AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Exhibit 10.1
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of August 20, 2009 (the
“Effective Date”) by and among SILICON VALLEY BANK, a California corporation, with its principal
place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a loan production
office located at 000 Xxxxxxxxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000 (“Bank”),
TRUSTWAVE HOLDINGS, INC., a Delaware corporation (“Holdings”), TW MIRAGE NETWORKS, INC., a Texas
corporation (“TW”), TRUSTWAVE INTERMEDIATE, INC., a Delaware corporation (“Intermediate”)and TW
VERICEPT CORPORATION, a Delaware corporation (formerly known as “TrustWave Acquisition,
Inc.)(“Vericept” and individually and collectively, jointly and severally, with Holdings, TW and
Intermediate, “Borrower”), provides the terms on which Bank shall lend to Borrower and Borrower
shall repay Bank. This Agreement amends and restates in its entirety that certain Loan and
Security Agreement, dated as of April 26, 2006, between Securepipe, Inc., F9 Acquisition Corp. and
Bank, as amended by that certain Consent, Joinder and First Loan Modification Agreement dated as of
December 29, 2006, as further amended by that certain Consent, Joinder and Second Loan Modification
Agreement dated as of August 8, 2007, as further amended by a certain Consent and Third Loan
Modification Agreement dated August 21, 2007, as further amended by a certain Fourth Loan
Modification Agreement dated as of September 25, 2008, as further amended by a certain Joinder and
Fifth Loan Modification Agreement dated as of March 20, 2009, and as further amended by a certain
Sixth Loan Modification Agreement dated as of May 21, 2009. In consideration of the mutual
covenants contained herein and benefits to be derived herefrom, the parties agree as follows:
WHEREAS, each Borrower has requested that Bank establish the loan arrangement as set forth
herein; and
WHEREAS, each Borrower requests that as a convenience to that Borrower, such loans as may be
made hereunder shall be directed to Holdings which will, in turn, distribute the proceeds thereof
to the respective Borrower;
NOW THEREFORE, as an additional inducement for Bank to establish the loan arrangement and to
direct such loans as may be made hereunder to Holdings as described above, each Borrower covenants
and agrees as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed following GAAP.
Calculations and determinations must be made following GAAP. Capitalized terms not otherwise
defined in this Agreement shall have the meanings set forth in Section 13. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the
Code to the extent such terms are defined therein.
1.1 Designation of Agent. Each Borrower hereby designates Holdings as the agent of
that Borrower to discharge the duties and responsibilities as provided herein.
1.2 Operation of Borrowing. Except as otherwise provided in this Article, loans and
advances hereunder shall be requested solely by Holdings as agent for each Borrower. Each Borrower
shall be directly indebted to Bank for each advance distributed to Holdings, together with all
accrued interest thereon, as if that amount had been advanced directly by Bank to such Borrower.
Bank shall have no responsibility to inquire as to the distribution of loans and advances made by
Bank through Holdings as described herein.
1.3 Continuation of Authority of Agent. The authority of Holdings to request loans on
behalf of, and to bind, the Borrowers, shall continue unless and until Bank actually receives
written notice of the termination of such authority.
2 LOAN AND TERMS OF PAYMENT
2.1 Promise to Pay. Borrower hereby unconditionally promises to pay Bank the outstanding
principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due
in accordance with this Agreement.
2.1.1 Revolving Advances.
(a) Availability. Subject to the terms and conditions of this Agreement, Bank shall
make Advances not exceeding the Availability Amount. Amounts borrowed under the Revolving Line
may be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to the
applicable terms and conditions precedent herein.
(b) Termination; Repayment. The Revolving Line terminates on the Revolving Line
Maturity Date, when the principal amount of all Advances, the unpaid interest thereon, and all
other Obligations relating to the Revolving Line shall be immediately due and payable.
(c) Procedures for Borrowing. Subject to the prior satisfaction of all other
applicable conditions to the making of an Advance set forth in this Agreement, to obtain an
Advance (other than Advances under Sections 2.1.3 or 2.1.5), Borrower shall notify Bank (which
notice shall be irrevocable) by electronic mail, facsimile, or telephone by 12:00 noon Eastern
time on the Funding Date of the Advance. Together with any such electronic or facsimile
notification, Borrower shall deliver to Bank by electronic mail or facsimile a completed
Payment/Advance Form executed by a Responsible Officer or his or her designee. Bank may rely on
any telephone notice given by a person whom Bank believes is a Responsible Officer or designee.
Bank shall credit Advances to the Designated Deposit Account. Bank may make Advances under this
Agreement based on instructions from a Responsible Officer or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become due.
(d) Early Termination Fee. In the event that Revolving Line is terminated prior to
the Revolving Line Maturity Date, the Borrower shall pay a prepayment fee to Bank in the amount
of Seventeen Thousand Five Hundred Dollars ($17,500) (the “Early Termination Fee”).
2.1.2 Letters of Credit Sublimit.
(a) As part of the Revolving Line, Bank shall issue or have issued Letters of Credit
for Borrower’s account. The face amount of outstanding Letters of Credit (including drawn
but unreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed Two
Million Five Hundred Thousand Dollars ($2,500,000), inclusive of Credit Extensions relating
to Sections 2.1.4 and 2.1.5. Such aggregate amounts utilized hereunder shall at all times
reduce the amount otherwise available for Advances under the Revolving Line. If, on the
Revolving Line Maturity Date, there are any outstanding Letters of Credit, then on such date
Borrower shall provide to Bank cash collateral in an amount equal to 105% of the face amount
of all such Letters of Credit plus all interest, fees, and costs due or to become due in
connection therewith (as estimated by Bank in its good faith business judgment), to secure
all of the Obligations relating to said Letters of Credit. All Letters of Credit shall be
in form and substance acceptable to Bank in its sole discretion and shall be subject to the
terms and conditions of Bank’s standard Application and Letter of Credit Agreement (the
“Letter of Credit Application”). Borrower agrees to execute any further documentation in
connection with the Letters of Credit as Bank may reasonably request. Borrower further
agrees to be bound by the regulations and interpretations of the issuer of any Letters of
Credit guarantied by Bank and opened for Borrower’s account or by Bank’s interpretations of
any Letter of Credit issued by Bank for Borrower’s account, and Borrower understands and
agrees that Bank shall not be liable for any error, negligence, or mistake, whether of
omission or commission, in following Borrower’s instructions or those contained in the
Letters of Credit or any modifications, amendments, or supplements thereto.
(b) The obligation of Borrower to immediately reimburse Bank for drawings made under
Letters of Credit shall be absolute, unconditional, and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement, such Letters of Credit, and the
Letter of Credit Application.
(a) Borrower may request that Bank issue a Letter of Credit payable in a Foreign
Currency. If a demand for payment is made under any such Letter of Credit, Bank shall treat
such demand
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as an Advance to Borrower of the equivalent of the amount thereof (plus fees and
charges in connection therewith such as wire, cable, SWIFT or similar charges) in Dollars at the
then-prevailing rate of exchange in San Francisco, California, for sales of the Foreign
Currency for transfer to the country issuing such Foreign Currency.
(b) To guard against fluctuations in currency exchange rates, upon the issuance of any
Letter of Credit payable in a Foreign Currency, Bank shall create a reserve (the “Letter of
Credit Reserve”) under the Revolving Line in an amount equal to ten percent (10%) of the
face amount of such Letter of Credit. The amount of the Letter of Credit Reserve may be
adjusted by Bank from time to time to account for fluctuations in the exchange rate. The
availability of funds under the Revolving Line shall be reduced by the amount of such Letter
of Credit Reserve for as long as such Letter of Credit remains outstanding.
2.1.3 Foreign Exchange Sublimit. As part of the Revolving Line, Borrower may enter into
foreign exchange contracts with Bank under which Borrower commits to purchase from or sell to Bank
a specific amount of Foreign Currency (each, a “FX Forward Contract”) on a specified date (the
“Settlement Date”). FX Forward Contracts shall have a Settlement Date of at least one (1) FX
Business Day after the contract date and shall be subject to a reserve of ten percent (10%) of each
outstanding FX Forward Contract in a maximum aggregate amount equal to Two Hundred Fifty Thousand
Dollars ($250,000) (the “FX Reserve”). The aggregate amount of FX Forward Contracts at any one
time may not exceed ten (10) times the amount of the FX Reserve and the aggregate amount of FX
Forward Contracts may not exceed Two Million Five Hundred Thousand Dollars ($2,500,000), inclusive
of Credit Extensions relating to Sections 2.1.3, and 2.1.5.
2.1.4 Cash Management Services Sublimit. Borrower may use up to Two Million Five Hundred
Thousand Dollars ($2,500,000) (the “Cash Management Services Sublimit”), inclusive of Credit
Extensions relating to Sections 2.1.3 and 2.1.4 of the Revolving Line for Bank’s cash management
services which may include merchant services, direct deposit of payroll, business credit card, and
check cashing services identified in Bank’s various cash management services agreements
(collectively, the “Cash Management Services”). Any amounts Bank pays on behalf of Borrower or any
amounts that are not paid by Borrower for any Cash Management Services will be treated as Advances
under the Revolving Line and will accrue interest at the interest rate applicable to Advances.
2.1.5 Overadvances. If, at any time, the Credit Extensions under Sections 2.1.2, 2.1.3,
2.1.4, and 2.1.5 exceed the lesser of either (a) the Revolving Line or (b) the Borrowing Base,
Borrower shall immediately pay to Bank in cash such excess.
2.2 Payment of Interest on the Credit Extensions.
(a) Interest Rate. Subject to Section 2.2(b), the principal amount outstanding
under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime
Rate, which interest shall be payable monthly.
(b) Default Rate. Immediately upon the occurrence and during the continuance of an
Event of Default, Obligations shall bear interest at a rate per annum which is five percentage
points above the rate effective immediately before the Event of Default (the “Default Rate”).
Payment or acceptance of the increased interest rate provided in this Section 2.2(b) is not a
permitted alternative to timely payment and shall not constitute a waiver of any Event of Default
or otherwise prejudice or limit any rights or remedies of Bank.
(c) Adjustment to Interest Rate. Changes to the interest rate of any Credit
Extension based on changes to the Prime Rate shall be effective on the effective date of any
change to the Prime Rate and to the extent of any such change.
(d) 360-Day Year. Interest shall be computed on the basis of a 360-day year for the
actual number of days elapsed.
(e) Payments. Unless otherwise provided, interest is payable on the Payment Date.
Payments of principal and/or interest received after 12:00 noon Eastern time are considered
received at the opening of business on the next Business Day. When a payment is due on a day
that is not a Business Day, the payment is due the next Business Day and additional fees or
interest, as applicable, shall continue to accrue.
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2.3 Fees. Borrower shall pay to Bank:
(a) Commitment Fee. A fully earned, non-refundable commitment fee of Twenty Five
Thousand Dollars ($25,000.00), on the Effective Date; and
(b) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and
expenses, plus expenses, for documentation and negotiation of this Agreement) incurred through
and after the Effective Date, when due.
(c) Unused Revolving Line Facility Fee. A fee (the “Unused Revolving Line Facility
Fee”), payable quarterly, in arrears, on a calendar year basis, in an amount equal to one-quarter
of one percent (0.25%) per annum of the average unused portion of the Revolving Line, as
determined by Bank. The unused portion of the Revolving Line, for the purposes of this
calculation, shall include amounts reserved under the Cash Management Services Sublimit for
products provided and under the Foreign Exchange Sublimit for FX Forward Contracts. Borrower
shall not be entitled to any credit, rebate or repayment of any Unused Revolving Line Facility
Fee previously earned by Bank pursuant to this Section notwithstanding any termination of the
Agreement or the suspension or termination of Bank’s obligation to make loans and advances
hereunder.
(d) Early Termination Fee. The Early Termination Fee, when due hereunder.
3 CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Credit Extension. Bank’s obligation to make the initial
Credit Extension is subject to the condition precedent that Bank shall have received, in form and
substance satisfactory to Bank, such documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate, including, without limitation:
(a) Duly executed original signatures to the Loan Documents to which it is a party;
(b) Duly executed original signatures to the Control Agreement[s];
(c) Borrower shall have delivered its Operating Documents and a good standing certificate of
Borrower certified by the (i) Secretary of State of the State of Delaware for Holdings,
Intermediate and Vericept, and (ii) Secretary of State of the State of Texas for TW, each as of a
date no earlier than thirty (30) days prior to the Effective Date;
(d) Duly executed original signatures to the completed Borrowing Resolutions for Borrower;
(e) Bank shall have received certified copies, dated as of a recent date, of financing
statement searches, as Bank shall request, accompanied by written evidence (including any UCC
termination statements) that the Liens indicated in any such financing statements either
constitute Permitted Liens or have been or, in connection with the initial Credit Extension, will
be terminated or released; and
(f) Borrower shall have paid the fees and Bank Expenses then due as specified in Section 2.3
hereof.
3.2 Conditions Precedent to all Credit Extensions. Bank’s obligations to make each Credit
Extension, including the initial Credit Extension, is subject to the following:
(a) except as otherwise provided in Section 3.4, timely receipt of an executed
Payment/Advance Form;
(b) the representations and warranties in Section 5 shall be true in all material respects
on the date of the Payment/Advance Form and on the Funding Date of each Credit Extension;
provided, however, that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring to a specific
date shall be true, accurate and complete in all material respects as of
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such date, and no
Default or Event of Default shall have occurred and be continuing or result from the Credit
Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the
representations and warranties in Section 5 remain true in all material respects; provided,
however, that such materiality qualifier
shall not be applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those representations and
warranties expressly referring to a specific date shall be true, accurate and complete in all
material respects as of such date; and
(c) in Bank’s sole discretion, there has not been any material impairment in the general
affairs, management, results of operation, financial condition or the prospect of repayment of
the Obligations, or there has not been any material adverse deviation by Borrower from the most
recent business plan of Borrower presented to and accepted by Bank.
3.3 Covenant to Deliver.
Borrower agrees to deliver to Bank each item required to be delivered to Bank under this
Agreement as a condition to any Credit Extension. Borrower expressly agrees that the extension of
a Credit Extension prior to the receipt by Bank of any such item shall not constitute a waiver by
Bank of Borrower’s obligation to deliver such item, and any such extension in the absence of a
required item shall be in Bank’s sole discretion.
4 CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest. Borrower hereby grants Bank, to secure the payment and
performance in full of all of the Obligations, a continuing security interest in, and pledges to
Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof. Borrower represents, warrants, and covenants that the security
interest granted herein is and shall at all times continue to be a first priority perfected
security interest in the Collateral (subject only to Permitted Liens that may have superior
priority to Bank’s Lien under this Agreement). If Borrower shall acquire a commercial tort claim,
Borrower shall promptly notify Bank in a writing signed by Borrower of the general details thereof
and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory
to Bank.
If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the
Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment
in full in cash of the Obligations and at such time as Bank’s obligation to make Credit Extensions
has terminated, Bank shall, at Borrower’s sole cost and expense, release its Liens in the
Collateral and all rights therein shall revert to Borrower.
4.2 Authorization to File Financing Statements. Borrower hereby authorizes Bank to file
financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or
protect Bank’s interest or rights hereunder, including a notice that any disposition of the
Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Bank
under the Code.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 Due Organization and Authorization. Borrower and each of its Subsidiaries are duly
existing and in good standing, as Registered Organizations in their respective jurisdictions of
formation] and are qualified and licensed to do business and are in good standing in any
jurisdiction in which the conduct of their business or their ownership of property requires that
they be qualified except where the failure to do so could not reasonably be expected to have a
material adverse effect on Borrower’s business. In connection with this Agreement, Borrower has
delivered to Bank a completed certificate signed by Borrower (the “Perfection Certificate”).
Borrower represents and warrants to Bank that (a) Borrower’s exact legal name is that indicated on
the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the
type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the
Perfection Certificate accurately sets forth Borrower’s organizational identification number or
accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth
Borrower’s place of business, or, if more than one, its chief executive office as well as
Borrower’s mailing address (if different than its chief executive office); (e) Borrower (and each
of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation,
organizational structure or type, or any organizational number assigned
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by its jurisdiction; and
(f) all other information set forth on the Perfection Certificate pertaining to Borrower and each
of its Subsidiaries is accurate and complete. If Borrower is not now a Registered Organization but
later becomes one, Borrower shall promptly notify Bank of such occurrence and provide Bank with
Borrower’s organizational identification number.
The execution, delivery and performance of the Loan Documents have been duly authorized, and
do not conflict with Borrower’s organizational documents, nor constitute an event of default under
any material agreement by which Borrower is bound. Borrower is not in default under any agreement
to which it is a party or by which it is bound in which the default could reasonably be expected to
have a material adverse effect on Borrower’s business.
5.2 Collateral. Borrower has good title to, has rights in, and the power to transfer each
item of the Collateral upon which it purports to xxxxx x Xxxx hereunder, free and clear of any and
all Liens except Permitted Liens. Borrower has no deposit accounts other than the deposit accounts
with Bank, the deposit accounts, if any, described in the Perfection Certificate delivered to Bank
in connection herewith, or of which Borrower has given Bank notice and taken such actions as are
necessary to give Bank a perfected security interest therein.
The Collateral is not in the possession of any third party bailee (such as a warehouse) except
as otherwise provided in the Perfection Certificate. None of the components of the Collateral
shall be maintained at locations other than as provided in the Perfection Certificate or as
Borrower has given Bank notice pursuant to Section 7.2. In the event that Borrower, after the date
hereof, intends to store or otherwise deliver any portion of the Collateral to a bailee, then
Borrower will first receive the written consent of Bank and such bailee must execute and deliver a
bailee agreement in form and substance satisfactory to Bank in its sole discretion.
All Inventory is in all material respects of good and marketable quality, free from material
defects.
Borrower is the sole owner of its intellectual property, except for non-exclusive licenses
granted to its customers in the ordinary course of business, and except with respect to open source
computer programs. Each patent is valid and enforceable, and no part of the intellectual property
has been judged invalid or unenforceable, in whole or in part, and to the best of Borrower’s
knowledge, no claim has been made that any part of the intellectual property violates the rights of
any third party except to the extent such claim could not reasonably be expected to have a material
adverse effect on Borrower’s business. Except as noted on the Perfection Certificate, Borrower is
not a party to, nor is bound by, any material license or other agreement with respect to which
Borrower is the licensee that prohibits or otherwise restricts Borrower from granting a security
interest in Borrower’s interest in such license or agreement or any other property. Borrower shall
provide written notice to Bank within ten (10) days of entering or becoming bound by any such
license or agreement which is reasonably likely to have a material impact on Borrower’s business or
financial condition (other than over-the-counter software that is commercially available to the
public). Borrower shall take such steps as Bank requests to obtain the consent of, or waiver by,
any person whose consent or waiver is necessary for all 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 (such consent or
authorization may include a licensor’s agreement to a contingent assignment of the license to Bank
if Bank determines that is necessary in its good faith judgment), whether now existing or entered
into in the future.
5.3 Litigation. There are no actions or proceedings pending or, to the knowledge of the
Responsible Officers, threatened in writing by or against Borrower or any of its Subsidiaries
involving more than One Hundred Fifty Thousand Dollars ($150,000.00).
5.4 No Material Deviation in Financial Statements. All consolidated financial statements for
Borrower and any of its Subsidiaries 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. The fair salable value of Borrower’s assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; Borrower is not left with
unreasonably small capital after the transactions in this Agreement; and 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
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activities in extending credit for margin stock (under Regulations T and U of the Federal
Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair
Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of
which could reasonably be expected to have a material adverse effect on its business. None of
Borrower’s or any of its Subsidiaries’ 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 of its Subsidiaries have 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.
5.7 Subsidiaries; Investments. Borrower does not own any stock, partnership interest or other
equity securities except for Permitted Investments.
5.8 Tax Returns and Payments; Pension Contributions. Borrower has timely filed all required
tax returns and reports, and Borrower and its Subsidiaries have timely paid all foreign, federal,
state and local taxes, assessments, deposits and contributions owed by Borrower. Borrower may
defer payment of any contested taxes, provided that Borrower (a) in good faith contests its
obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and
conducted, (b) notifies Bank in writing of the commencement of, and any material development in,
the proceedings, (c) posts bonds or takes any other steps required to prevent the governmental
authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is
other than a “Permitted Lien”. Borrower is unaware of any claims or adjustments proposed for any
of Borrower’s prior tax years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid all amounts necessary to fund all present pension, profit sharing and
deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from
participation in, and has not permitted partial or complete termination of, or permitted the
occurrence of any other event with respect to, any such plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency.
5.9 Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely to
acquire F9 Acquisition Corp. and to refinance outstanding Indebtedness of each Borrower and not for
personal, family, household or agricultural purposes.
5.10 Full Disclosure. No written representation, warranty or other statement of Borrower in
any certificate or written statement given to Bank, as of the date such representations,
warranties, or other statements were made, taken together with all such written 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 viewed as facts and that actual results
during the period or periods covered by such projections and forecasts may differ from the
projected or forecasted results).
6 AFFIRMATIVE COVENANTS
Borrower shall do all of the following:
6.1 Government Compliance. Maintain its and all its Subsidiaries’ legal existence and good
standing in their respective jurisdictions of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to have a material
adverse effect on Borrower’s business or operations. Borrower shall comply, and have each
Subsidiary comply, with all laws, ordinances and regulations to which it is subject, the
noncompliance with which could have a material adverse effect on Borrower’s business.
6.2 Financial Statements, Reports, Certificates.
(a) Deliver to Bank: (i) as soon as available, but no later than thirty (30) days after
the last day of each month, a company prepared consolidated and consolidating balance sheet and
income statement covering Borrower’s and each of its Subsidiary’s operations for such month
certified by a Responsible Officer and in a form acceptable to Bank; (ii) as soon as available,
but no later than one hundred fifty (150) days after the last day of Borrower’s fiscal year (on
or before August 15, 2009 with respect Borrower’s fiscal year ending December 31, 2007 and on or
before September 30, 2009 with respect Borrower’s fiscal year ending December 31, 2008), audited
consolidated financial statements prepared under GAAP, consistently applied, together with an
unqualified opinion on the financial statements from an independent certified public accounting
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firm acceptable to Bank in its reasonable discretion; (iii) within five (5) days of delivery,
copies of all statements, reports and notices made available to Borrower’s security holders or to
any holders of Subordinated Debt; (iv) in the event that Borrower becomes subject to the
reporting requirements under the Securities Exchange Act of 1934, as amended, within five (5)
days of filing, all reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange
Commission or a link thereto on Borrower’s or another website on the Internet; (v) a prompt
report
of any legal actions pending or threatened against Borrower or any of its Subsidiaries that
could result in damages or costs to Borrower or any of its Subsidiaries of One Hundred Fifty
Thousand Dollars ($150,000) or more; (vi) prompt notice of an event that materially and adversely
affects the value of the intellectual property; (vii) annually, within thirty (30) days after the
last day of Borrower’s fiscal year end, Board approved projections; and (viii) other financial
information reasonably requested by Bank.
(b) Within thirty (30) days after the last day of each month, deliver to Bank a duly
completed Borrowing Base Certificate signed by a Responsible Officer, with (i) aged listings of
accounts receivable and accounts payable (by invoice date) and (ii) deferred revenue report.
(c) Within thirty (30) days after the last day of each month, deliver to Bank with the
monthly financial statements, a duly completed Compliance Certificate signed by a Responsible
Officer setting forth calculations showing compliance with the financial covenants set forth in
this Agreement.
(d) Allow Bank to audit Borrower’s Collateral at Borrower’s expense. Such audits shall be
conducted no more often than once every twelve (12) months unless an Event of Default has
occurred and is continuing.
6.3 Inventory; Returns. Keep all Inventory in good and marketable condition, free from
material defects. Returns and allowances between Borrower and its Account Debtors shall follow
Borrower’s customary practices as they exist at the Effective Date. Borrower must promptly notify
Bank of all returns, recoveries, disputes and claims that involve more than One Hundred Thousand
Dollars ($100,000).
6.4 Taxes; Pensions. Make, and cause each of its Subsidiaries to make, timely payment of all
foreign, federal, state, and local taxes or assessments (other than taxes and assessments which
Borrower is contesting pursuant to the terms of Section 5.8 hereof) and shall deliver to Bank, on
demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund
all present pension, profit sharing and deferred compensation plans in accordance with their terms.
6.5 Insurance. Keep its business and the Collateral insured for risks and in amounts standard
for companies in Borrower’s industry and location and as Bank may reasonably request. Insurance
policies shall be in a form, with companies, and in amounts that are satisfactory to Bank. All
property policies shall have a lender’s loss payable endorsement showing Bank as lender loss payee
and waive subrogation against Bank, and all liability policies shall show, or have endorsements
showing, Bank as an additional insured. All policies (or the loss payable and additional insured
endorsements) shall provide that the insurer must give Bank at least twenty (20) days notice before
canceling, amending, or declining to renew its policy. At Bank’s request, Borrower shall deliver
certified copies of policies and evidence of all premium payments. Proceeds payable under any
policy shall, at Bank’s option, be payable to Bank on account of the Obligations. Notwithstanding
the foregoing, (a) so long as no Event of Default has occurred and is continuing, Borrower shall
have the option of applying the proceeds of any casualty policy up to $50,000.00, in the aggregate,
toward the replacement or repair of destroyed or damaged property; provided that any such replaced
or repaired property (i) shall be of equal or like value as the replaced or repaired Collateral and
(ii) shall be deemed Collateral in which Bank has been granted a first priority security interest,
and (b) after the occurrence and during the continuance of an Event of Default, all proceeds
payable under such casualty policy shall, at the option of Bank, be payable to Bank on account of
the Obligations. If Borrower fails to obtain insurance as required under this Section 6.5 within
thirty (30) days of the Effective Date or to pay any amount or furnish any required proof of
payment to third persons and Bank, Bank may make all or part of such payment or obtain such
insurance policies required in this Section 6.5, and take any action under the policies Bank deems
prudent.
6.6 Operating Accounts.
(a) Maintain its primary operating accounts with Bank and all of Borrower’s cash or
securities in excess of that amount used for Borrower’s operations shall be maintained at Bank or
SVB Securities, with the exception of the Borrower’s Chinese international operating account for
the purpose of current ordinary
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and necessary operating expenses; provided that the maximum
aggregate balance of such account does not exceed Two Hundred Fifty Thousand Dollars ($250,000)
at any time (the “Permitted Account”). Any Guarantor shall maintain all depository, operating
and securities accounts with Bank, or SVB Securities.
(b) Provide Bank five (5) days prior written notice before establishing any Collateral
Account at or with any bank or financial institution other than Bank or its Affiliates. In
addition, for each Collateral Account that Borrower at any time maintains, Borrower shall cause
the applicable bank or financial institution (other than Bank) at or with which any Collateral
Account is maintained to execute and deliver a Control Agreement or other appropriate instrument
with respect to such Collateral Account to perfect Bank’s Lien in such Collateral Account in
accordance with the terms hereunder. Notwithstanding the foregoing, the provisions of the
previous sentence shall not apply to the Borrower’s Foreign Subsidiaries’ international operating
accounts for the purpose of current and necessary operating expenses, provided that the balance
of such Collateral Account or Accounts, in the aggregate, is less than Two Hundred Fifty Thousand
Dollars ($250,000.00). In addition, the provisions of the previous sentence shall not apply to
deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of Borrower’s employees and identified to Bank by Borrower as
such.
6.7 Financial Covenants. The Borrower shall at all times comply with the following financial
covenants, to be tested as of the last day of each month, unless otherwise noted, on a consolidated
basis (provided, however, that for purposes of calculating the covenants in
paragraphs (a) and (b) below for the months of June 2009 and July 2009, Borrower “on a consolidated
basis” shall exclude Intermediate and Vericept):
(a) Liquidity. As of the last day of each month, a ratio of (i) Quick Assets to (ii)
the sum of all Obligations and liabilities of Borrower to Bank, plus the aggregate amount of any
issued Letters of Credit by Bank, of at least 1.75 to 1.0.
(b) EBITDA. Borrower shall achieve EBITDA of: (i) a loss no greater than Five Hundred
Thousand Dollars (($500,000)) for (A) the month ending June 30, 2009, (B) the two (2) months ending
July 31, 2009, (C) the three (3) months ending August 31, 2009, (D) the four (4) months ending
September 30, 2009 and (E) the five (5) months ending October 31, 2009, (ii) a loss no greater than
Two Hundred Fifty Thousand Dollars (($250,000)) for the six (6) months ending November 30, 2009,
(iii) at least zero ($0.00) (no loss) for (A) the seven (7) months ending December 31, 2009, (B)
the eight (8) months ending January 31, 2010, (C) the nine (9) months ending February 28, 2010, (D)
the ten (10) months ending March 31, 2010, and (E) the eleven (11) months ending April 30, 2010,
(iv) at least Seven Hundred Fifty Thousand Dollars ($750,000) for the twelve (12) months ending May
31, 2010, (v) at least One Million Two Hundred Fifty Thousand Dollars ($1,250,000) for the twelve
(12) months ending June 30, 2010, (vi) at least One Million Seven Hundred Fifty Thousand Dollars
($1,750,000) for the twelve (12) months ending July 31, 2010 and (vii) at least Two Million Seven
Hundred Fifty Thousand Dollars ($2,750,000) for the twelve (12) months ending August 31, 2010.
(c) Capital Expenditures. Borrower shall not permit its capital expenditures (as
determined in accordance with GAAP, but excluding expenses incurred in connection with the
acquisition of Vericept by Holdings) to exceed $3,200,000 in any fiscal year.
6.8 Protection and Registration of Intellectual Property Rights. Borrower shall: (a)
protect, defend and maintain the validity and enforceability of its intellectual property; (b)
promptly advise Bank in writing of material infringements of its intellectual property; and (c) not
allow any intellectual property material to Borrower’s business to be abandoned, forfeited or
dedicated to the public without Bank’s written consent. If Borrower decides to register any
copyrights or mask works in the United States Copyright Office, Borrower shall: (x) provide Bank
with at least fifteen (15) days prior written notice of its intent to register such copyrights or
mask works together with a copy of the application it intends to file with the United States
Copyright Office (excluding exhibits thereto); (y) execute an intellectual property security
agreement or such other documents as Bank may reasonably request to maintain the perfection and
priority of Bank’s security interest in the copyrights or mask works intended to be registered with
the United States Copyright Office; and (z) record such intellectual property security agreement
with the United States Copyright Office contemporaneously with filing the copyright or mask work
application(s) with the United States Copyright Office. Borrower shall promptly provide to Bank a
copy of the application(s) filed with the United States Copyright Office together with evidence of
the recording of the intellectual property security agreement necessary for Bank to maintain the
perfection and priority of its security
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interest in such copyrights or mask works. Borrower shall
provide written notice to Bank of any application filed by Borrower in the United States Patent and
Trademark Office for a patent or to register a trademark or service xxxx within 30 days after any
such filing.
6.9 Litigation Cooperation. From the date hereof and continuing through the termination of
this Agreement, make available to Bank, without expense to Bank, Borrower and its officers,
employees and agents and
Borrower’s books and records, to the extent that Bank may deem them reasonably necessary to
prosecute or defend any third-party suit or proceeding instituted by or against Bank with respect
to any Collateral or relating to Borrower.
6.10 Landlord Waiver. On or before thirty (30) days of the Effective Date, the Borrower shall
deliver to Bank a landlord waiver in form and substance reasonably satisfactory to Bank.
6.11 Further Assurances. Borrower shall execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral or to
effect the purposes of this Agreement.
7 NEGATIVE COVENANTS
Borrower shall not do any of the following without Bank’s prior written consent:
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, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn-out
or obsolete Equipment; and (c) in connection with Permitted Liens and Permitted Investments.
Borrower shall not enter into an agreement with any Person other than Bank which restricts the
subsequent granting of a security interest in the Intellectual Property.
7.2 Changes in Business, Management, Ownership, or Business Locations. (a) Engage in or
permit any of its Subsidiaries to engage in any business other than the businesses currently
engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b)
liquidate or dissolve; or (c) (i) if the Key Person ceases to hold such office with Borrower and a
replacement reasonably satisfactory to Bank is not made within sixty (60) days after departure from
Borrower; or (ii) enter into any transaction or series of related transactions in which the
stockholders of Borrower immediately prior to the first such transaction own less than 50% of the
voting stock of Borrower immediately after giving effect to such transaction or related series of
such transactions (other than by the sale of Borrower’s equity securities in a public offering or
to venture capital investors so long as Borrower identifies to Bank the venture capital investors
prior to the closing of the transaction). Borrower shall not, without at least thirty (30) days
prior written notice to Bank: (1) add any new offices or business locations, including warehouses
(unless such new offices or business locations contain less than One Hundred Thousand Dollars
($100,000), in the aggregate, per fiscal year, in Borrower’s assets or property), (2) change its
jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal
name, or (5) change any organizational number (if any) assigned by its jurisdiction of
organization.
7.3 Mergers or Acquisitions. Without the Bank’s prior written consent, which shall not be
unreasonably withheld or delayed, 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 (a) total
consideration including cash and the value of any non-cash consideration, for any one transaction
shall not exceed Two Million Dollars ($2,000,000), and all such transactions shall not in the
aggregate exceed Six Million Dollars ($6,000,000) in any fiscal year of Borrower; (b) the entity to
be acquired is in the same or similar line of business as the Borrower, (c) the acquisition is not
a “hostile” takeover by Borrower, (d) no Event of Default has occurred and is continuing or would
exist after giving effect to the transactions; (e) Borrower is the surviving legal entity; and (f)
each entity acquired by Borrower shall, immediately prior to the acquisition, show positive
trailing twelve (12) month EBITDA. A Subsidiary may merge or consolidate into another Subsidiary
or 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 the Collateral, 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, permit any Collateral not to be subject to the
first priority security interest granted herein.
7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to
the terms of Section 6.6.(b) hereof.
7.7 Distributions; Investments. (a) Directly or indirectly make any Investment other than
Permitted Investments, or permit any of its Subsidiaries to do so; or (b) pay any dividends or make
any distribution or payment or redeem, retire or purchase any capital stock, provided that (i)
Borrower may convert any of its convertible securities into other securities pursuant to the terms
of such convertible securities or otherwise in exchange thereof, (ii) Borrower may pay dividends
solely in common stock; and (iii) Borrower may repurchase the stock of former employees or
consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist
at the time of such repurchase and would not exist after giving effect to such repurchase, provided
such repurchase does not exceed in the aggregate of Five Hundred Thousand Dollars ($500,000) per
fiscal year.
7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any
material transaction with any Affiliate of Borrower, except for transactions that are in the
ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable
to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person.
7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt, except under
the terms of the subordination, intercreditor, or other similar agreement to which such
Subordinated Debt is subject, or (b) amend any provision in any document relating to the
Subordinated Debt which would increase the amount thereof or adversely affect the subordination
thereof to Obligations owed to Bank.
7.10 Compliance. Become an “investment company” or a company controlled by an “investment
company”, under the Investment Company Act of 1940 or undertake as one of its important activities
extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor
Standards Act or violate any other law or regulation, if the violation could reasonably be expected
to have a material adverse effect on Borrower’s business, or permit any of its Subsidiaries to do
so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete
termination of, or permit the occurrence of any other event with respect to, any present pension,
profit sharing and deferred compensation plan which could reasonably be expected to result in any
liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency.
8 EVENTS OF DEFAULT
Any one of the following shall constitute an event of default (an “Event of Default”) under
this Agreement:
8.1 Payment Default. Borrower fails to (a) make any payment of principal or interest on any
Credit Extension on its due date, or (b) pay any other Obligations within three (3) Business Days
after such Obligations are due and payable (which three day grace period will not apply to payments
due on the Maturity Date). During the cure period, the failure to cure the payment default is not
an Event of Default (but no Credit Extension will be made during the cure period);
8.2 Covenant Default.
(a) Borrower fails or neglects to perform any obligation in Section 6.2, 6.6, 6.7, or violates
any covenant in Section 7; or
(b) Borrower fails or neglects to perform, keep, or observe any other term, provision,
condition, covenant or agreement contained in this Agreement, any Loan Documents, and as to any
default (other than those
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specified in this Section 8 below) under such other term, provision,
condition, covenant or agreement that can be cured, has failed to cure the default within ten (10)
days after the occurrence thereof; provided, however, that if the default cannot by its nature be
cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within
such ten (10) day period, and such default is likely to be cured within a reasonable time, then
Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to
attempt to cure such default, and within such reasonable time period the failure to cure the
default shall not be deemed an Event of Default (but no Credit Extensions shall be made during such
cure period). Grace periods provided under this section shall not apply, among other things, to
financial covenants or any other covenants set forth in subsection (a) above;
8.3 Material Adverse Change. A Material Adverse Change occurs;
8.4 Attachment. (a) Any material portion of Borrower’s assets is attached, seized, levied on,
or comes into possession of a trustee or receiver and the attachment, seizure or levy is not
removed in ten (10) days; (b) the service of process upon Bank ( or Bank’s Affiliate) seeking to
attach, by trustee or similar process, any funds of, or of any entity under control of Borrower
(including a Subsidiary) on deposit with the Bank; (c) Borrower is enjoined, restrained, or
prevented by court order from conducting a material part of its business; (d) a judgment or other
claim in excess of Fifty Thousand Dollars ($50,000) becomes a Lien on any of Borrower’s assets; or
(e) a notice of lien, levy, or assessment is filed against any of Borrower’s assets by any
government agency and not paid within ten (10) days after Borrower receives notice. These are not
Events of Default if stayed or if a bond is posted pending contest by Borrower (but no Credit
Extensions shall be made during the cure period);
8.5 Insolvency (a) Borrower is unable to pay its debts (including trade debts) as they become
due or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an
Insolvency Proceeding is begun against Borrower and not dismissed or stayed within thirty (30) days
(but no Credit Extensions shall be made while of any of the conditions described in clause (a)
exist and/or until any Insolvency Proceeding is dismissed);
8.6 Other Agreements. There is a default in any agreement to which Borrower or any Guarantor
is a party with a third party or parties resulting in a right by such third party or parties,
whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of
Fifty Thousand Dollars ($50,000) or that could have a material adverse effect on Borrower’s or any
Guarantor’s business;
8.7 Judgments. A judgment or judgments for the payment of money in an amount, individually or
in the aggregate, of at least Fifty Thousand Dollars ($50,000) (not covered by independent
third-party insurance) shall be rendered against Borrower and shall remain unsatisfied and unstayed
for a period of fifteen (15) days after the entry thereof (provided that no Credit Extensions will
be made prior to the satisfaction or stay of such judgment);
8.8 Misrepresentations. Borrower or any Person acting for Borrower makes any representation,
warranty, or other statement now or later in this Agreement, any Loan Document or in any writing
delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such
representation, warranty, or other statement is incorrect in any material respect when made; or
8.9 Subordinated Debt. A default or breach occurs under any agreement between Borrower and
any creditor of Borrower that signed a subordination, intercreditor, or other similar agreement
with Bank, or any creditor that has signed such an agreement with Bank breaches any terms of such
agreement.
8.10 Guaranty. (a) Any guaranty of any Obligations terminates or ceases for any reason to be
in full force and effect; (b) any Guarantor does not perform any obligation or covenant under any
guaranty of the Obligations; (c) any circumstance described in Sections 8.3, 8.4, 8.5, 8.7, or 8.8.
occurs with respect to any Guarantor; (d) the liquidation, winding up, or termination of existence
of any Guarantor; or (e) (i) a material impairment in the perfection or priority of Bank’s Lien in
the collateral provided by Guarantor or in the value of such collateral or (ii) a material adverse
change in the general affairs, management, results of operation, condition (financial or otherwise)
or the prospect of repayment of the Obligations occurs with respect to any Guarantor.
9 BANK’S RIGHTS AND REMEDIES
9.1 Rights and Remedies. While 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, notify any Person owing Borrower money of Bank’s
security interest in such funds, and verify the amount of such account;
(d) make any payments and do any acts it considers necessary or reasonable to protect the
Collateral and/or its security interest in the Collateral. Borrower shall assemble the
Collateral if Bank requests 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. Bank is hereby granted a non-exclusive, royalty-free license or
other right to use, without charge, Borrower’s labels, patents, copyrights, mask works, rights of
use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its
rights under this Section, Borrower’s rights under all licenses and all franchise agreements
inure to Bank’s benefit;
(g) place a “hold” on any account maintained with Bank and/or deliver a notice of exclusive
control, any entitlement order, or other directions or instructions pursuant to any Control
Agreement or similar agreements providing control of any Collateral;
(h) demand and receive possession of Borrower’s Books; and
(i) exercise all rights and remedies available to Bank under the Loan Documents or at law or
equity, including all remedies provided under the Code (including disposal of the Collateral
pursuant to the terms thereof).
9.2 Power of Attorney. Borrower hereby irrevocably appoints Bank as its lawful
attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of
Default, to: (a) endorse Borrower’s name on any checks or other forms of payment or security; (b)
sign Borrower’s name on any invoice or xxxx of lading for any Account or drafts against Account
Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account
Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust all
claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge,
encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the
Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints
Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect
or continue the perfection of any security interest regardless of whether an Event of Default has
occurred until all Obligations have been satisfied in full and Bank is under no further obligation
to make Credit Extensions hereunder. Bank’s foregoing appointment as Borrower’s attorney in fact,
and all of Bank’s rights and powers, coupled with an interest, are irrevocable until all
Obligations have been fully repaid and performed and Bank’s obligation to provide Credit Extensions
terminates.
9.3 Accounts Verification; Collection. If an Event of Default has occurred and is continuing,
Bank may notify any Person owing Borrower money of Bank’s security interest in such funds and
verify the amount of such account. After the occurrence of an Event of Default, any amounts
received by Borrower shall be held in trust by Borrower for Bank, and, if requested by Bank,
Borrower shall immediately deliver such receipts to Bank in the form received from the Account
Debtor, with proper endorsements for deposit.
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9.4 Protective Payments. If Borrower fails to obtain the insurance called for by Section 6.5
or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to
pay under this Agreement or any other Loan Document, Bank may obtain such insurance or make such
payment, and all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing
interest at the then highest applicable rate, and secured by the Collateral. Bank will make
reasonable efforts to provide Borrower with notice of Bank obtaining such insurance at the time it
is obtained or within a reasonable time thereafter. 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 Application of Payments and Proceeds. Unless an Event of Default has occurred and is
continuing, Bank shall apply any funds in its possession, whether from Borrower account balances,
payments, or
proceeds realized as the result of any collection of Accounts or other disposition of the
Collateral, first, to Bank Expenses, including without limitation, the reasonable costs, expenses,
liabilities, obligations and attorneys’ fees incurred by Bank in the exercise of its rights under
this Agreement; second, to the interest due upon any of the Obligations; and third, to the
principal of the Obligations and any applicable fees and other charges, in such order as Bank shall
determine in its sole discretion. Any surplus shall be paid to Borrower or other Persons legally
entitled thereto; Borrower shall remain liable to Bank for any deficiency. If an Event of Default
has occurred and is continuing, Bank may apply any funds in its possession, whether from Borrower
account balances, payments, proceeds realized as the result of any collection of Accounts or other
disposition of the Collateral, or otherwise, to the Obligations in such order as Bank shall
determine in its sole discretion. Any surplus shall be paid to Borrower or other Persons legally
entitled thereto; Borrower shall remain liable to Bank for any deficiency. If Bank, in its good
faith business judgment, directly or indirectly enters into a deferred payment or other credit
transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable
at any time, of either reducing the Obligations by the principal amount of the purchase price or
deferring the reduction of the Obligations until the actual receipt by Bank of cash therefor.
9.6 Bank’s Liability for Collateral. So long as Bank complies with reasonable banking
practices regarding the safekeeping of the Collateral in the possession or under the control of
Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any
loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act
or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss,
damage or destruction of the Collateral.
9.7 No Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to require strict
performance by Borrower of any provision of this Agreement or any other Loan Document shall not
waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance
herewith or therewith. No waiver hereunder shall be effective unless signed by Bank and then is
only effective for the specific instance and purpose for which it is given. Bank’s rights and
remedies under this Agreement and the other Loan Documents 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 in exercising any remedy is not a waiver, election, or acquiescence.
9.8 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, consents, requests, approvals, demands, or other communication (collectively,
“Communication”) by any party to this Agreement or any other Loan Document must be in writing and
shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual
receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or
certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when
sent by electronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a
reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent to the address,
facsimile number, or email address indicated below. Bank or Borrower may change its address or
facsimile number by giving the other party written notice thereof in accordance with the terms of
this Section 10.
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| If to Borrower: | TrustWave Holdings, Inc. | |||
| 00 Xxxx Xxxxxxx | ||||
| Xxxxx 0000 | ||||
| Xxxxxxx, Xxxxxxxx 00000 | ||||
| Attn: ______________________ | ||||
| Fax: ______________________ | ||||
| Email: ______________________ | ||||
| If to Bank: | Silicon Valley Bank | |||
| 000 Xxxxxxxxxxx Xxxxxxxx | ||||
| Xxxxx 000 | ||||
| Xxxxxxxxxx, Xxxxxxxx 00000 | ||||
| Attn: Xx. Xxx Xxxxx | ||||
| Fax: (000) 000-0000 | ||||
| Email: xxxxxx@xxx.xxx | ||||
| with a copy to: | Xxxxxx & Xxxxxxxxxx LLP | |||
| Xxxxx Xxxxxx Xxxxx | ||||
| Xxxxxx, Xxxxxxxxxxxxx 00000 | ||||
| Attn: Xxxxx X. Xxxxxxx, Esquire | ||||
| Fax: (000) 000-0000 | ||||
| Email: XXxxxxxx@xxxxxxxxx.xxx |
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER AND JUDICIAL REFERENCE
Illinois 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
Illinois. NOTWITHSTANDING THE FOREGOING, BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANK
DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE BANK’S
RIGHTS AGAINST BORROWER OR ITS PROPERTY.
TO
THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR
ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS
REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
12.1 Successors and Assigns. This Agreement binds and is for the benefit of the successors
and permitted assigns of each party. Borrower may not assign this Agreement or any rights or
obligations under it without Bank’s prior written consent (which may be granted or withheld in
Bank’s discretion). Bank has the right, without the consent of or 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 and the other Loan Documents.
12.2 Indemnification. Borrower agrees to indemnify, defend and hold Bank and its directors,
officers, employees, agents, attorneys, or any other Person affiliated with or representing Bank
harmless against: (a) all obligations, demands, claims, and liabilities (collectively, “Claims”)
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 arising from
transactions between Bank and Borrower (including reasonable attorneys’ fees and expenses), except
for Claims and/or losses directly caused by Bank’s gross negligence or willful misconduct.
12.3 Limitation of Actions. Any claim or cause of action by Borrower against Bank, its
directors, officers, employees, agents, accountants, attorneys, or any other Person affiliated with
or representing Bank based upon, arising from, or relating to this Loan Agreement or any other Loan
Document, or any other transaction
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contemplated hereby or thereby or relating hereto or thereto, or any other matter, cause or
thing whatsoever, occurred, done, omitted or suffered to be done by Bank, its directors, officers,
employees, agents, accountants or attorneys, shall be barred unless asserted by Borrower by the
commencement of an action or proceeding in a court of competent jurisdiction by (a) the filing of a
complaint within one year from the earlier of (i) the date any of Borrower’s officer or directors
had knowledge of the first act, the occurrence or omission upon which such claim or cause of
action, or any part thereof, is based, or (ii) the date this Agreement is terminated, and (b) the
service of a summons and complaint on an officer of Bank, or on any other person authorized to
accept service on behalf of Bank, within thirty (30) days thereafter. Borrower agrees that such
one-year period is a reasonable and sufficient time for Borrower to investigate and act upon any
such claim or cause of action. The one-year period provided herein shall not be waived, tolled, or
extended except by the written consent of Bank in its sole discretion. This provision shall
survive any termination of this Loan Agreement or any other Loan Document.
12.4 Time of Essence. Time is of the essence for the performance of all Obligations in this
Agreement.
12.5 Severability of Provisions. Each provision of this Agreement is severable from every
other provision in determining the enforceability of any provision.
12.6 Amendments in Writing; Integration. All amendments to this Agreement must be in writing
signed by both Bank and Borrower. This Agreement and the Loan Documents represent the entire
agreement about this subject matter and supersede prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations between the parties about
the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan
Documents.
12.7 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.
12.8 Survival. All covenants, representations and warranties made in this Agreement continue
in full force until this Agreement has terminated pursuant to its terms and all Obligations (other
than inchoate indemnity obligations and any other obligations which, by their terms, are to survive
the termination of this Agreement) have been satisfied. The obligation of Borrower in Section 12.2
to indemnify Bank shall survive until the statute of limitations with respect to such claim or
cause of action shall have run.
12.9 Confidentiality. In handling any confidential information, Bank shall exercise the same
degree of care that it exercises for its own proprietary information, but disclosure of information
may be made: (a) to Bank’s Subsidiaries or Affiliates; (b) to prospective transferees or purchasers
of any interest in the Credit Extensions (provided, however, Bank shall use commercially reasonable
efforts to obtain such prospective transferee’s or purchaser’s agreement to the terms of this
provision); (c) as required by law, regulation, subpoena, or other order; (d) to Bank’s regulators
or as otherwise required in connection with Bank’s examination or audit; and (e) as Bank considers
appropriate in exercising remedies under this Agreement. Confidential information does not include
information that either: (i) 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 (ii) is disclosed to Bank
by a third party, if Bank does not know that the third party is prohibited from disclosing the
information.
12.10 Borrower Liability. Each Borrower hereunder shall be obligated to repay all
Credit Extensions made hereunder, regardless of which Borrower actually receives said Credit
Extension, as if each Borrower hereunder directly received all Credit Extensions. Each
Borrower waives any suretyship defenses available to it under the Code or any other applicable law.
Each Borrower waives any right to require Bank to: (i) proceed against any Borrower or any other
person; (ii) proceed against or exhaust any security; or (iii) pursue any other remedy. Bank may
exercise or not exercise any right or remedy it has against any Borrower or any security it holds
(including the right to foreclose by judicial or non-judicial sale) without affecting any
Borrower’s liability. Notwithstanding any other provision of this Agreement or other related
document, each Borrower irrevocably waives all rights that it may have at law or in equity
(including, without limitation, any law subrogating Borrower to the rights of Bank under this
Agreement) to seek contribution, indemnification or any other form of reimbursement from any other
Borrower, or any other Person now or hereafter primarily or secondarily liable for any of the
Obligations, for any payment made by Borrower with respect to the Obligations in connection with
this Agreement or otherwise and all rights that it might have to benefit from, or to participate
in, any security for the Obligations as a result of any payment made by Borrower with respect to
the Obligations in connection with this Agreement or
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otherwise. Any agreement providing for indemnification, reimbursement or any other
arrangement prohibited under this Section shall be null and void. If any payment is made to a
Borrower in contravention of this Section, such Borrower shall hold such payment in trust for Bank
and such payment shall be promptly delivered to Bank for application to the Obligations, whether
matured or unmatured.
12.11 Right of Set Off. Borrower hereby grants to Bank, a lien, security interest
and right of set off as security for all Obligations to Bank, whether now existing or hereafter
arising upon and against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the control of Bank
(including a Bank subsidiary) or in transit to any of them. At any time after the occurrence and
during the continuance of an Event of Default, without demand or notice, Bank may set off the same
or any part thereof and apply the same to any liability or obligation of Borrower even though
unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND
ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.
13 DEFINITIONS
13.1 Definitions. As used in this Agreement, the following terms have the following meanings:
“Account” is any “account” as defined in the Code with such additions to such term as may
hereafter be made, and includes, without limitation, all accounts receivable and other sums owing
to Borrower.
“Account Debtor” is any “account debtor” as defined in the Code with such additions to such
term as may hereafter be made.
“Advance” or “Advances” means an advance (or advances) under the Revolving Line.
“Affiliate” of any 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.
“Agreement” is defined in the preamble hereof.
“Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the Borrowing Base
minus (b) the Amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters
of Credit) plus an amount equal to the Letter of Credit Reserves, minus (c) the FX Reserve, and
minus (d) the outstanding principal balance of any Advances (including any amounts used for Cash
Management Services).
“Bank” is defined in the preamble hereof.
“Bank Expenses” are all audit fees and expenses, costs, and expenses (including reasonable
attorneys’ fees and expenses) for preparing, negotiating, administering, defending and enforcing
the Loan Documents (including, without limitation, those incurred in connection with appeals or
Insolvency Proceedings) or otherwise incurred with respect to Borrower.
“Board” means Borrower’s Board of Directors.
“Borrower” is defined in the preamble hereof
“Borrower’s Books” are all Borrower’s books and records including ledgers, federal and state
tax returns, records regarding Borrower’s assets or liabilities, the Collateral, business
operations or financial condition, and all computer programs or storage or any equipment containing
such information.
“Borrowing Base” is (i) eighty percent (80.0%) of Eligible Accounts, plus (ii) eighty percent
(80.0%) of Borrower’s Eligible UK Subsidiary Accounts, as determined by Bank from Borrower’s most
recent Borrowing Base
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Certificate; provided, however, that Bank may decrease the foregoing
percentages in its good faith business
judgment based on events, conditions, contingencies, or risks which, as determined by Bank,
may adversely affect Collateral. The total aggregate Eligible UK Subsidiary Accounts may not, at
any time exceed the lesser of: (i) One Million Seven Hundred Fifty Thousand Dollars
($1,750,000.00), or (ii) twenty-five percent (25.0%) of the aggregate Borrowing Base.
“Borrowing Base Certificate” is that certain certificate in the form attached hereto as
Exhibit D.
“Borrowing Resolutions” are, with respect to any Person, those resolutions adopted by such
Person’s Board of Directors and delivered by such Person to Bank approving the Loan Documents to
which such Person is a party and the transactions contemplated thereby, together with a certificate
executed by its secretary on behalf of such Person certifying that (a) such Person has the
authority to execute, deliver, and perform its obligations under each of the Loan Documents to
which it is a party, (b) that attached as Exhibit A to such certificate is a true, correct, and
complete copy of the resolutions then in full force and effect authorizing and ratifying the
execution, delivery, and performance by such Person of the Loan Documents to which it is a party,
(c) the name(s) of the Person(s) authorized to execute the Loan Documents on behalf of such Person,
together with a sample of the true signature(s) of such Person(s), and (d) that Bank may
conclusively rely on such certificate unless and until such Person shall have delivered to Bank a
further certificate canceling or amending such prior certificate.
“Business Day” is any day that is not a Saturday, Sunday or a day on which Bank is closed.
“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally
guaranteed by the United States or any agency or any State thereof having maturities of not more
than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1)
year after its creation and having the highest rating from either Standard & Poor’s Ratings Group
or Xxxxx’x Investors Service, Inc., and (c) Bank’s certificates of deposit issued maturing no more
than one (1) year after issue.
“Cash Management Services” is defined in Section 2.1.5.
“Cash Management Services Sublimit” is defined in Section 2.1.5.
“Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in
effect in the State of Illinois; provided, that, to the extent that the Code is used to define any
term herein or in any Loan Document and such term is defined differently in different Articles or
Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any
Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the
State of Illinois, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect
in such other jurisdiction solely for purposes on the provisions thereof relating to such
attachment, perfection, priority, or remedies and for purposes of definitions relating to such
provisions.
“Collateral” is any and all properties, rights and assets of Borrower described on Exhibit
A.
“Collateral Account” is any Deposit Account, Securities Account, or Commodity Account.
“Commodity Account” is any “commodity account” as defined in the Code with such additions to
such term as may hereafter be made.
“Communication” is defined in Section 10.
“Compliance Certificate” is that certain certificate in the form attached hereto as
Exhibit C.
“Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or
not, of that Person for (a) 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;
(b) any obligations for undrawn letters of credit for the account of that Person; and (c) 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
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rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of business. The amount of a
Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not determinable, the
maximum reasonably anticipated liability for it determined by the Person in good faith; but the
amount may not exceed the maximum of the obligations under any guarantee or other support
arrangement.
“Control Agreement” is any control agreement entered into among the depository institution at
which Borrower maintains a Deposit Account or the securities intermediary or commodity intermediary
at which Borrower maintains a Securities Account or a Commodity account, Borrower, and Bank
pursuant to which Bank obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.
“Credit Extension” is any Advance, Letter of Credit, FX Forward Contract, amount utilized for
Cash Management Services, or any other extension of credit by Bank for Borrower’s benefit.
“Current Liabilities” are all obligations and liabilities of Borrower to Bank, plus, without
duplication, the aggregate amount of Borrower’s Total Liabilities that mature within one (1) year.
“Debt Service” means, as of the last day of each fiscal month, any amounts of principal and
interest paid or repaid on Indebtedness of Borrower, including without limitation, all Indebtedness
to the Bank, any other lenders or note holders, Subordinated Debt, and capital leases in the
ordinary course of Borrower’s business (but excluding operating leases).
“Default” means any event which with notice or passage of time or both, would constitute an
Event of Default.
“Default Rate” is defined in Section 2.2(b).
“Deferred Revenue” is all amounts received or invoiced in advance of performance under
contracts and not yet recognized as revenue.
“Deposit Account” is any “deposit account” as defined in the Code with such additions to such
term as may hereafter be made.
“Designated Deposit Account” is Borrower’s deposit account, account number _____________,
maintained with Bank.
“Dollars,” “dollars” and “$” each mean lawful money of the United States.
“Domestic Subsidiary” means a Subsidiary organized under the laws of the United States or any
state or territory thereof or the District of Columbia.
“Early Termination Fee” is defined in Section 2.1.1(d).
“EBITDA” shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to the extent deducted
in the calculation of Net Income, depreciation expense and amortization expense, plus (d) income
tax expense.
“Effective Date” is defined in the preamble of this Agreement.
“Eligible Accounts” are Accounts which arise in the ordinary course of Borrower’s business
that meet all Borrower’s representations and warranties in Section 5.3. Bank reserves the right,
at any time and from time to time after the Effective Date, to adjust any of the criteria set forth
below and to establish new criteria in its good faith business judgment. Unless Bank agrees
otherwise in writing, Eligible Accounts shall not include:
(a) Accounts for which the Account Debtor has not been invoiced;
(b) Accounts that the Account Debtor has not paid within ninety (90) days of invoice date;
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(c) Accounts owing from an Account Debtor, fifty percent (50%) or more of whose Accounts have
not been paid within ninety (90) days of invoice date;
(d) Credit balances over ninety (90) days from invoice date;
(e) Accounts owing from an Account Debtor, including Affiliates, whose total obligations to
Borrower exceed twenty-five (25%) of all Accounts, for the amounts that exceed that percentage,
unless Bank approves in writing;
(f) Accounts owing from an Account Debtor which does not have its principal place of business
in the United States except for Eligible Foreign Accounts;
(g) Accounts owing from an Account Debtor which is a federal, state or local government entity
or any department, agency, or instrumentality thereof except for Accounts of the United States if
Borrower has assigned its payment rights to Bank and the assignment has been acknowledged under the
Federal Assignment of Claims Act of 1940, as amended;
(h) Accounts owing from an Account Debtor to the extent that Borrower is indebted or obligated
in any manner to the Account Debtor (as creditor, lessor, supplier or otherwise — sometimes called
“contra” accounts, accounts payable, customer deposits or credit accounts), with the exception of
customary credits, adjustments and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business;
(i) Accounts for demonstration or promotional equipment, or in which goods are consigned, or
sold on a “sale guaranteed”, “sale or return”, “sale on approval”, “xxxx and hold”, or other terms
if Account Debtor’s payment may be conditional;
(j) Accounts for which the Account Debtor is Borrower’s Affiliate, officer, employee, or
agent;
(k) Accounts in which the Account Debtor disputes liability or makes any claim (but only up to
the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding,
or becomes insolvent, or goes out of business;
(l) Accounts owing from an Account Debtor with respect to which Borrower has received deferred
revenue (but only to the extent of such deferred revenue);
(m) Accounts for which Bank in its good faith business judgment determines collection to be
doubtful; and
(n) other Accounts Bank deems ineligible in the exercise of its good faith business judgment.
“Eligible Foreign Accounts” are Accounts for which the Account Debtor does not have its
principal place of business in the United States but are otherwise Eligible Accounts that Bank
approves in writing, on a case by case basis, in its sole and absolute discretion.
“Eligible UK Subsidiary Accounts” are Accounts which are owned by Borrower’s UK Subsidiary,
TrustWave Limited., which would constitute Eligible Accounts but for the fact that they are owned
by TrustWave Limited., and are owing from an Account Debtor located in the United Kingdom, and
with respect to which Bank has a first priority fixed charge, in form and substance acceptable to
Bank.
“Equipment” is all “equipment” as defined in the Code with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles
(including motor vehicles and trailers), and any interest in any of the foregoing.
“ERISA” is the Employment Retirement Income Security Act of 1974, and its regulations.
“Event of Default” is defined in Section 8.
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“Foreign Currency” means lawful money of a country other than the United States.
“Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.
“Funding Date” is any date on which a Credit Extension is made to or on account of Borrower
which shall be a Business Day.
“FX Business Day” is any day when (a) Bank’s Foreign Exchange Department is conducting its
normal business and (b) the Foreign Currency being purchased or sold by Borrower is available to
Bank from the entity from which Bank shall buy or sell such Foreign Currency.
“FX Forward Contract” is defined in Section 2.1.4.
“FX Reserve” is defined in Section 2.1.4.
“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other Person as may be approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of the date of determination.
“General Intangibles” is all “general intangibles” as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and includes without
limitation, all copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published or unpublished, any
patents, trademarks, service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights, goodwill, franchise
agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims,
income and other tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without limitation key man, property damage, and
business interruption insurance), payments of insurance and rights to payment of any kind.
“Guarantor” is any present or future guarantor of the Obligations, including TrustWave
Holdings Limited, and TrustWave Limited.
“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or
services, such as reimbursement and other obligations for surety bonds and letters of credit, (b)
obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease
obligations, and (d) Contingent Obligations.
“Insolvency Proceeding” is any proceeding by or against any Person under the United States
Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit
of creditors, compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
“Interest Expense” means for any fiscal period, interest expense (whether cash or non-cash)
determined in accordance with GAAP for the relevant period ending on such date, including, in any
event, interest expense with respect to any Credit Extension and other Indebtedness of Borrower,
including, without limitation or duplication, all commissions, discounts, or related amortization
and other fees and charges with respect to letters of credit and bankers’ acceptance financing and
the net costs associated with interest rate swap, cap, and similar arrangements, and the interest
portion of any deferred payment obligation (including leases of all types).
“Inventory” is all “inventory” as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation all merchandise,
raw materials, parts, supplies, packing and shipping materials, work in process and finished
products, including without limitation such inventory as is temporarily out of Borrower’s custody
or possession or in transit and including any returned goods and any documents of title
representing any of the above.
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“Investment” is any beneficial ownership interest in any Person (including stock, partnership
interest or other securities), and any loan, advance or capital contribution to any Person, except
in accordance with Section 7.3 hereof.
“IP Agreement” is that certain Intellectual Property Security Agreement executed and delivered
by Borrower to Bank dated as of April 26, 2006, as amended and supplemented.
“Key Person” is the Borrower’s Chief Executive Officer.
“Letter of Credit” means a standby letter of credit issued by Bank or another institution
based upon an application, guarantee, indemnity or similar agreement on the part of Bank as set
forth in Section 2.1.3.
“Letter of Credit Application” is defined in Section 2.1.3(a).
“Letter of Credit Reserve” has the meaning set forth in Section 2.1.3(d).
“Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or other
encumbrance.
“Liquid Assets” shall mean all unrestricted and unencumbered cash, Cash Equivalents, and
marketable securities maintained at Bank or SVB Securities (provided a control agreement is in
place) in Borrower’s name and not pledged to any other Person, less any pending disbursements at
such given time.
“Loan Amount” in respect of each Equipment Advance is the original principal amount of such
Equipment Advance.
“Loan Documents” are, collectively, this Agreement, the Warrant, the Perfection Certificate,
the IP Agreement, the Subordination Agreement, any note, or notes or guaranties executed by
Borrower or any Guarantor, and any other present or future agreement between Borrower any Guarantor
and/or for the benefit of Bank in connection with this Agreement, all as amended, restated, or
otherwise modified.
“Material Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s
Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the
business, operations, or condition (financial or otherwise) of Borrower; (c) a material impairment
of the prospect of repayment of any portion of the Obligations; or (d) Bank determines, based upon
information available to it and in its reasonable judgment, that there is a reasonable likelihood
that Borrower shall fail to comply with one or more of the financial covenants in Section 6 during
the next succeeding financial reporting period.
“Net Income” means, as calculated on a consolidated basis for Borrower and its Subsidiaries
for any period as at any date of determination, the net profit (or loss), after provision for
taxes, of Borrower and its Subsidiaries for such period taken as a single accounting period.
“Obligations” are Borrower’s obligation to pay when due any debts, principal, interest, Bank
Expenses and other amounts Borrower owes Bank now or later, whether under this Agreement, the Loan
Documents, or otherwise, including, without limitation, all obligations relating to letters of
credit, cash management services, and foreign exchange contracts, if any, and including interest
accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower
assigned to Bank, and the performance of Borrower’s duties under the Loan Documents.
“Operating Documents” are, for any Person, such Person’s formation documents, as certified
with the Secretary of State of such Person’s state of formation on a date that is no earlier than
30 days prior to the Effective Date, and its bylaws in current form each of the foregoing with all
current amendments or modifications thereto.
“Other Equipment” is leasehold improvements, intangible property such as computer software and
software licenses, equipment specifically designed or manufactured for Borrower, other intangible
property, limited use property and other similar property and soft costs approved by Bank,
including taxes, shipping, warranty charges, freight discounts and installation expenses.
“Payment/Advance Form” is that certain form attached hereto as Exhibit B.
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“Payment Date” is the first day of each calendar month.
“Perfection Certificate” is defined in Section 5.1.
“Permitted Account” is defined in Section 6.6(a).
“Permitted Indebtedness” is:
(a) Borrower’s Indebtedness to Bank under this Agreement and the other Loan Documents;
(b) Indebtedness existing on the Effective Date and shown on the Perfection Certificate;
(c) Subordinated Debt;
(d) unsecured Indebtedness to trade creditors incurred in the ordinary course of business; and
(e) extensions, refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (d) 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 Perfection Certificate and existing on the Effective Date;
(b) Cash Equivalents, in any fiscal year; and
(c) Investments of Subsidiaries in or to other Subsidiaries or Borrower and Investments by
Borrower in Subsidiaries not to exceed One Million Dollars ($1,000,000.00) in the aggregate, for
all other fiscal years, for such Subsidiaries’ ordinary and necessary current operating expenses.
“Permitted Liens” are:
(a) Liens existing on the Effective Date and shown on the Perfection Certificate or arising
under this Agreement and the 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 Liens;
(c) purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financing
the acquisition of the Equipment securing no more than Three Hundred Thousand Dollars ($300,000.00)
in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the
Lien is confined to the property and improvements and the proceeds of the Equipment; and
(d) 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.
“Person” is any individual, sole proprietorship, partnership, limited liability company, joint
venture, company, trust, unincorporated organization, association, corporation, institution, public
benefit corporation, firm, joint stock company, estate, entity or government agency.
“Prime Rate” is the greater of (i) four and one-half of one percent (4.50%) or (ii) Bank’s
most recently announced “prime rate,” even if it is not Bank’s lowest rate.
“Quick Assets” is, on any date, Borrower’s unrestricted cash and Cash Equivalents maintained
at Bank, plus net Eligible Accounts.
-23-
“Registered Organization” is any “registered organization” as defined in the Code with such
additions to such term as may hereafter be made
“Responsible Officer” is any of the Chief Executive Officer, President, Chief Financial
Officer and Controller of Borrower.
“Revolving Line” is an Advance or Advances in aggregate amount of up to Ten Million Dollars
($10,000,000) outstanding at any time; provided, however, that on and from the
Effective Date to and including the date on which Bank has received, in form and substance
satisfactory to Bank in its sole discretion, field exams for
each of the Borrowers and Borrower’s audited consolidated financial statements prepared under
GAAP, consistently applied, together with an unqualified opinion on the financial statements from
an independent certified public accounting firm acceptable to Bank in its reasonable discretion for
Borrower’s fiscal year ended December 31, 2007, “Revolving Line” shall mean an Advance or Advances
in aggregate amount of up to Five Million Dollars ($5,000,000) outstanding at any time.
“Revolving Line Maturity Date” is September 24, 2010.
“Securities Account” is any “securities account” as defined in the Code with such additions to
such term as may hereafter be made.
“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now
or hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or other similar
agreement in form and substance satisfactory to Bank entered into between Bank and the other
creditor), on terms acceptable to Bank.
“Subsidiary” means, with respect to any Person, any Person of which more than 50% of the
voting stock or other equity interests is owned or controlled, directly or indirectly, by such
Person or one or more Affiliates of such Person.
“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 of Subordinated Debt permitted by Bank to be paid by Borrower, but excluding all other
Subordinated Debt.
“Transfer” is defined in Section 7.1.
“Unused Revolving Line Facility Fee” is defined in Section 2.3(c).
“Warrant” is that certain Warrant to Purchase Stock dated April 26, 2006, executed by Borrower
in favor of Bank.
Signature page follows.
-24-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
Effective Date.
| BORROWER: | ||||||
| TRUSTWAVE HOLDINGS, INC. | ||||||
| By: | /s/ Xxxxxx X. XxXxxxxx | |||||
| Name: | Xxxxxx X. XxXxxxxx | |||||
| Title: | Chief Executive Officer | |||||
| TW MIRAGE NETWORKS, INC. | ||||||
| By: | /s/ Xxxxxx X. XxXxxxxx | |||||
| Name: | Xxxxxx X. XxXxxxxx | |||||
| Title: | Chief Executive Officer | |||||
| TRUSTWAVE INTERMEDIATE, INC. | ||||||
| By: | /s/ Xxxxxx X. XxXxxxxx | |||||
| Name: | Xxxxxx X. XxXxxxxx | |||||
| Title: | Chief Executive Officer | |||||
| TW VERICEPT CORPORATION | ||||||
| By: | /s/ Xxxxxx X. XxXxxxxx | |||||
| Name: | Xxxxxx X. XxXxxxxx | |||||
| Title: | Chief Executive Officer | |||||
| BANK: | ||||||
| SILICON VALLEY BANK | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
The undersigned, TRUSTWAVE LIMITED, a company registered in England & Wales, ratifies,
confirms and reaffirms, all and singular, the terms and conditions of a certain Deed of Guarantee
in favor of Bank dated September 25, 2008 (the “Guarantee”) and acknowledges, confirms and agrees
that the Guarantee shall remain in full force and effect and shall in no way be limited by the
execution of this Amended and Restated Loan and Security Agreement, or any other documents,
instruments and/or agreements executed and/or delivered in connection therewith.
[Signature page to Loan and Security Agreement]
TRUSTWAVE LIMITED
| By: | /s/ Xxxxxx X. XxXxxxxx | |||||
| Name: | Xxxxxx X. XxXxxxxx | |||||
| Title: | ||||||
The undersigned, TRUSTWAVE HOLDINGS LIMITED, a company registered in England & Wales,
ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Deed of
Guarantee in favor of Bank dated November 27, 2007 (the “Guarantee”) and acknowledges, confirms and
agrees that the Guarantee shall remain in full force and effect and shall in no way be limited by
the execution of this Amended and Restated Loan and Security Agreement, or any other documents,
instruments and/or agreements executed and/or delivered in connection therewith.
TRUSTWAVE HOLDINGS LIMITED
| By: | /s/ Xxxxxx X. XxXxxxxx | |||||
| Name: | Xxxxxx X. XxXxxxxx | |||||
| Title: | ||||||
[Signature page to Loan and Security Agreement]
EXHIBIT A
The Collateral consists of all of Borrower’s right, title and interest in and to the following
personal property:
All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights
or rights to payment of money, leases, license agreements, franchise agreements, General
Intangibles, commercial tort claims, documents, instruments (including any promissory notes),
chattel paper (whether tangible or electronic), cash, deposit accounts, certificates of deposit,
fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing),
securities, and all other investment property, supporting obligations, and financial assets,
whether now owned or hereafter acquired, wherever located; and
all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests
in any of the above and all substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of any or all of the
foregoing.
1
EXHIBIT B
Loan Payment/Advance Request Form
Deadline for same day processing is Noon E.S.T.*
Fax To:
|
Date: |
LOAN PAYMENT:
TRUSTWAVE HOLDINGS, INC.
TW MIRAGE NETWORKS, INC.
TRUSTWAVE INTERMEDIATE, INC.
TW VERICEPT CORPORATION
TW MIRAGE NETWORKS, INC.
TRUSTWAVE INTERMEDIATE, INC.
TW VERICEPT CORPORATION
From Account #____________________________________
|
To Account #____________________________________ | |
(Deposit Account #)
|
(Loan Account #) | |
Principal $ ____________________________________
|
and/or Interest $____________________________________ |
Authorized Signature:____________________________________
|
Phone Number: ________________________ | |
Print Name/Title: ____________________________________ |
Loan Advance:
Complete Outgoing Wire Request section below if all or a portion of the funds from this loan
advance are for an outgoing wire.
From Account #______________________
|
To Account #_____________________________ | |
(Loan Account #)
|
(Deposit Account #) |
Amount of Advance $___________________________
All Borrower’s representations and warranties in the Loan and Security Agreement are true, correct
and complete in all material respects on the date of the request for an advance; provided, however,
that such materiality qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and provided, further that
those representations and warranties expressly referring to a specific date shall be true, accurate
and complete in all material respects as of such date:
Authorized Signature: ___________________________
|
Phone Number: ___________________________ | |
Print Name/Title: ___________________________ |
Outgoing Wire Request:
Complete only if all or a portion of funds from the loan advance above is to be wired.
Deadline for same day processing is noon, E.S.T.
Complete only if all or a portion of funds from the loan advance above is to be wired.
Deadline for same day processing is noon, E.S.T.
Beneficiary Name:
|
Amount of Wire: $ | |||||
Beneficiary Bank:
|
Account Number: | |||||
City and State: |
||||||
Beneficiary Bank Transit (ABA) #:
|
Beneficiary Bank Code (Swift, Sort, Chip, etc.): | |||||
| (For International Wire Only) | ||||||
Intermediary Bank:
|
Transit (ABA) #: | |||||
For Further Credit to:
|
||||||
| Special Instruction: | ||
| * | Unless otherwise provided for an Advance bearing interest at LIBOR. |
1
By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be
processed in accordance with and subject to the terms and conditions set forth in the agreements(s)
covering funds transfer service(s), which agreements(s) were previously received and executed by me
(us).
Authorized Signature:
|
2nd Signature (if required): | |||||
Print Name/Title:
|
Print Name/Title: | |||||
Telephone #:
|
Telephone #: | |||||
2
EXHIBIT C
COMPLIANCE CERTIFICATE
COMPLIANCE CERTIFICATE
TO:
|
SILICON VALLEY BANK | Date: | ||
FROM:
|
TRUSTWAVE HOLDINGS, INC. | |||
| TW MIRAGE NETWORKS, INC. | ||||
| TRUSTWAVE INTERMEDIATE, INC. | ||||
| TW VERICEPT CORPORATION |
The undersigned authorized officers of TRUSTWAVE HOLDINGS, INC., TW MIRAGE NETWORKS, INC.,
TRUSTWAVE INTERMEDIATE, INC. and TW VERICEPT CORPORATION (individually and collectively, jointly
and severally, the “Borrower”) certify that under the terms and conditions of the Loan and Security
Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for
the period ending _______________ with all required covenants except as noted below, (2) there are
no Events of Default, (3) all representations and warranties in the Agreement are true and correct
in all material respects on this date except as noted below; provided, however, that such
materiality qualifier shall not be applicable to any representations and warranties that already
are qualified or modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be true, accurate and
complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has
timely filed all required tax returns and reports, and Borrower has timely paid all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as
otherwise permitted pursuant to the terms of Section 5.8 of the Agreement, and (5) no Liens have
been levied or claims made against Borrower relating to unpaid employee payroll or benefits of
which Borrower has not previously provided written notification to Bank. Attached are the required
documents supporting the certification. The undersigned certify that these are prepared in
accordance with generally GAAP consistently applied from one period to the next except as explained
in an accompanying letter or footnotes. The undersigned acknowledge 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. Capitalized terms used but not otherwise defined herein shall have the meanings given
them in the Agreement.
Please indicate compliance status by circling Yes/No under “Complies” column.
| Reporting Covenant | Required | Complies | ||
Monthly consolidated and consolidating financial statements
with Compliance Certificate |
Monthly within 30 days | Yes No | ||
Annual financial statement (CPA Audited) |
FYE within 150 days** | Yes No | ||
Board Approved Projections |
Annually, within 30 days after year end | Yes No | ||
Borrowing Base Certificate (together with A/R & A/P Agings,
and deferred revenue report) |
Monthly within 30 days | Yes No | ||
Audit |
Annually | Yes No |
| Financial Covenant | Required | Actual | Complies | |||
Maintain on a Monthly Basis: |
||||||
(a) Liquidity |
1.75:1.0 | :1.0 | Yes No | |||
(b) EBITDA* |
$ | $ | Yes No | |||
(c) Capital Expenditures |
$3,200,000 | $ | Yes No |
| * | As set forth in section 6.7(b) of the Loan Agreement. | |
| ** | 8/15/2009 for FY 2007; 9/30/09 for FY 2008 |
1
The following financial covenant analyses and information set forth in Schedule 1
attached hereto are true and accurate as of the date of this Certificate.
The following are the exceptions with respect to the certification above: (If no exceptions
exist, state “No exceptions to note.”)
| TRUSTWAVE HOLDINGS, INC. |
BANK USE ONLY | |||||||||
By:
|
Received by: | |||||||||
| authorized signer | ||||||||||
Name:
|
Date: | |||||||||
Title: |
||||||||||
| Verified: | ||||||||||
| Date: | ||||||||||
| Compliance Status: Yes No | ||||||||||
| TW MIRAGE NETWORKS, INC. | ||||
By: |
||||
Name:
|
||||
Title:
|
||||
| TRUSTWAVE INTERMEDIATE, INC. | ||||
By: |
||||
Name:
|
||||
Title:
|
||||
| TW VERICEPT CORPORATION | ||||
By: |
||||
Name:
|
||||
Title:
|
||||
2
Schedule 1 to Compliance Certificate
Financial Covenants of Borrower
Financial Covenants of Borrower
Dated:
In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall control.
In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall control.
I. LIQUIDITY (Section 6.7(a))
A. Borrower’s unrestricted cash and Cash Equivalents maintained at Bank |
$ | |
B. Net Eligible Accounts |
$ | |
C. Quick Assets (the sum of lines A and B) |
$ | |
D. Obligations and liabilities of Borrower to Bank |
$ | |
E. Aggregate amount of any issued Letters of Credit by Bank |
$ | |
F The sum of Line D and Line E |
$ | |
G. Liquidity Ratio, Line C divided by Line F |
Is line G equal to or greater than 1.75:1:00?
Compliance:
_______ No, not in compliance
|
_______ Yes, in compliance |
II. EBITDA (Section 6.7(b))
| Required: | See chart below |
Actual:
A. Net Income |
$ | |
B. Interest Expense |
$ | |
C. To the extent deducted in the determination of Net Income |
||
1. Depreciation expense |
$ | |
2. Amortization expense |
$ | |
3. Income tax expense |
$ | |
4. The sum of lines C.1, 2, and 3 |
$ | |
D. EBITDA (line A plus line B plus line C) |
$ |
Is line D equal to or greater than $__________? (see chart below)
3
Required:
Minimum cumulative EBIDTA at the end of each period noted below in the following amounts:
| Date | EBITDA | |||
One month ended June 30, 2009 |
($500,000 | ) | ||
two (2) months ending July 31, 2009 |
($500,000 | ) | ||
three (3) months ending August 31, 2009 |
($500,000 | ) | ||
four (4) months ending September 30, 2009 |
($500,000 | ) | ||
five (5) months ending October 31, 2009 |
($500,000 | ) | ||
six (6) months ending November 30, 2009 |
($250,000 | ) | ||
seven (7) months ending December 31, 2009 |
$ | 0 | ||
eight (8) months ending January 31, 2010 |
$ | 0 | ||
nine (9) months ending February 28, 2010 |
$ | 0 | ||
ten (10) months ending March 31, 2010 |
$ | 0 | ||
eleven (11) months ending April 30, 2010 |
$ | 0 | ||
twelve (12) months ending May 31, 2010 |
$ | 750,000 | ||
twelve (12) months ending June 30, 2010 |
$ | 1,250,000 | ||
4
| Date | EBITDA | |||
twelve (12) months ending July 31, 2010 |
$ | 1,750,000 | ||
twelve (12) months ending August 31, 2010 |
$ | 2,750,000 | ||
Compliance:
_______ No, not in compliance
|
_______ Yes, in compliance |
5
EXHIBIT B- BORROWING BASE CERTIFICATE
Borrowers: TrustWave Holdings, Inc., TW Mirage Networks, Inc., Trustwave Intermediate, Inc.
and TW Vericept Corporation
Lender: Silicon Valley Bank
Loan Amount: $10,000,000.00 ($5,000,000 until receipt by Bank, in form and substance satisfactory
to Bank in its sole discretion, of field exams for each of the Borrowers and Borrower’s audited
consolidated financial statements prepared under GAAP, consistently applied, together with an
unqualified opinion on the financial statements from an independent certified public accounting
firm acceptable to Bank in its reasonable discretion for Borrower’s fiscal year ended December 31,
2007)
ACCOUNTS RECEIVABLE
1. Accounts
Receivable (invoiced) Book Value as of ___________ |
$ | |||
2. Additions (please explain on reverse) |
$ | |||
3. TOTAL ACCOUNTS RECEIVABLE |
$ | |||
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication) |
||||
4. Amounts over 90 days due |
$ | |||
5. Balance of 50% over 90 day accounts |
$ | |||
6. Foreign Accounts |
$ | |||
7. Foreign Invoiced Accounts |
$ | |||
8. Contra/Customer Deposit Accounts |
$ | |||
9. Intercompany/Employee Accounts |
$ | |||
10. Credit balances over 90 days |
$ | |||
11. Concentration Limits |
$ | |||
12. U.S. Governmental Accounts |
$ | |||
13. Promotion or Demo Accounts; Guaranteed Sale or Consignment Sale Accounts |
$ | |||
14. Accounts with Progress/Milestone/Pre-xxxxxxxx; Contract Accounts |
$ | |||
15. Accounts for Retainage Xxxxxxxx |
$ | |||
16. Trust Accounts |
$ | |||
17. Xxxx and Hold Accounts |
$ | |||
18. Unbilled Accounts |
$ | |||
19. Non-Trade Accounts |
$ | |||
20. Accounts with Extended Term Invoices |
$ | |||
21. Accounts subject to Chargebacks |
$ | |||
22. Disputed Accounts |
$ | |||
23. Other (please explain on reverse) |
$ | |||
24. Deferred Revenue |
$ | |||
25. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS |
$ | |||
26. Eligible Accounts (#3 minus #25) |
$ | |||
27. ELIGIBLE AMOUNT OF ACCOUNTS (80% of #26) |
$ | |||
28. ELIGIBLE UK SUBSIDIARY ACCOUNTS |
||||
29. Eligible UK Subsidiary Accounts Receivable Book Value as of |
$ | |||
30. Eligible Amount of Eligible UK Accounts (lesser of (i) 25% of the
aggregate Borrowing Base, and (ii) $1,750,000) |
$ | |||
31. LOAN VALUE OF ALL ACCOUNTS (#27, plus #30) |
$ | |||
BALANCES |
||||
32. Maximum Loan Amount |
$ | 10,000,000.00 | * | |
33. Total Funds Available [Lesser of #32 or #31] |
$ | |||
34. Present balance owing on Line of Credit |
$ | |||
35. Outstanding under Sublimits |
$ | |||
36. RESERVE POSITION (#33 minus #34 and #35) |
$ |
6
| * | $5,000,000 until receipt by Bank, in form and substance satisfactory to Bank in its sole discretion, of field exams for each of the Borrowers and Borrower’s audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm acceptable to Bank in its reasonable discretion for Borrower’s fiscal year ended December 31, 2007 |
The undersigned represents and warrants that this is true, complete and correct, and that the
information in this Borrowing Base Certificate complies with the representations and warranties in
the Loan and Security Agreement between the undersigned and Silicon Valley Bank.
| COMMENTS: | ||||
| TRUSTWAVE HOLDINGS, INC. | ||||
By: |
||||
| Authorized Signer | ||||
Date: |
||||
| TW MIRAGE NETWORKS, INC. |
||||
By: |
||||
| Authorized Signer | ||||
Date: |
||||
| TRUSTWAVE INTERMEDIATE, INC. | ||||
By: |
||||
| Authorized Signer | ||||
Date: |
||||
| TW VERICEPT CORPORATION | ||||
By: |
||||
| Authorized Signer | ||||
Date: |
||||
BANK USE ONLY
Received by: |
||||
| authorized signer | ||||
Date: |
||||
Verified: |
||||
| authorized signer | ||||
Date: |
||||
| Compliance Status: Yes No | ||||
7
