Legal Proceedings

EX-10.19 3 a88653exv10w19.txt EXHIBIT 10.19 EXHIBIT 10.19 SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS BORROWER: NOVATEL WIRELESS, INC. DATE: NOVEMBER 21, 2002 THIS AMENDMENT TO LOAN DOCUMENTS is entered into between Silicon Valley Bank ("Silicon") and the borrower named above ("Borrower"). The Parties agree to amend the Loan and Security Agreement between them, dated November 29, 2001 (as otherwise amended, if at all, the "Loan Agreement"), as follows, effective as of the date hereof. (Capitalized terms used but not defined in this Amendment shall have the meanings set forth in the Loan Agreement.) 1. MODIFIED AUDIT FEES. That certain sentence in Section 5.4 of the Loan Agreement that currently reads as follows: "The foregoing inspections and audits shall be at Borrower's expense and the charge therefor shall be $700 per person per day (or such higher amount as shall represent Silicon's then current standard charge for the same), plus reasonable out of pocket expenses." is hereby amended to read as follows: "The foregoing inspections and audits shall be at Borrower's expense and the charge therefor shall be $750 per person per day (or such higher amount as shall represent Silicon's then current standard charge for the same), plus reasonable out of pocket expenses." 2. MODIFIED CREDIT LIMIT. Section 1 of the Schedule to Loan and Security Agreement entitled "1. CREDIT LIMIT" is hereby amended in its entirety to read as follows: 1. CREDIT LIMIT (Section 1.1): An amount equal to the sum of (a) and (b) and (c) below: (a) An amount not to exceed the lesser of: (i) $5,000,000 at any one time outstanding (the "Maximum Credit Limit"); or (ii) 65% of the amount of Borrower's Eligible Receivables (as defined in Section 8 above); plus -1- SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS - -------------------------------------------------------------------------------- (b) STANDBY LETTER OF CREDIT. Silicon previously issued for the account of Borrower a Standby Letter of Credit in the amount of $50,000 (the "Standby Letter of Credit"), which Standby Letter of Credit is secured by a certificate of deposit pledged to Silicon on Silicon's standard form documentation; plus (c) BUSINESS CREDIT CARD SERVICES. Borrower is party to certain standard form applications and agreements of Silicon in connection with Silicon's business credit card services contemplated therein ("Business Credit Card Services"), with a credit limit thereon of $50,000 (or such higher amount as Silicon may agree to in writing, the "Business CC Limit"), and, without limiting any of the terms of such applications and agreements, Borrower will pay all standard fees and charges of Silicon in connection with the Business Credit Card Services. All amounts that Silicon pays or expends in respect of any Business Credit Card Services shall constitute Obligations hereunder. Borrower hereby agrees to indemnify, save, and hold Silicon harmless from any loss, cost, expense, or liability, including payments made by Silicon, expenses, and reasonable attorneys' fees incurred by Silicon arising out of or in connection with any Business Credit Card Services. Borrower's Obligations arising out of or in connection with the Business Credit Card Services (the "Business CC Obligations") shall be fully cash-secured (including, without limitation, cash security in the form of one or more certificates of deposit) pursuant to Silicon's standard form pledge documentation (such cash security, the "Business CC Cash Collateral"; it being understood and agreed that the Business CC Cash Collateral constitutes additional Collateral). Borrower hereby covenants and agrees that the amount of cash collateral pledged to Silicon as the Business CC Cash Collateral shall at all times be at least the then extant Business CC Limit plus all interest, fees and costs due or to become due in connection with the Business CC. For purposes of this Agreement, the Business CC Obligations constitute Obligations and -2- SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS - -------------------------------------------------------------------------------- shall count toward the Credit Limit under this Agreement. LETTER OF CREDIT SUBLIMIT (Section 1.5): $400,000. FOREIGN EXCHANGE CONTRACT SUBLIMIT: $400,000. Borrower may enter into foreign exchange forward contracts with Silicon, on its standard forms, under which Borrower commits to purchase from or sell to Silicon a set amount of foreign currency more than one business day after the contract date (the "FX Forward Contracts"); provided that (1) at the time the FX Forward Contract is entered into Borrower has Loans available to it under this Agreement in an amount at least equal to 10% of the amount of the FX Forward Contract; and (2) the total FX Forward Contracts at any one time outstanding may not exceed 10 times the amount of the Foreign Exchange Contract Sublimit set forth above. Silicon shall have the right to withhold, from the Loans otherwise available to Borrower under this Agreement, a reserve (which shall be in addition to all other reserves) in an amount equal to 10% of the total FX Forward Contracts from time to time outstanding, and in the event at any time there are insufficient Loans available to Borrower for such reserve, Borrower shall deposit and maintain with Silicon cash collateral in an amount at all times equal to such deficiency, which shall be held as Collateral for all purposes of this Agreement. Silicon may, in its discretion, terminate the FX Forward Contracts at any time that an Event of Default occurs and is continuing. Borrower shall execute all standard form applications and agreements of Silicon in connection with the FX Forward Contracts, and without limiting any of the terms of such applications and agreements, Borrower shall pay all standard fees and charges of Silicon in connection with the FX Forward Contracts. -3- SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS - -------------------------------------------------------------------------------- 3. MODIFIED INTEREST RATE. Section 2 of the Schedule to Loan and Security Agreement is hereby amended by modifying the words which presently read "A rate equal to the `Prime Rate' in effect from time to time, plus 2.0% per annum, provided that the interest rate in effect each month shall not be less than 7.0% per annum." to read as follows: A rate equal to the `Prime Rate' in effect from time to time, plus 2.75% per annum, provided that the interest rate in effect each month shall not be less than 7.0% per annum. 4. MODIFIED MATURITY DATE. Section 4 of the Schedule to Loan and Security Agreement is hereby amended in its entirety to read as follows: 4. MATURITY DATE (Section 6.1): November 28, 2003. 5. ADDITION OF MINIMUM CASH LIQUIDITY COVENANT. The following Minimum Cash Liquidity Covenant is hereby added in Section 5 of the Schedule to Loan and Security Agreement and shall read as follows: MINIMUM CASH LIQUIDITY: In addition to the Standby Letter of Credit and the Business CC Cash Collateral, Borrower shall at all times maintain a minimum of Loans available to Borrower under this Agreement plus unrestricted cash in accounts maintained at Silicon in an amount of not less than $500,000; provided, however, that the amount of unrestricted cash in accounts maintained at Silicon shall not at any time be less than $350,000. 6. DELETION OF MINIMUM QUICK RATIO AND MINIMUM TANGIBLE NET WORTH FINANCIAL COVENANTS. The Minimum Quick Ratio and Minimum Tangible Net Worth Financial Covenants set forth in Section 5 of the Schedule to Loan and Security Agreement are hereby deleted. 7. DEPOSIT REQUIREMENT. Paragraph (1) of Section 9 of the Schedule to Loan and Security Agreement is hereby amended to read as follows: (1) BANKING RELATIONSHIP. Borrower shall at all times maintain its primary banking relationship with Silicon. Without limiting the generality of the foregoing, Borrower shall, at all times, maintain not less than 80% of its total cash (including without limitation Borrower's deposit accounts and operating accounts) on deposit with Silicon. 8. FEE. As consideration for Silicon entering into this Amendment, Borrower shall concurrently pay Silicon a fee in the amount of $50,000, which shall be non-refundable and in -4- SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS - -------------------------------------------------------------------------------- addition to all interest and other fees payable to Silicon under the Loan Documents. Silicon is authorized to charge said fee to Borrower's loan account. 9. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon that all representations and warranties set forth in the Loan Agreement, as amended hereby, are true and correct. 10. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior written amendments to the Loan Agreement signed by Silicon and Borrower, and the other written documents and agreements between Silicon and Borrower set forth in full all of the representations and agreements of the parties with respect to the subject matter hereof and supersede all prior discussions, representations, agreements and understandings between the parties with respect to the subject hereof. Except as herein expressly amended, all of the terms and provisions of the Loan Agreement, and all other documents and agreements between Silicon and Borrower shall continue in full force and effect and the same are hereby ratified and confirmed. BORROWER: SILICON: NOVATEL WIRELESS, INC. SILICON VALLEY BANK BY /S/ JOHN MAJOR BY /S/ ROBERT ANDERSEN ------------------------------- ----------------------------- CHAIRMAN AND CEO VICE PRESIDENT ------------------------------- ----------------------------- BY /S/ MELVIN L. FLOWERS ------------------------------- SR. V.P. AND CFO & SECRETARY ------------------------------- -5-