LOAN AND SECURITY AGREEMENT
EXHIBIT
10.3
THIS LOAN AND SECURITY
AGREEMENT (this “Agreement”) dated as of
September 29, 2008 (the “Effective Date” between SILICON VALLEY BANK, a
California corporation with a loan production office located at One Xxxxxx
Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
(“Bank”), and BRIDGELINE SOFTWARE, 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. Capitalized terms not otherwise defined in this Agreement shall
have the meanings set forth in Section 13. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meaning
provided by the Code to the extent such terms are defined therein.
2 LOAN AND TERMS OF
PAYMENT
2.1 Promise to
Pay. Borrower hereby unconditionally promises to pay Bank the
outstanding principal amount of all Credit Extensions and accrued and unpaid
interest thereon as and when due in accordance with this Agreement.
2.1.1 Revolving
Advances.
(a) Availability. Subject
to the terms and conditions of this Agreement, Bank shall make Advances not
exceeding the Availability Amount. Amounts borrowed under the
Revolving Line may be repaid and, prior to the Revolving Line Maturity Date,
reborrowed, subject to the applicable terms and conditions precedent
herein.
(b) Termination;
Repayment. The Revolving Line terminates on the Revolving Line
Maturity Date, when the principal amount of all Advances, the unpaid interest
thereon, and all other Obligations relating to the Revolving Line shall be
immediately due and payable.
2.1.2 Letters of Credit
Sublimit.
(a) As part
of the Revolving Line, Bank shall issue or have issued Letters of Credit for
Borrower’s account. Such aggregate amounts utilized hereunder shall
at all times reduce the amount otherwise available for Advances under the
Revolving Line. The face amount of outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit and any Letter of Credit
Reserve) may not exceed Five Hundred Thousand Dollars ($500,000.00), inclusive
of Credit Extensions relating to Sections 2.1.3 and 2.1.4. The
aggregate amount available to be used for the issuance of Letters of Credit may
not exceed (i) the lesser of (A) the Revolving Line or (B) the Borrowing
Base, minus (ii) the outstanding principal amount of any Advances
(including any amounts used for Cash Management Services and the face amount of
any outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit and any Letter of Credit Reserve), and minus (iii) the FX
Reserve. If, on the Revolving Line Maturity Date, or the effective
date of any termination of this Agreement by Borrower, there are any outstanding
Letters of Credit, then on such date Borrower shall provide to Bank cash
collateral in an amount equal to 105% of the face amount of all such Letters of
Credit (except for Letters of Credit payable in Foreign Currency for which such
percentage shall be 110%) plus all interest, fees, and costs due or to become
due in connection therewith (as estimated by Bank in its good faith business
judgment), to secure all of the Obligations relating to said Letters of
Credit. 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 standard Application and Letter of Credit Agreement (the
“Letter of Credit
Application”). Borrower agrees to execute any further
documentation in connection with the Letters of Credit as Bank may reasonably
request. Borrower further agrees to be bound by the regulations and
interpretations of the issuer of any Letters of Credit guarantied by Bank and
opened for Borrower’s account or by Bank’s interpretations of any Letter of
Credit issued by Bank for Borrower’s account, and Borrower understands and
agrees that Bank shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in
following
Borrower’s instructions or those contained in the Letters of Credit or any
modifications, amendments, or supplements thereto.
(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, such
Letters of Credit, and the Letter of Credit Application.
(c) Borrower
may request that Bank issue a Letter of Credit payable in a Foreign
Currency. 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 fees and charges in connection therewith such as
wire, cable, SWIFT or similar charges) in Dollars at the then-prevailing rate of
exchange in San Francisco, California, for sales of the Foreign Currency for
transfer to the country issuing such Foreign Currency.
(d) To guard
against fluctuations in currency exchange rates, upon the issuance of any Letter
of Credit payable in a Foreign Currency, Bank shall create a reserve (the “Letter of Credit Reserve”)
under the Revolving Line in an amount equal to ten percent (10%) of the face
amount of such Letter of Credit. The amount of the Letter of Credit
Reserve may be adjusted by Bank from time to time to account for fluctuations in
the exchange rate. Bank shall deliver notice to Borrower of any such
adjustment. The availability of funds under the Revolving Line shall
be reduced by the amount of such Letter of Credit Reserve for as long as such
Letter of Credit remains outstanding.
2.1.3 Foreign Exchange
Sublimit. As part of the Revolving Line, Borrower may enter
into foreign exchange contracts with Bank under which Borrower commits to
purchase from or sell to Bank a specific amount of Foreign Currency (each, a
“FX Forward Contract”)
on a specified date (the “Settlement
Date”). FX Forward Contracts shall have a Settlement Date of
at least one (1) FX Business Day after the contract date and shall be subject to
a reserve of ten percent (10%) of each outstanding FX Forward Contract in a
maximum aggregate amount equal to Fifty Thousand Dollars ($50,000.00) (such
maximum shall be the “FX Reserve”). The
aggregate amount of FX Forward Contracts at any one time may not exceed ten (10)
times the amount of the FX Reserve. The amount otherwise available
for Credit Extensions under the Revolving Line shall be reduced by an amount
equal to ten percent (10%) of each outstanding FX Forward Contract (the “FX Reduction Amount”).
Any amounts needed to fully reimburse Bank will be treated as Advances under the
Revolving Line and will accrue interest at the interest rate applicable to
Advances.
2.1.4 Cash Management Services
Sublimit. Borrower may use up to Five Hundred Thousand Dollars
($500,000.00), inclusive of Credit Extensions relating to Sections 2.1.2 and
2.1.3 of the Revolving Line for Bank’s cash management services which may
include merchant services, direct deposit of payroll, business credit card, and
check cashing services identified in Bank’s various cash management services
agreements (collectively, the “Cash Management
Services”). Any amounts Bank pays on behalf of 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.
2.2 Overadvances. If,
at any time, the sum of (a) the outstanding principal amount of any Advances
(including any amounts used for Cash Management Services), plus (b) the face
amount of any outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit and any Letter of Credit Reserve), plus (c) the FX Reduction
Amount, exceeds the lesser of either the Revolving Line or the Borrowing Base,
Borrower shall immediately pay to Bank in cash such excess.
2.3 Payment of Interest on the Credit
Extensions.
(a) Interest
Rate. Subject to Section 2.3(b), the principal amount
outstanding under the Revolving Line shall accrue interest at a floating per
annum rate equal to one percentage point (1.0%) above the Prime Rate, which
interest shall be payable monthly in accordance with Section 2.3(f)
below.
(b) Default
Rate. Immediately upon the occurrence and during the
continuance of an Event of Default, Obligations shall bear interest at a rate
per annum which is five percentage points above the rate that is otherwise
applicable thereto (the “Default
Rate”). Payment or acceptance of the increased interest rate
provided in this Section 2.3(b) is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Bank.
(c) Adjustment to Interest
Rate. Changes to the interest rate of any Credit Extension
based on changes to the Prime Rate shall be effective on the effective date of
any change to the Prime Rate and to the extent of any such change.
(d) 360-Day
Year. Interest shall be computed on the basis of a 360-day
year for the actual number of days elapsed.
(e) Debit of
Accounts. Bank may debit any of Borrower’s deposit accounts,
including the Designated Deposit Account, for principal and interest payments or
any other amounts Borrower owes Bank when due. These debits shall not
constitute a set-off.
(f) Payments. Unless
otherwise provided, interest is payable monthly on the first calendar day of
each month. Payments of principal and/or interest received after
12:00 p.m. 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.
2.4 Fees. Borrower
shall pay to Bank:
(a) Commitment
Fee. A fully earned, non-refundable commitment fee of Nine
Thousand Three Hundred Seventy-Five Dollars ($9,375.00), on the Effective
Date;
(b) Letter of Credit
Fee. Bank’s customary fees and expenses for the issuance or
renewal of Letters of Credit, including, without limitation, a Letter of Credit
Fee of two percent (2.0%) per annum of the face amount of each Letter of Credit
issued, upon the issuance, each anniversary of the issuance, and the renewal of
such Letter of Credit by Bank;
(c) Termination
Fee. Subject to the terms of Section 12.1, a termination
fee;
(d) Unused Revolving Line
Facility Fee. A fee (the “Unused Revolving Line Facility
Fee”), payable quarterly, in arrears, on a calendar year basis, in an
amount equal to three eighths of one percent (0.375%) per annum of the average
unused portion of the Revolving Line, as reasonably determined by
Bank. The unused portion of the Revolving Line, for the purposes of
this calculation, shall include amounts reserved under the Cash Management
Services Sublimit for products provided and under the Foreign Exchange Sublimit
for FX Forward Contracts. Borrower shall not be entitled to any credit, rebate
or repayment of any Unused Revolving Line Facility Fee previously earned by Bank
pursuant to this Section notwithstanding any termination of the Agreement or the
suspension or termination of Bank’s obligation to make loans and advances
hereunder; and
(e) Bank
Expenses. All Bank Expenses (including reasonable attorneys’
fees and expenses, plus expenses, for documentation and negotiation of this
Agreement) incurred through and after the Effective Date, when due.
3 CONDITIONS OF
LOANS
3.1 Conditions Precedent to Initial
Advance. Bank’s obligation to make the initial Advance is
subject to the condition precedent that Borrower shall consent to or shall have
delivered, in form and substance satisfactory to Bank, such documents, and
completion of such other matters, as Bank may reasonably deem necessary or
appropriate, including, without limitation:
(a) duly
executed original signatures to the Loan Documents to which it is a
party;
(b) duly
executed original signatures to the Control Agreement(s);
(c) its
Operating Documents and a good standing certificate of Borrower certified by the
Secretary of State of the State of Delaware as of a date no earlier than thirty
(30) days prior to the Effective Date;
(d) duly
executed original signatures to the completed Borrowing Resolutions for
Borrower;
(e) certified
copies, dated as of a recent date, of financing statement searches, as Bank
shall request, accompanied by written evidence (including any UCC termination
statements) that the Liens indicated in any such financing statements either
constitute Permitted Liens or have been or, in connection with the initial
Advance, will be terminated or released;
(f) the
Perfection Certificate executed by Borrower, together with the duly executed
original signatures thereto;
(g) a legal
opinion of Borrower’s counsel dated as of the Effective Date together with the
duly executed original signatures thereto;
(h) evidence
satisfactory to Bank that the insurance policies required by Section 6.5 hereof
are in full force and effect, together with appropriate evidence showing lender
loss payable and/or additional insured clauses or endorsements in favor of
Bank;
(i) the
completion of the Initial Audit with results satisfactory to Bank in its sole
and absolute discretion; and
(j) payment
of the fees and Bank Expenses then due as specified in Section 2.4
hereof.
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) except as
otherwise provided in Section 3.4(a), timely receipt of an executed
Payment/Advance Form;
(b) the
representations and warranties in Section 5 shall be true in all material
respects on the date of the Payment/Advance Form and on the Funding Date of each
Credit Extension; provided, however, that such materiality qualifier shall not
be applicable to any representations and warranties that already are qualified
or modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, 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 in all material respects; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date; and
(c) in Bank’s
reasonable discretion, there has not been any material impairment in the general
affairs, management, results of operation, financial condition or the prospect
of repayment of the Obligations, or there has not been any material adverse
deviation by Borrower from the most recent business plan of Borrower presented
to Bank.
3.3 Covenant to Deliver.
Borrower
agrees to deliver to Bank each item required to be delivered to Bank under this
Agreement as a condition to any Credit Extension. Borrower expressly
agrees that a Credit Extension made prior to the receipt by Bank of any such
item shall not constitute a waiver by Bank of Borrower’s obligation to deliver
such item, and any such Credit Extension in the absence of a required item shall
be made in Bank’s sole discretion.
3.4 Procedures for
Borrowing.
Subject
to the prior satisfaction of all other applicable conditions to the making of an
Advance set forth in this Agreement, to obtain an Advance (other than Advances
under Sections 2.1.2 or 2.1.4), Borrower shall notify Bank (which notice shall
be irrevocable) by electronic mail, facsimile, or telephone by 12:00 noon
Eastern time on the Funding Date of the Advance. Together with any
such electronic or facsimile notification, Borrower shall deliver to Bank by
electronic mail or facsimile a completed Payment/Advance Form executed by a
Responsible Officer or his or her designee. Bank may rely on any
telephone notice given by a person whom Bank reasonably believes is a
Responsible Officer or designee. Bank shall credit Advances to the
Designated 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.
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, a continuing security
interest in, and pledges to Bank, the Collateral, wherever located, whether now
owned or hereafter acquired or arising, and all proceeds and products
thereof. Borrower represents, warrants, and covenants that the
security interest granted herein is and shall at all times continue to be a
first priority perfected security interest in the Collateral (subject only to
Permitted Liens that may have superior priority to Bank’s Lien under this
Agreement). If Borrower shall acquire a commercial tort claim,
Borrower shall promptly notify Bank in a writing signed by Borrower of the
general 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 reasonably satisfactory to
Bank.
If this
Agreement is terminated, Bank’s Lien in the Collateral shall continue until the
Obligations (other than inchoate indemnity obligations) are repaid in full in
cash. Upon payment in full in cash of the Obligations and at such
time as Bank’s obligation to make Credit Extensions has terminated, Bank shall,
at Borrower’s sole cost and expense, release its Liens in the Collateral and all
rights therein shall revert to Borrower.
4.2 Authorization to File Financing
Statements. Borrower hereby authorizes Bank to file financing
statements, without notice to Borrower, with all appropriate jurisdictions to
perfect or protect Bank’s interest or rights hereunder, including a notice that
any disposition of the Collateral, by either Borrower or any other Person, shall
be deemed to violate the rights of Bank under the Code. Upon the
written request of Borrower, Bank shall provide copies of all financing
statements filed by Bank pursuant to this Agreement.
5 REPRESENTATIONS AND
WARRANTIES
Borrower
represents and warrants as follows:
5.1 Due Organization, Authorization;
Power and Authority. Borrower and each of its Subsidiaries are
duly existing and in good standing as a Registered Organization in its
jurisdiction of formation and is qualified and licensed to do business and is in
good standing in any jurisdiction 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 have a material adverse effect on
Borrower’s business. In connection with this Agreement, Borrower has
delivered to Bank a completed perfection certificate signed by Borrower (the
“Perfection
Certificate”). Borrower represents and warrants to Bank that
(a) Borrower’s exact legal name is that indicated on the Perfection
Certificate and on the signature page hereof; (b) Borrower is an
organization of the type and is organized in the jurisdiction set forth in the
Perfection Certificate; (c) the Perfection Certificate accurately sets forth
Borrower’s organizational identification number or accurately states that
Borrower has none; (d) the Perfection Certificate accurately sets forth
Borrower’s place of business, or, if more than one, its chief executive office
as well as Borrower’s mailing address (if different than its chief executive
office); (e) Borrower (and each of its predecessors) has not, in the past
five (5) years, changed its jurisdiction of formation, organizational structure
or type, or any organizational number assigned by its jurisdiction; and (f) all
other information set forth on the Perfection Certificate pertaining to Borrower
and each of its Subsidiaries is accurate and complete (it being understood and
agreed that Borrower may from time to time update certain information in the
Perfection Certificate after the Effective Date to the extent permitted by one
or more specific provisions in this Agreement). If Borrower is not
now a Registered Organization but later becomes one, Borrower shall promptly
notify Bank of such occurrence and provide Bank with Borrower’s organizational
identification number.
The
execution, delivery and performance by Borrower of the Loan Documents to which
it is a party have been duly authorized, and do not (i) conflict with any of
Borrower’s organizational documents, (ii) contravene, conflict with,
constitute a default under or violate any material Requirement of Law,
(iii) contravene, conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by
which Borrower or any of its Subsidiaries or any of their property or assets may
be bound or affected, (iv) require any action by, filing, registration, or
qualification with, or Governmental Approval from, any Governmental Authority
(except such Governmental Approvals which have already been obtained and are in
full force and effect),
or (v) constitute an event of default under any material agreement by which
Borrower is bound. Borrower is not in default under any agreement to
which it is a party or by which it is bound in which the default could have a
material adverse effect on Borrower’s business.
5.2 Collateral. Borrower
has good title to, has rights in, and the power to transfer each item of the
Collateral upon which it purports to xxxxx x Xxxx hereunder, free and clear of
any and all Liens except Permitted Liens. Borrower has no deposit
accounts other than the deposit accounts with Bank, the deposit accounts, if
any, described in the Perfection Certificate delivered to Bank in connection
herewith, or of which Borrower has given Bank notice and taken such actions as
are necessary to give Bank a perfected security interest therein. The
Accounts are bona fide, existing obligations of the Account
Debtors.
The Collateral is not in the possession
of any third party bailee (such as a warehouse) except as otherwise provided in
the Perfection Certificate. None of the components of the Collateral
shall be maintained at locations other than as provided in the Perfection
Certificate or as permitted pursuant to Section 7.2. 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 execute and deliver a bailee
agreement in form and substance satisfactory to Bank in its sole
discretion.
Except as noted on the Perfection
Certificate, Borrower is not a party to, nor is bound by, any material license
or other agreement with respect to which Borrower is the licensee (a) that
prohibits or otherwise restricts Borrower from granting a security interest in
Borrower’s interest in such license or agreement or any other property, or
(b) for which a default under or termination of could interfere with the
Bank’s right to sell any Collateral. Borrower shall provide written
notice to Bank within ten (10) days of entering or becoming bound by any such
license or agreement (other than over-the-counter software that is commercially
available to the public). Borrower shall take such steps as Bank
requests to obtain the consent of, or waiver by, any person whose consent or
waiver is necessary for (x) all such licenses or agreements 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, and (y) Bank
to have the ability in the event of a liquidation of any Collateral to dispose
of such Collateral in accordance with Bank’s rights and remedies under this
Agreement and the other Loan Documents.
5.3 Accounts Receivable;
Inventory. For any Eligible Account in any Borrowing Base
Certificate, all statements made and all unpaid balances appearing in all
invoices, instruments and other documents evidencing such Eligible Accounts are
and shall be true and correct and all such invoices, instruments and other
documents, and all of Borrower's Books are genuine and in all respects what they
purport to be. Whether or not an Event of Default has occurred and is
continuing, Bank may notify any Account Debtor owing Borrower money of Bank’s
security interest in such funds and verify the amount of such Eligible
Account. All sales and other transactions underlying or giving rise
to each Eligible Account shall comply in all material respects with all
applicable laws and governmental rules and regulations. Borrower has
no knowledge of any actual or imminent Insolvency Proceeding of any Account
Debtor whose accounts are Eligible Accounts in any Borrowing Base
Certificate. To the best of Borrower’s knowledge, all signatures and
endorsements on all documents, instruments, and agreements relating to all
Eligible Accounts are genuine, and all such documents, instruments and
agreements are legally enforceable in accordance with their terms.
5.4 Litigation. Except
as set forth on the Perfection Certificate, there are no actions or proceedings
pending or, to the knowledge of the Responsible Officers, threatened in writing
by or against Borrower or any of its Subsidiaries involving more than Fifty
Thousand Dollars ($50,000.00).
5.5 No Material Deviation in Financial
Statements. All consolidated financial statements for Borrower
and any of its Subsidiaries 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.
5.6 Solvency. The fair
salable value of Borrower’s assets (including goodwill minus disposition costs)
exceeds the fair value of its liabilities; Borrower is not left with
unreasonably small capital after the transactions in this Agreement; and
Borrower is able to pay its debts (including trade debts) as they
mature.
5.7 Regulatory
Compliance. Borrower is not an “investment company” or a
company “controlled” by an “investment company” under the Investment Company Act
of 1940, as amended. Borrower is not engaged as one of its important
activities in extending credit for margin stock (under Regulations X, T and U of
the Federal Reserve Board of Governors). Borrower has complied in all
material respects with the Federal Fair Labor Standards Act. Neither
Borrower nor any of its Subsidiaries is a “holding company” or an “affiliate” of
a “holding company” or a “subsidiary company” of a “holding company” as each
term is defined and used in the Public Utility Holding
Company
Act of 2005. Borrower has not violated any laws, ordinances or rules,
the violation of which could reasonably be expected to have a material adverse
effect on its business. None of Borrower’s or any of its
Subsidiaries’ 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 of its Subsidiaries have 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 their respective businesses as currently conducted, except where the
failure to obtain or make such consents, approvals, authorizations, declarations
or filings would not be reasonably expected to have a material adverse effect on
its business.
5.8 Subsidiaries;
Investments. Borrower does not own any stock, partnership
interest or other equity securities except for Permitted
Investments.
5.9 Tax Returns and Payments; Pension
Contributions. Borrower has timely filed all required tax
returns and reports (except for Borrower’s 2007 state and federal tax returns,
which shall be filed no later than forty-five (45) days after the Effective
Date), and Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower. Borrower
may defer payment of any contested taxes, provided that Borrower (a) in good
faith contests its obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (b) notifies Bank in writing
of the commencement of, and any material development in, the proceedings, (c)
posts bonds or takes any other steps required to prevent the governmental
authority levying such contested taxes from obtaining a Lien upon any of the
Collateral that is other than a “Permitted Lien”. Borrower is unaware
of any claims or adjustments proposed for any of Borrower's prior tax years
which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid all amounts necessary to fund all present
pension, profit sharing and deferred compensation plans in accordance with their
terms, and Borrower has not withdrawn from participation in, and has not
permitted partial or complete termination of, or permitted the occurrence of any
other event with respect to, any such plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental
agency.
5.10 Use of
Proceeds. Borrower shall use the proceeds of the Credit
Extensions solely as working capital and to fund its general business
requirements, and not for personal, family, household or agricultural
purposes.
5.11 Full Disclosure. No
written representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank, as of the date such
representation, warranty, or other statement was made, 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 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.
(a) Maintain
its and all its Subsidiaries’ legal existence and good standing in their
respective jurisdictions 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.
(b) Obtain
all of the Governmental Approvals necessary for the performance by Borrower of
its obligations under the Loan Documents to which it is a party and the grant of
a security interest to Bank in all of the Collateral. Borrower shall
promptly provide copies of any such obtained Governmental Approvals to
Bank.
6.2 Financial Statements, Reports,
Certificates.
(a) Deliver
to Bank: (i) as soon as available, but no later than thirty (30) days
after the last day of each month, a company prepared unaudited consolidated and
consolidating balance sheet and income statement covering Borrower’s
consolidated operations for such month certified by a Responsible Officer and in
a form acceptable to Bank; (ii) 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
acceptable to Bank in its reasonable discretion; (iii) within five (5) days
of delivery, copies of all statements, reports and notices made available to
Borrower’s security holders or to any holders of Subordinated Debt; (iv) within
five (5) days of filing, all reports on Form 10-K, 10-Q and 8-K filed with the
Securities and Exchange Commission or a link thereto on Borrower’s or another
website on the Internet; (v) a prompt report of any legal actions pending or
threatened against Borrower or any of its Subsidiaries that could result in
damages or costs to Borrower or any of its Subsidiaries of Fifty Thousand
Dollars ($50,000) or more; (vi) at least annually, but
no later than forty-five (45) days after approval by Borrower’s Board of
Directors, Borrower’s financial projections; and (viii) other financial
information reasonably requested by Bank.
(b) Within
thirty (30) days after the last day of each month, deliver to Bank a duly
completed Borrowing Base Certificate signed by a Responsible Officer, with aged
listings of accounts receivable and accounts payable (by invoice
date).
(c) Within
thirty (30) days after the last day of each month, deliver to Bank with the
monthly financial
statements, a duly completed Compliance Certificate signed by a Responsible
Officer setting forth calculations showing compliance with the financial
covenants set forth in this Agreement.
(d) Allow
Bank to audit Borrower’s Collateral at Borrower’s expense. Such
audits shall be conducted no more often than once every six (6) months unless an
Event of Default has occurred and is continuing. Notwithstanding the
foregoing, no Credit Extension may be requested prior to the Initial
Audit.
6.3 Inventory;
Returns. 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 Effective Date. Borrower must promptly notify Bank of
all returns, recoveries, disputes and claims that involve more than One Hundred
Thousand Dollars ($100,000).
6.4 Taxes;
Pensions. Timely file, and require each of its Subsidiaries to
timely file, all required tax returns and reports and timely pay, and require
each of its Subsidiaries to timely file, all foreign, federal, state and local
taxes, assessments, deposits and contributions owed by Borrower and each of its
Subsidiaries, except for deferred payment of any taxes contested pursuant to the
terms of Section 5.9 hereof, and shall deliver to Bank, on demand, appropriate
certificates attesting to such payments, and pay all amounts necessary to fund
all present pension, profit sharing and deferred compensation plans in
accordance with their terms.
6.5 Insurance. Keep its
business and the Collateral insured for risks and in amounts standard for
companies in Borrower’s industry and location and as Bank may reasonably
request. Insurance policies shall be in a form, with companies, and
in amounts that are reasonably satisfactory to Bank. All property
policies shall have a lender’s loss payable endorsement showing Bank as lender
loss payee and waive subrogation against Bank, and all liability policies shall
show, or have endorsements showing, Bank as an additional
insured. All policies (or the loss payable and additional insured
endorsements) shall provide that the insurer must give Bank at least twenty (20)
days notice before canceling, amending, or declining to renew 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. Notwithstanding the foregoing, (a) so long as no Event
of Default has occurred and is continuing, Borrower shall have the option of
applying the proceeds of any casualty policy up to Fifty Thousand Dollars
($50,000) with respect to any loss, but not exceeding One Hundred Thousand
Dollars ($100,000) in the aggregate for all losses under all casualty policies
in any one year, toward the replacement or repair of destroyed or damaged
property; provided that any such replaced or repaired property (i) shall be
of equal or like value as the replaced or repaired Collateral and
(ii) shall be deemed Collateral in which Bank has been granted a first
priority security interest, and (b) after the occurrence and during the
continuance of an Event of Default, all proceeds payable under such casualty
policy shall, at the option of Bank, be payable to Bank on account of the
Obligations. If Borrower fails to obtain insurance as required under
this Section 6.5 or to pay any amount or furnish any required proof of
payment to third persons and Bank, Bank may make all or part of such payment or
obtain such insurance policies required in this Section 6.5, and take any action
under the policies Bank deems reasonably prudent.
6.6 Operating
Accounts.
(a) Maintain
all of Borrower’s and its Subsidiaries’ primary domestic operating, depository
and securities accounts with Bank and Bank’s Affiliates, which accounts shall
represent greater than fifty percent (50.0%) of the dollar value of Borrower’s
and such Subsidiaries accounts at all financial institutions.
(b) Provide
Bank five (5) days prior written notice before establishing any Collateral
Account at or with any bank or financial institution other than Bank or Bank’s
Affiliates. For each Collateral Account that Borrower at any time
maintains, Borrower shall cause the applicable bank or financial institution
(other than Bank) at or with which any Collateral Account is maintained to
execute and deliver a Control Agreement or other appropriate instrument with
respect to such Collateral Account to perfect Bank’s Lien in such Collateral
Account in accordance with the terms hereunder, which Control Agreement may not
be terminated without the prior written consent of the Bank. The
provisions of the previous sentence 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 Borrower’s employees and identified to Bank by
Borrower as such.
6.7 Financial
Covenants.
Borrower
shall maintain at all times, to be tested as of the last day of each month,
unless otherwise noted, on a consolidated basis with respect to Borrower and its
Subsidiaries:
(a) Adjusted Quick
Ratio. A ratio of Quick Assets to Total Liabilities minus
Deferred Revenue of at least 1.5 to 1.0; and
(b) EBITDA. Maintain,
measured as of the end of each fiscal quarter for the prior two (2) fiscal
quarters, EBITDA of at least Two Hundred Fifty Thousand Dollars
($250,000.00).
6.8 Protection of Intellectual Property
Rights. Borrower shall: (a) take commercially
reasonable measures on advice of counsel to protect, defend and maintain the
validity and enforceability of its intellectual property; (b) promptly advise
Bank in writing of material infringements of its intellectual property; and (c)
not allow any intellectual property material to Borrower’s business to be
abandoned, forfeited or dedicated to the public without Bank’s written
consent.
6.9 Litigation
Cooperation. From the date hereof and continuing through the
termination of this Agreement, make available to Bank, without expense to Bank,
Borrower and its officers, employees and agents and Borrower's books and
records, to the extent that Bank may deem them reasonably necessary to prosecute
or defend any third-party suit or proceeding instituted by or against Bank with
respect to any Collateral or relating to Borrower.
6.10 Further
Assurances. Execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank’s Lien in the
Collateral or to effect the purposes of this Agreement. Deliver to
Bank, within five
(5) days after the same are sent or received, copies of all correspondence,
reports, documents and other filings with any Governmental Authority regarding
compliance with or maintenance of Governmental Approvals or Requirements of Law
or that could reasonably be expected to have a material effect on any of the
Governmental Approvals or otherwise on the operations of Borrower or any of its
Subsidiaries.
7 NEGATIVE
COVENANTS
Borrower
shall not do any of the following without Bank’s prior written
consent:
7.1 Dispositions. Convey,
sell, lease, transfer or otherwise dispose of (collectively, “Transfer”), or permit any of
its Subsidiaries to Transfer, all or any part of its business or property,
except for Transfers (a) of Inventory in the ordinary course of business;
(b) of worn-out or obsolete Equipment; (c) in connection with Permitted Liens
and Permitted Investments; and (d) of non-exclusive licenses for the use of
the property of Borrower or its Subsidiaries in the ordinary course of
business.
7.2 Changes in Business, Management,
Ownership, or Business Locations. (a) Engage in or permit
any of its Subsidiaries to engage in any business other than the businesses
currently engaged in by Borrower and such Subsidiary, as applicable, or
reasonably related thereto; (b) liquidate or dissolve; or (c) (i) have
a change in
senior
management or (ii) enter into any transaction or series of related
transactions in which the stockholders of Borrower who were not stockholders
immediately prior to the first such transaction own more than 40% of the voting
stock of Borrower immediately after giving effect to such transaction or related
series of such transactions (other than by the sale of Borrower’s equity
securities in a public offering or to venture capital investors so long as
Borrower identifies to Bank the venture capital investors prior to the closing
of the transaction). Borrower shall not, without at least thirty (30)
days prior written notice to Bank: (1) add any new offices or business
locations, including warehouses (unless such new offices or business locations
contain less than Ten Thousand Dollars ($10,000) in Borrower’s assets or
property), (2) change its jurisdiction of organization, (3) change its
organizational structure or type, (4) change its legal name, or (5) 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 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, allow, or suffer 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, permit any Collateral not
to be subject to the first priority security interest granted herein, or enter
into any agreement, document, instrument or other arrangement (except with or in
favor of Bank) with any Person which directly or indirectly prohibits or has the
effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging,
pledging, granting a security interest in or upon, or encumbering any of
Borrower’s or any Subsidiary’s intellectual property, except as is otherwise
permitted in Section 7.1 hereof and the definition of “Permitted Lien”
herein.
7.6 Maintenance of Collateral
Accounts. Maintain any Collateral Account except pursuant to
the terms of Section 6.6(b) hereof.
7.7 Distributions;
Investments. (a) Pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock,
provided that (i) Borrower may convert any of its convertible securities
into other securities pursuant to the terms of such convertible securities or
otherwise in exchange thereof, (ii) Borrower may pay dividends solely in
common stock; and (iii) Borrower may repurchase the stock of former employees or
consultants pursuant to stock repurchase agreements so long as an Event of
Default does not exist at the time of such repurchase and would not exist after
giving effect to such repurchase, provided such repurchase does not exceed in
the aggregate of One Hundred Thousand Dollars ($100,000) per fiscal year; or (b)
directly or indirectly make any Investment other than Permitted Investments, or
permit any of its Subsidiaries to do so.
7.8 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.
7.9 Subordinated
Debt. (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar
agreement to which such Subordinated Debt is subject, or (b) amend any
provision in any document relating to the Subordinated Debt which would increase
the amount thereof or adversely affect the subordination thereof to Obligations
owed to Bank.
7.10 Compliance. Become
an “investment company” or a company controlled by an “investment company”,
under the Investment Company Act of 1940, as amended, or undertake as one of its
important activities extending credit to purchase or carry margin stock (as
defined in Regulation U of the Board of Governors of the Federal Reserve
System), 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 permit any of its Subsidiaries to do so; withdraw or
permit any Subsidiary to withdraw from participation in, permit partial or
complete termination of, or permit the occurrence of any other event with
respect to, any present pension, profit sharing and deferred compensation plan
which could reasonably be expected to result in any liability of Borrower,
including
any liability to the Pension Benefit Guaranty Corporation or its successors or
any other governmental agency.
8 EVENTS OF
DEFAULT
Any one
of the following shall constitute an event of default (an “Event of Default”) under this
Agreement:
8.1 Payment
Default. Borrower fails to (a) make any payment of
principal or interest on any Credit Extension on its due date, or (b) pay
any other Obligations within three (3) Business Days after such Obligations are
due and payable (which three (3) Business Day grace period shall not apply to
payments due on the Revolving Line Maturity Date). During the cure
period, the failure to cure the payment default is not an Event of Default (but
no Credit Extension will be made during the cure period);
8.2 Covenant Default.
(a)
Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4, 6.5,
6.6 or 6.7, or violates any covenant in Section 7; or
(b)
Borrower fails or neglects to perform, keep, or observe any other term,
provision, condition, covenant or agreement contained in this Agreement or any
Loan Documents, and as to any default (other than those specified in this
Section 8) under such other term, provision, condition, covenant or agreement
that can be cured, has failed to cure the default within ten (10) days after the
occurrence thereof; provided, however, that if the default cannot by its nature
be cured within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) 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 set forth in subsection (a) above;
8.3 Material Adverse
Change. A Material Adverse Change occurs;
8.4 Attachment; Levy; Restraint on
Business.
(a) (i) The
service of process seeking to attach, by trustee or similar process, any funds
in excess of Fifty Thousand Dollars ($50,000) of Borrower or of any entity under
control of Borrower (including a Subsidiary) on deposit with Bank or any Bank
Affiliate, or (ii) a notice of lien, levy, or assessment is filed against any of
Borrower’s assets by any government agency, and the same under subclauses (i)
and (ii) hereof are not, within ten (10) days after the occurrence thereof,
discharged or stayed (whether through the posting of a bond or otherwise);
provided, however, no Credit Extensions shall be made during any ten (10) day
cure period; and
(b) (i) any
material portion of Borrower’s assets is attached, seized, levied on, or comes
into possession of a trustee or receiver, or (ii) any court order enjoins,
restrains, or prevents Borrower from conducting any part of its
business;
8.5 Insolvency (a)
Borrower is unable to pay its debts (including trade debts) as they become due
or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or
(c) an Insolvency Proceeding is begun against Borrower and not dismissed or
stayed within thirty (30) days (but no Credit Extensions shall be made while of
any of the conditions described in clause (a) exist and/or until any Insolvency
Proceeding is dismissed);
8.6 Other
Agreements. 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 Fifty Thousand Dollars ($50,000) or
that could have a material adverse effect on Borrower’s business;
8.7 Judgments. One or
more judgments, orders, or decrees for the payment of money in an amount,
individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000)
(not covered by independent third-party insurance as to which liability has been
accepted by such insurance carrier) shall be rendered against Borrower
and shall
remain unsatisfied, unvacated, or unstayed for a period of ten (10) days after
the entry thereof (provided that no Credit Extensions will be made prior to the
satisfaction, vacation, or stay of such judgment, order, or
decree);
8.8 Misrepresentations. Borrower
or any Person acting for Borrower makes any representation, warranty, or other
statement now or later in this Agreement, any Loan Document or in any writing
delivered to Bank or to induce Bank to enter this Agreement or any Loan
Document, and such representation, warranty, or other statement is incorrect in
any material respect when made;
8.9 Subordinated
Debt. A default or breach occurs under any agreement between
Borrower and any creditor of Borrower that signed a subordination,
intercreditor, or other similar agreement with Bank, or any creditor that has
signed such an agreement with Bank breaches any terms of such
agreement;
8.10 Governmental
Approvals. Any Governmental Approval shall have been
(a) revoked, rescinded, suspended, modified in an adverse manner or not
renewed in the ordinary course for a full term or (b) subject to any
decision by a Governmental Authority that designates a hearing with respect to
any applications for renewal of any of such Governmental Approval or that could
result in the Governmental Authority taking any of the actions described in
clause (a) above, and such decision or such revocation, rescission, suspension,
modification or non-renewal (i) has, or could reasonably be expected to have, a
Material Adverse Change, or (ii) adversely affects the legal qualifications
of Borrower or any of its Subsidiaries to hold such Governmental Approval in any
applicable jurisdiction and such revocation, rescission, suspension,
modification or non-renewal could reasonably be expected to affect the status of
or legal qualifications of Borrower or any of its Subsidiaries to hold any
Governmental Approval in any other jurisdiction; or
8.11 Post-Closing. Failure
by Borrower to deliver to Bank, within forty-five (45) days after the Effective
Date, original, executed landlord’s consents in favor of Bank, in form and
substance satisfactory to Bank, for Borrower’s locations in Woburn,
Massachusetts, and Atlanta, Georgia.
9 BANK’S RIGHTS AND
REMEDIES
9.1 Rights and
Remedies. While 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) demand
that Borrower (i) deposits cash with Bank in an amount equal to the aggregate
amount of any Letters of Credit remaining undrawn, as collateral security for
the repayment of any future drawings under such Letters of Credit, and Borrower
shall forthwith deposit and pay such amounts, and (ii) pay in advance all Letter
of Credit fees scheduled to be paid or payable over the remaining term of any
Letters of Credit;
(d) terminate
any FX Forward Contracts;
(e) settle or
adjust disputes and claims directly with Account Debtors for amounts on terms
and in any order that Bank reasonably considers advisable, notify any Person
owing Borrower money of Bank’s security interest in such funds, and verify the
amount of such account;
(f) make any
payments and do any acts it considers necessary or reasonable to protect the
Collateral and/or 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;
(g) apply to
the Obligations 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;
(h) ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell the Collateral. Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank’s exercise of its rights under this Section, Borrower’s
rights under all licenses and all franchise agreements inure to Bank’s
benefit;
(i) place a
“hold” on any account maintained with Bank and/or deliver a notice of exclusive
control, any entitlement order, or other directions or instructions pursuant to
any Control Agreement or similar agreements providing control of any
Collateral;
(j) demand
and receive possession of Borrower’s Books; and
(k) exercise
all rights and remedies available to Bank under the Loan Documents or at law or
equity, including all remedies provided under the Code (including disposal of
the Collateral pursuant to the terms thereof).
9.2 Power of
Attorney. Borrower hereby irrevocably appoints Bank as its
lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower’s name
on any checks or other forms of payment or security; (b) sign Borrower’s name on
any invoice or xxxx of lading for any Account or drafts against Account Debtors;
(c) settle and adjust disputes and claims about the Accounts directly with
Account Debtors, for amounts and on terms Bank determines reasonable; (d) make,
settle, and adjust all claims under Borrower’s insurance policies; (e) pay,
contest or settle any Lien, charge, encumbrance, security interest, and adverse
claim in or to the Collateral, or any judgment based thereon, or otherwise take
any action to terminate or discharge the same; and (f) 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 Bank’s security
interest in the Collateral 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 Protective
Payments. If Borrower fails to obtain the insurance called for
by Section 6.5 or fails to pay any premium thereon or fails to pay any other
amount which Borrower is obligated to pay under this Agreement or any other Loan
Document, Bank may obtain such insurance or make such payment, and all amounts
so paid by Bank are Bank Expenses and immediately due and payable, bearing
interest at the then highest applicable rate charged by Bank, and secured by the
Collateral. Bank will make reasonable efforts to provide Borrower
with notice of Bank obtaining such insurance at the time it is obtained or
within a reasonable time thereafter. No payments by Bank are deemed
an agreement to make similar payments in the future or Bank’s waiver of any
Event of Default.
9.4 Application of Payments and Proceeds. Borrower
shall have no right to specify the order or the accounts to which Bank shall
allocate or apply any payments required to be made by Borrower to Bank or
otherwise received by Bank under this Agreement when any such allocation or
application is not specified elsewhere in this Agreement. If an Event
of Default has occurred and is continuing, Bank may apply any funds in its
possession, whether from Borrower account balances, payments, proceeds realized
as the result of any collection of Accounts or other disposition of the
Collateral, or otherwise, to the Obligations in such order as Bank shall
determine in its sole discretion. Any surplus shall be paid to
Borrower or other Persons legally entitled thereto; Borrower shall remain liable
to Bank for any deficiency. If Bank, in its good faith business
judgment, directly or indirectly enters into a deferred payment or other credit
transaction with any purchaser at any sale of Collateral, Bank shall have the
option, exercisable at any time, of either reducing the Obligations by the
principal amount of the purchase price or deferring the reduction of the
Obligations until the actual receipt by Bank of cash therefor.
9.5 Bank’s Liability for
Collateral. So long as Bank complies with reasonable banking
practices regarding the safekeeping of the Collateral in the possession or under
the control of Bank, 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 No Waiver; Remedies
Cumulative. Bank’s failure, at any time or times, to require
strict performance by Borrower of any provision of this Agreement or any other
Loan Document shall not waive, affect, or diminish any right of Bank thereafter
to demand strict performance and compliance herewith or therewith. No
waiver hereunder shall be effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it is
given. Bank’s rights and remedies under this Agreement and the other
Loan Documents 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 in exercising any remedy is not
a waiver, election, or acquiescence.
9.7 Demand
Waiver. 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, consents, requests, approvals, demands, or other communication by any
party to this Agreement or any other Loan Document must be in writing and shall
be deemed to have been validly served, given, or delivered: (a) upon the earlier
of actual receipt and three (3) Business Days after deposit in the U.S. mail,
first class, registered or certified mail return receipt requested, with proper
postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated
below. Bank or Borrower may change its mailing or electronic mail
address or facsimile number by giving the other party written notice thereof in
accordance with the terms of this Section 10.
If to
Borrower: Bridgeline
Software, Inc.
00 Xxxxx
Xxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attn: Xxxx
X. Xxxxxx, CFO
Fax: (000)
000-0000
Email: xxxxxxx@xxxxxxxxxxxx.xxx
with a
copy
to: Xxxxx,
Xxxxxx-Xxxxx & Xxxxxxxxx, P.C.
0000 Xxxxxxx Xxxx
Xxxxxxx,
Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X.
Xxxxxx, Esquire
Fax: (000)
000-0000
Email: xxxxxxx@xxxx.xxx
If to
Bank: Silicon
Valley Bank
0000 Xxxxxxxxxx Xxxxxx
One Xxxxxx Executive Pa0rk, Suite
200
Newton, Massachusetts
Attn: Xx. Xxxxxx
Xxxxxx
Fax: (000)
000-0000
Email: XXxxxxx@xxx.xxx
with a
copy
to: Xxxxxx
& Xxxxxxxxxx, LLP
Xxxxx
Xxxxxx Xxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attn: Xxxxx
X. Xxxxxxx, Esquire
Fax: (000)
000-0000
Email: XXxxxxxx@xxxxxxxxx.xxx
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 nothing
in this Agreement shall be deemed to operate to preclude Bank from bringing suit
or taking
other
legal action in any other jurisdiction to realize on the Collateral or any other
security for the Obligations, or to enforce a judgment or other court order in
favor of Bank. Borrower expressly submits and consents in advance to
such jurisdiction in any action or suit commenced in any such court, and
Borrower hereby waives any objection that it may have based upon lack of
personal jurisdiction, improper venue, or forum non conveniens and hereby
consents to the granting of such legal or equitable relief as is deemed
appropriate by such court. Borrower hereby waives personal service of
the summons, complaints, and other process issued in such action or suit and
agrees that service of such summons, complaints, and other process may be made
by registered or certified mail addressed to Borrower at the address set forth
in Section 10 of this Agreement and that service so made shall be deemed
completed upon the earlier to occur of Borrower’s actual receipt thereof or
three (3) days after deposit in the U.S. mails, proper postage
prepaid.
TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, 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 Termination Prior to Maturity
Date. This Agreement may be terminated prior to the Revolving
Line Maturity Date by Borrower, effective three (3) Business Days after written
notice of termination is given to Bank or if Bank’s obligation to fund Credit
Extensions terminates pursuant to the terms of Section
2.1.1(b). Notwithstanding any such termination, Bank’s lien and
security interest in the Collateral shall continue until Borrower fully
satisfies its Obligations. If such termination is at Borrower’s
election or at Bank’s election due to the occurrence and continuance of an Event
of Default, Borrower shall pay to Bank, in addition to the payment of any other
expenses or fees then-owing, a termination fee in an amount equal to Twenty-Five
Thousand Dollars ($25,000.00), provided that no termination
fee shall be charged if the credit facility hereunder is replaced with a new
facility from another division of Silicon Valley Bank. Upon payment
in full of the Obligations and at such time as Bank’s obligation to make Credit
Extensions has terminated, Bank shall release its liens and security interests
in the Collateral and all rights therein shall revert to Borrower
12.2 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 and the other Loan Documents.
12.3 Indemnification. Borrower
agrees to indemnify, defend and hold Bank and its directors, officers,
employees, agents, attorneys, or any other Person affiliated with or
representing Bank (each, an “Indemnified Person”) harmless
against: (a) all obligations, demands, claims, and liabilities
(collectively, “Claims”)
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
such Indemnified Person from, following, or arising from transactions between
Bank and Borrower (including reasonable attorneys’ fees and expenses), except
for Claims and/or losses directly caused by such Indemnified Person’s gross
negligence or willful misconduct.
12.4 Time of
Essence. Time is of the essence for the performance of all
Obligations in this Agreement.
12.5 Severability of
Provisions. Each provision of this Agreement is severable from
every other provision in determining the enforceability of any
provision.
12.6 Correction of Loan
Documents. Bank may correct patent errors and fill in any
blanks in this Agreement and the other Loan Documents consistent with the
agreement of the parties.
12.7 Amendments in Writing;
Integration. All amendments to this Agreement must be in
writing and 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.
12.8 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.
12.9 Survival. All
covenants, representations and warranties made in this Agreement continue in
full force until this Agreement has terminated pursuant to its terms and all
Obligations (other than inchoate indemnity obligations and any other obligations
which, by their terms, are to survive the termination of this Agreement) have
been satisfied. 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.
12.10 Confidentiality. In
handling any confidential information, Bank shall exercise the same degree of
care that it exercises for its own proprietary information, but disclosure of
information may be made: (a) to Bank’s Subsidiaries or Affiliates; (b) to
prospective transferees or purchasers of any interest in the Credit Extensions
(provided, however, Bank shall use commercially reasonable efforts to obtain
such prospective transferee’s or purchaser’s agreement to the terms of this
provision); (c) as required by law, regulation, subpoena, or other order;
(d) to Bank’s regulators or as otherwise required in connection with Bank’s
examination or audit; (e) as Bank considers appropriate in exercising remedies
under the Loan Documents; and (f) to third-party service providers of Bank so
long as such service providers have executed a confidentiality agreement with
Bank with terms no less restrictive than those contained
herein. Confidential information does not include information that
either: (i) 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 (ii) is
disclosed to Bank by a third party, if Bank does not know that the third party
is prohibited from disclosing the information.
Bank may
use confidential information for any purpose, including, without limitation, for
the development of client databases, reporting purposes, and market analysis, so
long as Bank does not disclose Borrower’s identity or the identity of any person
associated with Borrower unless otherwise expressly permitted by this
Agreement. The provisions of the immediately preceding sentence shall
survive the termination of this Agreement.
12.11 Right of Set
Off. Borrower hereby grants to Bank, a lien, security
interest and right of set off 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 Bank
(including a Bank subsidiary) or in transit to any of them. At any
time after the occurrence and 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 even though unmatured
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 BORROWER ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.
13 DEFINITIONS
13.1 Definitions. As
used in this Agreement, the following terms have the following
meanings:
“Account” is any “account” as
defined in the Code with such additions to such term as may hereafter be made,
and includes, without limitation, all accounts receivable and other sums owing
to Borrower.
“Account Debtor” is any
“account debtor” as defined in the Code with such additions to such term as may
hereafter be made.
“Advance” or “Advances” means an advance (or
advances) under the Revolving Line.
“Affiliate” of any 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.
“Agreement” is defined in the
preamble hereof.
“Availability Amount” is (a)
the lesser of (i) the Revolving Line or (ii) the amount available under the
Borrowing Base, minus
(b) the amount of all outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit) plus an amount equal to the Letter of Credit
Reserve, minus (c) the FX Reduction Amount, minus (d) any amounts used for Cash
Management Services, and minus (e) the outstanding principal balance of any
Advances.
“Bank” is defined in the
preamble hereof.
“Bank Expenses” are all audit
fees and expenses, costs, and expenses (including reasonable attorneys’ fees and
expenses) for preparing, amending, negotiating, administering, defending and
enforcing the Loan Documents (including, without limitation, those incurred in
connection with appeals or Insolvency Proceedings) or otherwise incurred with
respect to Borrower.
“Borrower” is defined in the
preamble hereof.
“Borrower’s Books” are all
Borrower’s books and records including ledgers, federal and state tax returns,
records regarding Borrower’s assets or liabilities, the Collateral, business
operations or financial condition, and all computer programs or storage or any
equipment containing such information.
“Borrowing Base” is eighty
percent (80.0%) of Eligible Accounts, as determined by Bank from Borrower’s most
recent Borrowing Base Certificate; provided, however, that Bank may decrease the
foregoing percentage in its good faith business judgment based on events,
conditions, contingencies, or risks which, as determined by Bank, may adversely
affect Collateral.
“Borrowing Base Certificate” is
that certain certificate in the form attached hereto as Exhibit
C.
“Borrowing Resolutions” are,
with respect to any Person, those resolutions adopted by such Person’s Board of
Directors and delivered by such Person to Bank approving the Loan Documents to
which such Person is a party and the transactions contemplated thereby, together
with a certificate executed by its secretary on behalf of such Person certifying
that (a) such Person has the authority to execute, deliver, and perform its
obligations under each of the Loan Documents to which it is a party,
(b) that attached as Exhibit A to such certificate is a true, correct, and
complete copy of the resolutions then in full force and effect authorizing and
ratifying the execution, delivery, and performance by such Person of the Loan
Documents to which it is a party, (c) the name(s) of the Person(s) authorized to
execute the Loan Documents on behalf of such Person, together with a sample of
the true signature(s) of such Person(s), and (d) that Bank may conclusively
rely on such certificate unless and until such Person shall have delivered to
Bank a further certificate canceling or amending such prior
certificate.
“Business Day” is any day that
is not a Saturday, Sunday or a day on which Bank is closed.
“Cash Equivalents” means
(a) marketable direct obligations issued or unconditionally guaranteed by
the United States or any agency or any state thereof having maturities of not
more than one (1) year from the date of acquisition; (b) commercial paper
maturing no more than one (1) year after its creation and having the highest
rating from either Standard & Poor’s Ratings Group or Xxxxx’x Investors
Service, Inc.; (c) Bank’s certificates of deposit issued maturing no more than
one (1) year after issue; and (d) money market funds at least ninety-five
percent (95%) of the assets of which constitute Cash Equivalents of the kinds
described in clauses (a) through (c) of this definition.
“Cash Management Services” is defined in Section
2.1.4.
“Claims: is defined in Section
12.3.
“Code” is the Uniform
Commercial Code, as the same may, from time to time, be enacted and in effect in
the Commonwealth of Massachusetts; provided, that, to the extent that the Code
is used to define any term herein or in any Loan Document and such term is
defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection, or priority of, or remedies with
respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial
Code in effect in a jurisdiction other than the Commonwealth of Massachusetts,
the term “Code” shall
mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes on the provisions thereof relating to such
attachment, perfection, priority, or remedies and for purposes of definitions
relating to such provisions.
“Collateral” is any and all
properties, rights and assets of Borrower described on Exhibit
A.
“Collateral Account” is any
Deposit Account, Securities Account, or Commodity Account.
“Commodity Account” is any
“commodity account” as defined in the Code with such additions to such term as
may hereafter be made.
“Compliance Certificate” is
that certain certificate in the form attached hereto as Exhibit
D.
“Contingent Obligation” is, for
any Person, any direct or indirect liability, contingent or not, of that Person
for (a) any indebtedness, lease, dividend, earnout payment, 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; (b) any obligations
for undrawn letters of credit for the account of that Person; and (c) 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
any guarantee or other support arrangement.
“Control Agreement” is any
control agreement entered into among the depository institution at which
Borrower maintains a Deposit Account or the securities intermediary or commodity
intermediary at which Borrower maintains a Securities Account or a Commodity
Account, Borrower, and Bank pursuant to which Bank obtains control (within the
meaning of the Code) over such Deposit Account, Securities Account, or Commodity
Account.
“Credit Extension” is any
Advance, Letter of Credit, FX Forward Contract, amount utilized for Cash
Management Services, or any other extension of credit by Bank for Borrower’s
benefit.
“Default Rate” is defined in
Section 2.3(b).
“Deferred Revenue” is all
amounts received or invoiced in advance of performance under contracts and not
yet recognized as revenue.
“Deposit Account” is any
“deposit account” as defined in the Code with such additions to such term as may
hereafter be made.
“Designated Deposit Account” is
Borrower’s deposit account, account number _____________, maintained with
Bank.
“Dollars,” “dollars” and “$” each mean lawful money of
the United States.
“EBITDA” shall mean (a) Net
Income, plus (b) Interest Expense, plus (c) to the extent deducted in the
calculation of Net Income, depreciation expense, amortization expense, and
non-cash stock compensation expense, plus (d) income tax expense.
“Effective Date” is the date
set forth in the preamble of this Agreement.
“Eligible Accounts” means
Accounts which arise in the ordinary course of Borrower’s business that meet all
Borrower’s representations and warranties in Section 5.3. Bank
reserves the right, at any time after the Effective Date, to adjust any of the
criteria set forth below and to establish new criteria in its reasonable good
faith business judgment. 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
regardless of invoice payment period terms;
(b) Accounts
owing from an Account Debtor, fifty percent (50%) or more of whose Accounts have
not been paid within ninety (90) days of invoice date;
(c) Accounts
owing from an Account Debtor which does not have its principal place of business
in the United States, unless Bank otherwise approves of in writing, on a case by
case basis at the sole discretion of Bank;
(d) Accounts
billed and/or payable outside of the United States, unless Bank otherwise
approves of in writing, on a case by case basis at the sole discretion of
Bank;
(e) Accounts
owing from an Account Debtor to the extent that Borrower is indebted or
obligated in any manner to the Account Debtor (as creditor, lessor, supplier or
otherwise - sometimes called “contra” accounts, accounts payable, customer
deposits or credit accounts), with the exception of customary credits,
adjustments and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business;
(f) Accounts
for which the Account Debtor is Borrower’s Affiliate, officer, employee, or
agent;
(g) Accounts
with credit balances over ninety (90) days from invoice date;
(h) Accounts
owing from 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;
(i) Accounts
owing from an Account Debtor which is a United States government entity or any
department, agency, or instrumentality thereof unless Borrower has assigned its
payment rights to Bank and the assignment has been acknowledged under the
Federal Assignment of Claims Act of 1940, as amended;
(j) Accounts
for demonstration or promotional equipment, or in which goods are consigned, or
sold on a “sale guaranteed”, “sale or return”, “sale on approval”, or other
terms if Account Debtor’s payment may be conditional;
(k) Accounts
owing from an Account Debtor that has not been invoiced or where goods or
services have not yet been rendered to the Account Debtor (sometimes called memo
xxxxxxxx or pre-xxxxxxxx);
(l) Accounts
subject to contractual arrangements between Borrower and an Account Debtor where
payments shall be scheduled or due according to completion or fulfillment
requirements where the Account Debtor has a right of offset for damages suffered
as a result of Borrower’s failure to perform in accordance with the contract
(sometimes called contracts accounts receivable, progress xxxxxxxx, milestone
xxxxxxxx, or fulfillment contracts);
(m) Accounts
owing from an Account Debtor the amount of which may be subject to withholding
based on the Account Debtor’s satisfaction of Borrower’s complete performance
(but only to the extent of the amount withheld; sometimes called retainage
xxxxxxxx);
(n) Accounts
subject to trust provisions, subrogation rights of a bonding company, or a
statutory trust;
(o) Accounts
owing from an Account Debtor that has been invoiced for goods that have not been
shipped to the Account Debtor unless Bank, Borrower, and the Account Debtor have
entered into an agreement acceptable to Bank in its sole discretion wherein the
Account Debtor acknowledges that (i) it has title to and has ownership of the
goods wherever located, (ii) a bona fide sale of the goods has occurred, and
(iii) it owes payment for such goods in accordance with invoices from Borrower
(sometimes called “xxxx and hold” accounts);
(p) Accounts
that represent non-trade receivables or that are derived by means other than in
the ordinary course of Borrower’s business;
(q) Accounts
for which Borrower has permitted Account Debtor’s payment to extend beyond 90
days;
(r) Accounts
subject to chargebacks or others payment deductions taken by an Account
Debtor;
(s) Accounts
in which the Account Debtor disputes liability or makes any claim (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;
(t) Accounts
for which Bank in its good faith business judgment determines collection to be
doubtful; and
(u) other
Accounts Bank deems ineligible in the exercise of its reasonable good faith
business judgment.
“Equipment” is all “equipment”
as defined in the Code with such additions to such term as may hereafter be
made, and includes without limitation all machinery, fixtures, goods, vehicles
(including motor vehicles and trailers), and any interest in any of the
foregoing.
“ERISA” is the Employee
Retirement Income Security Act of 1974, and its regulations.
“Event of Default” is defined
in Section 8.
“Foreign Currency” means lawful
money of a country other than the United States.
“Funding Date” is any date on
which a Credit Extension is made to or on account of Borrower which shall be a
Business Day.
“FX Business Day” is any day
when (a) Bank’s Foreign Exchange Department is conducting its normal business
and (b) the Foreign Currency being purchased or sold by Borrower is available to
Bank from the entity from which Bank shall buy or sell such Foreign
Currency.
“FX Forward Contract” is defined in Section
2.1.3.
“FX Reduction Amount” is
defined in Section 2.1.3.
“FX Reserve” is defined in Section
2.1.3.
“GAAP” is generally accepted
accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other Person as may be
approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.
“General Intangibles” is all
“general intangibles” as defined in the Code in effect on the date hereof with
such additions to such term as may hereafter be made, and includes without
limitation, all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work, whether published or unpublished, any patents, trademarks, service marks
and, to the extent permitted under applicable law, any applications therefor,
whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights,
goodwill, franchise agreements, purchase orders, customer lists, route lists,
telephone numbers, domain names, claims, income and other tax refunds, security
and other deposits, options to purchase or sell real or personal property,
rights in all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without limitation key man,
property damage, and business interruption insurance), payments of insurance and
rights to payment of any kind.
“Governmental Approval” is any
consent, authorization, approval, order, license, franchise, permit,
certificate, accreditation, registration, filing or notice, of, issued by, from
or to, or other act by or in respect of, any Governmental
Authority.
“Governmental Authority” is any
nation or government, any state or other political subdivision thereof, any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative functions of or pertaining to government, any securities exchange
and any self-regulatory organization.
“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.
“Indemnified Person” is defined
in Section 12.3.
“Initial Audit” is Bank’s
inspection of the Collateral and Borrower’s Books.
“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.
“Interest Expense” means for
any fiscal period, interest expense (whether cash or non-cash) determined in
accordance with GAAP for the relevant period ending on such date, including, in
any event, interest expense with respect to any Credit Extension and other
Indebtedness of Borrower and its Subsidiaries, including, without limitation or
duplication, all commissions, discounts, or related amortization and other fees
and charges with respect to letters of credit and bankers’ acceptance financing
and the net costs associated with interest rate swap, cap, and similar
arrangements, and the interest portion of any deferred payment obligation
(including leases of all types).
“Inventory” is all “inventory”
as defined in the Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all merchandise,
raw materials, parts, supplies, packing and shipping materials, work in process
and finished products, including without limitation such inventory as is
temporarily out of Borrower’s custody or possession or in transit and including
any returned goods and any documents of title representing any of the
above.
“Investment” is any beneficial
ownership interest in any Person (including stock, partnership interest or other
securities), and any loan, advance or capital contribution to any
Person.
“Letter of Credit” means a
standby letter of credit issued by Bank or another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Bank as
set forth in Section 2.1.2.
“Letter of Credit Application”
is defined in Section 2.1.2(a).
“Letter of Credit Reserve” has
the meaning set forth in Section 2.1.2(d).
“Lien” is a claim, mortgage,
deed of trust, levy, charge, pledge, security interest or other encumbrance of
any kind, whether voluntarily incurred or arising by operation of law or
otherwise against any property.
“Loan Documents” are,
collectively, this Agreement, the Perfection Certificate, any note, or notes or
guaranties executed by Borrower, and any other present or future agreement by
Borrower and/or for the benefit of Bank in connection with this Agreement, all
as amended, restated, or otherwise modified.
“Material Adverse Change” is
(a) a material impairment in the perfection or priority of Bank’s Lien in the
Collateral or in the value of such Collateral; (b) a material adverse change in
the business, operations, or condition (financial or otherwise) of Borrower; (c)
a material impairment of the prospect of repayment of any portion of the
Obligations, or (d)
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.
“Net Income” means, as
calculated on a consolidated basis for Borrower and its Subsidiaries for any
period as at any date of determination, the net profit (or loss), after
provision for taxes, of Borrower and its Subsidiaries for such period taken as a
single accounting period.
“Obligations” are Borrower’s
obligation to pay when due any debts, principal, interest, Bank Expenses and
other amounts Borrower owes Bank now or later, whether under this Agreement, the
Loan Documents, or otherwise, including, without limitation, all obligations
relating to letters of credit (including reimbursement obligations for drawn and
undrawn 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, and
the performance of Borrower’s duties under the Loan Documents.
“Operating Documents” are, for
any Person, such Person’s formation documents, as certified with the Secretary
of State of such Person’s state of formation on a date that is no earlier than
30 days prior to the Effective Date, and, (a) if such Person is a corporation,
its bylaws in current form, (b) if such Person is a limited liability company,
its limited liability company agreement (or similar agreement), and (c) if such
Person is a partnership, its partnership agreement (or similar agreement), each
of the foregoing with all current amendments or modifications
thereto.
“Payment/Advance Form” is that
certain form attached hereto as Exhibit
B.
“Perfection Certificate” is
defined in Section 5.1.
“Permitted Indebtedness”
is:
(a) Borrower’s
Indebtedness to Bank under this Agreement and the other Loan
Documents;
(b) Indebtedness
existing on the Effective Date and shown on the Perfection
Certificate;
(c) Subordinated
Debt;
(d) unsecured
Indebtedness to trade creditors incurred in the ordinary course of
business;
(e) Indebtedness
incurred as a result of endorsing negotiable instruments received in the
ordinary course of business;
(f) Indebtedness
secured by Permitted Liens; and
(g) extensions,
refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (f) above, provided that the principal amount
thereof is not increased or the terms thereof are not modified to impose more
burdensome terms upon Borrower or its Subsidiary, as the case may
be.
“Permitted Investments”
are:
(a) Investments
shown on the Perfection Certificate and existing on the Effective Date;
and
(b) Cash
Equivalents.
“Permitted Liens”
are:
(a) Liens
existing on the Effective Date and shown on the Perfection Certificate or
arising under this Agreement and the 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, provided that no
notice of any such Lien has been filed or recorded under the Internal Revenue
Code of 1986, as amended, and the Treasury Regulations adopted
thereunder;
(c) purchase
money Liens (i) on Equipment acquired or held by Borrower incurred for financing
the acquisition of the Equipment securing no more than Fifty Thousand Dollars
($50,000.00) in the aggregate amount outstanding, or (ii) existing on Equipment
when acquired, if the Lien is
confined to the property and improvements and the proceeds of the
Equipment;
(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;
and
(e) leases or
subleases of real property granted in the ordinary course of business, and
leases, subleases, non-exclusive licenses or sublicenses of property (other than
real property or intellectual property)
granted
in the ordinary course of Borrower’s business, if the leases,
subleases, licenses and sublicenses do not prohibit granting Bank a security
interest.
“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 the greater of
(a) Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate, and (b) five percent (5.0%).
“Quick Assets” is, on any date,
Borrower’s consolidated unrestricted cash, Cash Equivalents, and investments
with Bank with maturities of fewer than 12 months determined according to GAAP,
maintained with Bank, and net billed accounts receivable.
“Registered Organization” is
any “registered organization” as defined in the Code with such additions to such
term as may hereafter be made.
“Requirement of Law” is as to
any Person, the organizational or governing documents of such Person, and any
law (statutory or common), treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
“Responsible Officer” is any of
the Chief Executive Officer, President, Chief Financial Officer and Controller
of Borrower.
“Revolving Line” is an Advance
or Advances in an amount equal to One Million Two Hundred Fifty Thousand Dollars
($1,250,000.00).
“Revolving Line Maturity Date”
is September 28, 2009.
“Securities Account” is any
“securities account” as defined in the Code with such additions to such term as
may hereafter be made.
“Settlement Date” is defined in
Section 2.1.3.
“Subordinated Debt” is
indebtedness incurred by Borrower subordinated to all of Borrower’s now or
hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or
other similar agreement in form and substance satisfactory to Bank entered into
between Bank and the other creditor), on terms acceptable to Bank.
“Subsidiary” means, with
respect to any Person, any Person of which more than 50.0% of the voting stock
or other equity interests (in the case of Persons other than corporations) is
owned or controlled directly or indirectly by such Person or one or more of
Affiliates of such 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, but excluding
all other Subordinated Debt.
“Transfer” is defined in
Section 7.1.
“Unused Revolving Line Facility
Fee” is defined in Section 2.4(d).
[Signature page follows.]
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 Effective
Date.
BORROWER:
By /s/ Xxxx X.
Cebula______________________
Name:
Xxxx X. Xxxxxx
________________________
Title: CFO_________________________________
BANK:
SILICON
VALLEY BANK
By /s/ Xxxxxx X.
Silvia_______________________
Name: Xxxxxx X.
Silvia_________________________
Title: Relationship Manager
___________________
EXHIBIT A – COLLATERAL
DESCRIPTION
The
Collateral consists of all of Borrower’s right, title and interest in and to the
following personal property:
All
goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles (except as provided below), commercial
tort claims, 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), 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.
Notwithstanding
the foregoing, the Collateral does not include any of the following, whether now
owned or hereafter acquired: any copyright rights, copyright applications,
copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, any patents, patent
applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the
same, trademarks, service marks and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, and the goodwill of
the business of Borrower connected with and symbolized thereby, know-how,
operating manuals, trade secret rights, rights to unpatented inventions, and any
claims for damage by way of any past, present, or future infringement of any of
the foregoing; provided, however, 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.
Pursuant
to the terms of a certain negative pledge arrangement with Bank, Borrower has
agreed not to encumber any of its copyright rights, copyright applications,
copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, any patents, patent
applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the
same, trademarks, service marks and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, and the goodwill of
the business of Borrower connected with and symbolized thereby, know-how,
operating manuals, trade secret rights, rights to unpatented inventions, and any
claims for damage by way of any past, present, or future infringement of any of
the foregoing, without Bank’s prior written consent.
EXHIBIT B – LOAN
PAYMENT/ADVANCE REQUEST FORM
Deadline
for same day processing is Noon E.S.T.
| Fax To: |
Date:
_____________________
|
Loan
Payment:
From
Account
#_______________________________
To Account #
_____________________________________
(Deposit Account
#)
(Loan
Account #)
Principal
$
___________________________________
and/or Interest $ ___________________________________
Authorized
Signature: _________________________
Phone Number:
___________________________________
Print
Name/Title: ______________________________
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
Advance $ __________________________
All
Borrower’s representations and warranties in the Loan and Security Agreement are
true, correct and complete in all material respects on the date of the request
for an advance; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such
date:
Authorized
Signature: _________________________
Phone
Number: _________________________
Print
Name/Title: ______________________________
Outgoing
Wire Request:
Complete
only if all or a portion of funds from the loan advance above is to be
wired.
Deadline
for same day processing is noon, 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
|
ACCOUNTS
RECEIVABLE
|
|
|
1. Accounts
Receivable (invoiced) 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. Foreign
Accounts
|
$_______________
|
|
7. Foreign
Invoiced Accounts
|
$_______________
|
|
8. Contra/Customer
Deposit Accounts
|
$_______________
|
|
9. Intercompany/Employee
Accounts
|
$_______________
|
|
10. Credit
balances over 90 days
|
$_______________
|
|
11. Concentration
Limits
|
$_______________
|
|
12. U.S.
Governmental Accounts
|
$_______________
|
|
13. Promotion
or Demo Accounts; Guaranteed Sale or Consignment Sale
Accounts
|
$_______________
|
|
14. Accounts
with Progress/Milestone/Pre-xxxxxxxx; Contract Accounts
|
$_______________
|
|
15. Accounts
for Retainage Xxxxxxxx
|
$_______________
|
|
16. Trust
Accounts
|
$_______________
|
|
17. Xxxx
and Hold Accounts
|
$_______________
|
|
18. Unbilled
Accounts
|
$_______________
|
|
19. Non-Trade
Accounts
|
$_______________
|
|
20. Accounts
with Extended Term Invoices
|
$_______________
|
|
21. Accounts
subject to Chargebacks
|
$_______________
|
|
22. Disputed
Accounts
|
$_______________
|
|
23. Other
(please explain on reverse)
|
$_______________
|
|
24. Deferred
Revenue
|
$_______________
|
|
25. TOTAL
ACCOUNTS RECEIVABLE DEDUCTIONS
|
$_______________
|
|
26. Eligible
Accounts (#3 minus #25)
|
$_______________
|
|
27. ELIGIBLE
AMOUNT OF ACCOUNTS (80% of #26)
|
$_______________
|
|
BALANCES
|
|
|
28. Maximum
Loan Amount
|
$_______________
|
|
29. Total
Funds Available (Lesser of #28 or #27)
|
$_______________
|
|
30. Present
balance owing on Line of Credit
|
$_______________
|
|
31. Outstanding
under Sublimits
|
$_______________
|
|
32. RESERVE
POSITION (#29 minus #30 and #31)
|
$_______________
|
[Continued
on following page.]
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:
By:
_______________________
Authorized
Signer
Date:
_____________________
|
BANK
USE ONLY
Received
by: _____________________
authorized
signer
Date: __________________________
Verified:
________________________
authorized
signer
Date:
___________________________
Compliance
Status: Yes No
|
EXHIBIT D - COMPLIANCE
CERTIFICATE
Date:
_______________________
TO: SILICON
VALLEY BANK
The
undersigned authorized officer of Bridgeline Software, Inc. (“Borrower”)
certifies that under the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the “Agreement”), (1) Borrower is in complete
compliance for the period ending _______________ with all required covenants
except as noted below, (2) there are no Events of Default, (3) all
representations and warranties in the Agreement are true and correct in all
material respects on this date except as noted below; provided, however, that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, (4) Borrower, and each of its
Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise
permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no
Liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Bank. Attached
are the required documents supporting the certification. The
undersigned certifies that these are prepared in accordance with GAAP
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The undersigned 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. Capitalized terms used but not otherwise defined herein
shall have the meanings given them in the Agreement.
|
Please
indicate compliance status by circling Yes/No under “Complies”
column.
|
||
|
Reporting
Covenant
|
Required
|
Complies
|
|
Monthly
financial statements with
Compliance
Certificate
|
Monthly
within 30 days
|
Yes No
|
|
Annual
financial statement (CPA Audited)
|
FYE
within 120 days
|
Yes No
|
|
10-Q,
10-K and 8-K
|
Within
5 days after filing with SEC
|
Yes No
|
|
Borrowing
Base Certificate, A/R & A/P Agings
|
Monthly
within 30 days
|
Yes No
|
|
Board-approved
projections
|
Annually,
w/in 45 days of approval
|
Yes No
|
|
Financial
Covenant
|
Required
|
Actual
|
Complies
|
|
Maintain
at all times (tested):
|
|||
|
Adjusted
Quick Ratio (monthly)
|
1.5:1.0
|
_____:1.0
|
Yes No
|
|
2-Quarter
Trailing EBITDA (quarterly)
|
$250,000.00
|
________
|
Yes No
|
The following financial covenant
analyses and information set forth in Schedule 1 attached hereto are true and
accurate as of the date of this Certificate.
The following are the exceptions with
respect to the certification above: (If no exceptions exist, state
“No exceptions to note.”)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------
|
By:
_________________________
Name: _______________________
Title:
_______________________
|
BANK
USE ONLY
Received
by: _______________________
authorized
signer
Date:
____________________________
Verified:
__________________________
authorized
signer
Date: ____________________________
Compliance
Status: Yes No
|
Schedule 1 to Compliance
Certificate
Financial Covenants of
Borrower
In the event of a conflict between this
Schedule and the Loan Agreement, the terms of the Loan Agreement shall
govern.
Dated: ____________________
I. Adjusted Quick Ratio (Section
6.7(a))
Required: 1.50:1.00
Actual:
|
A.
|
Aggregate
value of the unrestricted cash and cash equivalents of Borrower and its
Subsidiaries maintained at Bank
|
$
______
|
|
B.
|
Aggregate
value of net billed accounts receivable of Borrower and its
Subsidiaries
|
$
______
|
|
C.
|
Aggregate
value of investments of Borrower and its Subsidiaries maintained with Bank
with maturities of fewer than 12 months
|
$
______
|
|
D.
|
Quick
Assets (sum of lines A through C)
|
$
______
|
|
E.
|
Aggregate
value of Obligations to Bank
|
$
______
|
|
F.
|
Aggregate
value of liabilities that should, under GAAP, be classified as liabilities
on Borrower’s consolidated balance sheet, including all Indebtedness, and
not otherwise reflected in line E above
|
$ ______
|
|
G.
|
Total
Liabilities (the sum of lines E and F)
|
$ ______
|
|
H.
|
Aggregate
value of all amounts received or invoiced by Borrower in advance of
performance under contracts and not yet recognized as
revenue
|
$ ______
|
|
I.
|
Line
G minus line H
|
$ ______
|
|
J.
|
Adjusted
Quick Ratio (line D divided by line I)
|
Is line J
equal to or greater than 1.50:1:00?
________ No,
not in
compliance ________ Yes,
in compliance
II. EBITDA (Section
6.7(b))
Required: $250,000.00
Actual:
|
A.
|
Net
Income
|
$
______
|
|
B.
|
To
the extent included in the determination of Net Income
|
|
|
1. The
provision for income taxes
|
$
______
|
|
|
2. Depreciation
expense
|
$
______
|
|
|
3. Amortization
expense
|
$
______
|
|
|
4. Non-cash
stock compensation expense
|
$
______
|
|
|
5. Net
Interest Expense
|
$
______
|
|
|
6. All
non-cash income
|
$
______
|
|
|
7. The
sum of line 1 through 5 minus line 6
|
$
______
|
|
|
C.
|
EBITDA
(line A plus line B.7)
|
Is line C
equal to or greater than $250,000.00?
No, not in
compliance Yes, in
compliance
