Exhibit 10.14
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated as of December
20, 2002, between SILICON VALLEY BANK, a California chartered bank, with its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000
and with a loan production office located at One Newton Executive Park, Suite
200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, doing business under
the name "Silicon Valley East" ("Bank") and ONESOURCE INFORMATION SERVICES,
INC., a Delaware corporation ("Borrower"), provides the terms on which Bank
shall lend to Borrower and Borrower shall repay Bank. The parties agree as
follows:
1. ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document. Capitalized terms in this Agreement
shall have the meanings set forth in Section 13.
2. LOAN AND TERMS OF PAYMENT
2.1. PROMISE TO PAY. Borrower hereby unconditionally promises to pay
Bank the unpaid principal amount of all Credit Extensions and interest on the
unpaid principal amount of the Credit Extensions as and when due in accordance
with this Agreement.
2.1.1. REVOLVING ADVANCES.
(a) Availability. Bank shall make Advances not exceeding (i)
the lesser of (A) the Revolving Line or (B) the Borrowing Base, minus (ii) the
amount of all outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit), minus (iii) the FX Reserve, and minus (iv) the aggregate
outstanding Advances hereunder (including any Cash Management Services). Amounts
borrowed under this Section may be repaid and reborrowed during the term of this
Agreement.
(b) Borrowing Procedure. To obtain an Advance, Borrower must
notify Bank by facsimile or telephone by 3:00 p.m. Eastern time on the Business
Day the Advance is to be made. If such notification is by telephone, Borrower
must promptly confirm the notification by delivering to Bank a completed
Payment/Advance Form in the form attached as EXHIBIT B. Bank shall credit
Advances to Borrower's deposit account. Bank may make Advances under this
Agreement based on instructions from a Responsible Officer or his or her
designee or without instructions if the Advances are necessary to meet
Obligations which have become due. Bank may rely on any telephone notice given
by a person whom Bank believes is a Responsible Officer or designee. Borrower
shall indemnify Bank for any loss Bank suffers due to such reliance.
(c) Termination; Repayment. The Revolving Line terminates on
the Revolving Maturity Date, when the principal amount of all Advances and the
unpaid interest thereon, shall be immediately due and payable.
2.1.2. LETTERS OF CREDIT.
(a) Bank shall issue or have issued Letters of Credit for
Borrower's account not exceeding (i) the lesser of the Revolving Line or the
Borrowing Base minus (ii) the outstanding principal balance of any Advances
(including any Cash Management Services), minus (iii) the amount of all Letters
of Credit (including drawn but unreimbursed Letters of Credit), plus an amount
equal to any Letter of Credit Reserves. The face amount of outstanding Letters
of Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve) may not exceed $5,000,000.00. Each Letter of Credit shall have
an expiry date no later than 364 days after the Revolving Maturity Date provided
Borrower's Letter of Credit reimbursement obligation shall be secured by cash on
terms acceptable to Bank on and after (i) the Revolving Maturity Date if the
term of this Agreement is
not extended by Bank, or (ii) the occurrence of an Event of Default hereunder.
All Letters of Credit shall be, in form and substance, acceptable to Bank in its
sole discretion and shall be subject to the terms and conditions of Bank's form
of standard Application and Letter of Credit Agreement. Borrower agrees to
execute any further documentation in connection with the Letters of Credit as
Bank may reasonably request.
(b) The obligation of Borrower to immediately reimburse Bank
for drawings made under Letters of Credit shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement and such Letters of Credit, under all circumstances whatsoever.
Borrower shall indemnify, defend, protect, and hold Bank harmless from any loss,
cost, expense or liability, including, without limitation, reasonable attorneys'
fees, arising out of or in connection with any Letters of Credit.
(c) Borrower may request that Bank issue a Letter of Credit
payable in a currency other than United States Dollars. If a demand for payment
is made under any such Letter of Credit, Bank shall treat such demand as an
Advance to Borrower of the equivalent of the amount thereof (plus cable charges)
in United States currency at the then prevailing rate of exchange in San
Francisco, California, for sales of that other currency for cable transfer to
the country of which it is the currency.
(d) Upon the issuance of any letter of credit payable in a
currency other than United States Dollars, Bank shall create a reserve (the
"Letter of Credit Reserve") under the Revolving Line for letters of credit
against fluctuations in currency exchange rates, in an amount equal to ten
percent (10%) of the face amount of such letter of credit. The amount of such
reserve may be amended by Bank from time to time to account for fluctuations in
the exchange rate. The availability of funds under the Revolving Line shall be
reduced by the amount of such reserve for so long as such letter of credit
remains outstanding.
2.1.3. FOREIGN EXCHANGE SUBLIMIT. If there is availability under the
Revolving Line and the Borrowing Base, then Borrower may enter in foreign
exchange forward contracts with the Bank under which Borrower commits to
purchase from or sell to Bank a set amount of foreign currency more than one
business day after the contract date (the "FX Forward Contract"). Bank shall
subtract 10% of each outstanding FX Forward Contract from the foreign exchange
sublimit which is a maximum of $5,000,000.00 (the "FX Reserve"). The total FX
Forward Contracts at any one time may not exceed 10 times the amount of the FX
Reserve. Bank may terminate the FX Forward Contracts if an Event of Default
occurs.
2.1.4. CASH MANAGEMENT SERVICES SUBLIMIT. Borrower may use up to
$5,000,000.00 (the "Cash Management Services Sublimit") for the Bank's Cash
Management Services, which may include merchant services, direct deposit of
payroll, business credit card, and check cashing services identified in the
various cash management services agreements related to such services (the "Cash
Management Services"). Such aggregate amounts utilized under the Cash Management
Services Sublimit shall at all times reduce the amount otherwise available for
Credit Extensions under the Revolving Line. Any amounts Bank pays on behalf of
Borrower or any amounts that are not paid by Borrower for any Cash Management
Services will be treated as Advances under the Revolving Line and will accrue
interest at the interest rate applicable to Advances.
2.1.5. EQUIPMENT ADVANCES.
(a) Availability. Though September 30, 2003 (the "Equipment
Availability End Date"), Bank shall make advances ("Equipment Advance" and,
collectively, "Equipment Advances") not exceeding the Equipment Line. The
Equipment Advances may only be used to finance Eligible Equipment purchased on
or after 90 days before the date of each Equipment Advance and no Equipment
Advances may exceed 100% of the equipment invoice excluding taxes, shipping,
warranty charges, freight discounts and installation expense relating to such
Equipment, unless such costs constitute Other Equipment. Notwithstanding the
foregoing, the initial Equipment Advance hereunder (the "Initial Equipment
Advance") may be used to refinance Eligible Equipment purchased with an invoice
date after January 1, 2002, and shall be requested by Borrower within thirty
(30) days after the Closing Date. After repayment, Equipment Advances may not be
reborrowed.
(b) Interest Rate. Interest accrues from the date of each
Equipment Advance at a per annum rate equal to the aggregate of the Bank's Prime
Rate, and one half of one percent (0.50%) and is payable monthly.
(c) Repayment.
(i) Equipment Advances outstanding on March 31, 2003 are
payable in (a) 36 consecutive equal monthly installments of principal,
plus (b) monthly payments of accrued interest, beginning on April 1, 2003,
continuing on the first (1st) day of each month thereafter, and ending on
March 1, 2006.
(ii) Equipment Advances outstanding on September 30, 2003
(with the exception of Equipment Advances being repaid pursuant to Section
2.1.5(c)(i)) are payable in (a) 36 consecutive equal monthly installments
of principal, plus (b) monthly payments of accrued interest, beginning on
October 1, 2003, continuing on the first (1st)day of each month
thereafter, and ending on September 1, 2006.
(d) To obtain an Equipment Advance, Borrower must notify Bank
(the notice is irrevocable) by facsimile no later than 3:00 p.m. Eastern time
one (1) Business Day before the day on which the Equipment Advance is to be
made. The notice in the form of EXHIBIT B (Payment/Advance Form) must be signed
by a Responsible Officer or designee and include a copy of the invoice for the
Equipment being financed.
2.1.6 UNDISBURSED CREDIT EXTENSIONS. The Bank's obligation to lend
the undisbursed portion of the Obligations shall terminate if a Material Adverse
Change has occurred, or there has been any material adverse deviation by
Borrower from the most recent business plan of Borrower presented to and
accepted by Bank prior to the execution of this Agreement.
2.2. OVERADVANCES. If Borrower's Obligations under Section 2.1.1,
2.1.2, 2.1.3, and 2.1.4 exceed the lesser of either (i) the Revolving Line or
(ii) the Borrowing Base, Borrower must immediately pay in cash to Bank the
excess.
2.3. INTEREST RATE; PAYMENTS.
(a) Interest Rate. The principal amounts outstanding under the
Revolving Line shall accrue interest at a per annum rate equal to the aggregate
of the Bank's Prime Rate, and one quarter of one percent (0.25%). During the
continuance of an Event of Default, Obligations shall bear interest at five
percent (5.0%) above the rate effective immediately before the Event of Default.
The applicable interest rate hereunder shall increase or decrease when the Prime
Rate changes. Interest is computed on the basis of a 360 day year for the actual
number of days elapsed.
(b) Payments. Interest is payable on the first (1st) Business
Day of each month. Payments received after 12:00 noon Eastern time are
considered received at the opening of business on the next Business Day. When a
payment is due on a day that is not a Business Day, the payment is due the next
Business Day and additional fees or interest, as applicable, shall continue to
accrue.
(c) Debit of Accounts. Bank may debit any of Borrower's
deposit accounts including Account Number [__________] for principal and
interest payments or any amounts Borrower owes Bank. Bank shall promptly notify
Borrower when it debits Borrower's accounts. These debits are not a set-off.
2.4. FEES. Borrower shall pay to Bank:
(a) Unused Revolving Line Fee. A fully earned, non-refundable
unused revolving line fee equal to one quarter of one percent (0.25%) of the
average difference between $5,000,000.00 minus the outstanding Advances (made
pursuant to Section 2.1.1) in each quarter, due and payable on the last day of
each quarter; and
(b) Equipment Line Fee. A fully earned, non-refundable
equipment line fee equal to $12,500.00, due and payable on the Equipment
Availability End Date. Notwithstanding the foregoing: (i) in the event that the
aggregate amount of Equipment Advances outstanding on the Equipment Availability
End Date is greater than $2,500,000.00, the equipment line fee shall be
$10,000.00, and (ii) in the event that the aggregate
amount of Equipment Advances outstanding on the Equipment Availability End Date
is greater than $3,750,000.00, no equipment line fee shall be due; and
(c) Equipment Line Prepayment Fee. In addition to the
equipment line fee, above, in the event that Borrower repays all principal and
accrued interest due with respect to outstanding Equipment Advances prior to
March 31, 2005, a fully earned, non-refundable equipment line prepayment fee
equal to $12,500.00; and
(d) Letter of Credit Fee. The Borrower shall pay the Bank's
customary fees and expenses for the issuance of Letters of Credit, including,
without limitation, a Letter of Credit Fee of one percent (1.0%) per annum of
the face amount of each Letter of Credit issued, upon the issuance or renewal of
such Letter of Credit by the Bank; and
(e) Bank Expenses. All Bank Expenses (including reasonable
attorneys' fees and expenses incurred through and after the Closing Date) when
due.
3. CONDITIONS OF LOANS
3.1. CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION. The Bank's
obligation to make the initial Credit Extension is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, the following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower with respect to
certificate of incorporation, bylaws, incumbency and resolutions
authorizing the execution and delivery of this Agreement;
(c) a Negative Pledge Agreement covering Intellectual
Property;
(d) a legal opinion of Borrower's counsel, in form and
substance acceptable to Bank;
(e) financing statements (Forms UCC-1);
(f) Account Control Agreement/ Investment Account Control
Agreement;
(g) insurance certificates;
(h) payment of the fees and Bank Expenses then due specified
in Section 2.4 hereof;
(i) Certificate of Foreign Qualification (if applicable);
(j) Certificate of Good Standing/Legal Existence; and
(k) such other documents, and completion of such other
matters, as Bank may reasonably request.
3.2. CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Bank's
obligations to make each Credit Extension, including the initial Credit
Extension, is subject to the following:
(a) timely receipt of any Payment/Advance Form; and
(b) the representations and warranties in Section 5 shall be
materially true on the date of the Payment/Advance Form and on the effective
date of each Credit Extension and no Event of Default shall have occurred and be
continuing, or result from the Credit Extension. Each Credit Extension is
Borrower's representation and warranty on that date that the representations and
warranties in Section 5 remain true.
4. CREATION OF SECURITY INTEREST
4.1. GRANT OF SECURITY INTEREST. Borrower hereby grants Bank, to
secure the payment and performance in full of all of the Obligations and the
performance of each of Borrower's duties under the Loan Documents, a continuing
security interest in, and pledges and assigns to the Bank, the Collateral,
wherever located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof. Borrower warrants and represents that the
security interest granted herein shall be a first priority security interest in
the Collateral. During an Event of Default, Bank may place a "hold" on any
deposit account pledged as Collateral.
Except as noted on the Perfection Certificate, as of the date hereof,
Borrower is not a party to, nor is bound by, any material license or other
agreement with respect to which the Borrower is the licensee that prohibits or
otherwise restricts Borrower from granting a security interest in Borrower's
interest in such license or agreement or any other property. Borrower shall not
enter into, or become bound by, any such material license or agreement which is
reasonably likely to have a material impact on Borrower's business or financial
condition, unless Borrower provides Bank with written notice within five (5)
Business Days after entering into such license or agreement. Borrower shall take
such steps as Bank reasonably requests to obtain the consent of, or waiver by,
any person whose consent or waiver is necessary for all such material licenses
or contract rights to be deemed "Collateral" and for Bank to have a security
interest in it that might otherwise be restricted or prohibited by law or by the
terms of any such license or agreement, whether now existing or entered into in
the future.
Borrower agrees that any disposition of the Collateral in violation of
this Agreement, by either the Borrower or any other Person, shall be deemed to
violate the rights of the Bank under the Code. If the Agreement is terminated,
Bank's lien and security interest in the Collateral shall continue until
Borrower fully satisfies its Obligations. If Borrower shall at any time, acquire
a commercial tort claim, Borrower shall promptly notify Bank in a writing signed
by Borrower of the brief details thereof and grant to Bank in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory to
Bank.
4.2 AUTHORIZATION TO FILE FINANCING STATEMENTS. Borrower hereby
authorizes Bank to file financing statements, without notice to Borrower, with
all appropriate jurisdictions in order to perfect or protect Bank's interest or
rights hereunder.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1. DUE ORGANIZATION AND AUTHORIZATION. Borrower and each
Subsidiary is duly existing and in good standing in its state of formation and
qualified and licensed to do business in, and in good standing in, any state in
which the conduct of its business or its ownership of property requires that it
be qualified except where the failure to do so could not reasonably be expected
to cause a Material Adverse Change. In connection with this Agreement, the
Borrower delivered to the Bank a certificate signed by the Borrower and entitled
"Perfection Certificate". The Borrower represents and warrants to the Bank that:
(a) the Borrower's exact legal name is that indicated on the Perfection
Certificate and on the signature page hereof; and (b) the Borrower is an
organization of the type, and is organized in the jurisdiction, set forth in the
Perfection Certificate; and (c) the Perfection Certificate accurately sets forth
the Borrower's organizational identification number or accurately states that
the Borrower has none; and (d) the Perfection Certificate accurately sets forth
the Borrower's place of business, or, if more than one, its chief executive
office as well as the Borrower's mailing address if different, and (e) all other
information set forth on the Perfection Certificate pertaining to the Borrower
is accurate and complete. If the Borrower does not now have an organizational
identification number, but later obtains one, Borrower shall forthwith notify
the Bank of such organizational identification number.
The execution, delivery and performance of the Loan Documents have
been duly authorized, and do not conflict with Borrower's organizational
documents, nor constitute an event of default under any material agreement by
which Borrower is bound. Borrower is not in default under any agreement to which
or by which it is bound in which the default could reasonably be expected to
cause a Material Adverse Change.
5.2. COLLATERAL. Borrower has good title to the Collateral, free of
Liens except Permitted Liens. Borrower has no deposit account, other than the
deposit accounts with Bank and deposit accounts described in the Perfection
Certificate delivered to the Bank in connection herewith. The Accounts are bona
fide, existing obligations, and the service or property has been performed or
delivered to the account debtor or its agent for immediate shipment to and
unconditional acceptance by the account debtor. The Collateral is not in the
possession of any third party bailee (such as a warehouse). In the event that
Borrower, after the date hereof, intends to store or otherwise deliver any
portion of the Collateral to a bailee, then Borrower will first receive the
written consent of Bank and such bailee must acknowledge in writing that the
bailee is holding such Collateral for the benefit of Bank. Borrower has no
knowledge of any actual or imminent Insolvency Proceeding of any account debtor
whose accounts are an Eligible Account in any Borrowing Base Certificate. All
Inventory is in all material respects of good and marketable quality, free from
material defects. Borrower is the sole owner of the Intellectual Property,
except for non-exclusive licenses granted to its customers in the ordinary
course of business. Each Patent is valid and enforceable and no part of the
Intellectual Property has been judged invalid or unenforceable, in whole or in
part, and no claim has been made that any part of the Intellectual Property
violates the rights of any third party {except to the extent such claim could
not reasonably be expected to cause a Material Adverse Change.
5.3. LITIGATION. Except as shown in the Perfection Certificate,
there are no actions or proceedings pending or, to the knowledge of Borrower's
Responsible Officers, threatened by or against Borrower or any Subsidiary in
which an adverse decision could reasonably be expected to cause a Material
Adverse Change.
5.4. NO MATERIAL DEVIATION IN FINANCIAL STATEMENTS. All consolidated
financial statements for Borrower and any Subsidiary delivered to Bank fairly
present in all material respects Borrower's consolidated financial condition and
Borrower's consolidated results of operations. There has not been any material
deterioration in Borrower's consolidated financial condition since the date of
the most recent financial statements submitted to Bank.
5.5. SOLVENCY. Borrower is able to pay its debts (including trade
debts) as they mature.
5.6. REGULATORY COMPLIANCE. Borrower is not an "investment company"
or a company "controlled" by an "investment company" under the Investment
Company Act. Borrower is not engaged as one of its important activities in
extending credit for margin stock (under Regulations T and U of the Federal
Reserve Board of Governors). Borrower has complied in all material respects with
the Federal Fair Labor Standards Act. Borrower has not violated any laws,
ordinances or rules, the violation of which could reasonably be expected to
cause a Material Adverse Change. None of Borrower's or any Subsidiary's
properties or assets has been used by Borrower or any Subsidiary or, to the best
of Borrower's knowledge, by previous Persons, in disposing, producing, storing,
treating, or transporting any hazardous substance other than legally. Borrower
and each Subsidiary has timely filed all required tax returns and paid, or made
adequate provision to pay, all material taxes, except those being contested in
good faith with adequate reserves under GAAP. Borrower and each Subsidiary has
obtained all consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all government authorities that are
necessary to continue its business as currently conducted except where the
failure to make such declarations, notices or filings would not reasonably be
expected to cause a Material Adverse Change.
5.7. SUBSIDIARIES. Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments. Borrower
has not transferred any assets to, or made any investment in Borrower's U.K.
Subsidiary, OneSource Information Services Ltd., or Borrower's U.S. Subsidiary,
Corporate Technology Information Services, Inc., subsequent to November 30,
2002, except for intercompany charges and royalty payments made in the ordinary
course (in accordance with Section 7.7) by and among Borrower and its
Subsidiaries.
5.8. FULL DISCLOSURE. No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank
taken together with all such written certificates and written statements given
to Bank contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements, in light of the circumstances in which they were made, not
misleading (it being recognized by Bank that the projections and forecasts
provided by Borrower in good faith and based upon reasonable assumptions are not
viewed as facts and that actual results during the period or periods covered by
such projections and forecasts may differ from the projected or forecasted
results).
6. AFFIRMATIVE COVENANTS
Borrower shall do all of the following:
6.1. GOVERNMENT COMPLIANCE. Borrower shall maintain its and all
Subsidiaries' legal existence and good standing in its jurisdiction of formation
and maintain qualification in each jurisdiction in which the failure to so
qualify would reasonably be expected to have a material adverse effect on
Borrower's business or operations. Borrower shall comply, and have each
Subsidiary comply, with all laws, ordinances and regulations to which it is
subject, noncompliance with which could have a material adverse effect on
Borrower's business or operations or would reasonably be expected to cause a
Material Adverse Change.
6.2. FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower shall deliver to Bank: (i) as soon as available,
but no later than:(A) twenty five (25) days after the last day of the first two
months of each fiscal quarter, and (B) forty five (45) days after the last day
of the third month of each fiscal quarter, a company prepared consolidated
balance sheet and income statement covering Borrower's consolidated operations
during the period certified by a Responsible Officer and in a form acceptable to
Bank; (ii) as soon as available, but no later than forty five (45) days after
the last day of each fiscal quarter, a company prepared consolidating balance
sheet and income statement covering Borrower's, and all of Borrower's
Subsidiaries', consolidated operations during the period certified by a
Responsible Officer and in a form acceptable to Bank; (iii) as soon as
available, but no later than one hundred twenty (120) days after the last day of
Borrower's fiscal year, audited consolidated financial statements prepared under
GAAP, consistently applied, together with an unqualified opinion on the
financial statements from an independent certified public accounting firm
reasonably acceptable to Bank; (iv) within five (5) days of filing, copies of
all statements, reports and notices made available to Borrower's security
holders or to any holders of Subordinated Debt and all reports on Form 10-K,
10-Q and 8-K filed with the Securities and Exchange Commission; (v) a prompt
report of any legal actions pending or threatened against Borrower or any
Subsidiary that could result in damages or costs to Borrower or any Subsidiary
of One Hundred Thousand Dollars ($100,000.00) or more; and (vi) other financial
information reasonably requested by Bank.
(b) Within twenty five (25) days after the last day of each
month, Borrower shall deliver to Bank a Borrowing Base Certificate signed by a
Responsible Officer in the form of EXHIBIT C, with aged listings of accounts
receivable (by invoice date).
(c) Within (i) twenty five (25) days after the last day of the
first two months of each fiscal quarter, and (ii) forty five (45) days after the
last day of the third month of each fiscal quarter, Borrower shall deliver to
Bank with the monthly financial statements a Compliance Certificate signed by a
Responsible Officer in the form of EXHIBIT D.
(d) Allow Bank to audit Borrower's Collateral at Borrower's
expense. Such audits shall be conducted no more often than once every twelve
(12) months unless an Event of Default has occurred and is continuing. The
Borrower shall provide the Bank with access to all its records and financial
information so that the next such audit (the "Initial Audit") of Borrower's
Collateral shall be completed by Bank prior to the initial Credit Extension
under this Agreement.
6.3. INVENTORY; RETURNS. Borrower shall keep all Inventory in good
and marketable condition, free from material defects. Returns and allowances
between Borrower and its account debtors shall follow Borrower's customary
practices as they exist at the Closing Date. Borrower must promptly notify Bank
of all returns, recoveries, disputes and claims that involve more than Fifty
Thousand Dollars ($50,000.00).
6.4. TAXES. Borrower shall make, and cause each Subsidiary to make,
timely payment of all material federal, state, and local taxes or assessments
(other than taxes and assessments which Borrower is contesting in good faith,
with adequate reserves maintained in accordance with GAAP) and will deliver to
Bank, on demand, appropriate certificates attesting to such payments.
6.5. INSURANCE. Borrower shall keep its business and the Collateral
insured for risks and in amounts, and as Bank may reasonably request. Insurance
policies shall be in a form, with companies, and in amounts, standard for
Borrower's industry, and that are satisfactory to Bank in Bank's reasonable
discretion. All property policies shall have a lender's loss payable endorsement
showing Bank as an additional loss payee and all liability policies shall show
the Bank as an additional insured and all policies shall provide that the
insurer must give Bank at least twenty (20) days notice before canceling its
policy. At Bank's request, Borrower shall deliver certified copies of policies
and evidence of all premium payments. Proceeds payable under any policy shall,
at Bank's option, be payable to Bank on account of the Obligations.
6.6. ACCOUNTS. In order to permit the Bank to monitor the Borrower's
financial performance and condition, Borrower, and all Borrower's Subsidiaries,
shall maintain Borrower's, and such Subsidiaries', primary depository, operating
accounts (with the exception of the primary operating account of Borrower's U.K.
Subsidiary, OneSource Information Services Ltd.) and securities accounts with
Bank and some portion of the Borrower's, and such Subsidiaries', cash or
securities in excess of that amount used for Borrower's, and such Subsidiaries',
operations shall be maintained or administered through the Bank. Borrower shall
identify to Bank, in writing, any bank or securities account opened by Borrower
with any institution other than Bank. In addition, for each such account that
the Borrower at any time opens or maintains, Borrower shall, at the Bank's
request and option, pursuant to an agreement in form and substance acceptable to
the Bank, cause the depositary bank or securities intermediary to agree that
such account is the collateral of the Bank pursuant to the terms hereunder. The
provisions of this paragraph shall not apply to deposit accounts exclusively
used for payroll, payroll taxes and other employee wage and benefit payments to
or for the benefit of the Borrower's employees.
6.7. FINANCIAL COVENANTS.
Borrower, and Borrower's Subsidiaries, shall maintain on a
consolidated basis, at all times:
(a) ADJUSTED QUICK RATIO. A ratio of Quick Assets to Current
Liabilities minus Deferred Revenue of at least 2.0 to 1.0, to be
tested as of the last day of each month.
(b) PROFITABILITY. Borrower shall have a minimum net profit
(including any extraordinary gains and extraordinary write-downs of
goodwill or other intangible assets) of $1.00 for each fiscal
quarter, to be tested as of the last day of each quarter.
6.8. FURTHER ASSURANCES. Borrower shall execute any further
instruments and take further action as Bank reasonably requests to perfect or
continue Bank's security interest in the Collateral or to effect the purposes of
this Agreement.
7. NEGATIVE COVENANTS
Borrower shall not do any of the following without the Bank's prior
written consent:
7.1. DISPOSITIONS. Convey, sell, lease, transfer or otherwise
dispose of (collectively a "Transfer"), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, except for Transfers (i)
of Inventory in the ordinary course of business; (ii) of non-exclusive licenses
and similar arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business; or (iii) of worn-out or
obsolete Equipment.
7.2. CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS
LOCATIONS. Engage in or permit any of its Subsidiaries to engage in any business
other than the businesses currently engaged in by Borrower or reasonably related
thereto, or have a material change in its ownership (other than by the sale of
Borrower's equity securities in a public offering or pursuant to changes in the
ownership of the Borrower due to purchases and sales of the Borrower's equity
securities on the public market, or to venture capital investors or other
institutional investors so long as Borrower identifies to Bank the venture
capital investors or institutional investors prior to the closing of the
investment), or management. Borrower shall not, without at least thirty (30)
days prior written notice to Bank: (i) relocate its chief executive office, or
add any new offices or business locations, including warehouses (unless such new
offices or business locations contain less than Five Thousand Dollars
($5,000.00) in Borrower's assets or
property), or (ii) change its jurisdiction of organization, or (iii) change its
organizational structure or type, or (iv) change its legal name, or (v) change
any organizational number (if any) assigned by its jurisdiction of organization.
7.3. MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any of
its Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person. A Subsidiary may merge or
consolidate into another Subsidiary or into the Borrower.
7.4. INDEBTEDNESS. Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.
7.5. ENCUMBRANCE. Create, incur, or allow any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interest granted herein. The Collateral may also be subject to Permitted Liens.
7.6. DISTRIBUTIONS; INVESTMENTS. (i) Directly or indirectly acquire
or own any Person, or make any Investment in any Person, other than Permitted
Investments, or permit any of its Subsidiaries to do so; or (ii) pay any
dividends or make any distribution or payment or redeem, retire or purchase any
capital stock (except for repurchases of stock from former employees or
directors of Borrower under the terms of applicable repurchase agreements in an
aggregate amount not to exceed $150,000 in the aggregate in any fiscal year,
provided that no Event of Default has occurred, is continuing or would exist
after giving effect to the repurchases). The provisions of this Section 7.6
shall not apply to any purchases of capital stock by the Borrower pursuant to
any stock buy-back program duly authorized by the Borrower's board of directors,
provided that: (a) Borrower is not in default under this Agreement, and (b) such
buy-back, or any portion thereof, will not result in an occurrence of an Event
of Default, either immediately or solely as a result of the passage of time
(including, without limitation, the violation of any financial covenant for any
succeeding reporting period).
7.7. TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into
or permit to exist any material transaction with any Affiliate of Borrower,
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a non-affiliated Person.
7.8. SUBORDINATED DEBT. Make or permit any payment on any
Subordinated Debt, except under the terms of the Subordinated Debt, or amend any
provision in any document relating to the Subordinated Debt, without Bank's
prior written consent.
7.9. COMPLIANCE. Become an "investment company" or a company
controlled by an "investment company", under the Investment Company Act of 1940
or undertake as one of its important activities extending credit to purchase or
carry margin stock, or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material
adverse effect on Borrower's business or operations or would reasonably be
expected to cause a Material Adverse Change, or permit any of its Subsidiaries
to do so.
8. EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1. PAYMENT DEFAULT. Borrower fails to pay any of the Obligations
within three (3) days after their due date. During the additional period the
failure to cure the default is not an Event of Default (but no Credit Extension
shall be made during the cure period);
8.2. COVENANT DEFAULT. Borrower fails or neglects to perform any
obligation in Section 6 or violates any covenant in Section 7 or fails or
neglects to perform, keep, or observe any other material term,
provision, condition, covenant or agreement contained in this Agreement, any
Loan Documents, or in any present or future agreement between Borrower and Bank
and as to any default under such other material term, provision, condition,
covenant or agreement that can be cured, has failed to cure the default within
fifteen (15) days after the occurrence thereof; provided, however, that if the
default cannot by its nature be cured within the fifteen (15) day period or
cannot after diligent attempts by Borrower be cured within such fifteen (15) day
period, and such default is likely to be cured within a reasonable time, then
Borrower shall have an additional period (which shall not in any case exceed
thirty (30) days) to attempt to cure such default, and within such reasonable
time period the failure to cure the default shall not be deemed an Event of
Default (but no Credit Extensions shall be made during such cure period). Grace
periods provided under this section shall not apply, among other things, to
financial covenants or any other covenants that are required to be satisfied,
completed or tested by a date certain.
8.3. MATERIAL ADVERSE CHANGE. A Material Adverse Change occurs;
8.4. ATTACHMENT. (i) Any material portion of Borrower's assets is
attached, seized, levied on, or comes into possession of a trustee or receiver
and the attachment, seizure or levy is not removed in ten (10) days; (ii) the
service of process upon the Borrower seeking to attach, by trustee or similar
process, any funds of the Borrower on deposit with the Bank; (iii) Borrower is
enjoined, restrained, or prevented by court order from conducting a material
part of its business; (iv) a judgment or other claim becomes a Lien on a
material portion of Borrower's assets; or (v) a notice of lien, levy, or
assessment is filed against any of Borrower's assets by any government agency
and not paid within ten (10) days after Borrower receives notice. These are not
Events of Default if stayed or if a bond is posted pending contest by Borrower
(but no Credit Extensions shall be made during the cure period);
8.5. INSOLVENCY. (i) Borrower becomes insolvent; (ii) Borrower
begins an Insolvency Proceeding; or (iii) an Insolvency Proceeding is begun
against Borrower and not dismissed or stayed within forty five (45) days (but no
Credit Extensions shall be made before any Insolvency Proceeding is dismissed);
8.6. OTHER AGREEMENTS. If there is a default in any agreement to
which Borrower is a party with a third party or parties resulting in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of One Hundred Thousand
Dollars ($100,000) or that could result in a Material Adverse Change;
8.7. JUDGMENTS. If a judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least Two Hundred Thousand
Dollars ($200,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of ten (10) days (provided that no Credit
Extensions will be made prior to the satisfaction or stay of such judgment); and
8.8. MISREPRESENTATIONS. If Borrower or any Person acting for
Borrower makes any material misrepresentation or material misstatement now or
later in any warranty or representation in this Agreement or in any writing
delivered to Bank or to induce Bank to enter this Agreement or any Loan
Document.
9. BANK'S RIGHTS AND REMEDIES
9.1. RIGHTS AND REMEDIES. When an Event of Default occurs and
continues Bank may, without notice or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but
if an Event of Default described in Section 8.5 occurs all Obligations are
immediately due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's
benefit under this Agreement or under any other agreement between Borrower and
Bank;
(c) Settle or adjust disputes and claims directly with account
debtors for amounts, on terms and in any order that Bank considers advisable and
notify any Person owing Borrower money of Bank's security interest in such funds
and verify the amount of such account. Borrower shall collect all payments in
trust
for Bank and, if requested by Bank, immediately deliver the payments to Bank in
the form received from the account debtor, with proper endorsements for deposit;
(d) Make any payments and do any acts it considers necessary
or reasonable to protect its security interest in the Collateral. Borrower shall
assemble the Collateral if Bank requests and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank's rights
or remedies;
(e) Apply to the Obligations, then due and payable, any (i)
balances and deposits of Borrower it holds, or (ii) any amount held by Bank
owing to or for the credit or the account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell the Collateral; and
(g) Dispose of the Collateral according to the Code.
9.2. POWER OF ATTORNEY. Borrower hereby irrevocably appoints Bank as
its lawful attorney-in-fact, to be effective upon the occurrence and during the
continuance of an Event of Default, to: (i) endorse Borrower's name on any
checks or other forms of payment or security; (ii) sign Borrower's name on any
invoice or xxxx of lading for any Account or drafts against account debtors;
(iii) settle and adjust disputes and claims about the Accounts directly with
account debtors, for amounts and on terms Bank determines reasonable; (iv) make,
settle, and adjust all claims under Borrower's insurance policies; and (v)
transfer the Collateral into the name of Bank or a third party as the Code
permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign
Borrower's name on any documents necessary to perfect or continue the perfection
of any security interest regardless of whether an Event of Default has occurred
until all Obligations have been satisfied in full and Bank is under no further
obligation to make Credit Extensions hereunder. Bank's foregoing appointment as
Borrower's attorney in fact, and all of Bank's rights and powers, coupled with
an interest, are irrevocable until all Obligations have been fully repaid and
performed and Bank's obligation to provide Credit Extensions terminates.
9.3. ACCOUNTS NOTIFICATION/COLLECTION. In the event that an Event of
Default occurs and is continuing, Bank may notify any Person owing Borrower
money of Bank's security interest in the funds and verify and/or collect the
amount of the Account. During the continuance of an Event of Default, any
amounts received by Borrower shall be held in trust by Borrower for Bank, and,
if requested by Bank, Borrower shall immediately deliver such receipts to Bank
in the form received from the account debtor, with proper endorsements for
deposit.
9.4. BANK EXPENSES. Any amounts paid by Bank as provided herein are
Bank Expenses and are immediately due and payable, and shall bear interest at
the then applicable rate and be secured by the Collateral. No payments by Bank
shall be deemed an agreement to make similar payments in the future or Bank's
waiver of any Event of Default.
9.5. BANK'S LIABILITY FOR COLLATERAL. So long as the Bank complies
with reasonable banking practices regarding the safekeeping of collateral,
unless prohibited by applicable law, the Bank shall not be liable or responsible
for: (a) the safekeeping of the Collateral; (b) any loss or damage to the
Collateral; (c) any diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other person. Borrower bears
all risk of loss, damage or destruction of the Collateral.
9.6. REMEDIES CUMULATIVE. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements are cumulative. Bank has
all rights and remedies provided under the Code, by law, or in equity. Bank's
exercise of one right or remedy is not an election, and Bank's waiver of any
Event of Default is not a continuing waiver. Bank's delay is not a waiver,
election, or acquiescence. No waiver hereunder shall be effective unless signed
by Bank and then is only effective for the specific instance and purpose for
which it was given.
9.7. DEMAND WAIVER. Unless prohibited by applicable law, Borrower
waives demand, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees held by Bank on which Borrower is liable.
10. NOTICES
All notices or demands by any party to this Agreement or any
other related agreement must be in writing and be personally delivered or sent
by an overnight delivery service, by certified mail, postage prepaid, return
receipt requested, or by telefacsimile at the addresses listed below. Either
Bank or Borrower may change its notice address by giving the other written
notice.
If to Borrower: OneSource Information Services, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxx Xxxxxx
FAX: (000) 000-0000
with a copy to: Xxxxx, Xxxxxxx & Xxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Esquire
FAX: (000) 000-0000
If to Bank: Silicon Valley Bank
One Newton Executive Park, Suite 200
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxxxxx Xxxxxxx
FAX: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esquire
FAX: (000) 000-0000
11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
Massachusetts law governs the Loan Documents without regard to
principles of conflicts of law. Borrower and Bank each submit to the exclusive
jurisdiction of the State and Federal courts in Massachusetts; provided,
however, that if for any reason Bank cannot avail itself of such courts in the
Commonwealth of Massachusetts, Borrower accepts jurisdiction of the courts and
venue in Santa Xxxxx County, California. NOTWITHSTANDING THE FOREGOING, THE BANK
SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR
ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH THE BANK DEEMS
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE
ENFORCE THE BANK'S RIGHTS AGAINST THE BORROWER OR ITS PROPERTY.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12. GENERAL PROVISIONS
12.1. SUCCESSORS AND ASSIGNS. This Agreement binds and is for the
benefit of the successors and permitted assigns of each party. Borrower may not
assign this Agreement or any rights or Obligations under it without Bank's prior
written consent which may be granted or withheld in Bank's discretion. Bank has
the right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights and benefits under this Agreement, the Loan Documents
or any related agreement.
12.2. INDEMNIFICATION. Borrower hereby indemnifies, defends and
holds the Bank and its officers, employees and agents against: (a) all
obligations, demands, claims, and liabilities asserted by any other party in
connection with the transactions contemplated by the Loan Documents; and (b) all
losses or Bank Expenses incurred, or paid by Bank from, following, or
consequential to transactions between Bank and Borrower (including reasonable
attorneys' fees and expenses), except for losses caused by Bank's gross
negligence or willful misconduct.
12.3. RIGHT OF SET-OFF. Borrower and any guarantor hereby grant to
Bank, a lien, security interest and right of setoff as security for all
Obligations to Bank, whether now existing or hereafter arising upon and against
all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the
control of the Bank or in transit to any of them. During the continuance of an
Event of Default, without demand or notice, Bank may set off the same or any
part thereof and apply the same to any liability or obligation of Borrower and
any guarantor then due and payable and regardless of the adequacy of any other
collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO
EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH
SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO
SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
12.4. TIME OF ESSENCE. Time is of the essence for the performance of
all Obligations in this Agreement.
12.5. SEVERABILITY OF PROVISION. Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.
12.6. AMENDMENTS IN WRITING; INTEGRATION. All amendments to this
Agreement must be in writing signed by both Bank and Borrower. This Agreement
and the Loan Documents represent the entire agreement about this subject matter,
and supersede prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
into this Agreement and the Loan Documents.
12.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, constitute
one Agreement.
12.8. SURVIVAL. All covenants, representations and warranties made
in this Agreement continue in full force while any Obligations remain
outstanding. The obligation of Borrower in Section 12.2 to indemnify Bank shall
survive until the statute of limitations with respect to such claim or cause of
action shall have run.
12.9. CONFIDENTIALITY. In handling any information of Borrower, Bank
shall exercise the same degree of care that it exercises for its own
confidential and proprietary information, but disclosure of information may be
made: (i) to Bank's subsidiaries or affiliates in connection with their business
with Borrower; (ii) to prospective transferees or purchasers of any interest in
the Credit Extensions (provided, however, Bank shall use commercially reasonable
efforts in obtaining such prospective transferee's or purchaser's agreement to
the terms of this provision); (iii) as required by law, regulation, subpoena, or
other order, (iv) as required in connection with Bank's examination or audit;
and (v) as Bank considers appropriate in exercising remedies under this
Agreement. Confidential information does not include information that either:
(a) is in the public domain or in Bank's possession
when disclosed to Bank, or becomes part of the public domain after disclosure to
Bank; or (b) is disclosed to Bank by a third party, if Bank does not know that
the third party is prohibited from disclosing the information.
13. DEFINITIONS
13.1. DEFINITIONS. In this Agreement:
"ACCOUNTS" are all existing and later arising accounts,
contract rights, and other obligations owed Borrower in connection with its sale
or lease of goods (including licensing software and other technology) or
provision of services, all credit insurance, guaranties, other security and all
merchandise returned or reclaimed by Borrower and Borrower's Books relating to
any of the foregoing, as such definition may be amended from time to time
according to the Code.
"ADVANCE" or "ADVANCES" is a loan advance (or advances) under
the Revolving Line.
"AFFILIATE" of a Person is a Person that owns or controls
directly or indirectly the Person, any Person that controls or is controlled by
or is under common control with the Person, and each of that Person's senior
executive officers, directors, partners and, for any Person that is a limited
liability company, that Person's managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable
costs or expenses (including reasonable attorneys' fees and expenses) for
preparing, negotiating, defending and enforcing the Loan Documents (including
appeals or Insolvency Proceedings).
"BORROWER'S BOOKS" are all Borrower's books and records
including ledgers, records regarding Borrower's assets or liabilities, the
Collateral, business operations or financial condition and all computer programs
or discs or any equipment containing the information.
"BORROWING BASE" is 80% of Eligible Accounts, as determined by
Bank from Borrower's most recent Borrowing Base Certificate; provided, however,
that Bank may lower the percentage of the Borrowing Base after performing an
audit of Borrower's Collateral.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a
day on which the Bank is closed.
CASH MANAGEMENT SERVICES" are defined in Section 2.1.4.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the Uniform Commercial Code as adopted in
Massachusetts, as amended and as may be amended and in effect from time to time.
"COLLATERAL" is any and all properties, rights and assets of
the Borrower granted by the Borrower to Bank or arising under the Code, now, or
in the future, in which the Borrower obtains an interest, or the power to
transfer rights, including, without limitation, the property described on
EXHIBIT A.
"CONTINGENT OBLIGATION" is, for any Person, any direct or
indirect liability, contingent or not, of that Person for (i) any indebtedness,
lease, dividend, letter of credit or other obligation of another such as an
obligation directly or indirectly guaranteed, endorsed, co-made, discounted or
sold with recourse by that Person, or for which that Person is directly or
indirectly liable; (ii) any obligations for undrawn letters of credit for the
account of that Person; and (iii) all obligations from any interest rate,
currency or commodity swap agreement, interest rate cap or collar agreement, or
other agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity prices; but
"Contingent Obligation" does not include endorsements in the ordinary course of
business. The amount of a Contingent Obligation is the stated or determined
amount of the primary obligation for which the Contingent Obligation is made or,
if not determinable, the maximum
reasonably anticipated liability for it determined by the Person in good faith;
but the amount may not exceed the maximum of the obligations under the guarantee
or other support arrangement.
"CREDIT EXTENSION" is each Advance, Equipment Advance, Letter
of Credit, Term Loan, Exchange Contract, Bridge Loan Advance or any other
extension of credit by Bank for Borrower's benefit.
"CURRENT ASSETS" are amounts that under GAAP should be
included on that date as current assets on Borrower's consolidated balance
sheet.
"CURRENT LIABILITIES" are the aggregate amount of Borrower's
Total Liabilities which mature within one (1) year, which shall include, without
limitation, all obligations and liabilities of Borrower to Bank.
"DEFERRED REVENUE" is all amounts received in advance of
performance under contracts and not yet recognized as revenue.
"ELIGIBLE ACCOUNTS" are billed Accounts in the ordinary course
of Borrower's business that meet all Borrower's representations and warranties
in Section 5.2; but Bank may change eligibility standards by giving Borrower
thirty (30) days prior written notice. Unless Bank agrees otherwise in writing,
Eligible Accounts shall not include:
(a) Accounts that the account debtor has not paid within
ninety (90) days of invoice date;
(b) Accounts for an account debtor, fifty percent (50%)
or more of whose Accounts have not been paid within ninety
(90) days of invoice date;
(c) Credit balances over ninety (90) days from invoice
date;
(d) Accounts for an account debtor, including
Affiliates, whose total obligations to Borrower exceed
twenty-five (25%) of all Accounts, for the amounts that exceed
that percentage, unless Bank approves in writing;
(e) Accounts for which the account debtor does not have
its principal place of business in the United States;
(f) Accounts for which the account debtor is a federal,
state or local government entity or any department, agency, or
instrumentality thereof;
(g) Accounts for which Borrower owes the account debtor,
but only up to the amount owed (sometimes called "contra"
accounts, accounts payable, customer deposits or credit
accounts);
(h) Accounts for demonstration or promotional equipment,
or in which goods are consigned, sales guaranteed, sale or
return, sale on approval, xxxx and hold, or other terms if
account debtor's payment may be conditional;
(i) Accounts for which the account debtor is Borrower's
Affiliate, officer, employee, or agent;
(j) Accounts in which the account debtor disputes
liability or makes any claim and Bank believes there may be a
basis for dispute (but only up to the disputed or claimed
amount), or if the Account Debtor is subject to an Insolvency
Proceeding, or becomes insolvent, or goes out of business;
(k) Accounts for which Bank reasonably determines
collection to be doubtful.
"ELIGIBLE EQUIPMENT" is (a) general purpose computer
equipment, office equipment, test and laboratory equipment, furnishings, subject
to the limitations set forth herein, and (b) Other Equipment that complies with
all of Borrower's representations and warranties to Bank and which is acceptable
to Bank in all respects.
"EQUIPMENT" is all present and future machinery, equipment,
tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments
in which Borrower has any interest.
"EQUIPMENT ADVANCE" is defined in Section 2.1.5.
"EQUIPMENT AVAILABILITY END DATE" is defined in Section 2.1.5.
"EQUIPMENT LINE" is an Equipment Advance or Equipment Advances
of up to $5,000,000.00. Notwithstanding the foregoing, the availability of the
initial Credit Extension under the Equipment Line shall be subject to the
receipt by the Bank of satisfactory results, in the sole and absolute discretion
of the Bank, of the Initial Audit of Borrower's Collateral pursuant to Section
6.2 hereof. If the results of the Initial Audit are not satisfactory to the Bank
for any reason, the Bank may, at its discretion, reduce the amount of the
Equipment Line, or not make any Credit Extensions hereunder, except pursuant to
terms satisfactory to Bank.
"ERISA" is the Employment Retirement Income Security Act of
1974, and its regulations.
"FX FORWARD CONTRACT" is defined in Section 2.1.3.
"FX RESERVE" is defined in Section 2.1.3.
"GAAP" is generally accepted accounting principles.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the
deferred price of property or services, such as reimbursement and
other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INITIAL AUDIT" is defined in Section 6.2.
"INITIAL EQUIPMENT ADVANCE" is defined in Section 2.1.6.
"INSOLVENCY PROCEEDING" is any proceeding by or against any
Person under the United States Bankruptcy Code, or any other bankruptcy or
insolvency law, including assignments for the benefit of creditors,
compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
"INTELLECTUAL PROPERTY" is any copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, now owned or
later acquired; any patents, trademarks, service marks and applications
therefor; any trade secret rights, including any rights to unpatented
inventions, now owned or hereafter acquired.
"INVENTORY" is present and future inventory in which Borrower
has any interest, including merchandise, raw materials, parts, supplies, packing
and shipping materials, work in process and finished products intended for sale
or lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"LETTER OF CREDIT" means a letter of credit or similar
undertaking issued by Bank pursuant to Section 2.1.2.
"LETTER OF CREDIT RESERVE" has the meaning set forth in
Section 2.1.2.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note,
or notes or guaranties executed by Borrower, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated.
"MATERIAL ADVERSE CHANGE" is: (i) A material impairment in the
perfection or priority of Bank's security interest in the Collateral or in the
value of such Collateral; (ii) a material adverse change in the business,
operations, or condition (financial or otherwise) of the Borrower; (iii) a
material impairment of the prospect of repayment of any portion of the
Obligations; or (iv) Bank determines, based upon information available to it and
in its reasonable judgment, that there is a reasonable likelihood that Borrower
shall fail to comply with one or more of the financial covenants in Section 6
during the next succeeding financial reporting period.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses
and other amounts Borrower owes Bank now or later, including letters of credit,
cash management services, and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.
"OTHER EQUIPMENT" is computer software and software licenses,
and soft costs approved by the Bank, including sales tax, freight and
installation expenses. Unless otherwise agreed to by Bank, not more than 25% of
the proceeds of the Equipment Line shall be used to finance Other Equipment.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Bank under this Agreement
or the Loan Documents;
(b) Indebtedness existing on the Closing Date and shown
on the Perfection Certificate;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the
ordinary course of business; and
(e) Indebtedness secured by Permitted Liens.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Perfection Certificate and
existing on the Closing Date; and
(b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States or its agency
or any state maturing within 1 year from its acquisition, (ii)
commercial paper maturing no more than 1 year after its
creation and having the highest rating from either Standard &
Poor's Corporation or Xxxxx'x Investors Service, Inc., (iii)
Bank's certificates of deposit issued maturing no more than 1
year after issue, and (iv) any other investments administered
through the Bank.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the
Perfection Certificate or arising under this Agreement or
other Loan Documents;
(b) Liens for taxes, fees, assessments or other
government charges or levies, either not delinquent or being
contested in good faith and for which Borrower maintains
adequate reserves on its Books, if they have no priority over
any of Bank's security interests;
(c) Leases or subleases and non-exclusive licenses or
sublicenses granted in the ordinary course of Borrower's
business, if the leases, subleases, licenses and sublicenses
do not prohibit granting Bank a security interest; and
(d) Liens incurred in the extension, renewal or
refinancing of the indebtedness secured by Liens described in
(a) through (c), but any extension, renewal or replacement
Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may
not increase.
"PERSON" is any individual, sole proprietorship, partnership,
limited liability company, joint venture, company, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if
it is not Bank's lowest rate. Except as otherwise provided elsewhere herein, any
Credit Extension made hereunder based on the Bank's Prime Rate shall increase or
decrease with the changes in the Bank's Prime Rate.
"QUICK ASSETS" is, on any date, the Borrower's consolidated,
unrestricted cash, cash equivalents, net billed accounts receivable and
investments with maturities of fewer than 12 months determined according to
GAAP.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer,
President, Chief Financial Officer and Controller of Borrower.
"REVOLVING LINE" is an Advance or Advances of up to $5,000,000.00.
Notwithstanding the foregoing, the availability of the initial Credit Extension
under the Revolving Line shall be subject to the receipt by the Bank of
satisfactory results, in the sole and absolute discretion of the Bank, of the
Initial Audit of Borrower's Collateral pursuant to Section 6.2 hereof. If the
results of the Initial Audit are not satisfactory to the Bank for any reason,
the Bank may, at its discretion, reduce the amount of the Revolving Line, or not
make any Credit Extensions hereunder, except pursuant to terms satisfactory to
Bank.
"REVOLVING MATURITY DATE" is December 19, 2003.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's debt to Bank (pursuant to a subordination agreement entered into
between the Bank, the Borrower and the subordinated creditor), on terms
acceptable to Bank.
"SUBSIDIARY" is any Person, corporation, partnership, limited
liability company, joint venture, or any other business entity of which more
than 50% of the voting stock or other equity interests is owned or controlled,
directly or indirectly, by the Person or one or more Affiliates of the Person.
"TOTAL LIABILITIES" is on any day, obligations that should, under
GAAP, be classified as liabilities on Borrower's consolidated balance sheet,
including all Indebtedness, and current portion of Subordinated Debt permitted
by Bank to be paid by Borrower, but excluding all other Subordinated Debt.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts as of the date first above written.
BORROWER:
ONESOURCE INFORMATION SERVICES, INC.
By /s/ Xxx Xxxxxx
---------------------------------------
Name: Xxx Xxxxxx
---------------------------------------
Title: CFO
---------------------------------------
BANK:
SILICON VALLEY BANK, d/b/a
SILICON VALLEY EAST
By /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
-------------------------------------
Title: Vice President
------------------------------------
SILICON VALLEY BANK
By /s/ Xxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxx
-------------------------------------
Title: AVP
------------------------------------
(Signed in Santa Xxxxx County, California)
EXHIBIT A
The Collateral consists of all right, title and interest of Borrower in
and to the following:
All goods, equipment, inventory, contract rights or rights to payment of
money, license agreements, franchise agreements, general intangibles (including
payment intangibles), accounts (including health-care receivables), documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, fixtures, letters of credit rights (whether
or not the letter of credit is evidenced by a writing), commercial tort claims,
securities, and all other investment property supporting obligations, and
financial assets, whether now owned or hereafter acquired, wherever located; and
All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.
The Collateral does not include:
Any copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published or
unpublished, now owned or later acquired; any patents, trademarks, service marks
and applications therefor; any trade secret rights, including any rights to
unpatented inventions, now owned or hereafter acquired. Notwithstanding the
foregoing, the Collateral shall include all accounts, license and royalty fees
and other revenues, proceeds, or income arising out of or relating to any of the
foregoing Intellectual Property. To the extent a court of competent jurisdiction
holds that a security interest in any Intellectual Property is necessary to have
a security interest in any accounts, license and royalty fees and other
revenues, proceeds, or income arising out of or relating to any of the foregoing
Intellectual Property, then the Collateral shall, effective as of the Closing
Date, include the Intellectual Property, to the extent necessary to permit
perfection of the Bank's security interest in such accounts, license and royalty
fees and other revenues, proceeds, or income arising out of or relating to any
of the Intellectual Property.
EXHIBIT B
LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 E.S.T.
Fax To: (000) 000-0000 Date:
-------------------------
LOAN PAYMENT:
Sample documents Client Name (Borrower)
From Account # To Account #
-------------------------- ------------------
(Deposit Account #) (Loan Account #)
Principal $ and/or Interest $
----------------------- -----------------------
ALL BORROWER'S REPRESENTATION AND WARRANTIES IN THE LOAN AND SECURITY
AGREEMENT ARE TRUE, CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS TO ON
THE DATE OF THE TELEPHONE TRANSFER REQUEST FOR AND ADVANCE, BUT THOSE
REPRESENTATIONS AND WARRANTIES EXPRESSLY REFERRING TO ANOTHER DATE SHALL
BE TRUE, CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS AS OF THE DATE:
AUTHORIZED SIGNATURE: Phone Number:
------------------- -----------------
LOAN ADVANCE:
COMPLETE OUTGOING WIRE REQUEST SECTION BELOW IF ALL OR A PORTION OF THE
FUNDS FROM THIS LOAN ADVANCE ARE FOR AN OUTGOING WIRE.
From Account # To Account #
----------------------- ---------------------
(Loan Account #) (Deposit Account #)
Amount of Revolving Line Advance $ Amount of Equipment Line Advance $
------------------- -------------------
ALL BORROWER'S REPRESENTATION AND WARRANTIES IN THE LOAN AND SECURITY AGREEMENT
ARE TRUE, CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS TO ON THE DATE OF
THE TELEPHONE TRANSFER REQUEST FOR AND ADVANCE, BUT THOSE REPRESENTATIONS
AND WARRANTIES EXPRESSLY REFERRING TO ANOTHER DATE SHALL BE TRUE, CORRECT
AND COMPLETE IN ALL MATERIAL RESPECTS AS OF THE DATE:
AUTHORIZED SIGNATURE: Phone Number:
---------------- -------------------------
OUTGOING WIRE REQUEST
COMPLETE ONLY IF ALL OR A PORTION OF FUNDS FROM THE LOAN ADVANCE ABOVE ARE TO BE
WIRED.
Deadline for same day processing is 3:00pm, E.S.T.
Beneficiary Name: Amount of Wire: $
--------------------- ---------------------
Beneficiary Bank: Account Number:
--------------------- ---------------------
City and State:
------------------------
Beneficiary Bank Transit (ABA) #: Beneficiary Bank Code (Swift, Sort, Chip, etc.):
-- -- -- -- -- -- (FOR INTERNATIONAL WIRE ONLY)
Intermediary Bank: Transit (ABA) #:
-------------------- -----------------------
For Further Credit to:
---------------------------------------------------------
Special Instruction:
-----------------------------------------------------------
By signing below, I (we) acknowledge and agree that my (our) funds
transfer request shall be processed in accordance with and subject to the
terms and conditions set forth in the agreements(s) covering funds
transfer service(s), which agreements(s) were previously received and
executed by me (us).
Authorized Signature: 2nd Signature (If Required):
----------------- ------------
Print Name/Title: Print Name/Title:
---------------------- -----------------------
Telephone # Telephone #
-----------------
EXHIBIT C
BORROWING BASE CERTIFICATE
________________________________________________________________________________
Borrower: ONESOURCE INFORMATION SERVICES, INC. Lender: SILICON VALLEY BANK
Commitment Amount: $5,000,000
________________________________________________________________________________
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 50% over 90 day accounts $______________
6. Credit balances over 90 days $______________
7. Concentration Limits $______________
8. Foreign Accounts $______________
9. Governmental Accounts $______________
10. Contra Accounts $______________
11. Promotion or Demo Accounts $______________
12. Intercompany/Employee Accounts $______________
13. Other (please explain on reverse) $______________
14. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $______________
15. Eligible Accounts (#3 minus #14) $______________
16. LOAN VALUE OF ACCOUNTS (80% of #15) $______________
BALANCES
17. Maximum Loan Amount $5,000,000.00
18. Total Funds Available (Lesser of #17 or #16) $______________
19. Present balance owing on Line of Credit $______________
20. Outstanding under Sublimits (L/C, F/X, Cash Management
Services) $______________
21. RESERVE POSITION (#18 minus #19 and #20) $______________
The undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the
undersigned and Silicon Valley Bank.
COMMENTS: BANK USE ONLY
By: ___________________________ Received by: _____________________
Authorized Signer AUTHORIZED SIGNER
Date: _________________________
Verified: ________________________
AUTHORIZED SIGNER
Date:_____________________________
Compliance Status: Yes No
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: ONESOURCE INFORMATION SERVICES, INC.
The undersigned authorized officer of ONESOURCE INFORMATION SERVICES, INC.
certifies that under 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 in the
Agreement are true and correct in all material respects on this date. Attached
are the required documents supporting the certification. The Officer certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) consistently applied from one period to the next except as
explained in an accompanying letter or footnotes. The Officer acknowledges that
no borrowings may be requested at any time or date of determination that
Borrower is not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES"
COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Interim financial statements with CC Within 25 days of 1st & 2nd months of each quarter Yes No
Within 45 days of 3rd month of each quarter Yes No
Consolidating financial statements Within 45 days of quarter end Yes No
Annual (CPA Audited) FYE within 120 days Yes No
10-Q, 10-K and 8-K Within 5 days after filing with SEC Yes No
BBC A/R Agings Monthly within 25 days Yes No
Collateral Audit Annually and with initial Credit Extension Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain at all times (tested):
Minimum Adjusted Quick Ratio (monthly) 2.0:1.0 _____:1.0 Yes No
Minimum Profitability (quarterly) $1.00 $_______ Yes No
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely, BANK USE ONLY
ONESOURCE INFORMATION SERVICES, INC.
Received by:
----------------------
AUTHORIZED SIGNER
-----------------------------
SIGNATURE Date:
--------------------------
-----------------------------
TITLE Verified:
--------------------------
AUTHORIZED SIGNER
-----------------------------
DATE Date:
-----------------------------
Compliance Status: Yes No
732148.5 (56120/624)
