Exhibit 10.36
Silicon Valley Financial Services
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xx. 00000
(000) 000-0000 - Fax (000) 000-0000
ACCOUNTS RECEIVABLE PURCHASE AGREEMENT
This Accounts Receivable Purchase Agreement (the "Agreement") is made on
this 19th day of November, 1999 by and between Silicon Valley Bank ("Buyer")
having a place of business at the address specified above and Peritus Software
Services, Inc., a Massachusetts corporation, ("Borrower") having its principal
place of business and chief executive office at Xxx Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx 00000, Fax: (000) 000-0000.
1. Definitions. When used herein, the following terms shall have the following
meanings.
1.1. "Account Balance" shall mean, on any given day, the face amount of all
Purchased Receivables unpaid on that day.
1.2. "Account Debtor" shall have the meaning set forth in the Massachusetts
Uniform Commercial Code and shall include any person liable on any Purchased
Receivable, including without limitation, any guarantor of the Purchased
Receivable and any issuer of a letter of credit or banker's acceptance.
1.3. "Adjustments" shall mean all discounts, allowances, returns, disputes,
counterclaims, offsets, defenses, rights of recoupment, rights of return,
warranty claims, or short payments, asserted by or on behalf of any Account
Debtor with respect to any Purchased Receivable.
1.4. "Administrative Fee" shall have the meaning as set forth in Section 3.3
hereof.
1.5. "Advance" shall have the meaning set forth in Section 2.2 hereof.
1.6. "Collateral" shall have the meaning set forth in Section 8 hereof.
1.7. "Collections" shall mean all good funds received by Buyer from or on
behalf of an Account Debtor with respect to Purchased Receivables.
1.8. "Compliance Certificate" shall mean a certificate, in a form provided by
Buyer to Seller, which contains the certification of the chief financial officer
of Seller that the representations and warranties set forth in this Agreement
are true and correct as of the date such certificate is delivered.
1.9. "Event of Default" shall have the meaning set forth in Section 9 hereof.
1.10. "Finance Charges" shall have the meaning set forth in Section 3.2 hereof.
1.11. "Invoice Transmittal" shall mean a writing signed by an authorized
representative of Seller which accurately identifies the receivables which
Buyer, at its election, may purchase, and includes for each such receivable the
correct amount owed by the Account Debtor, the name and address of the Account
Debtor, the invoice number, the invoice date and the account code.
1.12. "Obligations" shall mean all advances, financial accommodations,
liabilities, obligations, covenants and duties owing, arising, due or payable by
Seller to Buyer of any kind or nature, present or future, arising under or in
connection with this Agreement or under any other document, instrument or
agreement, whether or not evidenced by any note, guarantee or other instrument,
whether arising on account or by overdraft, whether direct or indirect
(including those acquired by assignment) absolute or contingent, primary or
secondary, due or to become due, now owing or hereafter arising, and however
acquired; including, without limitation, all Advances, Finance Charges,
Administrative Fees, interest, Repurchase Amounts, fees, expenses, professional
fees and attorneys' fees and any other sums chargeable to Seller hereunder or
otherwise.
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1.13. "Prime Rate" shall mean the rate announced from time to time by Silicon
Valley Bank as its Prime Rate.
1.14. "Purchased Receivables" shall mean all those accounts, receivables,
chattel paper, instruments, contract rights, documents, general intangibles,
letters of credit, drafts, bankers acceptances, and rights to payment, and all
proceeds thereof (all of the foregoing being referred to as "receivables"),
arising out of the invoices and other agreements identified on or delivered with
any Invoice Transmittal delivered by Seller to Buyer which Buyer elects to
purchase and for which Buyer makes an Advance.
1.15. "Reconciliation Date" shall mean the last calendar day of each
Reconciliation Period.
1.16. "Reconciliation Period" shall mean each calendar month of every year.
1.17. "Refund" shall have the meaning set forth in Section 3.5 hereof.
1.18. "Reserve" shall have the meaning set forth in Section 2.4 hereof.
1.19. "Repurchase Amount" shall have the meaning set forth in Section 4.2
hereof.
2. Purchase and Sale of Receivables.
2.1. Offer to Sell Receivables. During the term hereof, and provided that there
does not then exist any Event of Default or any event that with notice, lapse of
time or otherwise would constitute an Event of Default, Seller may request that
Buyer purchase receivables and Buyer may, in its sole discretion, elect to
purchase receivables provided further that the Seller is in compliance with all
of the terms and conditions herein, including, without limitation, Section 2.2
below. Seller shall deliver to Buyer an Invoice Transmittal with respect to any
receivable for which a request for purchase is made. An authorized
representative of Seller shall sign each Invoice Transmittal delivered to Buyer.
Buyer shall be entitled to rely on all the information provided by Seller to
Buyer on or with the Invoice Transmittal and to rely on the signature on any
Invoice Transmittal as an authorized signature of Seller.
2.2. Acceptance of Receivables. Buyer shall have no obligation to purchase any
receivable listed on an Invoice Transmittal. Buyer may exercise its sole
discretion in approving the credit of each Account Debtor before buying any
receivable. Upon acceptance by Buyer of all or any of the receivables described
on any Invoice Transmittal, Buyer shall pay to Seller Eighty Percent (80.0%)
percent of the face amount of each receivable Buyer desires to purchase. Such
payment shall be the "Advance" with respect to such receivable. Buyer may, from
time to time, in its sole discretion, upon notice to Seller change the
percentage of the Advance. Upon Buyer's acceptance of the receivable and payment
to Seller of the Advance, the receivable shall become a "Purchased Receivable."
It shall be a condition to each Advance that (i) all of the representations and
warranties set forth in Section 6 of this Agreement be true and correct on and
as of the date of the related Invoice Transmittal and on and as of the date of
such Advance as though made at and as of each such date, and (ii) no Event of
Default or any event or condition that with notice, lapse of time or otherwise
would constitute an Event of Default shall have occurred and be continuing, or
would result from such Advance. Notwithstanding the foregoing, in no event shall
the aggregate amount of all Purchased Receivables outstanding at any time exceed
Four Million Dollars ($4,000,000.00).
2.3. Effectiveness of Sale to Buyer. Effective upon Buyer's payment of an
Advance, and for and in consideration therefor and in consideration of the
covenants of this Agreement, Seller hereby absolutely sells, transfers and
assigns to Buyer, all of Seller's right, title and interest in and to each
Purchased Receivable and all monies due or which may become due on or with
respect to such Purchased Receivable. Buyer shall be the absolute owner of each
Purchased Receivable. Buyer shall have, with respect to any goods related to the
Purchased Receivable, all the rights and remedies of an unpaid seller under the
Massachusetts Uniform Commercial Code and other applicable law, including the
rights of replevin, claim and delivery, reclamation and stoppage in transit.
2.4. Establishment of a Reserve. Upon the purchase by Buyer of each Purchased
Receivable, Buyer shall establish a reserve. The reserve shall be the amount by
which the face amount of the Purchased Receivable exceeds the Advance on that
Purchased Receivable (the "Reserve"); provided, the Reserve with respect to all
Purchased Receivables outstanding at any one time shall be an amount not less
than Twenty Percent (20.0%) of the Account
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Balance at that time and may be set at a higher percentage at Buyer's sole
discretion upon notice to Seller. The reserve shall be a book balance maintained
on the records of Buyer and shall not be a segregated fund.
3. Collections, Charges and Remittances.
3.1. Collections. Upon receipt by Buyer of Collections, Buyer shall promptly
credit such Collections to Seller's Account Balance on a daily basis; provided,
that if Seller is in default under this Agreement, Buyer shall apply all
Collections to Seller's Obligations hereunder in such order and manner as Buyer
may determine. If an item of collection is not honored or Buyer does not receive
good funds for any reason, the amount shall be included in the Account Balance
as if the Collections had not been received and Finance Charges under Section
3.2 shall accrue thereon.
3.2. Finance Charges. On each Reconciliation Date Seller shall pay to Buyer a
finance charge in an amount equal to 1.30 percent per month of the average daily
Account Balance outstanding during the applicable Reconciliation Period (the
"Finance Charges"). Buyer shall deduct the accrued Finance Charges from the
Reserve as set forth in Section 3.5 below.
3.3. Administrative Fee. On each Reconciliation Date Seller shall pay to Buyer
an Administrative Fee equal to Three-Quarters of One Percent (0.75%) of the face
amount of each Purchased Receivable first purchased during that Reconciliation
Period (the "Administrative Fee"). Buyer shall deduct the Administrative Fee
from the Reserve as set forth in Section 3.5 below.
3.4. Accounting. Buyer shall prepare and send to Seller after the close of
business for each Reconciliation Period, an accounting of the transactions for
that Reconciliation Period, including the amount of all Purchased Receivables,
all Collections, Adjustments, Finance Charges, and the Administrative Fee. The
accounting shall be deemed correct and conclusive unless Seller makes written
objection to Buyer within thirty (30) days after the Buyer mails the accounting
to Seller.
3.5. Refund to Seller. Provided that there does not then exist an Event of
Default or any event or condition that with notice, lapse of time or otherwise
would constitute an Event of Default, Buyer shall refund to Seller by check
after the Reconciliation Date, the amount, if any, which Buyer owes to Seller at
the end of the Reconciliation Period according to the accounting prepared by
Buyer for that Reconciliation Period (the "Refund"). The Refund shall be an
amount equal to:
(A) (1) The Reserve as of the beginning of that Reconciliation Period,
plus
(2) the Reserve created for each Purchased Receivable
purchased during that Reconciliation Period, minus
(B) The total for that Reconciliation Period of:
(1) the Administrative Fee;
(2) Finance Charges;
(3) Adjustments;
(4) Repurchase Amounts, to the extent Buyer has agreed to accept
payment thereof by deduction from the Refund;
(5) the Reserve for the Account Balance as of the first day of the
following Reconciliation Period in the minimum percentage set
forth in Section 2.4 hereof; and
(6) all amounts due, including professional fees and expenses, as
set forth in Section 12 for which written demand has been made
by Buyer to Seller during that Reconciliation Period to the
extent Buyer has agreed to accept payment thereof by deduction
from the Refund.
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In the event the formula set forth in this Section 3.5 results in an amount due
to Buyer from Seller, Seller shall make such payment in the same manner as set
forth in Section 4.3 hereof for repurchases. If the formula set forth in this
Section 3.5 results in an amount due to Seller from Buyer, Buyer shall make such
payment by check, subject to Buyer's rights under Section 4.3 and Buyer's rights
of offset and recoupment.
4. Recourse and Repurchase Obligations.
4.1. Recourse. Buyer's acquisition of Purchased Receivables from Seller shall be
with full recourse against Seller. In the event the Obligations exceed the
amount of Purchased Receivables and Collateral, Seller shall be liable for any
deficiency.
4.2. Seller's Agreement to Repurchase. Seller agrees to pay to Buyer on demand,
the full face amount, or any unpaid portion, of any Purchased Receivable:
(A) which remains unpaid ninety (90) calendar days after the invoice date;
or
(B) which is owed by any Account Debtor who has filed, or has had filed
against it, any bankruptcy case, 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; or
(C) with respect to which there has been any breach of warranty or
representation set forth in Section 6 hereof or any breach of any covenant
contained in this Agreement; or
(D) with respect to which the Account Debtor asserts any discount,
allowance, return, dispute, counterclaim, offset, defense, right of
recoupment, right of return, warranty claim, or short payment;
together with all reasonable attorneys' and professional fees and expenses and
all court costs incurred by Buyer in collecting such Purchased Receivable and/or
enforcing its rights under, or collecting amounts owed by Seller in connection
with, this Agreement (collectively, the "Repurchase Amount").
4.3. Seller's Payment of the Repurchase Amount or Other Amounts Due Buyer. When
any Repurchase Amount or other amount owing to Buyer becomes due, Buyer shall
inform Seller in writing of the manner of payment which may be any one or more
of the following in Buyer's sole discretion: (a) in cash immediately upon demand
therefor; (b) by delivery of substitute invoices and an Invoice Transmittal
acceptable to Buyer which shall thereupon become Purchased Receivables; (c) by
adjustment to the Reserve pursuant to Section 3.5 hereof; (d) by deduction from
or offset against the Refund that would otherwise be due and payable to Seller;
(e) by deduction from or offset against the amount that otherwise would be
forwarded to Seller in respect of any further Advances that may be made by
Buyer; or (f) by any combination of the foregoing as Buyer may from time to time
choose.
4.4. Seller's Agreement to Repurchase All Purchased Receivables. Upon and after
the occurrence of an Event of Default, Seller shall, upon Buyer's demand (or, in
the case of an Event of Default under Section 9(B), immediately without notice
or demand from Buyer) repurchase all the Purchased Receivables then outstanding,
or such portion thereof as Buyer may demand. Such demand may, at Buyer's option,
include and Seller shall pay to Buyer immediately upon demand, cash in an amount
equal to the Advance with respect to each Purchased Receivable then outstanding
together with all accrued Finance Charges, Adjustments, Administrative Fees,
reasonable attorney's and professional fees, court costs and expenses as
provided for herein, and any other Obligations. Upon receipt of payment in full
of the Obligations, Buyer shall immediately instruct Account Debtors to pay
Seller directly, and return to Seller any Refund due to Seller. For the purpose
of calculating any Refund due under this Section only, the Reconciliation Date
shall be deemed to be the date Buyer receives payment in good funds of all the
Obligations as provided in this Section 4.4.
5. Power of Attorney. Seller does hereby irrevocably appoint Buyer and its
successors and assigns as Seller's true and lawful attorney in fact, and hereby
authorizes Buyer, regardless of whether there has been an Event of Default, (a)
to sell, assign, transfer, pledge, compromise, or discharge the whole or any
part of the Purchased Receivables;
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(b) to demand, collect, receive, xxx, and give releases to any Account Debtor
for the monies due or which may become due upon or with respect to the Purchased
Receivables and to compromise, prosecute, or defend any action, claim, case or
proceeding relating to the Purchased Receivables, including the filing of a
claim or the voting of such claims in any bankruptcy case, all in Buyer's name
or Seller's name, as Buyer may choose; (c) to prepare, file and sign Seller's
name on any notice, claim, assignment, demand, draft, or notice of or
satisfaction of lien or mechanics' lien or similar document with respect to
Purchased Receivables; (d) to notify all Account Debtors with respect to the
Purchased Receivables to pay Buyer directly; (e) to receive, open, and dispose
of all mail addressed to Seller for the purpose of collecting the Purchased
Receivables; (f) to endorse Seller's name on any checks or other forms of
payment on the Purchased Receivables; (g) to execute on behalf of Seller any and
all instruments, documents, financing statements and the like to perfect Buyer's
interests in the Purchased Receivables and Collateral; and (h) to do all acts
and things necessary or expedient, in furtherance of any such purposes. If Buyer
receives a check or item which is payment for both a Purchased Receivable and
another receivable, the funds shall first be applied to the Purchased Receivable
and, so long as there does not exist an Event of Default or an event that with
notice, lapse of time or otherwise would constitute an Event of Default, the
excess shall be remitted to Seller. Upon the occurrence and continuation of an
Event of Default, all of the power of attorney rights granted by Seller to Buyer
hereunder shall be applicable with respect to all Purchased Receivables and all
Collateral.
6. Representations, Warranties and Covenants.
6.1. Receivables' Warranties, Representations and Covenants. To induce Buyer to
buy receivables and to render its services to Seller, and with full knowledge
that the truth and accuracy of the following are being relied upon by the Buyer
in determining whether to accept receivables as Purchased Receivables, Seller
represents, warrants, covenants and agrees, with respect to each Invoice
Transmittal delivered to Buyer and each receivable described therein, that:
(A) Seller is the absolute owner of each receivable set forth in the
Invoice Transmittal and has full legal right to sell, transfer and assign
such receivables;
(B) The correct amount of each receivable is as set forth in the Invoice
Transmittal and is not in dispute;
(C) The payment of each receivable is not contingent upon the fulfillment
of any obligation or contract, past or future and any and all obligations
required of the Seller have been fulfilled as of the date of the Invoice
Transmittal;
(D) Each receivable set forth on the Invoice Transmittal is based on an
actual sale or granting of a software license and delivery of goods and/or
services actually rendered (or to be rendered, with respect to software
maintenance invoices, including third party software, "Maintenance
Invoices" only) is presently due and owing to Seller, is not past due or
in default, is not subject to offset, has not been previously sold,
assigned, transferred, or pledged, and is free of any and all liens,
security interests and encumbrances other than liens, security interests
or encumbrances in favor of Buyer or any other division or affiliate of
Silicon Valley Bank, provided that, in each instance, all Maintenance
Invoices submitted to the Buyer are accompanied by a notice to the Buyer
specifically noting that services have not been rendered for such
receivable;
(E) There are no defenses, offsets, or counterclaims against any of the
receivables, and no agreement has been made under which the Account Debtor
may claim any deduction or discount, except as otherwise stated in the
Invoice Transmittal;
(F) Each Purchased Receivable shall be the property of the Buyer and shall
be collected by Buyer, but if for any reason it should be paid to Seller,
Seller shall promptly notify Buyer of such payment, shall hold any checks,
drafts, or monies so received in trust for the benefit of Buyer, and shall
promptly transfer and deliver the same to the Buyer;
(G) Buyer shall have the right of endorsement, and also the right to
require endorsement by Seller, on all payments received in connection with
each Purchased Receivable and any proceeds of Collateral;
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(H) Seller, and to Seller's best knowledge, each Account Debtor set forth
in the Invoice Transmittal, are solvent as that term is defined in the
United States Bankruptcy Code and the Massachusetts Uniform Commercial
Code, and no such Account Debtor has filed or had filed against it a
voluntary or involuntary petition for relief under the United States
Bankruptcy Code;
(I) Each Account Debtor named on the Invoice Transmittal will not object
to the payment for, or the quality or the quantity of the subject matter
of, the receivable and is liable for the amount set forth on the Invoice
Transmittal;
(J) Each Account Debtor shall promptly be notified, after acceptance by
Buyer, that the Purchased Receivable has been transferred to and is
payable to Buyer, and Seller shall not take or permit any action to
countermand such notification; and
(K) All receivables forwarded to and accepted by Buyer after the date
hereof, and thereby becoming Purchased Receivables, shall comply with each
and every one of the foregoing representations, warranties, covenants and
agreements referred to above in this Section 6.1.
6.2. Additional Warranties, Representations and Covenants. In addition to the
foregoing warranties, representations and covenants, to induce Buyer to buy
receivables and to render its services to Seller, Seller hereby represents,
warrants, covenants and agrees that:
(A) Seller will not assign, transfer, sell, or grant , or permit any lien
or security interest in any Purchased Receivables or Collateral (other
than Equipment that is subject to a loan, lease or security agreement
prior to the date hereof, other than obsolete equipment, to or in favor of
any other party, without Buyer's prior written consent);
(B) The Seller's name, form of organization, chief executive office, and
the place where the records concerning all Purchased Receivables and
Collateral are kept is set forth at the beginning of this Agreement,
Collateral is located only at the location set forth in the beginning of
this Agreement, or, if located at any additional location, as set forth on
a schedule attached to this Agreement, and Seller will give Buyer at least
thirty (30) days prior written notice if such name, organization, chief
executive office or other locations of Collateral or records concerning
Purchased Receivables or Collateral is changed or added and shall execute
any documents necessary to perfect Buyer's interest in the Purchased
Receivables and the Collateral;
(C) Seller shall (i) pay all of its normal gross payroll for employees,
and all federal and state taxes, as and when due, including without
limitation all payroll and withholding taxes and state sales taxes; (ii)
deliver at any time and from time to time at Buyer's request, evidence
satisfactory to Buyer that all such amounts have been paid to the proper
taxing authorities; and (iii) if requested by Buyer, pay its payroll and
related taxes through a bank or an independent payroll service reasonably
acceptable to Buyer.
(D) Seller has not, as of the xxxx Xxxxxx delivers to Buyer an Invoice
Transmittal, or as of the xxxx Xxxxxx accepts any Advance from Buyer,
filed a voluntary petition for relief under the United States Bankruptcy
Code or had filed against it an involuntary petition for relief;
(E) If Seller owns, holds or has any interest in, any copyrights (whether
registered, or unregistered), patents or trademarks, and licenses of any
of the foregoing, such interest has been disclosed to Buyer and is
specifically listed and identified on a schedule to this Agreement, and
Seller shall promptly notify Buyer if Seller hereafter obtains any
interest in any additional copyrights, patents, trademarks or licenses
that are significant in value or are material to the conduct of its
business; and
(F) Seller shall provide Buyer with a Compliance Certificate (i) on a
quarterly basis to be received by Buyer no later than the fifth calendar
day following each calendar quarter, and; (ii) on a more frequent or other
basis if and as requested by Buyer.
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7. Adjustments. In the event of a breach of any of the representations,
warranties, or covenants set forth in Section 6.1, or in the event any
Adjustment or dispute is asserted by any Account Debtor, Seller shall promptly
notify Buyer and shall, subject to the Buyer's approval, resolve such disputes
and advise Buyer of any adjustments. Unless the disputed Purchased Receivable is
repurchased by Seller and the full Repurchase Amount is paid, Buyer shall remain
the absolute owner of any Purchased Receivable which is subject to Adjustment or
repurchase under Section 4.2 hereof, and any rejected, returned, or recovered
personal property, with the right to take possession thereof at any time. If
such possession is not taken by Buyer, Seller is to resell it for Buyer's
account at Seller's expense with the proceeds made payable to Buyer. While
Seller retains possession of said returned goods, Seller shall segregate said
goods and xxxx them "property of Silicon Valley Financial Services."
8. Security Interest. To secure the prompt payment and performance to Buyer of
all of the Obligations, Seller hereby grants to Buyer a continuing lien upon and
security interest in all of Seller's now existing or hereafter arising rights
and interest in the following , whether now owned or existing or hereafter
created, acquired, or arising, and wherever located (collectively, the
"Collateral"):
(A) All accounts, receivables, contract rights, chattel paper,
instruments, documents, letters of credit, bankers acceptances, drafts,
checks, cash, securities, and general intangibles (including, without
limitation, all claims, causes of action, deposit accounts, guaranties,
rights in and claims under insurance policies (including rights to premium
refunds), rights to tax refunds, copyrights, patents, trademarks, rights
in and under license agreements, and all other intellectual property);
(B) All inventory, including Seller's rights to any returned or rejected
goods, with respect to which Buyer shall have all the rights of any unpaid
seller, including the rights of replevin, claim and delivery, reclamation,
and stoppage in transit;
(C) All monies, refunds and other amounts due Seller, including, without
limitation, amounts due Seller under this Agreement (including Seller's
right of offset and recoupment);
(D) Investment Property;
(E) All equipment, machinery, furniture, furnishings, fixtures, tools,
supplies and motor vehicles (the "Equipment");
(F) All farm products, crops, timber, minerals and the like (including oil
and gas);
(G) All accessions to, substitutions for, and replacements of, all of the
foregoing;
(H) All books and records pertaining to all of the foregoing; and
(I) All proceeds of the foregoing, whether due to voluntary or involuntary
disposition, including insurance proceeds.
Seller is not authorized to sell, assign, transfer or otherwise convey any
Collateral, other than Equipment that is subject to a loan, lease or security
interest in effect prior to the date hereof, or obsolete Equipment, without
Buyer's prior written consent, except for the licensing of software in the
Seller's usual course of business. Seller agrees to sign UCC financing
statements, in a form acceptable to Buyer, and any other instruments and
documents requested by Buyer to evidence, perfect, or protect the interests of
Buyer in the Collateral. Seller agrees to deliver to Buyer the originals of all
instruments, chattel paper and documents evidencing or related to Purchased
Receivables and Collateral.
9. Default. The occurrence of any one or more of the following shall constitute
an Event of Default hereunder.
(A) Seller fails to pay any amount owed to Buyer as and when due;
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(B) There shall be commenced by or against Seller 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 its assets;
(C) Seller shall become insolvent in that its debts are greater than the
fair value of its assets, or Seller is generally not paying its debts as
they become due;
(D) Any involuntary lien, garnishment, attachment or the like is issued
against or attaches to the Purchased Receivables or any Collateral;
(E) Seller shall breach any covenant, agreement, warranty, or
representation set forth herein, and the same is not cured to Buyer's
satisfaction within ten (10) days after Buyer has given Seller oral or
written notice thereof; provided, that if such breach is incapable of
being cured it shall constitute an immediate default hereunder;
(F) Seller is not in compliance with, or otherwise is in default under,
any term of any document, instrument or agreement evidencing a debt,
obligation or liability of any kind or character of Seller, now or
hereafter existing, in favor of Buyer or any division or affiliate of
Silicon Valley Bank, regardless of whether such debt, obligation or
liability is direct or indirect, primary or secondary, joint, several or
joint and several, or fixed or contingent, together with any and all
renewals and extensions of such debts, obligations and liabilities, or any
part thereof;
(G) An event of default shall occur under any guaranty executed by any
guarantor of the Obligations of Seller to Buyer under this Agreement, 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;
(H) A default or event of default shall occur under any agreement between
Seller and any creditor of Seller that has entered into a subordination
agreement with Buyer; or
(I) Any creditor that has entered into a subordination agreement with
Buyer shall breach any of the terms of or not comply with such
subordination agreement.
10. Remedies Upon Default. Upon the occurrence of an Event of Default,
(1) without implying any obligation to buy receivables, Buyer may cease buying
receivables or extending any financial accommodations to Seller; (2) all or a
portion of the Obligations shall be, at the option of and upon demand by Buyer,
or with respect to an Event of Default described in Section 9(B), automatically
and without notice or demand, due and payable in full; and (3) Buyer shall have
and may exercise all the rights and remedies under this Agreement and under
applicable law, including the rights and remedies of a secured party under the
Massachusetts Uniform Commercial Code, all the power of attorney rights
described in Section 5 with respect to all Collateral, and the right to collect,
dispose of, sell, lease, use, and realize upon all Purchased Receivables and all
Collateral in any commercial reasonable manner. Seller and Buyer agree that any
notice of sale required to be given to Seller shall be deemed to be reasonable
if given five (5) days prior to the date on or after which the sale may be held.
In the event that the Obligations are accelerated hereunder, Seller shall
repurchase all of the Purchased Receivables as set forth in Section 4.4.
11. Accrual of Interest. If any amount owed by Seller hereunder is not paid when
due, including, without limitation, amounts due under Section 3.5, Repurchase
Amounts, amounts due under Section 12, and any other Obligations, such amounts
shall bear interest at a per annum rate equal to the per annum rate of the
Finance Charges until the earlier of (i) payment in good funds or (ii) entry of
a final judgment thereof, at which time the principal amount of any money
judgment remaining unsatisfied shall accrue interest at the highest rate allowed
by applicable law.
12. Fees, Costs and Expenses; Indemnification. The Seller will pay to Buyer
immediately upon demand all fees, costs and expenses (including reasonable fees
of attorneys and professionals and their costs and expenses ) that Buyer incurs
or may from time to time impose in connection with any of the following: (a)
preparing, negotiating , administering, and enforcing this Agreement or any
other agreement executed in connection herewith, including any amendments,
waivers or consents in connection with any of the foregoing, (b) any litigation
or dispute
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(whether instituted by Buyer, Seller or any other person) in any way relating to
the Purchased Receivables, the Collateral, this Agreement or any other agreement
executed in connection herewith or therewith, (d) enforcing any rights against
Seller or any guarantor, or any Account Debtor, (e) protecting or enforcing its
interest in the Purchased Receivables or the Collateral, (f) collecting the
Purchased Receivables and the Obligations, and (g) the representation of Buyer
in connection with any bankruptcy case or insolvency proceeding involving
Seller, any Purchased Receivable, the Collateral, any Account Debtor, or any
guarantor. Seller shall indemnify and hold Buyer harmless from and against any
and all claims, actions, damages, costs, expenses, and liabilities of any nature
whatsoever arising in connection with any of the foregoing.
13. Severability, Waiver, and Choice of Law. In the event that any provision of
this Agreement is deemed invalid by reason of law, this Agreement will be
construed as not containing such provision and the remainder of the Agreement
shall remain in full force and effect. Buyer retains all of its rights, even if
it makes an Advance after a default. If Buyer waives a default, it may enforce a
later default. Any consent or waiver under, or amendment of, this Agreement must
be in writing. Nothing contained herein, or any action taken or not taken by
Buyer at any time, shall be construed at any time to be indicative of any
obligation or willingness on the part of Buyer to amend this Agreement or to
grant to Seller any waivers or consents. This Agreement has been transmitted by
Seller to Buyer at Buyer's office in the Wellesley, Massachusetts and has been
executed and accepted by Buyer in the Commonwealth of Massachusetts. This
Agreement shall be governed by and interpreted in accordance with the internal
laws of the Commonwealth of Massachusetts.
14. Account Collection Services. Certain Account Debtors may require or prefer
that all of Seller's receivables be paid to the same address and/or party, or
Seller and Buyer may agree that all receivables with respect to certain Account
Debtors be paid to one party. In such event Buyer and Seller may agree that
Buyer shall collect all receivables whether owned by Seller or Buyer and
(provided that there does not then exist an Event of Default or event that with
notice, lapse or time or otherwise would constitute an Event of Default, and
subject to Buyer's rights in the Collateral) Buyer agrees to remit to Seller the
amount of the receivables collections it receives with respect to receivables
other than Purchased Receivables. It is understood and agreed by Seller that
this Section does not impose any affirmative duty on Buyer to do any act other
than to turn over such amounts. All such receivables and collections are
Collateral and in the event of Seller's default hereunder, Buyer shall have no
duty to remit collections of Collateral and may apply such collections to the
obligations hereunder and Buyer shall have the rights of a secured party under
the Massachusetts Uniform Commercial Code.
15. Notices. All notices and demands shall be given to Buyer and Seller at the
addresses or faxes set forth on the first page of 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 pre-paid,
(b) one (1) calendar day after deposit with an overnight mail or messenger
service; or (c) on the same date of confirmed transmission if sent by hand
delivery, telecopy, telefax or telex.
16. Jury Trial. SELLER AND BUYER EACH HEREBY (a) WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL ON ANY CLAIM OR ACTION ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, ANY RELATED AGREEMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY; (b) RECOGNIZE AND AGREE THAT THE FOREGOING WAIVER CONSTITUTES
A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT; AND (c) REPRESENT AND
WARRANT THAT IT HAS REVIEWED THIS WAIVER, HAS DETERMINED FOR ITSELF THE
NECESSITY TO REVIEW THE SAME WITH ITS LEGAL COUNSEL, AND KNOWINGLY AND
VOLUNTARILY WAIVES ALL RIGHTS TO A JURY TRIAL.
17. 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 Buyer or Seller. Seller and Buyer shall each have the right to
terminate this Agreement at any time. Notwithstanding the foregoing, any
termination of this Agreement shall not affect Buyer's security interest in the
Collateral and Buyer's ownership of the Purchased Receivables, and this
Agreement shall continue to be effective, and Buyer's rights 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.
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18. Titles and Section Headings. The titles and section headings used herein are
for convenience only and shall not be used in interpreting this Agreement.
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19. Other Agreements. The terms and provisions of this Agreement shall not
adversely affect the rights of Buyer or any other division or affiliate of
Silicon Valley Bank under any other document, instrument or agreement. The terms
of such other documents, instruments and agreements shall remain in full force
and effect notwithstanding the execution of this Agreement. In the event of a
conflict between any provision of this Agreement and any provision of any other
document, instrument or agreement between Seller on the one hand, and Buyer or
any other division or affiliate of Silicon Valley Bank on the other hand, Buyer
shall determine in its sole discretion which provision shall apply. Seller
acknowledges specifically that any security agreements, liens and/or security
interests currently securing payment of any obligations of Seller owing to Buyer
or any other division or affiliate of Silicon Valley Bank also secure Seller's
obligations under this Agreement, and are valid and subsisting and are not
adversely affected by execution of this Agreement. Seller further acknowledges
that (a) any collateral under other outstanding security agreements or other
documents between Seller and Buyer or any other division or affiliate of Silicon
Valley Bank secures the obligations of Seller under this Agreement and (b) a
default by Seller under this Agreement constitutes a default under other
outstanding agreements between Seller and Buyer or any other division or
affiliate of Silicon Valley Bank. 21. IN WITNESS WHEREOF, Seller and Buyer have
executed this Agreement as an instrument under seal under the laws of the
Commonwealth of Massachusetts as of the day and year above written.
SELLER: PERITUS SOFTWARE SERVICES, INC.
By: ________________________________________
Title: _____________________________________
BUYER: SILICON VALLEY BANK
By: ________________________________________
Title: _____________________________________
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EXHIBIT "A"
TO FINANCING STATEMENT AND SECURITY AGREEMENT
This FINANCING STATEMENT and SECURITY AGREEMENT covers the following types or
items of property (in addition to, and without limiting the types of property
set forth on page 1 hereof):
A) All accounts, receivables, contract rights, chattel paper, instruments,
documents, letters of credit, bankers acceptances, drafts, checks, cash,
securities, deposit accounts, and general intangibles (including, without
limitation, all claims, causes of action, guaranties, rights in and claims
under insurance policies (including rights to premium refunds), rights to
tax refunds, copyrights, patents, trademarks, rights in and under license
agreements, and all other intellectual property);
B) All inventory, including Seller's rights to any returned or rejected
goods, with respect to which Buyer shall have all the rights of any unpaid
seller, including the rights of replevin, claim and delivery, reclamation,
and stoppage in transit;
C) All monies, refunds and other amounts due Seller, including, without
limitation, amounts due Seller under this Agreement (including Seller's
right of offset and recoupment);
D) All equipment, machinery, furniture, furnishings, fixtures, tools,
supplies and motor vehicles;
E) All farm products, crops, timber, minerals and the like (including oil and
gas);
F) All accessions to, substitutions for, and replacements of, all of the
foregoing;
G) All books and records pertaining to all of the foregoing; and
H) All proceeds of the foregoing, whether due to voluntary or involuntary
disposition, including insurance proceeds.
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