EXHIBIT 10.33
--------------------------------------------------------------------------------
LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
VIEWLOCITY, INC.,
AS BORROWER
AND
SILICON VALLEY BANK,
AS BANK
DECEMBER 27, 2002
--------------------------------------------------------------------------------
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT dated December 27, 2002, between
SILICON VALLEY BANK ("Bank"), whose address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and having a loan production office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and VIEWLOCITY, INC., a corporation organized
and in good standing in the State of Georgia f/k/a SynQuest, Inc. ("Borrower"),
whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
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.
2 LOAN AND TERMS OF PAYMENT
2.1 PROMISE TO PAY.
Borrower promises to pay 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), minus (iii) all amounts for services then utilized under the Cash
Management Services Sublimit and minus (iv) the FX Reserve; PROVIDED, HOWEVER,
that in no event shall the outstanding principal amount of Advances exceed
$1,500,000 at any one time outstanding. Amounts borrowed under this Section may
be repaid and reborrowed during the term of this Agreement. All advances shall
be evidenced by the Revolving Promissory Note to be executed and delivered by
Borrower to Bank on the Closing Date and shall be repaid in accordance with the
terms of the Revolving Promissory Note.
(b) To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 3:00 p.m. Eastern time on the Business Day the Advance is to be
made. Borrower must promptly confirm the notification by delivering to Bank the
Payment/Advance Form attached as EXHIBIT B. Bank will credit Advances to
Borrower's deposit account. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become
due. For purposes of this Section 2.1.1(b), Bank may rely on any telephone
notice given by a person whom Bank reasonably 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 are immediately payable.
(d) Bank's obligation to lend the undisbursed portion of the
Obligations will terminate if, in Bank's sole discretion, there has been a
material adverse change in the general affairs, management, results of
operation, condition (financial or otherwise) or the prospect of repayment of
the Obligations, or there has been any material adverse deviation by Borrower
from the most recent business plan of Borrower presented to and accepted by Bank
prior to the execution of this Agreement.
2.1.2 LETTERS OF CREDIT.
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 the Cash Management Sublimit, minus the FX Reserve; however, the face
amount of outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit) may not at any time exceed Three Hundred Twenty-Nine Thousand
Nine Hundred Dollars ($329,900). Each Letter of Credit will have an expiry date
of no later than one hundred eighty (180) days after the Revolving Maturity
Date, but Borrower's obligations to reimburse Bank under the Letters of Credit
will 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. Prior to or simultaneously
with the opening of each Letter of Credit, Borrower shall pay to Bank, a letter
of credit fee (each a "Letter of Credit Fee" and collectively the "Letter of
Credit Fees") in an amount equal to one percent (1%) per annum of the face
amount of the Letter of Credit. Such Letter of Credit Fees shall be paid in
advance upon the issuance of the Letter of Credit and upon each anniversary
thereof, if any. In addition, Borrower shall pay to Bank any and all additional
issuance, negotiation, processing, transfer or other fees to the extent and as
and when required by Bank.
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 the 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 from the foreign exchange sublimit (the "FX Reserve") which is
a maximum of Five Hundred Thousand Dollars ($500,000) minus all amounts for
services then utilized under the Cash Management Services Sublimit. 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.
Borrower may use up to Five Hundred Thousand Dollars ($500,000) LESS
the outstanding amount of the FX Reserve (the "Cash Management Services
Sublimit") for Bank's Cash Management Services, which may include merchant
services, direct deposit of payroll, business credit card, and check cashing
services identified in various cash management services agreements related to
such services (the "Cash Management Services"). Such aggregate amounts utilized
under the Cash Management Services Sublimit will at all times reduce the amount
otherwise available to be borrowed under the Committed Revolving Line. Any
amounts Bank pays on behalf of Borrower or any amounts that are not paid by
Borrower for any Cash Management Services will be treated as Advances under the
Committed Revolving Line and will accrue interest at the rate for Advances.
2.2 OVERADVANCES.
If Borrower's Obligations under Section 2.1.1 exceed the lesser of
either (i) the Committed Revolving Line or (ii) the Borrowing Base, Borrower
shall immediately pay Bank the excess.
2.3 INTEREST RATE, PAYMENTS.
(a) INTEREST RATE. Advances accrue interest on the outstanding
principal balance in accordance with the Revolving Promissory Note. After an
Event of Default, Obligations accrue interest at five percent (5%) above the
rate effective immediately before the Event of Default. The interest rate
increases or decreases when the Prime Rate changes. Interest is computed on a
360 day year for the actual number of days elapsed.
2
(b) PAYMENTS. Interest due on the Committed Revolving Line is payable
on the first (1st) day of each month. Bank may debit any of Borrower's deposit
accounts including Account Number 3300291886 for principal and interest payments
owing or any amounts Borrower owes 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 Eastern time are considered received at the opening of business
on the next Business Day. When a payment is due on a day that is not a Business
Day, the payment is due the next Business Day and additional fees or interest
accrue.
2.4 FEES.
Borrower will pay:
(a) FACILITY FEE. Borrower shall pay a fully earned, nonrefundable
origination fee in the amount of Thirty Seven Thousand Five Hundred Dollars
($37,500), which shall be due and payable on the Closing Date.
(b) BANK EXPENSES. All Bank Expenses (including reasonable attorneys'
fees and reasonable expenses of Bank's domestic and foreign counsel) incurred
through and after the date of this Agreement, are payable when due.
2.5 LOCKBOX.
Borrower shall direct the mailing of all items of payment from its
Account Debtors which have offices or are organized in the United States to a
post-office box designated by Bank, or to such other additional or replacement
post-office boxes pursuant to the request of Bank from time to time
(collectively, the "Lockbox"). Bank shall have unrestricted and exclusive access
to the Lockbox. For purposes of determining interest due and payable on the
Obligations, funds will be considered collected two (2) Business Days after
deposit into the Lockbox. Bank reserves the right, exercised in its sole and
absolute discretion from time to time, to provide credit prior to final
collection of an item of payment and to disallow credit for any item of payment
which is unsatisfactory to Bank. In the event items of payment are returned to
Bank for any reason whatsoever, Bank may, in the exercise of its discretion from
time to time, forward such items of payment a second time. Any returned items of
payment for which Borrower has previously received credit shall be charged back
to the Committed Revolving Line.
3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.
The obligation of Bank to make the first Advance is subject to the
condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, the following:
(a) this Agreement;
(b) the Revolving Promissory Note;
(c) a certificate of the Secretary of Borrower with respect to
articles, bylaws, incumbency and resolutions authorizing the execution and
delivery of this Agreement;
(d) evidence satisfactory to the Bank and its counsel of (i) the
merger of all of Borrower's Domestic Subsidiaries with and into the Borrower and
(ii) the change of Borrower's name from SynQuest, Inc. to Viewlocity, Inc.;
(e) an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the
Borrower, that the execution, delivery and performance of this Agreement and the
Loan Documents do not violate the Articles of Incorporation of the Borrower;
3
(f) financing statements (Forms UCC-1);
(g) insurance certificate;
(h) payment of the fees and Bank Expenses then due specified in
Section 2.4 hereof;
(i) receipt of the Warrant, subject only to passage of time to
accommodate necessary waivers and/or satisfaction of certain voting rights of
the holders of shares of the Borrower's Series A Stock;
(j) such other documents, and completion of such other matters,
as Bank may reasonably deem necessary or appropriate.
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 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 CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST.
Borrower grants Bank a continuing security interest in all presently
existing and later acquired Company Collateral to secure all Obligations and
performance of each of Borrower's duties under the Loan Documents. Except for
Permitted Liens, any security interest will be a first priority security
interest in the Company Collateral. Bank, upon the occurrence of any Event of
Default, may place a "hold" on any deposit account of Borrower maintained with
Bank. If this Agreement is terminated, Bank's lien and security interest in the
Company Collateral will continue until Borrower fully satisfies its Obligations.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION.
Borrower is duly existing and in good standing in the State of Georgia
and qualified and licensed to do business in, and in good standing in, any state
in which the conduct of its business or its ownership of property requires that
it be qualified, except where the failure to do so could not reasonably be
expected to cause a Material Adverse Change. Borrower's exact legal name is as
set forth on the first page of this Agreement. 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. Except as set forth in
SCHEDULE 5.1, 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.
4
5.2 COMPANY COLLATERAL.
Borrower has good title to the Collateral, free of Liens except
Permitted Liens. The Accounts are bona fide, existing obligations, and the
service or property has been performed or delivered to the Account Debtor or its
agent for immediate shipment to 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. Except to the extent set forth
in SCHEDULE 5.2, Borrower is the sole owner of the Intellectual Property, except
for non-exclusive licenses granted to its customers in the ordinary course of
business. Each Patent is valid and enforceable and no part of the Intellectual
Property has been judged invalid or unenforceable, in whole or in part, and no
claim has been made that any part of the Intellectual Property violates the
rights of any third party, 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, 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 consolidated
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 or any of the Loan Documents; 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
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. Bank
hereby acknowledges and agrees 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.
6 AFFIRMATIVE COVENANTS
Borrower will do all of the following for so long as Bank has an
obligation to lend, or there are outstanding Obligations:
6.1 GOVERNMENT COMPLIANCE.
Borrower will maintain its and all Subsidiaries' legal existence and
its good standing as a Registered Organization in only the State of Georgia and
Borrower will 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: (i) deliver to Bank, as soon as available, but no
later than thirty (30) days after the last day of each month that is not also
the last month in the fiscal quarter of Borrower, a company prepared
consolidated balance sheet and income statement covering Borrower's consolidated
operations during the period certified by a Responsible Officer and in a form
acceptable to Bank; (ii) make available to Bank, no later than forty-five (45)
days after the last day of each of the first three fiscal quarters of Borrower's
fiscal year, audited consolidated financial statements prepared under GAAP,
consistently applied; (iii) make available to Bank, no later than ninety (90)
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; (iv) deliver to Bank
within five (5) days of filing, notice of filing of all statements, reports and
notices made available to Borrower's security holders or to any holders of
Subordinated Debt and of all reports on Form 10-K, 10-Q and 8-K with the
Securities and Exchange Commission; (v) deliver to Bank, as soon as available,
but no later than thirty (30) days after the last day of Borrower's fiscal year,
company prepared operating budget for the fiscal year; (vi) deliver to Bank, 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; and (vii) deliver to Bank budgets, sales projections,
operating plans or other financial information Bank reasonably requests; and
(viii) deliver to Bank 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. The Bank agrees that the quarterly and annual financial statements
described in clauses (ii) and (iii) above shall be deemed to have been made
available hereunder when such financial statements are available to the Bank on
the Securities and Exchange Commission's Electronic Data Gathering, Analysis and
Retrieval system ("▇▇▇▇▇") or any successor system thereto.
6
(b) Within thirty (30) days after the last day of each month, Borrower
will deliver to Bank a Borrowing Base Certificate signed by a Responsible
Officer in the form of EXHIBIT C, with aged listings of accounts receivable.
(c) Borrower will deliver to Bank with the monthly and quarterly
financial statements a Compliance Certificate signed by a Responsible Officer in
the form of EXHIBIT D.
(d) Allow Bank to audit Borrower's Company Collateral at Borrower's
expense. Such audits will be conducted no more often than 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
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 (other than taxes
and assessments which Borrower is contesting in good faith, with adequate
reserves maintained in accordance with GAAP) and will deliver to Bank, on
demand, appropriate certificates attesting to the payment.
6.5 INSURANCE.
Borrower will keep its business and the Company Collateral insured for
risks and in amounts standard for Borrower's industry, and 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 lender'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 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 PRIMARY ACCOUNTS.
Borrower will maintain all of its primary depository, operating and
investment accounts with or through Bank.
6.7 FINANCIAL COVENANTS.
Borrower will maintain as of the last day of each month (unless
otherwise stated below):
(a) QUICK RATIO. A ratio of Quick Assets to Current Liabilities
minus Deferred Maintenance Revenue of at least 1.50 to 1.00.
(b) TANGIBLE NET WORTH. A Tangible Net Worth of not less than
One Million Dollars ($1,000,000) from the Closing Date through September 30,
2003, and One Million Five Hundred Thousand Dollars ($1,500,000) thereafter;
PROVIDED, HOWEVER, that effective upon each issuance of any equity securities by
the Borrower, the minimum amounts set forth above for the period in which such
equity issuance occurs and for each period thereafter shall be automatically
increased by an amount equal to fifty percent (50%) of amount by which
shareholders' equity is increased as a result of such equity issuance..
7
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 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 material to Borrower's business 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 Company Collateral or to effect the purposes of this Agreement.
6.10 AMENDMENT TO CHARTER.
Borrower shall, not later than May 31, 2003, amend its Third Amended
and Restated Articles of Incorporation to modify the certificate of designation
applicable to the Borrower's Series A Convertible Preferred Stock (the "Series A
Stock") to provide that a pledge or mortgage of all or substantially all of the
Borrower's assets does not give rise to any right of the holders of the Series A
Stock to receive any liquidating, redemption or similar payments on their shares
of Series A Stock, all on terms and conditions satisfactory to Bank.
7 NEGATIVE COVENANTS
Borrower will not do any of the following without Bank's prior written
consent, for so long as Bank has an obligation to lend or there are any
outstanding Obligations:
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, including without limitation, cash or cash
equivalents, EXCEPT for Transfers (i) of Inventory in the ordinary course of
business; (ii) of non-exclusive licenses and similar arrangements for the use of
the property of Borrower or its Subsidiaries in the ordinary course of business;
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 management or ownership of greater than
twenty five percent (25%) (other than by the sale of Borrower's equity
securities in a public offering or to venture capital investors so long as
Borrower identifies and advises Bank of the venture capital investors prior to
the closing of the investment or the sale of Borrower's integration business).
Borrower will not, without at least thirty (30) days prior written notice,
change its state of formation or relocate its chief executive office. In
addition Borrower will use reasonable efforts to give Bank notice of 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
8
would result from such action during the term of this Agreement and (ii) such
transaction would not result in a decrease of more than twenty five percent
(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 Company 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.
Other than loans and other advances or cash distributions to
Subsidiaries which exist immediately prior to the Closing, Borrower shall not
directly or indirectly enter into or permit to exist any material transaction
with any Affiliate of Borrower or any Subsidiary except for transactions that
are in the ordinary course of Borrower's or such Subsidiary's business, upon
fair and reasonable terms that are no less favorable to Borrower or such
Subsidiary than would be obtained in an arm's length transaction with a
nonaffiliated Person; provided, Bank understands and agrees that additional
loans and other advances or cash distributions made after the Closing Date to
any Affiliates of Borrower or any Subsidiary of Borrower may not at any time in
the aggregate exceed $1,500,000 without Bank's prior written consent. In
addition, nothing in this Agreement shall prohibit Borrower or any Subsidiary of
Borrower after the Closing Date from converting any loans or other advances now
or hereafter made, into equity in Borrower or a Subsidiary.
7.8 SUBORDINATED DEBT.
Make or permit any payment on any Subordinated Debt, except under the
terms of the Subordinated Debt, or amend any provision in any document relating
to the Subordinated Debt without Bank's prior written consent.
7.9 COMPLIANCE.
Become an "investment company" or a company controlled by an
"investment company," under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Credit Extension for that purpose; fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the
Federal Fair Labor Standards Act or violate any other law or regulation, if the
violation could reasonably be expected to have a material adverse effect on
Borrower's business or operations or would reasonably be expected to cause a
Material Adverse Change, or permit any of its Subsidiaries to do so.
9
8 EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1 PAYMENT DEFAULT.
If Borrower fails to pay any of the Obligations when due;
8.2 COVENANT DEFAULT.
If Borrower does not perform any obligation in Section 6 or violates
any covenant in Section 7; or if Borrower or any Guarantor does not perform or
observe any other material term, condition or covenant in this Agreement, any
Loan Documents, or in any agreement between Borrower or any Guarantor and Bank
and as to any default under a term, condition or covenant that can be cured, has
not cured the default within ten (10) days after it occurs, or if the default
cannot be cured within ten (10) days or cannot be cured after Borrower's attempt
within ten (10) day period, and the default may be cured within a reasonable
time, then Borrower has an additional period (of not more than thirty (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.
If there (i) occurs a material adverse change in the business,
operations, or condition (financial or otherwise) of the Borrower, or (ii) is a
material impairment of the prospect of repayment of any portion of the
Obligations or (iii) is a material impairment of the value or priority of Bank's
security interests in the Company Collateral (each of (i), (ii) and (iii) 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 ten (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 ten (10)
days after Borrower receives notice. These are not Events of Default if stayed
or if a bond is posted pending contest by Borrower (but no Credit Extensions
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 thirty (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;
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 ten (10) days (but
no Credit Extensions will be made before the judgment is stayed or satisfied);
10
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; or
8.9 GUARANTY.
Any guaranty of any Obligations ceases for any reason to be in full
force or any Guarantor does not perform any obligation under any guaranty of the
Obligations, or any material misrepresentation or material misstatement exists
now or later in any warranty or representation in any guaranty of the
Obligations or in any certificate delivered to Bank in connection with the
guaranty, or any circumstance described in Sections 8.4, 8.5 or 8.7 occurs to
any Guarantor.
8.10 SUBSIDIARIES.
Any circumstance described in Sections 8.3, 8.4, 8.5 or 8.7 occurs to
any Subsidiary of Borrower.
8.11 WARRANT.
If for any reason the original Warrant is not received by Bank within
15 days of the Closing Date.
9 BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES.
When an Event of Default occurs and continues Bank may, without notice
or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's benefit
under this Agreement or under any other agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with Account Debtors
for amounts, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Company Collateral. Borrower
will assemble the Company Collateral if Bank requires and make it available as
Bank designates. Bank may enter premises where the Company Collateral is
located, take and maintain possession of any part of the Company 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
Bank or its Affiliate 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 Company Collateral. Bank is granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower's labels, Patents, Copyrights, rights of use of any name, trade
secrets, trade names, Trademarks, service marks, and advertising matter, or any
similar property as it pertains to the Company Collateral, in completing
production of, advertising for sale, and selling any Company Collateral
11
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 Company Collateral according to the Code.
9.2 POWER OF ATTORNEY.
Effective only when an Event of Default occurs and continues and Bank
seeks to exercise its rights and/or remedies pursuant to this Agreement or any
of the Loan Documents, 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 Company Collateral into
the name of Bank or a third party as the Code permits. Bank may exercise the
power of attorney to sign Borrower's name on any documents necessary to perfect
or continue the perfection of any security interest regardless of whether an
Event of Default has occurred. Bank's appointment as Borrower's attorney in
fact, and all of Bank's rights and powers, coupled with an interest, are
irrevocable until all Obligations have been fully repaid and performed and
Bank's obligation to provide Credit Extensions terminates.
9.3 ACCOUNTS COLLECTION.
When an Event of Default occurs and continues, Bank may notify any
Person owing Borrower money of Bank's security interest in the funds and verify
the amount of the Account. Borrower must collect all payments in trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank in the form
received from the Account Debtor, with proper endorsements for deposit.
9.4 BANK EXPENSES.
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons, Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Company 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 COMPANY COLLATERAL.
If Bank complies with reasonable banking practices and the Code, it is
not liable for: (a) the safekeeping of the Company Collateral; (b) any loss or
damage to the Company Collateral; (c) any diminution in the value of the Company
Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other person. Except as otherwise provided in this Section 9.5, Borrower bears
all risk of loss, damage or destruction of the Company 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.
12
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 below:
If to Borrower: Viewlocity, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇, CFO
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to Bank: Silicon Valley Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, SVP
A party may change its notice address by giving the other party
written notice.
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
Unless otherwise provided for in a Loan Document, Georgia law
governs the Loan Documents without regard to principles of conflicts of law.
Borrower and Bank each submit to the exclusive jurisdiction of the State and
Federal courts in the State of Georgia provided, however, that if for any reason
the Bank can not avail itself of the courts of the State of Georgia, the
Borrower and Bank each submit to the jurisdiction of the State and Federal
Courts in Santa ▇▇▇▇▇ County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS.
This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any
rights under it without Bank's prior written consent which may be granted or
withheld in Bank's discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank's obligations, rights and benefits
under this Agreement.
13
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.
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 (provided, however, Bank shall use
commercially reasonable efforts in obtaining such prospective transferee or
purchasers agreement of the terms of this provision), (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.
14
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 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:
"ACCOUNT DEBTOR" means any Person who is obligated on an Account and
"Account Debtors" mean all Persons who are obligated on the Accounts.
"ACCOUNTS" has the meaning set forth in the Code and includes 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, and 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 seventy-five percent (75%) of Eligible Accounts
(or with respect to Foreign Accounts of the Dollar Currency Equivalent) as
determined by Bank from Borrower's most recent Borrowing Base Certificate;
PROVIDED, HOWEVER, that Bank may lower the percentage of the Borrowing Base
after performing an audit of Borrower's Company Collateral; PROVIDED, FURTHER,
that no Foreign Accounts shall be included in the Borrowing Base unless and
until the Bank shall have received such instruments, documents and agreements as
the Bank may require (a) for the Subsidiary of the Borrower that holds such
Foreign Account to guarantee the Obligations and (b) in order to create, perfect
or confirm a first priority perfected lien on or security interest in such
Foreign Accounts in favor of the Bank as security for the Obligations, all on
terms and conditions satisfactory to the Bank in its discretion..
"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 Uniform Commercial Code, in effect in the State of
Georgia.
"COLLATERAL" means collectively, (i) the Company Collateral, (ii) to
the extent a Foreign Security Agreement has been or hereafter is delivered, the
Foreign Subsidiary Collateral and (iii) to the extent a
15
Foreign Pledge Agreement has been or hereafter is delivered, the Stock
Collateral, but "Collateral" does not include any assets subject to Purchase
Money Liens or subject to any lien set forth on the Schedule.
"COMMITTED REVOLVING LINE" is Advances of up to One Million Eight
Hundred Twenty-Nine Thousand Nine Hundred Dollars ($1,829,900).
"COMPANY COLLATERAL" is the property described on EXHIBIT A.
"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 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.
"DEFERRED MAINTENANCE REVENUE" is all amounts received in advance of
performance under maintenance contracts and not yet recognized as revenue.
"DOLLAR CURRENCY EQUIVALENT" means, on any date of determination, the
amount of United States Dollars which results from the sale of a given amount in
Pounds Sterling, Euros or Australian Dollars, as the case may be, determined at
the rate of exchange quoted by the Bank, at 11:00 A.M. (California time) on such
date of determination, to prime banks for the spot sale in the London foreign
exchange market of Pounds Sterling, Euros or Australian Dollar for United States
Dollars.
"DOMESTIC SUBSIDIARY" means any Subsidiary of Borrower that is
organized in the United States of America.
"ELIGIBLE ACCOUNTS" are Accounts in the ordinary course of Borrower's
business that meet all 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 90 days of
invoice date;
(b) Accounts for an Account Debtor, 50% or more of whose Accounts have
not been paid within 90 days of invoice date;
(c) Credit balances over 90 days from invoice date;
16
(d) Accounts for an Account Debtor, including Affiliates, whose total
obligations to Borrower exceed 25% of all Accounts, for the amounts that exceed
that percentage, unless the Bank approves in writing;
(e) Accounts for which the Account Debtor does not have its principal
place of business in the United States, other than Accounts from Account Debtors
domiciled in the United Kingdom or Australia which are subject to a Foreign
Security Agreement and which do not represent more than 30% of all Eligible
Accounts;
(f) Accounts for which the Account Debtor is a federal, state or local
government entity or any department, agency, or instrumentality;
(g) Accounts for which Borrower owes the Account Debtor, but only up
to the amount owed (sometimes called "contra" accounts, accounts payable,
customer deposits or credit accounts);
(h) Accounts for demonstration or promotional equipment, or in which
goods are consigned, sales guaranteed, sale or return, sale on approval, ▇▇▇▇
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 in which the Bank does not have a first priority
perfected lien or security interest; or
(l) Accounts for which Bank reasonably determines collection to be
doubtful.
"EQUIPMENT" has the meaning set forth in the Code and includes is
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.
"FOREIGN PLEDGE AGREEMENTS" means that certain share mortgage, charge
over share or any similar agreement now or hereafter delivered by the Borrower
or one or more of the Foreign Subsidiaries in favor of Bank, pursuant to which
the Borrower or such Foreign Subsidiaries grant to Bank a first lien in all the
stocks of each Foreign Subsidiary.
"FOREIGN SUBSIDIARY COLLATERAL" means the collateral described in the
Foreign Pledge Agreement and the Foreign Security Agreements now or hereafter
delivered by a Foreign Subsidiary in favor of Bank.
"FOREIGN SECURITY AGREEMENTS" means each mortgage debenture, deed of
charge or any similar agreement now or hereafter delivered a Foreign Subsidiary
in favor of the Bank, pursuant to which such Foreign Subsidiary grants to Bank
first priority lien in such Foreign Subsidiary's Accounts.
"FOREIGN SUBSIDIARIES" means each present and future Subsidiary of
Borrower or any Domestic Subsidiary that are organized outside of the in the
United States of America, including, without limitation, Viewlocity Holding
France SARL (France), Viewlocity (UK) LTD (England), Viewlocity Australia Pty
LTD (Australia), SC-21 PTE LTD (Singapore), Frontec Norge AS (Norway), Synquest
S.A. (France), Synquest LTD. (United Kingdom), Synquest BV (Netherlands) and
Viewlocity Japan Co. LTD (Japan).
"GAAP" is generally accepted accounting principles.
17
"GUARANTIES" means the Unlimited Guaranties from each present or
future Subsidiary of the Borrower, including, without limitation, the
Guarantors, as the same may be amended from time to time.
"GUARANTORS" are any present or future guarantor of the Obligations,
including without limitation, the Foreign Subsidiaries.
"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 and Patents including amendments, renewals,
extensions, and all licenses or other rights to use and all license fees and
royalties from the use;
(b) Any trade secrets and any intellectual property rights in computer
software and computer software products now or later existing, created, acquired
or held;
(c) All design rights which may be available to Borrower now or later
created, acquired or held;
(d) Any claims for damages (past, present or future) for infringement
of any of the rights above, with the right, but not the obligation, to ▇▇▇ 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.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" means each Intellectual
Property Security Agreement now or hereafter delivered by Borrower or any
Subsidiary in favor of Bank.
"INVENTORY" has the meaning set forth in the Code and includes 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 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.
"LETTER OF CREDIT" is defined in Section 2.1.2.
"LETTER-OF-CREDIT RIGHT" means a right to payment or performance under
a letter of credit, whether or not the beneficiary has demanded or is at the
time entitled to demand payment or performance.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
18
"LOAN DOCUMENTS" are, collectively, this Agreement, the Revolving
Promissory Note, the Guaranties, the Foreign Pledge Agreements, the Foreign
Security Agreements, the Warrant, the Intellectual Property Security Agreements,
any note, or notes or guaranties executed by Borrower, any Subsidiaries, or any
Guarantor, and any other present or future agreement between Borrower and/or for
the benefit of Bank in connection with this Agreement, all as amended, extended
or restated.
"MATERIAL ADVERSE CHANGE" has the meaning set forth 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.
"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
(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;
19
(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.
"PROCEEDS" has the meaning described in the Code as in effect from
time to time.
"PRIME RATE" is Bank's most recently announced "prime rate," even if
it is not Bank's lowest rate.
"PURCHASE MONEY LIENS" means (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.
"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.
"REGISTERED ORGANIZATION" means an organization organized solely under
the law of a single state or the United States and as to which the state or the
United States must maintain a public record showing the organization to have
been organized.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.
"REVOLVING MATURITY DATE" is December __, 2003.
"REVOLVING PROMISSORY NOTE" means that certain Revolving Promissory
Note of even date herewith in the maximum principal amount of One Million Eight
Hundred Twenty-Nine Thousand Nine Hundred Dollars ($1,829,900) from Borrower in
favor of Bank, together with all renewals, amendments, modifications and
substitutions, therefor.
"SCHEDULE" is any attached schedule of exceptions.
"SECURITY AGREEMENTS" means collectively, the Foreign Security
Agreements.
"SERIES A STOCK" shall have the meaning given such term in Section
6.10.
"STOCK COLLATERAL" means the collateral now or hereafter described in
the Foreign Pledge Agreement.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's indebtedness owed to Bank and which is reflected in a written
agreement in a manner and form acceptable to Bank and approved by Bank in
writing.
"SUBSIDIARY" is for any Person, 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.
20
"SUPPORTING OBLIGATION" means a Letter-of-credit right, secondary
obligation or obligation of a secondary obligor or that supports the payment or
performance of an account, chattel paper, a document, a general intangible, an
instrument or investment property.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries, PLUS Subordinated Debt, 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.
"TOTAL LIABILITIES" is on any day, obligations that should, under
GAAP, be classified as liabilities on Borrower's consolidated balance sheet,
including all Indebtedness, and current portion Subordinated Debt allowed to be
paid, but excluding all other Subordinated Debt.
"TRADEMARKS" are trademark and servicemark rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Borrower connected with the trademarks.
"WARRANT" means that certain Warrant to Purchase Stock of even date
herewith between Borrower and Bank.
BORROWER:
VIEWLOCITY, INC.
By: /s/ L. ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: L. ▇▇▇▇▇ ▇▇▇▇▇
Title: EVP and CFO
BANK:
SILICON VALLEY BANK
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
21
EXHIBIT A
The Company Collateral consists of all of Borrower's right, title and
interest in and to the following:
All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;
All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, financial assets,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired and Borrower's Books relating to the foregoing; and
All Supporting Obligations and all Borrower's Books relating to the
foregoing and any and all claims, rights and interests in any of the above and
all substitutions for, additions and accessions to and Proceeds thereof.
EXHIBIT B
LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 E.S.T.
FAX TO: ▇▇▇-▇▇▇-▇▇▇▇ DATE:____________
/ / Loan Payment: _______________ Client Name (Borrower)
From Account #________________________ To Account #____________________
(Deposit Account #) (Loan Account #)
Principal $_______________________ and/or Interest $______________________
All Borrower's representations and warranties in the Loan and Security
Agreement are true, correct and complete in all material respects to on the
date of the telephone transfer request for and advance, but those
representations and warranties expressly referring to another date shall be
true, correct and complete in all material respects as of the date:
AUTHORIZED SIGNATURE: Phone Number:
----------------------- ---------------
/ / LOAN ADVANCE:
COMPLETE OUTGOING WIRE REQUEST SECTION BELOW IF ALL OR A PORTION OF THE
FUNDS FROM THIS LOAN ADVANCE ARE FOR AN OUTGOING WIRE.
From Account #________________________ To Account #____________________
(Loan Account #) (Deposit Account #)
Amount of Advance $___________________
All Borrower's representations and warranties in the Loan and Security
Agreement are true, correct and complete in all material respects to on the
date of the telephone transfer request for and advance, but those
representations and warranties expressly referring to another date shall be
true, correct and complete in all material respects as of the date:
AUTHORIZED SIGNATURE: Phone Number:
---------------------- ---------------
OUTGOING WIRE REQUEST
COMPLETE ONLY IF ALL OR A PORTION OF FUNDS FROM THE LOAN ADVANCE ABOVE ARE
TO BE WIRED.
Deadline for same day processing is 12:00 p.m., E.S.T.
Beneficiary Name: __________________ Amount of Wire: $_________________
Beneficiary Bank: __________________ Account Number: __________________
City and Sate: _______________________
Beneficiary Bank Transit (ABA) #: ___________ Beneficiary Bank Code
(Swift, Sort, Chip, etc.):___
(FOR INTERNATIONAL WIRE ONLY)
Intermediary Bank:______________________ Transit (ABA) #:__________________
For Further Credit to:______________________________________________________
Special Instruction:________________________________________________________
BY SIGNING BELOW, I (WE) ACKNOWLEDGE AND AGREE THAT MY (OUR) FUNDS TRANSFER
REQUEST SHALL BE PROCESSED IN ACCORDANCE WITH AND SUBJECT TO THE TERMS AND
CONDITIONS SET FORTH IN THE AGREEMENTS(s) COVERING FUNDS TRANSFER
SERVICE(s), WHICH AGREEMENTS(s) WERE PREVIOUSLY RECEIVED AND EXECUTED BY ME
(US).
Authorized Signature: 2nd Signature (If Required):
--------------- ---------
Print Name/Title: Print Name/Title:
------------------- --------------------
Telephone # Telephone #
------------------------- --------------------------
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: Viewlocity, Inc. Bank: Silicon Valley Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Commitment Amount: $________
DOMESTIC ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of ____ $__________
2. Additions (please explain on reverse) $__________
3. TOTAL DOMESTIC ACCOUNTS RECEIVABLE $__________
FOREIGN ACCOUNTS RECEIVABLE
4. UK Accounts Receivable Book Value _____ Exchange Rate _______ $__________
5. Australian Accounts Receivable Book Value _____ Exchange Rate _______ $__________
6. Additions (please explain on reverse) $__________
7. TOTAL FOREIGN ACCOUNTS RECEIVABLE $__________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
8. Amounts over 90 days due $__________
9. Balance of 50% over 90 day accounts $__________
10. Credit balances over 90 days $__________
11. Concentration Limits* $__________
12. Foreign Accounts (other than UK and Australia included 4 above $__________
13. Governmental Accounts $__________
14. Contra Accounts $__________
15. Promotion or Demo Accounts $__________
16. Intercompany/Employee Accounts $__________
17. Other (please explain on reverse) $__________
18. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $__________
19. Eligible Accounts (#3 minus #18) $__________
20. LOAN VALUE OF ACCOUNTS (75% of #19) $__________
BALANCES
21. Maximum Loan Amount $__________
22. Total Funds Available [Lesser of #21 or #20] $__________
23. Present balance owing on Line of Credit $__________
24. Outstanding under Sublimits (LC or FX) $__________
25. RESERVE POSITION (#22 minus #23 and #24) $__________
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THIS IS TRUE, COMPLETE AND CORRECT,
AND THAT THE INFORMATION IN THIS BORROWING BASE CERTIFICATE COMPLIES WITH THE
REPRESENTATIONS AND WARRANTIES IN THE
LOAN AND SECURITY AGREEMENT BETWEEN THE
UNDERSIGNED AND SILICON VALLEY BANK.
COMMENTS:
BANK USE ONLY
Rec'd By:
-----------
Auth. Signer
By: Date:
---------------------------------- -------------
Authorized Signer
Verified:
-----------
Auth. Signer
Date:
-------------
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FROM: Viewlocity, Inc.
The undersigned authorized officer of Viewlocity, Inc. ("Borrower")
certifies that under the terms and conditions of the
Loan and Security Agreement
between Borrower and Bank (the "Agreement"), (i) Borrower is in complete
compliance for the period ending _______________ with all required covenants
except as noted below and (ii) all representations and warranties in the
Agreement are true and correct in all material respects on this date. Attached
are the required documents supporting the certification. The Officer certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) consistently applied from one period to the next except as
explained in an accompanying letter or footnotes. The Officer acknowledges that
no borrowings may be requested at any time or date of determination that
Borrower is not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Monthly financial statements + CC Monthly within 30 days Yes No
Quarterly financial statements + CC Quarterly within 45 days Yes No
Annual (Audited) FYE available within 90 days Yes No
SEC Reports and filings Notice within 5 days of filing Yes No
A/R Agings Monthly within 30 days Yes No
A/R Audit Initial and Semi-Annual Yes No
Borrowing Base Certificate Monthly within 30 days Yes No
FINANCIAL COVENANTS REQUIRED ACTUAL COMPLIES
------------------- -------- ------ --------
Maintain on a Monthly Basis:
Quick Ratio 1.50:1.0 _.__:1.00 Yes No
Minimum Tangible Net Worth $1,000,000(1) $________ Yes No
Have there been updates to Borrower's intellectual property, if appropriate? Yes No
COMMENTS REGARDING EXCEPTIONS: See Attached.
----------
(1) This convent increases to $1,500,000 after September 30, 2003
BANK USE ONLY
Sincerely, Received by:
-----------------------
AUTHORIZED SIGNER
Viewlocity, Inc. Date:
------------------------------
Verified:
---------------------------------------- --------------------------
SIGNATURE AUTHORIZED SIGNER
Date:
---------------------------------------- ------------------------------
TITLE
Compliance Status: Yes No
----------------------------------------
DATE