 (the “Credit
Agreement”); and

     WHEREAS, in connection with the Borrower’s contemplated acquisition of all or substantially
all of the issued and outstanding stock of Speedware Corporation Inc., a Canadian corporation
(“Speedware”), the Borrower, Guarantor, the Administrative Agent and the Lenders have agreed, on
the terms and conditions herein set forth, that the Credit Agreement be amended in certain
respects.

AGREEMENTS:

     NOW, THEREFORE, in consideration of the premises and the mutual agreements, representations
and warranties herein set forth, and for other good and valuable consideration, the receipt and
sufficiency which are hereby acknowledged and confessed, the Borrower, the Guarantor, the
Administrative Agent and the Lenders do hereby agree as follows:

     Section 1. General Definitions. Capitalized terms used herein which are
defined in the Credit Agreement shall have the same meanings when used herein.

     Section 2. Amendment of Definitions.

     (a) The definitions of “Borrowing Base,” “Borrowing Base Certificate,” “Consolidated Net
Worth,” “Consolidated Net Worth Adjustment Amount” and “Eligible Accounts Receivable” in
Section 1.1 of the Credit Agreement are hereby deleted in their entirety, and any reference
to any of such deleted terms in the Credit Agreement shall no longer have any force or effect.

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     (b) The definition of “Consolidated EBITDA” in Section 1.1 of the Credit Agreement is
hereby amended and restated in its entirety to hereafter read as follows:

     “Consolidated EBITDA”: for any period, with respect to any Person,
Consolidated Net Income of such Person for such period (A) plus, without duplication
and to the extent reflected as a charge in the statement of such Consolidated Net Income for
such period, the sum of (i) total income and franchise tax expense, (ii) interest expense,
amortization or writeoff of debt discount and debt issuance costs and commissions and
discounts and other fees and charges associated with Indebtedness, (iii) depreciation and
amortization expense, (iv) amortization of intangibles including, but not limited to,
goodwill and organization costs, (v) other extraordinary noncash charges (in accordance with
GAAP) (including non-cash currency exchange losses), (vi) any extraordinary and unusual
losses (including losses on sales of assets other than inventory sold in the ordinary course
of business), (vii) any non-cash losses resulting from the Borrower’s investment in Internet
Autoparts and HM Coop, and (viii) one time cash expenses related to (a) severance payments,
(b) transactions fees and expenses and (c) pro forma synergies agreed to between the Company
and the Administrative Agent, in each case in connection with the acquisition of the Capital
Stock of Speedware Corporation Inc., a Canadian corporation (“Speedware”), so long
as the aggregate amount of all such cash expenses does not exceed $5,000,000; and (B)
minus, without duplication and to the extent reflected as a credit or gain in the
statement of such Consolidated Net Income for such period, the sum of (i) any extraordinary
and unusual gains (including gains on the sales of assets, other than inventory sold in the
ordinary course of business), and (ii) other extraordinary non-cash credits or gains (in
accordance with GAAP) (including non-cash currency exchange gains) and (iii) any non-cash
gains resulting from the Borrower’s investment in Internet Autoparts and HM Coop;
provided that for the purposes of calculating Consolidated EBITDA for any period of
four consecutive fiscal quarters (each, a “Reference Period”) for purposes of
Section 8.1, (i) if at any time during such Reference Period the Borrower or any Subsidiary
shall consummate an acquisition pursuant to Sections 8.9(k), 8.9(l) or 8.9(n), the
Consolidated EBITDA for such Reference Period shall be calculated on a pro
forma basis (assuming the consummation of such acquisition and the incurrence or
assumption of any Indebtedness in connection therewith occurred on the first day of such
Reference Period) and (ii) if at any time during such Reference Period the Borrower or any
Subsidiary shall consummate the Designated Asset Sale or the sale of any line of business or
product line, the Consolidated EBITDA for such Reference Period shall be reduced on a
pro forma basis by an amount equal to the Consolidated EBITDA (if positive)
attributable to the property that is the subject of the Designated Asset Sale or the sale of
any line of business or product line.

     Section 3. Deletion of Borrowing Base Related Facility Usage Restrictions.
Section 2.1(a), Section 2.10(a) and the first sentence of Section 3.1(a) of
the Credit Agreement are hereby amended and restated in their entirety to hereafter read as
follows:

     2.1 Commitments. (a) Subject to the terms and conditions hereof, each Lender
severally agrees to make revolving credit loans (each, a “Loan”, collectively,
“Loans”) to the Borrower from time to time during the Commitment Period in an
aggregate principal amount at any one time outstanding, when added to such Lender’s
Commitment Percentage of all Letter of Credit
Outstandings, not to exceed the amount of

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such Lender’s Commitment. Notwithstanding the
foregoing, the sum of all Letter of Credit Outstandings and the aggregate principal amount
of the Loans outstanding at any time shall not exceed the Commitments. During the Commitment
Period, the Borrower may use the Commitments by borrowing, prepaying the Loans in whole or
in part, and reborrowing, all in accordance with the terms and conditions hereof.

     2.10 Mandatory Prepayments and Commitment Reductions. (a) If at any time the sum of
the Loans and the Letter of Credit Outstandings exceeds the Commitments (including at any
time after any reduction of the Commitments pursuant to Section 2.5), the Borrower shall
make a payment in the amount of such excess which payment shall be applied in the order set
forth in Section 2.5(b). To the extent that after giving effect to any prepayment of the
Loans required by the preceding sentence, the sum of the Loans and Letter of Credit
Outstandings exceed the Commitments, the Borrower shall, without notice or demand,
immediately cash collateralize the then outstanding L/C Obligations in an amount equal to
such excess upon terms reasonably satisfactory to the Administrative Agent.

     3.1 The L/C Commitment. (a) Subject to the terms and conditions hereof, the
Issuing Lender, in reliance on the agreements of the other Lenders set forth in Section
3.4(a), agrees to issue Letters of Credit for the account of the Borrower on any Business
Day during the Commitment Period in such form as may be approved from time to time by the
Issuing Lender; provided that no Issuing Lender shall issue any Letter of Credit if, after
giving effect to such issuance, (i) the L/C Obligations would exceed $5,000,000 or (ii) the
sum of the Loans and Letter of Credit Outstandings of all the Lenders would exceed the
Commitments of all of the Lenders.

     Section 4. Deletion of Borrowing Base Certificate Reporting Requirements and Other
Borrowing Base and Eligible Accounts Receivable References.

     (a) Sections 6.2(d) and 12.1(b)(vii) of the Credit Agreement, including
without limitation, the proviso following Section 12.1(b)(vii) of the Credit Agreement, are
hereby deleted in their entirety and shall no longer be of any force or effect and “[Reserved]”
shall be added in lieu thereof.

     (b) Section 5.26 of the Credit Agreement is hereby amended and restated in its
entirety to hereafter read as follows:

     5.26 Status of Accounts Receivables and Other Collateral. The Borrower shall
not redate any invoice or sale or make or allow to be made sales on extended dating beyond
what is customary in the industry.

     (c) Section 7.6 of the Credit Agreement is hereby amended to delete the last sentence
thereof in its entirety.

     Section 5. Amendment of Affirmative Covenants. Section 7.11 of the
Credit Agreement is hereby amended to add the following new sentence at the end thereof:

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     It is understood and agreed that in respect of the acquisition by the Borrower of 100%
of the Capital Stock of Speedware, so long as the Borrower and all of its applicable
Subsidiaries fully comply with the terms of this Section 7.11 within fifteen (15) days after
the consummation of such acquisition, the Borrower shall be deemed to have complied with the
terms of this Section 7.11; provided, however, that notwithstanding the
foregoing, the Capital Stock of Prelude Systems Inc. shall not be required to be pledged in
accordance with the terms of this Section 7.11 unless and until fifteen (15) days after the
Lien against such Capital Stock permitted under Section 8.3(o) is released by the holder of
such Lien.

     Section 6. Amendments of Financial Covenants.

     (a) Section 8.1(a) of the Credit Agreement is hereby amended and restated in its
entirety to hereafter read as follows:

     (a) Maintenance of Consolidated EBITDA less Capital Expenditures to Consolidated
Interest Expense. Permit the ratio of (i) Consolidated EBITDA of the Borrower and its
Subsidiaries for the period of four consecutive fiscal quarters ending on the last day of
each fiscal quarter (commencing with the fiscal quarter ending March 31, 2005) less Capital
Expenditures for such four fiscal quarters to (ii) Consolidated Interest Expense of the
Borrower and its Subsidiaries for such four fiscal quarters to be less than 1.25 to 1.0.

     (b) Section 8.1(b) of the Credit Agreement is hereby deleted in its entirety and shall
no longer be of any force or effect and “[Reserved]” shall be added in lieu thereof.

     (c) Section 8.1(c) of the Credit Agreement is hereby amended and restated in its
entirety to hereafter read as follows:

     (c) Maintenance of Consolidated Total Debt to Consolidated EBITDA. Permit the
ratio of (i) Consolidated Total Debt of the Borrower and its Subsidiaries as of the last day
of each of the fiscal quarters set forth below less the aggregate amount of cash and
Cash Equivalents shown on the consolidated balance sheet of the Borrower as of the last day
of the applicable fiscal quarter to (ii) Consolidated EBITDA of the Borrower and its
Subsidiaries for the period of four consecutive fiscal quarters ending on the last day of
each of the fiscal quarters set forth below to be greater than the ratio set forth opposite
such fiscal quarter below:

	 	 	 	 	 
	Quarter Ending	 	Amount	 
	March 31, 2005
	 	 	4.25 to 1.00	 
	June 30, 2005
	 	 	4.25 to 1.00	 
	September 30, 2005
	 	 	4.25 to 1.00	 
	December 31, 2005
	 	 	4.25 to 1.00	 
	March 31, 2006
	 	 	4.00 to 1.00	 

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     Section 7. Amendments of Other Negative Covenants.

     (a) New Sections 8.2(o) and 8.2(p) are hereby added to the Credit Agreement to
hereafter be and read as follows:

     (o) Indebtedness of the Borrower incurred solely for purposes of financing a portion of
the purchase price paid by the Borrower for the Borrower’s acquisition of the Capital Stock
in Speedware; provided that the original principal amount of such Indebtedness does
not exceed $120,000,000; and provided further that such Indebtedness is unsecured at
all times.

     (p) the existing “earn-out” obligation of Speedware payable to the prior shareholder(s)
of Prelude Systems Inc. in connection with Speedware’s acquisition of all Capital Stock in
Prelude Systems Inc.

     (b) A new Section 8.3(o) is hereby added to the Credit Agreement to hereafter be and
read as follows:

     (o) Liens against the Capital Stock of Prelude Systems Inc. to secure the “earn-out”
obligations of Speedware permitted under Section 8.2(p).

     (c) A new Section 8.4(m) is hereby added to the Credit Agreement to hereafter be
and read as follows:

     (m) Guarantee Obligations of any Subsidiary in respect of the Indebtedness of the
Borrower permitted under Section 8.2(o); provided that such Subsidiary is a
guarantor of the Obligations under the Guarantee and Collateral Agreement; and provided
further that such Guarantee Obligations are unsecured at all times.

     (d) A new Section 8.9(n) is hereby added to the Credit Agreement to hereafter be and
read as follows:

     (n) acquisition by the Borrower of all Capital Stock in Speedware for an aggregate
purchase price (net of proceeds of options or warrants or cash held by Speedware or fees and
expenses in connection with such acquisition) not to exceed $120,000,000.

     Section 8. Amendments to Indemnification Provisions. Section 12.5 of
the Credit Agreement is hereby amended and restated in its entirety to hereafter be and read as
follows:

     12.5. Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse
the Administrative Agent and JPMSI for all their reasonable out-of-pocket costs and expenses
incurred in connection with the syndication of the Commitments and the development,
preparation and execution of, and any amendment, supplement or modification to, this
Agreement and any Notes and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including,

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without limitation, the reasonable
fees and disbursements of counsel to the Administrative Agent, (b) to pay or reimburse each
Lender, the Administrative Agent and JPMSI for all of their reasonable out-of-pocket costs
and expenses incurred in connection with the enforcement or preservation of any rights under
this Agreement, any Notes, the other Loan Documents and any such other documents, including,
without limitation, the reasonable fees and disbursements of counsel to the Administrative
Agent and, at any time after and during the continuance of an Event of Default, of one
counsel to all of the Lenders, (c) to pay, indemnify, and hold each Lender, the
Administrative Agent and JPMSI harmless from, any and all recording and filing fees and any
and all liabilities with respect to, or resulting from any delay in paying, stamp, excise,
documentary, property and other similar taxes, if any, which may be payable or determined to
be payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this Agreement, any Notes,
the other Loan Documents and any such other documents, and (d) to pay, indemnify, and hold
each Lender, the Administrative Agent and JPMSI and their respective officers, directors,
employees, agents and controlling persons (each of the foregoing, an “indemnified person”)
harmless from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, including, without limitation, the reasonable fees and disbursements of counsel
with respect to the execution, delivery, enforcement, performance and administration of this
Agreement, any Notes, the other Loan Documents, or the use of the proceeds of the Loans in
connection with the Transactions and any such other documents (all the foregoing in this
clause (d), collectively, the “indemnified liabilities”), provided that the Borrower shall
have no obligation hereunder to an indemnified person with respect to indemnified
liabilities that are found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of such
indemnified person, or, in the case of indemnified liabilities arising under this Agreement,
any Notes and the other Loan Documents that are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from a material breach by such
indemnified person of this Agreement, any Notes or the other Loan Documents, as the case may
be. The agreements in this Section shall survive repayment of the Loans and all other
amounts payable hereunder

     Section 9. Representations and Warranties. The Borrower represents and
warrants to the Administrative Agent and the Lenders that the representations and warranties
contained in Article 5 of the Credit Agreement and in all of the other Loan Documents are
true and correct in all material respects on and as of the effective date hereof as though made on
and as of such effective date, except to the extent any such representation or warranty is stated
to relate solely to an earlier date. The Borrower hereby certifies that no event has occurred and
is continuing which
constitutes a Default or an Event of Default under the Credit Agreement. Additionally, the
Borrower hereby represents and warrants to the Administrative Agent and the Lenders that the
following resolutions or authorizations remain in full force and effect as of the effective date
hereof and have not been modified, amended, superseded or revoked:

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     (a) The resolutions of the Offering Committee of the Board of Directors of the Borrower
adopted as of July 27, 2003 and as set forth in Exhibit II of that certain Borrowing
Certificate dated July 27, 2003, previously executed and delivered to the Administrative
Agent in connection with the Credit Agreement by the Senior Vice President of Finance and
Administration and the Secretary and General Counsel of the Borrower; and

     (b) The resolutions of the Board of Directors of the Guarantor adopted as of July 27, 2003
and as set forth in Exhibit II of that certain Borrowing Certificate dated July 27, 2003,
previously executed and delivered to the Administrative Agent in connection with the Credit
Agreement by the Senior Vice President of Finance and Administration and the Secretary and
General Counsel of the Guarantor.

     Section 10. Limitations. The amendments set forth herein are limited
precisely as written and shall not be deemed to (a) be a consent to, or waiver or modification of,
any other term or condition of the Credit Agreement or any of the other Loan Documents, or (b)
except as expressly set forth herein, prejudice any right or rights which the Lenders may now have
or may have in the future under or in connection with the Credit Agreement, the Loan Documents or
any of the other documents referred to therein. Except as expressly modified hereby or by express
written amendments thereof, the terms and provisions of the Credit Agreement, the Notes and any
other Loan Documents or any other documents or instruments executed in connection with any of the
foregoing are and shall remain in full force and effect. In the event of a conflict between this
Amendment and any of the foregoing documents, the terms of this Amendment shall be controlling.

     Section 11. Payment of Expenses. The Borrower agrees, whether or not the
transactions hereby contemplated shall be consummated, to reimburse and save the Administrative
Agent and each of the Lenders harmless from and against liability for the payment of all reasonable
substantiated out-of-pocket costs and expenses arising in connection with the preparation,
execution, delivery, amendment, modification, waiver and enforcement of, or the preservation of any
rights under this Amendment, including, without limitation, the reasonable fees and expenses of
counsel for the Administrative Agent, in each case, as set forth in Section 12.5 of the
Credit Agreement. The provisions of this Section shall survive the termination of the Credit
Agreement and the repayment of the Obligations.

     Section 12. Descriptive Headings, etc. The descriptive headings of the
several Sections of this Amendment are inserted for convenience only and shall not be deemed to
affect the meaning or construction of any of the provisions hereof.

     Section 13. Entire Agreement. This Amendment and the documents referred to
herein represent the entire understanding of the parties hereto regarding the subject matter hereof
and supersede all prior and contemporaneous oral and written agreements of the parties hereto with
respect to the subject matter hereof, including, without limitation, any commitment letters
regarding the transactions contemplated by this Amendment.

     Section 14. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts and all of such counterparts shall

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together constitute one and the same instrument. Complete sets of counterparts shall be lodged
with the Borrower and the Administrative Agent.

     Section 15. References to Credit Agreement. As used in the Credit Agreement
(including all Exhibits thereto) and all other Loan Documents, on and subsequent to the effective
date hereof, the term “Agreement” shall mean the Credit Agreement, as amended by this Amendment.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by their respective duly authorized officers as of the date first above written.

NOTICE PURSUANT TO TEX. BUS. & COMM. CODE §26.02

THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED BY ANY OF THE PARTIES BEFORE OR SUBSTANTIALLY
CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF TOGETHER CONSTITUTE A WRITTEN CREDIT AGREEMENT AND
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

	 	 	 	 	 
	 	 	ACTIVANT SOLUTIONS, INC.,
	 	 	as Borrower
	 
	 	 	 	 
	

	 	By:	 	/s/ GREG PETERSEN 
	

	 	 	 	 
	

	 	Name:	 	Greg Petersen
	

	 	 	 	 
	

	 	Title:	 	Senior Vice President and Chief
Financial Officer
	

	 	 	 	 
	 
	 	 	 	 
	 	 	ACTIVANT SOLUTIONS HOLDING
	 	 	COMPANY, INC., as Guarantor
	 
	 	 	 	 
	

	 	By:	 	/s/ GREG PETERSEN
	

	 	 	 	 
	

	 	Name:	 	Greg Petersen
	

	 	 	 	 
	

	 	Title:	 	Senior Vice President and Chief
Financial Officer
	

	 	 	 	 
	 
	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.,
	 	 	as Administrative Agent and as a Lender
	 
	 	 	 	 
	

	 	By:	 	/s/ EDMOND DEFOREST
	

	 	 	 	 
	

	 	Name:	 	Edmond DeForest
	

	 	 	 	 
	

	 	Title:	 	Vice President
	

	 	 	 	 

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	 	 	COMERICA BANK, as a Lender
	 
	 	 	 	 
	

	 	By:	 	/s/ PAUL GERLING
	

	 	 	 	 
	

	 	Name:	 	Paul Gerling
	

	 	 	 	 
	

	 	Title:	 	Senior Vice President
	

	 	 	 	 

9exv10w01

 

Exhibit 10.01

FIRST AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

This First Amendment to Loan and Security Agreement is entered into as of May 12, 2005 (the

“Amendment”), by and between COMERICA BANK (“Bank”) and CEPHEID (“Borrower”).

RECITALS

Borrower and Bank are parties to that certain Loan and Security Agreement dated as of

November 9, 2004, as amended (the “Agreement”). The parties desire to amend the Agreement

in accordance with the terms of this Amendment.

NOW, THEREFORE, the parties agree as follows:

Section 1.1 of the Agreement is hereby amended to add or amend the following defined terms to read
as follows:

“Collateral” means the property described on Exhibit A attached
hereto.

                                                            “Credit Extension” means each Advance, Letter of Credit, Equipment Advance, or
any other extension of credit by Bank for the benefit of Borrower hereunder.

“Equipment Advance” has the meaning set forth in Section 2.1(c).

                                                            “Equipment Line” means a credit extension of up to Three Million Dollars
($3,000,000).

“Equipment Maturity Date” means May 12, 2009.

“Purchase Card Sublimit” means $300,000.

“Revolving Line” means a credit extension of up to Four Million

Three Hundred Thousand Dollars ($4,300,000).

 

 

The first sentence of Section 2.1(a)(i) of the Agreement is hereby amended to read as follows:
“Subject to and upon the terms and conditions of this Agreement, Borrower may request Advances in
an aggregate outstanding amount not to exceed the lesser of (i) the Revolving Line or (ii) the
Borrowing Base, minus, in each case, the aggregate face amount of all outstanding Letters of Credit
and the Purchase Card Sublimit.”

The first sentence of Section 2.1(b)(i) of the Agreement is hereby amended to read as follows:
“Subject to the terms and conditions of this Agreement, at any time prior to the Revolving Maturity
Date, Bank agrees to issue or cause to be issued standby letters of credit for the account of
Borrower (each, a “Letter of Credit” and collectively, the “Letters of Credit”) in an aggregate
outstanding face amount not to exceed the lesser of the Revolving Line or the Borrowing Base minus,
in each case, the aggregate amount of the outstanding Advances and the Purchase Card Sublimit,
provided that the aggregate face amount of all outstanding Letters of Credit shall not exceed Two
Million Dollars ($2,000,000) at any time.”

New Sections 2.1(c) and (d) are hereby added to the Agreement to read as follows:

(c) Equipment Advances.

                    (i) Subject to and upon the terms and conditions of this Agreement, at any time
from the date hereof through May 12, 2006, Bank agrees to make advances (each an
“Equipment Advance” and, collectively, the “Equipment Advances”) to Borrower in an
aggregate amount not to exceed the Equipment Line. Each Equipment Advance shall not
exceed one hundred percent (100%) of the invoice amount of new equipment and tenant
improvements approved by Bank from time to time (which Borrower shall, in any case,
have purchased within 90 days of the date of the corresponding Equipment Advance),
excluding taxes, shipping, warranty charges, freight discounts and installation
expense. Notwithstanding the foregoing, in the initial Equipment Advance, Bank will
finance such equipment and tenant improvements purchased at any time after September
1, 2004.

                    (ii) Interest shall accrue from the date of each Equipment Advance at the rate
specified in Section 2.3, and shall be payable monthly on the twenty fourth (24th)
day of each month so long as any Equipment Advances are outstanding. Any Equipment
Advances that are outstanding on July ___, 2005 shall be payable in thirty six (36)
equal monthly installments of principal, plus all accrued interest, beginning on
August ___, 2005, and continuing on the same day of each month thereafter. Any
Equipment Advances that are outstanding on October ___, 2005 (which have not already
begun amortizing) shall be payable in thirty six (36) equal monthly installments of
principal, plus all accrued interest, beginning on November ___, 2005, and continuing
on the same day of each month thereafter. Any Equipment Advances that are
outstanding on January ___, 2006 (which have not already begun amortizing) shall be
payable in thirty six (36) equal monthly installments of principal, plus all accrued
interest, beginning on February ___, 2006, and continuing on the same day of each
month

 

 

thereafter. Any Equipment Advances that are outstanding on April ___, 2006 (which
have not already begun amortizing) shall be payable in thirty six (36) equal monthly
installments of principal, plus all accrued interest, beginning on May ___, 2006, and
continuing on the same day of each month thereafter. On the Equipment Maturity
Date, at which time all amounts owing under this Section 2.1(c) and any other
amounts owing under this Agreement shall be immediately due and payable. Equipment
Advances, once repaid, may not be reborrowed. Except as set forth in the Amended
and Restated LIBOR Addendum to Loan and Security Agreement executed in connection
herewith, Borrower may prepay any Equipment Advances without penalty or premium.

                    (iii) When Borrower desires to obtain an Equipment Advance, Borrower shall
notify Bank (which notice shall be irrevocable) by facsimile transmission to be
received no later than 3:00 p.m. Pacific time three (3) Business Days before the day
on which the Equipment Advance is to be made. Such notice shall be substantially in
the form of Exhibit B. The notice shall be signed by a Responsible Officer
or its designee and include a completed loan supplement in substantially the form
attached hereto as Exhibit A and a copy of the invoice, serial number, and
proof of payment of such invoice for any equipment or tenant improvements to be
financed.

          (d) Purchase Cards. Subject to the terms and conditions set forth in
this Agreement, Bank agrees to make credit available to Borrower pursuant to a
Treasury Management Service Agreement Purchasing Card between Borrower and Bank, in
Bank’s standard form, in an amount not to exceed the Purchase Card Sublimit. As set
forth herein, the Purchase Card Sublimit shall be reserved against the Revolving
Line and the Borrowing Base to apply to Borrower’s obligations under such agreement.

Section 2.2 of the Agreement is hereby amended in its entirety to read as follows:

     2.2 Overadvances. If the aggregate amount of the outstanding Advances
plus the aggregate face amount of all outstanding Letters of Credit plus the
Purchase Card Sublimit exceeds the lesser of the Revolving Line or the Borrowing
Base at any time, Borrower shall immediately pay to Bank, in cash, the amount of
such excess.

Section 2.3(a) of the Agreement is hereby amended in its entirety to read as follows:

          (a) Interest Rates. Except as set forth in Section 2.3(b), the
Advances and the Equipment Advances, each of which shall be a Prime Rate Option
Advance or a LIBOR Option Advance as elected by Borrower in accordance with the
terms set forth in the Amended and Restated LIBOR Addendum to Loan and Security
Agreement dated as of May 12, 2005, shall bear interest on the outstanding Daily
Balance thereof at the applicable rate set forth in such Amended and Restated LIBOR
Addendum to Loan and Security Agreement.

 

 

Sections 6.6 and 6.7 of the Agreement are hereby amended in their entirety to read as follows:

     6.6 Minimum Unrestricted Cash at Bank. Borrower shall maintain with
Bank and/or Comerica Securities (provided that securities account control agreements
are in place with respect to such accounts) at all times a balance of unrestricted
cash that is at least eight tenths (0.80) of the outstanding balance of all
Indebtedness (including without limitation any outstanding Letters of Credit and the
Purchase Card Sublimit) owing by Borrower to Bank.

     6.7 Minimum Unrestricted Cash. Borrower shall maintain at all times a
balance of unrestricted cash that is at least Twenty Five Million Dollars
($25,000,000), provided that, at any time that any Equipment Advances are
outstanding, Borrower shall maintain at all times a balance of unrestricted cash
that is at least the greater of (i) Twenty Five Million Dollars ($25,000,000) or
(ii) Remaining Months Liquidity. As used herein, “Remaining Months Liquidity” means
the net change in Borrower’s cash during the six months immediately preceding the
date of measurement net of changes in debt, stock, paid-in capital, minority
interests, and milestone license payments set forth on Schedule 1 attached hereto.

 

 

Exhibit A to the Agreement is hereby amended to read as Exhibit A (including
attachments) to this Amendment.

Exhibit C to the Agreement is hereby amended to read as Exhibit C to this
Amendment.

Exhibit D to the Agreement is hereby amended to read as Exhibit D to this
Amendment.

Schedule 1 to the Amendment is hereby added and incorporated by this reference into the
Amendment.

Borrower grants and pledges to Bank a continuing security interest in all presently existing and
hereafter acquired or arising Collateral, as described on Exhibit A to this Amendment, in
order to secure prompt repayment of any and all Obligations and in order to secure prompt
performance by Borrower of each of its covenants and duties under the Agreements and the other Loan
Documents. Except as set forth in the Schedule, such security interest constitutes a valid, first
priority security interest in the presently existing Collateral, and will constitute a valid, first
priority security interest in Collateral acquired after the date hereof.

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. Borrower ratifies and reaffirms the continuing
effectiveness of all promissory notes, guaranties, security agreements, mortgages, deeds of trust,
environmental agreements, and all other instruments, documents and agreements entered into in
connection with the Agreement, except to the extent such security interest are being released
pursuant to Section 17 above.

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.

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.

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. Corporate Resolutions to Borrow;

          c. Amended and Restated LIBOR Addendum to Loan and Security Agreement;

          d. disbursement instructions, an agreement to provide insurance, and an auto-debit
authorization;

          e. an amount equal to all Bank Expenses incurred through the date of this Amendment (not to
exceed $3,000 in connection with this Amendment); and

          f. 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.

	 	 	 	 	 
	 	 	CEPHEID
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	COMERICA BANK
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 

 

 

EXHIBIT A

COLLATERAL DESCRIPTION ATTACHMENT

TO LOAN AND SECURITY AGREEMENT

All Borrower’s (herein referred to as “Borrower” or “Debtor”):

(i) accounts now owned or hereafter arising and all proceeds thereof, including cash and noncash
proceeds and any returned or repossessed goods arising therefrom and including any deposit or
similar accounts into which any such proceeds are deposited, and all other property due or to
become due to Debtor arising out of the sale or other disposition of Debtor’s property, whether in
the form of instruments, payment intangibles, investment property, deposit accounts or letter of
credit rights;

(ii) cash, cash equivalents, and investments, including without limitation all deposit accounts of
whatever nature (including all money market accounts), investment property (including securities
and securities entitlements), money, and all of Debtor’s books and records with respect to any of
the foregoing, and any and all cash proceeds and/or noncash proceeds of any of the foregoing; and

(iii) all equipment, tenant improvements, or other personal property of Debtor financed by Bank
pursuant to that certain Loan and Security Agreement dated as of November 9, 2004, as amended by
that certain First Amendment to Loan and Security Agreement dated as of May 12, 2005, as further
amended or replaced from time to time (collectively, the “Loan Agreement”), including, without
limitation as listed on Annex A to each Loan Supplement executed by Borrower in connection
with the Loan Agreement, whether now owned or hereafter acquired, wherever located, together with
all substitutions, renewals or replacements of and additions, improvements, and accessions to any
and all of the foregoing, and all proceeds from sales, renewals, releases or other dispositions
thereof.

 

 

Loan Supplement

LOAN AGREEMENT SUPPLEMENT, dated ___(“Supplement”), supplements the Loan and Security
Agreement dated as of November 9, 2004, as amended by that certain First Amendment to Loan and
Security Agreement dated as of May 12, 2005, as further amended or replaced from time to time
(collectively, the “Loan Agreement”) by and between the undersigned (“Borrower”), and Comerica Bank
(“Bank”). Capitalized terms used herein but not otherwise defined herein are used with the
respective meanings given to such terms in the Loan Agreement.

To secure the prompt payment by Borrower of all Obligations (as defined in the Loan Agreement), and
the performance by Borrower of all the terms contained in the Loan Agreement, Borrower grants Bank,
a first priority security interest in each item of equipment and other property described in
Annex A attached hereto, which equipment and other property shall be deemed to be
additional Collateral under the Loan Agreement. The Loan Agreement is hereby incorporated by
reference herein and is hereby ratified, approved and confirmed. Annex A is attached
hereto. This Supplement may be executed by Borrower and Bank in separate counterparts, each of
which when so executed and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

This Supplement is delivered as of this day and year first above written.

	 	 	 	 	 	 	 	 	 
	COMERICA BANK	 	 	 	CEPHEID
	“Bank”	 	 	 	“Borrower”
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	 	 	 	 	Name:	 	 
	

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 
	

	 	 
	 	 	 	 	 	 

Annex A - Description of additional Collateral

 

 

Annex A

The Equipment and tenant improvements being financed with the Equipment Advance is listed below.
Upon the funding of such Equipment Advance, this schedule automatically shall be deemed to be a
part of the Collateral.

	 	 	 	 	 	 	 	 	 
	Description of

Equipment:

	 	Make
	 	Model
	 	Serial #
	 	Invoice #

 

 

EXHIBIT C

BORROWING BASE CERTIFICATE

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Borrower: CEPHEID	 	Lender: Comerica Bank
	Commitment Amount: $4,300,000	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	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 25% over 90 day accounts	 	$                    	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	6.	 	 	Concentration Limits 1	 	 	 	 	 	 
	 	 	 	7.	 	 	Ineligible Foreign Accounts 2	 	$                    	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	8.	 	 	Governmental Accounts	 	$                    	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	9.	 	 	Contra Accounts	 	$                    	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	10.	 	 	Demo Accounts	 	$                    	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	11.	 	 	Intercompany/Employee Accounts	 	$                    	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	12.	 	 	Other (please explain on reverse)	 	$                    	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	13.	 	 	TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS
	 	 	 	 	 	$                    
	

	 	 	14.	 	 	Eligible Accounts (#3 minus #13)
	 	 	 	 	 	$                    
	

	 	 	15.	 	 	LOAN VALUE OF ACCOUNTS (80% of #14)
	 	 	 	 	 	$                    
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	BALANCES	 	 	 	 	 	 
	

	 	 	16.	 	 	Maximum Loan Amount
	 	 	 	 	 	$4,300,000
	

	 	 	17.	 	 	Total Funds Available [Lesser of #16 or #15]
	 	 	 	 	 	$                    
	

	 	 	18.	 	 	Present balance owing on Line of Credit
	 	 	 	 	 	$                    
	

	 	 	19.	 	 	Outstanding under Sublimits
	 	 	 	 	 	$                    
	

	 	 	20.	 	 	RESERVE POSITION (#17 minus #18 and #19)
	 	 	 	 	 	$                    

	1	 	Ineligible concentration Accounts include
Accounts with respect to an account debtor, including Subsidiaries and
Affiliates, whose total obligations to Borrower exceed twenty-five percent
(25%) of all Accounts, to the extent such obligations exceed the aforementioned
percentage, except (A) Accounts with respect to which Northrop Grumman is the
account debtor, (B) Accounts with respect to which Fisher Scientific is the
account debtor, (c) Accounts with respect to which Smiths Detection is the
account debtor, and (D) as approved in writing by Bank.
	 
	2	 	“Eligible Foreign
Accounts” means Accounts with respect to which the account debtor does
not have its principal place of business in the United States and that (a) are
supported by one or more letters of credit or credit insurance in an amount and
of a tenor, and issued by a financial institution or insurer, acceptable to
Bank, (b) are accounts on which the account debtor is Takara Bio Inc., a
corporation formed under the laws of Japan, or Gene Company Limited (provided
such Accounts are not otherwise excluded under the definition of
“Eligible Accounts”), or (c) that Bank approves on a case-by-case
basis.

 

 

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 Comerica Bank.

	 	 	 	 	 	 	 
	CEPHEID	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	

	 	Authorized Signer	 	 	 	 

 

 

EXHIBIT D

COMPLIANCE CERTIFICATE

TO:
          COMERICA BANK

FROM:     CEPHEID

The undersigned authorized officer of CEPHEID hereby certifies that in accordance with 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 of Borrower stated in
the Agreement are true and correct as of the date hereof. Attached herewith are the required
documents supporting the above certification. The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently
applied from one period to the next except as explained in an accompanying letter or footnotes.

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

	 	 	 	 	 	 	 
	Reporting Covenant	 	Required	 	 	 	Complies
	Quarterly financial statements

	 	Quarterly at 10-Q deadline
	 	Yes
	 	No
	Annual (CPA Audited)

	 	Annually at 10-K deadline
	 	Yes
	 	No
	10K and 10Q

	 	Concurrent with filing at the

Securities Exchange Commission
	 	Yes
	 	No
	A/R & A/P Agings, Borrowing Base Cert.

	 	Monthly within 20 days
	 	Yes
	 	No

	 	 	 	 	 	 	 	 	 
	Financial Covenant	 	Required	 	Actual	 	 	 	Complies
	Minimum Unrestricted Cash at Bank

	 	0.80x Bank debt
	 	$                    
	 	Yes
	 	No
	Minimum Unrestricted Cash

	 	$25,000,000*
	 	$                    
	 	Yes
	 	No

*At any time that any Equipment Advances are outstanding, Borrower shall maintain at all times a balance of
unrestricted cash that is at least the greater of (i) Twenty Five Million Dollars ($25,000,000) and (ii) six
(6) times Remaining Months Liquidity

	 	 	 	 	 
	Comments Regarding Exceptions: See Attached.	 	BANK USE ONLY
	 
	 	 	 	 
	

	 	Received by:	 	 
	

	 	 	 	 
	Sincerely,

	 	 	 	          AUTHORIZED SIGNER
	 
	 	 	 	 
	

	 	Date:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Verified:	 	 
	 

	 	 	 	 
	SIGNATURE

	 	 	 	          AUTHORIZED SIGNER
	 
	 	 	 	 
	

	 	Date:	 	 
	 

	 	 	 	 
	TITLE
	 	 	 	 
	 
	 	 	 	 
	 	 	Compliance Status                               Yes No
	 

	 	 	 	 
	DATE
	 	 	 	 

 

 

Schedule 1

Milestone Payments

$1,000,000 in the quarter ending March 31, 2005

$1,000,000 in the quarter ending June 30, 2005

$8,000,000 in the quarter ending September 30, 2005

$1,000,000 in the quarter ending December 31, 2005

 

 

CORPORATE RESOLUTIONS TO BORROW

	 	 	 
	 
	 
	 	 
	Borrower:           CEPHEID
	 	 
	 
	 	 
	 

I, the undersigned Secretary or Assistant Secretary of CEPHEID (the “Corporation”), HEREBY CERTIFY
that the Corporation is organized and existing under and by virtue of the laws of the State of
California.

I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and complete copies of the
Certificate of Incorporation, as amended, and the Restated Bylaws of the Corporation, each of which
is in full force and effect on the date hereof.

I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly called and held, at
which a quorum was present and voting (or by other duly authorized corporate action in lieu of a
meeting), the following resolutions were adopted.

BE IT RESOLVED, that any one (1) of the following named officers, employees, or agents of this
Corporation, whose actual signatures are shown below:

	 	 	 	 	 
	NAMES	 	POSITION	 	ACTUAL SIGNATURES
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 

acting for and on behalf of this Corporation and as its act and deed be, and they hereby are,
authorized and empowered:

Borrow Money. To borrow from time to time from Comerica Bank (“Bank”), on such terms as may be
agreed upon between the officers, employees, or agents of the Corporation and Bank, such sum or
sums of money as in their judgment should be borrowed, without limitation.

Execute Loan Documents. To execute and deliver to Bank that certain First Amendment to Loan and
Security Agreement dated as of May 12, 2005 (the “Amendment”) and any documents related to the
Amendment or to that certain Loan and Security Agreement dated as of April 25, 2003, as amended
(collectively with the Amendment, the “Loan Documents”), and also to execute and deliver to Bank
one or more amendments, renewals, extensions, modifications, consolidations, or substitutions for
the Loan Documents.

Grant Security. To grant a security interest to Bank in the Collateral described in the Loan
Documents, which security interest shall secure all of the Corporation’s Obligations, as described
in the Loan Documents.

Letters of Credit. To execute letter of credit applications and other related documents pertaining
to Bank’s issuance of letters of credit.

 

 

Purchase Card Program. To execute agreements related to Bank’s purchase card program.
Negotiate Items. To draw, endorse, and discount with Bank all drafts, trade acceptances,
promissory notes, or other evidences of indebtedness payable to or belonging to the Corporation or
in which the Corporation may have an interest, and either to receive cash for the same or to cause
such proceeds to be credited to the account of the Corporation with Bank, or to cause such other
disposition of the proceeds derived therefrom as they may deem advisable.

Further Acts. In the case of lines of credit, to designate additional or alternate individuals as
being authorized to request advances thereunder, and in all cases, to do and perform such other
acts and things, to pay any and all fees and costs, and to execute and deliver such other documents
and agreements as they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these resolutions and
performed prior to the passage of these resolutions are hereby ratified and approved, that these
Resolutions shall remain in full force and effect and Bank may rely on these Resolutions until
written notice of their revocation shall have been delivered to and received by Bank. Any such
notice shall not affect any of the Corporation’s agreements or commitments in effect at the time
notice is given.

I FURTHER CERTIFY that the officers, employees, and agents named above are duly elected, appointed,
or employed by or for the Corporation, as the case may be, and occupy the positions set forth
opposite their respective names; that the foregoing Resolutions now stand of record on the books of
the Corporation; and that the Resolutions are in full force and effect and have not been modified
or revoked in any manner whatsoever.

IN WITNESS WHEREOF, I have hereunto set my hand on May 12, 2005, and attest that the signatures set
opposite the names listed above are their genuine signatures.

	 	 	 	 	 
	 	 	CERTIFIED AND ATTESTED BY:
	 
	 	 	 	 
	

	 	X	 	 
	

	 	 	 	 

LIBOR

Amended and Restated Addendum to Loan and Security Agreement

     This Amended and Restated Addendum to Loan and Security Agreement (this “Addendum”) is entered
into as of this 24th day of May 12, 2005, by and between COMERICA BANK (“Bank”) and CEPHEID
(“Borrower”). This Addendum supplements the terms of the Loan and Security Agreement dated as of
October 27, 2004 between Borrower and Bank, as amended from time to time, including without
limitation by that certain First Amendment to Loan and Security Agreement dated as of even date
herewith (collectively, the “Note”). This Agreement is intended to and does completely amend and
restate, without novation, that certain LIBOR Addendum to Loan and Security Agreement entered into
between Bank and Borrower dated as of October 27, 2004.

 

 

     1. Definitions.

          a. Advance. As used herein, “Advance” means an Advance (as defined in the Note)
requested by Borrower and made by Bank under the Note, including a LIBOR Option Advance or a Prime
Rate Option Advance.

          b. Business Day. As used herein, “Business Day” means any day except a Saturday,
Sunday or any other day designated as a holiday under Federal or California statute or regulation.

          c. Credit Extension means an Advance and/or an Equipment Advance.

          d. Equipment Advance. As used herein, “Equipment Advance” means an Equipment Advance
(as defined in the Note) requested by Borrower and made by Bank under the Note, including a LIBOR
Option Advance and/or a Prime Rate Option Advance.

          e. LIBOR. As used herein, “LIBOR” means the rate per annum (rounded upward if
necessary, to the nearest whole 1/100 of 1%) and determined pursuant to the following formula:

	 	 	 	 	 	 	 
	

	 	LIBOR =
	 	Base LIBOR	 	 
	

	 	 	 	 	 	 
	

	 	 	 	100% - LIBOR Reserve Percentage	 	 

                    i. “Base LIBOR” means the rate per annum determined by Bank at which deposits for the relevant
LIBOR Period would be offered to Bank in the approximate amount of the relevant LIBOR Option
Advance in the inter-bank LIBOR market selected by Bank, upon request of Bank at 10:00 a.m.
California time, on the day that is the first day of such LIBOR Period.

                    ii. “LIBOR Reserve Percentage” means the reserve percentage prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as
defined in Regulation D of the Federal Reserve Board, as amended), adjusted by Bank for expected
changes in such reserve percentage during the applicable LIBOR Period.

          f. LIBOR Business Day. As used herein, “LIBOR Business Day” means a Business day on
which dealings in Dollar deposits may be carried out in the interbank LIBOR market.

          g. LIBOR Period. As used herein, “LIBOR Period” means, with respect to a LIBOR Option
Advance:

 

 

                    i. initially, the period commencing on, as the case may be, the date the Credit Extension is
made or the date on which the Credit Extension is converted to a LIBOR Option Advance, and
continuing for (A) in every case of an Equipment Advance, (i) before the Equipment Advance begins
to amortize, a period for any number of days selected by Borrower in the notice of Credit Extension
as provided in the Note or in the notice of conversion as provided in this Addendum provided that
the last day of such period shall be on or before the date on which the applicable Equipment
Advance would begin to amortize, and (ii) after the Equipment Advance has begun to amortize, a
period for any number of days selected by Borrower provided that the last day of such period shall
be on or before the Equipment Maturity Date and (B) in every case of an Advance, a thirty (30) day
period thereafter, so long as the LIBOR Option is quoted for such period in the applicable
interbank LIBOR market, as such period is selected by Borrower in the notice of Credit Extension as
provided in the Note or in the notice of conversion as provided in this Addendum; and

                    ii. thereafter, each period commencing on the last day of the next preceding LIBOR Period
applicable to such LIBOR Option Advance and continuing for, (A) in every case of an Equipment
Advance, a three (3) year period thereafter and (B) in every case of an Advance, a thirty (30) day
period thereafter, so long as the LIBOR Option is quoted for such period in the applicable
interbank LIBOR market, as such period is selected by Borrower in the notice of continuation as
provided in this Addendum.

          h. Regulation D. As used herein, “Regulation D” means Regulation D of the Board of
Governors of the Federal Reserve System as amended or supplemented from time to time.

          i. Regulatory Development. As used herein, “Regulatory Development” means any or all
of the following: (i) any change in any law, regulation or interpretation thereof by any public
authority (whether or not having the force of law); (ii) the application of any existing law,
regulation or the interpretation thereof by any public authority (whether or not having the force
of law); and (iii) compliance by Bank with any request or directive (whether or not having the
force of law) of any public authority.

     2. Interest Rate Options.

          g. Borrower shall have the following options regarding the interest rate to be paid by
Borrower on Advances under the Note:

 

 

                    i. A rate equal to two and one-half percent (2.50%) above Bank’s LIBOR, (the “LIBOR Option”),
which LIBOR Option shall be in effect during the relevant LIBOR Period; or

                    ii. A rate equal to the “Prime Rate” as defined in the Note and quoted from time to time by
Bank as such rate may change from time to time (the “Prime Rate Option”).

          h. Equipment Advances shall bear interest at a rate equal to the “Prime Rate” as defined in
the Note and quoted from time to time by Bank, as such rate may change from time to time.
Notwithstanding the foregoing, at the time any Equipment Advance begins to amortize (and only at
such point in time), Borrower shall have the following options regarding the interest rate to be
paid by Borrower on such Equipment Advance under the Note:

                    i. A rate equal to two and one-half percent (2.50%) above Bank’s LIBOR, (the “LIBOR Option”),
which LIBOR Option shall be in effect during the relevant LIBOR Period; or

                    ii. A rate equal to the “Prime Rate” as defined in the Note and quoted from time to time by
Bank as such rate may change from time to time (the “Prime Rate Option”).

     3. LIBOR Option Advance. The minimum LIBOR Option Advance will not be less than Two
Hundred Fifty Thousand Dollars and 00/100 Dollars ($250,000) for any LIBOR Option Advance.

     4. Payment of Interest on LIBOR Option Advances. Interest on each LIBOR Option
Advance shall be payable pursuant to the terms of the Note. Interest on such LIBOR Option Advance
shall be computed on the basis of a 360-day year and shall be assessed for the actual number of
days elapsed from the first day of the LIBOR Period applicable thereto but not including the last
day thereof.

     5. Bank’s Records Re: LIBOR Option Advances. With respect to each LIBOR Option
Advance, Bank is hereby authorized to note the date, principal amount, interest rate and LIBOR
Period applicable thereto and any payments made thereon on Bank’s books and records (either
manually or by electronic entry) and/or on any schedule attached to the Note, which notations shall
be prima facie evidence of the accuracy of the information noted.

     6. Selection/Conversion of Interest Rate Options. At the time any Credit Extension is
requested under the Note and/or Borrower wishes to select the LIBOR Option for all or a portion of
the outstanding principal balance of the Note, and at the end of each LIBOR Period, Borrower shall
give Bank notice specifying (a) the interest rate option selected by Borrower; (b) the principal
amount subject thereto; and (c) if the LIBOR Option is selected, the length of the applicable LIBOR
Period. Any such notice may be given by telephone so long as, with respect to each LIBOR Option
selected by Borrower, (i) Bank receives written confirmation from Borrower not later than three (3)
LIBOR Business Days after such telephone notice is given; and (ii) such

 

 

notice is given to Bank prior to 10:00 a.m., California time, on the first day of the LIBOR
Period. For each LIBOR Option requested hereunder, Bank will quote the applicable fixed LIBOR Rate
to Borrower at approximately 10:00 a.m., California time, on the first day of the LIBOR Period. If
Borrower does not immediately accept the rate quoted by Bank, any subsequent acceptance by Borrower
shall be subject to a redetermination of the rate by Bank; provided, however, that if Borrower
fails to accept any such quotation given, then the quoted rate shall expire and Bank shall have no
obligation to permit a LIBOR Option to be selected on such day. If no specific designation of
interest is made at the time any Credit Extension is requested under the Note or at the end of any
LIBOR Period, Borrower shall be deemed to have selected the Prime Rate Option for such Credit
Extension or the principal amount to which such LIBOR Period applied. At any time the LIBOR Option
is in effect, Borrower may, at the end of the applicable LIBOR Period, convert to the Prime Rate
Option. At any time the Prime Rate Option is in effect, Borrower may convert to the LIBOR OPTION,
and shall designate a LIBOR Period.

     7. Default Interest Rate. From and after the maturity date of the Note, or such
earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise,
the outstanding principal balance of the Note shall bear interest until paid in full at an
increased rate per annum (computed on the basis of a 360-day year, actual days elapsed) equal to
five percent (5.00%) above the rate of interest from time to time applicable to the Note.

     8. Prepayment. In the event that the LIBOR Option is the applicable interest rate for
all or any part of the outstanding principal balance of the Note, and any payment or prepayment of
any such outstanding principal balance of the Note shall occur on any day other than the last day
of the applicable LIBOR Period (whether voluntarily, by acceleration, required payment, or
otherwise), or if Borrower elects the LIBOR Option as the applicable interest rate for all or any
part of the outstanding principal balance of the Note in accordance with the terms and conditions
hereof, and, subsequent to such election, but prior to the commencement of the applicable LIBOR
Period, Borrower revokes such election for any reason whatsoever, or if the applicable interest
rate in respect of any outstanding principal balance of the Note hereunder shall be changed, for
any reason whatsoever, from the LIBOR Option to the Prime Rate Option prior to the last day of the
applicable LIBOR Period, or if Borrower shall fail to make any payment of principal or interest
hereunder at any time that the LIBOR Option is the applicable interest rate hereunder in respect of
such outstanding principal balance of the Note, Borrower shall reimburse Bank, on demand, for any
resulting loss, cost or expense incurred by Bank as a result thereof, including, without
limitation, any such loss, cost or expense incurred in obtaining, liquidating, employing or
redeploying deposits from third parties. Such amount payable by Borrower to Bank may include,
without limitation, an amount equal to the excess, if any, of (a) the amount of interest which
would have accrued on the amount so prepaid, or not so borrowed, refunded or converted, for the
period from the date of such prepayment or of such failure to borrow, refund or convert, through
the last day of the relevant LIBOR Period, at the applicable rate of interest for such outstanding
principal balance of the Note, as provided under this Note, over (b) the amount of interest (as
reasonably determined by Bank) which would have accrued to Bank on such amount by placing such
amount on deposit for a comparable period with leading banks in the

 

 

interbank LIBOR market. Calculation of any amounts payable to Bank under this paragraph shall
be made as though Bank shall have actually funded or committed to fund the relevant outstanding
principal balance of the Note hereunder through the purchase of an underlying deposit in an amount
equal to the amount of such outstanding principal balance of the Note and having a maturity
comparable to the relevant LIBOR Period; provided, however, that Bank may fund the outstanding
principal balance of the Note hereunder in any manner it deems fit and the foregoing assumptions
shall be utilized only for the purpose of the calculation of amounts payable under this paragraph.
Upon the written request of Borrower, Bank shall deliver to Borrower a certificate setting forth
the basis for determining such losses, costs and expenses, which certificate shall be conclusively
presumed correct, absent manifest error. Any prepayment hereunder shall also be accompanied by the
payment of all accrued and unpaid interest on the amount so prepaid. Any outstanding principal
balance of the Note which is bearing interest at such time at the Prime Rate Option may be prepaid
without penalty or premium. Partial prepayments hereunder shall be applied to the installments
hereunder in the inverse order of their maturities.

BY INITIALING BELOW, BORROWER ACKNOWLEDGE(S) AND AGREE(S) THAT: (A) THERE IS NO RIGHT TO PREPAY
ANY LIBOR OPTION ADVANCE, IN WHOLE OR IN PART, WITHOUT PAYING THE PREPAYMENT AMOUNT SET FORTH
HEREIN (“PREPAYMENT AMOUNT”), EXCEPT AS OTHERWISE REQUIRED UNDER APPLICABLE LAW; (B) BORROWER SHALL
BE LIABLE FOR PAYMENT OF THE PREPAYMENT AMOUNT IF BANK EXERCISES ITS RIGHT TO ACCELERATE PAYMENT OF
ANY LIBOR OPTION ADVANCE AS PART OR ALL OF THE OBLIGATIONS OWING UNDER THE NOTE, INCLUDING WITHOUT
LIMITATION, ACCELERATION UNDER A DUE-ON-SALE PROVISION; (C) BORROWER WAIVES ANY RIGHTS UNDER
SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE OR ANY SUCCESSOR STATUTE; AND (D) BANK HAS MADE EACH
LIBOR OPTION ADVANCE PURSUANT TO THE NOTE IN RELIANCE ON THESE AGREEMENTS.

	 	 	 
	

	 	 
	BORROWER’S INITIALS
	 	 

 

 

     9. Hold Harmless and Indemnification. Borrower agrees to indemnify Bank and to hold
Bank harmless from, and to reimburse Bank on demand for, all losses and expenses which Bank
sustains or incurs as a result of (i) any payment of a LIBOR Option Advance prior to the last day
of the applicable LIBOR Period for any reason, including, without limitation, termination of the
Note, whether pursuant to this Addendum or the occurrence of an Event of Default; (ii) any
termination of a LIBOR Period prior to the date it would otherwise end in accordance with this
Addendum; or (iii) any failure by Borrower, for any reason, to borrow any portion of a LIBOR Option
Advance.

     10. Funding Losses. The indemnification and hold harmless provisions set forth in
this Addendum shall include, without limitation, all losses and expenses arising from interest and
fees that Bank pays to lenders of funds it obtains in order to fund the loans to Borrower on the
basis of the LIBOR Option(s) and all losses incurred in liquidating or re-deploying deposits from
which such funds were obtained and loss of profit for the period after termination. A written
statement by Bank to Borrower of such losses and expenses shall be conclusive and binding, absent
manifest error, for all purposes. This obligation shall survive the termination of this Addendum
and the payment of the Note.

     11. Regulatory Developments Or Other Circumstances Relating To Illegality or
Impracticality of LIBOR. If any Regulatory Development or other circumstances relating to the
interbank Euro-dollar markets shall, at any time, in Bank’s reasonable determination , make it
unlawful or impractical for Bank to fund or maintain, during any LIBOR Period, to determine or
charge interest rates based upon LIBOR, Bank shall give notice of such circumstances to Borrower
and:

          a. In the case of a LIBOR Period in progress, Borrower shall, if requested by Bank, promptly
pay any interest which had accrued prior to such request and the date of such request shall be
deemed to be the last day of the term of the LIBOR Period; and

          b. No LIBOR Period may be designated thereafter until Bank determines that such would be
practical.

     12. Additional Costs. Borrower shall pay to Bank from time to time, upon Bank’s
request, such amounts as Bank determines are needed to compensate Bank for any costs it incurred
which are attributable to Bank having made or maintained a LIBOR Option Advance or to Bank’s
obligation to make a LIBOR Option Advance, or any reduction in any amount receivable by Bank
hereunder with respect to any LIBOR Option or such obligation (such increases in costs and
reductions in amounts receivable being herein called “Additional Costs”), resulting from any
Regulatory Developments, which (i) change the basis of taxation of any amounts payable to Bank
hereunder with respect to taxation of any amounts payable to Bank hereunder with respect to any
LIBOR Option Advance (other than taxes imposed on the overall net income of Bank for any LIBOR
Option Advance by the jurisdiction where Bank is headquartered or the jurisdiction where Bank
extends the LIBOR Option Advance; (ii) impose or modify any reserve, special deposit, or similar
requirements relating to any extensions of credit

 

 

or other assets of, or any deposits with or other liabilities of, Bank (including any LIBOR
Option Advance or any deposits referred to in the definition of LIBOR); or (iii) impose any other
condition affecting this Addendum (or any of such extension of credit or liabilities). Bank shall
notify Borrower of any event occurring after the date hereof which entitles Bank to compensation
pursuant to this paragraph as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation. Determinations by Bank for purposes of this paragraph,
shall be conclusive, provided that such determinations are made on a reasonable basis.

     13. Legal Effect. Except as specifically modified hereby, all of the terms and
conditions of the Note remain in full force and effect.

{Remainder of page intentionally left blank; signature pages follow.}

 

 

     IN WITNESS WHEREOF, the parties have agreed to the foregoing as of the date first set forth
above.

	 	 	 	 	 	 	 
	CEPHEID	 	COMERICA BANK
	Borrower	 	Bank
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	 	 	Title:

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