Exhibit 10.19
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT (this "Agreement") dated as of September
16, 1999, between SILICON VALLEY BANK, a California-chartered bank, with its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000
and with a loan production office located at Wellesley Office Park, 00 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxxxxx 00000, doing business under the name
"Silicon Valley East" ("Bank") and XXXXXXX.XXX, LTD., a Delaware corporation
with its chief executive office located at 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 ("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. 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 CREDIT EXTENSIONS. Borrower will pay Bank the unpaid principal amount
of all Credit Extensions and interest on the unpaid principal amount of the
Credit Extensions in accordance with the terms of this Agreement.
2.1.1 REVOLVING ADVANCES.
(a) Bank will make Advances not exceeding the Committed Revolving
Line or 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. 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. 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.
2.1.2 EQUIPMENT ADVANCES.
(a) Subject to and upon the terms and conditions of this Agreement,
Bank agrees to make advances (each an "Equipment Advance" and collectively, the
"Equipment Advances") to Borrower in an aggregate amount not to exceed the
Committed Equipment Line in the following manner: (i) on the Closing Date (the
"Equipment Availability End Date No. 1") in an aggregate amount no greater than
Six Hundred Thousand Dollars ($600,000.00) (the "Equipment Line No. 1"), and
(ii) at any time from the Closing Date through the Equipment Availability End
Date
No. 2, in an aggregate amount no greater than the Committed Equipment Line, less
the outstanding principal amounts advanced pursuant to Equipment Line No. 1 (the
"Equipment Line No. 2"). To evidence the Equipment Advances, Borrower shall
deliver to Bank, at the time of each Equipment Advance request, an invoice for
the Equipment to be purchased or refinanced. Equipment Advance requests under
Equipment Line No. 1 shall only be permitted to refinance existing equipment
leases entered into on or after October 1, 1998, provided that such request is
submitted to the Bank on or before the Closing Date. Equipment Advance requests
under Equipment Line No. 2 shall only be permitted for Equipment purchased after
March 31, 1999. The Equipment Advances shall not exceed One Hundred Percent
(100%) of the invoice amount of such equipment approved from time to time by
Bank, including taxes, shipping, warranty charges, freight discounts and
installation expense. Equipment comprised of software shall not constitute
greater than twenty-five percent (25.0%) of aggregate Equipment Advances.
(b) To obtain an Equipment Advance, Borrower must notify Bank (the
notice is irrevocable) by facsimile no later than 3:00 p.m. Eastern time one (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.
2.2 OVERADVANCES. Notwithstanding the Equipment Advances, if Borrower's
Obligations under Section 2.1.1 exceed the lesser of the Committed Revolving
Line or the Borrowing Base, Borrower must pay in cash to Bank the excess within
one (1) Business Day after receiving notice from Bank.
2.3 INTEREST RATE; PAYMENTS.
(a) COMMITTED REVOLVING LINE RATE OF INTEREST. Advances accrue
interest on the outstanding principal balance at a per annum rate equal to the
aggregate of the Prime Rate, PLUS Three-Quarters of One Percent (0.75%).
(b) COMMITTED EQUIPMENT LINE RATE OF INTEREST/PAYMENTS. Interest
shall accrue from the date of each Equipment Advance at the per annum rate equal
to the aggregate of the Prime Rate, PLUS One percent (1.0%), and shall be
payable monthly on the Payment Date of each month. Any Equipment Advances made
pursuant to the Equipment Line No. 1 will be payable in Thirty-Six (36) equal
monthly installments of principal, plus all accrued interest, beginning on the
Payment Date of each month following the Equipment Availability End Date No. 1
and ending on the Equipment Maturity Date No. 1. Any Equipment Advances made
pursuant to the Equipment Line No. 2 that are outstanding on the Equipment
Availability End Date No. 2 will be payable in Thirty-Six (36) equal monthly
installments of principal, plus all accrued interest, beginning on the Payment
Date of each month following the Equipment Availability End Date No. 2 and
ending on the Equipment Maturity Date No. 2. Equipment Advances, once repaid,
may not be reborrowed.
(c) DEFAULT RATE OF INTEREST. After an Event of Default, for the
period during which any Event of Default continues Advances and Equipment
Advances accrue interest at five percent (5.0%) above the rate effective
immediately before the Event of Default.
(d) COMPUTATION. 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.
(e) PAYMENTS. Interest is payable on the Payment Date of each month.
Bank may debit any of Borrower's deposit accounts including Account Number
[______________] for principal and interest payments under the Committed
Revolving Line and the Committed Equipment Line or any amounts Borrower owes
Bank. 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.
2.4 FEES. Borrower will pay to Bank:
(a) Facility Fee. A fully earned, non-refundable facility fee equal
to Twenty Thousand Dollars ($20,000.00), which fee shall be due on the Closing
Date and shall be fully earned and non-refundable; and
(b) Bank Expenses. All Bank Expenses incurred through and after the
Closing Date when due.
3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION. Bank's obligation to
make the initial Credit Extension is subject to the condition precedent that it
receives, in form and substance satisfactory to Bank, the following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower with respect to
articles, bylaws, incumbency and resolutions authorizing the execution and
delivery of this Agreement;
(c) a Negative Pledge Agreement covering Borrower's intellectual
property;
(d) an opinion of Borrower's counsel;
(e) financing statements (Forms UCC-1);
(f) a Perfection Certificate;
(g) an insurance certificate;
(h) payoff of all lienholders;
(i) payment of the fees and Bank Expenses as provided herein; and
(j) Certificates of Good Standing and Foreign Qualification.
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
(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 shall have occurred and be
continuing, or result from the Credit Extension. Each
Credit Extension is Borrower's representation and warranty on that date that the
representations and warranties in Section 5 remain materially 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; PROVIDED, HOWEVER, that Bank agrees to release its security
interest in Collateral to the extent that any such Collateral is subject to a
third party purchase money security interest, as such term is defined under
ss.9-107 of the Uniform Commercial Code. Except for Permitted Liens, any
security interest will be a first priority security interest in the 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 and each Subsidiary is a
corporation duly existing and in good standing in its state of incorporation and
qualified and licensed to do business in, and in good standing in, any state in
which the failure to be so qualified would have a material adverse effect on the
Borrower's business or operation.
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 Eligible Accounts are bona fide, existing
obligations, and the service or property has been performed or delivered, as the
case may be, 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.
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 reasonably be expected to 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 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, 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.
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' 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, 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 twenty-five (25) days after the last day of each month (except that
subsequent to an IPO: (A) for months in which no Obligations are outstanding or
Credit Extensions were made, within twenty-five (25) days after the last day of
each quarter, and (B) for months in which Obligations are outstanding or Credit
Extensions were made, within twenty-five (25) 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
acceptable to Bank and certified by a Responsible Officer; (ii) as soon as
available, but no later than ninety (90) days after the end 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) within five (5) days of filing, copies of all statements, reports
and notices made available to Borrower's security holders or to any holders of
Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K filed with the
Securities and Exchange Commission; (iv) a prompt report of any legal actions
pending or threatened against Borrower or any Subsidiary that could reasonably
be expected to result in damages or costs to Borrower or any Subsidiary of
$100,000 or more; and (v) budgets, sales projections, operating plans or other
financial information Bank may reasonably request.
(b) Within twenty-five (25) days after the last day of each month in
which either
(i) Obligations under the Committed Revolving Line are outstanding, or (ii)
Advances were made, 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.
(c) Within twenty-five (25) days after the last day of each month
(except that subsequent to an IPO: (i) for months in which no Obligations are
outstanding or Credit Extensions were made, within twenty-five (25) days after
the last day of each quarter, and (ii) for months in which Obligations are
outstanding or Credit Extensions were made, within twenty-five (25) days after
the last day of each month), Borrower will deliver to Bank with the monthly
and/or quarterly 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 once every twelve
(12) 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 the Closing Date. Borrower must promptly notify Bank of all
returns, recoveries, disputes and claims that involve more than $50,000.00 per
occurrence.
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 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.
6.6 [Intentionally deleted].
6.7 FINANCIAL COVENANTS.
Borrower will maintain:
(A) ADJUSTED QUICK RATIO. The Borrower shall maintain, as of the
last day of each month (except that subsequent to an IPO: (i) for months
in which no Obligations are outstanding or Credit Extensions were made, as
of the last day of each quarter, and (ii) for months in which Obligations
are outstanding or Credit Extensions were made, as of the last day of each
month), a ratio of Quick Assets to Current Liabilities minus (i) Deferred
Maintenance Revenue, and (ii) pre-paid website subscriptions of at least
1.25 to 1.0.
(B) TANGIBLE NET WORTH. The Borrower shall maintain, as of the last
day of each month, a Tangible Net Worth plus Subordinated Debt of at
least: (i) Eight Million Dollars ($8,000,000.00) commencing with the
period ending June 30, 1999, and (ii) Four Million Dollars ($4,000,000.00)
for each period thereafter. Notwithstanding the foregoing, upon the
occurrence of an IPO, the Borrower shall maintain, as of the last day of
each quarter, a
Tangible Net Worth plus Subordinated Debt of at least Ten Million Dollars
($10,000,000.00).
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 without the Bank's written
consent, which will not be unreasonably withheld:
7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise dispose of
(collectively a "Transfer"), or permit any of its Subsidiaries to 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 or its Subsidiaries in the
ordinary course of business; (iii) of worn-out or obsolete Equipment, (iv) of
assets by any of Borrower's wholly-owned Subsidiaries to another of its
wholly-owned Subsidiaries or to the Borrower, or (v) of assets by Borrower to
any of its wholly-owned Subsidiaries PROVIDED that such transfer or transfers of
assets by the Borrower in the aggregate shall be limited to the amount of One
Million Two Hundred Fifty Thousand Dollars ($1,250,000.00) when aggregated with
the exception for investments in and loans to Subsidiaries provided for in
paragraph (d) of the definition of Permitted Investments in Section 13.1.
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 or management. Borrower will not, without at least 30 days prior
written notice to Bank, relocate its principal executive office or, without at
least five (5) day's prior written notification to Bank, add any new offices or
business locations.
7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person except where (i) such transactions
do not in the aggregate result in a decrease of more than 25% of Tangible Net
Worth and (ii) no Event of Default has occurred and is continuing or would exist
after giving effect to the transactions. A Subsidiary may merge or consolidate
into another Subsidiary or into Borrower.
7.4 INDEBTEDNESS. Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness in excess of $50,000.00 in the aggregate.
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, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to Bank's first priority
security interest in the Collateral to change except for 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 permit any of its Subsidiaries to do so; or (ii) pay any
dividends or make any distribution or payment or redeem, retire or purchase any
capital stock; except with respect to the repurchase of stock pursuant to an
employee stock option plan or severance agreement.
7.7 TRANSACTIONS WITH AFFILIATES. Except for Permitted Liens and Permitted
Investments, 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) Business Days after their due date (the "Cure Period"). During the
Cure Period the failure to cure the default is not an Event of Default (but no
Credit Extensions will be made during the Cure Period);
8.2 COVENANT DEFAULT. Borrower does not perform any obligation in Sections
6.1, 6.2, 6.3, 6.4, 6.5, 6.7, and 6.8 or violates any covenant in Article 7 or
does not perform or observe any other material term, condition or covenant in
this Agreement, or 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 in such 10-day period, and the default may be cured within a reasonable
time, then Borrower has an additional time, (of not more than 30 days) to
attempt to cure the default. During the additional period the failure 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. A material adverse effect on: (i) the
perfection or priority of Bank's security interest in the Collateral or in the
value of such Collateral which is not covered by adequate insurance occurs; or
(ii) the business operations or condition (financial or otherwise) of Borrower
and its Subsidiaries taken as a whole, or (iii) the ability of Borrower to repay
the Obligations or otherwise perform its obligations under the Loan Documents.
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 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 material portion 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 Credit Extensions 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 30 days (but no Credit Extensions will be made before any
Insolvency Proceeding is dismissed);
8.6 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 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 reasonably considers
necessary or reasonable to protect its security interest in the
Collateral. Borrower will assemble the Collateral if Bank requests and
make it available as Bank designates. Bank may enter premises where the
Collateral is located, take and maintain possession of any part of the
Collateral, and pay, purchase, contest, or compromise any Lien which
appears to be prior or superior to its security interest and pay all
expenses incurred. Borrower grants Bank a license to enter and occupy any
of its premises, without charge, to exercise any of Bank's rights or
remedies;
(e) Apply to the Obligations any (i) balances and deposits of
Borrower it holds, or (ii) any amount held by Bank owing to or for the
credit or the account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral; and
(g) 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 in writing by Bank, deliver the
payments to Bank in the form received from the account debtor, with proper
endorsements for deposit, within five (5) Business Days after such request.
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 reasonably deems prudent. Any amounts paid by
Bank are Bank Expenses and due and payable within five (5) Business Days after
such payment, 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. 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 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 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.
A Party may change its notice address by giving the other Party written notice.
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
The laws of the Commonwealth of Massachusetts shall apply to this
Agreement. 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 MASSACHUSETTS 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 THE COMMONWEALTH OF MASSACHUSETTS, BORROWER ACCEPTS JURISDICTION
OF THE COURTS AND VENUE 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.
12.4 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 and the Loan
Documents 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 present or prospective
business relations 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.
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.
"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 reasonable out of pocket 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).
"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.
"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 Massachusetts Uniform Commercial Code.
"COLLATERAL" is the property described on EXHIBIT A.
"COMMITTED EQUIPMENT LINE" is one or more Credit Extensions of up to One
Million Dollars ($1,000,000.00).
"COMMITTED REVOLVING LINE" is one or more Credit Extensions of up to Four
Million Dollars ($4,000,000.00) at any time outstanding.
"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.
"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 which mature within one (1) year, which shall include, without
limitation, all obligations and liabilities of Borrower to Bank.
"DEFERRED MAINTENANCE REVENUE" is all amounts received in advance of
performance under maintenance contracts and not yet recognized as revenue.
"ELIGIBLE ACCOUNTS" are Accounts in the ordinary course of Borrower's
business that meet all Borrower's representations and warranties in Section 5.2.
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, 50% or more of whose Accounts
have not been paid within ninety (90) days of invoice date;
(c) Accounts for an account debtor, including Affiliates, whose
total obligations to Borrower exceed 25% of all Accounts, to the extent
such obligations exceed that percentage, unless Bank approves in writing;
(d) Accounts for which the account debtor does not have its
principal place of business in the United States;
(e) Accounts for which the account debtor is a federal, state or
local government entity or any department, agency, or instrumentality
thereof;
(f) 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);
(g) 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;
(h) Accounts for which the account debtor is Borrower's Affiliate,
officer, employee, or agent;
(i) 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 amount), or if the Account Debtor is subject to
an Insolvency Proceeding, or becomes insolvent, or goes out of business;
and
(j) Accounts for which Bank reasonably determines collection to be
doubtful.
"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" has the meaning set forth in Section 2.1.2.
"EQUIPMENT AVAILABILITY END DATE NO. 1" has the meaning set forth in
Section 2.1.2.
"EQUIPMENT AVAILABILITY END DATE NO. 2 " means the date which is six (6)
months following the Closing Date.
"EQUIPMENT MATURITY DATE NO. 1" means the date which is thirty-six (36)
months following the Closing Date.
"EQUIPMENT MATURITY DATE NO. 2" means the date which is forty-two (42)
months following the Closing Date.
"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" 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.
"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.
"IPO" means an initial registered public offering of shares of the
Borrower's common stock in compliance with the Securities Act of 1933, as
amended (or any successor law), which shares are listed on a recognized national
securities exchange or approved for quotation on NASDAQ-AMEX.
"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, 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.
"MATERIAL ADVERSE CHANGE" is defined in Section 8.3.
"MATURITY DATE" means, as applicable, (i) the Revolving Maturity Date with
respect to Advances under the Committed Revolving Line pursuant to Section
2.1.1, and (ii) the Equipment Maturity Date No. 1 and the Equipment Maturity
Date No. 2, as applicable, with respect to Equipment Advances pursuant to
Section 2.1.2.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including letters of credit and foreign
exchange contracts, if any, and including interest accruing after Insolvency
Proceedings begin and debts, liabilities, or obligations of Borrower assigned to
Bank.
"PAYMENT DATE" means the first (1st) calendar day of each month commencing
on the first such day after the Closing Date and ending on the Maturity Date.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Bank under this Agreement or the Loan
Documents;
(b) Indebtedness existing on the Closing Date and shown on Schedule
13.1(a);
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary course
of business; and
(e) Indebtedness secured by Permitted Liens; and
(f) Extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (f) above,
provided that the principal amount thereof is not increased or the terms
thereof are not modified to impose more burdensome terms upon Borrower or
its Subsidiary, as the case may be.
"PERMITTED INVESTMENTS" are:
(a) Investments existing on the Closing Date and shown on Schedule
13.1(b);
(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 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 1 year after issue;
(c) all investments permitted under Section 7.3; and
(d) (i) investments in the capital stock of its wholly-owned
Subsidiaries, and (ii) extensions of credit or loans to any of its
wholly-owned Subsidiaries and any of its wholly-owned Subsidiaries
extensions of credit or loans to another of its wholly-owned Subsidiaries
or to the Borrower, PROVIDED that: (A) the aggregate amount of such
investments or extensions of credit in paragraphs (i) and (ii) above shall
not be greater than One Million Two Hundred Fifty Thousand Dollars
($1,250,000.00) when aggregated with the exception provided for in Section
7.1(v), and (B) such investments or extensions of credit in paragraphs (i)
and (ii) above shall be in the ordinary course of business in each
instance.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Schedule
13.1(c), 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, IF the leases, subleases, licenses
and sublicenses permit granting Bank a security interest; and
(e) 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 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" means the date which is one day prior to one (1)
year from the Closing Date.
"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, joint venture, 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.
BORROWER:
XXXXXXX.XXX, LTD.
By /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: CFO, SVP
BANK:
SILICON VALLEY BANK, d/b/a
SILICON VALLEY EAST
By /s/ Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: AVP
SILICON VALLEY BANK
By /s/ Xxxxxxx Xxxxxx
----------------------------
Name: Xxxxxxx Xxxxxx
Title: AVP
(Signed in Santa Xxxxx County, California)
EXHIBIT A
The Collateral consists of all right, title and interest of Borrower in
and to the following:
All goods, equipment, inventory, contract rights, general intangibles,
accounts, documents, instruments, chattel paper, cash, deposit accounts,
fixtures, letters of credit, investment property, and financial assets, whether
now owned or hereafter acquired, wherever located PROVIDED, HOWEVER, that no
more than sixty-five percent (65%) of Borrower's right, title or interest in the
capital stock of any of Borrower's non-U.S. Subsidiaries shall constitute
Collateral hereunder; and
All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.
The Collateral does not include:
(a) Any copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work,
whether published or unpublished, now owned or later acquired; (b) any
patents, trademarks, service marks 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; (c) any claims for damages
by way of any past, present and future infringement of any of the
foregoing; or (d) except as otherwise provided under Uniform Commercial
Code ss.9-318(4), any general intangibles of the Borrower (whether owned
or held as licensee or lessee, or otherwise), to the extent that (i) such
general intangibles are not assignable or capable of being encumbered as a
matter of law or under the terms of the license, lease or other agreement
applicable thereto (but solely to the extent that any such restriction
shall be enforceable under applicable law), without the consent of the
licensor or lessor thereof or other applicable party thereto and (ii) such
consent has not been obtained.
EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., E.S.T.
TO: CENTRAL CLIENT SERVICE DIVISION DATE: _____________________________
FAX#: (000) 000-0000 TIME: _____________________________
EXHIBIT C
BORROWING BASE CERTIFICATE
--------------------------------------------------------------------------------
Borrower: XXXXXXX.XXX, LTD. Lender: Silicon Valley Bank
Commitment Amount: $4,000,000.00
--------------------------------------------------------------------------------
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 $_______________
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 $_______________
18. Total Funds Available (Lesser of #17 or #16) $_______________
19. Present balance owing on Line of Credit $_______________
20. RESERVE POSITION (#18 minus #19) $_______________
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: XXXXXXX.XXX, LTD.
The undersigned authorized officer of XXXXXXX.XXX, LTD. 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
------------------ -------- --------
Financial Statements & CC Monthly within 25 days
(if not borrowing, quarterly within 25
days subsequent to IPO) Yes No
Annual (CPA Audited) FYE within 90 days Yes No
10-Q, 10-K and 8-K Within 5 days after filing with SEC Yes No
BBC & A/R Agings Monthly within 25 days when borrowing Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain:
Minimum Adjusted Quick Ratio* 1.25:1.0 _____:1.0 Yes No
Minimum Tangible Net Worth** *** $________ Yes No
*Tested monthly (except that subsequent to an IPO, when not borrowing, tested
quarterly)
**Tested monthly, changing to quarterly after IPO
***See Section 6.7 of Loan Agreement
Comments Regarding Exceptions: See Attached.
Sincerely,
--------------------------------------------------------------------------------
SIGNATURE
________________________TITLE
-----------------------------
