EXHIBIT 10.1
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
DIGITALTHINK, INC.
TABLE OF CONTENTS
Page
1 ACCOUNTING AND OTHER TERMS...........................................4
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2 LOAN AND TERMS OF PAYMENT............................................4
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2.1 Promise to Pay..............................................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........................................6
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4.1 Grant of Security Interest..................................6
4.2 Authorization To File.......................................6
5 REPRESENTATIONS AND WARRANTIES.......................................7
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5.1 Due Organization and Authorization..........................7
5.2 Collateral..................................................7
5.3 Litigation..................................................7
5.4 No Material Adverse Change in Financial Statements..........7
5.5 Solvency....................................................7
5.6 Regulatory Compliance.......................................8
5.7 Investments in Subsidiaries.................................8
5.8 Full Disclosure.............................................8
6 AFFIRMATIVE COVENANTS................................................8
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6.1 Government Compliance.......................................8
6.2 Financial Statements, Reports, Certificates.................8
6.3 Inventory; Returns..........................................9
6.4 Taxes.......................................................9
6.5 Insurance...................................................9
6.6 Accounts; Minimum Balances..................................9
6.7 Financial Covenants.........................................9
6.8 Further Assurances.........................................10
7 NEGATIVE COVENANTS..................................................10
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7.1 Dispositions...............................................10
7.2 Changes in Business, Ownership, Management or Locations of
Collateral.................................................10
7.3 Mergers or Acquisitions....................................10
7.4 Indebtedness...............................................10
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...................................................11
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8.1 Payment Default............................................11
8.2 Covenant Default...........................................11
8.3 Material Adverse Change....................................12
8.4 Attachment.................................................12
8.5 Insolvency.................................................12
8.6 Other Agreements...........................................12
8.7 Judgments..................................................12
8.8 Misrepresentations.........................................12
9 BANK'S RIGHTS AND REMEDIES..........................................12
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9.1 Rights and Remedies........................................12
9.2 Power of Attorney..........................................13
9.3 Bank Expenses..............................................13
9.4 Bank's Liability for Collateral............................14
9.5 Remedies Cumulative........................................14
9.6 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..................................................14
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12.1 Successors and Assigns.....................................14
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............................................15
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
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated as of the Effective
Date, between SILICON VALLEY BANK ("Bank"), whose address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ with a loan production office located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and DIGITALTHINK, INC.
("Borrower"), whose address is ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
RECITALS
A........Bank and Borrower are parties to that certain Loan and Security
Agreement dated December 20, 2001, as amended (collectively, the "Original
Agreement").
B........Borrower and Bank desire in this Agreement to set forth their agreement
with respect to a working capital loan and to amend and restate in its entirety
without novation the Original Agreement in accordance with the provisions
herein.
AGREEMENT
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 Committed Revolving Line,
minus (ii) the Cash Management Services Sublimit, minus (iii) the amount of
all outstanding Letters of Credit (including drawn but unreimbursed Letters
of Credit), and minus (iv) the FX Reserve. 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 12:00 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 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 Sublimit.
Bank will issue or have issued Letters of Credit for Borrower's account not
exceeding (i) the Committed Revolving Line minus (ii) the outstanding principal
balance of the Advances minus the Cash Management Sublimit, minus (iii) the FX
Reserve; however, the face amount of outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit) may not exceed $4,000,000. Borrower's
Letter of Credit reimbursement obligation will be secured by unencumbered cash
on terms acceptable to Bank at any time upon 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.
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, which is a maximum of $1,000,000 (the "FX
Reserve"). 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. The FX Reserve may not exceed (i) Committed
Revolving Line minus (ii) the outstanding principal balance of the Advances
minus (iii) the amount of all outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit) minus (iv) the outstanding portion of the Cash
Management Services Sublimit.
2.1.4 Cash Management Services Sublimit.
Borrower may use up to $1,000,000 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 Sublimit"); provided,
however, the Cash Management Services Sublimit may not exceed (i) the Committed
Revolving Line minus (ii) the outstanding principal balance of the Advances
minus (iii) the amount of all outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit) minus (iv) the outstanding portion of FX
reserve. All amounts Bank pays for any Cash Management Services will be treated
as Advances under the Committed Revolving Line.
2.2 Overadvances.
If Borrower's Obligations under Section 2.1.1, 2.1.2, 2.1.3 and 2.1.4 exceed the
Committed Revolving Line, Borrower must immediately pay in cash to Bank the
excess.
2.3 Interest Rate, Payments.
(a) Interest Rate. Advances accrue interest on the outstanding principal
balance at a per annum rate of 0.5 percentage points above the Prime Rate.
After an Event of Default, Obligations accrue interest at 5 percent above
the rate effective immediately before the Event of Default. The interest
rate increases or decreases when the Prime Rate changes. Interest is
computed on a 360 day year for the actual number of days elapsed.
(b) Payments. Interest due on the Committed Revolving Line is payable on the
17th of each month. Bank may debit any of Borrower's deposit accounts
including Account Number 3300018304 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 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 interest shall accrue.
2.4 Fees.
Borrower will pay:
(a) Facility Fee. A fully earned, non refundable quarterly facility fee of
$4,396.20 is due on January 1, 2004 and $7,000 will be due on the 1st day
of each fiscal quarter thereafter; and
(b) Bank Expenses. All Bank Expenses (including reasonable attorneys' fees and
reasonable expenses incurred through and after the date of this Agreement,
are payable when due.
2.4.2 Letter of Credit Fee.
Borrower will pay Bank the Letter of Credit Fee at the time of the issuance or
renewal of each Letter of Credit, and on each anniversary thereof.
3 CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Credit Extension.
Bank's obligation to make the initial Credit Extension is subject to the
condition precedent that it receive the agreements, documents and fees it
requires.
3.2 Conditions Precedent to all Credit Extensions.
Bank's obligations to make each Credit Extension, including the initial Credit
Extension, is subject to the following:
(a) timely receipt of any Payment/Advance Form; and
(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 CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest.
Borrower grants Bank a continuing security interest in all presently existing
and later acquired Collateral to secure all Obligations and performance of each
of Borrower's duties under the Loan Documents. Except for Permitted Liens, any
security interest will be a first priority security interest in the Collateral.
Bank may place a "hold" on any deposit account pledged as Collateral. If this
Agreement is terminated, Bank's lien and security interest in the Collateral
will continue until Borrower fully satisfies its Obligations.
4.2 Authorization To File.
Borrower authorizes Bank to file financing statements without notice to
Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in
order to perfect or protect Bank's interest in the Collateral.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 Due Organization and Authorization.
Borrower and each Subsidiary is duly existing and in good standing in its state
of formation and qualified and licensed to do business in, and in good standing
in, any state in which the conduct of its business or its ownership of property
requires that it be qualified, except where the failure to do so could not
reasonably be expected to cause a Material Adverse Change. Borrower has not
changed its state of formation or its organizational structure or type or any
organizational number (if any) assigned by its jurisdiction of formation.
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
or Borrower has Rights to each asset that is Collateral. Borrower has no other
deposit account, other than the deposit accounts described in the Schedule. 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. The Collateral
is not in the possession of any third party bailee (such as at a warehouse). In
the event that Borrower, after the date hereof, intends to store or otherwise
deliver the Collateral to such a bailee, then Borrower will receive the prior
written consent of Bank and such bailee must acknowledge in writing that the
bailee is holding such Collateral for the benefit of Bank. All Inventory is in
all material respects of good and marketable quality, free from material
defects.
5.3 Litigation.
Except as shown in the Borrower's SEC filing, 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 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 Investments in 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
being 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.
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 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 certified by a Responsible Officer and in a
form 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) 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 (iv) budgets, sales projections,
operating plans or other financial information Bank reasonably requests.
(b) Within 30 days after the last day of each month, Borrower will deliver to
Bank with the monthly financial statements a Compliance Certificate signed
by a Responsible Officer in the form of Exhibit C.
(c) Allow Bank to audit Borrower's Collateral at Borrower's expense. Such
audits will be conducted only at such times as an Event of Default has
occurred and is continuing.
6.3 Inventory; Returns.
Borrower will keep all Inventory in good and marketable condition, free from
material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary practices as they exist at execution of
this Agreement. Borrower must promptly notify Bank of all returns, recoveries,
disputes and claims that involve more than $50,000.
6.4 Taxes.
Borrower will make, and cause each Subsidiary to make, timely payment of all
material federal, state, and local taxes or assessments and will deliver to
Bank, on demand, appropriate certificates attesting to the payment.
6.5 Insurance.
Borrower will keep its business and the Collateral insured for risks and in
amounts, as Bank 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 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 Accounts; Minimum Balances.
Borrower will maintain its depository and investment accounts with or through
Bank. In addition, Borrower agrees that it shall maintain the lesser of (i)
$8,000,000 or (ii) 80% of its total cash or cash equivalents in Bank's sweep,
demand deposit or investment accounts.
6.7 Financial Covenants.
Borrower will maintain as of the last day of each month:
(i) Minimum Cash. Borrower shall maintain, at all times, unrestricted cash and
short term marketable securities at Bank of at least 2 times the
outstanding Advances (including the aggregate usage under the Letters of
Credit Sublimit, Foreign Exchange Sublimit and Cash Management Services
Sublimit).
(ii) Minimum EBITDA. Borrower shall maintain a minimum EBITDA of ($3,500,000)
for the quarter ended September 30, 2003, ($2,100,000) for the quarter
ending December 31, 2003, ($1,500,000) for the quarter ending March 31,
2004, ($750,000) for the quarter ending June 30, 2004, $1 for the quarter
ending September 30, 2004, the quarter ending December 31, 2004 and the
quarter ending March 31, 2005. "EBITDA" is Borrower's consolidated earnings
before interest expense, income taxes, depreciation, amortization of
intangible assets, and other non-cash charges, such as write down of
intangibles and restructuring charges.
6.8 Further Assurances.
Borrower will execute any further instruments and take further action as Bank
reasonably requests to perfect or continue Bank's security interest in the
Collateral or to effect the purposes of this Agreement.
7 NEGATIVE COVENANTS
For so long as Bank has an obligation to lend or there are any outstanding
Obligations, Borrower shall not, without Bank's prior written consent (which
shall be a matter of its good faith business judgment), do any of the following:
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, 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 Locations of Collateral.
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 of greater than 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 the venture capital
investors prior to the closing of the investment). Borrower will not, without at
least 30 days prior written notice, relocate its chief executive office, change
its state of formation (including reincorporation), change its organizational
number or name or add any new offices or business locations (such as warehouses)
in which Borrower maintains or stores over $5,000 in Collateral.
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 to exist any material transaction
with any Affiliate of Borrower except for transactions that are in the ordinary
course of Borrower's business, upon fair and reasonable terms that are no less
favorable to Borrower than would be obtained in an arm's length transaction with
a non-affiliated Person.
7.8 Subordinated Debt.
Make or permit any payment on any Subordinated Debt, except under the terms of
the Subordinated Debt, or amend any provision in any document relating to the
Subordinated Debt without Bank's prior written consent.
7.9 Compliance.
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.
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 within 3 days after their due
date, however, during such period no Credit Extensions will be made;
8.2 Covenant Default.
(a) If Borrower fails to perform any obligation under Sections 6.2 or 6.7 or
violates any of the covenants contained in Section 7 of this Agreement, or
(b) If Borrower fails or neglects to perform, keep, or observe any other
material term, provision, condition, covenant, or agreement contained in
this Agreement, in any of the Loan Documents, or in any other present or
future agreement between Borrower and Bank and as to any default under such
other term, provision, condition, covenant or agreement that can be cured,
has failed to cure such default within ten (10) days after the occurrence
thereof; provided, however, that if the default cannot by its nature be
cured within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is
likely to be cured within a reasonable time, then Borrower shall have an
additional reasonable period (which shall not in any case exceed thirty
(30) days) to attempt to cure such default, and within such reasonable time
period the failure to have cured such default shall not be deemed an Event
of Default (provided that no Credit Extensions will be made during such
cure period);
8.3 Material Adverse Change.
If there (i) occurs a material adverse change in the business, operations, or
financial condition 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
Collateral (the foregoing being defined as 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;
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 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; 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;
(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; 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
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 Bank Expenses.
If Borrower fails to pay any amount or furnish any required proof of payment to
third persons, Bank may make all or part of the payment or obtain insurance
policies required in Section 6.5, and take any action under the policies Bank
deems prudent. Any amounts paid by Bank are Bank Expenses and immediately due
and payable, bearing interest at the then applicable rate and secured by the
Collateral. No payments by Bank are deemed an agreement to make similar payments
in the future or Bank's waiver of any Event of Default.
9.4 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.
Except as provided above, Borrower bears all risk of loss, damage or destruction
of the Collateral.
9.5 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.
9.6 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 San Francisco County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
12.1 Successors and Assigns.
This Agreement binds and is for the benefit of the successors and permitted
assigns of each party. Borrower may not assign this Agreement or any rights
under it without Bank's prior written consent which may be granted or withheld
in Bank's discretion. Bank has the right, without the consent of or notice to
Borrower, to sell, transfer, negotiate, or grant participation in all or any
part of, or any interest in, Bank's obligations, rights and benefits under this
Agreement.
12.2 Indemnification.
Borrower will 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.
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 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:
"Accounts" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its sale or lease of
goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all
merchandise returned or reclaimed by Borrower and Borrower's Books relating
to any of the foregoing, as such definition may be amended from time to
time according to the Code.
"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.
"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.
"Code" is the California Uniform Commercial Code, as applicable.
"Collateral" is the property described on Exhibit A.
"Committed Revolving Line" is a Credit Extension of up to $8,000,000.
"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.
"Credit Extension" is each Advance, Letter of Credit, Exchange Contract, or
any other extension of credit by Bank for Borrower's benefit.
"Effective Date" is the date Bank executes this Agreement.
"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.
"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.
"Letter of Credit" is defined in Section 2.1.2.
"Letter of Credit Fee" is for each Letter of Credit an amount equal to one
and one-quarter percent (1.25%) of the face amount of such Letter of
Credit.
"Lien" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"Loan Documents" are, collectively, this Agreement, any note, or notes or
guaranties executed by Borrower or Guarantor, and any other present or
future agreement between Borrower and/or for the benefit of Bank in
connection with this Agreement, all as amended, extended or restated.
"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" has the meaning set forth in recital paragraph A.
"Permitted Indebtedness" is:
(a) Borrower's indebtedness to Bank under this Agreement or any other Loan
Document;
(b) Indebtedness existing on the Effective 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 Effective 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 Effective 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.
"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 17, 2004.
"Rights", as applied to the Collateral, means the Borrower's rights and
interests in, and powers with respect to, that Collateral, whatever the
nature of those rights, interests and powers and, in any event, including
Borrower's power to transfer rights in such Collateral to Bank.
"Schedule" is any attached schedule of exceptions.
"Subordinated Debt" is debt incurred by Borrower subordinated to Borrower's
indebtedness owed to Bank and which is reflected in a written agreement in
a manner and form acceptable to Bank and approved by Bank in writing.
"Subsidiary" is for any Person, or any other business entity of which more
than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates
of the Person.
"Tangible Net Worth" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus, (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and
expense, patents, trade and service marks and names, copyrights and
research and development expenses except prepaid expenses, and (c) reserves
not already deducted from assets, and (ii) Total Liabilities.
"Total Liabilities" is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower's consolidated balance sheet,
including all Indebtedness, and current portion Subordinated Debt allowed
to be paid, but excluding all other Subordinated Debt.
BORROWER:
DigitalThink, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Chief Financial Officer
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BANK:
SILICON VALLEY BANK
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Senior Vice President
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Effective Date: December 18, 2003
-------------------------------------
EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest in and to
the following whether owned now or hereafter arising and whether the Borrower
has rights now or hereafter has rights therein and wherever located:
All goods and equipment now owned or hereafter acquired, including, without
limitation, all machinery, fixtures, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
All inventory, now owned or hereafter acquired, including, without limitation,
all merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products including such inventory as is temporarily
out of Borrower's custody or possession or in transit and including any returns
upon any accounts or other proceeds, including insurance proceeds, resulting
from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
All contract rights and general intangibles (as such definitions may be amended
from time to time according to the Code), now owned or hereafter acquired,
including, without limitation, goodwill, trademarks, servicemarks, trade styles,
trade names, patents, patent applications, leases, license agreements, franchise
agreements, blueprints, drawings, purchase orders, customer lists, route lists,
infringements, claims, computer programs, computer discs, computer tapes,
literature, reports, catalogs, design rights, income tax refunds, payments of
insurance and rights to payment of any kind,;
All now existing and hereafter arising accounts, contract rights, royalties,
license rights and all other forms of obligations owing to Borrower arising out
of the sale or lease of goods, the licensing of technology or the rendering of
services by Borrower (as such definitions may be amended from time to time
according to the Code) whether or not earned by performance, and any and all
credit insurance, insurance (including refund) claims and proceeds, guaranties,
and other security thereof, 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,
letter of credit rights, certificates of deposit, instruments and chattel paper
and electronic chattel paper now owned or hereafter acquired and Borrower's
Books relating to the foregoing;
All copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired; all claims
for damages by way of any past, present and future infringement of any of the
foregoing; and
All Borrower's Books relating to the foregoing and any and all claims, rights
and interests in any of the above and all substitutions for, additions and
accessions to and proceeds thereof.
Notwithstanding the foregoing, the Collateral shall not be deemed to include any
copyrights, copyright applications, copyright registration and like protection
in each work of authorship and derivative work thereof, whether published or
unpublished, now owned or hereafter acquired; any patents, patent applications
and like protections including without limitation improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part of the
same, trademarks, servicemarks and applications thereof, whether registered or
not, and the goodwill of the business of Borrower connected with and symbolized
by such trademarks, any trade secret rights, including any rights to unpatented
inventions, know-how, operating manuals, license rights and agreements and
confidential information, now owned or hereafter acquired; or any claims for
damage by way of any past, present and future infringement of any of the
foregoing (collectively, the "Intellectual Property"), except that the
Collateral shall include the proceeds of all the Intellectual Property including
proceeds from the sale, licensing or
other disposition of the Intellectual Property and proceeds that are accounts,
(e.g., accounts receivable of Borrower, or general intangibles consisting of
proceeds and rights to payment). Notwithstanding the prior sentence, if a
judicial authority (including a U.S. Bankruptcy Court) holds that a security
interest in the underlying Intellectual Property is necessary to have a security
interest in such accounts and general intangibles of Borrower that are proceeds
of the Intellectual Property, then the Collateral shall automatically, and
effective as of the Closing Date, include the Intellectual Property to the
extent necessary to permit perfection of Bank's security interest in such
accounts and general intangibles of Borrower that are proceeds of the
Intellectual Property.
Borrower and Bank are parties to that certain Negative Pledge Agreement, whereby
Borrower, in connection with Bank's loan or loans to Borrower, has agreed, among
other things, not to sell, transfer, assign, mortgage, pledge, lease grant a
security interest in, or encumber any of its intellectual property, without
Bank's prior written consent.
EXHIBIT B
LOAN PAYMENT/ADVANCE REQUEST FORM DEADLINE FOR SAME DAY PROCESSING IS 12:00
P.S.T.
Fax To: Date:
LOAN PAYMENT:
DigitalThink, Inc. (Borrower)
From Account # To Account #
------------------- --------------------
(Deposit Account #) (Loan Account #)
Principal $ and/or Interest $
---------------------- --------------------------
All Borrower's representation and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects up to and including the
date of the transfer request for a loan payment, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of that 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 representation and warranties in the Amended and Restated Loan
and Security Agreement are true, correct and complete in all material respects
up to and including the date of the transfer request for an advance, but those
representations and warranties expressly referring to another date shall be
true, correct and complete in all material respects as of that 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 12:00pm, P.S.T.
Beneficiary Name: Amount of Wire: $
------------------- ------------------------
Beneficiary Bank: Account Number:
------------------- ------------------------
City and State:
-------------------------------------------------------------
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 #
----------------------------- -----------------------------
NEGATIVE PLEDGE AGREEMENT
This Negative Pledge Agreement is made as of the Effective Date by and between
DigitalThink, Inc. ("Borrower") and Silicon Valley Bank ("Bank").
In connection with, among other documents, the Amended and Restated Loan and
Security Agreement (the "Loan Documents") being concurrently executed herewith
between Borrower and Bank, Borrower agrees as follows:
1. Except for non-exclusive licenses granted in the ordinary course of
business, Borrower shall not sell, transfer, assign, mortgage, pledge,
lease, grant a security interest in, or encumber any of Borrower's
intellectual property, including, without limitation, the following:
a. Any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or
not the same also constitutes a trade secret, now or hereafter existing,
created, acquired or held;
b. All mask works or similar rights available for the protection of
semiconductor chips, now owned or hereafter acquired;
c. Any and all trade secrets, and any and all intellectual property rights in
computer software and computer software products now or hereafter existing,
created, acquired or held;
d. Any and all design rights which may be available to Borrower now or
hereafter existing, created, acquired or held;
e. All patents, patent applications and like protections including, without
limitation, improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same, including without
limitation the patents and patent applications;
f. Any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected
with and symbolized by such trademarks;
g. Any and all claims for damages by way of past, present and future
infringements of any of the rights included above, with the right, but not
the obligation, to ▇▇▇ for and collect such damages for said use or
infringement of the intellectual property rights identified above;
h. All licenses or other rights to use any of the Copyrights, Patents,
Trademarks or Mask Works, and all license fees and royalties arising from
such use to the extent permitted by such license or rights; and
i. All amendments, extensions, renewals and extensions of any of the
Copyrights, Trademarks, Patents, or Mask Works; and
j. All proceeds and products of the foregoing, including without limitation
all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing;
2. It shall be an event of default under the Loan Documents between Borrower
and Bank if there is a breach of any term of this Negative Pledge
Agreement.
3. Capitalized terms used but not otherwise defined herein shall have the same
meaning as in the Loan Documents.
BORROWER:
DigitalThink, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Title: Chief Financial Officer
-------------------------------------
BANK:
SILICON VALLEY BANK
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Title: Senior Vice President
--------------------------------------