EXHIBIT 10.9
--------------------------------------------------------------------------------
LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
Table Of Contents
Page
1. ACCOUNTING AND OTHER TERMS............................................. 1
2. LOAN AND TERMS OF PAYMENT.............................................. 1
2.1 Advances......................................................... 1
2.1.1 Revolving Advances....................................... 1
2.2 Overadvances..................................................... 1
2.3 Interest Rate, Payments.......................................... 1
2.4 Fees............................................................. 2
3. CONDITIONS OF LOANS.................................................... 2
3.1 Conditions Precedent to Initial Advance.......................... 2
3.2 Conditions Precedent to All Advances............................. 2
4. CREATION OF SECURITY INTEREST.......................................... 2
4.1 Grant of Security Interest....................................... 2
5. REPRESENTATIONS AND WARRANTIES......................................... 3
5.1 Due Organization and Authorization............................... 3
5.2 Collateral....................................................... 3
5.3 Litigation....................................................... 3
5.4 No Material Adverse Change In Financial Statements............... 3
5.5 Solvency......................................................... 3
5.6 Regulatory Compliance............................................ 3
5.7 Subsidiaries..................................................... 4
5.8 Full Disclosure.................................................. 4
6. AFFIRMATIVE COVENANTS.................................................. 4
6.1 Government Compliance............................................ 4
6.2 Financial Statements, Reports, Certificates...................... 4
6.3 Inventory; Returns............................................... 5
6.4 Taxes............................................................ 5
6.5 Insurance........................................................ 5
6.6 Primary Accounts................................................. 5
6.7 Financial Covenants.............................................. 5
6.8 Intellectual Property Rights..................................... 6
6.9 Further Assurances............................................... 6
7. NEGATIVE COVENANTS..................................................... 6
7.1 Dispositions.......................................................6
Table Of Contents
(CONTINUED)
Page
7.2 Changes in Business, Ownership, Management or Business Locations...6
7.3 Mergers or Acquisitions............................................6
7.4 Indebtedness.......................................................6
7.5 Encumbrance........................................................6
7.6 Distributions; Investments.........................................6
7.7 Transactions with Affiliates.......................................7
7.8 Subordinated Debt..................................................7
7.9 Compliance.........................................................7
8. EVENTS OF DEFAULT...................................................... 7
8.1 Payment Default.................................................. 7
8.2 Covenant Default................................................. 7
8.3 Material Adverse Change.......................................... 7
8.4 Attachment....................................................... 8
8.5 Insolvency....................................................... 8
8.6 Other Agreements................................................. 8
8.7 Judgments........................................................ 8
8.8 Misrepresentations............................................... 8
9.1 Rights and Remedies.............................................. 8
9.2 Power of Attorney................................................ 9
9.3 Accounts Collection.............................................. 9
9.4 Bank Expenses.................................................... 9
9.5 Bank's Liability for Collateral.................................. 9
9.6 Remedies Cumulative.............................................. 10
9.7 Demand Waiver.................................................... 10
10. NOTICES............................................................... 10
11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER............................ 10
12. GENERAL PROVISIONS.................................................... 10
12.1 Successors and Assigns......................................... 10
12.2 Indemnification................................................ 10
12.3 Time of Essence................................................ 11
12.4 Severability of Provision...................................... 11
12.5 Amendments In Writing, Integration............................. 11
12.6 Counterparts................................................... 11
2
Table Of Contents
(CONTINUED)
Page
12.7 Survival....................................................... 11
12.8 Confidentiality................................................ 11
12.9 Attorneys' Fees, Costs and Expenses............................ 11
13. DEFINITIONS........................................................... 11
13.1 Definitions.................................................... 11
3
This LOAN AND SECURITY AGREEMENT dated May 22, 1998, between SILICON VALLEY
BANK ("Bank"), whose address is 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000
and CLARENT CORPORATION ("Borrower'), whose address is 0000 Xxxxxxxx, Xxxxx 000,
Xxxxxxx Xxxx, Xxxxxxxxxx 00000 provides the terms on which Bank will lend to
Borrower and Borrower will repay Bank. The parties agree as follows:
1. ACCOUNTING AND OTHER TERMS
--------------------------
Accounting terms not defined in this Agreement will be construed following
GAAP Calculations and determinations must be made following GAAP. The term
"financial statements" includes the notes and schedules. The terms "including"
and "includes" always mean "including (or includes) without limitation," in this
or any Loan Document. This Agreement shall be construed to impart upon Bank a
duty to act reasonably at all times.
2. LOAN AND TERMS OF PAYMENT
-------------------------
2.1 Advances.
Borrower will pay Bank the unpaid principal amount of all Advances and
interest on the unpaid principal amount of the Advances.
2.1.1 Revolving Advances.
(a) Bank will make Advances not exceeding the lesser of (A) the Committed
Revolving Line, subject to the Cap Amount or (B) the Borrowing Base, whichever
is less. Amounts borrowed under this Section may be repaid and reborrowed during
the term of this Agreement.
(b) To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 3:00 p.m. Pacific time on the Business Day the Advance is to be
made. Borrower must promptly confirm the notification by delivering to Bank the
Payment/Advance Form attached as Exhibit B. Bank will credit Advances to
Borrower's 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. Bank may rely on any telephone notice given by a person whom Bank believes
is a Responsible Officer or designee. Borrower will indemnify Bank for any loss
Bank suffers due to reliance.
(c) The Committed Revolving Line terminates on the Revolving Maturity
Date, when all Advances and other amounts due under this Agreement are
immediately payable.
2.2 Overadvances.
If Borrower's Obligations under Section 2.1.1 exceed the lesser of either
(i) the Committed Revolving Line or (ii) the Borrowing Base, Borrower must
immediately pay Bank the excess.
2.3 Interest Rate, Payments.
(a) Interest Rate. Advances accrue interest on the outstanding principal
balance at a per annum rate of one-half of one percentage point (0.500%) above
the Prime Rate. After an Event of Default, Obligations accrue interest at five
percentage points (5.000%) above the rate effective immediately before the Event
of Default. The interest rate increases or decreases when the Prime Rate
changes. Interest is computed on a 360 day year for the actual number of days
elapsed.
(b) Payments. Interest due on the Committed Revolving Line is payable on
the eleventh (11th) of each month. Bank may debit any of Borrower's deposit
accounts including Account Number ______________ for principal and interest
payments or any amounts Borrower owes Bank under this
Agreement. Bank will notify Borrower when it debits Borrower's accounts. These
debits are not a set-off. Payments received after 2:00 PM Pacific time are
considered received at the opening of business on the next Business Day. When a
payment is due on a day that is not a Business Day, the payment is due the next
Business Day and additional fees or interest accrue.
2.4 Fees.
Borrower will pay:
(a) Facility Fee and Increase Fee. A fully earned, non-refundable Facility
Fee of $12,000 due on the Closing Date. Additionally, upon Borrower's election
to Advance in excess of the Cap Amount, Borrower will pay to Bank an additional
fee pro-rated at a rate of 0.400% per annum on the Advance amount in excess of
the Cap Amount (the "Increase Fee"), prior to such Advance.
(b) Bank Expenses. All Bank Expenses (including reasonable attorneys' fees
and expenses) incurred in connection with the negotiation and documentation of
this Agreement are payable when due.
3. CONDITIONS OF LOANS
-------------------
3.1 Conditions Precedent to Initial Advance.
Bank's obligation to make the initial Advance is subject to the condition
precedent that it receive the agreements, documents and fees set forth herein.
Bank's completion of a satisfactory accounts receivable audit.
3.2 Conditions Precedent to All Advances.
Bank's obligations to make each Advance, including the initial Advance, is
subject to the following:
(a) timely receipt of any Payment/Advance Form; and
(b) the representations and warranties in Section 5 must be materially true
on the date of the Payment/Advance Form and on the effective date of each
Advance and no Event of Default may have occurred and be continuing, or result
from the Advance. Each Advance is Borrower's representation and warranty on that
date that the representations and warranties of Section 5 remain true.
4. CREATION OF SECURITY INTEREST
-----------------------------
4.1 Grant of Security Interest.
Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral, except Bank acknowledges the existence of a prior lien on the
Intellectual Property in connection with the existing bridge loan in the
original principal amount of $2,600,000, dated February 26, 1998, by and between
Borrower and a third party creditor and additionally any lien taken on the
Intellectual Property in connection with bridge financing to Borrower's Series C
round of financing between Borrower and third party creditor. Notwithstanding
(i) that Borrower has granted to Bank a security interest in the Patents,
Trademarks, Copyrights, Mask Works and, (ii) that the Patents, Trademarks, Mask
Works and Copyrights are included in the Collateral, Bank shall not enforce its
security interest in the Patents, Trademarks, Mask Works, and Copyrights, other
than solely to the extent necessary to enable Bank to enforce its perfected
security interest in the Collateral other than the
Patents, Trademarks, Mask Works and Copyrights. Bank may place a "hold" on any
deposit account pledged as Collateral.
5. REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower represents and warrants as follows:
5.1 Due Organization and Authorization.
Borrower and each Subsidiary is duly existing and in good standing in its
state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it
is bound in which the default could cause a Material Adverse Change.
5.2 Collateral.
Borrower has good title to the Collateral, free of Liens except Permitted
Liens. The Accounts are bona fide, existing obligations, and the service or
property has been performed or delivered to the account debtor or its agent for
immediate shipment to the account debtor. Borrower has no notice of any actual
or imminent Insolvency Proceeding of any account debtor whose accounts are an
Eligible Account in any Borrowing Base Certificate. All Inventory is in all
material respects of good and marketable quality, free from material defects.
Borrower is the sole owner of the Intellectual Property, except for non-
exclusive licenses granted to its customers in the ordinary course of business.
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 no claim has
been made that any part of the Intellectual Property violates the rights of any
third party.
5.3 Litigation.
Except as shown in the Schedule, there are no actions or proceedings
pending or, to Borrower's knowledge, threatened by or against Borrower or any
Subsidiary in which an adverse decision could cause a Material Adverse Change.
5.4 No Material Adverse Change In Financial Statements.
All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrowers 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; the 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 activities in extending credit for margin stock (under
Regulations G, T and U of the Federal Reserve Board of
Governors). Borrower has complied with the Federal Fair Labor Standards Act.
Borrower has not violated any laws, ordinances or rules, the violation of which
is reasonably likely to cause a Material Adverse Change. None of Borrower's or
any of Subsidiary's properties or assets has been used by Borrower or any
Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary has timely filed all required
tax returns and paid, or made adequate provision to pay, all taxes, except those
being contested in good faith with adequate reserves under GAAP. Borrower and
each Subsidiary has obtained all consents, approvals and authorizations of, made
all declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently conducted.
5.7 Subsidiaries.
Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments, which includes Clarent Asia Pacific
Corporation.
5.8 Full Disclosure.
No representation, warranty or other statement of Borrower in any
certificate or written statement 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.
6. AFFIRMATIVE COVENANTS
---------------------
Borrower will do all of the following:
6.1 Government Compliance.
Borrower will maintain its and all Subsidiaries' legal existence and good
standing in its jurisdiction of formation and maintain qualification in each
jurisdiction in which the failure to so qualify could have a material adverse
effect on Borrower's business or operations. Borrower will comply, and have
each Subsidiary comply, with all laws, ordinances and regulations to which it is
subject, noncompliance with which could have a material adverse effect on
Borrower's business or operations or cause a Material Adverse Change.
6.2 Financial Statements, Reports, Certificates.
(a) Borrower will deliver to Bank: (i) as soon as available, but no later
than 45 days after the last day of each month, a company prepared consolidated
balance sheet and income statement covering Borrower's consolidated operations
during the period, in a form and certified by a Responsible Officer acceptable
to Bank; (ii) as soon as available, but no later than 120 days after the last
day of Borrower's fiscal year, audited consolidated financial statements
prepared under GAAP, consistently applied, together with an unqualified opinion
on the financial statements from an independent certified public accounting firm
acceptable to Bank; (iii) a prompt report of any legal actions pending or
threatened against Borrower or any Subsidiary that could result in damages or
costs to Borrower or any Subsidiary of $250,000 or more, (iv) budgets, sales
projections, operating plans or other financial information Bank requests; and
(v) prompt notice of any material change in the composition of the Intellectual
Property, including any subsequent ownership right of Borrower in or to any
Copyright, Patent or Trademark not shown in any intellectual property security
agreement between Borrower and Bank or knowledge of an event that materially
adversely affects the value of the Intellectual Property.
(b) At such times outstandings exist under the Committed Revolving Line and
prior to any Advance when there are no outstandings, within 20 days after the
last day of each month, Borrower will deliver to Bank a Borrowing Base
Certificate signed by a Responsible Officer in the form of Exhibit C, with aged
listings of accounts receivable and accounts payable.
(c) Within 45 days after the last day of each month, Borrower will deliver
to Bank with the monthly financial statements a Compliance Certificate signed by
a Responsible Officer in the form of Exhibit D.
(d) Bank has the right to audit Borrower's Accounts at Borrower's expense,
but the audits will be conducted no more often than every 6 months unless an
Event of Default has occurred and is continuing.
6.3 Inventory; Returns.
Borrower will keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary practices as they exist at execution of
this Agreement. Borrower must promptly notify Bank of all returns, recoveries,
disputes and claims that involve more than $50,000.
6.4 Taxes.
Borrower will make, and cause each Subsidiary to make, timely payment of
all material federal, state, and local taxes or assessments and will deliver to
Bank, on demand, appropriate certificates attesting to the payment.
6.5 Insurance.
Borrower will keep its business and the Collateral insured for risks and in
amounts, as Bank reasonably requests. Insurance policies will be in a form,
with companies, and in amounts that are satisfactory to Bank. All property
policies will have a lender's loss payable endorsement showing Bank as an
additional loss payee as its interests appear and all liability policies will
show the Bank as an additional insured as its interests appear and provide that
the insurer must give Bank at least 20 days notice before canceling its policy.
At Bank's request, Borrower will deliver certified copies of policies and
evidence of all premium payments. Proceeds payable under any policy will, at
Bank's option, be payable to Bank on account of the Obligations.
6.6 Primary Accounts.
Borrower will maintain its primary depository and operating accounts with
Bank.
6.7 Financial Covenants.
Borrower will maintain as of the last day of each month:
(i) Quick Ratio. A ratio of Quick Assets to Current Liabilities of at least
1.50 to 1.00.
(ii) Debt/Tangible Net Worth Ratio. A ratio of Total Liabilities less
Subordinated Debt to Tangible Net Worth plus Subordinated Debt of not more
than 1.00 to 1.00.
(iii) Tangible Net Worth. A Tangible Net Worth of at least $1,500,000, plus
50% of New Equity.
(iv) Profitability. Borrower will be profitable each quarter, except that
Borrower may suffer losses not to exceed $500,000 for the three (3) months
ending 3/31/98; and $200,000 for the three (3) months ending 6/30/98.
6.8 Intellectual Property Rights.
Borrower will (i) protect, defend and maintain the validity and
enforceability of the Intellectual Property and promptly advise Bank in writing
of material infringements and (ii) not allow any Intellectual Property to be
abandoned, forfeited or dedicated to the public without Bank's written consent.
6.9 Further Assurances.
Borrower will execute any further instruments and take further action as
Bank requests to perfect or continue Bank's security interest in the Collateral
or to effect the purposes of this Agreement.
7. NEGATIVE COVENANTS
------------------
Borrower will not do any of the following without Bank's 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, other than Transfers (i) of Inventory in the ordinary
course of business, (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business, (iii) of worn-out or obsolete Equipment, (iv) of exclusive licenses
and similar arrangements with geographic region or time limitations, or (v) of
other assets not in excess of $250,000 in any fiscal year during the term of
this Agreement.
7.2 Changes in Business, Ownership, Management or Business Locations.
Engage in or permit any of its Subsidiaries to engage in any business other
than the businesses currently engaged in by Borrower or have a material change
in its ownership of greater than 25%. Borrower will not, without at least 30
days prior written notice, relocate its chief executive office.
7.3 Mergers or Acquisitions.
(i) 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, if no Event of Default has occurred and is
continuing or would result from such action during the term of this
Agreement or result in a decrease of more than 25% of Tangible Net Worth;
or (ii) merge or consolidate a Subsidiary into another Subsidiary or into
Borrower, if no Event of Default has occurred and is continuing or would
result from such action during the term of this Agreement or result in a
decrease of more than 25% of Tangible Net Worth.
7.4 Indebtedness.
Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.
7.5 Encumbrance.
Create, incur, or allow any Lien on any 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, or permit any Collateral
not to be subject to the first priority security interest granted here.
7.6 Distributions; Investments.
Directly or indirectly acquire or own any Person, or make any Investment in
any Person, other than Permitted Investments, or permit any of its Subsidiaries
to do so. Pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock;
provided, however, that (i) Borrower may redeem or repurchase up to $200,000
worth of its common stock, in the aggregate, per fiscal year, and (ii) Borrower
may pay dividends on its preferred stock up to $100,000 (Bank must give written
consent on payments over $100,000).
7.7 Transactions with Affiliates.
Directly or indirectly enter or permit any material transaction with any
Affiliate except transactions that are in the ordinary course of Borrower's
business, on terms which are not materially more favorable to Borrower than
would be obtained in an arm's length transaction with a non-affiliated Person.
7.8 Subordinated Debt.
Make or permit any payment on any Subordinated Debt, except under the terms
of the Subordinated Debt, or amend any provision in any document relating to the
Subordinated Debt without Bank's prior written consent.
7.9 Compliance.
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, or use
the proceeds of any Advance 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 have a
material adverse effect on Borrower's business or operations or cause a Material
Adverse Change, or permit any of its Subsidiaries to do so.
8. EVENTS OF DEFAULT
-----------------
Any one of the following is an Event of Default:
8.1 Payment Default.
If Borrower fails to pay any of the Obligations;
8.2 Covenant Default.
If Borrower does not perform any obligation in Section 6 or violates any
covenant in Section 7 or does not perform or observe any other material term,
condition or covenant in this Agreement, any Loan Documents, or in any agreement
between Borrower and Bank and as to any default under a term, condition or
covenant that can be cured, has not cured the default within 10 days after it
occurs, or if the default cannot be cured within 10 days or cannot be cured
after Borrower's attempts within 10 day period, and the default may be cured
within a reasonable time, then Borrower has an additional period (of not more
than 30 days) to attempt to cure the default. During the additional time, the
failure to cure the default is not an Event of Default (but no Advances will be
made during the cure period);
8.3 Material Adverse Change.
If there (i) occurs a material adverse change in the business, operations,
or condition (financial or otherwise) of the Borrower, or (ii) is a material
impairment of the value, perfection, or priority of Bank's security interests in
the Collateral;
8.4 Attachment.
If any material portion of Borrower's assets is attached, seized, levied
on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower's assets by any government agency and not paid within 10 days
after Borrower receives notice. These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Advances will be made
during the cure period);
8.5 Insolvency.
If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 60 days (but no Advances will be made before any
Insolvency Proceeding is dismissed);
8.6 Other Agreements.
If there is a default in any agreement between Borrower and a third party
that results in the third party's exercise of the right to accelerate any
Indebtedness exceeding $100,000 or that could cause a Material Adverse Change;
8.7 Judgments.
If a money judgment(s) in the aggregate of at least $50,000 is rendered
against Borrower and is unsatisfied and unstayed for 10 days (but no Advances
will be made before the judgment is stayed or satisfied); or
8.8 Misrepresentations.
If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document.
9. BANK'S RIGHTS AND REMEDIES
9.1 Rights and Remedies.
When an Event of Default occurs and continues Bank may, without notice or
demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an Event
of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's benefit under
this Agreement or under any other agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account debtors for
amounts, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or reasonable
to protect its security interest in the Collateral. Borrower will assemble
the Collateral if Bank requires and make it available as Bank designates.
Bank may enter premises where the Collateral is located, take and maintain
possession of any part of the Collateral, and pay, purchase, contest, or
compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower
grants Bank a license to enter and occupy any of its premises, without
charge, to exercise any of Bank's rights or remedies;
(e) Apply to the Obligations any (i) balances and deposits of Borrower it
holds, or (ii) any amount held by Bank owing to or for the credit or the
account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral. Bank is 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; and
(g) Dispose of the Collateral according to the Code.
9.2 Power of Attorney.
Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or xxxx of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Advances terminates.
9.3 Accounts Collection.
When an Event of Default occurs and continues, Bank may notify any Person
owing Borrower money of Bank's security interest in the funds and verify the
amount of the Account. Upon the occurrence and continuation of an Event of
Default, Borrower must collect all payments in trust for Bank and, if requested
by Bank, immediately deliver the payments to Bank in the form received from the
account debtor, with proper endorsements for deposit.
9.4 Bank Expenses.
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.
9.5 Bank's Liability for Collateral.
If Bank complies with reasonable banking practices it is not liable for:
(a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral;
(c) any diminution in the value of the Collateral, or (d) any act or default of
any carrier, warehouseman, bailee, or other person. Borrower bears all risk of
loss, damage or destruction of the Collateral, except those resulting from
Bank's failure to comply with reasonable banking practices.
9.6 Remedies Cumulative.
Bank's rights and remedies under this Agreement, the Loan Documents, and
all other agreements are cumulative. Bank has all rights and remedies provided
under the Code, by law, or in equity. Bank's exercise of one right or remedy is
not an election, and Bank's waiver of any Event of Default is not a continuing
waiver. Bank's delay is not a waiver, election, or acquiescence. No waiver is
effective unless signed by Bank and then is only effective for the specific
instance and purpose for which it was given.
9.7 Demand Waiver.
Borrower waives demand, notice of default or dishonor, notice of payment
and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.
10. NOTICES
-------
All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A Party may change its notice address by giving the other Party
written notice.
11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
------------------------------------------
California law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Santa Xxxxx County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12. GENERAL PROVISIONS
------------------
12.1 Successors and Assigns.
This Agreement binds and is for the benefit of the successors and permitted
assigns of each party. Borrower may not assign this Agreement or any rights
under it without Bank's prior written consent which may be granted or withheld
in Bank's discretion. Bank has the right, without the consent of or notice to
Borrower, to sell, transfer, negotiate, or grant participation in all or any
part of, or any interest in, Bank's obligations, rights and benefits under this
Agreement.
12.2 Indemnification.
Borrower will indemnity, defend and hold harmless Bank and its officers,
employees, and agents against: (a) all obligations, demands, claims, and
liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from transactions between Bank and Borrower (including
reasonable attorneys fees and expenses), except for losses caused by Bank's, or
its agents, representatives, successors or assignees, gross negligence or
willful misconduct.
12.3 Time of Essence.
Time is of the essence for the performance of all obligations in this
Agreement.
12.4 Severability of Provision.
Each provision of this Agreement is severable from every other provision in
determining the enforceability of any provision.
12.5 Amendments In Writing, Integration.
All amendments to this Agreement must be in writing. This Agreement
represents the entire agreement about this subject matter, and supersedes prior
negotiations or agreements. All prior agreements, understandings,
representations, warranties, and negotiations between the parties about the
subject matter of this Agreement merge into this Agreement and the Loan
Documents.
12.6 Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.
12.7 Survival.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The
obligations of Borrower in Section 12.2 to indemnity Bank will survive until all
statutes of limitations for actions that may be brought against Bank have run.
12.8 Confidentiality.
In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates
in connection with their business with Borrower, (ii) to prospective transferees
or purchasers of any interest in the Loans who agree in writing to assume the
confidentiality obligation set forth in this Section 12.8, (iii) as required by
law, regulation, subpoena, or other order, (iv) as required in connection with
Bank's examination or audit and (v) as Bank considers appropriate exercising
remedies under this Agreement. Confidential information does not include
information that either: (a) is in the public domain or in Bank's possession
when disclosed to Bank, or becomes part of the public domain after disclosure to
Bank; or (b) is disclosed to Bank by a third party, if Bank does not know that
the third party is prohibited from disclosing the information.
12.9 Attorneys' Fees, Costs and Expenses.
In any action or proceeding between Borrower and Bank arising out of the
Loan Documents, the prevailing party will be entitled to recover its reasonable
attorneys' fees and other costs and expenses incurred, in addition to any other
relief to which it may be entitled.
13. DEFINITIONS
-----------
13.1 Definitions.
In this Agreement:
"Accounts" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its sale or lease of
goods (including licensing software and other technology)
or provision of services, all credit insurance, guaranties, other security and
all merchandise returned or reclaimed by Borrower and Borrower's Books relating
to any of the foregoing.
"Advance" or "Advances" is a loan advance (or advances) under the Committed
Revolving Line.
"Affiliate" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"Bank Expenses" are all audit fees and expenses and reasonable costs or
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, defending and enforcing the Loan Documents (including appeals or
Insolvency Proceedings).
"Borrower's Books" are all Borrower's books and records including ledgers,
records regarding Borrower's assets or liabilities, the Collateral, business
operations or financial condition and all computer programs or discs or any
equipment containing the information.
"Borrowing Base" is (i) 80% of Eligible Accounts plus (ii) 70% of Eligible
Pre-Approved Foreign Accounts plus (iii) 90% of Eligible Letter of Credit
Supported Foreign Accounts, as determined by Bank from Borrowers most recent
Borrowing Base Certificate.
"Business Day" is any day that is not a Saturday, Sunday or a day on which
the Bank is closed.
"Closing Date" is the date of this Agreement.
"Code" is the California Uniform Commercial Code.
"Collateral" is the property described on Exhibit A.
"Committed Revolving Line" is an Advance of up to $5,000,000, however
capped at $3,000,000 (the "Cap Amount"). Any Advance in excess of the Cap
Amount is conditioned upon Borrower's payment of the Increase Fee, as described
in Section 2.4.
"Contingent Obligation" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"Copyrights" are all copyright rights, applications or registrations and
like protections in each work or authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.
"Current Liabilities" are the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year.
"Eligible Accounts" are Accounts in the ordinary course of Borrower's
business that meet all Borrower's representations and warranties in Section 5.2;
but Bank may change eligibility standards by giving Borrower notice. Unless
Bank agrees otherwise in writing, Eligible Accounts will not include:
(a) Accounts that the account debtor has not paid within 90 days of invoice
date;
(b) Accounts for an account, debtor, 50% or more of whose Accounts have not
been paid within 90 days of invoice date;
(c) Credit balances over 90 days from invoice date;
(d) Accounts for an account debtor, including Affiliates, whose total
obligations to Borrower exceed 25% of all Accounts, for the amounts that
exceed that percentage, unless the Bank approves in writing, except for
those certain Accounts from AT&T Jens, Siemens ATEA and Telecomet/KDD, for
which the percentage may be 40%;
(e) Accounts for which the account debtor does not have its principal place of
business in the United States except for Eligible Pre-Approved Foreign
Accounts;
(f) Accounts for which the account debtor is a federal, state or local
government entity or any department, agency, or instrumentality;
(g) Accounts for which Borrower owes the account debtor, but only up to the
amount owed (sometimes called "contra" accounts, accounts payable, customer
deposits or credit accounts);
(h) Accounts for demonstration or promotional equipment, or in which goods are
consigned, sales guaranteed, sale or return, sale on approval, xxxx and
hold, or other terms if account debtor's payment may be conditional;
(i) Accounts for which the account debtor is Borrower's Affiliate, officer,
employee, or agent;
(j) Accounts in which the account debtor disputes liability or makes any claim
and Bank reasonably and in good faith believes there is a strong basis for
dispute (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;
(k) Accounts for which Bank reasonably and in good faith determines collection
to be doubtful.
"Eligible Pre-Approved Foreign Accounts" are Accounts for which the account
debtor does not have its principal place of business in the United States but
are: Accounts owing from AT&T Jens, ATT Easylink, ATT Internetworking Center, HK
Telecom/International, Siemens ATEA, Singapore Telecommunications, Sun Telephone
and Telecomet/KDD.
"Eligible Letter of Credit Supported Foreign Accounts" are Accounts for
which the account debtor does not have its principal place of business in the
United States but are supported by letter(s) of credit negotiated and acceptable
to Bank.
"Equipment" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"ERISA" is the Employment Retirement Income Security Act of 1974, and its
regulations.
"GAAP" is generally accepted accounting principles.
"Indebtedness" is (a) indebtedness for borrowed money or the deferred price
of property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"Insolvency Proceeding" are proceedings by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency, law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"Intellectual Property" is:
(a) Copyrights, Trademarks, Patents, and Mask Works including amendments,
renewals, extensions, and all licenses or other rights to use and all license
fees and royalties from the use;
(b) Any trade secrets and any intellectual property rights in computer
software and computer software products now or later existing, created, acquired
or held;
(c) All design rights which may be available to Borrower now or later
created, acquired or held;
(d) Any claims for damages (past, present or future) for infringement of
any of the rights above, with the right, but not the obligation, to xxx and
collect damages for use or infringement of the intellectual property rights
above;
All proceeds and products of the foregoing, including all insurance,
indemnity or warranty payments.
"Inventory" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"Investment" is any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.
"Lien" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"Loan Documents" are, collectively, this Agreement, any note, or notes or
guaranties executed by Borrower or Guarantor, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated.
"Mask Works" are all mask works or similar rights available for the
protection of semiconductor chips, now owned or later acquired.
"Material Adverse Change" is defined in Section 8.3.
"New Equity" is new cash equity contributions, excluding the conversion of
present or future debt into equity.
"Obligations" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, pursuant to the Loan Documents,
including letters of credit and Exchange Contracts
and including interest accruing after Insolvency Proceedings begin and debts,
liabilities, or obligations of Borrower assigned to Bank.
"Patents" are patents, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same.
"Permitted Indebtedness" is:
(a) Borrower's indebtedness to Bank under this Agreement or any other Loan
Document;
(b) Indebtedness existing on the Closing Date and shown on the Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary course of
business;
(e) Indebtedness secured by Permitted Liens;
(f) Contingent obligations of Borrower consisting of guarantees (and other
credit support) of the obligations of vendors and suppliers of Borrower in
respect of transactions entered into in the ordinary course of business;
(g) Indebtedness with respect to capital lease obligations (including
leases of real property);
(h) Prepaid royalties and deferred revenue in connection with prepaid
support services;
(i) Indebtedness to bridge loan investors incurred in connection with
Borrower's bridge loan financing(s) in an amount or amounts to be determined by
Borrower, from time to time, prior to Borrower's Series C Preferred Stock
financing;
(j) Other Indebtedness of Borrower, not exceeding $150,000 in the
aggregate outstanding at any time; and
(k) Extensions, renewals, refundings, refinancings, modifications,
amendments and restatements of any of the items of Permitted Indebtedness (a)
through (j) above, provided that the principal amount thereof is not increased
or the terms thereof are not modified to impose more burdensome terms upon
Borrower; and
"Permitted Investments" are:
(a) Investments shown on the Schedule and existing on the Closing Date;
(b) (i) marketable direct obligations issued or unconditionally guaranteed
by the United States or its agency or any State maturing within 1 year from its
acquisition, (ii) commercial paper maturing no more than I year after its
creation and having the highest rating from either Standard & Poor's Corporation
or Xxxxx'x Investors Service, Inc., and (iii) Bank's certificates of deposit
issued maturing no more than 1 year after issue;
(c) Extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the ordinary
course of business;
(d) Investments consisting of the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business;
(e) Investments (including debt obligations) received in connection with
the bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of business;
(f) Investments consisting of (i) compensation of employees, officers and
directors of Borrower so long as the Board of Directors of Borrower determines
that such compensation is in the best interests of Borrower, (ii) travel
advances, employee relocation loans and other employee loans and advances in the
ordinary course of business, (iii) loans to employees, officers or directors
relating to the purchase of equity securities of Borrower, (iv) other loans to
officers and employees approved by the Board of Directors; and
(g) other Investments aggregating not in excess of $500,000 at any time.
"Permitted Liens" are:
(a) Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower or
its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the equipment;
(d) Leases or subleases and licenses or sublicenses granted in the
ordinary course of Borrower's business and any interest or title of a lessor,
licensor or under any lease or license, if the leases, subleases, licenses and
sublicenses permit granting Bank a security interest;
(e) Liens, not otherwise permitted, which Liens do not in the aggregate
exceed $150,000;
(f) Liens securing Permitted Indebtedness; and
(g) 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 association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"Prime Rate" is Bank's most recently announced "prime rate," even if it is
not Bank's lowest rate.
"Quick Assets" is, on any date, the Borrower's consolidated, unrestricted
cash, cash equivalents, net billed accounts receivable and investments with
maturities of fewer than 12 months determined according to GAAP.
"Responsible Officer" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.
"Revolving Maturity Date" is May 21, 1999.
"Schedule" is any attached schedule of exceptions.
"Subordinated Debt" is debt incurred by Borrower subordinated to Borrower's
debt to Bank (and identified as subordinated by Borrower and Bank).
"Subsidiary" is for any Person, or any other business entity of which more
than 50% of the voting stock or other equity interests is owned or controlled,
directly or indirectly, by the Person or one or more Affiliates of the Person.
"Tangible Net Worth" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus, (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
Patents, trade and service marks and names, Copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities plus Subordinated Debt.
"Total Liabilities" is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.
"Trademarks" are trademark and servicemark rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Assignor connected with the trademarks.
BORROWER:
CLARENT CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Title: Secretary
-----------------------------------
BANK:
SILICON VALLEY BANK
By: /s/ Silicon Valley Bank
--------------------------------------
Title:
-----------------------------------
SCHEDULE TO LOAN AND SECURITY AGREEMENT
DATED MAY 22, 1998
BY AND BETWEEN
CLARENT CORPORATION
AND
SILICON VALLEY BANK
Permitted Indebtedness shall include:
That certain bridge loan in the original principal amount of $2,600,000, dated
February 26, 1998, by and between Borrower and a third party creditor and
additionally any lien taken on the Intellectual Property in connection with
bridge financing to Borrower's Series C round of financing between Borrower and
third party creditor. Such bridge loan is convertible into Series C shares at a
price equal to 100% of share price, with warrants to purchase up to 15% of the
bridge loan amount at a price equal to 85% of share price.
EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest in
and to the following:
All goods and equipment now owned or hereafter acquired, including, without
limitation, all machinery, fixtures, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;
All documents, cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, letters of credit, certificates of
deposit, instruments and chattel paper now owned or hereafter acquired and
Borrower's Books relating to the foregoing;
All copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired; all claims
for damages by way of any past, present and future infringement of any of the
foregoing; and
All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.
EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.
TO: CENTRAL CLIENT SERVICE DIVISION DATE:_______________________________
FAX#: (000) 000-0000 TIME:________________________________
--------------------------------------------------------------------------------
FROM: CLARENT CORPORATION
---------------------------------------------------------------------------
CLIENT NAME (BORROWER)
REQUESTED BY:
-------------------------------------------------------------------
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:
-----------------------------------------------------------
PHONE NUMBER:
-------------------------------------------------------------------
FROM ACCOUNT # TO ACCOUNT#
------------------------ ------------------------
REQUESTED TRANSACTION TYPE REQUESTED DOLLAR AMOUNT
-------------------------- ------------
PRINCIPAL INCREASE (ADVANCE) $
---------------------------------
PRINCIPAL PAYMENT (ONLY) $
---------------------------------
INTEREST PAYMENT (ONLY) $
---------------------------------
PRINCIPAL AND INTEREST (PAYMENT) $
---------------------------------
OTHER INSTRUCTIONS:
------------------------------------------------------------
-------------------------------------------------------------------------------
All Borrower's representations and warranties in the Loan and Security
Agreement are true, correct and complete in all material respects on the date
of the telephone request for and Advance confirmed by this Borrowing
Certificate; but those representations and warranties expressly referring to
another date shall be true, correct and complete in all material respects as of
that date.
--------------------------------------------------------------------------------
BANK USE ONLY
TELEPHONE REQUEST:
-----------------
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
------------------------- ---------------------------------
Authorized Requester Phone #
------------------------- ---------------------------------
Received By (Bank) Phone #
__________________________________
Authorized Signature (Bank)
--------------------------------------------------------------------------------
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: CLARENT CORPORATION Lender: Silicon Valley Bank
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Commitment Amount: $5,000,000 (capped at $3,000,000)
ACCOUNTS RECEIVABLE
1. Accounts Receivable 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. Credit balances over 90 day $____________
7. Concentration Limits* $____________
8. Foreign Accounts $____________
9. Governmental Accounts $____________
10. Contra Accounts $____________
11. Promotion or Demo Accounts $____________
12. Intercompany/Employee Accounts $____________
13. Other (please explain on reverse) $____________
14. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $____________
15. Eligible Accounts (#3 minus #14) $____________
16. LOAN VALUE OF ACCOUNTS (80% of #15) $____________
* 40% for AT&T Jens, Siemens ATEA and Telecomet/KDD
PRE APPROVED FOREIGN ACCOUNTS RECEIVABLE DEDUCTIONS
17. Accounts Receivable Book Value as of $____________
18. Additions (please explain on reverse) $____________
19. TOTAL FOREIGN ACCOUNTS RECEIVABLE $____________
a. Amounts over 90 days due $____________
b. Balance of 50% over 90 day accounts $____________
c. Concentration Limits $____________
d. Governmental Accounts $____________
e. Foreign (ineligible) $____________
f. Contra Accounts $____________
9. Promotion or Demo Accounts $____________
h. Intercompany/Employee Accounts $____________
i. Other (please explain on reverse side) $____________
20. TOTAL FOREIGN ACCOUNTS RECEIVABLE $____________
DEDUCTIONS
21. Eligible Accounts (#19 minus #26) $____________
22. LOAN VALUE OF FOREIGN ACCOUNTS (70% of #21) $____________
AT&T Jens, ATT Easylink, ATT Internetworking Center, HK Telecorn/International,
Siemens ATEA, Singapore Telecommunications, Sun Telephone and Telecomet/KDD
LETTER OF CREDIT SECURED FOREIGN ACCOUNTS RECEIVABLE
23. Accounts Receivable Book Value as of _______________ $____________
24. Additions (please explain on reverse) $____________
25. TOTAL FOREIGN ACCOUNTS RECEIVABLE $____________
DEDUCTIONS
a. Amounts over 90 days due $____________
b. Balance of 50% over 90 day accounts $____________
c. Concentration Limits $____________
d. Governmental Accounts $____________
e. Foreign (ineligible) $____________
f. Contra Accounts $____________
g. Promotion or Demo Accounts $____________
h. Intercompany/Employee Accounts $____________
i. Other (please explain on reverse) $____________
26. TOTAL FOREIGN ACCOUNTS RECEIVABLE $____________
DEDUCTIONS
27. Eligible Accounts (#23 minus #26) $____________
28. LOAN VALUE OF FOREIGN ACCOUNTS (90% of #27) $____________
BALANCES
29. Maximum Loan Amount $____________
30. Total Funds Available [Lesser of #29 or (#16 plus #22 $_____________
plus #28)]
31. Present balance owing on Line of Credit $_____________
32. Outstanding under Sublimits ( ) $_____________
33. RESERVE POSITION (#30 minus #31 and #32) $____________
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: | BANK USE ONLY |
| ------------- |
| |
| Rec'd By: |
| -------------- |
CLARENT CORPORATION | Auth. Signer |
| Date: |
By:_________________________________ | ----------------- |
Authorized Signer | Verified |
| --------------- |
| Auth. Signer |
| Date: |
| ------------------ |
|------------------------- |
--------------------------
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
FROM: CLARENT CORPORATION
The undersigned authorized officer of CLARENT CORPORATION certifies that
under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the "Agreement"), (i) Borrower is in complete compliance for
the period ending __________ with all required covenants except as noted below
and (ii) all representations and warranties in the Agreement are true and
correct in all material respects on this date. Attached are the required
documents supporting the certification. The Officer certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP)
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The Officer acknowledges that no borrowings
may be requested at any time or date of determination that Borrower is not in
compliance with any of the terms of the Agreement, and that compliance is
determined not just at the date this certificate is delivered.
Please indicate compliance status by circling Yes/No under "Complies" column.
Reporting Covenant Required Complies
--------------------------------------- ------------------------------- ------------------
Monthly financial statements + CC Monthly within 45 days Yes No
Annual (Audited) FYE within 120 days Yes No
A/R & A/P Agings* Monthly within 20 days Yes No
A/R Audit Initial and Semi-Annual Yes No
Borrowing Base Certificate* Monthly within 20 days Yes No
*at such times as outstandings exist and prior to any disbursement if no
outstandings exist
Financial Covenant Required Actual Complies
--------------------------------------- ----------------------- ------------- ---------------
Maintain on a Monthly Basis:
Minimum Quick Ratio 1.50:1.00 ____:1.00 Yes No
Minimum Tangible New Work $1,500,000 plus $_______ Yes No
50% of new equity
Maximum Debt/Tangible New Worth 1.00:1.00 ____:1.00 Yes No
Profitability: beginning 9/30/98 Quarterly $_______ Yes No
and thereafter
Losses not to exceed: $500,000 for the three (3) months ending Yes No
3/31/98; and $200,000 for the three (3)
months ending 6/30/98
Comments Regarding Exceptions: See Attached
-----------------------------------
| BANK USE ONLY |
Sincerely, | ------------- |
| |
| Received By: |
CLARENT CORPORATION | -------------------- |
| Authorized Signature |
| Date: |
__________________________________ | ---------------------- |
Signature | Verified |
| -------------------- |
| Authorized Signature |
__________________________________ | Date: |
Title | ----------------------- |
| Compliance Status: Yes No |
-----------------------------------
__________________________________
Date
SILICON VALLEY BANK
PRO FORMA INVOICE FOR LOAN CHARGES
BORROWER: CLARENT CORPORATION
LOAN OFFICER: Xxxxx Xxxx
DATE: May 22, 1998
Revolving Loan Fee $12,000.00
Credit Report 35.00
UCC Search Fee 150.00
UCC Filing Fee 40.00
Intellectual Property Filing Fees 550.00
TOTAL FEE DUE $12,775.00
------------- ==========
Please indicate the method of payment:
( ) A check for the total amount is attached.
( ) Debit DDA # for the total amount.
-----
( ) Loan proceeds
Borrower:
By:
------------------------------------
(Authorized Signer)
---------------------------------------
Silicon Valley Bank (Date)
Account Officer's Signature
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This Intellectual Property Security Agreement is entered into as of May 22,
1998 by and between SILICON VALLEY BANK ("Bank") and CLARENT CORPORATION
("Grantor").
RECITALS
--------
A. Bank has agreed to make certain advances of money and to extend certain
financial accommodation to Grantor (the "Loans") in the amounts and manner set
forth in that certain Loan and Security Agreement by and between Bank and
Grantor dated May 22, 1998 (as the same may be amended, modified or supplemented
from time to time, the "Loan Agreement"; capitalized terms used herein are used
as defined in the Loan Agreement). Bank is willing to make the Loans to
Grantor, but only upon the condition, among others, that Grantor shall grant to
Bank a security interest in certain Copyrights, Trademarks, Patents, and Mask
Works to secure the obligations of Grantor under the Loan Agreement.
Notwithstanding (i) that Grantor has granted to Bank a security interest in the
Patents, Trademarks, Copyrights, Mask Works and, (ii) that the Patents,
Trademarks, Mask Works and Copyrights are included in the Collateral, Bank shall
not enforce its security interest in the Patents, Trademarks, Mask Works, and
Copyrights, other than solely to the extent necessary to enable Bank to enforce
its perfected security interest in the Collateral other than the Patents,
Trademarks, Mask Works and Copyrights.
B. Pursuant to the terms of the Loan Agreement, Grantor has granted to
Bank a security interest in all of Grantors right, title and interest, whether
presently existing or hereafter acquired, in, to and under all of the
Collateral.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, and intending to be legally bound, as collateral security
for the prompt and complete payment when due of its obligations under the Loan
Agreement, Grantor hereby represents, warrants, covenants and agrees as follows:
AGREEMENT
---------
To secure its obligations under the Loan Agreement, Grantor grants and
pledges to Bank a security interest in all of Grantor's right, title and
interest in, to and under its Intellectual Property Collateral (including
without limitation those Copyrights, Patents, Trademarks and Mask Works listed
on Schedules A, B, C, and D hereto), and including without limitation all
proceeds thereof (such as, by way of example but not by way of limitation,
license royalties and proceeds of infringement suits), the right to xxx for
past, present and future infringements, all rights corresponding thereto
throughout the world and all re-issues, divisions continuations, renewals,
extensions and continuations-in-part thereof.
This security interest is granted in conjunction with the security interest
granted to Bank under the Loan Agreement. The rights and remedies of Bank with
respect to the security interest granted hereby are in addition to those set
forth in the Loan Agreement and the other Loan Documents, and those which are
now or hereafter available to Bank as a matter of law or equity. Each right,
power and remedy of Bank provided for herein or in the Loan Agreement or any of
the Loan Documents, or now or hereafter existing at law or in equity shall be
cumulative and concurrent and shall be in addition to every right, power or
remedy provided for herein and the exercise by Bank of any one or more of the
rights, powers or remedies provided for in this Intellectual Property Security
Agreement, the Loan Agreement or any of the other Loan Documents, or now or
hereafter existing at law or in equity, shall not preclude the simultaneous or
later exercise by any person, including Bank, of any or all other rights, powers
or remedies.
IN WITNESS WHEREOF, the parties have cause this Intellectual Property
Security Agreement to be duly executed by its officers thereunto duly authorized
as of the first date written above.
GRANTOR:
Address of Grantor: CLARENT CORPORATION
0000 Xxxxxxxx, Xxxxx 000 By: /s/ Xxxxxxx X. Xxxxx
------------------------------- ---------------------------------------
Xxxxxxx Xxxx, XX 00000
-------------------------------
Title: Secretary
------------------------------------
Attn:
-------------------------
BANK:
Address of Bank: XXXXXXX XXXXXX XXXX
0000 Xxxxxx Xxxxx By:
Xxxxx Xxxxx, XX 00000-0000 ---------------------------------------
Title:
-----------------------------------
Attn:
--------------------------
EXHIBIT A
---------
Copyrights
Description Registration/ Registration/
----------- Application Application
Number Date
------ ----
EXHIBIT B
---------
Patents
Description Registration/ Registration/
----------- Application Application
Number Date
------ ----
EXHIBIT C
---------
Trademarks
Description Registration/ Registration/
----------- Application Application
Number Date
------ ----
EXHIBIT D
---------
Mask Works
Description Registration/ Registration/
----------- Application Application
Number Date
------ ----
CORPORATE BORROWING RESOLUTION
Borrower: CLARENT CORPORATION Bank: Silicon Valley Bank
0000 Xxxxxxxx, Xxxxx 000 0000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000 Xxxxx Xxxxx, XX 00000-0000
I, the undersigned Secretary or Assistant Secretary of CLARENT CORPORATION
("Borrower"), HEREBY CERTIFY that Borrower is a corporation duly organized and
existing under and by virtue of the laws of the State of California.
I FURTHER CERTIFY that at a meeting of the Directors of Borrower (or by other
duly authorized corporate action in lieu of a meeting), duly called and held, at
which a quorum was present and voting, the following resolutions were adopted.
BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of Borrower, whose actual signatures are shown below:
NAMES POSITIONS ACTUAL SIGNATURES
----- --------- -----------------
Xxxxx Xxxxx President /s/ Xxxxx Xxxxx
------------------------------------ -------------------------------------- --------------------------------------
Xxxxxx Xxxxx Controller /s/ Xxxxxx Xxxxx
------------------------------------ -------------------------------------- --------------------------------------
------------------------------------ -------------------------------------- --------------------------------------
------------------------------------ -------------------------------------- --------------------------------------
acting for and on behalf of Borrower and as its act and deed be, and they hereby
are, authorized and empowered:
Borrow Money. To borrow from time to time from Silicon Valley Bank
("Bank"), on such terms as may be agreed upon between the officers of
Borrower and Bank, such sum or sums of money as in their judgment should be
borrowed.
Execute Loan Documents. To execute and deliver to Bank the loan documents
of Borrower, on Bank's forms, at such rates of interest and on such terms
as may be agreed upon, evidencing the sums of money so borrowed or any
indebtedness of Borrower to Bank, and also to execute and deliver to Bank
one or more renewals, extensions, modifications, refinancings,
consolidations, or substitutions for one or more of the loan documents, or
any portion of the loan documents.
Grant Security. To grant a security interest to Bank in any of Borrower's
assets, which security interest shall secure all of Borrower's obligations
to Bank.
Negotiate Items. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to Borrower or in which Borrower may have an
interest, and either to receive cash for the same or to cause such proceeds
to be credited to the account of Borrower with Bank, or to cause such other
disposition of the proceeds derived therefrom as they may deem advisable.
Letters of Credit. To execute letter of credit applications and other
related documents pertaining to Bank's issuance of letters of credit.
Foreign Exchange Contracts. To execute and deliver foreign exchange
contracts, either spot or forward, from time to time, in such amount as, in
the judgment of the officer or officers herein authorized.
Issue Warrants. To issue warrants to purchase Borrower's capital stock,
for such class, series and number, and on such terms, as an officer of
Borrower shall deem appropriate.
Further Acts. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay any
and all fees and costs, and to execute and deliver such other documents and
agreements, including agreements waiving the right to a trial by jury, as
they may in their discretion deem reasonably necessary or proper in order
to carry into effect the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of Borrower's agreements or commitments in effect at the
time notice is given.
I FURTHER CERTIFY that the persons named above are principal officers of the
Corporation and occupy the positions set opposite their respective names; that
the foregoing Resolutions now stand of record on the books of the Corporation;
and that they are in full force and effect and have not been modified or revoked
in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on May 22, 1998 and attest that
the signatures set opposite the names listed above are their genuine signatures.
CERTIFIED TO AND ATTESTED BY:
X /s/ Xxxxxxx X. Xxxxx
----------------------------------------
*Secretary or Assistant Secretary
X
----------------------------------------
*NOTE: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, this resolution should
also be signed by a second Officer or Director of Borrower.
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of February 16, 1999,
by and between Clarent Corporation ("Borrower") and Silicon Valley Bank
("Bank").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may
------------------------------------
be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among
other documents, a Loan and Security Agreement, dated May 22, 1998, as may be
amended from time to time, (the "Loan Agreement"). The Loan Agreement provided
for, among other things, a Committed Revolving Line in the original principal
amount of Five Million Dollars ($5,000,000) (the "Revolving Facility"). Defined
terms used but not otherwise defined herein shall have the same meanings as in
the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
----------------------------------------
secured by the Collateral as described in the Loan Agreement. Additionally,
Borrower has agreed not to mortgage, pledge, hypothecate, or otherwise encumber
any of its Intellectual Property, pursuant to a Negative Pledge agreement of
even date herewith.
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
------------------------------
A. Modification(s) to Loan Agreement
---------------------------------
1. The first sentence of Section 2.1.2 entitled "Letters of Credit"
is hereby amended to read as follows:
Bank will issue or have issued Letters of Credit for Borrower's
account not exceeding (i) the lesser of the Committed Revolving
Line or the Borrowing Base minus (ii) the outstanding principal
balance of the Advances, but the face amount of outstanding
Letters of Credit (including drawn but unreimbursed Letters of
Credit and any Letter of Credit Reserve) may not exceed
$7,000,000.
2. Section 2.1.3 entitled "Equipment Advances' is hereby
incorporated into the Loan Agreement, to read as follows:
(a) Through November 16, 1999 (the "Equipment Availability End
Date"), Bank will make advances ("Equipment Advance" and,
collectively, "Equipment Advances") not exceeding the Committed
Equipment Line. The Equipment Advances may only be used to
purchase or refinance Equipment purchased on or 90 days before
the Closing Date and may not exceed 100% of the equipment
invoice, excluding taxes, shipping, warranty charges, freight
discounts and installation expense. Leasehold improvements,
software, custom Equipment, and personal computers may constitute
up to $2,000,000 of aggregate Equipment Advances.
(b) Interest accrues from the date of each Equipment Advance at
the rate in Section 2.3(a) and is payable monthly until the
Equipment Availability End Date occurs. Equipment Advances
outstanding from Closing Date to May 16, 1999 are payable in 24
equal monthly installments of principal, plus accrued interest,
beginning on the
1.
16th day of each month beginning June 16, 1999 and ending on May
16, 2001. Equipment Advances outstanding from May 16th 1999 to
August 16, 1999 are payable in 24 equal monthly installments of
principal, plus accrued interest, beginning on September 16, 1999
and ending on August 16, 2001. Equipment Advances outstanding on
the Equipment Availability End Date are payable in 24 equal
monthly installments of principal, plus accrued interest,
beginning on the 16th day of each month following the Equipment
Availability End Date and ending on November 16, 2001 the
(Equipment Loan Maturity Date). Equipment Advances when repaid
may not be reborrowed.
(c) To obtain an Equipment Advance, Borrower must notify Bank
(the notice is irrevocable) by facsimile no later than 3:00 p.m.
Pacific time 1 Business Day before the day on which the Equipment
Advance is to be made. The notice in the form of Exhibit B
(Payment/Advance Form) must be signed by a Responsible Officer or
designee and include a copy of the invoice for the Equipment
being financed.
3. Section 2.3 entitled "Interest Rate, Payments" is hereby amended,
in its entirety, to read as follows;
(a) Interest Rate. (i) Advances accrue interest on the
outstanding principal balance at a per annum rate of one-half of
one percentage point (0.500%) above the Prime Rate, decreasing to
one-quarter of one percentage point (0.250%) above the Prime
Rate, upon Borrower's achievement of two consecutive quarters of
Profitability of at least $500,000; Such interest rate change
shall be effective as of the first day of the month following
Bank's receipt of Borrower's financial statements indicating
Borrower has met the above described criteria; (ii) Interest
accrues from the date of each Equipment Advance at the rate of
three-fourth of one percentage point (0.750%) above the Prime
Rate. After an Event of Default, Obligations accrue interest at
five percentage points (5.000%) above the rate effective
immediately before the Event of Default. The interest rate
increases or decreases when the Prime Rate changes. Interest is
computed on a 360 day year for the actual number of days elapsed.
(b) Payments. Interest due on the Committed Revolving Line is
payable on the sixteenth (16th) of each month. Bank may debit
any of Borrower's deposit accounts including Account Number
3300099320 for principal and interest payments or any amounts
Borrower owes Bank under this Agreement. Bank will notify
Borrower when it debits Borrower's accounts. These debits are
not a set-off. Payments received after 2:00 PM Pacific time are
considered received at the opening of business on the next
Business Day. When a payment is due on a day that is not a
Business Day, the payment is due the next Business Day and
additional fees or interest accrue.
4. Sub-Section (d) of Section 6.7 entitled "Financial Covenants,
Reports, Certificates" is hereby amended to read as follows:
Bank has the right to audit Borrower's Accounts at Borrower's
expense, but the audits will be conducted no more often than
annually unless an Event of Default has occurred and is
continuing. However, if outstanding Advances exceed $3,500,000
for more than 60 consecutive days, such audits shall be conducted
semi-annually.
5. Section 6.7 entitled "Financial Covenants" is hereby amended, in
its entirety, to read as follows:
2.
Borrower will maintain as of the last day of each month:
(i) Quick Ratio [Adjusted]. A ratio of Quick Assets to Current
Liabilities minus software Deferred Maintenance Revenue of at
least 1.50 to 1.00.
(ii) Tangible Net Worth. A Tangible Net Worth of at least
$10,000,000.
(iii) Debt/Net Worth Ratio [Adjusted]. A ratio of Total
Liabilities less Subordinated Debt less software Deferred
Maintenance Revenue to Tangible Net Worth plus Subordinated Debt
of not more than 1.00 to 1.00.
(iv) Liquidity Coverage Ratio. A Liquidity Coverage Ratio of
2.00 to 1.00; provided, however, upon Borrower's achievement of
two consecutive quarters (on a rolling 3 months period) of Debt
Service Coverage Ratio of 1.50 to 1.00, the Liquidity Coverage
Ratio shall be replaced by quarterly Debt Service Coverage Ratio
of 1.50 to 1.00.
(v) Profitability. Borrower will achieve a minimum
profitability of $1 each quarter, except that Borrower may suffer
losses not to exceed $2,500,000 for the quarter ended December
31, 1998; $3,000,000 for the quarter ending March 31, 1999;
$2,750,000 for the quarter ending June 30, 1999; $2,800,000 for
the quarter ending September 30, 1999; and $1,000,000 for the
quarter ending December 31, 1999.
6. The following Sub-Section (I) is hereby incorporated into Section
13.1 entitled "Definitions" under "Eligible Account," to read as
follows:
(I) Accounts for any account debtor with extended payment terms
of longer than net 90 days.
7. The following defined terms are hereby amended and/or
incorporated into Section 13.1 entitled "Definitions" to read as
follows:
"Borrowing Base" is (i) $1,000,000 (the "Non-Formula Amount")
plus (ii) 80% of Eligible Accounts plus (iii) 70% of Eligible
Pre-Approved Foreign Accounts plus (iv) 90% of Eligible Letter of
Credit Supported Foreign Accounts, as determined by Bank from
Borrower's most recent Borrowing Base Certificate.
"Committed Equipment Line" is a Credit Extension of up to
$3,000,000.
"Committed Revolving Line" is an Advance of up to $7,000,000.
"Eligible Pre-Approved Foreign Accounts" are Accounts for which
the account debtor does not have its principal place of business
in the United States but are: Accounts owing from AT&T Jens, ATT
Easylink, ATT Internetworking Center, HK Telecom/International,
Siemens ATEA, and Singapore Telecom.
"Equipment Advance" is defined in Section 2.1.3.
"Equipment Availability End Date" is defined in Section 2.1.3.
"Equipment Maturity Date" is defined in Section 2.1.3.
3.
"Debt Service Coverage Ratio" is a ratio of annualized earnings
after tax plus annualized interest and annualized non cash
expenses divided by current maturities long term debt, plus
annualized interest.
"Deferred Maintenance Revenue" is all amounts received in advance
of performance under maintenance contracts and not yet recognized
as revenue.
"Liquidity Coverage Ratio" is a ratio of unrestricted cash (and
cash equivalents on deposit or invested with Bank) plus an amount
equal to the Borrowing Base (however, specifically excluding the
Non-Formula Amount) minus any outstanding Letters of Credit
including drawn but unreimbursed Letters of Credit divided by the
Non-Formula Amount plus the aggregate Equipment Advances then
outstanding.
"Revolving Maturity Date" is February 16, 2000.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
------------------
necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE. Borrower shall pay to Bank a fee in the amount of
-------------------
Forty Thousand Two Hundred Fifty Dollars ($40,250) (the "Loan Fee") plus all
out-of-pocket expenses.
6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
-----------------------
below) agrees that, as of the date hereof, it has no defenses against the
obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
-------------------
below) understands and agrees that in modifying the existing Indebtedness, Bank
is relying upon Borrower's representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to
this Loan Modification Agreement, the terms of the Existing Loan Documents
remain unchanged and in full force and effect. Bank's agreement to modifications
to the existing Indebtedness pursuant to this Loan Modification Agreement in no
way shall obligate Bank to make any future modifications to the Indebtedness.
Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Indebtedness. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. No maker, endorser, or guarantor will be
released by virtue of this Loan Modification Agreement. The terms of this
paragraph apply not only to this Loan Modification Agreement, but also to all
subsequent loan modification agreements.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
----------
conditioned upon Borrower's payment of the Loan Fee.
This Loan Modification Agreement is executed as of the date first
written above.
BORROWER: BANK:
CLARENT CORPORATION SILICON VALLEY BANK
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx Xxxx
------------------- --------------
Name: Xxxxxx X. Xxxxx Name: Xxxxx Xxxx
--------------- ------------
Title: Director of Finance Title: VP
------------------- ------------
4.
________________________________________________________________________________
EXHIBIT C
BORROWING BASE CERTIFICATE
________________________________________________________________________________
Borrower: CLARENT CORPORATION Lender: Silicon Valley Bank
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Commitment Amount: $7,0000,000
________________________________________________________________________________
ACCOUNTS RECEIVABLE
1. Accounts Receivable 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. Credit balances over 90 day $__________
7. Concentration Limits* $__________
8. Foreign Accounts $__________
9. Governmental Accounts $__________
10. Contra Accounts $__________
11. Promotion or Demo Accounts $__________
12. Intercompany/Employee Accounts $__________
13. Accounts with over 90 day terms $__________
14. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $__________
15. Eligible Accounts (#3 minus #14) $__________
16. LOAN VALUE OF ACCOUNTS (80% of #15) $__________
*40% for AT&T Jens, Siemens ATEA
PREAPPROVED FOREIGN ACCOUNTS RECEIVABLE DEDUCTIONS
17. Accounts Receivable Book Value as of _____ $__________
18. Additions (please explain on reverse) $__________
19. TOTAL FOREIGN ACCOUNTS RECEIVABLE $__________
a. Amounts over 90 days due $__________
b. Balance of 50% over 90 day accounts $__________
c. Concentration Limits $__________
d. Governmental Accounts $__________
e. Foreign (ineligible) $__________
f. Contra Accounts $__________
g. Promotion or Demo Accounts $__________
h. Intercompany/Employee Accounts $__________
i. Other (please explain on reverse) $__________
20. TOTAL FOREIGN ACCOUNTS RECEIVABLE
DEDUCTIONS $__________
21. Eligible Accounts (#19 minus #26) $__________
22. LOAN VALUE OF FOREIGN ACCOUNTS (70% of #21) $__________
AT&T Jens, ATT Easylink, ATT Internetworking Center, HK Telecom/International,
Siemens ATEA, Singapore Telecommunications
C-1.
LETTER OF CREDIT SECURED FOREIGN ACCOUNTS RECEIVABLE
23. Accounts Receivable Book Value as of _____ $__________
24 Additions (please explain on reverse) $__________
TOTAL FOREIGN ACCOUNTS RECEIVABLE DEDUCTIONS
a. Amounts over 90 days due $__________
b. Balance of 50% over 90 day accounts $__________
c. Concentration Limits $__________
d. Governmental Accounts $__________
e. Foreign (ineligible) $__________
f. Contra Accounts $__________
g. Promotion or Demo Accounts $__________
h. Intercompany/Employee Accounts $__________
i. Other (please explain on reverse) $__________
26. TOTAL FOREIGN ACCOUNTS RECEIVABLE
DEDUCTIONS $__________
27. Eligible Accounts (#23minus #26) $__________
28. LOAN VALUE OF FOREIGN ACCOUNTS (90% of #27) $__________
BALANCES
19. Maximum Loan Amount $__________
30. Total Funds Available [Lesser of #29 or ($1,000,000 +#16 + #22 + #28)] $__________
31. Present balance owing on Line of Credit $__________
32. Outstanding under Sublimits (Letters of Credit) $__________
33. RESERVE POSITION (#30minus #31 and #32) $__________
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: BANK USE ONLY
-------------
Rec'd by: ________
Auth. Signer
CLARENT CORPORATION Date:_____________
By:________________________ Verified:_________
Authorized Signer Auth. Signer
Date:_____________
__________________
-----------------------
C-2.
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
FROM: CLARENT CORPORATION
The undersigned authorized officer of CLARENT CORPORATION ("Borrower")
certifies that under the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the "Agreement"), (i) Borrower is in complete
compliance for the period ending ____________________with all required covenants
except as noted below and (ii)all representations and warranties in the
Agreement are true and correct in all material respects on this date. Attached
are required documents supporting the certification. The Officer certifies that
these are prepared in accordance with generally Accepted Accounting Principles
(GAAP) consistently applied from one period to the next except as explained in
accompanying letter or footnotes. The Officer acknowledges that no borrowings
may be requested at any time or date determination that Borrower is not in
compliance with any of the terms of the Agreement, and that compliance is
determined not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Monthly financial statements + CC Monthly within 30 days Yes No
Annual (Audited) FYE within 120 days Yes No
A/R & NP Agings Monthly within 20 days Yes No
Borrowing Base Certificate Monthly within 20 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
----------------- -------- ------ --------
Maintain on a Monthly Basis:
Minimum Quick Ratio (adjusted) 1.50:1.00 _____:1.00 Yes No
Minimum Tangible Net Worth $10,000,000 $________ Yes No
Maximum Debt/Tangible Net Worth
(adjusted) 1.00:1.00 _____:1.00 Yes No
Minimum Liquidity coverage/**/ 2.00:1.00 _____:1.00 Yes No
Minimum Debt Service Coverage/**/ 1.50:1.00 _____:1.00 Yes No
Profitability: Quarterly $ 1.00 $________ Yes No
Losses not to exceed: $2,500,000 for QE 12/31/98 Yes No
$3,000,000 for QE 3/31/99
$2,750,000 for QE 6/30/99
$2,800,000 for QE 9/30/99
$1,000,000 for QE 12/31/99
**Upon Borrower's achievement of two consecutive quarters (on a rolling 3 months
period) of Debt Service Coverage Ratio of 1.50 to 1.00, the Liquidity Coverage
Ratio shall be replaced by quarterly Debt Service Coverage Ratio of 1.50 to
1.00.
D-1.
-----------------------------------
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY
Sincerely, Received by:_______________________
AUTHORIZED SIGNER
CLARENT CORPORATION Date:______________________________
_________________________________ Verified:__________________________
Signature AUTHORIZED SIGNER
_________________________________ Date ______________________________
Title
Compliance Status: Yes No
_________________________________ ------------------------------------
Date
D-2.
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This Intellectual Property Security Agreement is entered into as of
February 16, 1999 by and between SILICON VALLEY BANK ("Bank") and CLARENT
CORPORATION ("Grantor").
RECITALS
--------
A. Bank has agreed to make certain advances of money and to extend
certain financial accommodation to Grantor (the "Loans") in the amounts and
manner set forth in that certain Loan and Security Agreement by and between Bank
and Grantor dated May 22, 1998 (as the same may be amended, modified or
supplemented from time to time, the "Loan Agreement"; capitalized terms used
herein are used as defined in the Loan Agreement). Bank is willing to make the
Loans to Grantor, but only upon the condition, among others, that Grantor shall
grant to Bank a security interest in certain Copyrights, Trademarks, Patents,
and Mask Works to secure the obligations of Grantor under the Loan Agreement.
Notwithstanding (i) that Grantor has granted to Bank a security interest in the
Patents, Trademarks, Copyrights, Mask Works and, (ii) that the Patents,
Trademarks, Mask Works and Copyrights are included in the Collateral, Bank shall
not enforce its security interest in the Patents, Trademarks, Mask Works, and
Copyrights, other than solely to the extent necessary to enable Bank to enforce
its perfected security interest in the Collateral other than the Patents,
Trademarks, Mask Works and Copyrights.
B. Pursuant to the terms of the Loan Agreement, Grantor has granted to
Bank a security interest in all of Grantor's right, title and interest, whether
presently existing or hereafter acquired, in, to and under all of the
Collateral.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, and intending to be legally bound, as collateral security
for the prompt and complete - payment when due of its obligations under the Loan
Agreement, Grantor hereby represents, warrants, covenants and agrees as follows:
AGREEMENT
---------
To secure its obligations under the Loan Agreement, Grantor grants and
pledges to Bank a security interest in all of Grantor's right, title and
interest in, to and under its Intellectual Property Collateral (including
without limitation those Copyrights, Patents, Trademarks and Mask Works listed
on Schedules A, B, C, and D hereto), and including without limitation all
proceeds thereof (such as, by way of example but not by way of limitation,
license royalties and proceeds of infringement suits), the right to xxx for
past, present and future infringements, all rights corresponding thereto
throughout the world and all re-issues, divisions continuations, renewals,
extensions and continuations-in-part thereof.
This security interest is granted in conjunction with the security interest
granted to Bank under the Loan Agreement. The rights and remedies of Bank with
respect to the security interest granted hereby are in addition to those set
forth in the Loan Agreement and the other Loan Documents, and those which are
now or hereafter available to Bank as a matter of law or equity. Each right,
power and remedy of Bank provided for herein or in the Loan Agreement or any of
the Loan Documents, or now or hereafter existing at law or in equity shall be
cumulative and concurrent and shall be in addition to every right, power or
remedy provided for herein and the exercise by Bank of any one or more of the
rights, powers or remedies provided for in this Intellectual Property Security
Agreement, the Loan Agreement or any of the other Loan Documents, or now or
hereafter existing at law or in equity, shall not preclude the simultaneous or
later exercise by any person, including Bank, of any or all other rights, powers
or remedies.
IN WITNESS WHEREOF, the parties have cause this Intellectual Property
Security Agreement to be duly executed by its officers thereunto duly authorized
as of the first date written above.
1.
GRANTOR:
Address of Grantor: CLARENT CORPORATION
000 Xxxxxxxxx Xx. By: /s/ Xxxxxx X. Xxxxx
----------------------
Xxxxxxx Xxxx, XX 00000
Title: Director of Finance
-------------------
Attn:______________________
BANK:
Address of Bank: SILICON VALLEY BANK
0000 Xxxxxx Xxxxx By: /s/ Xxxxx Xxxx
----------------------
Xxxxx Xxxxx, XX 00000-0000
Title: VP
--------------------
Attn:______________________
2.
EXHIBIT A
---------
Copyrights
Description Registration/ Registration/
-----------
Application Application
Number Date
------ ----
A-1.
EXHIBIT B
---------
Patents
Description Registration/ Registration/
-----------
CLARENT CORPORATION Application Application
SUMMARY OF PATENTS Number Date
------ ----
Description Registration/ Registration/
-----------
Application Application
Number Date
------ ----
1 Dynamic Forward Error Correction
Algorithm for Internet Telephone 812 8/8/97
2 Internet Telephone System with Dynamically
Varying CODEC 820 12/12/97
3 System Architecture For Internet Telephone 821 12/12/97
4 System and Method For Real-Time Data and
Voice transmission Over An Internet Network 964 3/27/98
B-1.
EXHIBIT C
---------
Trademarks
Description Registration/ Registration/
-----------
Application Application
Number Date
------ ----
CLARENT CORPORATION
SUMMARY OF TRADEMARKS
"Clarent" registration pending
The Clarent Logo application pending
"Clarent ThroughPacket" application pending
"Clarent Command Center" application pending
C-1.
EXHIBIT D
---------
Mask Works
Description Registration/ Registration/
-----------
Application Application
Number Date
------ ----
D-1.
NEGATIVE PLEDGE AGREEMENT
This Negative Pledge Agreement is made as of February 16, 1999, by and
between Clarent Corporation ("Borrower") and Silicon Valley Bank ("Bank").
In connection with, among other documents, the Loan and Security Agreement (the
"Loan Documents") being concurrently executed herewith between Borrower and
Bank, Borrower agrees as follows:
1. Borrower shall not sell, transfer, assign, mortgage, pledge, lease,
grant a security interest in, or encumber any of Borrower's
intellectual property, including, without limitation, the following:
a. Any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and
whether or not the same also constitutes a trade secret, now or
hereafter existing, created, acquired or held;
b. All mask works or similar rights available for the protection of
semiconductor chips, now owned or hereafter acquired;
c. Any and all trade secrets, and any and all intellectual property
rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
d. Any and all design rights which may be available to Borrower now
or hereafter existing, created, acquired or held;
e. All patents, patent applications and like protections including,
without limitation, improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the
same, including without limitation the patents and patent
applications;
f. Any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower
connected with and symbolized by such trademarks, including
without limitation;
g. Any and all claims for damages by way of past, present and future
infringements of any of the rights included above, with the
right, but not the obligation, to xxx for and collect such
damages for said use or infringement of the intellectual property
rights identified above;
h. All licenses or other rights to use any of the Copyrights,
Patents, Trademarks or Mask Works, and all license fees and
royalties arising from such use to the extent permitted by such
license or rights;
i. All amendments, extensions, renewals and extensions of any of the
Copyrights, Trademarks, Patents, or Mask Works; and
1.
j. All proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or
warranty payable in respect of any of the foregoing;
2. It shall be an event of default under the Loan Documents between
Borrower and Bank if there is a breach of any term of this Negative
Pledge Agreement.
3. Capitalized terms used but not otherwise defined herein shall have the
same meaning as in the Loan Documents.
BORROWER:
CLARENT CORPORATION
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
--------------------------------
Title: Director of Finance
--------------------------------
BANK:
SILICON VALLEY BANK
By: /s/ Xxxxx Xxxx
--------------------------------
Name: Xxxxx Xxxx
--------------------------------
Title: VP
--------------------------------
2.
SILICON VALLEY BANK
PRO FORMA INVOICE FOR LOAN CHARGES
BORROWER: CLARENT CORPORATION
LOAN OFFICER: XXXXX XXXX
DATE: FEBRUARY 16, 1999
REVOLVING LOAN FEE* $25,250.00
EQUIPMENT LOAN FEE 15,000.00
TOTAL FEE DUE $40,250.00
------------- ==========
*INCLUSIVE OF LOAN DOCUMENTATION FEE AND ALL OTHER CHARGES.
PLEASE INDICATE THE METHOD OF PAYMENT:
{ } A CHECK FOR THE TOTAL AMOUNT IS ATTACHED.
{ } DEBIT DDA# 3300099320 FOR THE TOTAL AMOUNT.
{ } LOAN PROCEEDS
BORROWER:
BY: /S/ XXXXXX X. XXXXX
---------------------------------------
(AUTHORIZED SIGNER)
/S/ XXXXX XXXX 2/25/99
--------------------------------------------
SILICON VALLEY BANK (DATE)
ACCOUNT OFFICER'S SIGNATURE
This STATEMENT is presented for filing pursuant to the California Uniform
Commercial Code
------------------------------------------------------------------------------------------------------------------------------------
1. FILE NO. OF ORIG. FINANCING STATEMENT 1A. DATE OF FILING OF ORIG. FINANCING STATEMENT 1B. DATE OF ORIG. FINANCING STATEMENT
9823660423 8/19/98
1C. PLACE OF FILING ORIG. FINANCING STATEMENT
CALIFORNIA
------------------------------------------------------------------------------------------------------------------------------------
2. DEBTOR (LAST NAME FIRST) 2A. SOCIAL SECURITY NO., FEDERAL TAX NO.
Clarent Corporation
------------------------------------------------------------------------------------------------------------------------------------
2B. XXXXXXX XXXXXXX 0X. XXXX, XXXXX 0X. XXX CODE
0000 Xxxxxxxx Xxxxxxx Xxxx, XX 00000
------------------------------------------------------------------------------------------------------------------------------------
3. ADDITIONAL DEBTOR (IF ANY) (LAST NAME FIRST) 3A. SOCIAL SECURITY OR FEDERAL TAX NO.
------------------------------------------------------------------------------------------------------------------------------------
3B. XXXXXXX XXXXXXX 0X. XXXX, XXXXX 0X. XXX CODE
------------------------------------------------------------------------------------------------------------------------------------
4. SECURED PARTY 4A. SOCIAL SECURITY NO., FEDERAL TAX NO.
OR BANK TRANSIT AND A.B.A. NO.
NAME SILICON VALLEY BANK
MAILING ADDRESS 0000 Xxxxxx Xxxxx
XXXX Xxxxx Xxxxx XXXXX XX ZIP CODE 95054
------------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY (IF ANY) 5A. SOCIAL SECURITY NO., FEDERAL TAX NO.
OR BANK TRANSIT AND A.B.A. NO.
NAME
MAILING ADDRESS
CITY STATE ZIP CODE
------------------------------------------------------------------------------------------------------------------------------------
6. A [_] CONTINUATION- The original Financing Statement between the foregoing
Debtor and Secured Party bearing the file number and date shown above
is continued. If collateral is crops or timber, check here [_] and
insert description of real property on which growing or to be grown
in item 7 below.
--------------------------------------------------------------------------------
B [_] RELEASE- From the collateral described in the Financing Statement
bearing the file number shown above, the Secured Party releases the
collateral described in item 7 below.
--------------------------------------------------------------------------------
C [_] ASSIGNMENT- The Secured Party certifies that the Secured Party has
assigned to the Assignee above named, the Secured Party's rights
under the Financing Statement bearing the file number shown above in
the collateral described in item 7 below.
--------------------------------------------------------------------------------
D [_] TERMINATION- The Secured Party certifies that the Secured Party no
longer claims a security interest under Financing Statement bearing
the file number shown above.
--------------------------------------------------------------------------------
E [X] AMENDMENT- The Financing Statement bearing the file number shown
above is amended as set forth in Item 7 below. (Signature of Debtor
required on all amendments.)
--------------------------------------------------------------------------------
F [_] OTHER
--------------------------------------------------------------------------------
7. Debtor's address has changed to:
000 Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
--------------------------------------------------------------------------------
8. Clarent Corporation (DATE) 2/24/1999 C 9. This Space Use of Filing Officer
O (Date, Time, Filing Office)
D
E
---
1
------------------------------------------------------------------------------
By: /s/ Xxxxxx X. Xxxxx Director of Finance 2
---------------------------------------------------------------------------
SIGNATURE(S) OF DEBTOR(S) (TITLE)
SILICON VALLEY BANK 3
------------------------------------------------------------------------------
4
By:___________________________________________________________________________
SIGNATURE(S) OF SECURED PARTY(IES) (TITLE) 5
------------------------------------------------------------------------------
10. RETURN COPY TO 6
NAME Data File Services, Inc.
XXXXXXX X.X. Xxx 000 0
XXXX XXX Xxx Xxxx
XXXXX XX 8
91408-2750
9
(1) FILING OFFICER COPY
This STATEMENT is presented for filing pursuant to the California Uniform
Commercial Code
------------------------------------------------------------------------------------------------------------------------------------
1. FILE NO OF ORIG. FINANCING STATEMENT 1A. DATE OF FILING OF ORIG. FINANCING STATEMENT 1B. DATE OF ORIG. FINANCING STATEMENT
9823660423 8/19/98
1C. PLACE OF FILING ORIG. FINANCING STATEMENT
CALIFORNIA
------------------------------------------------------------------------------------------------------------------------------------
2. DEBTOR (LAST NAME FIRST) 2A. SOCIAL SECURITY NO., FEDERAL TAX NO.
CLARENT CORPORATION
------------------------------------------------------------------------------------------------------------------------------------
2B. XXXXXXX XXXXXXX 0X. XXXX, XXXXX 0X. XXX CODE
000 Xxxxxxxxxx Xxxxx Xxxxxxx Xxxx, XX 00000
------------------------------------------------------------------------------------------------------------------------------------
3. ADDITIONAL DEBTOR (IF ANY) (LAST NAME FIRST) 3A. SOCIAL SECURITY OR FEDERAL TAX NO.
------------------------------------------------------------------------------------------------------------------------------------
3B. XXXXXXX XXXXXXX 0X. XXXX, XXXXX 0X. XXX CODE
------------------------------------------------------------------------------------------------------------------------------------
4. SECURED PARTY 4A. SOCIAL SECURITY NO., FEDERAL TAX NO.
OR BANK TRANSIT AND A.B.A. NO.
NAME SILICON VALLEY BANK
MAILING ADDRESS 0000 Xxxxxx Xxxxx
XXXX Xxxxx Xxxxx XXXXX XX ZIP CODE 95054
------------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY (IF ANY) 5A. SOCIAL SECURITY NO., FEDERAL TAX
NO. OR BANK TRANSIT AND A.B.A. NO.
NAME
MAILING ADDRESS
CITY STATE ZIP CODE
------------------------------------------------------------------------------------------------------------------------------------
6. A [_] CONTINUATION- The original Financing Statement between the foregoing
Debtor and Secured Party bearing the file number and date shown above
is continued. If collateral is crops or timber, check here [_] and
insert description of real property on which growing or to be grown
in item 7 below.
--------------------------------------------------------------------------------
B [_] RELEASE- From the collateral described in the Financing Statement
bearing the file number shown above, the Secured Party releases the
collateral described in item 7 below.
--------------------------------------------------------------------------------
C [_] ASSIGNMENT- The Secured Party certifies that the Secured Party has
assigned to the Assignee above named, the Secured Party's rights
under the Financing Statement bearing the file number shown above in
the collateral described in item 7 below.
--------------------------------------------------------------------------------
D [_] TERMINATION- The Secured Party certifies that the Secured Party no
longer claims a security interest under Financing Statement bearing
the file number shown above.
--------------------------------------------------------------------------------
E [X] AMENDMENT- The Financing Statement bearing the file number shown
above is amended as set forth in item 7 below. (Signature of Debtor
required on all amendments.)
--------------------------------------------------------------------------------
F [_] OTHER
--------------------------------------------------------------------------------
7.
THE COLLATERAL DESCRIPTION IS HEREBY AMENDED TO READ AS SET FORTH ON
ATTACHED EXHIBIT "A"
--------------------------------------------------------------------------------
8. CLARENT CORPORATION (DATE) 2/23 1999 C 9. This Space Use of Filing Officer
O (Date, Time, Filing Office)
D
E
---
1
------------------------------------------------------------------------------
By: /s/ Xxxxxx X. Xxxxx Director of Finance 2
---------------------------------------------------------------------------
SIGNATURE(S) OF DEBTOR(S) ECC/114 (TITLE)
SILICON VALLEY BANK 3
------------------------------------------------------------------------------
4
By:___________________________________________________________________________
SIGNATURE(S) OF SECURED PARTY(IES) (TITLE)
------------------------------------------------------------------------------
10. RETURN COPY TO 5
NAME Data File Services, Inc. 6
XXXXXXX X.X. Xxx 000
XXXX XXX Xxx Xxxx
XXXXX XX 7
91408-2750 8
(1) FILING OFFICER COPY 9
EXHIBIT A
---------
The Collateral consists of all of Borrower's right, title and interest in
and to the following:
All goods and equipment now owned or hereafter acquired, including, without
limitation, all machinery, fixtures, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;
All documents, cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, letters of credit, certificates of
deposit, instruments and chattel paper now owned or hereafter acquired and
Borrower's Books relating to the foregoing;
All copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired; all claims
for damages by way of any past, present and future infringement of any of the
foregoing; and
Notwithstanding (i) that Grantor has granted to Bank a security interest in the
Patents, Trademarks, Copyrights, and Mask Works and, (ii) that the Patents,
Trademarks, Mask Works and Copyrights are included in the Collateral, Bank shall
not enforce its security interest in the Patents, Trademarks, Mask Works, and
Copyrights, other than solely to the extent necessary to enable Bank to enforce
its perfected security in the Accounts and the Collateral other than the
Patents, Trademarks, Mask Works and Copyrights.
All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.
A-1.
This STATEMENT is presented for filing pursuant to the California Uniform
Commercial Code
------------------------------------------------------------------------------------------------------------------------------------
1. FILE NO OF ORIG. FINANCING STATEMENT 1A. DATE OF FILING OF ORIG. FINANCING STATEMENT 1B. DATE OF ORIG. FINANCING STATEMENT
9822660208 8/12/98
1C. PLACE OF FILING ORIG. FINANCING STATEMENT
CALIFORNIA
------------------------------------------------------------------------------------------------------------------------------------
2. DEBTOR (LAST NAME FIRST) 2A. SOCIAL SECURITY NO. FEDERAL TAX NO.
CLARENT CORPORATION
------------------------------------------------------------------------------------------------------------------------------------
2B. XXXXXXX XXXXXXX 0X. XXXX, XXXXX 0X. XXX CODE
000 Xxxxxxxxxx Xxxxx Xxxxxxx Xxxx, XX 00000
------------------------------------------------------------------------------------------------------------------------------------
3. ADDITIONAL DEBTOR (IF ANY) (LAST NAME FIRST) 3A. SOCIAL SECURITY OR FEDERAL TAX NO.
------------------------------------------------------------------------------------------------------------------------------------
3B. XXXXXXX XXXXXXX 0X. XXXX, XXXXX 0X. XXX CODE
------------------------------------------------------------------------------------------------------------------------------------
4. SECURED PARTY 4A. SOCIAL SECURITY NO., FEDERAL TAX
NO. OR BANK TRANSIT AND A.B.A. NO.
NAME SILICON VALLEY BANK
MAILING ADDRESS 0000 Xxxxxx Xxxxx
XXXX Xxxxx Xxxxx XXXXX XX ZIP CODE 95054
------------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY (IF ANY) 5A. SOCIAL SECURITY NO., FEDERAL TAX
N0. OR BANK TRANSIT AND A.B.A. NO.
NAME
MAILING ADDRESS
CITY STATE ZIP CODE
------------------------------------------------------------------------------------------------------------------------------------
6. A [_] CONTINUATION- The original Financing Statement between the foregoing
Debtor and Secured Party bearing the file number and date shown above
is continued. If collateral is crops or timber, check here [_] and
insert description of real property on which growing or to be grown
in item 7 below.
--------------------------------------------------------------------------------
B [_] RELEASE- From the collateral described in the Financing Statement
bearing the file number shown above, the Secured Party releases the
collateral described in item 7 below.
--------------------------------------------------------------------------------
C [_] ASSIGNMENT- The Secured Party certifies that the Secured Party has
assigned to the Assignee above named, the Secured Party's rights
under the Financing Statement bearing the file number shown above in
the collateral described in item 7 below.
--------------------------------------------------------------------------------
D [_] TERMINATION- The Secured Party certifies that the Secured Party no
longer claims a security interest under Financing Statement bearing
the file number shown above.
--------------------------------------------------------------------------------
E [X] AMENDMENT- The Financing Statement bearing the file number shown
above is amended as set forth in item 7 below. (Signature of Debtor
required on all amendments.)
--------------------------------------------------------------------------------
F [_] OTHER
--------------------------------------------------------------------------------
7.
THE COLLATERAL DESCRIPTION IS HEREBY AMENDED TO READ AS SET FORTH ON
ATTACHED EXHIBIT "A"
--------------------------------------------------------------------------------
8. CLARENT CORPORATION (DATE) 2/23/1999 C 9. This Space Use of Filing Officer
O (Date, Time, Filing Office)
D
E
---
/s/ Xxxxxx X. Xxxxx 1
------------------------------------------------------------------------------
By: Director of Finance 2
---------------------------------------------------------------------------
SIGNATURE(S) OF DEBTOR(S) ECC/114 (TITLE)
SILICON VALLEY BANK 3
------------------------------------------------------------------------------
4
By:___________________________________________________________________________
SIGNATURE(S) OF SECURED PARTY(IES) (TITLE) 5
------------------------------------------------------------------------------
10. RETURN COPY TO 6
NAME Data File Service, Inc.
XXXXXXX X.X. Xxx 000 0
XXXX XXX Xxx Xxxx
XXXXX XX 8
91408-2750
9
(1) FILING OFFICER COPY
EXHIBIT A
---------
The Collateral consists of all of Borrower's right, title and interest in
and to the following:
All goods and equipment now owned or hereafter acquired, including, without
limitation, all machinery, fixtures, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;
All documents, cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, letters of credit, certificates of
deposit, instruments and chattel paper now owned or hereafter acquired and
Borrower's Books relating to the foregoing; and
All copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired; all claims
for damages by way of any past, present and future infringement of any of the
foregoing, notwithstanding (i) that Grantor has granted to Bank a security
interest in the Patents, Trademarks, Copyrights, and Mask Works and, (ii) that
the Patents, Trademarks, Mask Works and Copyrights are included in the
Collateral, Bank shall not enforce its security interest in the Patents,
Trademarks, Mask Works, and Copyrights, other than solely to the extent
necessary to enable Bank to enforce its perfected security in the Accounts and
the Collateral other than the Patents, Trademarks, Mask Works and Copyrights.
All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.
A-1.
This STATEMENT is presented for filing pursuant to the California Uniform
Commercial Code
------------------------------------------------------------------------------------------------------------------------------------
1. FILE NO. OF ORIG. FINANCING STATEMENT 1A. DATE OF FILING OF ORIG. FINANCING STATEMENT 1B. DATE OF ORIG. FINANCING STATEMENT
9822660208 8/12/98
1C. PLACE OF FILING OF ORIG. FINANCING STATEMENT
CALIFORNIA
------------------------------------------------------------------------------------------------------------------------------------
2. DEBTOR (LAST NAME FIRST) 2A. SOCIAL SECURITY OR FEDERAL TAX NO.
Clarent Corporation
------------------------------------------------------------------------------------------------------------------------------------
2B. XXXXXXX XXXXXXX 0X. XXXX, XXXXX 0X. XXX CODE
0000 Xxxxxxxx Xxxxxxx Xxxx, XX 00000
------------------------------------------------------------------------------------------------------------------------------------
3. ADDITIONAL DEBTOR (IF ANY) (LAST NAME FIRST) 3A. SOCIAL SECURITY OR FEDERAL TAX NO.
------------------------------------------------------------------------------------------------------------------------------------
3B. XXXXXXX XXXXXXX 0X. XXXX, XXXXX 0X. XXX CODE
------------------------------------------------------------------------------------------------------------------------------------
4. SECURED PARTY 4A. SOCIAL SECURITY NO., FEDERAL TAX
NO. OR BANK TRANSIT AND A.B.A. NO.
NAME SILICON VALLEY BANK
MAILING ADDRESS 0000 Xxxxxx Xxxxx
XXXX Xxxxx Xxxxx XXXXX XX ZIP CODE 95054
------------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY (IF ANY) 5A. SOCIAL SECURITY NO., FEDERAL TAX
NO. OR BANK TRANSIT AND A.B.A. NO.
NAME
MAILING ADDRESS
CITY STATE ZIP CODE
------------------------------------------------------------------------------------------------------------------------------------
6. A [_] CONTINUATION- The original Financing Statement between the foregoing
Debtor and Secured Party bearing the file number and date shown above
is continued. If collateral is crops or timber, check here [_] and
insert description of real property on which growing or to be grown
in item 7 below.
--------------------------------------------------------------------------------
B [_] RELEASE- From the collateral described in the Financing Statement
bearing the file number shown above, the Secured Party releases the
collateral described in item 7 below.
--------------------------------------------------------------------------------
C [_] ASSIGNMENT- The Secured Party certifies that the Secured Party has
assigned to the Assignee above named, the Secured Party's rights
under the Financing Statement bearing the file number shown above in
the collateral described in item 7 below.
--------------------------------------------------------------------------------
D [_] TERMINATION- The Secured Party certifies that the Secured Party no
longer claims a security interest under Financing Statement bearing
the file number shown above.
--------------------------------------------------------------------------------
E [X] AMENDMENT- The Financing Statement bearing the file number shown
above is amended as set forth in Item 7 below. (Signature of Debtor
required on all amendments.)
--------------------------------------------------------------------------------
F [_] OTHER
--------------------------------------------------------------------------------
7. Debtor's address has changed to:
000 Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
--------------------------------------------------------------------------------
8. Clarent Corporation (DATE) 2/24/1999 C 9. This Space Use of Filing Officer
O (Date, Time, Filing Office)
D
E
---
1
------------------------------------------------------------------------------
By: /s/ Xxxxxx X. Xxxxx /s/ Director of Finance 2
---------------------------------------------------------------------------
SIGNATURE(S) OF DEBTOR(S) (TITLE)
SILICON VALLEY BANK 3
------------------------------------------------------------------------------
4
By:___________________________________________________________________________
SIGNATURE(S) OF SECURED PARTY(IES) (TITLE)
------------------------------------------------------------------------------
10. RETURN COPY TO 5
NAME Data File Services, Inc. 6
ADDRESS X.X. Xxx 000
XXXX XXX Xxx Xxxx 0
XXXXX XX
00000-0000 8
(4) FILING COPY - DBETOR 9
