Exhibit 10.1
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LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
CONCURRENT COMPUTER CORPORATION
AS BORROWER
AND
SILICON VALLEY BANK,
AS BANK
DECEMBER 23, 2004
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LOAN AND SECURITY AGREEMENT
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THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated December 23,
2004, between SILICON VALLEY BANK ("Bank"), whose address is 0000 Xxxxxx Xxxxx,
Xxxxx Xxxxx, Xxxxxxxxxx 00000 and having a loan production office at 0000
Xxxxxxxxx Xxxx, XX, X-00, Xxxxxxx, Xxxxxxx 00000 and CONCURRENT COMPUTER
CORPORATION, a corporation organized and in good standing in the State of
Delaware ("Borrower"), whose address is 0000 Xxxxx Xxxxx Xxxxxxx, Xxxxxx,
Xxxxxxx 00000, provides the terms on which Bank will lend to Borrower and
Borrower will repay Bank. The parties agree as follows:
1. ACCOUNTING AND OTHER TERMS
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Accounting terms not defined in this Agreement will be construed following
GAAP. Calculations and determinations must be made following GAAP. The term
"financial statements" includes the notes and schedules. The terms "including"
and "includes" always mean "including (or includes) without limitation," in this
or any Loan Document.
2. LOAN AND TERMS OF PAYMENT
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2.1 PROMISE TO PAY.
Borrower promises to pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.
2.1.1 REVOLVING ADVANCES.
(a) Bank will make Advances not exceeding (i) the lesser of (A) the
Committed Revolving Line or (B) the Borrowing Base, as in effect from time to
time, minus (ii) the amount of all outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit), minus (ii) the Cash Management
Services Reserve minus (iii) the FX Reserve. Amounts borrowed under this
Section may be repaid and reborrowed during the term of this Agreement. All
Advances shall be evidenced by the Revolving Promissory Note to be executed and
delivered by Borrower to Bank on the Closing Date and shall be repaid in
accordance with the terms of the Revolving Promissory Note.
(b) To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 3:00 p.m. Eastern time on the Business Day the Advance is to be
made. Borrower must promptly confirm the notification by delivering to Bank the
Loan Payment/Advance Request Form attached as Exhibit B (the "Payment/Advance
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Form"). Bank will credit Advances to Borrower's deposit account. Bank may make
Advances under this Agreement based on instructions from a Responsible Officer
or his or her designee or without instructions if the Advances are necessary to
meet Obligations which have become due. Bank may rely on any telephone notice
given by a person whom Bank believes is a Responsible Officer or designee.
Borrower will indemnify Bank for any loss Bank suffers due to such reliance.
(c) The Committed Revolving Line terminates on the Revolving Maturity
Date, when all Advances are immediately payable.
(d) Bank's obligation to lend the undisbursed portion of the
Obligations will terminate if, in Bank's sole discretion, there has occurred a
Material Adverse Change.
2.1.2 LETTERS OF CREDIT SUBLIMIT.
Bank will issue or have issued Letters of Credit for Borrower's account not
exceeding (a) the lesser of the Committed Revolving Line or the Borrowing Base,
as in effect from time to time, minus (b) the outstanding principal balance of
the Advances minus the Cash Management Services Reserve, minus the FX Reserve;
however, the face amount of outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit) may not at any time exceed Two Million Dollars
($2,000,000). Each Letter of Credit will have an expiry date of no later than
one hundred eighty (180) days after the Revolving Maturity Date, but Borrower's
obligations to reimburse Bank under the Letters of Credit will be secured by
cash on terms acceptable to Bank at any time after the Revolving Maturity Date
if the term of this Agreement is not extended by Bank. Borrower agrees to
execute any further documentation in connection with the Letters of Credit as
Bank may reasonably request. Prior to or simultaneously with the
opening of each Letter of Credit, Borrower shall pay to Bank, a letter of credit
fee (each a "Letter of Credit Fee" and collectively the "Letter of Credit Fees")
in an amount equal to two percent (2%) per annum of the face amount of the
Letter of Credit. Such Letter of Credit Fees shall be paid in advance upon the
issuance of the Letter of Credit and upon each anniversary thereof, if any. In
addition, Borrower shall pay to Bank any and all additional issuance,
negotiation, processing, transfer or other fees to the extent and as and when
customarily required by Bank.
2.1.3 FOREIGN EXCHANGE SUBLIMIT.
If there is availability under the Committed Revolving Line and the
Borrowing Base, then Borrower may enter in foreign exchange forward contracts
with the Bank under which Borrower commits to purchase from or sell to Bank a
set amount of foreign currency more than one business day after the contract
date (the "FX Forward Contract"). Bank will establish a reserve amount for each
outstanding FX Forward Contract in an amount equal to ten percent (10%) of the
notional amount of such FX Forward Contract up to a maximum of One Million
Dollars ($1,000,000) (the "FX Reserve"). The total FX Forward Contracts at any
one time may not exceed 10 times the amount of the FX Reserve. Bank may
terminate the FX Forward Contracts if an Event of Default occurs and is
continuing.
2.1.4 CASH MANAGEMENT SERVICES SUBLIMIT.
Borrower may use up to One Million Dollars ($1,000,000) for Bank's Cash
Management Services, which may include merchant services, direct deposit of
payroll, business credit card, and check cashing services identified in various
cash management services agreements related to such services (the "Cash
Management Services"). The aggregate amounts utilized under the Cash Management
Services Sublimit will at all times reduce the amount otherwise available to be
borrowed under the Committed Revolving Line (the "Cash Management Services
Reserve"). Any amounts Bank pays on behalf of Borrower or any amounts that are
not paid by Borrower for any Cash Management Services will be treated as
Advances under the Committed Revolving Line and will accrue interest at the rate
for Advances.
2.1.5 TERM LOAN.
(a) Bank will make a Term Loan available to Borrower.
(b) Borrower will pay thirty-six (36) equal installments of principal
and interest of Ninety-Three Thousand Seven Hundred One and 40/100 Dollars
($93,701.40) each (the "Term Loan Payment"). Each Term Loan Payment is payable
on the 1st of each month during the term of the loan. Borrower's final Term
Loan Payment, due on December 1, 2007, includes all outstanding Term Loan
principal and accrued interest.
2.2 OVERADVANCES.
If Borrower's Obligations under Sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4
exceed the lesser of either (i) the Committed Revolving Line or (ii) the
Borrowing Base, Borrower shall immediately pay Bank the excess.
2.3 INTEREST RATE, PAYMENTS.
(a) Interest Rate. Advances accrue interest on the outstanding
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principal balance in accordance with the LIBOR Supplement to Loan Agreement of
even date herewith between Borrower and Bank, which forms a part of this
Agreement. The Term Loan accrues interest at a per annum rate of eight percent
(8%). After an Event of Default and during the continuation thereof, at the
option of Bank upon notice to Borrower, the Obligations shall accrue interest at
three percent (3%) above the rate effective immediately before the Event of
Default. Interest is computed on a 360 day year for the actual number of days
elapsed.
(b) Payments. Interest due on the Committed Revolving Line is payable
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on the first (1st) day of each month. Bank may debit any of Borrower's deposit
accounts including Account Number XXXXXXXXXX for principal and interest payments
owing or any amounts Borrower owes Bank. Bank will promptly notify Borrower
when it debits Borrower's accounts. These debits are not a set-off. Payments
received after 12:00 noon Eastern time are considered received at the opening of
business on the next Business Day. When a payment is due on a day that is not a
Business Day, the payment is due the next Business Day and additional fees or
interest accrues.
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2.4 FEES.
(a) Commitment Fee. Borrower will pay Bank a commitment fee
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("Commitment Fee") in an amount equal to $75,000, of which $55,000 shall be
payable on the Closing Date and $20,000 shall be payable on the first
anniversary of the Closing Date. Such Commitment Fee shall be fully earned when
paid and shall not be subject to refund or rebate for any reason whatsoever.
(b) Unused Fee. Borrower will pay Bank a fee (the "Unused Line Fee")
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in an amount equal to one-quarter of one percent (0.25%) per annum of the
average daily unused and undisbursed portion of the Committed Revolving Line
accruing during each month. For purposes of this Section 2.4(b), the amount of
outstanding Letters of Credit, the Cash Management Services Sublimit and the FX
Reserve shall be deemed usage to the extent they reduce the availability of
Advances under the Committed Revolving Line. The accrued and unpaid portion of
the Unused Line Fee shall be paid by the Borrower to Bank on the first day of
each month for the prior month, commencing on the first such date following the
date hereof, and on the Revolving Maturity Date.
(c) Bank Expenses. Borrower will pay Bank all Bank Expenses (including
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reasonable attorneys' fees and reasonable expenses) incurred through and after
the date of this Agreement upon demand.
3. CONDITIONS OF LOANS
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3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.
Bank's obligation to make the initial Credit Extension is subject to the
condition precedent that it receives the agreements, documents and fees it
requires.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.
Bank's obligations to make each Credit Extension, including the initial
Credit Extension, is subject to the following:
(a) timely receipt of any Payment/Advance Form; and
(b) the representations and warranties in Section 5 must be true on the
date of the Payment/Advance Form and on the effective date of each Credit
Extension (other than those representations and warranties expressly referring
to another date, which representations and warranties shall be true as of such
date) and no Event of Default may have occurred and be continuing, or result
from the Credit Extension. Each Credit Extension is Borrower's representation
and warranty on that date that matters set forth in this Section 3.2(b) are true
and correct.
4. CREATION OF SECURITY INTEREST
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4.1 GRANT OF SECURITY INTEREST.
Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank upon the occurrence of any Event of Default and during the
continuation thereof, may place a "hold" on any deposit account of Borrower
maintained with Bank. If this Agreement is terminated, Bank's lien and security
interest in the Collateral will continue until Borrower fully satisfies its
Obligations.
4.2 AUTHORIZATION TO FILE.
Borrower authorizes Bank to file financing statements describing the
Collateral without notice to Borrower, with all appropriate jurisdictions, as
Bank deems appropriate, in order to perfect or protect Bank's interest in the
Collateral.
5. REPRESENTATIONS AND WARRANTIES
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Borrower represents and warrants as follows:
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5.1 DUE ORGANIZATION AND AUTHORIZATION.
Borrower and each Subsidiary is duly existing and in good standing in the
jurisdiction of its organization or formation and is qualified and licensed to
do business in, and in good standing in, any state in which the conduct of its
business or its ownership of property requires that it be qualified, except
where the failure to do so could not reasonably be expected to cause a Material
Adverse Change. Borrower exact legal name is as set forth on the first page of
this Agreement. The execution, delivery and performance of the Loan Documents
have been duly authorized, and do not conflict with Borrower's formation
documents, nor constitute an event of default under any material agreement by
which Borrower is bound. Borrower is not in default under any agreement to
which, or by which it is bound, in which the default could reasonably be
expected to cause a Material Adverse Change.
5.2 COLLATERAL.
Borrower has good title to the Collateral, free of Liens except Permitted
Liens. All Accounts listed by the Borrower as Eligible Accounts are bona fide,
existing obligations, and the service or property has been performed or
delivered to the account debtor or its agent for immediate shipment to and
unconditional acceptance by the account debtor. Borrower has no notice of any
actual or imminent Insolvency Proceeding of any account debtor whose accounts
are an Eligible Account in any Borrowing Base Certificate. All Inventory is in
all material respects of good and marketable quality, free from material
defects. Except as noted on the Schedule /Perfection Certificate, Borrower is
not a party to, nor is bound by, any material license or other material
agreement with respect to which the Borrower is the licensee that prohibits or
otherwise restricts Borrower from granting a security interest in Borrower's
interest in such material license or agreement or any other property. Borrower
will provide written notice to Bank within ten (10) days of entering or becoming
bound by any such material license or agreement which is reasonably likely to
have a material impact on Borrower's business or financial condition (other than
over-the-counter software that is commercially available to the public).
Borrower is the sole owner of the Intellectual Property, except for
non-exclusive licenses granted to its customers in the ordinary course of
business. Each Patent is valid and enforceable and no part of the Intellectual
Property has been judged invalid or unenforceable, in whole or in part, and no
claim has been made that any part of the Intellectual Property violates the
rights of any third party, except in any such case to the extent such
invalidity, claim or unenforceability would not reasonably be expected to cause
a Material Adverse Change.
5.3 LITIGATION.
There are no actions or proceedings pending or, to the knowledge of
Borrower's Responsible Officers, threatened by or against Borrower or any
Subsidiary in which a likely adverse decision could reasonably be expected to
cause a Material Adverse Change.
5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.
All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations. There has not been any Material Adverse Change since the date of the
most recent consolidated financial statements submitted to Bank.
5.5 SOLVENCY.
The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement or any of the Loan Documents; and Borrower is able to pay its debts
(including trade debts) as they mature.
5.6 REGULATORY COMPLIANCE.
Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors). Borrower has
complied in all material respects with the Federal Fair Labor Standards Act.
Borrower has not violated any laws, ordinances or rules, the violation of which
could reasonably be
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expected to cause a Material Adverse Change. None of Borrower's or any
Subsidiary's properties or assets has been used by Borrower or any Subsidiary
or, to the best of Borrower's knowledge, by previous Persons, in disposing,
producing, storing, treating, or transporting any hazardous substance other than
legally. Borrower and each Subsidiary has timely filed all required tax returns
and paid, or made adequate provision to pay, all material taxes, except those
being contested in good faith with adequate reserves under GAAP. Borrower and
each Subsidiary has obtained all consents, approvals and authorizations of, made
all declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently conducted,
except where the failure to do so could not reasonably be expected to cause a
Material Adverse Change.
5.7 SUBSIDIARIES.
Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments.
5.8 FULL DISCLOSURE.
No written representation, warranty or other statement of Borrower in any
certificate or written statement (other than projections and forecasts) given to
Bank (taken together with all such written certificates and written statements
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. All projections and forecasts provided by Borrower
were prepared in good faith and are based upon reasonable assumptions. Bank
acknowledges that projections and forecasts 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 and forecasted results.
6. AFFIRMATIVE COVENANTS
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Borrower will do all of the following for so long as Bank has an obligation
to make any Credit Extension, or there are outstanding Obligations:
6.1 GOVERNMENT COMPLIANCE.
Borrower will maintain its and all Subsidiaries' legal existence and good
standing as a Registered Organization in only the State of Delaware and maintain
qualification in each jurisdiction in which the failure to so qualify would
reasonably be expected to cause a material adverse effect on Borrower's business
or operations. Borrower will comply, and have each Subsidiary comply, with all
laws, ordinances and regulations to which it is subject, noncompliance with
which could have a material adverse effect on Borrower's business or operations
or would reasonably be expected to cause a Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower will deliver to Bank: (i) as soon as available, but no
later than thirty (30) days after the last day of each month, company prepared
consolidated and consolidating financial statements, consisting of balance
sheets, income statements and statements of cash flows covering Borrower's
consolidated operations during the period certified by a Responsible Officer and
in a form acceptable to Bank; (ii) as soon as available, but no later than one
hundred twenty (120) days after the last day of Borrower's fiscal year, audited
consolidated financial statements prepared under GAAP, consistently applied,
together with an unqualified opinion on the financial statements from an
independent certified public accounting firm reasonably acceptable to Bank;
(iii) annual operating budgets (including income statements, balance sheets and
cash flow statements, by month) for the upcoming fiscal year of Borrower within
ninety (90) days after the end of each fiscal year of Borrower; (iv) a prompt
report of any legal action pending or threatened against Borrower or any
Subsidiary that could result in damages or costs to Borrower or any Subsidiary
of $250,000 or more; (v) budgets, sales projections, operating plans or other
financial information Bank reasonably requests; and (vi) prompt notice of any
material change in the composition of the Intellectual Property, including any
subsequent ownership right of Borrower in or to any Copyright, Patent or
Trademark not shown in any intellectual property security agreement between
Borrower and Bank or knowledge of an event that materially adversely affects the
value of the Intellectual Property.
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(b) Within thirty (30) days after the last day of each month, Borrower
will deliver to Bank (i) a Borrowing Base Certificate signed by a Responsible
Officer in the form of Exhibit C, (ii) an aged listing of accounts receivable
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and (iii) an aged listing of accounts payable.
(c) Within thirty (30) days after the last day of each month, Borrower
will deliver to Bank with the monthly financial statements a Compliance
Certificate signed by a Responsible Officer in the form of Exhibit D.
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(d) Within thirty (30) days after the last day of each month, Borrower
will deliver to Bank a listing of all offices or businesses opened by Borrower
since the delivery of the last such listing (or since the date hereof, if no
prior listing has been provided); provided, however, that Borrower shall not be
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required to list any office of business location which has assets of less than
$25,000 until a Responsible Officer has knowledge of such new office or business
location; provided, further that the value of the assets located in all such
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unreported office or business locations does not exceed $75,000 in the
aggregate.
(e) Allow Bank to audit Borrower's Collateral at Borrower's expense.
Such audits will be conducted no more often than every twelve (12) months unless
an Event of Default has occurred and is continuing.
6.3 INVENTORY; RETURNS.
Borrower will keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary practices in all material respects as
they exist at execution of this Agreement. Borrower must promptly notify Bank
of all returns, recoveries, disputes and claims that involve more than $250,000
in the aggregate during any month or more than $1,000,000 in any period of six
(6) consecutive months.
6.4 TAXES.
Borrower will make, and cause each Subsidiary to make, timely payment of
all material federal, state, and local taxes or assessments (other than taxes
and assessments which Borrower is contesting in good faith, with adequate
reserves maintained in accordance with GAAP) and will deliver to Bank, on
demand, appropriate certificates attesting to the payment.
6.5 INSURANCE.
Borrower will keep its business and the Collateral insured for risks and in
amounts standard for Borrower's industry, and as Bank may reasonably request.
Insurance policies will be in a form, with companies, and in amounts that are
satisfactory to Bank in Bank's reasonable discretion. All property policies
will have a lender's loss payable endorsement showing Bank as an additional loss
payee and all liability policies will show the Bank as an additional insured and
provide that the insurer must give Bank at least twenty (20) days notice before
canceling its policy. At Bank's request, Borrower will deliver certified copies
of policies and evidence of all premium payments. Proceeds payable to Borrower
or in respect of Collateral under any policy will, at Bank's option, be payable
to Bank on account of the Obligations if there then exists an Event of Default.
6.6 PRIMARY ACCOUNTS.
Borrower will maintain its primary depository, investment and operating
accounts with Bank or its Affiliates.
6.7 FINANCIAL COVENANTS.
Borrower will maintain as of the last day of each month (unless otherwise
stated below):
(a) ADJUSTED QUICK RATIO. An Adjusted Quick Ratio of not less than (i)
1.75 to 1.00 as of the last date of each month that is also the last day of a
fiscal quarter and (ii) 1.65 to 1.00 as of the last date of each month that is
not also the last day of a fiscal quarter.
(b) TANGIBLE NET WORTH. A Tangible Net Worth of at least equal to the
sum of (i) (A)$21,000,000 as of the last date of each month that is also the
last day of a fiscal quarter and (B) $18,000,000 as of the last date of each
month that is not also the last day of a fiscal quarter plus (ii) an
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amount equal to fifty percent (50%) of (A) Borrower's positive net income for
any month ending after the Closing Date; (B) the principal amount of
Subordinated Debt incurred by Borrower after the Closing Date; and (C) the
proceeds, net of commission and expenses, received by Borrower from the issuance
of shares of its capital stock after the Closing Date.
6.8 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.
Borrower shall not register any Copyrights or Mask Works with the United
States Copyright Office unless it: (i) has given at least fifteen (15) days'
prior notice to Bank of its intent to register such Copyrights or Mask Works and
has provided Bank with a copy of the application it intends to file with the
United States Copyright Office (excluding exhibits thereto); (ii) executes a
security agreement or such other documents as Bank may reasonably request in
order to maintain the perfection and priority of Bank's security interest in the
proceeds of the Copyrights proposed to be registered with the United States
Copyright Office, including, but not limited to, any Accounts arising out of
such Copyrights; and (iii) records such security documents with the United
States Copyright Office contemporaneously with filing the Copyright
application(s) with the United States Copyright Office. Borrower shall promptly
provide to Bank a copy of the Copyright application(s) filed with the United
States Copyright Office, together with evidence of the recording of the security
documents necessary for Bank to maintain the perfection and priority of its
security interest in the proceeds of such Copyrights or Mask Works, including,
but not limited to, any Accounts arising out of such Copyrights or Mask Works.
Borrower shall provide written notice to Bank of any application filed by
Borrower in the United States Patent Trademark Office for a patent or to
register a trademark or service xxxx, in each case within thirty (30) days of
any such filing
Borrower will (i) protect, defend and maintain the validity and
enforceability of any material Intellectual Property and promptly advise Bank in
writing of material infringements and (ii) 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 FURTHER ASSURANCES.
Borrower will execute any further instruments and take further action as
Bank reasonably requests to perfect or continue Bank's security interest in the
Collateral or to effect the purposes of this Agreement.
7. NEGATIVE COVENANTS
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Borrower will not do any of the following without Bank's prior written
consent, for so long as Bank has an obligation to make Credit Extensions or
there are any outstanding Obligations:
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 (i) of Inventory in the ordinary
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course of business; (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business; (iii) of worn-out or obsolete Equipment or (iv) of Equipment or
other fixed assets having a value not in excess of $500,000 in the aggregate
during any fiscal year.
7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.
Engage in or permit any of its Subsidiaries to engage in any material line
of business other than those lines of business conducted by Borrower and its
Subsidiaries on the date hereof and any business reasonably related
complementary or incidental thereto or reasonable extensions thereof. Borrower
shall not change the persons holding the offices of Chief Executive Officer or
Chief Financial Officer (each a "Senior Executive") unless a replacement is
approved by a majority of Borrower's Board of Directors, including a majority of
those members of the Board of Directors who were members of the Board of
Directors and not employees of Borrower as of the date of this Agreement or who
are subsequent non-employee directors designated or approved by such initial
non-employee directors (the "Outside Directors"), within 90 days of the date of
the termination of such Senior Executive, provided that if a majority of the
Outside Directors determine that such Senior Executive shall not be replaced,
then
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Borrower shall so notify Bank within thirty (30) days of the determination.
Borrower will not, without at least thirty (30) days prior written notice,
change its state of formation or relocate its chief executive office.
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, or
transfer its property to, 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, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
here, subject to Permitted Liens. In addition, Borrower shall not sell,
transfer, assign, mortgage, pledge, lease, grant a security interest in, or
encumber, or enter into any agreement, document, instrument or other arrangement
(except with or in favor of the Bank) with any Person which directly or
indirectly prohibits or has the effect of prohibiting Borrower from selling,
transferring, assigning, mortgaging, pledging, leasing, granting a security
interest in or upon, or encumbering any of Borrower's Intellectual Property,
other than (i) customary restrictions and conditions contained in agreements
relating to the sale of assets or property (otherwise permitted by this
Agreement) pending such sale, provided that such restrictions and conditions
apply only to the assets or property to be sold, and (ii) customary provisions
in leases, licenses, and other contracts limiting the assignment thereof.
7.6 DISTRIBUTIONS; INVESTMENTS.
Directly or indirectly acquire or own any Person, or make any Investment in
any Person, or permit any of its Subsidiaries to do so, other than Permitted
Investments and Investments in Subsidiaries, net of returns on Investments
received from Subsidiaries, not to exceed $500,000 during any fiscal year. Pay
any dividends or make any distribution or payment or redeem, retire or purchase
any capital stock, other than (i) dividends or other payments or distributions
payable in shares of common stock or in options, warrants, or other rights to
purchase common stock, and (ii) redemptions, retirements or purchases of any
capital stock, or any options, warrants, or other rights to purchase capital
stock, either from employees, officers, and directors or in market transactions
for contribution to retirement plans for the benefit of employees of the
Borrower and its Subsidiaries, in an aggregate amount in any fiscal year not to
exceed $500,000.
7.7 TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter into or permit to exist any material
transaction with any Affiliate of Borrower except for (a) 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 nonaffiliated Person, (b) transactions with Subsidiaries
constituting Investments permitted by Section 7.6 and (c) stock purchases from
employees, officers or directors permitted by Section 7.6.
7.8 SUBORDINATED DEBT.
Make or permit any payment on any Subordinated Debt, except under the terms
of the Subordinated Debt, or amend any provision in any document relating to the
Subordinated Debt without Bank's prior written consent.
7.9 COMPLIANCE.
Become an "investment company" or a company controlled by an "investment
company," under the Investment Company Act of 1940 or undertake as one of its
important activities extending credit to purchase or carry margin stock, or use
the proceeds of any Credit Extension for that purpose; fail to meet
8
the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur if such Reportable Event
or Prohibited Transaction would reasonably be expected to result in a Material
Adverse Change; fail to comply with the Federal Fair Labor Standards Act or
violate any other law or regulation, if the violation would reasonably be
expected to cause a Material Adverse Change or permit any of its Subsidiaries to
do any of the foregoing.
8. EVENTS OF DEFAULT
-----------------
Any one of the following is an Event of Default:
8.1 PAYMENT DEFAULT.
If Borrower fails to pay any principal amount of the Obligations when due,
or any interest, fees or other amounts of the Obligations within three (3)
Business Days after the same have become due;
8.2 COVENANT DEFAULT.
(a) If Borrower fails to perform any obligation under Sections 6.2 or
6.7 or violates any of the covenants contained in Article 7 of this Agreement,
or
(b) If Borrower fails or neglects to perform, keep, or observe any
other material term, provision, condition, covenant, or agreement contained in
this Agreement, in any of the Loan Documents, or in any other agreement between
Borrower and Bank and as to any default under such other term, provision,
condition, covenant or agreement that can be cured, has failed to cure such
default within twenty (20) days after the earlier of (i) a Responsible Officer
of Borrower has knowledge, or should have had knowledge, of such default or (ii)
receipt of written notice of such default from Bank; provided, however, that if
the default cannot by its nature be cured within the twenty (20) period or
cannot after diligent attempts by Borrower be cured within such twenty (20) day
period, and such default is likely to be cured within a reasonable time, then
Borrower shall have an additional reasonable 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 have cured such default shall not be
deemed an Event of Default (provided that no Credit Extensions will be made
during such cure period);
8.3 MATERIAL ADVERSE CHANGE.
If there occurs a Material Adverse Change.
8.4 ATTACHMENT.
If any material portion of Borrower's assets is attached, seized, levied
on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in ten (10) days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or attachment is filed against
any of Borrower's assets by any government agency and not paid within ten (10)
days after Borrower receives notice. These are not Events of Default if stayed
or if a bond is posted pending contest by Borrower (but no Credit Extensions
will be made during the cure period);
8.5 INSOLVENCY.
If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Credit Extensions will be made before
any Insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS.
If there is a default in any agreement between Borrower and a third party
that gives the third party the right to accelerate any Indebtedness exceeding
$250,000 or that could cause a Material Adverse Change;
9
8.7 JUDGMENTS.
If a money judgment(s) in the aggregate of at least $250,000 is rendered
against Borrower and is unsatisfied and unstayed for thirty (30) days (but no
Credit Extensions will be made before the judgment is stayed or satisfied);
8.8 MISREPRESENTATIONS.
If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document; or
8.9 GUARANTY.
Any guaranty of any Obligations ceases for any reason to be in full force
or any Guarantor does not perform any obligation under any guaranty of the
Obligations, or any material misrepresentation or material misstatement exists
now or later in any warranty or representation in any guaranty of the
Obligations or in any certificate delivered to Bank in connection with the
guaranty, or any circumstance described in Sections 8.4, 8.5 or 8.7 occurs to
any Guarantor.
8.10 CHANGE OF CONTROL.
Any "person" or "group" (within the meaning of Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended) becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of greater than 25% of the shares of all
classes of stock then outstanding of Borrower ordinarily entitled to vote in the
election of directors.
8.11 SUBSIDIARIES.
Any circumstance described in Sections 8.3, 8.4, 8.5 or 8.7 occurs to any
Subsidiary of Borrower (other than Concurrent Realisations Ltd.) having assets
of $250,000 or more.
9. BANK'S RIGHTS AND REMEDIES
--------------------------
9.1 RIGHTS AND REMEDIES.
When an Event of Default occurs and continues Bank may, without notice or
demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's benefit
under this Agreement or under any other agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account debtors
for amounts, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrower will
assemble the Collateral if Bank requires and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank's rights
or remedies;
(e) Apply to the Obligations any (i) balances and deposits of Borrower
with Bank or its Affiliate it holds, or (ii) amount held by Bank owing to or
for the credit or the account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral. Bank is 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
10
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;
(g) Bank may place a "hold" on any account maintained with Bank and
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; and
(h) Dispose of the Collateral according to the Code.
Bank agrees that unless an Event of Default has occurred and is continuing, it
will not deliver a "Notice of Exclusive Control" under, and as such term is
defined in, the Securities Account Control Agreement of even date herewith among
Borrower, Bank, SVB Securities and Banc of America Securities LLC.
9.2 POWER OF ATTORNEY.
Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's
name on any checks or other forms of payment or security; (ii) sign Borrower's
name on any invoice or xxxx of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Credit Extensions
terminates.
9.3 ACCOUNTS COLLECTION.
When an Event of Default occurs and continues, Bank may notify any Person
owing Borrower money of Bank's security interest in the funds and verify the
amount of the Account. Borrower must collect all payments in trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank in the form
received from the account debtor, with proper endorsements for deposit.
9.4 BANK EXPENSES.
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons required hereunder, Bank may make all or part of the
payment or obtain insurance policies required in Section 6.5, and take any
action under the policies Bank deems prudent. Any amounts so paid by Bank are
Bank Expenses and immediately due and payable, bearing interest at the then
applicable rate and secured by the Collateral. No payments by Bank are deemed
an agreement to make similar payments in the future or Bank's waiver of any
Event of Default.
9.5 BANK'S LIABILITY FOR COLLATERAL.
If Bank complies with reasonable banking practices and the Code, it is not
liable for: (a) the safekeeping of the Collateral; (b) any loss or damage to the
Collateral; (c) any diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other person. Borrower bears
all risk of loss, damage or destruction of the Collateral.
9.6 REMEDIES CUMULATIVE.
Bank's rights and remedies under this Agreement, the Loan Documents, and
all other agreements are cumulative. Bank has all rights and remedies provided
under the Code, by law, or in equity. Bank's exercise of one right or remedy is
not an election, and Bank's waiver of any Event of Default is not a continuing
waiver. Bank's delay is not a waiver, election, or acquiescence. No waiver is
effective unless signed by Bank and then is only effective for the specific
instance and purpose for which it was given.
9.7 DEMAND WAIVER.
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
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accounts, documents, instruments, chattel paper, and guarantees held by Bank on
which Borrower is liable.
10. NOTICES
-------
All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A party may change its notice address by giving the other party
written notice.
11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
------------------------------------------
Georgia 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 the State of Georgia provided, however, that
if for any reason the Bank can not avail itself of the courts of the State of
Georgia, the Borrower and Bank each submit to the jurisdiction of the State and
Federal Courts in Santa Xxxxx County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12. GENERAL PROVISIONS
------------------
12.1 SUCCESSORS AND ASSIGNS.
This Agreement binds and is for the benefit of the successors and permitted
assigns of each party. Borrower may not assign this Agreement or any rights
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.
12.2 INDEMNIFICATION.
Borrower will indemnify, defend and hold harmless Bank and its officers,
employees, and agents against: (a) all obligations, demands, claims, and
liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank arising out of or otherwise related to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for any such amount determined in a final judgment by a court of
competent jurisdiction to have been caused by Bank's gross negligence or willful
misconduct.
12.3 TIME OF ESSENCE.
Time is of the essence for the performance of all obligations in this
Agreement.
12.4 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other provision in
determining the enforceability of any provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing and signed by Borrower
and Bank. This Agreement represents the entire agreement about this subject
matter, and supersedes prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement merge into this Agreement and
the Loan Documents.
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12.6 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.
12.7 SURVIVAL.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.
12.8 CONFIDENTIALITY.
In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates,
(ii) to prospective transferees or purchasers of any interest in the loans
(provided, however, Bank shall use commercially reasonable efforts in obtaining
such prospective transferee's or purchasers' agreement to the terms of this
provision), (iii) as required by law, regulation, subpoena, or other order, (iv)
as required in connection with Bank's examination or audit and (v) as Bank
considers appropriate exercising remedies under this Agreement. Confidential
information does not include information that either: (a) is in the public
domain or in Bank's possession when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank; or (b) is disclosed to Bank by a third
party, if Bank does not know that the third party is prohibited from disclosing
the information.
12.9 EFFECTIVE DATE.
Notwithstanding anything set forth in this Agreement or any Loan Document
to the contrary, this Agreement and all of the Loan Documents shall not be
effective until the date on which the Bank executes this Agreement as indicated
on the signature page to this Agreement.
12.10 ATTORNEYS' FEES, COSTS AND EXPENSES.
In any action or proceeding between Borrower and Bank arising out of the
Loan Documents, the prevailing party will be entitled to recover its reasonable
attorneys' fees and other reasonable costs and expenses actually incurred, in
addition to any other relief to which it may be entitled.
13. DEFINITIONS
-----------
13.1 DEFINITIONS.
In this Agreement:
"ACCOUNTS" has the meaning set forth in the Code and includes all existing
and later arising accounts, contract rights, and other obligations owed Borrower
in connection with its sale or lease of goods (including licensing software and
other technology) or provision of services, all credit insurance, guaranties,
other security and all merchandise returned or reclaimed by Borrower and
Borrower's Books relating to any of the foregoing.
"ADJUSTED QUICK RATIO" is, as of any date, the ratio of Quick Assets to
Current Liabilities minus Deferred Maintenance Revenue, in each case as of such
date, determined for Borrower and its Subsidiaries on a consolidated basis in
accordance with GAAP.
"ADVANCE" or "ADVANCES" is a loan advance (or advances) under the Committed
Revolving Line.
"AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs and
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
13
"BORROWER'S BOOKS" are all Borrower's books and records including ledgers,
records regarding Borrower's assets or liabilities, the Collateral, business
operations or financial condition and all computer programs or discs or any
equipment containing the information.
"BORROWING BASE" is the sum of (a) eighty percent (80%) of Eligible
Accounts (the "Advance Ratio") as determined by Bank, in accordance with its
customary credit and collateral practices and policies, from Borrower's most
recent Borrowing Base Certificate; provided, however, that (i) Bank will
-------- -------
increase the Advance Ratio for Eligible Accounts to eighty-five (85%) of
Eligible Accounts after performing an audit of Borrower's Collateral if such
audit shows that dilution for Borrower's Accounts, as determined by Bank, is
less than four percent (4%) and (ii) Bank may, in accordance with its customary
credit and collateral practices and policies, lower the Advance Ratio for
Eligible Accounts after performing an audit of Borrower's Collateral; plus (b)
----
so long as Borrower has not less than $15,000,000 in cash on deposit with Bank
or its Affiliates in which Bank has a first priority perfected security
interest, $5,000,000.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on which
the Bank is closed.
"CASH MANAGEMENT SERVICES" are defined in Section 2.1.4.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the Uniform Commercial Code, in effect in the State of Georgia,
as in effect from time to time.
"COLLATERAL" is the property described on Exhibit A.
---------
"COMMITTED REVOLVING LINE" is Advances of up to Ten Million Dollars
($10,000,000).
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement. Amounts of
obligations of the types described in clause (iii) above shall be determined
based on the net amounts, if any, such Person would then be required to pay upon
the termination thereof based on current market conditions.
"COPYRIGHTS" are all copyright rights, applications or registrations and
like protections in each work or authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.
"CREDIT EXTENSION" is each Advance, Letter of Credit, Term Loan, FX Forward
Contract or other foreign exchange contract, or any other extension of credit by
Bank for Borrower's benefit.
"CURRENT ASSETS" are, on any date, amounts that under GAAP should be
included on that date as current assets on Borrower's consolidated balance
sheet.
"CURRENT LIABILITIES" are, on any date, the aggregate amount of Borrower's
Total Liabilities which mature within one (1) year of such date.
"DEFERRED MAINTENANCE REVENUE" is all amounts received in advance of
performance of maintenance or service or other project warranty-related
contracts and not yet recognized as revenue.
"ELIGIBLE ACCOUNTS" are Accounts in the ordinary course of Borrower's
business that meet all Borrower's representations and warranties in Section 5;
but Bank may, in accordance with its customary credit and collateral practices
---
and policies, change eligibility standards by giving Borrower notice. Unless
Bank agrees otherwise in writing, Eligible Accounts will not include:
14
(a) Accounts that the account debtor has not paid within 90 days of
invoice date;
(b) Accounts for an account debtor, 50% or more of whose Accounts have
not been paid within 90 days of invoice date;
(c) Credit balances over 90 days from invoice date;
(d) Accounts for an account debtor, including Affiliates of such
account debtor, to the extent such Accounts exceed thirty percent (30%) of all
Accounts, for the amounts that exceed that percentage, unless the Bank approves
such excess amounts in writing; provided that so long as Borrower's Adjusted
Quick Ratio is greater than 2.00 to 1.00, Accounts owing from any of Comcast
Cable Communications, Inc., Time Warner Cable, Inc., America Online, Inc.,
Lockheed Xxxxxx Corporation and Xxx Communications, Inc. will not be deemed
Eligible Accounts to the extent the Accounts of such account debtor exceed
thirty-five percent (35%) of the total Accounts outstanding;
(e) Accounts for which the account debtor does not have its principal
place of business in the United States;
(f) Accounts for which the account debtor is a federal, state or local
government entity or any department, agency, or instrumentality except for
Accounts of the United States if the payee has assigned its payment rights to
Bank and the assignment has been acknowledged under the Assignment of Claims Act
of 1940 (31 U.S.C. 3727);
(g) Accounts for which Borrower owes the account debtor, but only up to
the amount owed (sometimes called "contra" accounts, accounts payable, customer
deposits or credit accounts);
(h) Accounts for demonstration or promotional equipment, or in which
goods are consigned, sales guaranteed, sale or return, sale on approval, xxxx
and hold, or other terms if account debtor's payment may be conditional;
(i) Accounts for which the account debtor is Borrower's Affiliate,
officer, employee, or agent;
(j) Accounts in which the account debtor disputes liability or makes
any claim and Bank believes there is a basis for dispute (but only up to the
disputed or claimed amount), or if the Account Debtor is subject to an
Insolvency Proceeding, or becomes insolvent, or goes out of business;
(k) Accounts for which Bank reasonably determines collection to be
doubtful.
"EQUIPMENT" has the meaning set forth in the Code and includes all present
and future machinery, equipment, tenant improvements, furniture, fixtures,
vehicles, tools, parts and attachments in which Borrower has any interest.
"ERISA" is the Employment Retirement Income Security Act of 1974, and its
regulations.
"FX FORWARD CONTRACT" is defined in Section 2.1.3.
"FX RESERVE" is defined in Section 2.1.3.
"GAAP" is generally accepted accounting principles.
"GUARANTOR" is any present or future guarantor of the Obligations.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred price
of property or services (excluding trade accounts payable which are not more
than sixty (60) days past due), 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.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INTELLECTUAL PROPERTY" is:
15
(a) Copyrights, Trademarks and Patents, and Mask Works including
amendments, renewals, extensions, and all licenses or other rights to use and
all license fees and royalties from the use;
(b) Any trade secrets and any intellectual property rights in computer
software and computer software products now or later existing, created, acquired
or held;
(c) All design rights which may be available to Borrower now or later
created, acquired or held;
(d) Any claims for damages (past, present or future) for infringement
of any of the rights above, with the right, but not the obligation, to xxx and
collect damages for use or infringement of the intellectual property rights
above;
(e) All Proceeds and products of the foregoing, including all
insurance, indemnity or warranty payments.
"INVENTORY" has the meaning set forth in the Code and includes all present
and future inventory in which Borrower has any interest, including merchandise,
raw materials, parts, supplies, packing and shipping materials, work in process
and finished products intended for sale or lease or to be furnished under a
contract of service, of every kind and description now or later owned by or in
the custody or possession, actual or constructive, of Borrower, including
inventory temporarily out of its custody or possession or in transit and
including returns on any accounts or other Proceeds from the sale or disposition
of any of the foregoing and any documents of title.
"INVESTMENT" is, for any Person: (a) the acquisition (whether for cash,
property, services or securities or otherwise) of capital stock, bonds, notes,
debentures, partnership or other ownership interests or other securities of any
other Person or any agreement to make any such acquisition (including, without
limitation, any "short sale" or any sale of any securities at a time when such
securities are now owned by the Person entering into such short sale), or (b)
any deposit with, capital contribution to, or advance, loan or other extension
of credit to, such Person (other than any such advance, loan or extension of
credit representing the purchase price of goods, intangibles or services sold or
supplied in the ordinary course of business) or Contingent Obligation incurred
with respect to Indebtedness or other liability of such Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person.
"LETTER OF CREDIT" is defined in Section 2.1.2.
"LETTER-OF-CREDIT RIGHT" means a right to payment or performance under a
letter of credit, whether or not the beneficiary has demanded or is at the time
entitled to demand payment or performance.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, the Revolving
Promissory Note, the Term Note, any note, or notes or guaranties executed by
Borrower or Guarantor, and any other present or future agreement between
Borrower and/or for the benefit of Bank in connection with this Agreement, all
as amended, extended or restated.
"MASK WORKS" are all mask works or similar rights available for the
protection of semiconductor chips, now owned or later acquired.
"MATERIAL ADVERSE CHANGE" means (i) a material adverse change in the
general affairs, management, results or operation or financial condition of
Borrower; or (ii) there has been a material impairment of the value for priority
of Bank's security interests in the Collateral.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including cash management services,
letters of credit and foreign exchange contracts, if any and including interest
accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.
"PATENTS" are patents, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same.
"PERMITTED INDEBTEDNESS" is:
16
(a) Borrower's indebtedness to Bank under this Agreement or any other
Loan Document;
(b) Indebtedness existing on the Closing Date and shown on the
Schedule;
(c) Subordinated Debt;
(d) Indebtedness secured by Permitted Liens;
(e) Indebtedness owing by a Subsidiary to Borrower or Contingent
Obligations incurred by Borrower with respect to Indebtedness or other
obligations of a Subsidiary, in each case to the extent constituting an
Investment permitted by Section 7.6;
(f) Indebtedness incurred by Subsidiaries of the Borrower organized in
jurisdictions other than the United States for working capital of such
Subsidiaries in an aggregate principal amount that does not exceed, as to all
such Subsidiaries, $500,000 at any one time outstanding;
(g) all extensions, renewals and refinancings of Indebtedness permitted
by (b) through (d) above provided that (i) any such extension, renewal and
refinancing does not increase the outstanding principal amount of Indebtedness
so extended, renewed or refinanced, (ii) any such extension, renewal and
refinancing does mature earlier than Indebtedness so extended, renewed or
refinanced and (iii) if the Indebtedness so extended, renewed or refinanced is
Subordinated Debt, such extension, renewal or refinancing Indebtedness is
subordinated in right of payment to the Obligations on terms no less favorable
to Bank than the Subordinated Debt so extended, renewed or refinanced.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Closing Date;
(b) Investments consisting of (i) marketable direct obligations issued
or unconditionally guaranteed by the United States or its agency or any State
maturing within 1 year from its acquisition, (ii) commercial paper maturing no
more than 1 year after its creation and having the highest rating from either
Standard & Poor's Corporation or Xxxxx'x Investors Service, Inc., and (iii)
Bank's certificates of deposit issued maturing no more than 1 year after issue;
(c) Promissory notes received as non-cash consideration for
dispositions of assets otherwise permitted by this Agreement;
(d) Investments received in connection with bankruptcies,
reorganizations or settlement of delinquent accounts and disputes with customers
or suppliers, in the ordinary course of business; and
(e) Investments in the forms of loans and advances made to employees of
Borrower(i) that do not exceed $25,000 in principal amount at any one time
outstanding or (ii) made for travel, entertainment or similar expenses incurred
in the ordinary course of business.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
--
any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries incurred for financing the acquisition of the Equipment or
incurred within one hundred twenty (120) days after such acquisitions, provided
that the aggregate principal amount of Indebtedness secured by such Liens does
not exceed $1,000,000 at any one time 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) Licenses or sublicenses granted in the ordinary course of
Borrower's business and any interest or title of a licensor or under any license
or sublicense, if the licenses and sublicenses permit granting Bank a security
--
interest;
17
(e) Leases or subleases granted in the ordinary course of Borrower's
business, including in connection with Borrower's leased premises or leased
property;
(f) Liens on the property of Subsidiaries organized in jurisdictions
other than the United States and securing Indebtedness described in clause (f)
of the definition of Permitted Indebtedness; and
(g) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
---
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PROCEEDS" has the meaning described in the Code as in effect from time to
time.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it is
not Bank's lowest rate.
"QUICK ASSETS" is, on any date, the Borrower's consolidated, unrestricted
cash, cash equivalents, net billed accounts receivable and investments with
maturities of fewer than 12 months from such date determined according to GAAP.
"REGISTERED ORGANIZATION" means an organization organized solely under the
law of a single state or the United States and as to which the state or the
United States must maintain a public record showing the organization to have
been organized.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.
"REVOLVING MATURITY DATE" is December 23, 2006.
"REVOLVING PROMISSORY NOTE" means that certain Revolving Promissory Note of
even date herewith in the maximum principal amount of Ten Million Dollars
($10,000,000) from Borrower in favor of Bank, together with all renewals,
amendments, modifications and substitutions, therefor.
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated in right of
payment to Borrower's indebtedness owed to Bank on terms satisfactory to Bank
and which is reflected in a written agreement in a manner and form acceptable to
Bank and approved by Bank in writing.
"SUBSIDIARY" is for any Person, or any other business entity of which more
than 50% of the voting stock or other equity interests is owned or controlled,
directly or indirectly, by the Person or one or more Affiliates of the Person.
"SUPPORTING OBLIGATION" means a Letter-of-credit right, secondary
obligation or obligation of a secondary obligor or that supports the payment or
performance of an account, chattel paper, a document, a general intangible, an
instrument or investment property.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries plus the principal amount of Subordinated Debt of
Borrower minus, (i) any amounts attributable to (a) goodwill, (b) intangible
-----
items such as unamortized debt discount and expense, Patents, trade and service
marks and names, Copyrights and research and development expenses except prepaid
expenses, and (c) reserves not already deducted from assets, and (ii) Total
---
Liabilities.
"TERM LOAN" is a loan of Three Million Dollars ($3,000,000).
"TERM LOAN MATURITY DATE" is December 23, 2007.
"TOTAL LIABILITIES" is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower's consolidated balance sheet, but
excluding all Subordinated Debt other than the then-current portion of such
Subordinated Debt allowed to be paid.
18
"TRADEMARKS" are trademark and service xxxx rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Borrower connected with the trademarks.
[Signatures appear on the following page]
19
IN WITNESS WHEREOF, Borrower and Bank have caused their duly authorized
officers to set their hands and seals as of the day and year first above written
BORROWER:
CONCURRENT COMPUTER CORPORATION
By: ___________________________________
Name:
Title:
BANK:
SILICON VALLEY BANK
By: ____________________________________
Name:
Title:
Effective as of December 23, 2004
EXHIBIT A
---------
The Collateral consists of all of Borrower's right, title and interest in
and to the following:
All goods and equipment now owned or hereafter acquired, including, without
limitation, all machinery, fixtures, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other Proceeds,
resulting from the sale or disposition of any of the foregoing and any documents
of title representing any of the above;
All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, license agreements, franchise
agreements, blueprints, drawings, purchase orders, customer lists, route lists,
infringements, claims, computer programs, computer discs, computer tapes,
literature, reports, catalogs, design rights, income tax refunds, payments of
insurance and rights to payment of any kind;
All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;
All Letter-Of-Credit Rights (whether or not the letter of credit is
evidenced by a writing);
All documents, cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, financial assets, letters of credit,
certificates of deposit, instruments and chattel paper now owned or hereafter
acquired and Borrower's Books relating to the foregoing;
All Supporting Obligations 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 and accessions to and Proceeds thereof.
Borrower has further agreed, among other things, not to sell, transfer,
assign, mortgage, pledge, lease grant a security interest in, or encumber any of
its Intellectual Property or enter into any agreement, document, instrument or
other arrangement (except with or in favor of the Bank) with any Person which
directly or indirectly prohibits or has the effect of prohibiting Borrower from
selling, transferring, assigning, mortgaging, pledging, leasing, granting a
security interest in, or encumbering any of its Intellectual Property, without
Bank's prior written consent.
Notwithstanding the foregoing, the Collateral shall not be deemed to
include any copyrights, copyright applications, copyright registration and like
protection in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; any patents, patent
applications and like protections including without limitation improvements,
divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same, trademarks, service marks and applications
therefor, whether registered or not, and the goodwill of the business of
Borrower connected with and symbolized by such trademarks, any trade secret
rights, including any rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; or any claims for damage by way of any past, present and
future infringement of any of the foregoing (collectively, the "Intellectual
Property"), except that the Collateral shall include the Proceeds of all the
Intellectual Property that are accounts, (i.e. accounts receivable) of Borrower
or general intangibles consisting of rights to payment, and if a judicial
authority (including a U.S. Bankruptcy Court) holds that a security interest in
the underlying Intellectual Property is necessary to have a security interest in
such accounts and general intangibles of Borrower that are Proceeds of the
Intellectual Property, then the Collateral shall automatically, and effective as
of the Closing Date, include the Intellectual Property to the extent necessary
to permit perfection of Bank's security interest in such accounts and general
intangibles of Borrower that are Proceeds of the Intellectual Property.
EXHIBIT B
---------
LOAN PAYMENT/ADVANCE REQUEST FORM
Deadline for same day processing is 3:00 E.S.T.
FAX TO: (000) 000-0000 DATE:
------------
--------------------------------------------------------------------------------
[_] Loan Payment: _______________ Client Name (Borrower)
From Account # To Account #
------------------- --------------------
(Deposit Account #) (Loan Account #)
Principal $ and/or Interest $
--------------------- ------------------------
All Borrower's representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects to on the date of the
telephone transfer request for and advance, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of the date:
AUTHORIZED SIGNATURE: Phone Number:
----------------------------- -------------
--------------------------------------------------------------------------------
[_] LOAN ADVANCE:
--------------------------------------------------------------------------------
COMPLETE OUTGOING WIRE REQUEST SECTION BELOW IF ALL OR A PORTION OF THE FUNDS
FROM THIS LOAN ADVANCE ARE FOR AN OUTGOING WIRE.
From Account # To Account #
------------------- --------------------
(Deposit Account #) (Loan 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 to on the date of the
telephone transfer request for and advance, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of the date:
AUTHORIZED SIGNATURE: Phone Number:
----------------------------- -------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
OUTGOING WIRE REQUEST
COMPLETE ONLY IF ALL OR A PORTION OF FUNDS FROM THE LOAN ADVANCE ABOVE ARE TO
BE WIRED.
Deadline for same day processing is 12:00 p.m., E.S.T.
Beneficiary Name: Amount of Wire: $
----------------------- -----------------
Beneficiary Bank: Account Number:
----------------------- -----------------
City and State:
-----------------------
Beneficiary Bank Transit (ABA) #: __ __ __ __ __ __ __ __ Beneficiary Bank Code
(Swift, Sort, Chip, etc.):
(FOR INTERNATIONAL WIRE ONLY)
Intermediary Bank: Transit (ABA) #:
----------------------- ------------------
For Further Credit to:
-------------------------------------------------------
Special Instruction:
-----------------------------------------------------------
By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).
Authorized Signature: 2nd Signature (If Required):
------------ -----------------
Print Name/Title: Print Name/Title:
-------------- ------------
Telephone # Telephone #
-------------------- ---------------------
--------------------------------------------------------------------------------
EXHIBIT C
BORROWING BASE CERTIFICATE
--------------------------------------------------------------------------------
Borrower: Concurrent Computer Corporation Bank: Silicon Valley Bank
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Commitment Amount: $10,000,000
--------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of $
-------------
2. Additions (please explain on reverse) $
-------------
3. TOTAL ACCOUNTS RECEIVABLE $
-------------
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $
------------
5. Balance of 50% over 90 day accounts $
------------
6. Credit balances over 90 days $
------------
7. Concentration Limits* $
------------
8. Foreign Accounts $
------------
9. Governmental Accounts $
------------
10. Contra Accounts $
------------
11. Promotion or Demo Accounts $
------------
12. Intercompany/Employee Accounts $
------------
13. Other (please explain on reverse) $
------------
14. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $
-------------
15. Eligible Accounts (#3 minus #14) $
-------------
16. LOAN VALUE OF ACCOUNTS (#15 times the Advance Ratio) $
-------------
* [__% FOR _______]
BALANCES
17. Maximum Loan Amount $
------------
18. Total Funds Available [Lesser of #17 or #16] $
-------------
19. Present balance owing on Line of Credit $
------------
20. Outstanding under Sublimits (LC or FX) $
------------
21. RESERVE POSITION (#18 minus #19 and #20) $
-------------
The undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the
undersigned and Silicon Valley Bank.
-----------------------------
COMMENTS: BANK USE ONLY
---- --- ----
Rec'd By:
-------------
Auth. Signer
By: Date:
------------------------------------- ------------------
Authorized Signer
Verified:
-------------
Auth. Signer
Date:
------------------
-----------------------
-----------------------------
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
FROM: Concurrent Computer Corporation
The undersigned authorized officer of Concurrent Computer Corporation
("Borrower") certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending _______________, 200__ with all
required covenants except as noted below and (ii) all representations and
warranties in the Agreement are true and correct in all material respects on
this date (other than those representations and warranties expressly referring
to another date, which representations and warranties shall be true as of such
date). In addition, the undersigned certifies that (1) Borrower and each
Subsidiary has timely filed all required tax returns and paid, or made adequate
provision to pay, all material taxes, except those being contested in good faith
with adequate reserves under GAAP and (ii) no liens has been levied or claims
made against Borrower or any of its Subsidiaries relating to unpaid employee
payroll or benefits which Borrower has not previously notified in writing to
Bank. Attached are the required documents supporting the certification. The
Officer certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) consistently applied from one period to the next
except as explained in an accompanying letter or footnotes. The Officer
acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
---------------------------------- ----------------------- ---------
Monthly financial statements + CC Monthly within 30 days Yes No
Annual (Audited) FYE within 120 days Yes No
A/R & A/P Agings Monthly within 30 days Yes No
A/R Audit Initial and Semi-Annual Yes No
Projections and Business Plan FYE within 90 days Yes No
Borrowing Base Certificate Monthly within 30 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
---------------------------- ------------------------ ----------- ---------
Maintain on a Monthly Basis:
Minimum Adjusted Quick Ratio 1.75:1.00 _____:1.00 Yes No
Minimum Tangible Net Worth $21,000,000 $ ________ Yes No
Profitability: Quarterly $__________ Yes No
_______________________
(1) Plus 50% of (a) monthly positive net income after the Closing Date, (b)
Subordinated Debt incurred after the Closing Date and (c) gross proceeds
received from the issuance of shares of capital stock after the Closing Date.
Borrower only has deposit accounts located at the following institutions:
___________________.
Has Borrower filed any new Trademark, Patent or Copyright applications? Yes/ No
(If "yes", please list below and complete the attached Addendum to Intellectual
Property Security Agreement)
Trademarks: ___________________________________________________
Patents: _______________________________________________________
Copyrights: _______________________________________________________
Has Borrower opened new office or business locations with assets in excess of
$25,000? Yes/No
(If "yes," please provide the location or locations)
___________________________________________________________
___________________________________________________________
___________________________________________________________
Has a Responsible Officer become aware of unreported new offices or business
locations with assets of less than $25,000 each or $75,000 in the aggregate?
Yes/No
(If "yes," please provide the location or locations)
___________________________________________________________
___________________________________________________________
___________________________________________________________
-----------------------------
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY
---- --- ----
Received By:
------------------------ -----------------
Authorized Signer
Sincerely, Date:
------------------------
--------------------
Verified:
-------------------
-------------------------------------------- Authorized Signer
Signature
Date:
-------------------------------------------- ------------------------
Title
Compliance Status: Yes No
--------------------------------------------
Date
Schedule to Loan and Security Agreement
---------------------------------------
The exact correct corporate name of Borrower is (attach a copy of the formation
documents, e.g., articles, partnership agreement):______________________________
Borrower's State of formation: _________________________________
Borrower has operated under only the following other names (if none, so state):
________________________________________________________________________
All other addresses at which the Borrower does business are as follows (attach
additional sheets if necessary and include all warehouse addresses):
Borrower has deposit accounts and/or investment accounts located only at the
following institutions:
List Acct. Numbers:
Liens existing on the Closing Date and disclosed to and accepted by Bank in
writing:
Investments existing on the Closing Date and disclosed to and accepted by Bank
in writing:
SUBORDINATED DEBT:
Indebtedness on the Closing Date and disclosed to and consented to by Bank in
writing:
The following is a list of the Borrower's copyrights (including copyrights of
software) which are registered with the United States Copyright Office. (Please
include name of the copyright and registration number and attach a copy of the
registration):
The following is a list of all software which the Borrower sells, distributes or
licenses to others, which is not registered with the United States Copyright
---
Office. (Please include versions which are not registered:
The following is a list of all of the Borrower's patents which are registered
with the United States Patent Office. (Please include name of the patent and
registration number and attach a copy of the registration.):
The following is a list of all of the Borrower's patents which are pending with
the United States Patent Office. (Please include name of the patent and a
copy of the application.):
The following is a list of all of the Borrower's registered trademarks. (Please
include name of the trademark and a copy of the registration.):
Borrower is not subject to litigation which would have a material adverse effect
on the Borrower's financial condition, except the following (attach additional
comments, if needed):
Tax ID Number ___________________________________________
Organizational Number, if any:___________________________
