iRobot 2007 Annual Report Download - page 111

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7. Revolving Line of Credit
On May 26, 2005, the Company obtained a working capital line of credit with a bank under which the
Company can borrow up to $20.0 million, including a $2.0 million sub-limit for equipment financing. Interest
accrues at a variable rate based on prime or published LIBOR rates. The line expired on May 26, 2007.
On June 5, 2007, the Company entered into a $35 million unsecured revolving credit facility with Bank of
America, N.A. to replace its expired working capital line of credit with Bank of America. The credit facility will be
available to fund working capital and other corporate purposes. The interest on loans under its working capital line of
credit will accrue, at the Company’s election, at either (i) Bank of America’s prime rate minus 1% or (ii) the
Eurodollar rate plus 1.25%. The credit facility will terminate and all amounts outstanding thereunder will be due and
payable in full on June 5, 2010. As of December 29, 2007, the Company had letters of credit outstanding of
$2.1 million and $32.9 million available under its working capital line of credit. This credit facility contains
customary terms and conditions for credit facilities of this type, including restrictions on its ability to incur or
guaranty additional indebtedness, create liens, enter into transactions with affiliates, make loans or investments, sell
assets, pay dividends or make distributions on, or repurchase, our stock, and consolidate or merge with other entities.
In addition, the Company is required to meet certain financial covenants customary with this type of
agreement, including maintaining a minimum specified tangible net worth, a minimum specified ratio of current
assets to current liabilities and a minimum specified annual net income.
This credit facility contains customary events of default, including for payment defaults, breaches of
representations, breaches of affirmative or negative covenants, cross defaults to other material indebtedness,
bankruptcy and failure to discharge certain judgments. If a default occurs and is not cured within any applicable
cure period or is not waived, the Company’s obligations under the credit facility may be accelerated. At
December 29, 2007, the Company was in compliance with all covenants under the credit facility.
8. Common Stock
Common stockholders are entitled to one vote for each share held and to receive dividends if and when
declared by the Board of Directors and subject to and qualified by the rights of holders of the preferred stock. Upon
dissolution or liquidation of the Company, holders of common stock will be entitled to receive all available assets
subject to any preferential rights of any then outstanding preferred stock.
9. Note Receivable from Stockholder
In May 1999, the Company issued a note receivable to a consultant for the purchase of 200,000 common shares
at $0.24 per share. The note accrued interest on June 30 and December 31 at 8% per annum. Interest was payable
semiannually in arrears on June 30 and December 31 of each year, and the principal was payable in full on the earlier
of May 15, 2005, or immediately prior to an initial public offering. At December 31, 2004 the remaining note
receivable balance was $43,000 and was included as a reduction of stockholders’ equity. This remaining balance
was paid in full in 2005.
10. Stock Option Plan
Under the Company’s 1994 Stock Option Plan (the “1994 Plan”), as amended, 8,785,465 shares of the
Company’s common stock were reserved for issuance to directors, officers, employees and consultants of the
Company. Options may be designated and granted as either “Incentive Stock Options” or “Nonstatutory” Stock
Options. Eligibility for Incentive Stock Options (“ISOs”) is limited to those individuals whose employment status
would qualify them for the tax treatment associated with ISOs in accordance with the Internal Revenue Code. The
1994 Plan expired November 16, 2004.
In October 2001, the Company adopted the 2001 Special Stock Option Plan (the “2001 Plan”). Under the 2001
Plan, the Board authorized the issuance of options to purchase 642,310 shares of previously authorized common
77
iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Form 10-K