Exhibit 10.34
[PACIFIC BUSINESS FUNDING LETTERHEAD]
RECEIVABLES FINANCING AGREEMENT
This Receivables Financing Agreement (the "Agreement"), dated as of
SEPTEMBER 25, 2001, is entered into by and between GADZOOX NETWORKS, INC., a
[ [X] corporation, [ ] partnership, [ ] sole proprietorship] ("Borrower") having
its principal place of business and chief executive office at the address set
forth below Borrower's signature, and Pacific Business Funding, a division of
Cupertino National Bank ("Lender") having an office at the address identified
above.
Capitalized terms used in this Agreement shall have the meanings assigned
to them in Section 13, Definitions.
1. FINANCE OF ACCOUNTS.
1.1 SCHEDULE OF ACCOUNTS. Borrower may, at any time, request that Lender
finance Accounts. Any such request by Borrower shall be made by delivering to
Lender a Schedule of Accounts (the "Schedule of Accounts") which describes in
detail the Accounts Borrower is requesting Lender to finance, including, (a)
the name and address of the Account Debtor of each such Account, (b) the amount
owned by the Account Debtor of each such Account, and (c) the date and number
of the invoice evidencing each such Account. Each Schedule of Accounts shall
have attached to it an invoice for each Account described on the Schedule of
Accounts, and shall be signed by an authorized representative of Borrower.
1.2 DISCRETIONARY APPROVAL OF ACCOUNTS. Lender may, in its sole
discretion, finance any Account included in a Schedule of Accounts, but is
under no obligation to finance any such Account. Lender may exercise its sole
discretion in approving each Account and the credit of each Account Debtor
before financing any Account.
1.3 PAYMENT OF ADVANCE; CREATION OF A BOOK RESERVE. Upon approval, in
Lender's sole discretion, of any of the Accounts described on a Schedule of
Accounts, Lender shall make an advance to Borrower for any approved Account in
an amount equal to EIGHTY percent (80%) of the face amount of such approved
Account (the "Advance"). Lender may, from time to time, in its discretion, upon
notice to Borrower, change the percentage of the Advance. Upon payment of the
Advance to Borrower, Lender shall also create a reserve on Lender's books and
records with respect to each Financed Account in an amount equal to the face
amount of the Financed Account minus the Advance for such Financed Account
(the ""Reserve"). Notwithstanding the foregoing, in no event shall the Reserve
with respect to all Financed Accounts outstanding at any time be less than
TWENTY percent (20%) of the Account Balance. Lender may, in its discretion,
upon notice to Borrower, increase the percentage of the Reserve at any time.
1.4 COLLECTION OF ACCOUNTS. At the time Lender pays the Advance with
respect to any Account, such Account shall constitute a Financed Account, and
Borrower hereby absolutely assigns to Lender, all of Borrower's right to
collect each Financed Account. Each Financed Account shall be collected
directly by Lender. At the request of Lender, Borrower and Lender shall jointly
notify each Account Debtor by letter that Financed Accounts owned by such
Account Debtor have been assigned and are payable to Lender. Such notification
shall be in form and substance satisfactory to Lender. Borrower shall not take
or permit any action to change or revoke any notification without Lender's
prior written consent and shall not request any Account Debtor to pay any
Financed Account to Borrower. Notwithstanding the foregoing, in the event
Borrower receives any payments of any Financed Accounts, Borrower shall (A)
immediately notify Lender of such payment, (B) hold such payment in trust and
safekeeping for Lender, and (C) immediately turn over to Lender the identical
checks, monies or other forms of payment received, with any necessary
endorsement or assignment. Lender shall have the right to endorse Borrower's
name on all payments received in connection with each Financed Account and on
any other proceeds of Collateral. If Lender receives a check or item which
is payment for both a Financed Account and a non-Financed Account, the funds
shall first be applied to the Financed Account and, so long as there does not
then exist an Event of Default or any event that with notice or lapse of time
would constitute an Event of Default, the excess shall be remitted to Borrower.
In the event Lender receives any other payments of non-Financed Accounts, Lender
shall remit to Borrower the collections of such non-Financed Accounts;
provided, that if any Event of Default or event that with notice or lapse of
time or otherwise would constitute an Event of Default then exists, Lender shall
have no duty to remit any such collections, which collections constitute
Collateral, and may apply such collections to reduce the Obligations.
2. FEES AND CUSTOMER PAYMENTS.
2.1 FINANCE FEES. Borrower shall pay to Lender on each Settlement Date, a
finance fee in an amount equal to SIXTY THREE HUNDREDS percent (.0063%) per
month of the average daily Account Balance outstanding during the Settlement
Period ending on such Settlement Date (the "Finance Fees"). Such accrued
Finance Fees shall be netted against the Reserve as described in Section 3.3.
2.2 ADMINISTRATIVE FEE. Borrower shall pay to Lender on each Settlement
Date, an Administrative Fee equal to ONE HALF OF ONE percent (.5%) of the face
amount of each Account financed by Lender during the Settlement Period ending
on such Settlement Date (the "Administrative Fee)". All Administrative Fees
shall be netted against the Reserve as described in Section 3.3.
2.3 MAXIMUM LAWFUL RATE. In no event shall any charges that may
constitute interest hereunder exceed the highest rate permitted under
applicable law. In the event that a count of competent jurisdiction makes a
final determination that Lender has received interest hereunder in excess of
the maximum lawful rate, then such excess shall be deemed a payment of
principal and the interest payable hereunder deemed amended to the amount
payable under the maximum lawful rate.
2.4 CREDITING CUSTOMER PAYMENTS. Upon Lender's receipt of payment of a
Financed Account, Lender shall promptly credit such customer payment (the
"Customer Payments") to the amount outstanding with respect to such Financed
Account. Notwithstanding the foregoing, if any Customer Payment is subsequently
dishonored or Lender does not receive good funds for any reason, the amount of
such uncollected Customer Payment shall be included in the Account Balances as
if such Customer Payment had not been received, and Finance Fees shall accrue
thereon, and the credit to the specific Financed Account shall be reversed.
Notwithstanding the foregoing, upon the occurrence of an Event of Default,
Lender shall apply all Customer Payments to Borrower's Obligations under this
Agreement in such order and manner as Lender shall, in its sole discretion,
determine.
2.5 ACCOUNTING. Lender shall deliver to Borrower after each Settlement
Date, a statement of Borrower's account which shall include an accounting of
the transactions for that Settlement Period, including the amount of all
Finance Fees, Administrative Fees, Adjustments, Chargeback Amounts, Customer
Payments and Financed Accounts. The accounting shall constitute an account
stated and shall be binding on Borrower and deemed correct unless Borrower
delivers to Lender a written objection within thirty (30) days after such
accounting is mailed to Borrower.
(Page 1 of 4)
3. ADJUSTMENTS, CHARGEBACKS AND REMITTANCES.
3.1. ADJUSTMENTS. In the event any Account Debtor asserts any offset,
defense, counterclaim, dispute, discount, allowance, right of return, right of
recoupment, or warranty claim with respect to a Financial Account, or pays less
than the face amount of such Financed Account (each, an "Adjustment"), Lender
may, in its sole discretion, either (A) deduct the amount of the Adjustment in
calculating the Remittance, or (B) chargeback to Borrower the Financial Account
with respect to which the Adjustment is asserted. Borrower shall advise Lender
immediately upon learning of any Adjustment asserted by any Account Debtor.
3.2 CHARGEBACKS. Lender shall have the right to chargeback to Borrower
any Financed Account:
(A) which remains unpaid ninety (90) calendar days after the invoice
date;
(B) with respect to which there has been a breach of any warranty,
representation, covenant or agreement set forth in this
Agreement;
(C) with respect to which the Account Debtor asserts any Adjustment;
or
(D) which is owed by an Account Debtor who has filed, or has had
filed against it, any bankruptcy case, insolvency proceeding,
assignment for the benefit of creditors, receivership or
insolvency proceeding, or who has become insolvent (as defined
in the United States Bankruptcy Code) or who is generally not
paying its debts as such debts become due.
Upon demand by Lender, Borrower shall pay to Lender the full face amount of any
Financed Account which has been charged back to Borrower pursuant to this
Section 3.2, or to the extent partial payment has been made, the amount by
which the face amount of such Financed Account exceeds such partial payment,
together with any attorneys' fees and costs incurred by Lender in connection
with collecting such Financed Account (collectively, the "Chargeback Amount").
Lender shall advise Borrower regarding how the Chargeback Amount shall be paid,
which may be by any one or a combination of the following, in Lender's sole
discretion: (1) payment in cash immediately upon demand; (2) deduction from or
offset against any Remittance that would otherwise be payable to Borrower; (3)
payment from any Advances that may otherwise be made to Borrower; (4)
adjustment to the Reserve pursuant to Section 1.3 hereof; or (5) delivery of
substitute Accounts and a Schedule of Accounts acceptable to Lender, which
Accounts shall constitute Financed Accounts.
3.3 REMITTANCE. Lender shall remit to Borrower after the Settlement Date,
the amount, if any, which Lender owes to Borrower at the end of the Settlement
Period based on the following calculations set forth below (the "Remittance");
provided, that if there then exists any Event of Default or any event or
condition that with notice or lapse of time would constitute an Event of
Default, Lender shall not be obligated to remit any payments to Borrower. If
the amount resulting from the following calculation is a positive number, such
amount is the amount of the Remittance for such Settlement Period. If the
resulting amount is a negative number, such amount is the amount owed by
Borrower to Lender.
The calculations to be used are as follows:
(A) The sum of the following:
(1) The Reserve as of the beginning of the subject Settlement
Period, plus
(2) the Reserve created for each Account financed during the
subject Settlement Period;
MINUS
(B) The sum of the following:
(1) Finance Fees accrued during the subject Settlement Period;
plus
(2) Administrative Fees accrued during the subject Settlement
Period; plus
(3) Adjustments during the subject Settlement Period; plus
(4) Chargeback Amounts to the extent Lender has agreed to
accept payment of any such Chargeback Amount by deduction
from the Remittance; plus
(5) All professional fees and expenses as set forth in Section
10 for which oral or written demand has been made by Lender
during the subject Settlement Period; plus
(6) The Reserve for the Account Balance as of the first day of
the following Settlement Period in the minimum percentage
set forth in Section 1.3 hereof.
If the foregoing calculations result in a Remittance payable to Borrower,
Lender shall make such payment by check, subject to Lender's rights of offset
and recoupment, and its right to deduct any Chargeback Amount as set forth in
Section 3.2. If the foregoing calculations result in an amount due to Lender
from Borrower, Borrower shall make such payment by any one or a combination of
the methods set forth in Section 3.2. hereof for chargebacks, as determined by
Lender in its discretion.
4. POWER OF ATTORNEY. Borrower hereby appoints Lender and its designees as
Borrower's true and lawful attorney in fact, to exercise in Lender's
discretion, and regardless of whether an Event of Default is then existing, all
of the following powers, such powers being coupled with an interest: (A) to
notify all Account Debtors with respect to the Financed Accounts to make
payment directly to Lender; (B) to receive, deposit, and endorse Borrower's
name on all checks, drafts, money orders and other forms of payment relating to
the Financed Accounts; (C) to demand, collect, receive, xxx, and give releases
to any Account Debtor for the monies due or which may become due on or in
connection with the Financed Accounts; (D) to compromise, prosecute, or defend
any action, claim, case, or proceeding relating to the Financed Accounts,
including the filing of a claim or the voting of such claims in any bankruptcy
case, all in Lender's name or Borrower's name, as Lender may elect; (E) to
sell, assign, transfer, pledge, compromise, or discharge any Financed Accounts;
(F) to receive, open, redirect and dispose of all mail addressed to Borrower
for the purpose of collecting the Financed Accounts and to take all the actions
permitted in subsection (B) above with respect to any payments in any such
mail; (G) to execute in the name of Borrower and file against Borrower in favor
of Lender such financing statements and other agreements as Lender deems
necessary to evidence or perfect its security interest in the Financed Accounts
and the other Collateral; and (H) to do all acts and things necessary or
expedient, in furtherance of any such purposes. Upon the occurrence of an Event
of Default, all of the power of attorney rights granted by Borrower to Lender
hereunder shall be applicable with respect to all Collateral.
5. CONTINUING REPRESENTATIONS, WARRANTIES AND COVENANTS. To induce Lender to
enter into this Agreement and finance Accounts, and with full knowledge that
Lender is relying on the truth and accuracy of the following in determining
whether to finance any Account, Borrower represents, warrants, covenants and
agrees as follows, which representations, warranties, covenants and agreements
shall survive the execution and delivery of this Agreement:
(A) The information contained in each Schedule of Accounts is true
and correct;
(B) Each Schedule of Accounts is signed by an authorized
representative of Borrower, and Lender shall have the right to
rely on such signature as an authorized signature of Borrower;
(Page 2 of 4)
(C) Borrower is the sole and absolute owner of each Account
described in each Schedule of Accounts and has the legal right
to transfer and assign such Account to Lender;
(D) Borrower has performed all obligations required by the Account
Debtor in connection with each Account described in each
Schedule of Accounts and payment of each such Account is not
contingent upon the fulfillment of any obligation or contract,
past or future;
(E) Each Account described on each Schedule of Accounts is correctly
stated therein, is not in dispute, is presently and
unconditionally owing at the time stated in the invoice
evidencing such Account as attached to the Schedule of Accounts,
is not past due or in default, represents a bona fide
indebtedness arising from the actual sale of goods or
performance of services to an Account Debtor in the ordinary
course of Borrower's business which has been received and
finally accepted by the Account Debtor;
(F) Each Account set forth on each Schedule of Accounts is not
subject to any offset, defense or counterclaim of any kind,
whether bona fide or otherwise, and no agreement has been made
under which the Account Debtor may claim any deduction or
discount, except as otherwise stated in the Schedule of Accounts;
(G) Each Account Debtor identified on each Schedule of Accounts is
liable for the amount set forth on such Schedule of Accounts
and will not object to the payment for, or the quality or the
quantity of the goods or services to which any Account described
on such Schedule of Accounts relates;
(H) Borrower, and to Borrower's best knowledge, each Account Debtor
set forth in each Schedule of Accounts, is and shall remain
solvent in that the present saleable value of such entity's
assets exceeds the total of such entity's liabilities;
(I) Borrower has not, as of the time Borrower accepts an Advance
from Lender, filed or had filed against it a petition for
relief under the United States Bankruptcy Code;
(J) Each Account and all other Collateral are free and clear of any
and all liens, security interests and encumbrances of any kind,
other than those in favor of Lender, and Borrower will not
assign, transfer, or grant any lien or security interest in any
Accounts or other Collateral to any other party, without
Lender's prior written consent;
(K) Borrower has not sold, assigned, transferred, pledged or
otherwise conveyed any Financed Accounts to any party other than
Lender, and Borrower shall not sell, assign, transfer, pledge or
otherwise convey any Collateral without Lender's prior consent,
except for the financing of Accounts to Lender and the sale of
finished inventory in Borrower's normal course of business;
(L) Borrower's name and form of organization are as set forth at the
beginning of this Agreement, and Borrower's chief executive
office, place of business and place where Collateral and records
concerning Accounts and other Collateral are kept are as set
forth below Borrower's signature, and Borrower will give Lender
at least thirty (30) days prior written notice if such name,
organization, place of business, location of Collateral or
records concerning Collateral is to be changed or added and
shall execute any documents necessary to perfect Lender's
interest in the Financed Accounts and the other Collateral; and
(M) Borrower shall pay all of its normal gross payroll for
employees, and all federal and state taxes, as and when due,
including all payroll and withholding taxes and state sales
taxes.
6. GRANT AND SECURITY INTEREST. To secure the prompt payment and performance
of all of Borrower's Obligations to Lender, Borrower hereby grants to Lender a
continuing lien upon and security interest in, and right of set off with
respect to, all of Borrower's right, title and interest in, to and under the
following, whether now owned by or owing to, or hereafter acquired by or
arising in favor of, Borrower, and regardless of where located (collectively
the "Collateral"):
(A) All accounts, accounts receivable, goods represented by accounts
or accounts receivable (including unpaid sellers' rights of
rescission, replevin, reclamation and stoppage in transit and
rights to returned, reclaimed or repossessed goods), chattel
paper, contract rights, documents, instruments, letters of
credit, banker's acceptances, drafts, securities and general
intangibles, including all claims, causes of action, deposit
accounts, rights to receive tax refunds, rights in and claims
under insurance policies (including rights to unearned premiums),
customer lists, copyrights, patents, trademarks, license
agreements, goodwill associated with trademarks and trademark
licenses, and other intellectual property of every kind and other
rights to payment;
(B) All inventory;
(C) All monies, remittances, and other amounts due under this
Agreement and any other agreement between Lender and Borrower;
(D) All equipment, machinery, motor vehicles, furniture, fixtures,
tools and supplies;
(E) All investment securities;
(F) All farm products, crops, timber, minerals and the like
(including oil and gas);
(G) All books and records relating to the foregoing, including all
computer programs, printed output and computer readable data;
(H) All accessions to, and substitutions and replacements for, each
of the foregoing; and
(I) All proceeds and products of the foregoing, whether due to
voluntary or involuntary disposition, including insurance
proceeds. Borrower shall sign and deliver to Lender UCC
financing statements, in form acceptable to Lender. Borrower
agrees to deliver to Lender the originals of all instruments,
chattel paper and documents evidencing or related to Financed
Accounts and other Collateral.
7. DEFAULT. The occurrence of any one or more of the following shall
constitute an event of default under this Agreement (each, an "Event of
Default");
(A) Borrower fails to pay any amount owed to Lender as and when due
under this Agreement or fails to pay any other Obligations as
and when due;
(B) Any warranty or representation by Borrower to Lender under this
Agreement is incorrect or untrue when made or thereafter becomes
untrue or incorrect;
(C) Borrower fails to perform or breaches any covenant or agreement
set forth in this Agreement or any other agreement between
Lender and Borrower;
(D) There shall be commenced by or against Borrower any voluntary or
involuntary case under the United States Bankruptcy Code, or any
assignment for the benefit of creditors, or appointment of a
receiver or custodian for any of Borrower's assets;
(E) Borrower shall become insolvent in that its debts are greater
than the fair value of its assets, or Borrower is generally not
paying its debts as they become due or is left with
unreasonably small capital;
(F) Any involuntary lien, garnishment, attachment or the like is
issued against or attaches to the Financed Accounts or the other
Collateral;
(G) An event of default shall occur under any guaranty executed by
any guarantor of the Obligations, or any material provision of
any such guaranty shall for any reason cease to be valid or
enforceable or any such guaranty shall be repudiated or
terminated, including by operation of law; or
(H) A default or event of default shall occur under any agreement
between Borrower and any creditor of Borrower who has entered
into a subordination agreement with Lender.
8. REMEDIES UPON DEFAULT. Upon the occurrence of an Event of Default, Lender
may, without notice, (A) without implying any obligation to finance Accounts,
cease financing Accounts; (B) accelerate the payment of all Obligations, which
Obligations shall be due and payable in full without demand; (C) exercise all
the rights and remedies under this Agreement and under applicable law,
including the rights and remedies of a secured party under the California
Uniform Commercial Code. Without limiting the generality of the foregoing,
Lender may (1) exercise all of the power of attorney rights described in
Section 4 with respect to all Collateral, and (2) collect, dispose of, sell,
lease, use, and realize upon all Financed Accounts and other Collateral in any
commercially reasonable manner. Borrower and Lender agree that any notice of
sale required to be given to Borrower shall be deemed to be reasonable if
given five (5) days prior to the date on or after which any sale may be held.
All remedies set forth herein shall be cumulative and none exclusive.
(Page 3 of 4)
9. ACCRUAL OF INTEREST. If any amount owed by Borrower hereunder is not paid
when due, including any amounts due under Section 3.3, Chargeback Amounts,
professional fees and expenses under Section 10 and any other Obligations, such
amounts shall bear interest at a per annum rate equal to the rate used to
calculate the Finance Fees, annualized, until Lender receives payment in good
funds in the full amount of such Obligations.
10. ATTORNEYS' FEES. Borrower shall pay to Lender immediately upon demand, all
costs and expenses, including reasonable fees and expenses of attorneys and
other professionals, that Lender incurs in connection with any and all of the
following: (A) preparing, amending, supplementing, negotiating and enforcing
this Agreement, or any other agreement executed in connection herewith; (B)
perfecting, protecting or enforcing Lender's security interest in the Financed
Accounts and the other Collateral; (C) collecting the Financed Accounts and the
Obligations; (D) defending or in any way addressing claims made or litigation
by or against Lender as a result of Lender's relationship with Borrower or any
guarantor; and (E) representing Lender in connection with any bankruptcy case
or insolvency proceeding involving Borrower, any Financed Account, any other
Collateral or any Account Debtor. Any attorneys' fees and expenses may, at
Lender's option, be netted against the reserve as set forth in Section 3.3.
11. TERM AND TERMINATION. The term of this Agreement shall be for one (1) year
from the date hereof, and from year to year thereafter unless terminated in
writing by Lender or Borrower. Borrower and Lender shall each have the right to
terminate this Agreement at any time. Notwithstanding the foregoing, any
termination of this Agreement shall not affect Lender's security interest in the
Collateral, and this Agreement shall continue to be effective, and Lender's
right and remedies hereunder shall survive such termination, until all
transactions entered into and Obligations incurred hereunder or in connection
herewith have been completed and satisfied in full.
12. MISCELLANEOUS.
12.1 SEVERABILITY. In the event that any provision of this Agreement is
held to be invalid or unenforceable, this Agreement will be construed as not
containing such provision and the remainder of the Agreement shall remain in
full force and effect.
12.2 CHOICE OF LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California, without giving effect to
principles of conflicts of law.
12.3 NOTICES. All notices shall be given to Lender and Borrower at the
addresses set forth in this Agreement and shall be deemed to have been
delivered and received: (A) if mailed, three (3) calendar days after deposited
in the United States mail, first class, postage prepaid; (B) one (1) calendar
day after deposit with an overnight mail or messenger service; (C) on the same
date of transmission if sent by hand delivery, telecopy, telefax or telex.
12.4 TITLES AND SECTION HEADINGS. The titles and section headings used
herein are for convenience only and shall not be used in interpreting this
Agreement.
13. DEFINITIONS. All terms used herein which are defined in the California
Uniform Commercial Code shall have the meaning given therein unless otherwise
defined in this Agreement. The term "including" is not limiting or exclusive.
When used herein, the following terms shall have the following meanings.
13.1 "ACCOUNT" shall mean all accounts, accounts receivable, chattel
paper, contract rights, documents, general intangibles, instruments, letters of
credit, banker's acceptance, and other rights to payment, and proceeds thereof.
13.2 "ACCOUNT BALANCE" shall mean, on any given day, the gross face amount
of all Financed Accounts unpaid on that day.
13.3 "ACCOUNT DEBTOR" shall have the meaning set forth in the California
Uniform Commercial Code and shall include any person liable on any Financed
Account, including any guarantor of the Financed Account and any issuer of a
letter of credit or banker's acceptance.
13.4 "ADJUSTMENT(S)" shall have the meaning set forth in Section 3.1.
13.5 "ADMINISTRATIVE FEE" shall have the meaning as set forth in Section
2.2.
13.6 "ADVANCE" shall have the meaning set forth in Section 1.3.
13.7 "CHARGEBACK AMOUNT" shall have the meaning set forth in Section 3.2.
13.8 "COLLATERAL" shall have the meaning set forth in Section 6.
13.9 "CUSTOMER PAYMENTS" shall have the meaning set forth in Section 2.4.
13.10 "EVENT OF DEFAULT" shall have the meaning set forth in Section 7.
13.11 "FINANCE FEES" shall have the meaning set forth in Section 2.1.
13.12 "FINANCED ACCOUNTS" shall mean all Accounts identified on any
Schedule of Accounts delivered by Borrower to Lender which Lender elects to
finance and against such Lender makes an Advance, and all monies due or to
become due thereunder.
13.13 "SCHEDULE OF ACCOUNTS" shall have the meaning set forth in Section
1.1.
13.14 "OBLIGATIONS" shall mean all advances, obligations, indebtedness
and duties owing by Borrower to Lender of any kind or nature, present or
future, arising under or in connection with this Agreement or any other
agreement entered into between Lender and Borrower, whether direct or indirect,
including all Advances, Finance Fees, Administrative Fees, Chargeback Amounts,
attorneys' fees and expenses.
13.15 "REMITTANCE" shall have the meaning set forth in Section 1.3.
13.16 "RESERVE" shall have the meaning set forth in Section 1.3.
13.17 "SETTLEMENT DATE" shall mean the last calendar day of each
Settlement Period.
13.18 "SETTLEMENT PERIOD" shall mean each calendar month of each year.
IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement
on the day and year written above.
ADDRESS OF BORROWER, CHIEF EXECUTIVE
"LENDER" OFFICER AND LOCATION OF COLLATERAL:
PACIFIC BUSINESS FUNDING, a division Street: 0000 Xxxxxxx Xxx.
of Cupertino National Bank -------------------------------
City: San Xxxx
----------------------------------
By /s/ Xxxxx X'Xxxx State: CA Zip Code:
---------------------------------- ------ ---------------
Title Executive Vice-President Telephone No.: (000) 000-0000
------------------------------- ----------------------
"BORROWER" Facsimile No.: (000) 000-0000
----------------------
/s/ Xxxxxxx Xxxxxxx OTHER LOCATIONS OF COLLATERAL, IF ANY,
------------------------------------ IN ADDITION TO ABOVE:
By Xxxxxxx Xxxxxxx ---------------------------------------
----------------------------------
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Title President and Chief Executive
Officer
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(Page 4 of 4)
AMENDMENT TO RECEIVABLES AGREEMENT
This Amendment to Receivables Financing Agreement (this "Amendment") is entered
into as of this 25th day of September, 2001, by and among Gadzook Networks, Inc.
("Borrower") and Pacific Business Funding, a division of Cupertino National Bank
("Lender").
WHEREAS, pursuant to that certain Receivables Financing Agreement dated
as of ________, by and between Borrower and Lender, as from time to time
amended, restated, supplemented or otherwise modified, (the "Receivables
Financing Agreement"), Lender had made or will hereafter make, Advances to
Borrower for the financing of Accounts. All capitalized terms used but not
otherwise defined in this Amendment shall have the respective meanings assigned
to such terms in the Receivables Financing Agreement.
WHEREAS, pursuant to the terms of the Receivables Financing Agreement,
Borrower has granted to Lender a security interest in its personal property
assets to secure its Obligations.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Granting Clause. Section 6 of the Receivables Financing Agreement is
hereby amended and restated to read in its entirety as follows:
"6. Grant of Security Interest; Other Agreements.
61 To secure the prompt payment and performance of all of
Borrower's Obligations to Lender, Borrower hereby grants to Lender a
continuing lien upon and security interest in, and right of set off
with respect to, all of Borrower's right, title and interest in, to
and under all personal property and other assets, whether now owned
by or owing to, or hereafter acquired by or arising in favor of,
Borrower, and regardless of where located, including the following
(collectively, the "Collateral"):
(A) All accounts, accounts receivable, chattel paper, contract
rights, documents, instruments, letters of credit,
letter-of-credit rights, supporting obligations, banker's
acceptances, drafts, securities and general intangibles,
including all software, payment intangibles, claims, causes of
action, rights to receive tax refunds, rights in and claims
under insurance policies (including rights to unearned
premiums); customer lists, copyrights, patents, trademarks,
license agreements, goodwill associated with trademarks and
trademark licenses, and other intellectual property of every
kind and other rights to payment;
(B) All inventory;
(C) All deposit accounts and deposits therein;
(D) All monies, remittances, and other amounts due under this
Agreement and any other agreement between Lender and Borrower;
(E) All equipment, machinery, motor vehicles, furniture,
fixtures, tools and supplies;
(F) All investment property;
(G) All farm products, crops, timber, minerals and the like
(including oil and gas);
(H) the following commercial tort claims _____________________
_______________________________________________________________
(I) All books and records relating to the foregoing, including
all computer programs, printed output and computer readable
data; and
(J) To the extent not otherwise included, all proceeds, tort
claims, insurance claims and other rights to payments not
otherwise included in the foregoing and products of the
foregoing and all accessions to, substitutions and replacements
for, and rents and profits of, each of the foregoing.
62 Borrower hereby irrevocably authorizes the Lender at any time
and from time to time to file in any filing office in any Uniform
Commercial Code jurisdiction any initial financing statements and
amendments thereto that (a) indicate the Collateral (i) as all
assets of Borrower or words of similar effect, regardless of whether
any particular asset comprised in the Collateral falls within the
scope of Article 9 of the Code or such jurisdiction, or (ii) as
being of an equal or lesser scope or with greater detail, and (b)
contain any other information required by part 5 of Article 9 of the
Code for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether Borrower is
an organization, the type of organization and any organization
identification number issued to Borrower, and (ii) in the case of a
financing statement filed as a fixture filing or indicating
Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral
relates. Borrower agrees to furnish any such information Lender
promptly upon request. Borrower also ratifies its authorization for
Lender to have filed in any Uniform Commercial Code jurisdiction any
initial financing statements or amendments thereto if filed prior to
the date hereof.
63 Borrower shall sign and deliver to Lender UCC financing
statements, in form acceptable to Lender as to those jurisdictions
that are not Uniform Commercial Code jurisdictions.
64 Borrower shall deliver to Lender the originals of all
instruments, certificated securities, chattel paper and documents
evidencing or related to Financed Accounts and other Collateral.
65 Borrower shall obtain signed acknowledgments of Lender's
security interests from bailees having possession of Borrower's
goods that they hold for the benefit of Lender.
66 At the request of Lender, Borrower shall obtain authenticated
control letters from each issuer of uncertificated securities,
securities intermediary, or commodities intermediary issuing or
holding any financial assets or commodities to or for Borrower.
67 Borrower shall maintain all of its deposit accounts with Lender.
68 If Borrower is or becomes the beneficiary of a letter of credit,
Borrower shall promptly, and in any event within two (2) business days after
becoming a beneficiary, notify Lender thereof and enter into a tri-party
agreement with Lender and the issuer and/or confirmation bank with respect to
letter-of-credit rights assigning such letter-of-credit rights to Lender.
69 Borrower shall take all steps necessary to grant the Lender control of
all electronic chattel paper in accordance with the Code and all
"transferable records" as defined in each of the Uniform Electronic
Transactions Act and the Electronic Signatures in Global and National
Commerce Act.
610 Borrower shall promptly, and in any event within two (2) Business Days
after the same is acquired by it, notify Lender of any commercial tort claim
(as defined in the Code) acquired by it and unless otherwise consented by
Lender, Borrower shall enter into a supplement to this Receivables Agreement,
granting to Lender a security interest in such commercial tort claim.
2. Section 5(L) of the Receivables Financing Agreement is hereby amended and
restated to read in its entirety as follows:
(L) Borrower's name as it appears in official filings in the state of its
incorporation or other organization, the type of entity of Borrower
(including corporation, partnership, limited partnership or limited
liability company), organizational identification number issued by
Borrower's state of incorporation or organization or a statement that no
such number has been issued, Borrower's state of organization or
incorporation, the location of Borrower's chief executive office, principal
place of business, offices, all warehouses and premises where Collateral is
stored or located, and the locations of its books and records concerning
the Collateral are set forth below Borrower's signature. Borrower has only
one state of incorporation or organization."
3. Additional Covenants. The following clauses (N), and (O) are added to
Section 5 of the Receivables Financing Agreement:
(N) Borrower shall not reincorporate or reorganize itself under the laws
of any jurisdiction other than the jurisdiction in which it is incorporated
or organized as of the date hereof without the prior written consent of
Lender; and
(O) Borrower acknowledges that it is not authorized to file any financing
statement or amendment or termination statement with respect to any
financing statement without the prior written consent of Lender and agrees
that it will not do so without the prior written consent of Lender, subject
to Borrower's rights under Section 9509(d)(2) of the Code.
4. The following are hereby added as new definitions to Section 13 of the
Receivables Financing Agreement:
"Code" means the California Commercial Code as in effect on July 1, 2001, as
the same may be amended from time to time.
"Uniform Commercial Code jurisdiction" means any jurisdiction that had adopted
all or substantially all of Article 9 as contained in the 2000 Official Text of
the Uniform Commercial Code, as recommended by the National Conference of
Commissioners on Uniform State Laws and the American Law Institute, together
with any subsequent amendments or modifications to the Official Text.
5. The definition of "Account" in Section 13.1 of the Receivables Financing
Agreement is hereby amended and restated to read as follows:
"Account" shall mean all accounts, accounts receivable, chattel paper, contract
rights, documents, general intangibles, instruments, letters of credit,
letter-of-credit rights, supporting obligations, banker's acceptances, and other
rights to payment, and proceeds thereof.
6. Effect on Receivables Financing Agreement. All references in the
Receivables Financing Agreement to the Receivables Financing Agreement shall be
deemed to refer to the Receivables Financing Agreement as amended hereby.
7. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
CALIFORNIA (WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAW RULES).
8. Counterparts. This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be
executed and delivered by its duly authorized officer as of the date first set
forth above.
"Borrower: GADZOOX Networks, Inc. "Lender"
---------------------------------------
PACIFIC BUSINESS FUNDING,
a division of Cupertino
National Bank
By: /s/ XXXXX XXXXXXX
-----------------------------------
Name: Xxxxx Xxxxxxx
----------------------------------
Title: VP Finance/CFO By: /s/ Xxxxx X'Xxxx
--------------------------------- --------------------------------
Name:
------------------------------
State of Formation: Delaware Title: Executive Vice President
-------------------- -----------------------------
Organizational Identification Number: 00-0000000
-----------
NEGATIVE PLEDGE AGREEMENT
This Negative Pledge Agreement is made as of September 27, 2001, by and
between Gadzoox Networks, Inc. ("Borrower") and Pacific Business Funding, a
division of Cupertino National Bank ("Bank").
In connection with the Receivables Financing Documents being concurrently
executed between Borrower and Bank, Borrower and Bank, Borrower agrees as
follows:
1. Except as permitted in the Receivables Financing Documents, Borrower
shall not sell, transfer, assign, mortgage, pledge, lease, grant a security
interest in, or encumber any of Borrower's intellectual property, including,
without limitation, the following:
a. Any and all copyright rights, copyright applications, copyright
registrations and like protection in each work or authorship and derivative work
thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret, now or hereafter existing, created, acquired or held
(collectively, the "Copyrights");
b. Any and all trade secrets, and any and all intellectual property
rights in computer software and computer software products now or hereafter
existing, created, acquired or held;
c. Any and all design rights which may be available to Borrower now or
hereafter existing, created, acquired or held;
d. All patents, patent applications and like protections, including,
without limitation, improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same, including, without limitation,
the patents and patent applications (collectively, the "Patents");
e. Any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like protections, and
the entire goodwill of the business of Borrower connected with and symbolized by
such trademarks (collectively, the "Trademarks");
f. Any and all claims for damages by way of past, present and future
infringements of any of the rights included above, with the right, but not the
obligation, to xxx for and collect such damages for said use or infringement of
the intellectual property rights identified above;
g. All licenses or other rights to use any of the Copyrights, Patents
or Trademarks and all license fees and royalties arising from such use to the
extent permitted by such license or rights;
h. All amendments, extensions, renewals and extensions of any of the
Copyrights, Patents or Trademarks; and
i. All proceeds and products of the foregoing, including, without
limitation, all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.
2. It shall be an Event of Default under the Receivables Financing
Documents between Borrower and Bank if there is a breach of any term of this
Negative Pledge Agreement.
3. Capitalized items used herein without definition shall have the same
meanings as set forth in the Loan and Security Agreement of even date herewith.
-----------------------
PACIFIC BUSINESS FUNDING, A DIVISION OF
CUPERTINO NATIONAL BANK
By: /s/ XXXXXXX XXXXXXX By: /s/ Xxxxx X'Xxxx
---------------------------------- -----------------------------------
Title: President & CEO Title: Executive Vice-President
------------------------------- --------------------------------
