Exhibit 10.11
LOAN AND SECURITY AGREEMENT
NUANCE COMMUNICATIONS
TABLE OF CONTENTS
Page
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1 ACCOUNTING AND OTHER TERMS 4
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2 LOAN AND TERMS OF PAYMENT 4
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2.1 Credit Extensions 4
2.2 Interest Rate, Payments 5
2.3 Fees 5
3 CONDITIONS OF LOANS 5
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3.1 Conditions Precedent to Initial Credit Extension 5
3.2 Conditions Precedent to all Credit Extensions 5
4 CREATION OF SECURITY INTEREST 6
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4.1 Grant of Security Interest 6
5 REPRESENTATIONS AND WARRANTIES 6
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5.1 Due Organization and Authorization 6
5.2 Collateral 6
5.3 Litigation 6
5.4 No Material Adverse Change in Financial Statements 7
5.5 Solvency 7
5.6 Regulatory Compliance 7
5.7 Subsidiaries 7
5.8 Full Disclosure 7
6 AFFIRMATIVE COVENANTS 7
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6.1 Government Compliance 7
6.2 Financial Statements, Reports, Certificates 8
6.3 Inventory; Returns 8
6.4 Taxes 8
6.5 Insurance 8
6.6 Primary Accounts 9
6.7 Financial Covenants 9
6.8 Further Assurances 9
7 NEGATIVE COVENANTS 9
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7.1 Dispositions 9
7.2 Changes in Business, Ownership, Management or Business Locations 9
7.3 Mergers or Acquisitions 9
7.4 Indebtedness 9
7.5 Encumbrance 10
7.6 Distributions; Investments 10
7.7 Transactions with Affiliates 10
7.8 Subordinated Debt 10
7.9 Compliance 10
8 EVENTS OF DEFAULT 10
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8.1 Payment Default 10
8.2 Covenant Default 10
8.3 Material Adverse Change 11
8.4 Attachment 11
8.5 Insolvency 11
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8.6 Other Agreements 11
8.7 Judgments 11
8.8 Misrepresentations 11
9 BANK'S RIGHTS AND REMEDIES 11
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9.1 Rights and Remedies 11
9.2 Power of Attorney 12
9.3 Accounts Collection 12
9.4 Bank Expenses 12
9.5 Bank's Liability for Collateral 13
9.6 Remedies Cumulative 13
9.7 Demand Waiver 13
10 NOTICES 13
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11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER 13
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12 GENERAL PROVISIONS 13
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12.1 Successors and Assigns 13
12.2 Indemnification 14
12.3 Time of Essence 14
12.4 Severability of Provision 14
12.5 Amendments in Writing, Integration 14
12.6 Counterparts 14
12.7 Survival 14
12.8 Confidentiality 14
12.9 Attorneys' Fees, Costs and Expenses 15
13 DEFINITIONS 15
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13.1 Definitions 15
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THIS LOAN AND SECURITY AGREEMENT dated June 23, 1999, between SILICON
VALLEY BANK ("Bank"), whose address is 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx,
Xxxxxxxxxx 00000 and NUANCE COMMUNICATIONS ("Borrower"), whose address is 0000
Xxxxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000 provides the terms on which Bank will
lend to Borrower and Borrower will repay Bank. The parties agree as follows:
1. ACCOUNTING AND OTHER TERMS
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Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document. This Agreement shall be construed to
impart upon Bank a duty to act reasonably at all times.
2 LOAN AND TERMS OF PAYMENT
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2.1 CREDIT EXTENSIONS.
Borrower will pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.
2.1.1 EQUIPMENT ADVANCES.
(a) Through June 23, 2000 (the "Equipment Availability End Date"),
Bank will make advances ("Equipment Advance" and, collectively, "Equipment
Advances") not exceeding the Committed Equipment Line. The Equipment Advances
may only be used to finance Equipment purchased on or after 90 days before the
respective Equipment Advance and may not exceed 100% of the equipment invoice.
Software licenses, leasehold improvements and other soft costs (consisting of
taxes, shipping, warranty charges, freight discounts and installation expense)
may constitute up to 50% of the aggregate Equipment Advances. Each Equipment
Advance must be for a minimum of $25,000. In addition, the initial Equipment
Advance may be used to purchase Equipment purchased on or after January 1, 1999.
(b) Interest accrues from the date of each Equipment Advance at the
rate in Section 2.2(a) and is payable monthly until the Equipment Availability
End Date occurs.
(c) Equipment Advances outstanding on December 23, 1999 are payable
in 36 equal monthly installments of principal, plus accrued interest, beginning
on January 23, 2000 and ending on December 23, 2002.
(d) Equipment Advances made after December 23, 1999 and outstanding
on the Equipment Availability End Date are payable in 36 equal monthly
installments of principal, plus accrued interest, beginning on the 23rd of each
month following the Equipment Availability End Date and ending on June 23, 2003
(the "Equipment Maturity Date"). Equipment Advances when repaid may not be
reborrowed.
(e) To obtain an Equipment Advance, Borrower must notify Bank (the
notice is irrevocable) by facsimile no later than 3:00 p.m. Pacific time 1
Business Day before the day on which the Equipment Advance is to be made. The
notice in the form of Exhibit B (Payment/Advance Form) must be signed by a
Responsible Officer or designee and include a copy of the invoice for the
Equipment being financed.
2.1.2 CASH MANAGEMENT FACILITY.
Borrower may use up to $250,000 for Bank's Cash Management Services,
which may include merchant services, direct deposit of payroll, business credit
card, and check cashing
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services identified in the Cash Management Services Agreement (the "Cash
Management Services"). The Cash Management Facility terminates on the Cash
Management Maturity Date, when all outstanding amounts under the Cash Management
Facility are immediately payable.
2.2 INTEREST RATE, PAYMENTS.
(a) Interest Rate. Equipment Advances accrue interest on the outstanding
principal balance at a per annum rate of 0.75 percentage points above the Prime
Rate. After the occurrence and during the continuance of an Event of Default,
Obligations accrue interest at 5 percent above the rate effective immediately
before the Event of Default. The interest rate increases or decreases when the
Prime Rate changes. Interest is computed on a 360 day year for the actual number
of days elapsed.
(b) Payments. Interest due on the Equipment Advances is payable on the 1st
of each month. Bank may debit any of Borrower's deposit accounts including
Account Number ____________________________ for principal and interest payments
or any amounts Borrower owes Bank under this Agreement. Bank will notify
Borrower when it debits Borrower's accounts. These debits are not a set-off.
Payments (OTHER THAN A WIRE TRANSFER OR IMMEDIATELY AVAILABLE FUNDS) received
after 12:00 noon Pacific 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
accrue.
2.3 FEES.
Borrower will pay:
(a) Facility Fee. A fully earned, non-refundable Facility Fee of $5,000
due on the Closing Date; and
(b) Bank Expenses. All Bank Expenses (including reasonable attorneys' fees
and expenses) incurred through and after the date of this Agreement, when due.
3 CONDITIONS OF LOANS
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3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.
Bank's obligation to make the initial Credit Extension is subject to the
condition precedent that it receive the agreements, documents and fees it
requires.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.
Bank's obligations to make each Advance, including the initial Advance, is
subject to the following:
(a) timely receipt of any Payment/Advance Form; and
(b) the representations and warranties in Section 5 must be materially
true on the date of the Payment/Advance Form and on the effective date of each
Credit Extension (except to the extent they relate specifically to an earlier
date, in which case such representations and warranties shall continue to have
been true and accurate as of such date) and no Event of Default may have
occurred and be continuing, or result from the Credit Extension. Each Credit
Extension is Borrower's representation and warranty on that date that the
representations and warranties of Section 5 remain true in all material
respects.
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4 CREATION OF SECURITY INTEREST
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4.1 GRANT OF SECURITY INTEREST.
Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank may place a "hold" on any deposit account pledged as
Collateral. Notwithstanding the foregoing, the security interest granted herein
does not extend to and the term "Collateral" does not include any license or
contract rights to the extent (i) the granting of a security interest in it
would be contrary to applicable law, or (ii) that such rights are nonassignable
by their terms (but only to the extent such prohibition is enforceable under
applicable law, including, without limitation, Section 9318(4) of the Code)
without the consent of the licensor or other party (but only to the extent such
consent has not been obtained). Except as disclosed on the Schedule, Borrower is
not a party to, nor is bound by, any license or other agreement that prohibits
or otherwise restricts Borrower from granting a security interest in Borrower's
interest in such license or agreement or any other property. Without prior
notice to Bank, Borrower shall not enter into, or become bound by, any such
license or agreement which is reasonably likely to have a material impact on
Borrower's business or financial condition. Borrower shall take such steps as
Bank reasonably requests to obtain the consent of, or waiver by, any person
whose consent or waiver is necessary for such licenses or contract rights to be
deemed "Collateral" and for Bank to have a security interest in it that might
otherwise be restricted or prohibited by law or by the terms of any such license
or agreement, whether now existing or entered into in the future. If the
Agreement is terminated, Bank's lien and security interest in the Collateral
will continue until Borrower fully satisfies its Obligations.
5 REPRESENTATIONS AND WARRANTIES
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Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION.
Borrower and each Subsidiary is duly existing and in good standing in its
state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified except for states as to which any failure
so to qualify would not cause a Material Adverse Change.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the default would reasonably be expected to cause a Material
Adverse Change.
5.2 COLLATERAL.
Borrower has good title to the Collateral, free of Liens except Permitted
Liens. All Inventory is in all material respects of good and marketable quality,
free from material defects.
5.3 LITIGATION.
Except as shown in the Schedule, there are no actions or proceedings
pending or, to Borrower's knowledge, threatened by or against Borrower or any
Subsidiary in which a likely adverse decision would reasonably be expected to
cause a Material Adverse Change.
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5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.
All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations. There has not been any material 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 G, 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 would reasonably be expected to cause a Material Adverse Change. None of
Borrower's or any Subsidiary's properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary has timely filed all required
tax returns and paid, or made adequate provision to pay, all taxes, except those
being contested in good faith with adequate reserves under GAAP. Borrower and
each Subsidiary has obtained all consents, approvals and authorizations of, made
all declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently conducted
except where the failure to obtain such consent, approval or authorization to
make such declaration or filing or to give any such notice 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 representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank taken together with all such
certificates and written statements given to Bank contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements contained in the certificates or statements not misleading (it being
recognized by Bank that the projections and forecasts provided by Borrower in
good faith and based upon reasonable assumptions are not to be viewed as facts
and that actual results during the period or periods covered by any such
projections and forecasts may differ from the projected or forecasted results).
6 AFFIRMATIVE COVENANTS
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Borrower will do all of the following:
6.1 GOVERNMENT COMPLIANCE.
Borrower will maintain its and all Subsidiaries' legal existence and good
standing in its jurisdiction of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
cause a Material Adverse Change in Borrower's
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business or operations. Borrower will comply, and have each Subsidiary comply,
with all laws, ordinances and regulations to which it is subject, noncompliance
with which could have a material adverse effect on Borrower's business or
operations or cause a Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower will deliver to Bank: (i) as soon as available, but no later
than 30 days after the last day of each month, a company prepared consolidated
balance sheet and income statement covering Borrower's consolidated operations
during the period, in a form and certified by a Responsible Officer acceptable
to Bank; (ii) as soon as available, but no later than 120 days after the last
day of Borrower's fiscal year, audited consolidated financial statements
prepared under GAAP, consistently applied, together with an opinion which is
unqualified or otherwise consented to by Bank on the financial statements from
an independent certified public accounting firm acceptable to Bank; (iii) a
prompt report of any legal actions pending or threatened against Borrower or any
Subsidiary that could result in damages or costs to Borrower or any Subsidiary
of $100,000 or more; and (iv) budgets, sales projections, operating plans or
other financial information Bank requests.
(b) Within 30 days after the last day of each month, Borrower will deliver
to Bank with the monthly financial statements a Compliance Certificate signed by
a Responsible Officer in the form of Exhibit C, together with accounts
receivable and accounts payable agings.
(c) At such times as an Event of Default has occurred and is continuing
Bank has the right to audit Borrower's Collateral at Borrower's expense.
6.3 INVENTORY; RETURNS.
Borrower will keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary practices as they exist at execution of
this Agreement. Borrower must promptly notify Bank of all returns, recoveries,
disputes and claims, that involve more than $50,000.
6.4 TAXES.
Borrower will make, and cause each Subsidiary to make, timely payment of
all material federal, state, and local taxes or assessments and will deliver to
Bank, on demand, appropriate certificates attesting to the payment.
6.5 INSURANCE.
Borrower will keep its business and the Collateral insured for risks and in
amounts, as Bank requests. Insurance policies will be in a form, with companies,
and in amounts that are satisfactory to Bank. All property policies will have a
lender's loss payable endorsement showing Bank as an additional loss payee and
all liability policies will show the Bank as an additional insured and provide
that the insurer must give Bank at least 20 days notice before canceling its
policy. At Bank's request, Borrower will deliver certified copies of policies
and evidence of all premium payments. So long as no Event of Default has
occurred and is continuing, proceeds payable under any casualty policy will, at
Borrower's option, be payable to Borrower to replace the property subject to the
claim, provided that any such replacement property shall be deemed Collateral in
which Bank has been granted a first priority security interest. If an Event of
Default has occurred and is continuing, then, at Bank's option, all proceeds
payable under any such casualty policy shall be payable to Bank on account of
the Obligations.
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6.6 PRIMARY ACCOUNTS.
Borrower will maintain its primary depository and operating accounts with
Bank.
6.7 FINANCIAL COVENANTS.
Borrower will maintain as of the last day of each month:
(i) TANGIBLE NET WORTH. A Tangible Net Worth of at least
$2,000,000.
(ii) LIQUIDITY COVERAGE. A ratio of cash plus 50% of net
Accounts, divided by the aggregate outstanding Equipment Advances of not less
than 2.00 to 1.00.
6.8 FURTHER ASSURANCES.
Borrower will execute any further instruments and take further action
as Bank reasonably requests to perfect or continue Bank's security interest in
the Collateral or to effect the purposes of this Agreement.
7 NEGATIVE COVENANTS
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Borrower will not do any of the following:
7.1 DISPOSITIONS.
Convey, sell, lease, transfer or otherwise dispose of (collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, other than Transfers (i) of Inventory in the ordinary
course of business; (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business; or (iii) of worn-out or obsolete Equipment.
7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.
Engage in or permit any of its Subsidiaries to engage in any business
other than the businesses currently engaged in by Borrower or have a material
change in its ownership of greater than 25% (other than the sale by Borrower of
equity securities of Borrower. Borrower will not, without at least 30 days prior
written notice, relocate its chief executive office or add any new offices or
business locations.
7.3 MERGERS OR ACQUISITIONS.
Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except where (i) no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement or result in a decrease of more than 25% of Tangible Net Worth; or
(ii) the merger or consolidation is (a) a Subsidiary into another Subsidiary or
(b) a Subsidiary into Borrower.
7.4 INDEBTEDNESS.
Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.
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7.5 ENCUMBRANCE.
Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
herein, subject only to Permitted Liens.
7.6 DISTRIBUTIONS; INVESTMENTS.
Directly or indirectly acquire or own any Person, or make any Investment in
any Person, other than Permitted Investments, or permit any of its Subsidiaries
to do so. Pay any dividends or make any distribution or payment or redeem,
retire or purchase any capital stock, except for repurchases of stock from
former employees or directors of Borrower under the terms of applicable
repurchase agreements in an aggregate amount not to exceed $50,000 in the
aggregate in any fiscal year, provided that no Event of Default has occurred, is
continuing or would exist after giving effect to the repurchases.
7.7 TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter or permit any material transaction with any
Affiliate (other than a Subsidiary) except transactions that are in the ordinary
course of Borrower's business, on terms 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.
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 in any material respect with the Federal Fair Labor Standards Act or
violate any other law or regulation, if the violation could be reasonably
expected to have a material adverse effect on Borrower's business or operations
or cause a Material Adverse Change, or permit any of its Subsidiaries to do so.
8 EVENTS OF DEFAULT
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Any one of the following is an Event of Default:
8.1 PAYMENT DEFAULT.
If Borrower fails to pay any of the Obligations within 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 Extensions will be made during the cure period);
8.2 COVENANT DEFAULT.
If 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
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within 10 days after it occurs, or if the default cannot be cured within 10 days
or cannot be cured after Borrower's attempts within 10 day period, and the
default may be cured within a reasonable time, then Borrower has an additional
period (of not more than 30 days) to attempt to cure the default. During the
additional time, the failure to cure the default is not an Event of Default (but
no Credit Extensions will be made during the cure period);
8.3 MATERIAL ADVERSE CHANGE.
(i) If there occurs a material impairment in the perfection or priority of
the Bank's security interest in the Collateral or in the value of such
Collateral which is not covered by adequate insurance or (ii) if the Bank
determines, based upon information available to it and in its reasonable
judgment, that there is a reasonable likelihood that Borrower will fail to
comply with one or more of the financial covenants in Section 6 during the next
succeeding financial reporting period.
8.4 ATTACHMENT.
If any material portion of Borrower's assets is attached, seized, levied
on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower's assets by any government agency and not paid within 10 days
after Borrower receives notice. These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Credit Extensions will be
made during the cure period);
8.5 INSOLVENCY.
If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Credit Extensions will be made before
any Insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS.
If there is a default in any agreement between Borrower and a third party
that gives the third party the right to accelerate any Indebtedness exceeding
$50,000 or that could reasonably expected to cause a Material Adverse Change;
8.7 JUDGMENTS.
If a money judgment(s) in the aggregate of at least $100,000 not covered by
insurance is rendered against Borrower and is unsatisfied and unstayed for 30
days (but no Credit Extensions will be made before the judgment is stayed or
satisfied); or
8.8 MISREPRESENTATIONS.
If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document.
9 BANK'S RIGHTS AND REMEDIES
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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:
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(a) Declare all Obligations immediately due and payable (but if an Event
of Default described in Section 8.5 occurs all Obligations are immediately due
and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's benefit under
this Agreement or under any other agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account debtors for
amounts, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or reasonable
to protect its security interest in the Collateral. Borrower will assemble the
Collateral if Bank requires and make it available as Bank designates. Bank may
enter premises where the Collateral is located, take and maintain possession of
any part of the Collateral, and pay, purchase, contest, or compromise any Lien
which appears to be prior or superior to its security interest and pay all
expenses incurred. Borrower grants Bank a license to enter and occupy any of its
premises, without charge, to exercise any of Bank's rights or remedies;
(e) Apply to the Obligations any (i) balances and deposits of Borrower it
holds, or (ii) any amount held by Bank owing to or for the credit or the account
of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral; and
(g) Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY.
Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or xxxx of landing for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Credit Extensions
terminates.
9.3 ACCOUNTS COLLECTION.
When an Event of Default occurs and continues, Bank may notify any Person
owing Borrower money of Bank's security interest in the funds and verify the
amount of the Account. Borrower must collect all payments in trust for Bank and,
if requested by Bank, immediately deliver the payments to Bank in the form
received from the account debtor, with proper endorsements for deposit.
9.4 BANK EXPENSES.
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank reasonably deems prudent. Any reasonable amounts paid by Bank are
Bank Expenses and immediately due and payable, bearing
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interest at the then applicable rate and secured by the Collateral. No payments
by Bank are deemed an agreement to make similar payments in the future or Bank's
waiver of any Event of Default.
9.5 BANK'S LIABILITY FOR COLLATERAL.
If Bank complies with reasonable banking practices it is not liable for:
(a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral;
(c) any diminution in the value of the Collateral; or (d) any act or default of
any carrier, warehouseman, bailee, or other person. Borrower bears all risk of
loss, damage or destruction of the Collateral.
9.6 REMEDIES CUMULATIVE.
Bank's rights and remedies under this Agreement, the Loan Documents, and
all other agreements are cumulative. Bank has all rights and remedies provided
under the Code, by law, or in equity. Bank's exercise of one right or remedy is
not an election, and Bank's waiver of any Event of Default is not a continuing
waiver. Bank's delay is not a waiver, election, or acquiescence. No waiver is
effective unless signed by Bank and then is only effective for the specific
instance and purpose for which it was given.
9.7 DEMAND WAIVER.
Borrower waives demand, notice of default or dishonor, notice of payment
and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.
10 NOTICES
-------
All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A party may change its notice address by giving the other party
written notice.
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
------------------------------------------
California 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 Santa Xxxxx County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
------------------
12.1 SUCCESSORS AND ASSIGNS.
This Agreement binds and is for the benefit of the successors and permitted
assigns of each party. Borrower may not assign this Agreement or any rights
under it without Bank's prior written consent which may be granted or withheld
in Bank's discretion. Bank has the right,
13
without the consent of or notice to Borrower, to sell, transfer, negotiate, or
grant participation in all or any part of, or any interest in, Bank's
obligations, rights and benefits under this Agreement.
12.2 INDEMNIFICATION.
Borrower will indemnify, defend and hold harmless Bank and its officers,
employees, and agents against: (a) all obligations, demands, claims, and
liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE.
Time is of the essence for the performance of all obligations in this
Agreement.
12.4 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other provision in
determining the enforceability of any provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing and signed by Borrower
and Bank. This Agreement represents the entire agreement about this subject
matter, and supersedes prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement merge into this Agreement and
the Loan Documents.
12.6 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.
12.7 SURVIVAL.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.
12.8 CONFIDENTIALITY.
In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates
in connection with their present or prospective business relations with
Borrower, (ii) to prospective transferees or purchasers of any interest in the
loans, (iii) as required by law, regulation, subpoena, or other order, (iv) as
required in connection with Bank's examination or audit and (v) as Bank
considers appropriate exercising remedies under this Agreement. Confidential
information does not include information that either: (a) is in the public
domain or in Bank's possession when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank; or (b) is disclosed to Bank by a third
party, if Bank does not know that the third party is prohibited from disclosing
the information.
14
12.9 ATTORNEYS' FEES, COSTS AND EXPENSES.
In any action or proceeding between Borrower and Bank arising out of
the Loan Documents, the prevailing party will be entitled to recover its
reasonable attorneys' fees and other costs and expenses incurred, in addition to
any other relief to which it may be entitled.
13 DEFINITIONS
-----------
13.1 DEFINITIONS.
In this Agreement:
"ACCOUNTS" are all existing and later arising accounts, contract
rights, and other obligations owed Borrower in connection with its sale or lease
of goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
"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 reasonable audit fees and expenses and
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) for preparing, negotiating, administering, defending and enforcing the
Loan Documents (including appeals or Insolvency Proceedings).
"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.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which the Bank is closed.
"CASH MANAGEMENT FACILITY" is defined in Section 2.1.2.
"CASH MANAGEMENT MATURITY DATE" is March 31, 2000.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the California Uniform Commercial Code.
"COLLATERAL" is the property described on Exhibit A.
---------
"COMMITTED EQUIPMENT LINE" is a Credit Extension of up to $2,000,000.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation
15
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 Equipment Advance or any other extension of
credit by Bank for Borrower's benefit.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"EQUIPMENT ADVANCE" is defined in Section 2.1.1.
"EQUIPMENT AVAILABILITY END DATE" is defined in Section 2.1.1.
"EQUIPMENT MATURITY DATE" is defined in Section 2.1.1.
"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 (other than trade debt incurred in the ordinary
course of business), such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"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.
"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 defined in Section 8.3.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including letters of credit and
Exchange Contracts and including interest
16
accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.
"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 and with respect to surety bonds
and similar obligations incurred in the ordinary course of business;
(e) Indebtedness secured by Permitted Liens;
(f) Indebtedness of Borrower to any Subsidiary and Contingent
Obligations of any Subsidiary with respect to obligations of Borrower (provided
that the primary obligations are not prohibited hereby), and Indebtedness of any
Subsidiary to any other Subsidiary and Contingent Obligations of any Subsidiary
with respect to obligations of any other Subsidiary (provided that the primary
obligations are not prohibited hereby);
(g) Other Indebtedness not otherwise permitted by Section 7.4 not
exceeding Fifty Thousand Dollars ($100,000) in the aggregate outstanding at any
time; and
(h) Extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (f) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Closing
Date;
(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard & Poor's
Corporation or Xxxxx'x Investors Service, Inc., (iii) Bank's certificates of
deposit issued maturing no more than 1 year after issue, and (iv) any
investments permitted by Borrower's investment policy, as amended from time to
time, provided that such investment policy (and any such amendment thereto) has
been approved by Bank;
(c) Investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of Borrower;
(d) Investments accepted in connection with Transfers permitted by
Section 7.1;
(e) Investments of Subsidiaries in or to other Subsidiaries or
Borrower and Investments by Borrower in Subsidiaries not to exceed $100,000 in
the aggregate in any fiscal year;
(f) Investments consisting of (i) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business, (ii) loans to employees, officers or directors relating to the
purchase of equity securities of Borrower or its Subsidiaries pursuant to
employee stock purchase plans or agreements approved by Borrower's Board of
Directors; (iii) compensation of employees, officers and directors of Borrower
or its Subsidiaries so long as Borrower's board of directors determines that
such compensation is in the best
17
interests of Borrower; and (iv) after loans to officers and employees approved
by Borrower's board of directors in an aggregate amount not in excess of
$100,000 outstanding at any time.
(g) Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with, customers or
suppliers arising in the ordinary course of business;
(h) Investments consisting of notes receivable of, or prepaid royalties
and other credit extensions, to customers and suppliers who are not Affiliates,
in the ordinary course of business; provided that this paragraph (h) shall not
apply to Investments of Borrower in any Subsidiary; and
(i) Joint ventures or strategic alliances in the ordinary course of
Borrower's business consisting of the non-exclusive licensing of technology, the
development of technology or the providing of technical support, provided that
any cash investments by Borrower do not exceed $100,000 in the aggregate in any
fiscal year.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the equipment;
(d) Leases or subleases and 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;
(e) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase;
(f) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 8.4 or 8.7;
(g) Liens in favor of other financial institutions arising in
connection with Borrower's deposit accounts held at such institutions, provided
that Bank has a perfected security interest in the amounts held in such deposit
accounts; and
(h) Other Liens not described above arising in the ordinary course of
business and not having or not reasonably likely to have a material adverse
effect on Borrower and its Subsidiaries taken as a whole.
"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.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation,
18
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.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's debt to Bank (and identified as subordinated by Borrower and Bank).
"SUBSIDIARY" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus,
-----
(i) any amounts attributable to (a) goodwill, (b) intangible items such as
unamortized debt discount and expense, Patents, trade and service marks and
names, Copyrights and research and development expenses except prepaid expenses,
and (c) reserves not already deducted from assets, and (ii) Total Liabilities.
"TOTAL LIABILITIES" is on any day, obligations that should, under GAAP,
be classified as liabilities on Borrower's consolidated balance sheet, including
all indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.
BORROWER:
Nuance Communications
By: /s/ Signature Illegible
Title: VP & CFD
BANK:
SILICON VALLEY BANK
By: /s/ Signature Illegible
Title: Vice President
19
EXHIBIT A
---------
The Collateral consists of all of Borrower's right, title and interest
in and to the following:
All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;
All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, financial assets,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired and Borrower's Books relating to the foregoing;
All copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work thereof,
whether published or unpublished, now owned or hereafter acquired; all trade
secret rights, including all rights to unpatented inventions, know-how,
operating manuals, license rights and agreements and confidential information,
now owned or hereafter acquired; all mask work or similar rights available for
the protection of semiconductor chips, now owned or hereafter acquired; all
claims for damages by way of any past, present and future infringement of any of
the foregoing; and
All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.
Notwithstanding the foregoing, the security interest granted herein
does not extend to and the term "Collateral" does not include any license or
contract rights to the extent (i) the granting of a security interest in it
would be contrary to applicable law, or (ii) that such rights are nonassignable
by their terms (but only to the extent such prohibition is enforceable under
applicable law, including, without limitation, Section 9318(4) of the Code)
without the consent of the licensor or other party (but only to the extent such
consent has not been obtained). Except as disclosed on the Schedule, Borrower is
not a party to, nor is bound by, any license or other agreement that prohibits
or otherwise restricts Borrower from granting a security interest in Borrower's
interest in such license or agreement or any other property. Without prior
notice to Bank, Borrower shall not enter into, or become bound by, any such
license or agreement which is reasonably likely to have a material impact on
Borrower's business or financial condition. Borrower shall take such steps as
Bank reasonably requests to obtain the consent of, or waiver by, any person
whose consent or waiver is necessary for such licenses or contract rights to be
deemed "Collateral" and for Bank to have a security interest in it that might
otherwise be restricted or prohibited by law or by the terms of any such license
or agreement, whether now existing or entered into in the future. If the
Agreement is terminated, Bank's lien and security interest in the Collateral
will continue until Borrower fully satisfies its Obligations.
EXHIBIT B
---------
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.
TO: CENTRAL CLIENT SERVICE DIVISION DATE: ______________________________
FAX#: (000) 000-0000 TIME: ______________________________
FROM: Nuance Communications
---------------------
CLIENT NAME (BORROWER)
REQUESTED BY:
_______________________________________________________________________________
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:
_______________________________________________________________________
PHONE NUMBER:
_______________________________________________________________________________
FROM ACCOUNT #________________ TO ACCOUNT
#___________________________________________________________________
REQUESTED TRANSACTION TYPE REQUESTED DOLLAR AMOUNT
-------------------------- -----------------------
PRINCIPAL INCREASE (ADVANCE) $________________________________________________
PRINCIPAL PAYMENT (ONLY) $________________________________________________
INTEREST PAYMENT (ONLY) $________________________________________________
PRINCIPAL AND INTEREST (PAYMENT) $________________________________________________
OTHER INSTRUCTIONS:__________________________________________________________________________________________
All Borrower's representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
telephone request for and Advance confirmed by this Borrowing Certificate; but
those representations and warranties expressly referring to another date shall
be true, correct and complete in all material respects as of that date.
BANK USE ONLY
TELEPHONE REQUEST:
-----------------
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
_________________________
----------------------------------
Authorized Requester Phone #
_________________________
----------------------------------
Received By (Bank) Phone #
__________________________________________
Authorized Signature (Bank)
EXHIBIT C
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
FROM: NUANCE COMMUNICATIONS
The undersigned authorized officer of Nuance Communications
("Borrower") certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending ______________ 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 + CC
And A/R and A/P agings Monthly within 30 days Yes No
Annual (Audited) FYE within 120 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Monthly Basis:
Minimum Tangible Net Worth $2,000,000 $________ Yes No
Minimum Liquidity Coverage* 2.00:1.00 _____:1.00 Yes No
* A ratio of cash plus 50% of net Accounts, divided by the aggregate
outstanding Equipment Advances.
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
Nuance Communications
---------------------------------
SIGNATURE
---------------------------------
TITLE
---------------------------------
DATE
BANK USE ONLY
Received by: __________________________
AUTHORIZED SIGNER
Date: _________________________________
Verified: _____________________________
AUTHORIZED SIGNER
Date: _________________________________
Compliance Status: Yes No
SILICON VALLEY BANK
PRO FORMA INVOICE FOR LOAN CHARGES
BORROWER: NUANCE COMMUNICATIONS
LOAN OFFICER: XXXXX XXXXXX
DATE: JUNE 23, 1999
EQUIPMENT LINE LOAN FEE $5,000.00
CREDIT REPORT 35.00
UCC SEARCH FEE 75.00
UCC FILING FEE 20.00
DOCUMENTATION FEE 750.00
TOTAL FEE DUE $5,880.00
------------- ---------
Please indicate the method of payment:
[_] A check for the total amount is attached.
[X] Debit DDA # __________________ for the total amount.
[_] Loan proceeds
BORROWER:
By: /s/ Signature Illegible
(Authorized Signer)
/s/ Signature Illegible
Silicon Valley Bank (Date)
Account Officer's Signature
NEGATIVE PLEDGE AGREEMENT
This Negative Pledge Agreement is made as of June 23, 1999 by and
between Nuance Communications ("Borrower") and Silicon Valley Bank ("Bank").
In connection with, among other documents, the Loan and Security Agreement (the
"Loan Documents") being concurrently executed herewith between Borrower and
Bank, Borrower agrees as follows:
1. Except for (i) non-exclusive licenses granted in the ordinary
course of business and exclusive licenses granted for a specific
geographical location or technical field in the ordinary course
of business, and (ii) other transfers not resulting in a Material
Adverse Change (as defined in the Loan 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 protections 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;
b. All mask works or similar rights available for the protection
of semiconductor chips, now owned or hereafter acquired;
c. 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;
d. Any and all design rights which may be available to Borrower
now or hereafter existing, created, acquired or held;
e. 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;
f. 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,
including without limitation;
g. 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;
h. All licenses or other rights to use any of the Copyrights,
Patents, Trademarks or Mask Works, and all license fees and
royalties arising from such use to the extent permitted by
such license or rights; and
i. All amendments, extensions, renewals and extensions of any of
the Copyrights, Trademarks, Patents, or Mask Works; and
j. 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 Loan Documents between
Borrower and Bank if there is a breach of any term of this
Negative Pledge Agreement.
3. Capitalized terms used but not otherwise defined herein shall
have the same meaning as in the Loan Documents.
BORROWER:
Nuance Communications
By: /s/ Signature Illegible
Name: Craham x. Xxxxx
Title: VP c CFO
BANK:
SILICON VALLEY BANK
By: /s/ Signature Illegible
Name: Xxxxxxxxxxx Xxxxxx
Title: VP
2
CORPORATE BORROWING RESOLUTION
BORROWER: NUANCE COMMUNICATIONS BANK: SILICON VALLEY BANK
0000 XXXXXX XXXX 0000 XXXXXX XXXXX
XXXXX XXXX, XX 00000 XXXXX XXXXX, XX 00000-0000
I, the undersigned Secretary or Assistant Secretary of Nuance Communications
("Borrower"), HEREBY CERTIFY that Borrower is a corporation duly organized and
existing under and by virtue of the laws of the State of California.
I FURTHER CERTIFY that at a meeting of the Directors of Borrower (or by other
duly authorized corporate action in lieu of a meeting), duly called and held, at
which a quorum was present and voting, the following resolutions were adopted.
BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of Borrower, whose actual signatures are shown below:
NAMES POSITIONS ACTUAL SIGNATURES
----- --------- -----------------
Xxxxxx A ?? President & CEO /s/ Signature
Illegible
Xxxxxx X Xxxxx VP & CFO /s/ Signature
Illegible
_____________________________ _____________________
____________________
_____________________________ _____________________
____________________
acting for and on behalf of Borrower and as its act and deed be, and they hereby
are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Silicon Valley Bank
("Bank"), on such terms as may be agreed upon between the officers of
Borrower and Bank, such sum or sums of money as in their judgment
should be borrowed.
EXECUTE LOAN DOCUMENTS. To execute and deliver to Bank the loan
documents of Borrower, on Bank's forms, at such rates of interest and
on such terms as may be agreed upon, evidencing the sums of money so
borrowed or any indebtedness of Borrower to Bank, and also to execute
and deliver to Bank one or more renewals, extensions, modifications,
refinancings, consolidations, or substitutions for one or more of the
loan documents, or any portion of the loan documents.
GRANT SECURITY. To grant a security interest to Bank in any of
Borrower's assets, which security interest shall secure all of
Borrower's obligations to Bank
NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to Borrower or in which Borrower may have an
interest, and either to receive cash for the same or to cause such
proceeds to be credited to the account of Borrower with Bank, or to
cause such other disposition of the proceeds derived therefrom as they
may deem advisable.
LETTERS OF CREDIT. To execute letter of credit applications and other
related documents pertaining to Bank's issuance of letters of credit.
FOREIGN EXCHANGE CONTRACTS. To execute and deliver foreign exchange
contracts, either spot or forward, from time to time, in such amount
as, in the judgment of the officer or officers herein authorized.
ISSUE WARRANTS. To issue warrants to purchase Borrower's capital stock,
for such class, series and number, and on such terms, as an officer of
Borrower shall deem appropriate.
FURTHER ACTS. In the case of lines of credit, to designate additional
or alternate individuals as being authorized to request advances
thereunder, and in all cases, to do and perform such other acts and
things, to pay any and all fees and costs, and to execute and deliver
such other documents and agreements, including agreements waiving the
right to a trial by jury, as they may in their discretion deem
reasonably necessary or proper in order to carry into effect the
provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of Borrower's agreements or commitments in effect at the
time notice is given.
I FURTHER CERTIFY that the persons named above are principal officers of the
Borrower and occupy the positions set opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Borrower; and that
they are in full force and effect and have not been modified or revoked in any
manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on June 23, 1999 and attest that
the signatures set opposite the names listed above are their genuine signatures.
CERTIFIED TO AND ATTESTED BY:
X /s/ Signature Illegible
*Secretary or Assistant Secretary
X /s/ Signature Illegible
*NOTE: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, this resolution should
also be signed by a second Officer or Director of Borrower.
2
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EXHIBIT A
---------
The Collateral consists of all of Borrower's right, title and interest
in and to the following:
All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;
All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, financial assets,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired and Borrower's Books relating to the foregoing;
All copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work thereof,
whether published or unpublished, now owned or hereafter acquired; all trade
secret rights, including all rights to unpatented inventions, know-how,
operating manuals, license rights and agreements and confidential information,
now owned or hereafter acquired; all mask work or similar rights available for
the protection of semiconductor chips, now owned or hereafter acquired; all
claims for damages by way of any past, present and future infringement of any of
the foregoing; and
All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.
Notwithstanding the foregoing, the security interest granted herein
does not extend to and the term "Collateral" does not include any license or
contract rights to the extent (i) the granting of a security interest in it
would be contrary to applicable law, or (ii) that such rights are nonassignable
by their terms (but only to the extent such prohibition is enforceable under
applicable law, including, without limitation, Section 9318(4) of the Code)
without the consent of the licensor or other party (but only to the extent such
consent has not been obtained). Except as disclosed on the Schedule, Borrower is
not a party to, nor is bound by, any license or other agreement that prohibits
or otherwise restricts Borrower from granting a security interest in Borrower's
interest in such license or agreement or any other property. Without prior
notice to Bank, Borrower's shall not enter into, or become bound by, any such
license or agreement which is reasonably likely to have a material impact on
Borrower's business or financial condition. Borrower shall take such steps as
Bank reasonably requests to obtain the consent of, or waiver by, any person
whose consent or waiver is necessary for such licenses or contract rights to be
deemed "Collateral" and for Bank to have a security interest in it that might
otherwise be restricted or prohibited by law or by the terms of any such license
or agreement, whether now existing or entered into in the future. If the
Agreement is terminated, Bank's lien and security interest in the Collateral
will continue until Borrower fully satisfies its Obligations.
XXXXXX XXXXXXX XXXXXXXX & XXXXXX
PROFESSIONAL CORPORATION
000 XXXX XXXX XXXX
XXXX XXXX, XXXXXXXXXX 00000-0000
TELEPHONE 000-000-0000 FACSIMILE 000-000-0000
XXX.XXXX.XXX
PALO ALTO, CALIFORNIA
KIRKLAND WASHINGTON
AUSTIN, TEXAS
XXXX XXXXX XXXXXX
RETIRED
May 5, 1999
Xxxxx Xxxxxx
Director of Finance
Nuance Communications
0000 Xxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Re: LOAN AND SECURITY AGREEMENT BETWEEN NUANCE COMMUNICATIONS AND
SILICON VALLEY BANK
Dear Xx. Xxxxxx:
You have asked us to represent you in connection with the
above-referenced finance transaction (the "Transaction") between Nuance
Communications (the "Company"), and Silicon Valley Bank ("SVB"). As you know,
our firm has represented SVB in the past and will continue to do so in the
future.
Our representation of the Company in the Transaction may give rise to a
conflict of interest, although we have been advised by SVB that it will be
separately represented in the Transaction by other counsel. We are governed by
certain Rules of Professional Conduct promulgated by the State Bar of
California, including Rule 3-310 (a copy of which is attached hereto as Exhibit
A), which rules are relevant to our proposed representation of the Company in
the Transaction. Accordingly, we wish to disclose to you the nature and extent
of our prior relationships with both the Company and SVB and to obtain your
written consent to our participation as your counsel in connection with the
Transaction, including your ratification and acknowledgement of our
participation in this Transaction prior to the date hereof. We are also seeking
a similar written acknowledgement and authorization from SVB with respect to our
representation of the Company in the Transaction in light of our previous
representation of SVB.
We would like you to be aware of the following in connection with your
decision to render your written consent as referred to above:
1. We represent SVB in general corporate and certain lending matters
other than those relating to the Transaction. As a result of our relationship to
SVB, we are in possession of confidential information regarding SVB.
Page 2
2. We have represented the Company prior to the date hereof and will
continue to represent the Company in general matters. As a result of our
relationship to the Company, we are in or will be in possession of confidential
information regarding the Company and its subsidiaries.
3. You have informed us that you decline to obtain independent counsel
in connection with the Transaction and have asked us to represent you in the
Transaction.
In light of the above-cited rules and the disclosure we have made in
this letter, we hereby request your consent to our acting as your counsel in
connection with the Transaction and to the general representation of all parties
after the conclusion of the Transaction except in the case where a material
conflict would be present (such material conflict to include, without
limitation, any litigation among the parties arising from this Transaction). In
order to effect the foregoing, please complete and execute the enclosed copy of
this letter and send an executed copy to the undersigned.
I would be more than happy to discuss any concerns or questions that
you may have with regard to this matter.
We appreciate your cooperation in this matter.
VERY TRULY YOURS,
XXXXXX XXXXXXX XXXXXXXX & XXXXXX
PROFESSIONAL CORPORATION
/s/ Signature Illegible
XXXXXX X. XXXXXX
ENCLOSURE
Page 3
I have read the foregoing, am aware of the possible conflicting
interests in the above mentioned transaction and hereby consent on behalf of the
Company to the representation of the Company by the law firm of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, P.C. in this transaction.
Date:___________________________ NUANCE COMMUNICATIONS
By:___________________________
Title: _______________________
Exhibit A
---------
STATE BAR OF CALIFORNIA
RULES OF PROFESSIONAL CONDUCT
-----------------------------
Rule 3-310. AVOIDING THE REPRESENTATION OF ADVERSE INTERESTS
(A) FOR PURPOSES OF THIS RULE:
(1) "Disclosure" means informing the client or former client of
the relevant circumstances and of the actual and reasonably
foreseeable adverse consequences to the client or former
client;
(2) "Informed written consent" means the client's or former
client's written agreement to the representation following
written disclosure;
(3) "Written" means any writing as defined in Evidence Code
section 250.
(B) A member shall not accept or continue representation of a client
without providing written disclosure to the client where:
(1) The member has a legal, business, financial, professional, or
personal relationship with a party or witness in the same
matter; or
(2) The member knows or reasonably should know that:
(a) the member previously had a legal, business,
financial, professional, or personal relationship
with a party or witness in the same matter; and
(b) the previous relationship would substantially affect
the member's representation; or
(3) The member has or had a legal, business, financial,
professional, or personal relationship with another person or
entity the member knows or reasonably should know would be
affected substantially by resolution of the matter; or
(4) The member has or had a legal, business, financial, or
professional interest in the subject matter of the
representation.
(C) A member shall not, without the informed written consent of each
client:
(1) Accept representation of more than one client in a matter in
which the interests of the clients potentially conflict; or
(2) Accept or continue representation of more than one client in a
matter in which the interests of the clients actually
conflict; or
(3) Represent a client in a matter and at the same time in a
separate matter accept as a client a person or entity whose
interest in the first matter is adverse to the client in the
first matter.
(D) A member who represents two or more clients shall not enter into an
aggregate settlement of the claims of or against the clients without
the informed written consent of each client.
(E) A member shall not, without the informed written consent of the client
or former client, accept employment adverse to the client or former
client where, by reason of the representation of the client or former
client, the member has obtained confidential information material to
the employment.
(F) A member shall not accept compensation for representing a client from
one other than the client unless:
(1) There is no interference with the member's independence of
professional judgment or with the client-lawyer relationship;
and
(2) Information relating to representation of the client is
protected as required by Business and Professions Code section
6068, subdivision (e); and
(3) The member obtains the client's informed written consent,
provided that no disclosure or consent is required if:
(a) such nondisclosure is otherwise authorized by law, or
(b) the member is rendering legal services on behalf of
any public agency which provides legal services to
other public agencies or the public.
