EXHIBIT 10.9
Loan and Security Agreement
Exhibit 10.9
LOAN AND SECURITY AGREEMENT
by and between
SYNCHRONOSS TECHNOLOGIES, INC.,
as the BORROWER
and
SILICON VALLEY BANK,
as the LENDER
MAY 21, 2001
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated May _, 2001,
between SILICON VALLEY BANK, a California chartered bank, an address of 0000
Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and a loan production office at 5
Radnor Corporate Center, Xxxxx 000, 000 Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxx
00000, telefacsimile number (000) 000-0000 ("Bank") AND SYNCHRONOSS
TECHNOLOGIES, INC., A DELAWARE corporation, having an address at 0000 Xxxxxx
Xxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxxxx 00000, telefacsimile number (610)
814-5501 ("Borrower"), 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. Capitalized terms in this Agreement
shall have the meanings set forth in Section 13.
2 LOAN AND TERMS OF PAYMENT
2.1 Revolving Advances.
(a) Bank will make Advances not exceeding the lesser of the
Committed Revolving Line or the Borrowing Base. Amounts borrowed under this
Section 2 .1 may be repaid and reborrowed during the term of this Agreement. All
Advances shall be evidenced by a Revolving Promissory Note to be executed and
delivered by Borrower to Bank on the Closing Date and shall be repaid in
accordance with the terms of the Revolving Promissory Note,
(b) To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 3:00 p.m. Eastern 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 that reliance.
(c) The Committed Revolving Line terminates on the Revolving
Maturity Date, when all Advances are immediately payable.
2.2 Equipment Advances.
(a) Subject to the terms and conditions of this Agreement, Bank
agrees to lend to Borrower, from time to time prior to the Commitment
Termination Date, equipment advances (each an "Equipment Advance" and
collectively the "Equipment Advances") in an aggregate amount not to exceed the
Committed Equipment Line. When repaid, the Equipment Advances may not be
reborrowed. The proceeds of the Equipment Advances will be used solely to
reimburse Borrower for the purchase of Eligible Equipment purchased within
ninety (90) days of the Equipment Advance. Bank's obligation to lend hereunder
shall terminate on the
earlier of (i) the occurrence and continuance of an Event of Default, or (ii)
the Commitment Termination Date. For purposes of this Section, the minimum
amount of each Equipment Advance is Two Hundred Fifty Thousand Dollars
($250,000), provided that Borrower must draw down not less than One Million
Dollars ($1,000,000) on the Committed Equipment Line within thirty (30) days of
the Closing Date. The maximum number of Equipment Advances that will be made is
six (6).
(b) To obtain an Equipment Advance, Borrower will deliver to Bank a
completed supplement in substantially the form attached AS EXHIBIT E ("Loan
Supplement"), copies of invoices for the Financed Equipment, together with a UCC
Financing Statement, if requested by Bank, covering the Equipment described on
the Loan Supplement, and such additional information as Bank may request at
least five (5) Business Days before the proposed funding date (the "Funding
Date"). On each Funding date, Bank will specify in the Loan Supplement for each
Equipment Advance, the Basic Rate, the Loan Factor, and the Payment Dates. If
Borrower satisfies the conditions of each Equipment Advance specified herein,
Bank will disburse such Equipment Advance by internal transfer to Borrower's
deposit account with Bank. Each Equipment Advance may not exceed one hundred
percent (100%) of the Original Stated Cost.
(C) Bank's obligation to lend the undisbursed portion of the
Committed Equipment Line will terminate if, in Bank's sole discretion, there has
been a material adverse change in the general affairs, management, results of
operation, condition (financial or otherwise) or the prospects of Borrower,
whether or not arising from transactions in the ordinary course of business, or
there has been any material adverse deviation by Borrower from the most recent
business plan of Borrower presented to and accepted by Bank prior to the
execution of this Agreement.
2.3 OVERADVANCES. If Borrower's Obligations under Section 2.1 exceed
the lesser of either (i) the Committed Revolving Line or (ii) the Borrowing
BASE, Borrower must immediately pay in cash to Bank the excess.
2.4 INTEREST RATE; PAYMENTS.
(a) INTEREST RATE.
(i) Advances under the Committed Revolving Line accrue
interest on the outstanding principal balance in accordance with the Revolving
Promissory Note.
(ii) Equipment Advances under the Committed Equipment Line
accrue interest on the outstanding principal balance in accordance with Section
2 .5 (b) herein.
(iii) After an Event of Default, Obligations accrue interest
at five percent (5%) above the rate set forth in the Revolving Promissory Note
and the rate applicable to each Equipment Advance as set forth in Section 2.5
herein effective immediately before the Event of Default.
(iv) The interest rate on the Committed Revolving Line
increases or decreases when the Prime Rate changes.
(v) Interest on the Obligations is computed on a 360-day year
for the actual number of days elapsed.
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(b) PAYMENTS.
(i) Interest on the Committed Revolving Line is payable on the
first (1st) day of each month.
(ii) Principal and Interest on the Committed Equipment Line is
payable in accordance with Section 2.5 (a) herein.
(iii) Bank may debit any of Borrower's deposit accounts
including Account Number ___________ for principal and interest payments when
due or any amounts Borrower owes Bank when due. Bank will notify Borrower when
it debits Borrower's accounts. These debits are not a set-off. Payments received
after 12:00 noon Eastern time are considered received at the opening of business
on the next Business Day. When a payment is due on a day that is not a Business
Day, the payment is due the next Business Day and interest accrues.
2.5 INTEREST RATE, PAYMENTS.
(a) PRINCIPAL AND INTEREST PAYMENTS ON PAYMENT DATES. Borrower will
repay the Equipment Advances on the terms provided in the Loan Supplement.
Borrower will make payments monthly in advance of principal and accrued interest
for each Equipment Advance (collectively, "Scheduled Payments"), on the first
Business Day of the month following the Funding Date (or commencing on the
Funding Date if the Funding Date is the first Business Day of the month) with
respect to such Equipment Advance and continuing thereafter during the Repayment
Period on the first Business Day of each calendar month (each a "Payment Date"),
in an amount equal to the Loan Factor multiplied by the Loan Amount for such
Equipment Advance as of such Payment Date. All unpaid principal and accrued
interest is due and payable in full on the last Payment Date with respect to
such Equipment Advance. Payments received after 12:00 noon Eastern time are
considered received at the opening of business on the next Business Day. An
Equipment Advance may only be prepaid in accordance with Sections 2.5 (e) and
2.5 (g).
(b) INTEREST RATE. Borrower will pay interest on the Payment Dates
(as described above) at the per annum rate of interest equal to the Basic Rate
determined by Bank as of the Funding Date for each Equipment Advance in
accordance with the definition of the Basic Rate. Any amounts outstanding during
the continuance of an Event of Default shall bear interest at a per annum rate
equal to the Basic Rate plus five percent (5%). If any change in the law
increases Bank's expenses or decreases its return from the Equipment Advances,
Borrower will pay Bank upon request the amount of such increase or decrease.
(c) INTERIM PAYMENT. In addition to the Scheduled Payments, on the
Funding Date for each Equipment Advance (unless the Funding Date is the first
Business Day of the month) Borrower shall pay to Bank, on behalf of Bank, the
projected interest to accrue from the Funding Date to the first Payment Date, at
the Bank's Prime Rate plus two percent (2.0%) per annum.
(d) FINAL PAYMENT. On the Maturity Date with respect to each
Equipment Advance, Borrower will pay, in addition to the unpaid principal and
accrued interest and all other amounts due on such date with respect to such
Equipment Advance, an amount equal to the Final Payment.
(e) PREPAYMENT UPON AN EVENT OF LOSS. if any Financed Equipment is
subject to an Event of Loss and Borrower is required to or elects to prepay the
Equipment
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Advance with respect to such Financed Equipment pursuant to Section 6 .7, then
such Equipment Advance shall be prepaid to the extent and in the manner provided
in such section.
(f) MANDATORY PREPAYMENT UPON AN ACCELERATION. If the Equipment
Advances are accelerated following the occurrence of an Event of Default or
otherwise (other than following an Event of Loss), then Borrower will
immediately pay to Bank (i) all unpaid Scheduled Payments (including principal
and interest) with respect to each Equipment Advance, (ii) all remaining
Scheduled Payments (including principal and interest unpaid) (iii) all accrued
unpaid interest, including the default rate of interest, to the date of the
prepayment, (iv) the Final Payment and (v) all other sums, if any, that shall
have become due and payable with respect to any Equipment Advance.
(g) PERMITTED PREPAYMENT OF LOANS. Borrower shall have the option
to prepay all, but not less than all, of the Equipment Advances advanced by Bank
under this Agreement, provided Borrower (1) provides written notice to Bank of
its election to prepay the Equipment Advances at least thirty (30) days prior to
such prepayment, and (ii) pays, on the date of the prepayment (A) all unpaid
Scheduled Payments (including principal and interest) with respect to each
Equipment Advance; (B) all outstanding principal; (C) all unpaid accrued
interest to the date of the prepayment; (D) the Final Payment; and (E) all
other sums, if any, that shall have become due and payable hereunder with
respect to this Agreement.
2.6 FEES. Borrower will pay to Bank:
(a) FACILITY FEE. A fully earned, nonrefundable facility fee for
the Committed Revolving Line of Seven Thousand Five Hundred Dollars ($7,500) due
on the Closing Date (which fee Bank acknowledges it has previously received);
and
(b) BANK EXPENSES. All Bank Expenses including reasonable attorneys'
fees and expenses (not exceeding Seven Thousand Five Hundred Dollars ($7,500),
plus all out-of-pocket expenses, for pre-closing preparation and negotiation of
this Agreement and the Loan Documents, provided reasonable negotiation),
incurred through and after the Closing Date when due.
2.7 REQUEST TO DEBIT ACCOUNTS.
Bank may debit any of Borrower's deposit accounts including Account
Number for principal and interest payments or any amounts
Borrower owes when due.
Bank will notify Borrower when it debits Borrower's accounts. These
debits are not a set-off.
3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION. Bank's
obligation to make the initial Credit Extension is subject to the following
conditions precedent:
(a) With respect to the initial Credit Extension under the Committed
Revolving Line only, Bank shall have conducted a satisfactory field audit of the
Borrower; and
(b) Bank receives the agreements, documents and fees it reasonably
requires.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Bank's obligations
to make each Credit Extension, including the initial Credit Extension, is
subject to the following:
(a) timely receipt of any Payment/Advance Form; and
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(b) the representations and warranties in Section 5 must be
materially true on the date of the Payment/Advance Form and on the effective
date of each Credit Extension and no Event of Default may have occurred and be
continuing, or result from the Credit Extension. Each Credit Extension is
Borrower's representation and warranty on that date that the representations and
warranties in 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. Bank may place a "hold" on
any deposit account pledged as Collateral. If the Agreement is terminated,
Bank's lien and security interest in the Collateral will continue until Borrower
fully satisfies its Obligations.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION. Borrower is duly existing
and in good standing in its state of formation and qualified and licensed to do
business in, and in good standing in, any state in which the conduct of its
business or its ownership of property requires that it be qualified, except
where failure to do so could not reasonably be expected to cause a material
Adverse Change. The execution, delivery and performance of the Loan Documents
have been duly authorized, and do not conflict with Borrower's formations
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 reasonably be expected
to cause a Material Adverse Change.
5.2 COLLATERAL. Borrower has good title to the Collateral, free of
Liens except Permitted Liens. The Eligible 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 and unconditional
acceptance by 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 (provided Bank acknowledges that with respect to certain license rights
held by Borrower in Intellectual Property licensed from third parties, Borrower
may not be the sole and exclusive owner of all rights to such Intellectual
Property). To the best of Borrower's knowledge, 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, to the knowledge of
Borrower's Responsible Officers and legal counsel, 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 Borrower's consolidated
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results of operations. There has not been any material deterioration in
Borrower's consolidated financial condition since the date of the most recent
financial statements submitted to Bank.
5.5 SOLVENCY. Borrower is able to pay its debts (including trade
debts) as they mature.
5.6 REGULATORY COMPLIANCE. Borrower is not an "investment company"
or a company "controlled" by an "investment company" under the Investment
Company Act. Borrower is not engaged as one of its important activities in
extending credit for margin stock (under Regulations 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 could cause a Material Adverse Change. None of Borrower's or
any Subsidiary's properties or assets has been used by Borrower or any
Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary has timely filed all required
tax returns and paid, or made adequate provision to pay, all material taxes.
Borrower and each Subsidiary has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all government authorities that are necessary to continue its business as
currently conducted, except where failure to do so could not reasonably be
expected to cause a Material Adverse Change.
5.7 SUBSIDIARIES. Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments.
5.8 FULL DISCLOSURE. No representation, warranty or other statement
of Borrower in any certificate or written statement given to Bank contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained in the certificates or statements not
misleading (it being recognized by Bank that the projections and forecasts, if
any, provided by Borrower in good faith and based upon reasonable assumptions
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections and forecasts may differ from the
projected or forecasted results).
6 AFFIRMATIVE COVENANTS
Borrower will do all of the following:
6.1 GOVERNMENT COMPLIANCE. Borrower will maintain its corporate
existence and good standing in its jurisdiction of incorporation 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 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.
Borrower will deliver to Bank: (i) as soon as available, but no
later than thirty (30) days after the last day of each month, a Borrower
prepared consolidated balance sheet and income statement covering Borrower's
consolidated operations during the period, in a form acceptable to Bank and
certified by a Responsible Officer; (ii) beginning with fiscal year 2001, as
soon as available, but no later than one hundred twenty (120) days after the end
of Borrower's fiscal year, audited consolidated financial statements prepared
under GAAP, consistently applied,
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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 One Hundred Thousand Dollars ($100,000.00) or more; and (iv) budgets, sales
projections, operating plans or other financial information Bank requests.
Within thirty (30) 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.
Within thirty (30) days after the last day of each month, Borrower
will deliver to Bank with the monthly financial statements a Compliance
Certificate signed by a Responsible Officer in the form of EXHIBIT D.
Bank has the right to audit Borrower's Accounts at Borrower's
expense not to exceed $5,000 per audit, but the audits will be conducted no more
often than once every twelve (12) months unless an Event of Default has occurred
and is continuing.
6.3 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.
6.4 INSURANCE. Borrower will keep its business and the Collateral
insured for risks and in amounts, as Bank requests. Insurance policies will be
in a form, with companies, and in amounts that are satisfactory to Bank. All
property policies will have a lender's loss payable endorsement showing Bank as
a loss payee and all liability policies will show the Bank as an additional
insured and provide that the insurer must give Bank at least twenty (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.
6.5 PRIMARY ACCOUNTS. Borrower will maintain its primary depository
and operating accounts with Bank.
6.6 FINANCIAL COVENANTS.
Borrower will maintain as of the last day of each month, unless
otherwise noted:
(a) QUICK RATIO. A ratio of (i) Quick Assets to (ii) Current
Liabilities, of at least 2.0 to 1.0.
(b) REVENUES. Borrower shall have year to date total revenue
of not less than the following amounts as of the dates indicated below, based on
the monthly financial statements delivered to Bank pursuant to Section 6 .2
herein:
DATES YEAR TO DATE TOTAL REVENUES
----- ---------------------------
March 31, 2001 $1,100,000
June 30, 2001 $2,600,000
September 30, 2001 $4,400,000
December 31, 2001 $6,800,000
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6.7 LOSS, DESTRUCTION OR DAMAGE.
Borrower will bear the risk of the Financed Equipment being lost,
stolen, destroyed, or damaged. If during the term of this Agreement any item of
Financed Equipment is lost, stolen, destroyed, damaged beyond repair, rendered
permanently unfit for use, or seized by a governmental authority for any reason
for a period equal to at least the remainder of the term of this Agreement (an
"Event of Loss"), then in each case, Borrower:
(a) prior to the occurrence of an Event of Default, at
Borrower's option, will (i) pay to Bank on account of the Obligations all
accrued interest to the date of the prepayment, plus all outstanding principal,
plus the Final Payment; or (ii) repair or replace any Financed Equipment subject
to an Event of Loss provided the repaired or replaced Financed Equipment is of
equal or like value to the Financed Equipment subject to an Event of Loss and
provided further that Bank has a first priority perfected security interest in
such repaired or replaced Financed Equipment.
(b) during the continuance of an Event of Default, on or
before the Payment Date after such Event of Loss for each such item of Financed
Equipment subject to such Event of Loss, Borrower will, at Bank's option, pay to
Bank an amount equal to the sum of: (i) all accrued and unpaid Scheduled
Payments (with respect to such Equipment Advance related to the Event of Loss)
due prior to the next such Payment Date, (ii) all Regularly Scheduled Payments
(including principal and interest), (iii) the Final Payment plus (iv) all other
sums, if any, that shall have become due and payable, including interest at the
Default Rate with respect to any past due amounts.
(c) On the date of receipt by Bank of the amount specified
above with respect to each such item of Financed Equipment subject to an Event
of Loss, this Agreement shall terminate as to such Financed Equipment. If any
proceeds of insurance or awards received from governmental authorities are in
excess of the amount owed under this Section, Bank shall promptly remit to
Borrower the amount in excess of the amount owed to Bank.
6.8 FURTHER ASSURANCES. Borrower will execute any further
instruments and take further action as Bank reasonably requests to perfect or
continue Bank's security interest in the Collateral or to effect the purposes of
this Agreement.
7 NEGATIVE COVENANTS
Borrower will not do any of the following:
7.1 DISPOSITIONS: Convey, sell, lease, transfer or otherwise dispose
of (collectively a "Transfer"), all or any part of its business or property,
other than a Transfer (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 in the ordinary course of business; or (iii) of wornout or obsolete
Equipment.
7.2 CHANGES IN BUSINESS OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.
(i) Engage in any business other than the businesses currently engaged in by
Borrower or business reasonably related thereto; or (ii) have a change of
twenty-five percent (25%) or more of its capital stock (other than the sale of
securities in a public offering or to existing investors) in its ownership or
management; or (iii) if Xxxxxxx X. Xxxxxx ceases to be a key executive officer
of the Borrower with substantial responsibility for Borrower's day to day
operations. Borrower
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will not, without at least thirty (30) days prior written notice to Bank,
relocate its principal executive office or add any new offices or business
locations.
7.3 MERGERS OR ACQUISITIONS. Merge or consolidate with any other
Person, or acquire all or substantially all of the capital stock or property of
another Person.
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 of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, except for Permitted Liens, or permit any Collateral not to be
subject to Bank's first priority security interest granted herein, subject only
to Permitted Liens.
7.6 INVESTMENTS; DISTRIBUTIONS. (i) Directly or indirectly acquire
or own any Person, or make any Investment in any Person, other than Permitted
Investments; or (ii) pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock.
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 less favorable to
Borrower than would be obtained in an arm's length transaction with a
non-affiliated Person.
7.8 SUBORDINATED DEBT. Make or permit any payment on any
Subordinated Debt, except under the terms of the Subordinated Debt, or amend any
provision in any document relating to the Subordinated Debt, without Bank's
prior written consent.
7.9 COMPLIANCE. Undertake as one of its important activities
extending credit to purchase or carry margin stock, or use the proceeds of any
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. Borrower fails to pay any of the Obligations
within three (3) days after their due date. During the additional three (3) day
period the failure to cure the default is not an Event of Default (but no Credit
Extensions shall be made during the cure period);
8.2 COVENANT DEFAULT. 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 ten (10) days after it occurs, or if the default cannot be cured within
ten (10) days or cannot be cured after Borrower's attempts in the ten (10) day
period, and the default may be cured within a reasonable time, then Borrower has
an additional time, (of not more than thirty (30) days) to attempt to cure the
default. During the additional period the failure
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to cure the default is not an Event of Default (but no Credit Extensions will be
made during the cure period);
8.3 MATERIAL ADVERSE CHANGE. (i) Bank determines, based upon
information available to it and in its reasonable judgment, that there is a
reasonable likelihood that Borrower will fail to comply with one or more of the
financial covenants in Section 6.6 during the next succeeding financial
reporting period; (ii) a material impairment of the perfection or priority of
the Bank's security interest in the Collateral or in the value of such
Collateral which is not covered by adequate insurance occurs; (iii) a material
adverse change in the business, operations, or condition (financial or
otherwise) of the Borrower occurs, or (iv) a material impairment of the prospect
of repayment of any portion of the Obligations occurs (collectively, a "Material
Adverse Change");
8.4 ATTACHMENT. (i) Any material portion of Borrower'S assets is
attached, seized, levied on, or comes into possession of a trustee or receiver
and the attachment, seizure or levy is not removed in ten (10) days; (ii)
Borrower is enjoined, restrained, or prevented by court order from conducting a
material part of its business; (iii) a judgment or other claim becomes a Lien
on a material portion of Borrower's assets; or (iv) a notice of lien, levy, or
assessment is filed against any of Borrower's assets by any government agency
and not paid within ten (10) days after Borrower receives notice. These are not
Events of Default if stayed or if a bond is posted pending contest by Borrower
(but no Credit Extension will be made during the cure period);
8.5 INSOLVENCY. (i) Borrower becomes insolvent; (ii) Borrower
begins an Insolvency Proceeding; or (iii) an Insolvency Proceeding is begun
against Borrower and not dismissed or stayed within thirty (30) days (but no
Credit Extensions will be made before any insolvency Proceeding is dismissed);
8.6 DEFAULT UNDER WARRANT. The Borrower shall breach any material
term of that certain Warrant from the Borrower in favor of the Bank of even date
herewith.
8.7 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
communication 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 ail of the following:
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);
Stop advancing money or extending credit for Borrower's
benefit under this Agreement or under any other agreement between Borrower and
Bank;
Settle or adjust disputes and claims directly with account
debtors for amounts, on terms and in any order that Bank considers advisable;
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
10
requests and make it available as Bank designates. Bank may enter premises
where the Collateral is located, take and maintain possession of any part of the
Collateral, and pay, purchase, contest, or compromise any Lien which appears to
be prior or superior to its security interest and pay all expenses incurred.
Borrower grants Bank a license to enter and occupy any of its premises, without
charge, to exercise any of Bank's rights or remedies;
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;
Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell the Collateral; and
Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY. 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 Credit Extensions terminates.
9.3 ACCOUNTS COLLECTION. When an Event of Default occurs and
continues, Bank may notify any Person owing Borrower money of Bank's security
interest in the funds and verify the amount of the Account. Borrower must
collect all payments in trust for Bank and, if requested by Bank, immediately
deliver the payments to Bank in the form received from the account debtor, with
proper endorsements for deposit.
9.4 BANK EXPENSES. If Borrower fails to pay any amount or furnish
any required proof of payment to third persons Bank may make all or part of the
payment or obtain insurance policies required in Section 6.5, and take any
action under the policies Bank 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 or responsible for: (a) the
safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c)
any diminution in the value of the Collateral; or (d) any act or default of any
carrier, warehouseman, bailee, or other person. Except as provided in the
preceding sentence, Borrower bears all risk of loss, damage or destruction of
the Collateral.
9.6 REMEDIES CUMULATIVE. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements are cumulative. Bank
has all rights and remedies provided under the Code, by law, or in equity.
Bank's exercise of one right or remedy is not an election, and Bank's waiver of
any Event of Default is not a continuing waiver. Bank's delay is
11
not a waiver, election, or acquiescence. No waiver its 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 guaranties held by Bank on which
Borrower is liable.
10 NOTICES
All notices or demands by any party to 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 at the addresses listed at the beginning of this
Agreement. Any notice sent to Borrower shall also be sent to Xxxxxxxxx Xxxxxxx
Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP, 000 Xxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxxxxx 00000, Attn: Xxxxx X. Xxxxxxxx, Esquire, telefacsimile number
(000) 000-0000. A party may change its notice address by giving the other party
written notice.
11 CHOICE OF LAW VENUE AND JURY TRIAL WAIVER
Pennsylvania 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 the Commonwealth of Pennsylvania
provided, however, that if for any reason the Bank can not avail itself of the
courts of the Commonwealth of Pennsylvania, the Borrower and Bank each submit to
the 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 OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO
THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS. This Agreement binds and is for the
benefit of the successors and permitted assigns of each party. Borrower may not
assign this Agreement or any rights or Obligations under it without Bank's prior
written consent which may be granted or withheld in Bank's discretion. Bank has
the right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights and benefits under this Agreement, the Loan Documents
or any related agreement.
12.2 INDEMNIFICATION. Borrower will indemnify, defend and hold
harmless Bank and its officers, employees and agents against: (a) all
obligations, demands, claims, and liabilities asserted by any other party in
connection with the transactions contemplated by the Loan Documents; and (b) all
losses or Bank Expenses incurred, or paid by Bank from, following, or
consequential to transactions between Bank and Borrower (including reasonable
attorneys' fees and expenses), except for losses caused by Bank's gross
negligence or willful misconduct.
12.3 TIME OF ESSENCE. Time is of the essence for the performance of
all Obligations in this Agreement.
12
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 signed by both Bank and Borrower. This Agreement,
the Loan Documents and the Loan Supplement, if any, represent the entire
agreement about this subject matter, and supersedes prior or contemporaneous
negotiations or agreements. All prior or contemporaneous agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
into this Agreement and the Loan Documents.
12.6 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, are one
Agreement.
12.7 SURVIVAL. All covenants, representations and warranties made
in this Agreement continue in full force while any Obligations remain
outstanding, The obligations of Borrower in Section 12.2 to indemnify Bank will
survive until all statutes of limitations for actions that may be brought
against Bank have run.
12.8 CONFIDENTIALITY. In handling any confidential information,
Bank will exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made:, (i) to
Bank's subsidiaries or affiliates in connection with their business with
Borrower; (ii) to prospective transferees or purchasers of any interest in the
Loans; (iii) as required by law, regulation, subpoena, or other order, (iv) as
required in connection with Bank's examination or audit; and (v) as Bank
considers appropriate in 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. In connection with any prospective transfer or purchase of any
interest in the Loans, bank will request that any prospective transferee or
purchaser agree to be bound by the terms of this Section, but the failure to
obtain any such agreement from any such Person shall not affect or impair in any
manner Bank's ability or right to disclose such information to such transferee
or purchaser.
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, whether or not a lawsuit is filed.
13 DEFINITIONS
13.1 DEFINITIONS.
"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.
13
"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, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"BASIC RATE" is, as of the Funding Date, a fixed per annum rate of
interest (based on a year of 360 days) equal to the greater of (i) nine percent
(9%) or (ii) the sum of (a) the Prime Rate, plus (b) the Loan Margin.
"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 eighty percent (80%) of Eligible Accounts, as
determined by Bank from Borrower's most recent Borrowing Base Certificate.
"BORROWING BASE CERTIFICATE" is EXHIBIT C.
"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 Pennsylvania Uniform Commercial Code.
"COLLATERAL" is the property described on EXHIBIT A.
"COMMITMENT TERMINATION DATE" is September 30, 2001.
"COMMITTED EQUIPMENT Line" is an Equipment Advance or Equipment
Advances of up to Two Million Dollars ($2,000,000).
"COMMITTED REVOLVING LINE" is an Advance or Advances of up to One
Million Five Hundred Thousand Dollars ($1,500,000).
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, comade, 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 designed 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
14
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.
"CREDIT EXTENSION" is each Advance, Equipment Advance, or any other
extension of credit by Bank for Borrower's benefit.
"CURRENT LIABILITIES" are the aggregate amount of Borrower's Total
Liabilities, excluding Indebtedness in favor of Bank, which mature within one
(1) year, plus all Indebtedness in favor of Bank.
"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
thirty (30) days prior written notice. Unless Bank agrees otherwise in writing,
Eligible Accounts will not include:
(a) Accounts that the account debtor has not paid within
ninety (90) days of invoice date;
(b) Accounts for an account debtor, fifty percent (50%) or
more of whose Accounts have not been paid within ninety (90) days of invoice
date;
(c) Credit balances over ninety (90) days from invoice date;
(d) Accounts for an account debtor, including Affiliates,
whose total obligations to Borrower exceed twenty-five percent (25%) of all
Accounts (except with respect to WorldCom, for which total obligations to
Borrower can not exceed fifty percent (50%) of ail Accounts), for the amounts
that exceed that percentage, unless Bank approves in writing;
(e) Accounts for which the account debtor does not have its
principal place of business in the United States;
(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, provided, however, that for purposes of
the definition of Eligible Accounts, Accounts from Celox and Vertek are not
Accounts from an Affiliate of Borrower;
(j) Accounts in which the account debtor disputes liability or
makes any claim and Bank believes there may be a basis for dispute (but only up
to the disputed or claimed
15
amount), or if the Account Debtor is subject to an Insolvency Proceeding, or
becomes insolvent, or goes out of business;
(k) Accounts for which Vertek is the Account Debtor, to the
extent that such Accounts in the aggregate exceed $100,000; and
(1) Accounts for which Bank reasonably determines collection
to be doubtful.
"ELIGIBLE EQUIPMENT" is new or used general purpose computer equipment,
office equipment, test and laboratory equipment, furnishings, and, subject to
the limitations set forth below, Other Equipment that complies with all of
Borrower's representations and warranties to Bank and which is acceptable to
Bank in all respects.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"EQUIPMENT ADVANCE" is defined in Section 2.2.
"EQUIPMENT TERM NOTE" means that certain Equipment Term Note of even
date herewith in the principal amount of Two Million Dollars ($2,000,000) from
Borrower in favor of Bank, together with all renewals, amendments, modifications
and substitutions therefor.
"ERISA" is the Employment Retirement Income Security Act of 1974,
and its regulations.
"FINAL PAYMENT" is a payment (in addition to and not a substitution
for the regular monthly payments of principal plus accrued interest) due on the
Maturity Date for such Equipment Advance equal to the Loan Amount for such
Equipment Advance multiplied by the Final Payment Percentage.
"FINAL PAYMENT PERCENTAGE" is, for each Equipment Advance, five
percent (5%).
"FINANCED EQUIPMENT" is defined in the Loan Supplement.
"FUNDING DATE" is any date on which an Equipment Advance is made to
or on account of Borrower.
"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" is any proceeding by or against any Person
under the United States Bankruptcy Code, or any other bankruptcy or insolvency
law, including assignments for the benefit of creditors, compositions,
extensions generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INTELLECTUAL PROPERTY" is:
(a) Copyrights, Trademarks, and Patents including amendments,
renewals, extensions, and all licenses or other rights to use and all license
fees and royalties from the use;
16
Any trade secrets and any Intellectual Property rights in
computer software and computer software products now or later existing, created,
acquired or held;
All design rights which may be available to Borrower now or
later created, acquired or held;
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; and
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 AMOUNT" is the aggregate amount of the Equipment Advance.
"LOAN DOCUMENTS" are, collectively, this Agreement, the Revolving
Promissory Note, the Equipment Term Note, any note, or notes or guaranties
executed by Borrower, 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.
"LOAN FACTOR" is the percentage which results from amortizing the
Equipment Advance over the Repayment Period, using the Basic Rate as the
interest rate.
"LOAN MARGIN" is one hundred fifty (150) basis points.
"LOAN SUPPLEMENT" is attached as EXHIBIT E.
"MATERIAL ADVERSE CHANGE" has been defined in Section 8.3 hereof.
"MATURITY DATE" is, with respect to each Equipment Advance, the last
day of the Repayment Period for such Equipment Advance, or if earlier, the date
of acceleration of such Equipment Advance by Bank following an Event of Default.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and
other amounts Borrower owes Bank now or later, including interest accruing after
Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower
assigned to Bank.
"ORIGINAL STATED COST" is (i), the original cost to the Borrower of
the item of new or used Equipment net of any and all freight, installation, tax
or (ii) the fair market value assigned to
17
such item of used Equipment by mutual agreement of Borrower and Bank at the time
of making of the Equipment Advance.
"OTHER EQUIPMENT" is leasehold improvements, intangible property
such as computer software and software licenses, and other soft costs approved
by the Bank, including sales tax, freight and installation expense. Unless
otherwise agreed to by Bank, not more than Five Hundred Thousand Dollars
($500,000) of the Committed Equipment Line shall consist of Other Equipment.
"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
the Loan Documents;
Indebtedness existing on the Closing Date and shown on the
Schedule;
Subordinated Debt;
Indebtedness to trade creditors incurred in the ordinary
course of business; and
Indebtedness secured by Permitted Liens.
"PERMITTED INVESTMENTS" ARE:
(b) Investments shown on the Schedule and existing on the
Closing Date;
(c) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within one
(1) year from its acquisition, (ii) commercial paper maturing no more than one
(1) 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 one (1) year after issue;
and
(d) LOANS TO EMPLOYEES OR DIRECTORS OF BORROWER TO PURCHASE
STOCK IN BORROWER IN AN AGGREGATE AMOUNT NOT TO EXCEED ONE MILLION TWO HUNDRED
THOUSAND DOLLARS ($1,200,000) IN THE AGGREGATE, PROVIDED THAT NO EVENT OF
DEFAULT HAS OCCURRED, IS CONTINUING OR WOULD EXIST AFTER GIVING EFFECT TO SUCH
LOANS.
"Permitted Liens" are:
(e) Liens existing on the Closing Date and shown on the
Schedule or arising under this Agreement or other Loan Documents;
(f) 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;
(g) 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;
18
(h) Leases or subleases and licenses or sublicenses granted in
the ordinary course of Borrower's business, if the leases, subleases, licenses
and sublicenses permit granting Bank a security interest; and
(i) Liens incurred in the extension, renewal or refinancing of
the indebtedness secured by Liens described in (a) through (c), but any
extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness may
not increase.
"PERSON" is any individual, sole proprietorship, partnership,
limited liability company, joint venture, company, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is 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 less than twelve (12) months determined according
to GAAP.
"REPAYMENT PERIOD," as to the Equipment Advances, is thirty (30)
months.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Director of Finance of Borrower.
"REVOLVING MATURITY DATE" is May __, 2002.
"REVOLVING PROMISSORY NOTE" means that certain Revolving Promissory
Note of even date herewith in the maximum principal amount of One Million Five
Hundred Thousand Dollars ($1,500,000) from Borrower in favor of Bank, together
with all renewals, amendments, modifications and substitutions, therefor.
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's indebtedness owed to Bank and which is reflected in a written
agreement in a manner and form acceptable to Bank and approved by Bank in
writing.
"SUBSIDIARY" is for any Person, joint venture, or any other business
entity of which more than fifty percent (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.
"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 service xxxx rights, registered or
not, applications to register and registrations and like protections, and the
entire goodwill of the business of Borrower connected with the trademarks.
[SIGNATURES ARE ON THE FOLLOWING PAGE ]
19
BORROWER:
SYNCHRONOSS TECHNOLOGIES, INC.
By:
Name: Xxxxxxx Xxxxxx
Title: CEO
BANK:
SILICON VALLEY BANK
BY:
Name: Illegible
Title:
SILICON VALLEY BANK
BY:
Name:
Title:
20
EXHIBIT A
COLLATERAL
The Collateral shall consist of all right, title and interest of
Borrower in and to the following:
(a) 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;
(b) 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, and
Borrower's Books relating to any of the foregoing;
(c) All contract rights and general intangibles now owned or
hereafter acquired, including, without limitation, goodwill, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, claims, literature, reports, catalogs, income tax
refunds, payments of insurance and rights to payment of any kind;
(d) 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 and Borrower's
Books relating to any of the foregoing;
(e) All documents, cash, deposit accounts, securities, letters
of credit, certificates of deposit, instruments and chattel paper now owned or
hereafter acquired and Borrower's Books relating to the foregoing; and
(f) Any and all claims, rights and interests in any of the
above and all substitutions for, additions and accessions to and proceeds
thereof.
Each item of equipment, or personal property financed with a
"Equipment Advance" pursuant to that certain Loan and Security Agreement, dated
as of May __, 2001 (the "Loan Agreement"), by and between Borrower and Bank,
including, without limitation, the property described in Annex A hereto, whether
now owned or hereafter acquired, together with all substitutions, renewals or
replacements of and additions, improvements, and accessions to any and all of
the foregoing, and all proceeds from sales, renewals, releases or other
dispositions thereof.
Notwithstanding the foregoing, the Collateral shall not be deemed to
include any 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
21
hereafter acquired; any patents, trademarks, servicemarks and applications
therefor; any trade secret rights, including any rights to unpatented
inventions, know-how, operating manuals, license rights and agreements and
confidential information, now owned or hereafter acquired; or any claims for
damages by way of any past, present and future infringement of any of the
foregoing.
Notwithstanding the foregoing, "Collateral" excludes Intellectual
Property currently held or hereafter obtained, but includes proceeds of
Intellectual Property (including all rights to payment or general intangibles
arising therefrom).
22
EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., EASTERN TIME
TO: CENTRAL CLIENT SERVICE DIVISION DATE: _________________________
FAX#: (000) 000-0000 TIME: ________________________
FROM: _____________________________________________________________
CLIENT NAME (BORROWER)
REQUESTED BY: _____________________________________________________________
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE: _______________________________________________________
PHONE NUMBER: _______________________________________________________
FROM ACCOUNT # __________________ TO ACCOUNT # ____________________
REQUESTED TRANSACTION TYPE REQUEST 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: Synchronoss Technologies, Inc. Lender: Silicon Valley Bank
Commitment Amount: $ 1,500,000
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 days $
7. Concentration Limits (50% for WorldCom) $
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) $
BALANCES
17. Maximum Loan Amount $ 1,500,000
18. Total Funds Available Lesser of #16 or #17 $
20. Present balance owing on Line of Credit $
21. Outstanding under Sublimits $
22. RESERVE POSITION (#17 minus #18 and #20) $
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:
By: ____________________________________
Authorized Signer
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: SYNCHRONOSS TECHNOLOGIES, INC.
The undersigned authorized officer of Synchronoss Technologies, Inc.
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 Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
A/R Agings Monthly within 30 days Yes No
Borrowing Base Certificate Monthly within 30 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Monthly Basis:
Minimum Quick Ratio 2.0:1.0 :1.0 Yes No
Maintain Year to Date Total Revenues as
of the following dates:
March 31, 2001 $1,100,000 $_______ Yes No
June 30, 2001 $2,600,000 $_______ Yes No
September 30, 2001 $4,400,000 $_______ Yes No
December 31, 2001 $6,800,000 $_______ Yes No
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY
Sincerely, Received by:
AUTHORIZED SIGNER
SIGNATURE DATE:
TITLE Verified
AUTHORIZED SIGNER
DATE DATE:
Compliance Status: Yes No
EXHIBIT E
FORM OF LOAN AGREEMENT SUPPLEMENT
LOAN AGREEMENT SUPPLEMENT No. [ ]
LOAN AGREEMENT SUPPLEMENT No. [ ], dated , 200_ ("Supplement"), to the Loan and
Security Agreement dated as of May _, 2001 (the "Loan Agreement) by and between
the undersigned ("Borrower"), and Silicon Valley Bank ("Bank").
Capitalized terms used herein but not otherwise defined herein are used with the
respective meanings given to such terms in the Loan Agreement.
To secure the prompt payment by Borrower of all amounts from time to time
outstanding under the Loan Agreement, and the performance by Borrower of all the
terms contained in the Loan Agreement, Borrower grants Bank, a first priority
security interest in each item of equipment and other property described in
Annex A hereto, which equipment and other property shall be deemed to be
additional Financed Equipment and Collateral. The Loan Agreement is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
Annex A (Equipment Schedule) and Annex B (Loan Terms Schedule) are attached
hereto.
The proceeds of the Loan should be transferred to Borrower's account with Bank
set forth below:
Bank Name: Silicon Valley Bank
Account No.: ___________________
Borrower hereby certifies that (a) the foregoing information is true and correct
and authorizes Bank to endorse in its respective books and records, the Basic
Rate applicable to the Funding Date of the Loan contemplated in this Loan
Agreement Supplement and the principal amount set forth in the Loan Terms
Schedule; (b) the representations and warranties made by Borrower in the Loan
Agreement are true and correct in all material respects on the date hereof and
will be true and correct in all material respects on such Funding Date. No
Event of Default has occurred and is continuing under the Loan Agreement. This
Supplement may be executed by Borrower and Bank in separate counterparts, each
of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
This Supplement is delivered as of this day and year first above
written.
--------------------------------
SILICON VALLEY BANK
By: By:
----------------------------- -----------------------------
Name: Name:
------------------------ ------------------------
Title: Title:
----------------------- -----------------------
Annex A - Description of Financed Equipment
Annex B - Loan Terms Schedule
Annex A to Exhibit E
The Financed Equipment being financed with the Equipment Advance which this Loan
Agreement Supplement is being executed is listed below. Upon the funding of
such Equipment Advance, this schedule automatically shall be deemed to be a part
of the Collateral.
Description of Equipment: Make Xxxxx Xxxxxx # Xxxxxxx #
Xxxxx X to Exhibit E
LOAN TERMS SCHEDULE #______________
Loan Funding Date: _________ , 200_
Original Loan Amount: $___________
Basic Rate: _____%
Loan Factor: _____%
Scheduled Payment Dates and Amounts*:
One (1) payment of $_____ due
_______ payment of $_____ due monthly in advance from ______ through ______.
One (1) payment of $_____ due
Maturity Date: __________
Final Payment: An additional amount equal to the Final Payment Percentage
multiplied by the Loan Amount then in effect, shall be paid on
the Maturity Date with respect to such Loan.
Payment No. Payment Date
1
2
3
4
35
[36]
....
*/ The amount of each Scheduled Payment will change as the Loan Amount changes.
REVOLVING PROMISSORY NOTE
-------------------------
$2,000,000 Radnor, Pennsylvania
October __, 2004
FOR VALUE RECEIVED, the undersigned, SYNCHRONOSS TECHNOLOGIES, INC., a
Delaware corporation ("Borrower") promises to pay to the order of SILICON
VALLEY BANK, a California-chartered bank ("Bank"), at such place as the holder
hereof may designate, in lawful money of the United States of America, the
aggregate unpaid principal amount of all advances ("Advances") made by Bank to
Borrower in accordance with the terms and conditions of the Loan and Security
Agreement between Borrower and Bank of even date herewith (as amended from time
to time, the "Loan Agreement"), up to a maximum principal amount of Two Million
Dollars ($2,000,000) ("Principal Sum"), or so much thereof as may be advanced
or readvanced and remains unpaid.
The unpaid Principal Sum, together with interest thereon at the rate or
rates provided in the Loan Agreement, shall be payable as set forth in the Loan
Agreements.
The fact that the balance hereunder may be reduced to zero from time to
time pursuant to the Loan Agreement will not affect the continuing validity of
this Note or the Loan Agreement, and the balance may be increased to the
Principal Sum after any such reduction to zero.
Borrower further agrees that, if any payment made to Borrower or any other
person is applied to this Note and is at any time annulled, set aside,
rescinded, invalidated, declared to be fraudulent or preferential, or otherwise
required to be refunded or repaid, or the proceeds of any property hereafter
securing this Note is required to be returned by Bank to Borrower, its estate,
trustee, receiver or any other party, including, without limitation, such
Borrower, under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or repayment, Borrower's
liability hereunder (and any lien, security interest or other collateral
securing such liability) shall be and remain in full force and effect, as fully
as if such payment had never been made, or, if prior thereto any such lien,
security interest or other collateral hereafter securing Borrower's liability
hereunder shall have been released or terminated by virtue of such
cancellation or surrender, this Note (and such lien, security interest or other
collateral) shall be reinstated in full force and effect, and such prior
cancellation or surrender shall not diminish, release, discharge, impair or
otherwise affect the obligations of Borrower in respect of the amount of such
payment (or any lien, security interest or other collateral securing such
obligation).
This Note is the "Revolving Promissory Note" described in the Loan
Agreement, to which reference is hereby made for a more complete statement of
the terms and conditions under which the loans and advances evidenced hereby
are made. This Note is secured as provided in the Loan Agreement. All
capitalized terms used herein and not otherwise defined shall have the meanings
given to such terms in the Loan Agreement.
Borrower irrevocably waives the right to direct the application of any and
all payments at any time hereafter received by Bank from or on behalf of
Borrower and Borrower irrevocably agrees that Bank shall have the continuing
exclusive right to apply any and all such payments against the then due and
owing obligations of Borrower as Bank may deem advisable. In the absence of a
specific determination by Bank with respect thereto, all payments shall be
applied in the following order: (a) then due and payable fees and expenses; (b)
then due and payable interest payments and mandatory prepayments; and (c) then
due and payable principal payments and optional prepayments.
Bank is hereby authorized by Borrower to endorse on Bank's books and
records each Advance made by Bank under this Note and the amount of each
payment or prepayment of principal of each such Advance received by Bank; it
being understood, however, that failure to make any such endorsement (or any
error in notation) shall not affect the obligations of Borrower with respect to
Advances made hereunder, and payments of principal by Borrower shall be
credited to Borrower notwithstanding the failure to make a notation (or any
errors in notation) thereof on such books and records.
The occurrence of any one or more of the following events shall constitute
an event of default (individually, an "Event of Default" and collectively, the
"Events of Default") under the terms of this Note:
(a) The failure of Borrower to pay to Bank within five (5) Business
Days of when due any and all amounts payable by Borrower to Bank under the
terms of this Note; or
(b) The occurrence of an Event of Default (as defined therein) under
the terms and conditions of any of the other Loan Documents.
Upon the occurrence of an Event of Default, at the option of Bank, all
amounts payable by Borrower to Bank under the terms of this Note shall
immediately become due and payable by Borrower to Bank without notice to
Borrower or any other person, and Bank shall have all of the rights, powers,
and remedies available under the terms of this Note, any of the other Loan
Documents and all applicable laws. Borrower and all endorsers, guarantors, and
other parties who may now or in the future be primarily or secondarily liable
for the payment of the indebtedness evidenced by this Note hereby severally
waive presentment, protest and demand, notice of protest, notice of demand and
of dishonor and non-payment of this Note and expressly agree that this Note or
any payment hereunder may be extended from time to time without in any way
affecting the liability of Borrower, guarantors and endorsers.
Borrower promises to pay all costs and expense of collection of this Note
and to pay all reasonable attorneys' fees incurred in such collection, whether
or not there is a suit or action, or in any suit or action to collect this Note
or in any appeal thereof. No delay by Bank in exercising any power or right
hereunder shall operate as a waiver of any power or right. Time is of the
essence as to all obligations hereunder.
2
This Note is issued pursuant to the Loan Agreement, which shall govern the
rights and obligations of Borrower with respect to all obligations hereunder.
Borrower acknowledges and agrees that this Note shall be governed by the
laws of the Commonwealth of Pennsylvania, excluding conflicts of laws
principles, even though for the convenience and at the request of borrower,
this Note may be executed elsewhere.
BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF PENNSYLVANIA IN ANY ACTION,
SUIT, OR PROCEEDING OF ANY KIND, AGAINST IT WHICH ARISES OUT OF OR BY REASON OF
THIS AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY REASON BANK CANNOT AVAIL
ITSELF OF THE COURTS OF PENNSYLVANIA, BORROWER ACCEPTS JURISDICTION OF THE
COURTS AND VENUE IN SANTA XXXXX COUNTY, CALIFORNIA. BORROWER AND BANK EACH
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY
RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
3
IN WITNESS WHEREOF, Borrower has caused this Note to be executed under
seal by its duly authorized officers as of the date first written above.
WITNESS/ATTEST: SYNCHRONOSS TECHNOLOGIES, INC.
/s/ [Illegible] By: /s/ Xxxxxxxx X. Xxxxxx (SEAL)
----------------------- -------------------------------
Name: XXXXXXXX X. XXXXXX
Title: CFO
4
EQUIPMENT TERM NOTE
$3,000,000 Radnor, Pennsylvania
October __, 2004
FOR VALUE RECEIVED, the undersigned, SYNCHRONOSS TECHNOLOGIES, INC., a
Delaware corporation ("Borrower") promises to pay to the order of SILICON VALLEY
BANK, a California-chartered bank, ("Bank"), at such place as the holder hereof
may designate, in lawful money of the United States of America, the aggregate
unpaid principal amount of all equipment advances ("Equipment Advances") made by
Bank to Borrower in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank of even date herewith (as amended
from time to time, the "Loan Agreement"), up to a maximum principal amount of
Three Million Dollars ($3,000,000) ("Principal Sum"), or so much thereof as may
be advanced and remains unpaid. Borrower may request Equipment Advances under
this Note from and until the "Equipment Availability End Date". The unpaid
Principal Sum, together with interest thereon at the rate or rates provided in
the Loan Agreement, shall be payable as set forth in the Loan Agreement.
This Note is "Equipment Term Note" described in the Loan Agreement, to
which reference is hereby made for a more complete statement of the terms and
conditions under which the loans and advances evidenced hereby are made. This
Note is secured as provided in the Loan Agreement. All capitalized terms used
herein and not otherwise defined shall have the meanings given to such terms in
the Loan Agreement.
Borrower irrevocably waives the right to direct the application of any and
all payments at any time hereafter received by Bank from or on behalf of
Borrower and Borrower irrevocably agrees that Bank shall have the continuing
exclusive right to apply any and all such payments against the then due and
owing obligations of Borrower as Bank may deem advisable. In the absence of a
specific determination by Bank with respect thereto, all payments shall be
applied in the following order: (a) then due and payable fees and expenses; (b)
then due and payable interest payments and mandatory prepayments; and (c) then
due and payable principal payments and optional prepayments.
Bank is hereby authorized by Borrower to endorse on Bank's books and
records each Equipment Advance made by Bank under this Note and the amount of
each payment or prepayment of principal of each such Equipment Advance received
by Bank; it being understood, however, that failure to make any such
endorsement (or any error in notation) shall not affect the obligations of
Borrower with respect to Equipment Advances made hereunder, and payments of
principal by Borrower shall be credited to Borrower notwithstanding the failure
to make a notation (or any errors in notation) thereof on such books and
records.
The occurrence of any one or more of the following events shall constitute
an event of default (individually, an "Event of Default" and collectively, the
"Events of Default") under the terms of this Note.
(a) The failure of Borrower to pay to Bank within five (5) Business
Days of when due any and all amounts payable by Borrower to Bank under the terms
of this Note; or
(b) The occurrence of an Event of Default (as defined therein) under
the terms and conditions of any of the other Loan Documents.
Upon the occurrence of an Event of Default, at the option of Bank, all
amounts payable by Borrower to Bank under the terms of this Note shall
immediately become due and payable by Borrower to Bank without notice to
Borrower or any other person, and Bank shall have all of the rights, powers, and
remedies available under the terms of this Note, any of the other Loan Documents
and all applicable laws. Borrower and all endorsers, guarantors, and other
parties who may now or in the future be primarily or secondarily liable for the
payment of the indebtedness evidenced by this Note hereby severally waive
presentment, protest and demand, notice of protest, notice of demand and of
dishonor and non-payment of this Note and expressly agree that this Note or any
payment hereunder may be extended from time to time without in any way affecting
the liability of Borrower, guarantors and endorsers.
Borrower promises to pay all costs and expense of collection of this Note
and to pay all reasonable attorneys' fees incurred in such collection, whether
or not there is a suit or action, or in any suit or action to collect this Note
or in any appeal thereof. No delay by Bank in exercising any power or right
hereunder shall operate as a waiver of any power or right. Time is of the
essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern the
rights and obligations of Borrower with respect to all obligations hereunder.
Borrower acknowledges and agrees that this Note shall be governed by the
laws of the Commonwealth of Pennsylvania, excluding conflicts of laws
principles, even though for the convenience and at the request of Borrower, this
Note may be executed elsewhere.
BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE COMMONWEALTH OF PENNSYLVANIA IN ANY ACTION, SUIT,
OR PROCEEDING OF ANY KIND, AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS
AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY REASON BANK CANNOT AVAIL ITSELF OF
THE COURTS OF PENNSYLVANIA, BORROWER ACCEPTS JURISDICTION OF THE COURTS AND
VENUE IN SANTA XXXXX COUNTY, CALIFORNIA. BORROWER AND BANK EACH HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
2
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH
PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
[SIGNATURES ARE ON THE FOLLOWING PAGE]
3
IN WITNESS WHEREOF, Borrower has caused this Note to be executed under
seal by its duly authorized officers as of the date first written above.
WITNESS/ATTEST: SYNCHRONOSS TECHNOLOGIES, INC.
/s/ [Illegible] By: /s/ Xxxxxxxx X. Xxxxxx (SEAL)
----------------------- -------------------------------
Name: XXXXXXXX X. XXXXXX
Title: CFO
4
