Exhibit 10.1
ACCOUNTS RECEIVABLE PURCHASE MODIFICATION AGREEMENT
This Accounts Receivable Purchase Modification Agreement is entered into as
of November 22, 2004, by and between Cognigen Networks, Inc. (the "Seller") and
Silicon Valley Bank ("Buyer").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Seller to Buyer, Seller is indebted to Buyer pursuant to, among other
documents, an Accounts Receivable Purchase Agreement, dated December 26, 2003 by
and between Seller and Buyer, as may be amended from time to time (the "Accounts
Receivable Purchase Agreement"). Capitalized terms used without definition
herein shall have the meanings assigned to them in the Accounts Receivable
Purchase Agreement.
Hereinafter, all indebtedness owing by Seller to Buyer shall be referred to as
the "Indebtedness."
2. DESCRIPTION OF COLLATERAL. The Collateral as described in the Accounts
Receivable Purchase Agreement, secures repayment of the Indebtedness.
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Documents."
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Accounts Receivable Purchase Agreement:
1. Section 2.2 entitled "Acceptance of Receivables" is hereby
amended in part to state that Buyer shall pay to Seller 75% of
the Estimated Amount of each receivable Buyer desires to
purchase, net of deferred revenue and offsets related to each
specific Account Debtor.
2. Section 2.4 entitled "Establishment of a Reserve" is hereby
amended in part to state that the Reserve with respect to all
Purchased Receivables outstanding at any one time shall be an
amount not less than 25% of the Account Balance at that time and
may be set at a higher or lower percentage at Buyer's sole
discretion.
3. The following is hereby incorporated into Section 6.2 entitled
"Additional Warranties, Representations and Covenants":
(J) Buyer may audit Seller's Collateral at Seller's expense. Such
audits will be conducted no more often than every year unless an
Event of Default has occurred and is continuing.
4. Buyer's next audit of Seller's Collateral shall occur on or
prior to March 31, 2005.
4. CONSISTENT CHANGES. The Existing Documents are each hereby amended wherever
necessary to reflect the changes described above.
5. PAYMENT OF LINE FEE. Seller shall pay Buyer out-of-pocket expenses.
6. NO DEFENSES OF SELLER. Seller agrees that, as of this date, it has no
defenses against the obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Seller understands and agrees that in modifying the
existing Indebtedness, Buyer is relying upon Seller's representations,
warranties, and agreements, as set forth in the Existing Documents. Except as
expressly modified pursuant to this Accounts Receivable Purchase Modification
Agreement, the terms of the Existing Documents remain unchanged and in full
force and effect. Buyer's agreement to modification to the existing Indebtedness
pursuant to this Accounts Receivable Purchase Modification Agreement in no way
shall obligate Buyer to make any future modifications to the Indebtedness.
Nothing in this Accounts Receivable Purchase Modification Agreement shall
constitute a satisfaction of the Indebtedness. It is the intention of Buyer and
Seller to retain as liable parties all makers and endorsers of Existing
Documents, unless the party is expressly released by Buyer in writing. No maker,
endorser, or guarantor will be released by virtue of this Accounts Receivable
Purchase Modification Agreement. The terms of this paragraph apply not only to
this Accounts Receivable Purchase Modification Agreement, but also to any
subsequent Accounts Receivable Purchase modification agreements.
8. CONDITIONS. The effectiveness of this Accounts Receivable Purchase Agreement
is conditioned upon payment of the out-of-pocket expenses.
9. COUNTERSIGNATURE. This Accounts Receivable Purchase Agreement shall become
effective only when executed by Seller and Buyer.
SELLER: BUYER:
COGNIGEN NETWORKS, INC. SILICON VALLEY BANK
By:/s/Xxxx X. Xxxx By:/s/Xxxxx Xxxxxxx
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Name: Xxxx X. Xxxx Name: Xxxxx Xxxxxxx
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Title: Chief Financial Officer Title: Vice President
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