EXHIBIT 10.16
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
CROSSWORLDS SOFTWARE, INC.
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TABLE OF CONTENTS
Page
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1 ACCOUNTING AND OTHER TERMS......................................................................................4
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2 LOAN AND TERMS OF PAYMENT..................................................................................... 4
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2.1 Credit Extensions.................................................................................. 4
2.2 Overadvances....................................................................................... 5
2.3 Interest Rate, Payments............................................................................ 5
2.4 Fees............................................................................................... 6
3 CONDITIONS OF LOANS........................................................................................... 6
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3.1 Conditions Precedent to Initial Credit Extension................................................... 6
3.2 Conditions Precedent to all Credit Extensions...................................................... 6
4 CREATION OF SECURITY INTEREST................................................................................. 7
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4.1 Grant of Security Interest......................................................................... 7
5 REPRESENTATIONS AND WARRANTIES................................................................................ 7
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5.1 Due Organization and Authorization................................................................. 7
5.2 Collateral......................................................................................... 7
5.3 Litigation......................................................................................... 8
5.4 No Material Adverse Change in Financial Statements................................................. 8
5.5 Solvency........................................................................................... 8
5.6 Regulatory Compliance.............................................................................. 8
5.7 Subsidiaries....................................................................................... 8
5.8 Full Disclosure.................................................................................... 8
6 AFFIRMATIVE COVENANTS......................................................................................... 9
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6.1 Government Compliance.............................................................................. 9
6.2 Financial Statements, Reports, Certificates........................................................ 9
6.3 Inventory; Returns................................................................................. 9
6.4 Taxes.............................................................................................. 9
6.5 Insurance.......................................................................................... 10
6.6 Primary Accounts................................................................................... 10
6.7 Financial Covenants................................................................................ 10
6.8 Registration of Intellectual Property Rights....................................................... 10
6.9 Further Assurances................................................................................. 10
7 NEGATIVE COVENANTS............................................................................................ 10
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7.1 Dispositions....................................................................................... 10
7.2 Changes in Business, Ownership, Management or Business Locations................................... 11
7.3 Mergers or Acquisitions............................................................................ 11
7.4 Indebtedness....................................................................................... 11
7.5 Encumbrance........................................................................................ 11
7.6 Distributions; Investments......................................................................... 11
7.7 Transactions with Affiliates....................................................................... 11
7.8 Subordinated Debt.................................................................................. 11
7.9 Compliance......................................................................................... 11
8 EVENTS OF DEFAULT............................................................................................. 12
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8.1 Payment Default.................................................................................... 12
8.2 Covenant Default................................................................................... 12
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8.3 Material Adverse Change............................................................................ 12
8.4 Attachment......................................................................................... 12
8.5 Insolvency......................................................................................... 12
8.6 Other Agreements................................................................................... 12
8.7 Judgments.......................................................................................... 13
8.8 Misrepresentations................................................................................. 13
9 BANK'S RIGHTS AND REMEDIES.................................................................................... 13
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9.1 Rights and Remedies................................................................................ 13
9.2 Power of Attorney.................................................................................. 13
9.3 Accounts Collection................................................................................ 14
9.4 Bank Expenses...................................................................................... 14
9.5 Bank's Liability for Collateral.................................................................... 14
9.6 Remedies Cumulative................................................................................ 14
9.9 Demand Waiver...................................................................................... 14
10 NOTICES...................................................................................................... 14
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11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER................................................................... 14
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12 GENERAL PROVISIONS........................................................................................... 15
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12.1 Successors and Assigns............................................................................ 15
12.2 Indemnification................................................................................... 15
12.3 Time of Essence................................................................................... 15
12.4 Severability of Provision......................................................................... 15
12.5 Amendments in Writing, Integration................................................................ 15
12.6 Counterparts...................................................................................... 15
12.7 Survival.......................................................................................... 15
12.8 Confidentiality................................................................................... 16
12.9 Effect of Amendment and Restatement............................................................... 16
12.10 Attorneys' Fees, Costs and Expenses.............................................................. 16
13 DEFINITIONS.................................................................................................. 16
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13.1 Definitions....................................................................................... 16
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This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated September
18, 2000 and effective as of June 30, 2000, between SILICON VALLEY BANK
("Bank"), whose address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
CrossWorlds Software, Inc. ("Borrower"), formerly known as Crossroads Software,
Inc., whose address is ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
RECITALS
A. Bank and Borrower are parties to that certain Loan and Security
Agreement dated December 10, 1996, as amended by that certain First Amendment to
Loan and Security Agreement dated September 29, 1997, that certain Second
Amendment to Loan and Security Agreement dated October 28, 1998, and various
Loan Modification Agreements, among other documents, (collectively, as so
amended, the "Original Agreement").
B. Borrower and Bank desire in this Agreement to set forth their
agreement with respect to certain loans and to amend and restate in its entirety
without novation the Original Agreement in accordance with the provisions
hereof.
AGREEMENT
The parties agree as follows:
1 ACCOUNTING AND OTHER TERMS
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Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document. This Agreement shall be construed to
impart upon Bank a duty to act reasonably at all times.
2 LOAN AND TERMS OF PAYMENT
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2.1 Credit Extensions.
Borrower will pay to Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.
2.1.1 Revolving Advances.
(a) Bank will make Advances not exceeding (i) the lesser of (A) the
Committed Revolving Line or (B) the Borrowing Base, minus (ii) the amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit), and minus (iii) the FX Reserve, and minus (iv) amounts outstanding for
Cash Management Services. Amounts borrowed under this Section may be repaid and
reborrowed during the term of this Agreement.
(b) To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 3:00 p.m. Pacific time on the Business Day the Advance is to be
made. Borrower must promptly confirm the notification by delivering to Bank the
Payment/Advance Form attached as Exhibit B. Bank will credit Advances to
Borrower's deposit account. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become
due. Bank may rely on any telephone notice given by a person whom Bank believes
is a Responsible Officer or designee. Borrower will indemnify Bank for any loss
Bank suffers due to such reliance.
(c) The Committed Revolving Line terminates on the Revolving Maturity
Date, when all Advances shall be immediately due and payable.
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2.1.2 Letters of Credit Sublimit.
Bank will issue or have issued Letters of Credit for Borrower's account
not exceeding (i) the lesser of the Committed Revolving Line or the Borrowing
Base minus (ii) the outstanding principal balance of the Advances minus amounts
outstanding for Cash Management Services, minus the FX Reserve; however, the
face amount of outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit) may not exceed $7,500,000 minus amounts outstanding for Cash
Management Services, minus the FX Reserve. Each Letter of Credit will have an
expiry date of no later than 180 days after the Revolving Maturity Date,
provided Borrower's reimbursement obligation must be secured by cash on terms
acceptable to Bank at any time after the Revolving Maturity Date if the term of
this Agreement is not extended by Bank. Borrower agrees to execute any further
documentation in connection with the Letters of Credit as Bank may reasonably
request.
2.1.3 Foreign Exchange Sublimit.
If there is availability under the Committed Revolving Line and the
Borrowing Base, then Borrower may enter in foreign exchange forward contracts
with Bank under which Borrower commits to purchase from or sell to Bank a set
amount of foreign currency more than one business day after the contract date
(the "FX Forward Contract"). Bank will subtract 10% of each outstanding FX
Forward Contract (the "FX Reserve") from the foreign exchange sublimit which is
a maximum of $7,500,000 minus amounts outstanding for Cash Management Services,
minus the face amount of outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit). The total FX Forward Contracts at any one time
may not exceed 10 times the amount of the FX Reserve. Bank may terminate the FX
Forward Contracts if an Event of Default occurs.
2.1.4 Cash Management Services Sublimit.
If there is availability under the Committed Revolving Line and the
Borrowing Base, then Borrower may use Bank's Cash Management Services up to an
amount equal to $7,500,000 minus the FX Reserve, minus the face amount of
outstanding Letters of Credit (including drawn but reimbursed Letters of
Credit.) Cash Management Services may include merchant services, direct deposit
of payroll, business credit cards, and check cashing services identified in
various cash management services agreements related to such services. The
aggregate balance outstanding on business credit cards shall reduce the amount
otherwise available to be borrowed under the Committed Revolving Line by a
factor of 1.25. All amounts paid or incurred by Bank with respect to any Cash
Management Services will be treated as Advances under the Committed Revolving
Line.
2.1.5 Term Loan.
Borrower is indebted to Bank for an equipment term loan that has a
principal balance of $722,222.12 as of September 18, 2000, and is evidenced by
Note #1100041297 ("Term Loan"). Borrower will continue to pay the Term Loan in
monthly installments of $55,555.56 for principal plus all accrued interest on
September 29, 2000 and on the 29th day of each month thereafter through
September 27, 2001, when all outstanding principal and accrued interest shall be
paid in full.
2.2 Overadvances.
If Borrower's aggregate Obligations under Section 211, 212, 2.1.3 and
2.1.4 exceed the lesser of the Committed Revolving Line or the Borrowing Base,
Borrower must immediately pay Bank the excess.
2.3 Interest Rate, Payments.
(a) Interest Rate. (i) Advances accrue interest on the outstanding
principal balance at a per annum rate of 0.50 percentage points above the Prime
Rate; and (ii) the Term Loan accrues interest at a per annum rate equal to the
Prime Rate. After an Event of Default, Obligations accrue interest at 5
5
percentage points above the rate effective immediately before the Event of
Default. Each interest rate increases or decreases when the Prime Rate changes.
Interest is computed on a 360 day year for the actual number of days elapsed.
(b) Payments. Accrued interest on the Committed Revolving Line is payable
on the 29/th/ day of each month. Bank may debit any of Borrower's deposit
accounts, including account no. 3300018867, for principal and interest payments
or any other amounts that Borrower owes to Bank. Bank will promptly notify
Borrower when it debits Borrower's accounts. These debits are not a set-off.
Payments received after 12:00 noon Pacific time are considered received at the
opening of business on the next Business Day. When a payment is due on a day
that is not a Business Day, the payment is due the next Business Day and
additional fees or interest accrue.
2.4 Fees.
Borrower will pay to Bank each of the following:
(a) Facility Fee. A fully earned, non-refundable Facility Fee of $25,000
for the Committed Revolving Line due on the Closing Date.
(b) Unused Commitment Fee. A commitment fee equal to 0.25% per annum of
the average unused portion of the Committed Revolving Line. Such fee shall be
payable in quarterly installments on the 15/th/ day of the month following each
calendar quarter. Each quarterly installment shall be calculated balance of the
average unused portion of the Committed Revolving Line during such quarter,
provided that the fee for the quarter ending on September 30, 2000 shall be pro-
rated and payable only for the period from the date of this Agreement through
September 30, 2000.
(c) Bank Expenses. All Bank Expenses (including reasonable attorneys'
fees and reasonable expenses) incurred through and after the date of this
Agreement, as and when they become due.
3 CONDITIONS OF LOANS
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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 shall have received the following in form and
substance satisfactory to Bank:
(a) this Agreement, duly executed;
(b) a certificate of the Secretary of Borrower with respect to
incumbency, and resolutions of Borrower's Board of Directors authorizing the
execution and delivery of this Agreement;
(c) the duly executed IP Security Agreement;
(d) a duly executed UCC-2 Amendment;
(e) an insurance certificate;
(f) payment of the fees and Bank Expenses then due as set forth in
Section 2.4 of this Agreement; and
(g) such other documents and evidence of completion of such other
actions as Bank may reasonably request.
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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 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
of Section 5 remain true.
4 SECURITY INTEREST
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4.1 Grant of Security Interest.
Borrower grants to 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, the 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 this Agreement is terminated, Bank's lien and security interest
in the Collateral will continue until Borrower fully satisfies its Obligations.
4.2 Acknowledgement of Existing Security Interest.
Borrower acknowledges and reaffirms Bank's existing security interest
created pursuant to the Original Agreement to secure all Obligations and
performance of each of Borrower's duties under the Original Agreement and the
Loan Documents.
5 REPRESENTATIONS AND WARRANTIES
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Borrower represents and warrants as follows:
5.1 Due Organization and Authorization.
Borrower and each Subsidiary is duly organized, existing and in good
standing in its state of formation and is qualified, licensed to do business,
and in good standing in any state in which the conduct of its business or its
ownership of property so requires, except where the 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 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 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. All Accounts are owned by Borrower itself, and not by a Subsidiary.
Invoices for all Accounts are issued by Borrower at its headquarters in
Burlingame, California, and all Accounts are payable to Borrower there. The
Accounts are bona fide, existing obligations, and the service or property has
been performed or delivered to the account debtor or its agent for immediate
shipment to 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
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business. Each Patent is valid and enforceable and no part of the Intellectual
Property has been judged invalid or unenforceable, in whole or in part, and no
claim has been made that any part of the Intellectual Property violates the
rights of any third party, except to the extent such claim could not reasonably
be expected to cause a Material Adverse Change.
5.3 Litigation.
Except as shown in the Schedule, there are no actions or proceedings
pending or, to the knowledge of Borrower's Responsible Officers and legal
counsel, threatened by or against Borrower or any Subsidiary in which a likely
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.
The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.
5.6 Regulatory Compliance.
Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors). Borrower has
complied in all material respects with the Federal Fair Labor Standards Act.
Borrower has not violated any laws, ordinances or rules, the violation of which
could reasonably be expected to 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, except where the 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 written representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank (taken together with all such
written certificates and written statements 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 is
recognized by Bank that the projections and forecasts provided by Borrower in
good faith and based upon reasonable assumptions are not viewed as facts and
that actual results during the period or periods covered by such projections and
forecasts may differ from the projected and forecasted results.
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6 AFFIRMATIVE COVENANTS
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Borrower will do all of the following:
6.1 Government Compliance.
Borrower will maintain its and all Subsidiaries' legal existence and good
standing in its jurisdiction of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
cause 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 would reasonably
be expected to 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 30 days after the last day of each month, a company prepared consolidated
balance sheet and income statement covering Borrower's consolidated operations
during the period, in a form and certified by a Responsible Officer acceptable
to Bank; (ii) as soon as available, but no later than 120 days after the last
day of Borrower's fiscal year, audited consolidated financial statements
prepared under GAAP, consistently applied, together with an unqualified opinion
on the financial statements from an independent certified public accounting firm
reasonably acceptable to Bank; (iii) within 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 result in damages or costs to Borrower or any Subsidiary of $100,000 or
more; (v) budgets, sales projections, operating plans or other financial
information Bank reasonably requests; and (vi) prompt notice of any material
change in the composition of the Intellectual Property, including any subsequent
ownership right of Borrower in or to any Copyright, Patent or Trademark not
shown in any intellectual property security agreement between Borrower and Bank
or knowledge of an event that materially adversely affects the value of the
Intellectual Property.
(b) Within 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 and accounts
payable.
(c) Within 30 days after the last day of each month, and within 120 days,
after the last day of its fiscal year, Borrower will deliver to Bank with the
monthly financial statements a Compliance Certificate signed by a Responsible
Officer in the form of Exhibit D.
(d) Bank has the right to audit Borrower's Collateral at Borrower's
expense, and the audits will be conducted once per year unless an Event of
Default has occurred and is continuing, in which case audits may be conducted at
any time in the sole discretion of the Bank.
6.3 Inventory; Returns.
Borrower will keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary practices as they exist at execution of
this Agreement. Borrower must promptly notify Bank of all returns, recoveries,
disputes and claims that involve more than $50,000.
6.4 Taxes.
Borrower will make, and cause each Subsidiary to make, timely payment of
all material federal, state, and local taxes or assessments and will deliver to
Bank, on demand, appropriate certificates attesting to the payment.
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6.5 Insurance.
Borrower will keep its business and the Collateral insured for risks and
in amounts, as Bank may reasonably request. Insurance policies will be in a
form, with companies, and in amounts that are satisfactory to Bank in Bank's
reasonable discretion. All property policies will have a Bank's loss payable
endorsement showing Bank as an additional loss payee and all liability policies
will show the Bank as an additional insured and provide that the insurer must
give Bank at least 20 days notice before canceling its policy. At Bank's
request, Borrower will deliver certified copies of policies and evidence of all
premium payments. Proceeds payable under any policy will, at Bank's option, be
payable to Bank on account of the Obligations.
6.6 Primary Accounts.
Borrower will maintain its primary depository and operating accounts with
Bank.
6.7 Financial Covenants.
Borrower will comply with the following:
(i) Quick Ratio (Adjusted). Borrower will maintain as of the last day
of each month a ratio of Quick Assets to Current Liabilities minus the current
portion of Borrower's Subordinated Debt to Comdisco minus Deferred Revenue; of
at least 2.50 to 1.00.
(ii) Maximum Loss. The aggregate net loss of Borrower and its
Subsidiaries (excluding amortization of stock-based compensation or in-process
R&D charges, goodwill or other intangible asset amortization, or any other
extraordinary non-cash item resulting from Borrower's acquisition of at least
50% of a non-affiliate company) will not exceed $10,000,000 in the quarter
ending September 30, 2000, $9,300,000 in the quarter ending December 31, 2000,
or $7,500,000 in the quarter ending March 31, 2001.
6.8 Registration of Intellectual Property Rights.
Borrower will register with the United States Patent and Trademark Office
or the United States Copyright Office its Intellectual Property within 30 days
of the date of this Agreement, and additional Intellectual Property rights
developed or acquired including revisions or additions with any product before
the sale or licensing of the product to any third party.
Borrower will (i) protect, defend and maintain the validity and
enforceability of the Intellectual Property and promptly advise Bank in writing
of material infringements and (ii) not allow any Intellectual Property to be
abandoned, forfeited or dedicated to the public without Bank's written consent.
6.9 Further Assurances.
Borrower will execute any further instruments and take further action as
Bank reasonably requests to perfect or continue Bank's security interest in the
Collateral or to effect the purposes of this Agreement.
7 NEGATIVE COVENANTS
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Borrower will not do any of the following without Bank's prior written
consent, which will not be unreasonably withheld:
7.1 Dispositions.
Convey, sell, lease, transfer or otherwise dispose of (collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, other than Transfers (i) of Inventory in the ordinary
course of business; (ii) of non-exclusive licenses and similar arrangements for
the use of the
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property of Borrower or its Subsidiaries in the ordinary course of business; or
(iii) of worn-out or obsolete Equipment.
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 reasonably related
thereto or have a material change in its ownership or management (other than the
sale of Borrower's equity securities in a public offering or to venture capital
investors approved by Bank) of greater than 25%. Borrower will not, without at
least 30 days prior written notice, relocate its chief executive office or 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) no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement and (ii) such transaction would not result in a decrease of more than
25% of Tangible Net Worth. 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.
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 the first priority security interest granted
here, subject to Permitted Liens.
7.6 Distributions; Investments.
Directly or indirectly acquire or own any Person, or make any Investment
in any Person, other than Permitted Investments, or permit any of its
Subsidiaries to do so. Pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock.
7.7 Transactions with Affiliates.
Directly or indirectly enter into 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 and as permitted by the Subordination Agreement,
or amend any provision in any document relating to the Subordinated Debt without
Bank's prior written consent.
7.9 Compliance.
Become an "investment company" or a company controlled by an "investment
company," under the Investment Company Act of 1940 or undertake as one of its
important activities extending credit to purchase or carry margin stock, or use
the proceeds of any Credit Extension for that purpose; fail to meet the minimum
funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair
Labor Standards Act or violate any other
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law or regulation, if the violation could reasonably be expected to have a
material adverse effect on Borrower's business or operations or would reasonably
be expected to cause a Material Adverse Change, or permit any of its
Subsidiaries to do so.
8 EVENTS OF DEFAULT
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Any one of the following is an Event of Default:
8.1 Payment Default.
If Borrower fails to pay any of the Obligations within 3 days after its due
date. During the 3-day additional period the failure to cure the default is not
an Event of Default (but no Credit Extension will be made during the cure
period);
8.2 Covenant Default.
If Borrower does not perform any obligation in Section 6 or violates any
covenant in Section 7 or does not perform or observe any other material term,
condition or covenant in this Agreement, in any Loan Document, or in any
agreement between Borrower and Bank. As to any non-payment default that can be
cured, if Borrower has not cured the default within 10 days after it occurs;
however if the default cannot be cured within 10 days or cannot be cured after
Borrower's attempts within the 10-day period, but the default may be cured
within a reasonable time, then Borrower shall have an additional period (of not
more than 30 days) to attempt to cure the default. During the additional time,
the failure to cure the default is not an Event of Default (but no Credit
Extensions will be made during the cure period);
8.3 Material Adverse Change.
(i) If there occurs a material impairment in the perfection or priority of
the Bank's security interest in the Collateral or in the value of such
Collateral (other than normal depreciation) which is not covered by adequate
insurance or (ii) if the 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 during the next succeeding financial reporting period (in either case,
a "Material Adverse Change").
8.4 Attachment.
If any material portion of Borrower's assets is attached, seized, levied
on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower's assets by any government agency and not paid within 10 days
after Borrower receives notice. These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Credit Extensions will be
made during the cure period);
8.5 Insolvency.
If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Credit Extensions will be made before
any Insolvency Proceeding is dismissed);
8.6 Other Agreements.
If there is a default in any agreement between Borrower and a third party
that gives the third party the right to accelerate any Indebtedness exceeding
$100,000 or that could cause a Material Adverse Change;
12
8.7 Judgments.
If a money judgment(s) in the aggregate of at least $50,000 is rendered
against Borrower and is unsatisfied and unstayed for 10 days (but no Credit
Extensions will be made before the judgment is stayed or satisfied); or
8.8 Misrepresentations.
If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document.
9 BANK'S RIGHTS AND REMEDIES
--------------------------
9.1 Rights and Remedies.
When an Event of Default occurs and continues Bank may, without notice or
demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an Event
of Default described in Section 85 occurs all Obligations are immediately due
and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's benefit under
this Agreement or under any other agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account debtors for
amounts, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or reasonable
to protect its security interest in the Collateral. Borrower will assemble the
Collateral if Bank requires and make it available as Bank designates. Bank may
enter premises where the Collateral is located, take and maintain possession of
any part of the Collateral, and pay, purchase, contest, or compromise any Lien
which appears to be prior or superior to its security interest and pay all
expenses incurred. Borrower grants Bank a license to enter and occupy any of its
premises, without charge, to exercise any of Bank's rights or remedies;
(e) Apply to the Obligations any (i) balances and deposits of Borrower it
holds, or (ii) any amount held by Bank owing to or for the credit or the account
of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral. Bank is granted a non-
exclusive, royalty-free license or other right to use, without charge,
Borrower's packaging materials, Patents, Copyrights, Mask Works, rights of use
of any name, trade secrets, trade names, Trademarks, service marks, marketing
and advertising materials, or any similar property as it pertains to the
Collateral, in completing production of, advertising for sale, and selling any
Collateral and, in connection with Bank's exercise of its rights under this
Section, Borrower's rights under all licenses and all franchise agreements inure
to Bank's benefit; and
(g) Dispose of the Collateral according to the Code.
9.2 Power of Attorney.
Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or ▇▇▇▇ 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
13
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
that is indebted to Borrower on any Account or other obligation of Bank's
security interest in such obligation, verify the amount, and take action to
collect it. Borrower will collect all proceeds of such obligations in trust for
Bank and, if requested by Bank, immediately deliver the proceeds 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 65, 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 and Section 9-207 of the
Code, it is not liable for: (a) the safekeeping of the Collateral; (b) any loss
or damage to the Collateral; (c) any diminution in the value of the Collateral;
or (d) any act or default of any carrier, warehouseman, bailee, or other person.
Borrower bears all risk of loss, damage or destruction of the Collateral.
9.6 Remedies Cumulative.
Bank's rights and remedies under this Agreement, the Loan Documents, and
all other agreements are cumulative. Bank has all rights and remedies provided
under the Code, by law, or in equity. Bank's exercise of one right or remedy is
not an election, and Bank's waiver of any Event of Default is not a continuing
waiver. Bank's delay is not a waiver, election, or acquiescence. No waiver is
effective unless signed by Bank and then is only effective for the specific
instance and purpose for which it was given.
9.7 Demand Waiver.
Borrower waives demand, notice of default or dishonor, notice of payment
and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.
10 NOTICES
-------
All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A party may change its notice address by giving the other party
written notice.
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
-------------------------------------------
California law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Santa ▇▇▇▇▇ County, California.
14
BORROWER AND BANK EACH WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY
HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
------------------
12.1 Successors and Assigns.
This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any
rights under it without Bank's prior written consent which may be granted or
withheld in Bank's discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank's obligations, rights and benefits
under this Agreement.
12.2 Indemnification.
Borrower will 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 and signed by
Borrower and Bank. This Agreement represents the entire agreement about this
subject matter, and supersedes prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Agreement merge into this
Agreement and the Loan Documents.
12.6 Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.
12.7 Survival.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.
15
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 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 Effect of Amendment and Restatement.
This Agreement is intended to and does completely amend and restate,
without novation, the Original Agreement. All Credit Extensions or loans
outstanding under the Original Agreement are and shall continue to be
outstanding under this Agreement. All security interests granted under the
Original Agreement are hereby confirmed and ratified and shall continue to
secure all Obligations under this Agreement.
12.10 Attorneys' Fees, Costs and Expenses.
In any action or proceeding between Borrower and Bank arising out of or
related to any of the Loan Documents, including any Insolvency Proceeding or any
adversary proceeding or contested matter therein, the prevailing party will be
entitled to recover its reasonable attorneys' fees and other reasonable costs
and expenses incurred, in addition to any other relief to which it may be
entitled.
13 DEFINITIONS
-----------
13.1 Definitions.
In this Agreement:
"Accounts" are all existing and later arising accounts, contract rights,
and other obligations owed to Borrower in connection with its sale or lease of
goods or provision of services (including licensing of software, other
technology and Intellectual Property), all credit insurance, guaranties, other
security and all merchandise returned or reclaimed by Borrower and Borrower's
Books relating to any of the foregoing.
"Advance" or "Advances" is a loan advance (or advances) under the
Committed Revolving Line.
"Affiliate" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"Bank Expenses" are all audit fees and expenses and reasonable costs and
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 65% of Eligible Accounts as determined by Bank from
Borrower's most recent Borrowing Base Certificate; provided, however, that Bank
-------- -------
may revise the percentage of the Borrowing Base after performing an audit of
Borrower's Collateral.
16
"Business Day" is any day that is not a Saturday, Sunday or a day on which
the Bank is closed.
"Cash Management Services" are defined in Section 2.1.4.
"Closing Date" is the date of this Agreement.
"Code" is the California Uniform Commercial Code.
"Collateral" is the property described on Exhibit A and all Intellectual
---------
Property.
"Comdisco" is Comdisco, Inc., a Delaware corporation.
"Committed Revolving Line" is Ten Million Dollars ($10,000,000).
"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, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"Copyrights" are all copyright rights, applications or registrations and
like protections in each work or authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.
"Credit Extension" is each Advance, Letter of Credit, Term Loan, F/X
Forward Contract, or any other extension of credit by Bank for Borrower's
benefit.
"Current Assets" are amounts that under GAAP should be included on that
date as current assets on Borrower's consolidated balance sheet.
"Current Liabilities" are the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year.
"Deferred Revenue" is all amounts received in advance of performance and
not yet recognized as revenue.
"Eligible Accounts" are Accounts arising in the ordinary course of
Borrower's business that comply with all of Borrower's representations and
warranties in Section 5; but Bank may change eligibility standards by giving
---
Borrower notice. Unless Bank agrees otherwise in writing, Eligible Accounts will
not include:
(a) Accounts that the account debtor has not paid within 60 days of invoice
date;
(b) Accounts from an account debtor, 50% or more of whose Accounts have not
been paid within 90 days of invoice date;
(c) Credit balances over 90 days from invoice date;
17
(d) Accounts from an account debtor, including Affiliates, whose total
obligations to Borrower exceed 25% of all Accounts, for the amounts that
exceed that percentage, unless the Bank approves in writing;
(e) Accounts from an account debtor that does not have its principal place
of business in the United States; provided that such foreign Accounts may
be included in Eligible Accounts if they have been pre-approved by Bank,
but only to the extent that they do not exceed 25% of the Borrowing Base.
(f) Accounts for which the account debtor is a federal, state or local
government entity or any department, agency, or instrumentality;
(g) Accounts which are offset by debt owned by Borrower to the account
debtor, but only up to the amount of the offset (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, ▇▇▇▇ and
hold, or other terms if account debtor's payment may be conditional;
(i) Accounts for which the account debtor is Borrower's Affiliate, officer,
employee, or agent;
(j) Accounts in which the account debtor disputes liability or makes any
claim and Bank 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;
(k) 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.
"ERISA" is the Employment Retirement Income Security Act of 1974, and its
regulations.
"FX Forward Contract" is defined in Section 2.1.3.
"FX Reserve " is defined in Section 2.1.3.
"GAAP" is generally accepted accounting principles.
"Indebtedness" is (a) indebtedness for borrowed money or the deferred price
of property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"Insolvency Proceeding" are proceedings by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"Intellectual Property" is:
(a) Copyrights, Trademarks, Patents, and Mask Works including amendments,
renewals, extensions, and all licenses or other rights to use them and all
license fees and royalties from such use;
(b) Any trade secrets and any intellectual property rights in computer
software and computer software products now or later existing, created, acquired
or held;
18
(c) All design rights which may be available to Borrower now or later
created, acquired or held;
(d) Any claims for damages (past, present or future) for infringement of
any of the rights above, with the right, but not the obligation, to ▇▇▇ and
collect damages for use or infringement of the intellectual property rights
above;
All proceeds and products of the foregoing, including all insurance,
indemnity or warranty payments.
"Inventory" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"Investment" is any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.
"IP Security Agreement" is the Amended and Restated Intellectual Property
Security Agreement to be executed by Borrower and Bank.
"Letter of Credit" is defined in Section 2.1.2.
"Lien" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"Loan Documents" are, collectively, this Agreement, the IP Security
Agreement, any UCC-1 or UCC-2 statements, the Subordination Agreement, any notes
or guaranties executed by Borrower or Guarantor, and any other present or future
instruments or agreement between Borrower and Bank or for the benefit of Bank in
connection with this Agreement, all as amended, extended or restated.
"Mask Works" are all mask works or similar rights available for the
protection of semiconductor chips, now owned or later acquired.
"Material Adverse Change" is defined in Section 8.3.
"Obligations" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including cash management services,
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.
"Original Agreement" is defined in recital paragraph A.
"Patents" are patents, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same.
"Permitted Indebtedness" is:
(a) Borrower's indebtedness to Bank under this Agreement or any other Loan
Document;
(b) Indebtedness existing on the Closing Date and shown on the Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary course of
business; and
19
(e) Indebtedness secured by Permitted Liens.
"Permitted Investments" are:
(a) Investments shown on the Schedule and existing on the Closing Date;
and
(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 ▇▇▇▇▇'▇ Investors Service, Inc., and (iii) Bank's certificates of
deposit issued maturing no more than 1 year after issue.
"Permitted Liens" are:
(a) Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
--
any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower or
its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
--
property and improvements and the proceeds of the equipment;
(d) Licenses or sublicenses granted in the ordinary course of Borrower's
business and any interest or title of a licensor or under any license or
sublicense, if the licenses and sublicenses permit granting Bank a security
--
interest;
(e) Leases or subleases granted in the ordinary course of Borrower's
business, including in connection with Borrower's leased premises or leased
property;
(f) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
---
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase.
"Person" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"Prime Rate" is Bank's most recently announced "prime rate," even if it is
not Bank's lowest rate.
"Quick Assets" is, on any date, the Borrower's consolidated, unrestricted
cash, cash equivalents, net billed accounts receivable and investments with
maturities of fewer than 12 months determined according to GAAP.
"Responsible Officer" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.
"Revolving Maturity Date" is June 30, 2001.
"Schedule" is any attached schedule of exceptions.
20
"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.
"Subordination Agreement" is the Subordination Agreement dated January 7,
----------
1999 by and among Bank, Borrower and Comdisco.
----
"Subsidiary" is for any Person, or any other business entity of which more
than 50% of the voting stock or other equity interests is owned or controlled,
directly or indirectly, by the Person or one or more Affiliates of the Person.
"Tangible Net Worth" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries, plus fifty percent (50%) of Deferred Revenue,
----
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.
---
"Term Loan" is defined in Section 2.1.5.
"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 ▇▇▇▇ rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business associated with or symbolized by the trademarks.
BORROWER:
CROSSWORLDS SOFTWARE, INC.
By: /S/ SIGNATURE ILLEGIBLE
-----------------------------------------
Title: Chief Financial Officer & Senior VP
--------------------------------------
BANK:
SILICON VALLEY BANK
By: /S/ SIGNATURE ILLEGIBLE
-----------------------------------------
Title: VP
--------------------------------------
21
AMENDED & RESTATED INTELLECTUAL PROPERTY SECURITY AGREEMENT
This Amended and Restated Intellectual Property Security Agreement is
entered into as of June 30, 2000 by and between SILICON VALLEY BANK ("Bank") and
CROSSWORLDS SOFTWARE, INC. ("Grantor").
RECITALS
--------
A. Bank and Grantor are parties to that certain Loan and Security
Agreement dated December 10, 1996, as amended by that certain First Amendment to
Loan and Security Agreement dated September 29, 1997, that certain Second
Amendment to Loan and Security Agreement dated October 28, 1998, and various
Loan Modification Agreements, among other documents, (collectively, as so
amended, the "Original Agreement").
B. Bank has made and has agreed to make certain advances of money and to
extend certain financial accommodation to Grantor (the "Loans") in the amounts
and manner set forth in the Original Agreement and in that certain Amended and
Restated Loan and Security Agreement by and between Bank and Grantor dated as of
September __, 2000 (as the same may be amended, modified or supplemented from
time to time, the "Loan Agreement"). Capitalized terms used herein are used as
defined in the Loan Agreement). Bank is willing to make the Loans to Grantor,
but only upon the condition, among others, that Grantor shall grant to Bank a
security interest in certain Copyrights, Trademarks, Patents, and Mask Works to
secure the obligations of Grantor under the Loan Agreement.
C. Pursuant to the terms of the Original Agreement and the Loan
Agreement, Grantor has granted to Bank a security interest in all of Grantor's
right, title and interest, whether presently existing or hereafter acquired, in,
to and under all of the Collateral.
D. Bank and Grantor are parties to that certain Intellectual Property
Security Agreement dated as of October 28, 1998 ("Existing IP Security
Agreement"). Grantor and Bank desire in this Agreement amend and restate in its
entirety without novation the Existing IP Security Agreement in accordance with
the provisions hereof.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, and intending to be legally bound, as collateral security
for the prompt and complete payment when due of its obligations under the Loan
Agreement, Grantor hereby represents, warrants, covenants and agrees as follows:
AGREEMENT
---------
Grantor acknowledges and reaffirms Bank's existing security interest
created pursuant to the Existing IP Security Agreement as security for all
Obligations and performance of each of Borrower's duties under the Loan
Agreement and the Loan Documents. This Agreement amends, restates and
supercedes the existing Intellectual Property Security Agreement in its entirety
without novation.
To secure its Obligations under the Loan Agreement and the Loan Documents,
Grantor grants and pledges to Bank a security interest in all of Grantor's
right, title and interest in, to and under its Intellectual Property Collateral
(including without limitation those Copyrights, Patents, Trademarks and Mask
Works listed on Schedules A, B, C, and D hereto), and including without
limitation all proceeds thereof (such as, by way of example but not by way of
limitation, license royalties and proceeds of infringement suits), the right to
▇▇▇ for past, present and future infringements, all rights corresponding thereto
throughout the world and all re-issues, divisions continuations, renewals,
extensions and continuations-in-part thereof.
This security interest is granted in conjunction with the security interest
granted to Bank under the Loan Agreement. The rights and remedies of Bank with
respect to the security interest granted hereby are in addition to those set
forth in the Loan Agreement and the other Loan Documents, and those which are
now or hereafter available to Bank as a matter of law or equity. Each right,
power and remedy of Bank provided for herein or in the Loan Agreement or any of
the Loan Documents, or now or hereafter existing at law or in equity shall be
cumulative and concurrent and shall be in addition to every right, power or
remedy provided for herein and the exercise by Bank of any one or more of the
rights, powers or remedies provided for in this Intellectual Property Security
Agreement, the Loan Agreement or any of the other Loan Documents, or now or
hereafter existing at law or in equity, shall not preclude the simultaneous or
later exercise by any person, including Bank, of any or all other rights, powers
or remedies.
IN WITNESS WHEREOF, the parties have cause this Intellectual Property
Security Agreement to be duly executed by its officers thereunto duly authorized
as of the first date written above.
GRANTOR:
Address of Grantor: CROSSWORLDS SOFTWARE, INC
CrossWorlds Software, Inc. By: /S/ SIGNATURE ILLEGIBLE
----------------------------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Title: Chief Financial Officer
-------------------------
Attn:_________________________
BANK:
Address of Bank: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ By: /S/ SIGNATURE ILLEGIBLE
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ----------------------------
Title: V.P.
-------------------------
Attn:_________________________
2
EXHIBIT A
---------
Copyrights
Registration/ Registration/
Application Application
Description Number Date
----------- ------ ----
EXHIBIT B
---------
Patents
Registration/ Registration/
Application Application
Description Number Date
----------- ------ ----
EXHIBIT C
---------
Trademarks
Registration/ Registration/
Application Application
Description Number Date
----------- ------ ----
EXHIBIT D
---------
Mask Works
Registration/ Registration/
Application Application
Description Number Date
----------- ------ ----