Exhibit 10.1
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT (this "Agreement") dated as of December
28, 2001, between SILICON VALLEY BANK, a California chartered bank, with its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000
and with a loan production office located at One Newton Executive Park, Suite
200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, doing business under
the name "Silicon Valley East" ("Bank") and BOTTOMLINE TECHNOLOGIES (de), INC.,
a Delaware corporation with offices at 000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxx
Xxxxxxxxx 00000 ("Borrower"), provides the terms on which Bank shall lend to
Borrower and Borrower shall repay Bank. The parties agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document. Capitalized terms in this Agreement
shall have the meanings set forth in Section 13.
2 LOAN AND TERMS OF PAYMENT
2.1 Promise to Pay. Borrower hereby unconditionally promises to pay Bank
the unpaid principal amount of all Credit Extensions and interest on the unpaid
principal amount of the Credit Extensions as and when due in accordance with
this Agreement.
2.1.1 Revolving Advances.
(a) Bank shall make Advances not exceeding (i) the Committed
Revolving Line or the Borrowing Base, whichever is less, minus (ii) the amount
of all outstanding Letters of Credit (including drawn but unreimbursed Letters
of Credit), minus (iii) the aggregate outstanding Advances hereunder. Amounts
borrowed under this Section may be repaid and reborrowed during the term of this
Agreement.
(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. If such notification is by telephone, Borrower must promptly confirm the
notification by delivering to Bank a completed Payment/Advance Form in the form
attached as Exhibit B. Bank shall credit Advances to Borrower's deposit account.
Bank may make Advances under this Agreement based on instructions from a
Responsible Officer or his or her designee. Bank may rely on any telephone
notice given by a person whom Bank reasonably believes is a Responsible Officer
or designee. Borrower shall indemnify Bank for any loss Bank suffers due to such
reliance.
(c) The Committed Revolving Line terminates on the Revolving
Maturity Date, when the principal amount of all Advances and the unpaid interest
thereon, shall be immediately payable.
2.1.2 Letters of Credit.
(a) Bank shall issue or have issued Letters of Credit for Borrower's
account not exceeding (i) the lesser of the Committed Revolving Line or the
Borrowing Base minus (ii) the outstanding principal balance of any Advances,
minus (iii) the amount of all Letters of Credit (including drawn but
unreimbursed Letters of Credit), plus an amount equal to any Letter of Credit
Reserves. The face amount of outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed
$2,000,000.00. Each Letter of Credit shall have an expiry date no later than 180
days after the Revolving Maturity Date provided Borrower's Letter of Credit
reimbursement obligation shall be secured by cash on terms acceptable to Bank on
and after (i) the Revolving Maturity Date if the term of this Agreement is not
extended by Bank, or (ii) the occurrence of an Event of Default hereunder. All
Letters of Credit shall be, in form and substance, acceptable to Bank in its
sole discretion and shall be subject to the terms and conditions of Bank's form
of standard Application and Letter of
Credit Agreement. Borrower agrees to execute any further documentation in
connection with the Letters of Credit as Bank may reasonably request.
(b) The obligation of Borrower to immediately reimburse Bank for
drawings made under Letters of Credit shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement and such Letters of Credit, under all circumstances whatsoever.
Borrower shall indemnify, defend, protect, and hold Bank harmless from any loss,
cost, expense or liability, including, without limitation, reasonable attorneys'
fees, arising out of or in connection with any Letters of Credit.
(c) Borrower may request that Bank issue a Letter of Credit payable
in a currency other than United States Dollars. If a demand for payment is made
under any such Letter of Credit, Bank shall treat such demand as an Advance to
Borrower of the equivalent of the amount thereof (plus cable charges) in United
States currency at the then prevailing rate of exchange in San Francisco,
California, for sales of that other currency for cable transfer to the country
of which it is the currency.
(d) Upon the issuance of any letter of credit payable in a currency
other than United States Dollars, Bank shall create a reserve (the "Letter of
Credit Reserve") under the Committed Revolving Line for letters of credit
against fluctuations in currency exchange rates, in an amount equal to ten
percent (10%) of the face amount of such letter of credit. The amount of such
reserve may be amended by Bank from time to time to account for fluctuations in
the exchange rate. The availability of funds under the Committed Revolving Line
shall be reduced by the amount of such reserve for so long as such letter of
credit remains outstanding.
2.2 Overadvances. If Borrower's Obligations under Section 2.1.1 and 2.1.2
exceed the lesser of either (i) the Committed Revolving Line or (ii) the
Borrowing Base, Borrower must immediately pay in cash to Bank the excess.
2.3 Interest Rate; Payments.
(a) Interest Rate. Advances accrue interest on the outstanding
principal balance at a per annum rate equal to the aggregate of the Bank's Prime
Rate, and one-half of one percent (0.50%). After an Event of Default,
Obligations shall bear interest at four percent (4.0%) above the rate effective
immediately before the Event of Default. The interest rate shall increase or
decrease when the Prime Rate changes. Interest is computed on the basis of a 360
day year for the actual number of days elapsed.
(b) Payments. Interest is payable on the first of each month. Bank
may debit any of Borrower's deposit accounts (unless prohibited by law)
including Account Number __________ for principal and interest payments or any
amounts Borrower owes Bank. Bank shall promptly notify Borrower when it debits
Borrower's accounts. These debits are not a set-off. Payments received after
12:00 noon Eastern time are considered received at the opening of business on
the next Business Day. When a payment is due on a day that is not a Business
Day, the payment is due the next Business Day and additional fees or interest,
as applicable, shall continue to accrue.
2.4 Fees. Borrower shall pay to Bank:
(a) Facility Fee. A fully earned, non-refundable facility fee of
$25,000.00 due on the Closing Date;
(b) Unused Facility Fee. As compensation for Bank's maintenance of
sufficient funds available for such purpose, Bank shall have earned a Unused
Facility Fee (so referred to herein), which fee shall be paid in full quarterly
in arrears, in an amount equal to (i) 0.50% of the unused portion of the
available proceeds of the Committed Revolving Line minus that portion of the
Committed Revolving Line which is available to be used to issue Letters of
Credit and (ii) 0.40% of the unused portion of the available proceeds of the
Committed Revolving Line which are available to be used to issue Letters of
Credit, which shall be calculated based on the average daily
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availability during each such quarter. The Borrower shall not be entitled to any
credit, rebate or repayment of any Unused Facility Fee previously earned by the
Bank pursuant to this Section notwithstanding any termination of the within
Agreement, or suspension or termination of the Bank's obligation to make loans
and advances hereunder; and
(c) Bank Expenses. All Bank Expenses (including reasonable
attorneys' fees and expenses incurred through and after the Closing Date) when
due.
3 CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Credit Extension. The obligation of
Bank to make the initial Credit Extension is subject to the condition precedent
that Bank shall have received, in form and substance satisfactory to Bank, the
following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower with respect to
articles, bylaws, incumbency and resolutions authorizing the execution and
delivery of this Agreement;
(c) Negative Pledge Agreement covering Intellectual Property;
(d) landlord's waiver;
(e) a legal opinion of Borrower's counsel, in form and substance
acceptable to Bank;
(f) financing statements;
(g) Account Control Agreement/ Investment Account Control Agreement
(h) insurance certificate;
(i) payment of the fees and Bank Expenses then due specified in
Section 2.4 hereof;
(j) Certificate of Foreign Qualification (if applicable);
(k) Certificate of Good Standing/Legal Existence; and
(l) such other documents, and completion of such other matters, as
Bank may reasonably deem necessary or appropriate.
3.2 Conditions Precedent to all Credit Extensions. Bank's obligations to
make each Credit Extension, including the initial Credit Extension, is subject
to the following:
(a) timely receipt of any Payment/Advance Form; and
(b) the representations and warranties in Section 5 shall be
materially true on the date of the Payment/Advance Form and on the effective
date of each Credit Extension and no Event of Default shall have occurred and be
continuing, or result from the Credit Extension. Each Credit Extension is
Borrower's representation and warranty on that date that the representations and
warranties in Section 5 remain true.
4 CREATION OF SECURITY INTEREST
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4.1 Grant of Security Interest. Borrower hereby grants Bank, to secure the
payment and performance in full of all of the Obligations and the performance of
each of Borrower's duties under the Loan Documents, a continuing security
interest in the Collateral, wherever located, whether now owned or hereafter
acquired or arising, and all proceeds and products thereof. Borrower warrants
and represents that the security interest granted herein shall be a first
priority security interest in the Collateral. The Collateral may also be subject
to Permitted Liens. Borrower agrees that Bank may file (with the UCC Financing
Statements to be filed hereunder) a notice that any disposition of the
Collateral in violation of this Agreement, by either the Borrower or any other
Person, shall be deemed to violate the rights of the Bank under the Code. If the
Borrower shall at any time have knowledge that it has acquired a material
commercial tort claim, Borrower shall use best efforts to promptly notify Bank
in a writing signed by Borrower of the brief details thereof and grant to Bank
in such writing a security interest therein and in the proceeds thereof, all
upon the terms of this Agreement, with such writing to be in form and substance
satisfactory to Bank. If the Agreement is terminated, Bank's lien and security
interest in the Collateral shall continue until Borrower fully satisfies its
Obligations.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 Due Organization and Authorization. Borrower is duly existing and in
good standing in its state of formation and qualified and licensed to do
business in, and in good standing in, any state in which the conduct of its
business or its ownership of property requires that it be qualified, except
where the failure to do so could not reasonably be expected to cause a Material
Adverse Change. The Borrower has previously delivered to the Bank a certificate
signed by the Borrower and entitled "Perfection Certificate". The Borrower
represents and warrants to the Bank that: (a) the Borrower's exact legal name is
that indicated on the Perfection Certificate and on the signature page hereof;
and (b) the Borrower is an organization of the type, and is organized in the
jurisdiction, set forth in the Perfection Certificate; and (c) the Perfection
Certificate accurately sets forth the Borrower's organizational identification
number or accurately states that the Borrower has none; and (d) the Perfection
Certificate accurately sets forth the Borrower's place of business, or, if more
than one, its chief executive office as well as the Borrower's mailing address
if different, and (e) all other information set forth on the Perfection
Certificate pertaining to the Borrower is accurate and complete. If the Borrower
does not now have an organizational identification number, but later obtains it,
Borrower shall forthwith notify the Bank or such organizational identification
number.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's organizational documents,
nor constitute an event of default under any material agreement by which
Borrower is bound. Borrower is not in default under any agreement to which or by
which it is bound in which the default could cause a Material Adverse Change.
5.2 Collateral. Borrower has good title to the Collateral, free of Liens
except Permitted Liens. Borrower has no other deposit account, other than the
deposit accounts with Bank and deposit accounts described in the Perfection
Certificate delivered to the Bank in connection herewith. The Accounts are bona
fide, existing obligations, and the service or property has been performed or
delivered to the account debtor or its agent for immediate shipment to and
unconditional acceptance by the account debtor. The Collateral is not in the
possession of any third party bailee (such as a warehouse) except (i) as listed
in the Perfection Certificate or (ii) Inventory stored at Borrower's vendor's
locations in the ordinary course of business in amounts consistent with past
practices. In the event that Borrower, after the date hereof, intends to store
or otherwise deliver any portion of the Collateral to a bailee (other than (i)
as listed in the Perfection Certificate or (ii) Inventory stored at Borrower's
vendor's locations in the ordinary course of business in amounts consistent with
past practices) then Borrower will first receive the written consent of Bank and
such bailee must acknowledge in writing that the bailee is holding such
Collateral for the benefit of Bank. Borrower has no knowledge of any actual or
imminent Insolvency Proceeding of any account debtor whose accounts are an
Eligible Account in any Borrowing Base Certificate. All Inventory is in all
material respects of good and marketable quality, free from material defects.
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5.3 Litigation. Except as shown in the Schedule, there are no actions or
proceedings pending or, to the knowledge of Borrower's Responsible Officers,
threatened by or against Borrower in which an 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 delivered to Bank fairly present in all
material respects Borrower's consolidated financial condition and Borrower's
consolidated results of operations as of the date of such financial statements.
There has not been any material deterioration in Borrower's consolidated
financial condition since the date of the most recent financial statements
submitted to Bank.
5.5 Solvency. Borrower is able to pay its debts (including trade debts) as
they mature.
5.6 Regulatory Compliance. Borrower is not an "investment company" or a
company "controlled" by an "investment company" under the Investment Company
Act. Borrower is not engaged as one of its important activities in extending
credit for margin stock (under Regulations T and U of the Federal Reserve Board
of Governors). Borrower has complied in all material respects with the Federal
Fair Labor Standards Act. Borrower has not violated any laws, ordinances or
rules, the violation of which could reasonably be expected to cause a Material
Adverse Change. None of Borrower's properties or assets has been used by
Borrower, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower 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 has obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all government authorities that are necessary to
continue its business as currently conducted except where the failure to make
such declarations, notices or filings would not reasonably be expected to cause
a Material Adverse Change.
5.7 Subsidiaries. Borrower does not own any stock, partnership interest or
other equity securities except for Permitted Investments.
5.8 Full Disclosure. No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank
contains any untrue statement of a material fact when made or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading when made.
6 AFFIRMATIVE COVENANTS
Until Borrower satisfies all obligations under this Agreement and Bank
commitment to lend hereunder is terminated, Borrower shall do all of the
following:
6.1 Government Compliance. Borrower shall maintain its legal existence and
good standing in its jurisdiction of formation and maintain qualification in
each jurisdiction in which the failure to so qualify would reasonably be
expected to have a material adverse effect on Borrower's business or operations.
Borrower shall comply with all laws, ordinances and regulations to which it is
subject, noncompliance with which would reasonably be expected to cause a
Material Adverse Change.
6.2 Financial Statements, Reports, Certificates.
(a) Borrower shall deliver to Bank: (i) as soon as available, but no
later than thirty(30) days after the last day of each month, a company prepared
consolidated and consolidating balance sheet and income statement covering
Borrower's consolidated operations during the period certified by a Responsible
Officer and in a form acceptable to Bank; (ii) as soon as available, but no
later than ninety (90) days after the last day of Borrower's fiscal year,
audited consolidated financial statements prepared under GAAP, consistently
applied, together with an
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unqualified opinion on the financial statements from an independent certified
public accounting firm reasonably acceptable to Bank; (iii) within ten (10) days
of filing, copies of all statements, reports and notices made available to
Borrower's security holders or to any holders of Subordinated Debt and all
reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange
Commission; (iv) a prompt report of any legal actions pending or threatened
against Borrower that would reasonably be expect to result in damages or costs
to Borrower of Three Hundred Thousand Dollars ($300,000.00) or more; and (v)
budgets, sales projections, operating plans or other financial information
reasonably requested by Bank.
(b) Within thirty (30) days after the last day of each month,
Borrower shall deliver to Bank a Borrowing Base Certificate signed by a
Responsible Officer in the form of Exhibit C, with aged listings of accounts
receivable (by invoice date).
(c) Within thirty (30) days after the last day of each month,
Borrower shall deliver to Bank with the monthly financial statements a
Compliance Certificate signed by a Responsible Officer in the form of Exhibit D.
(d) Borrower shall allow Bank to audit Borrower's Collateral at
Borrower's expense. Such audits shall be conducted no more often than once every
twelve (12) months unless an Event of Default has occurred and is continuing.
6.3 Inventory; Returns. Borrower shall keep all Inventory in good and
marketable condition, free from material defects. Returns and allowances between
Borrower and its account debtors shall follow Borrower's customary practices as
they exist at the Closing Date. Borrower must promptly notify Bank of all
returns, recoveries, disputes and claims that involve more than Two Hundred
Thousand Dollars ($200,000.00).
6.4 Taxes. Borrower shall make timely payment of all material federal,
state, and local taxes or assessments (other than taxes and assessments which
Borrower is contesting in good faith, with adequate reserves maintained in
accordance with GAAP) and will deliver to Bank, on demand, appropriate
certificates attesting to such payments.
6.5 Insurance. Borrower shall keep its business and the Collateral insured
for risks and in amounts, standard for Borrower's industry, and as Bank may
reasonably request in Bank's reasonable discretion. 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 an additional loss payee and all liability policies shall show
the Bank as an additional insured and all policies shall provide that the
insurer must give Bank at least twenty (20) days notice before canceling its
policy. At Bank's request, Borrower shall deliver certified copies of policies
and evidence of all premium payments. Proceeds payable under any policy shall,
at Bank's option, be payable to Bank on account of the Obligations.
Notwithstanding the foregoing, 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 $100,000.00, in the aggregate toward the replacement or
repair of destroyed or damaged property; provided that (i) any such replaced or
repaired property (a) shall be of equal or like value as the replaced or
repaired Collateral and (b) shall be deemed Collateral in which Bank has been
granted a first priority security interest and (ii) after the occurrence and
during the continuation of an Event of Default all proceeds payable under such
casualty policy shall, at the option of the Bank, be payable to Bank on account
of the Obligations. If Borrower fails to obtain insurance as required under
Section 6.5 or to pay any amount or furnish any required proof of payment to
third persons and the Bank, Bank may make all or part of such payment or obtain
such insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent.
6.6 Primary Accounts. In order to permit Bank to monitor Borrower's
financial performance and condition, Borrower shall maintain its primary
depository and operating accounts and securities accounts with Bank and a
majority of the Borrower's cash or securities in excess of that amount used for
Borrower's operations shall be maintained or administered through the Bank.
Borrower shall identify to Bank, in writing, of any bank or securities account
opened by Borrower with any institution other than Bank. In addition, for each
such account that the
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Borrower at any time opens or maintains, Borrower shall, at the Bank's request
and option, pursuant to an agreement in form and substance acceptable to the
Bank, cause the depositary bank or securities intermediary to agree that such
account is the collateral of the Bank pursuant to the terms hereunder. The
provisions of this paragraph shall not apply to deposit accounts exclusively
used for payroll, payroll taxes and other employee wage and benefit payments to
or for the benefit of the Borrower's employees.
6.7 Financial Covenants.
Borrower shall maintain at all times, to be tested as of the last day of
each month, unless otherwise noted:
(a) Adjusted Quick Ratio. Borrower shall maintain a ratio of Quick
Assets to Current Liabilities minus Deferred Revenue of at least 2.0 to
1.0. For the purposes hereof, Quick Assets, Current Liabilities and
Deferred Revenue shall relate only to Borrower's operations (i.e., exclude
foreign operations of subsidiaries).
(b) Maximum Net Loss/Minimum Net Profit. For any month Borrower
fails to maintain at least $7,000,000.00 in cash on deposit with the Bank,
Borrower (together with its subsidiaries on a consolidated basis) shall
have (i) Net Loss (based on the prior rolling three month period) not to
exceed (A) $2,250,000 for the month ending October 31, 2001, (B)
$2,000,000 for the month ending November 30, 2001, (C)$1,700,000 for the
month ending December 31, 2001, (D) $1,600,000 for the month ending
January 31, 2002, (E) $1,250,000 for the month ending February 28, 2002,
(F) $800,000 for the month ending March 31, 2002, (G) $625,000 for the
months ending April 30, 2002, May 31, 2002 and June 30, 2002; and (ii) net
profit (based on the prior rolling three month period) of One Dollar
($1.00), for each month thereafter.
6.8 Further Assurances. Borrower shall execute any further instruments and
take further action as Bank reasonably requests to perfect or continue Bank's
security interest in the Collateral or to effect the purposes of this Agreement.
7 NEGATIVE COVENANTS
Until Borrower satisfies all obligations under this Agreement and Bank's
commitment to lend hereunder is terminated, Borrower shall not do any of the
following without the Bank's prior written consent.
7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose of
(collectively a "Transfer"), all or any part of its business or property, except
for Transfers (i) of Inventory in the ordinary course of business; (ii) of
non-exclusive licenses and similar arrangements for the use of the property of
Borrower in the ordinary course of business; or (iii) of worn-out or obsolete
Equipment.
7.2 Changes in Business, Ownership, Management or Business Locations.
Engage in any business other than the businesses currently engaged in by
Borrower or have a material change in its ownership (other than by the sale of
Borrower's equity securities in a public or private offering so long as Borrower
identifies to Bank the investors prior to the closing of the investment and
within thirty (30) days after such investment, Bank and Borrower shall agree to
revised financial performance covenants and shall amend this Agreement
accordingly) or if any of (i) Xxxxxx XxXxxx or (ii) Xxxxxx Xxxxxx, or (iii)
Xxxxxx Xxxxxx cease to be employees or directors of Borrower and replacements
satisfactory to Bank are not made within thirty (30) days. Borrower shall not,
without at least thirty (30) days prior written notice to Bank: (i) relocate its
chief executive office, or add any new offices or business locations (unless
such new offices or business locations contain less than Fifty Thousand Dollars
($50,000.00) in Borrower's assets or property), or (ii) change its jurisdiction
of organization, or (iii) change its organizational structure or type, or (iv)
change its legal name, or (v) change any organizational number (if any) assigned
by its jurisdiction of organization.
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7.3 Mergers or Acquisitions. Merge or consolidate with any other Person,
or acquire all or substantially all of the capital stock or property of another
Person, unless: (i) there is no Event of Default hereunder, (ii) that such
merger, consolidation or acquisition will not result, on a post
merger/acquisition basis, in the breach of any of the covenants, terms and
conditions hereunder, (iii) that such acquired, merged or consolidated Person is
in the same or similar line of business as Borrower, (iv) Borrower is the
surviving legal entity, (v) Borrower incurs no additional indebtedness other
than Permitted Indebtedness and (vi) within thirty (30) days after such merger,
consolidation or acquisition, Bank and Borrower shall agree to revised financial
performance covenants and shall amend this Agreement accordingly.
7.4 Indebtedness. Create, incur, assume, or be liable for any
Indebtedness, 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, except for Permitted Liens, or permit any Collateral not to be subject
to the first priority security interest granted herein. The Collateral may also
be subject to Permitted Liens.
7.6 Distributions; Investments. (i) Directly or indirectly acquire or own
any Person, or make any Investment in any Person, other than Permitted
Investments; or (ii) pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock (except pursuant to Borrower's
existing $3,000,000 stock buy back program).
7.7 Transactions with Affiliates. Directly or indirectly enter or permit
any material transaction with any Affiliate, except transactions that are in the
ordinary course of Borrower's business, upon fair and reasonable terms that are
no less favorable to Borrower than would be obtained in an arm's length
transaction with a non-affiliated Person.
7.8 Subordinated Debt. Make or permit any payment on any Subordinated
Debt, except under the terms of the Subordinated Debt, or amend any provision in
any document relating to the Subordinated Debt, without Bank's prior written
consent.
7.9 Compliance. Become an "investment company" or a company controlled by
an "investment company", under the Investment Company Act of 1940 or undertake
as one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Credit Extension for that purpose; fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the
Federal Fair Labor Standards Act or violate any other law or regulation, if the
violation could reasonably be expected to have a material adverse effect on
Borrower's business or operations or would reasonably be expected to cause a
Material Adverse Change.
8 EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1 Payment Default. Borrower fails to pay any of the Obligations within
three (3) days after their due date. During the additional period the failure to
cure the default is not an Event of Default (but no Credit Extension shall be
made during the cure period);
8.2 Covenant Default. Borrower does not perform any obligation in Section
6 or violates any covenant in Section 7 or does not perform or observe any other
material term, condition or covenant in this Agreement, any Loan Documents, or
in any agreement between Borrower and Bank and as to any default under a term,
condition or covenant that can be cured, has not cured the default within ten
(10) days after it occurs, or if the default cannot be cured within ten (10)
days or cannot be cured after Borrower's attempts in the ten (10) day period,
and the default may be cured within a reasonable time, then Borrower shall have
additional time, (of not more than
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thirty (30) days) to attempt to cure the default. Grace periods provided under
this section shall not apply, among other things, to financial covenants or any
other covenants that are required to be satisfied, completed or tested by a date
certain. During the additional period the failure to cure the default is not an
Event of Default (but no Credit Extensions shall be made during the cure
period);
8.3 Material Adverse Change. A Material Adverse Change occurs;
8.4 Attachment. (i) Any material portion of Borrower's assets is attached,
seized, levied on, or comes into possession of a trustee or receiver and the
attachment, seizure or levy is not removed in ten (10) days; (ii) the service of
process upon the Borrower seeking to attach, by trustee or similar process any
material amount of funds of the Borrower on deposit with the Bank; (iii)
Borrower is enjoined, restrained, or prevented by court order from conducting a
material part of its business; (iv) a judgment or other claim becomes a Lien on
a material portion of Borrower's assets; or (v) a notice of lien, levy, or
assessment is filed against any of Borrower's assets by any government agency
and not paid within ten (10) days after Borrower receives notice. These are not
Events of Default if stayed or if a bond is posted pending contest by Borrower
(but no Credit Extensions shall be made during the cure period);
8.5 Insolvency. (i) Borrower becomes insolvent; (ii) Borrower begins an
Insolvency Proceeding; or (iii) an Insolvency Proceeding is begun against
Borrower and not dismissed or stayed within forty-five (45) days (but no Credit
Extensions shall be made before any Insolvency Proceeding is dismissed);
8.6 Other Agreements. If there is a default in any agreement to which
Borrower is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of One Hundred Thousand Dollars
($100,000) or that is reasonably likely to result in a Material Adverse Change;
8.7 Judgments. If a judgment or judgments for the payment of money in an
amount, individually or in the aggregate, of at least Two Hundred Thousand
Dollars ($200,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of ten (10) days (provided that no Credit
Extensions will be made prior to the satisfaction or stay of such judgment);
8.8 Revised Covenants. If Borrower and Bank do not agree to revised
financial performance covenants, if such revision is required in accordance with
Section 7.2 or Section 7.3 hereof, forty-five (45) days after the expiration of
the time period to agree on same set forth in Section 7.2 or Section 7.3 hereof;
or
8.9 Misrepresentations. If Borrower or any Person acting for Borrower
makes any material misrepresentation or material misstatement now or later in
any warranty or representation in this Agreement or in any writing delivered to
Bank or to induce Bank to enter this Agreement or any Loan Document.
9 BANK'S RIGHTS AND REMEDIES
9.1 Rights and Remedies. When an Event of Default occurs and continues
Bank may, without notice or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are
immediately due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's benefit
under this Agreement or under any other agreement between Borrower and
Bank;
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(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 reasonably
necessary to protect its security interest in the Collateral. Borrower
shall assemble the Collateral if Bank requests and make it available as
Bank designates. Subject to the rights of third parties, prohibitions or
limitations in agreements with third parties, and applicable law, 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. Subject to the rights of third
parties, prohibitions or limitations in agreements with third parties, and
applicable law, 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 it holds, or (ii) any amount held by Bank owing to or for the
credit or the account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral in accordance with
the Code or other applicable law. Subject to the rights of third parties,
prohibitions or limitations in agreements with third parties, and
applicable law, 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 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, subject
to the rights of third parties, prohibitions or limitations in agreements
with third parties, and applicable law; and
(g) Otherwise dispose of the Collateral according to the Code.
9.2 Power of Attorney. Borrower hereby irrevocably appoints Bank as its
lawful attorney-in-fact, to be effective upon the occurrence and during the
continuance of an Event of Default, to: (i) endorse Borrower's name on any
checks or other forms of payment or security; (ii) sign Borrower's name on any
invoice or xxxx of lading for any Account or drafts against account debtors;
(iii) settle and adjust disputes and claims about the Accounts directly with
account debtors, for amounts and on terms Bank determines reasonable; (iv) make,
settle, and adjust all claims under Borrower's insurance policies; and (v)
transfer the Collateral into the name of Bank or a third party as the Code
permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign
Borrower's name on any documents necessary to perfect or continue the perfection
of any security interest regardless of whether an Event of Default has occurred
until all Obligations have been satisfied in full and Bank is under no further
obligation to make Credit Extensions hereunder. Bank's foregoing appointment as
Borrower's attorney in fact, and all of Bank's rights and powers, coupled with
an interest, are irrevocable until all Obligations have been fully repaid and
performed and Bank's obligation to provide Credit Extensions terminates.
9.3 Accounts Collection. In the event that an Event of Default occurs and
is continuing, Bank may notify any Person owing Borrower money of Bank's
security interest in the funds and verify and/or collect the amount of the
Account. Any amounts received by Borrower shall, upon request by Bank, be held
in trust by Borrower for Bank, and, if requested by Bank, Borrower shall
immediately deliver such receipts to Bank in the form received from the account
debtor, with proper endorsements for deposit.
9.4 Bank Expenses. All Bank Expenses are immediately due and payable, and
shall bear interest at the then applicable rate and be secured by the
Collateral. No payments by Bank shall be deemed an agreement to make similar
payments in the future or Bank's waiver of any Event of Default.
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9.5 Bank's Liability for Collateral. So long as the Bank complies with
reasonable banking practices regarding the safekeeping of collateral, the Bank
shall not be liable or responsible for: (a) the safekeeping of the Collateral;
(b) any loss or damage to the Collateral; (c) any diminution in the value of the
Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other person. Except for the foregoing, Borrower bears all risk of loss, damage
or destruction of the Collateral.
9.6 Remedies Cumulative. Bank's rights and remedies under this Agreement,
the Loan Documents, and all other agreements are cumulative. Bank has all rights
and remedies provided under the Code, by law, or in equity. Bank's exercise of
one right or remedy is not an election, and Bank's waiver of any Event of
Default is not a continuing waiver. Bank's delay is not a waiver, election, or
acquiescence. No waiver hereunder shall be effective unless signed by Bank and
then is only effective for the specific instance and purpose for which it was
given.
9.7 Demand Waiver. Except as otherwise expressly set forth herein or as
required by applicable law, Borrower waives demand, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees held by Bank on which
Borrower is liable.
10 NOTICES
All notices or demands by any party to this Agreement or any other related
agreement must be in writing and be personally delivered or sent by an overnight
delivery service, by certified mail, postage prepaid, return receipt requested,
or by telefacsimile at the addresses listed below. Either Bank or Borrower may
change its notice address by giving the other written notice.
If to Borrower: Bottomline Technologies, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000
Attn: Mr. Xxxxx Xxxxxxx
FAX: (000) 000-0000
with a copy to: Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx, Esquire
FAX: (617) _______________
If to Bank: Silicon Valley Bank
One Newton Executive Park, Suite 200
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxxx Xxxxxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esquire
FAX: (000) 000-0000
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
Massachusetts law governs the Loan Documents without regard to principles
of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Massachusetts; provided,
11
however, that if for any reason Bank cannot avail itself of such courts in the
Commonwealth of Massachusetts, Borrower accepts jurisdiction of the courts and
venue in Santa Xxxxx County, California. NOTWITHSTANDING THE FOREGOING, THE BANK
SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR
ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH THE BANK DEEMS
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE
ENFORCE THE BANK'S RIGHTS AGAINST THE BORROWER OR ITS PROPERTY.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
12.1 Successors and Assigns. This Agreement binds and is for the benefit
of the successors and permitted assigns of each party. Borrower may not assign
this Agreement or any rights or Obligations under it without Bank's prior
written consent which may be granted or withheld in Bank's discretion. Bank has
the right, without the consent of or prior notice to Borrower, to sell,
transfer, negotiate, or grant participation in all or any part of, or any
interest in, Bank's obligations, rights and benefits under this Agreement, the
Loan Documents or any related agreement.
12.2 Indemnification. Borrower hereby indemnifies, defends and holds the
Bank and its officers, employees and agents harmless against: (a) all
obligations, demands, claims, and liabilities asserted by any other party in
connection with the transactions contemplated by the Loan Documents; and (b) all
losses or Bank Expenses incurred, or paid by Bank from, following, or
consequential to transactions between Bank and Borrower under the Loan Documents
(including reasonable attorneys' fees and expenses), except for losses caused by
Bank's gross negligence or willful misconduct.
12.3 Right of Set-Off. Borrower and any guarantor hereby grant to Bank, a
lien, security interest and right of setoff as security for all Obligations to
Bank, whether now existing or hereafter arising upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of the Bank or in
transit to any of them. 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 and any guarantor even though unmatured and regardless of the
adequacy of any other collateral securing the loan. ANY AND ALL RIGHTS TO
REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER OR ANY
GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
12.4 Time of Essence. Time is of the essence for the performance of all
Obligations in this Agreement.
12.5 Severability of Provision. Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.
12.6 Amendments in Writing; Integration. All amendments to this Agreement
must be in writing signed by both Bank and Borrower. This Agreement and the Loan
Documents represent the entire agreement about this subject matter, and
supersede prior negotiations or agreements. All prior agreements,
understandings,
12
representations, warranties, and negotiations between the parties about the
subject matter of this Agreement and the Loan Documents merge into this
Agreement and the Loan Documents.
12.7 Termination. Provided that all the Obligations then due have been
repaid in full, this Agreement may be terminated by Borrower without premium or
penalty.
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 while any Obligations remain outstanding. The
obligation of Borrower in Section 12.2 to indemnify Bank shall survive until the
statute of limitations with respect to such claim or cause of action shall have
run.
12.10 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: (i) to Bank's
subsidiaries or affiliates in connection with their business with Borrower; (ii)
to prospective transferees or purchasers of any interest in the Credit
Extensions (provided, however, Bank shall use commercially reasonable efforts in
obtaining such prospective transferee's or purchaser's agreement to the terms of
this provision); (iii) as required by law, regulation, subpoena, or other order,
(iv) as required in connection with Bank's examination or audit; and (v) as Bank
considers reasonably necessary in exercising remedies under this Agreement.
Confidential information does not include information that either: (a) is in the
public domain or in Bank's possession when disclosed to Bank, or becomes part of
the public domain after disclosure to Bank; or (b) is disclosed to Bank by a
third party, if Bank does not know that the third party is prohibited from
disclosing the information.
13 DEFINITIONS
13.1 Definitions.
"Accounts" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its sale or lease of
goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing, as such definition may be amended from time to time according to the
Code.
"Advance" or "Advances" is a loan advance (or advances) under the
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 or
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"Borrower's Books" are all Borrower's books and records including ledgers,
records regarding Borrower's assets or liabilities, the Collateral, business
operations or financial condition and all computer programs or discs or any
equipment containing the information.
"Borrowing Base" is 80.0% of Eligible Accounts, as determined by Bank from
Borrower's most recent Borrowing Base Certificate; provided, however, that Bank
may adjust the percentage of the Borrowing Base after performing an audit of
Borrower's Collateral.
13
"Business Day" is any day that is not a Saturday, Sunday or a day on which
the Bank is closed.
"Closing Date" is the date of this Agreement.
"Code" is the Uniform Commercial Code as adopted in Massachusetts, as
amended and as may be amended and in effect from time to time.
"Collateral" is any and all properties, rights and assets of the Borrower
granted by the Borrower to Bank or arising under the Code, now, or in the
future, in which the Borrower obtains an interest, or the power to transfer
rights, including, without limitation, the property described on Exhibit A.
"Committed Revolving Line" is Five Million Dollars ($5,000,000.00).
"Contingent Obligation" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"Credit Extension" is each Advance, Letter of Credit, or any other
extension of credit by Bank for Borrower's benefit under this Agreement.
"Current Liabilities" are the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year, which shall include, without
limitation, all obligations and liabilities of Borrower to Bank.
"Deferred Revenue" is as defined under GAAP.
"Eligible Accounts" are Accounts in the ordinary course of Borrower's
business that meet all Borrower's representations and warranties in Section 5.2;
but Bank may change eligibility standards by giving Borrower thirty (30) days
prior written notice. Unless Bank agrees otherwise in writing, Eligible Accounts
shall not include:
(a) Accounts that the account debtor has not paid within ninety (90)
days of invoice date;
(b) Accounts for an account debtor, fifty percent (50%) or more of
whose Accounts have not been paid within ninety (90) days of invoice date;
(c) Credit balances over ninety (90) days from invoice date;
(d) Accounts for an account debtor, including Affiliates, whose
total obligations to Borrower exceed twenty-five (25%) of all Accounts,
for the amounts that exceed that percentage, unless Bank approves in
writing;
(e) Accounts for which the account debtor does not have its
principal place of business in the United States;
14
(f) Accounts for which the account debtor is a federal, state or
local government entity or any department, agency, or instrumentality
thereof;
(g) Accounts for which Borrower owes the account debtor, but only up
to the amount owed (sometimes called "contra" accounts, accounts payable,
customer deposits or credit accounts);
(h) Accounts for demonstration or promotional equipment, or in which
goods are consigned, sales guaranteed, sale or return, sale on approval,
or other terms if account debtor's payment may be conditional;
(i) Accounts for which the account debtor is Borrower's Affiliate,
officer, employee, or agent;
(j) Accounts in which the account debtor disputes liability or makes
any claim and Bank believes there may be a basis for dispute (but only up
to the disputed or claimed amount), or if the Account Debtor is subject to
an Insolvency Proceeding, or becomes insolvent, or goes out of business;
(k) Accounts for which Bank reasonably determines after inquiry and
consultation with Borrower collection to be doubtful.
"Equipment" is 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.
"GAAP" is generally accepted accounting principles.
"Indebtedness" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"Insolvency Proceeding" is any proceeding by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"Intellectual Property" is any and all copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work thereof, whether published or unpublished; any
and all trade secrets, and any and all intellectual property rights in computer
software and computer software products; any and all design rights which may be
available to Borrower; all mask work or similar rights available for the
protection of semiconductor chips; all patents, patent applications and like
protections; any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like protections; all
licenses or other rights to use any of the foregoing; or any claims for damages
by way of any past, present and future infringement of any of the foregoing.
"Inventory" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"Investment" is any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.
15
"Letter of Credit" means a letter of credit or similar undertaking issued
by Bank pursuant to Section 2.1.2.
"Letter of Credit Reserve" has the meaning set forth in Section 2.1.2.
"Lien" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"Loan Documents" are, collectively, this Agreement, any note, or notes or
guaranties executed by Borrower 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.
"Material Adverse Change " is: (i) A material impairment in the perfection
or priority of Bank's security interest in the Collateral or in the value of
such Collateral; (ii) a material adverse change in the business, operations, or
condition (financial or otherwise) of the Borrower; or (iii) a material
impairment of the prospect of repayment of any portion of the Obligations ;or
(iv) Bank determines, based upon information available to it and in its
reasonable judgment, that there is a reasonable likelihood that Borrower shall
fail to comply with one or more of the financial covenants in Section 6 during
the next succeeding financial reporting period.
"Net Loss" is a reconciled amount that is calculated as the net loss of
the Borrower (on a consolidated basis) as determined by GAAP, and adjusted by
adding back, without duplication (i) amortization of acquisition intangibles,
(ii) acquisition stock compensation expense and (iii) non-cash charges related
to the issuance of warrants.
"Obligations" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later under this Agreement, including letters
of credit, cash management services, and foreign exchange contracts, if any, and
including interest accruing after Insolvency Proceedings begin.
"Permitted Indebtedness" is:
(a) Borrower's indebtedness to Bank under this Agreement or the Loan
Documents;
(b) Indebtedness existing on the Closing Date and shown on the
Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary course
of business;
(e) Indebtedness incurred for the purchase or lease of Equipment not
to exceed $1,000,000.00 in the aggregate during the term hereof, which
Indebtedness may be secured in accordance with subsection (c) of the
definition of Permitted Liens;
(f) Indebtedness secured by Permitted Liens other than subsection
(c) thereof;
(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.
"Permitted Investments" are:
(a) Investments shown on the Investments Schedule and existing on
the Closing Date;
(b) Equity Investments of a strategic nature in an aggregate
outstanding amount not to exceed $1,000,000.00;
16
(c) Loans or advances to Borrower's employees as determined by
Borrower's management up to an aggregate outstanding amount of $100,000 at
any time; and
(d) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any state maturing within
1 year from its acquisition, (ii) commercial paper maturing no more than 1
year after its creation and having the highest rating from either Standard
& Poor's Corporation or Xxxxx'x Investors Service, Inc., (iii) Bank's
certificates of deposit issued maturing no more than 1 year after issue,
(iv) any other investments administered through the Bank, and (v) equity
investments of a strategic nature consistent with Borrower's investment
policy previously delivered to Bank.
"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 incurred for financing the acquisition of the Equipment, or (ii)
existing on equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the equipment;
(d) Carriers', warehousemen's, mechanics', materialmen's repairmen's
or other like liens arising in the ordinary course of business which are
not overdue for a period of more than ninety (90) days or which are being
contested in good faith by appropriate proceedings;
(e) Leases or subleases and non-exclusive licenses or sublicenses
granted in the ordinary course of Borrower's business, if the leases,
subleases, licenses and sublicenses permit granting Bank a security
interest; and
(f) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (e), but any
extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and the principal amount of the
indebtedness may not increase.
"Person" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
"Prime Rate" is Bank's most recently announced "prime rate," even if it is
not Bank's lowest rate.
"Quick Assets" is, on any date, the Borrower's consolidated, unrestricted
cash held by Bank, cash equivalents held by Bank, net billed accounts receivable
and investments with maturities of fewer than 12 months held by Bank, determined
according to GAAP; provided that until March 1, 2002, unrestricted cash or cash
equivalents on deposit by Borrower with Fleet National Bank shall be included as
Quick Assets herein.
"Responsible Officer" is each of the Chief Executive Officer, President,
Chief Financial Officer and Treasurer of Borrower.
"Revolving Maturity Date" is the date which is twelve months from the
Closing Date.
17
"Schedule" is any attached schedule of exceptions.
"Subordinated Debt" is debt incurred by Borrower subordinated to
Borrower's debt to Bank (pursuant to a subordination agreement entered into
between the Bank, the Borrower and the subordinated creditor), on terms
acceptable to Bank.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts as of the date first above written.
BORROWER:
BOTTOMLINE TECHNOLOGIES (de), INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------------------
Name: Xxxxxx Xxxxxx
------------------------------------------
Title: Exec VP, COO & CFO
------------------------------------------
BANK:
SILICON VALLEY BANK, d/b/a
SILICON VALLEY EAST
By: /s/ Xxxxx Xxxxxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxxxxx
------------------------------------------
Title: Vice President
------------------------------------------
SILICON VALLEY BANK
By: /s/ Xxxxxx Xxxxxx
------------------------------------------
Name: Xxxxxx Xxxxxx
------------------------------------------
Title: Loan Admin. Team Leader
------------------------------------------
(Signed in Santa Xxxxx County, California)
19
EXHIBIT A
The Collateral consists of all right, title and interest of Borrower in
and to the following:
All goods, equipment, inventory, contract rights or rights to payment of
money, license agreements, franchise agreements, general intangibles (including
payment intangibles), accounts (including health-care receivables), documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, fixtures, letters of credit rights (whether
or not the letter of credit is evidenced by a writing), commercial tort claims,
securities, and all other investment property supporting obligations, and
financial assets, whether now owned or hereafter acquired, wherever located; and
All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.
Notwithstanding the foregoing, the Collateral does not include, in any
event:
Any and all copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work thereof,
whether published or unpublished; any and all trade secrets, and any and all
intellectual property rights in computer software and computer software
products; any and all design rights which may be available to Borrower; all mask
work or similar rights available for the protection of semiconductor chips; all
patents, patent applications and like protections; any trademark and servicemark
rights, whether registered or not, applications to register and registrations of
the same and like protections; all licenses or other rights to use any of the
foregoing; or any claims for damages by way of any past, present and future
infringement of any of the foregoing. Notwithstanding the foregoing, the
Collateral shall include all accounts, license and royalty fees and other
revenues, proceeds, or income arising out of or relating to any of the foregoing
intellectual property. To the extent a court of competent jurisdiction holds
that a security interest in any Intellectual Property is necessary to have a
security interest in any accounts, license and royalty fees and other revenues,
proceeds, or income arising out of or relating to any of the foregoing
Intellectual Property, then the Collateral shall, effective as of the Closing
Date, include the Intellectual Property, to the extent necessary to permit
perfection of the Bank's security interest in such accounts, license and royalty
fees and other revenues, proceeds, or income arising out of or relating to any
of the Intellectual Property and to the extent such inclusion is not violative
of, prohibited by or would trigger an adverse consequence under any material
agreement relating to such Intellectual Property or applicable law.
20
EXHIBIT B
Loan Payment/Advance Request Form
DEADLINE FOR SAME DAY PROCESSING IS 3:00 E.S.T.
Fax To: (000) 000-0000 Date: ____________________
--------------------------------------------------------------------------------
LOAN PAYMENT:
Sample documents Client Name (Borrower)
From Account #_______________________ To Account #___________________
(Deposit Account #) (Loan Account #)
Principal $_____________________ and/or Interest $______________________________
All Borrower's representation and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects to on the date of the
telephone transfer request for and advance, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of the date:
Authorized Signature: _________________________ Phone Number: __________________
LOAN ADVANCE:
Complete Outgoing Wire Request section below if all or a portion of the funds
from this loan advance are for an outgoing wire.
From Account #______________________ To Account #______________________
(Loan Account #) (Deposit Account #)
Amount of Advance $______________________
All Borrower's representation and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects to on the date of the
telephone transfer request for and advance, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of the date:
Authorized Signature: _________________________ Phone Number: __________________
OUTGOING WIRE REQUEST
Complete only if all or a portion of funds from the loan advance above are to be
wired.
Deadline for same day processing is 3:00pm, E.S.T.
Beneficiary Name: ____________________________ Amount of Wire: $_____________
Beneficiary Bank: ____________________________ Account Number: ______________
City and Sate: _______________________________
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: ___________________
Print Name/Title: _______________________
Telephone # _____________________________
2nd Signature (If Required): ____________
Print Name/Title: _______________________
Telephone # _____________________________
--------------------------------------------------------------------------------
21
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: Bottomline Technologies (de), Inc. Lender: Silicon Valley Bank
Commitment Amount: $5,00,000.00
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of ___________ $_______________
2. Additions (please explain on reverse) $_______________
3. TOTAL ACCOUNTS RECEIVABLE $_______________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $_______________
5. Balance of 50% over 90 day accounts $_______________
6. Credit balances over 90 days $_______________
7. Concentration Limits $_______________
8. Foreign Accounts $_______________
9. Governmental Accounts $_______________
10. Contra Accounts $_______________
11. Promotion or Demo Accounts $_______________
12. Intercompany/Employee Accounts $_______________
13. Other (please explain on reverse) $_______________
14. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $_______________
15. Eligible Accounts (#3 minus #14) $_______________
16. LOAN VALUE OF ACCOUNTS ( 80% of #15) $_______________
BALANCES
17. Maximum Loan Amount $_______________
18. Total Funds Available (Lesser of #17 or #16) $_______________
19. Present balance owing on Line of Credit $_______________
20. Outstanding under Sublimits (letters of credit ) $_______________
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
Received by: _____________________
By: ___________________________ AUTHORIZED SIGNER
Authorized Signer
Date: ____________________________
Verified: ________________________
AUTHORIZED SIGNER
Date: ____________________________
----------------------------------
22
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: BOTTOMLINE TECHNOLOGIES (de), INC.
The undersigned authorized officer of BOTTOMLINE TECHNOLOGIES (de), INC.
certifies that under the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the "Agreement"), (i) Borrower is in complete
compliance for the period ending _______________ with all required covenants
except as noted below and (ii) all representations and warranties in the
Agreement are true and correct in all material respects on this date. Attached
are the required documents supporting the certification. The Officer certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) consistently applied from one period to the next except as
explained in an accompanying letter or footnotes. The Officer acknowledges that
no borrowings may be requested at any time or date of determination that
Borrower is not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is delivered.
Please indicate compliance status by circling Yes/No under "Complies"
column.
Reporting Covenant Required Complies
------------------ -------- --------
Monthly financial statements Monthly within 30 days Yes No
with CC
Annual(CPA Audited) FYE within 90 days Yes No
10-Q, 10-K and 8-K Within 10 days after Yes No
filing with SEC
BBC A/R Agings Monthly within 30 days Yes No
Financial Covenant Required Actual Complies
------------------ -------- ------ --------
Maintain on a Monthly Basis:
Minimum Adjusted Quick Ratio 2.0:1.0 _____:1.0 Yes No
Profitability(net loss/min profit) $_*_______ $________ Yes No
*See Loan and Security Agreement
Comments Regarding Exceptions: See Attached. ----------------------------------
BANK USE ONLY
Sincerely,
Received by: _____________________
_____________________________ AUTHORIZED SIGNER
SIGNATURE Date: ____________________________
_____________________________ Verified: ________________________
TITLE AUTHORIZED SIGNER
_____________________________ Date: ____________________________
DATE
----------------------------------
23
