EXHIBIT 10.12
FIRST AMENDMENT TO CREDIT AGREEMENT
(with Borrowing Base)
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (with Borrowing Base)(this
"Amendment") dated effective as of October 22, 1998 (the "Effective Date"), is
by and between PERVASIVE SOFTWARE INC. ("Borrower"), and CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, formerly known as TEXAS COMMERCE BANK, NATIONAL
ASSOCIATION, a national banking association whose principal office is located in
Houston, Texas (the "Bank").
PRELIMINARY STATEMENT
The Bank and the Borrower have entered into an Amendment and Restatement of
Credit Agreement dated as of February 28, 1998 (the "Credit Agreement"). The
"Agreement", as used in the Credit Agreement, shall also refer to the Credit
Agreement as amended by this Amendment. All capitalized terms defined in the
Credit Agreement and not otherwise defined herein shall have the same meanings
herein as in the Credit Agreement. The Bank and the Borrower have agreed to
amend the Credit Agreement to the extent set forth herein, and in order to,
among other things, renew, modify, increase and extend the Commitment.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, the Bank and the Borrower hereby agree as follows:
1. REVOLVING CREDIT NOTE. Section 1.1.A of the Credit Agreement is amended
by substituting the following for the Section 1.1.A of the Credit Agreement:
"REVOLVING CREDIT NOTE 1.1.A Subject to the terms and conditions hereof, Bank
agrees to make loans ("Revolving Loan" or "Revolving Loans") to Borrower from
time to time before the Termination Date, not to exceed at any one time
outstanding $10,000,000.00 (the "Commitment"). Borrower has the right to
borrow, repay and reborrow. The Loans may only be used for financing timing
differences in cash flow or to fund acquisitions. Chapter 346 of the Texas
Finance Code will not apply to this Agreement, the Revolving Note or any
Revolving Loan. Revolving Loans shall take the form of advances under the
Revolving Note (as hereinafter defined) (each and all advances hereinafter
referred to as "Revolving Loan" or "Revolving Loans"), or issuances of standby
letters of credit ("Standby L/Cs") by Bank. Standby L/Cs issued by Bank
hereunder are hereafter referred to as "Letter of Credit" ("L/C"). The
Revolving Loans will be evidenced by, and will bear interest and be payable as
provided in, the promissory note of Borrower dated the Effective Date
(together with any and all renewals, extensions, modifications and
replacements thereof and substitutions therefor, the "Revolving Note"), which
is given in renewal, increase, modification and extension of that certain
promissory note dated February 28, 1998, in the original principal amount of
$4,000,000.00, maturing on September 30, 1999 (including all prior notes of
which said note represents a renewal, extension, modification, increase,
substitution, rearrangement or replacement thereof, the "Renewed Note"). The
parties hereto agree that there is as of the Effective Date an outstanding
principal balance of $-0-under the Revolving Note and $175,000.00 in L/C
Obligations outstanding, leaving a balance as of the Effective Date of
$9,825,000.00 under the Commitment available for Loans and issuance of L/C's
subject to the terms and conditions of this Agreement. The "Note" as used in
the Credit Agreement shall also refer to the "Note" as used in this Amendment.
"Termination Date" means the earlier of: (a) October 30, 1999; or (b) the date
specified by Bank pursuant to Section 6.1 hereof."
2. Section 1.2 of the Credit Agreement is amended to read as follows:
"COMMITMENT FEE 1.2 Borrower will pay a commitment fee (computed on the basis
of the actual number of days elapsed in a year comprised of 360 days of 1/4%
per annum on the daily average difference between the Commitment and the
principal balance of the Revolving Note, from the date hereof to the
Termination Date. The Commitment fee is due and payable quarterly, on the last
day of each third month after the Effective Date, in arrears."
3. The Credit Agreement is amended by restating Section 1.4 to read as
follows:
"CONFIRMATION OF SECURITY INTERESTS 1.4. Borrower confirms and ratifies each
of the liens, security interests and other interests granted in each and all
security agreements executed in connection with, related to, or securing the
Renewed Note as extending to and securing the Loans, the Revolving Note and
the L/C's including but not limited to each of those interests and liens
described in the following listed Security Agreements. Borrower further agrees
and acknowledges that the terms "secured indebtedness" and "indebtedness
secured hereby" as used in any security agreement including any supplemental
security agreements executed in connection with or related to, or securing the
Renewed Note, or any other indebtedness of Borrower to Bank, including but not
limited to the following security agreements executed by Borrower and
delivered to Bank: Security Agreement - Accounts and General Intangibles
executed as of September 18, 1996 (it being agreed that Bank has no security
interest in Accounts billed out of Japan); Security Agreement - Inventory
executed as of September 18, 1996; the Security Agreement - Equipment and
Fixtures executed as of March 31, 1997, including any Supplemental Security
Agreements supplementing any of the foregoing, and any other security
agreements previously executed by Borrower and delivered to Bank and not
released by Bank and all security agreements executed as of the Effective Date
(each and all "Security Agreements") include, but are not limited to, each and
all indebtedness of all character and kind related to or evidenced by the
Renewed Note, the L/Cs, the Revolving Note and related to the Loan Documents."
4. Exhibit C of the Credit Agreement is hereby amended by replacing prior
Exhibit C with the Exhibit C attached hereto and hereby incorporated into this
Amendment and the Credit Agreement for all purposes.
5. The Borrower hereby represents and warrants to the Bank that after giving
effect to the execution and delivery of this Amendment: (a) the representations
and warranties set forth in the Credit Agreement are true and correct on the
date hereof as though made on and as of such date; and (b) no Event of Default,
or event which with passage of time, the giving of notice or both would become
an Event of Default, has occurred and is continuing as of the date hereof.
Page 1 of 2 Pages
6. This Amendment shall become effective as of the Effective Date upon its
execution and delivery by each of the parties named in the signature lines
below, and the "Agreement" as used in the Credit Agreement shall also refer to
the Credit Agreement as amended by this Amendment.
7. The Borrower further acknowledges that each of the other Loan Documents is
in all other respects ratified and confirmed, and all of the rights, powers and
privileges created thereby or thereunder are ratified, extended, carried forward
and remain in full force and effect except as the Credit Agreement is amended by
this Amendment.
8. This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed an original and all of which taken together shall
constitute but one and the same agreement.
9. This Amendment shall be included within the definition of "Loan Documents"
as used in the Agreement.
10. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS AND AS APPLICABLE, THE LAWS OF THE UNITED STATES OF
AMERICA.
11. WAIVER AGREEMENT. Pursuant to Section D(v) of Exhibit C of the
Agreement, Borrower agreed to not make any cash acquisitions in an amount
exceeding $4,000,000.00 per annum, without the prior written consent of Bank..
Borrower has informed Bank that Borrower intends to acquire EveryWare
Development, Inc., for $10,750,000.00 in cash on or about November 20, 1998.
Bank hereby consents to such acquisition. This Section constitutes the only
evidence of Bank's consent to this specific acquisition and of Borrower's
compliance with the above cited Section of the Credit Agreement.
THIS WRITTEN AMENDMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN
AGREEMENT" AS DEFINED IN SECTION 26.02(A) OF THE TEXAS BUSINESS & COMMERCE CODE,
AND REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed effective as of the Effective Date.
BORROWER: PERVASIVE SOFTWARE INC.
By: /s/ James R. Offerdahl
---------------------------------------
Name: James R. Offerdahl
-------------------------------------
Title: Chief Operating Officer and Chief
Financial Officer
------------------------------------
Address: 12365 Riata Trace Pkwy. Bldg II,
Austin, TX 78727
----------------------------------
By: /s/ John Farr
---------------------------------------
Name: John Farr
-------------------------------------
Title: Vice President Finance
------------------------------------
Address: 12365 Riata Trace Pkwy. Bldg II,
Austin, TX 78727
----------------------------------
BANK: CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
By: /s/ Donna Day
---------------------------------------
Name: Donna Day
-------------------------------------
Title: Vice President
------------------------------------
Page 2 of 2 Pages
EXHIBIT C to Agreement between
PERVASIVE SOFTWARE INC. ("Borrower") and Chase Bank of Texas,
National Association ("Bank")
dated as of February 28, 1998, as same may be amended,
restated and supplemented in writing.
REPORTING REQUIREMENTS, FINANCIAL COVENANTS AND
COMPLIANCE CERTIFICATE FOR CURRENT REPORTING PERIOD
ENDING ___________, 199_ ("END DATE")
A. Reporting Period. Borrower will provide this Exhibit completed in Proper
Form with each financial statement delivered under the Agreement.
THIS REPORT IS FOR THE QUARTER ("REPORTING PERIOD")
ENDING ________, 199_ ("END DATE").
BORROWER'S FISCAL YEAR ENDS ON ______________________, 19__.
B. Financial Reporting. Borrower will COMPLIANCE
provide the following financial
information within the times indicated:
====================================================================================================================================
WHO WHEN DUE WHAT (CIRCLE):
- - -------------- -------------------------------------- ----------------------------------------------------------- ---------------
BORROWER (i) Within 120 days of Borrower's GAAP financial statements (balance sheet, income, cash Yes No
fiscal year end flow) audited with unqualified opinion by independent
CPAs satisfactory to Bank, with Compliance Certificate
and Securities and Exchange Commission Form 10-K
-------------------------------------- ----------------------------------------------------------- ---------------
(ii) Within 45 days of each quarter Unaudited consolidated financial statements accompanied Yes No
End Date including FYE quarter by Compliance Certificate and Securities and Exchange
Commission Form 10-Q
-------------------------------------- ----------------------------------------------------------- ---------------
(iii) Within 30 days of each month Accounts receivable aging and listing; and accounts Yes No
end including FYE month if any payable aging and listing
outstandings equal to or exceeding
$3,000,000.00 under the Revolving Note
====================================================================================================================================
====================================================================================================================================
C. FINANCIAL COVENANTS. Borrower will comply with the following financial covenants, Compliance
applying GAAP, the definitions in Section 8, and the calculations and adjustments from
the Actual Reported column below:
- - -------------------------------------------------------------------------------------------------------------------
REQUIRED. Each applies ACTUAL REPORTED. As of End Date or for reporting period (Circle)
AT ALL TIMES and is specified for financial test, as appropriate: Yes No
reported as indicated:
====================================================================================================================================
1. Maintain a Tangible Net Worth as Stockholders' Equity $_____ Yes No
adjusted of at least Minus: Goodwill $_____
$12,200,000.00 as of December 31, 1998, Other Intangible Assets $_____
increased quarterly by Loans/Advances to
(a) 75% of Borrower's net income Equity holders $_____
generated after December 31, 1998, with Loans to Affiliates $_____
the increased minimum TNW requirement Plus: Subordinated Debt $_____
beginning with the March 31, 1999,
calculation and continuing thereafter = Tangible Net Worth as adjusted $_____
on the last day of each quarter;
(b) 100% of all equity increases
resulting from issuance of additional
stock and acquisitions less goodwill or
other intangibles associated with such
acquisition (which at no time will
exceed the equity increase), and
(c) decreased by acquired R&D write-offs
and amortization of goodwill up to
$4,000,000 annually.
- - ------------------------------------------------------------------------------------------------------------------------------------
2. Maintain a Quick Ratio of at least $______________ / $ _________________ = $ __________ Yes No
the following: Current Assets Current Liabilities Quick Ratio
.85:1.0 at the end of the 12/31/98 and (less inventory) (including Bank
3/31/99 quarters; and Indebtedness outstanding
1.0:1.0 at the end of the 6/30/99 on the Revolving Note)
quarter and thereafter.
- - ------------------------------------------------------------------------------------------------------------------------------------
3. Total Funded Liabilities to EBITDA Most + YTD this - YTD last Total Yes No
for the 12 months ending at each fiscal Recent Year Year
quarter End Date of at least 2.25:1.00, FYE
at all times.
Net income $ $ $ $
Plus: Depreciation $ $ $ $
Amortization $ $ $ $
Interest Expense $ $ $ $
Tax Expense $ $ $ $
Specified Non-
Cash Charges $ $ $ $
Equals: EBITDA = $ $ $ $
As of fiscal quarter End Date:
Loans from Bank $___________
Plus: Other Liabilities
for borrowed money
(excluding normal trade debts) $___________
Equals: Total Funded Liabilities = $
===========
$_______________________ / $__________ = __________
Total Funded Liabilities EBITDA Ratio
- - ------------------------------------------------------------------------------------------------------------------------------------
4. Capital expenditures shall not exceed Capital expenditures will exclude any capital expenditures Yes No
the following without prior written associated with any merger or acquisition that has been
consent from the Bank: approved by the bank.
$3,600,000 for the Fiscal Year Ending
June 30, 1998.
$8,000,000 for the Fiscal Year Ending
June 30, 1999.
10% of gross revenues per quarter beginning
with the fiscal quarter ending
September 30, 1999 and each
fiscal quarter thereafter.
====================================================================================================================================
Page 1 of 2 Pages
====================================================================================================================================
D. Other Required Covenants to be maintained and to be certified. COMPLIANCE CERTIFICATE COMPLIANCE
====================================================================================================================================
REQUIRED ACTUAL REPORTED (CIRCLE)
------------ -------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
(i) No change in Chief Executive Officer of Borrower, without prior Yes No
written consent of Bank.
- - ------------------------------------------------------------------------------------------------------------------------------------
(ii) No additional debt in excess of $500,000.00 at any time other than Yes No
normal trade debt; capital leases; Indebtedness secured by purchase money
liens to acquire fixed assets; financing insurance premiums for ordinary
coverages; or debt consented to in advance by Bank, which consent shall be
given unless Bank believes in its good faith discretion that Borrower,
giving effect to such consent, shall be subject to a lower credit grade
under its normal standards than such grade as it was of the Effective Date.
- - ------------------------------------------------------------------------------------------------------------------------------------
(iii) No additional Liens, other than in favor of Bank, in excess of Yes No
$500,000.00, without prior written consent of Bank
- - ------------------------------------------------------------------------------------------------------------------------------------
(iv) An annual field analysis will be performed by Bank's Audit and Asset Yes No
Management Division if: (1) there are any outstandings equal to or
exceeding $4,000,000.00 under the Revolving Loan; and/or (2) the Borrower
defaults on any covenant in this Agreement
- - ------------------------------------------------------------------------------------------------------------------------------------
(v) No cash acquisitions in an amount exceeding $4,000,000.00 or Yes No
acquisitions utilizing the Bank Commitment, without the prior written
consent of the Bank.
====================================================================================================================================
THE ABOVE SUMMARY REPRESENTS SOME OF THE COVENANTS AND AGREEMENTS CONTAINED IN
THE AGREEMENT AND DOES NOT IN ANY WAY RESTRICT OR MODIFY THE TERMS AND
CONDITIONS OF THE AGREEMENT. IN CASE OF CONFLICT BETWEEN THIS EXHIBIT AND THE
AGREEMENT, THE AGREEMENT SHALL CONTROL.
The undersigned certifies that the above information and computations are true
and correct and not misleading as of the date hereof, and that since the date of
the Borrower's most recent Compliance Certificate (if any):
No default or Event of Default has occurred under the Agreement during the
current Reporting Period, or been discovered from a prior period, and not
reported.
A default or Event of Default (as described below) has occurred during the
current Reporting Period or has been discovered from a prior period and is being
reported for the first time and:
was cured on ___________________________________.
was waived by Bank in writing on ______________________________.
is continuing.
Description of Event of Default:
------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Executed , 19 .
-------------------------------- -----
BORROWER: PERVASIVE SOFTWARE INC.
SIGNATURE:
----------------------------------------------------------------------
NAME:
---------------------------------------------------------------------------
TITLE: (CFO, VP of Finance, Controller or CEO)
--------------------------------------------------------------------------
ADDRESS:
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Page 2 of 2 Pages
PROMISSORY NOTE
(this "Note")
U.S. $10,000,000.00 October 22, 1998 ("Date")
FOR VALUE RECEIVED, PERVASIVE SOFTWARE INC. ("Borrower"), promises to pay to
the order of CHASE BANK OF TEXAS, NATIONAL ASSOCIATION ("Bank") on or before
October 30, 1999 (the "Termination Date"), at its banking house at 712 Main
Street, P.O. Box 2558, Houston, Harris County, TX 77252-2558, or at such other
location as Bank may designate, in lawful money of the United States of America,
the lesser of: (i) the principal sum of TEN MILLION AND NO/100THS UNITED STATES
DOLLARS (U.S. $10,000,000.00) (the "Maximum Loan Total"); or (ii) the aggregate
unpaid principal amount of all loans made by Bank to Borrower pursuant to the
terms of the Credit Agreement (as hereinafter defined) (each such loan being a
"Loan"), which may be outstanding on the Termination Date. Each Loan shall be
due and payable on the maturity date agreed to by Bank and Borrower with respect
to such Loan (the "Maturity Date"). In no event shall any Maturity Date fall on
a date after the Termination Date. Subject to the terms and conditions of this
Note and the Loan Documents, Borrower may borrow, repay and reborrow all or any
part of the credit provided for herein at any time before the Termination Date,
there being no limitation on the number of Loans made so long as the total
unpaid principal amount at any time outstanding does not exceed the Maximum Loan
Total.
"Alternate Base Rate" shall mean for any day, a rate per annum (rounded upwards,
if necessary, to the next higher 1/16 of 1%) equal to the greatest of: (a) the
Prime Rate or (b) the Federal Funds Effective Rate in effect on such day plus
1/4 of 1%. For purposes hereof, "Prime Rate" shall mean the rate of interest
per annum determined from time to time by the Bank as its prime rate in effect
at its principal office in Houston, Texas and thereafter entered in the minutes
of its Loan and Discount Committee; each change in the Prime Rate shall be
effective on the date such change is determined; without special notice to the
Maker or any other person or entity. THE PRIME RATE IS A REFERENCE RATE AND
DOES NOT NECESSARILY REPRESENT THE LOWEST OR BEST RATE ACTUALLY CHARGED TO ANY
CUSTOMER AND ANY STATEMENT, REPRESENTATION OR WARRANTY IN THAT REGARD OR TO THAT
EFFECT IS EXPRESSLY DISCLAIMED BY BANK. PAYEE MAY MAKE LOANS AT RATES OF
INTEREST AT, ABOVE OR BELOW THE PRIME RATE. "Federal Funds Effective Rate"
shall mean, for any day, the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for the day of such
transactions received by the Bank from three Federal funds brokers of recognized
standing selected by Bank. If for any reason the Bank shall have determined
(which determination shall be conclusive absent manifest error) that it is
unable to ascertain the Federal Funds Effective Rate for any reason, including
the inability or failure of the Bank to obtain sufficient quotations in
accordance with the terms thereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the first sentence of this definition, as
appropriate, until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective on the effective date of
such change in the Prime Rate or the Federal Funds Effective Rate, respectively.
"Alternate Base Rate Loan" means a Loan which bears interest at a rate
determined by reference to the Alternate Base Rate.
"Assessment Rate" means, for any date, the annual rate (rounded upwards, if not
already a whole multiple of 1/16 of 1%, to the next higher 1/16 of 1%) most
recently estimated by the Bank as the then current net annual assessment rate
that will be employed in determining amounts payable by the Bank to the Federal
Deposit Insurance Corporation for insurance by the Corporation of time deposits
made in dollars at its domestic offices.
"Board" means the Board of Governors of the Federal Reserve System of the United
States.
"Borrowing Date" means any Business Day on which Bank shall make a Loan
hereunder.
"Business Day" means a day: (i) on which Bank and commercial banks in New York
City are generally open for business; and (ii) with respect to LIBOR Loans, on
which dealings in United States Dollar deposits are carried out in the interbank
markets.
"Highest Lawful Rate" means the maximum nonusurious rate of interest from time
to time permitted by applicable law. If Texas law determines the Highest Lawful
Rate, Bank has elected the "indicated" (weekly) ceiling as defined in the Texas
Credit Code or any successor statute. Bank may from time to time, as to current
and future balances, elect and implement any other ceiling under such Code
and/or revise the index, formula or provisions of law used to compute the rate
on this open-end account by notice to Borrower, if and to the extent permitted
by, and in the manner provided in such Code.
"Interest Period" means the period commencing on the Borrowing Date and ending
on the Maturity Date, consistent with the following provisions. The duration of
each Interest Period shall be: (a) in the case of an Alternate Base Rate Loan, a
period of up to 90 days unless any portion thereof is converted to a LIBOR Loan
hereunder; and (b) in the case of a LIBOR Loan, a period of up to one, two or
three months; in each case as selected by Borrower in accordance with the terms
of this Note. Borrower's choice of Interest Period is subject
Page 1 of 5 Pages
to the following limitations: (i) No Interest Period shall end on a date after
the Termination Date; and (ii) If the last day of an Interest Period would be a
day other than a Business Day, the Interest Period shall end on the next
succeeding Business Day (unless the Interest Period relates to a LIBOR Loan and
the next succeeding Business Day is in a different calendar month than the day
on which the Interest Period would otherwise end, in which case the Interest
Period shall end on the next preceding Business Day).
"LIBOR Loan" means a Loan which bears interest at a rate determined by reference
to the LIBOR Rate.
"LIBOR Rate" means a per annum interest rate determined by Bank by dividing: (i)
the average rate per annum (rounded upwards, if necessary, to the next 1/16 of
1%) of the rates per annum at which United States dollar deposits in an amount
comparable to the principal amount of the LIBOR Loan to which such LIBOR Rate is
applicable for a term equal to or substantially equal to the Interest Period are
offered by Bank to prominent banks in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of the applicable Interest Period; by (ii) Statutory Reserves.
"LIBOR Spread" means a spread of the following basis points (100 basis points
equaling 1.00%), based upon the Borrower's ratio of Total Funded Liabilities to
EBITDA as of the most recent fiscal quarter End Date (March 31, June 30,
September 30 and December 31) as defined and calculated in accordance with the
attached Exhibit A:
Total Funded Liabilities LIBOR Spread
/EBITDA (basis points)
=====================================================
if .74 or less then 150
-----------------------------------------------------
if .75 to 1.49 then 200
-----------------------------------------------------
if 1.50 or more then 225
=====================================================
"Loan Documents" means this Note and any document or instrument evidencing,
securing, guaranteeing or given in connection with this Note, including, but not
limited to, that certain Amendment and Restatement of Credit Agreement dated as
of February 28, 1998, entered into by and between Borrower and Bank (as may be
amended from time to time, the "Credit Agreement").
"Obligations" means all principal, interest and other amounts which are or
become owing under this Note or any other Loan Document.
"Obligor" means Borrower and any guarantor, surety, co-signer, general partner
or other person who may now or hereafter be obligated to pay all or any part of
the Obligations.
Specified Non-Cash Charges means all non-cash charges to the Borrower's income
statement (not reflected as depreciation or amortization) (a) resulting from
stock option transactions; or (b) as agreed in writing by Bank in its sole
discretion, upon Borrower's request.
"Statutory Reserves" means the difference (expressed as a decimal) of the number
one minus the aggregate of the maximum reserve percentages (including, without
limitation, any marginal, special, emergency, or supplemental reserves)
expressed as a decimal established by the Board and any other banking authority
to which Bank is subject to, with respect to the LIBOR Rate, for Eurocurrency
Liabilities (as defined in Regulation D of the Board). Such reserve percentages
shall include, without limitation, those imposed under such Regulation D. LIBOR
Loans shall be deemed to constitute Eurocurrency Liabilities and as such shall
be deemed to be subject to such reserve requirements without benefit of or
credit for proration, exceptions or offsets which may be available from time to
time to any bank under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
Loans may be either Alternate Base Rate Loans or LIBOR Loans, as selected by
Borrower in accordance with the terms of this Note. Borrower shall pay interest
on the unpaid principal amount of each Alternate Base Rate Loan at a rate per
annum equal to the lesser of: (i) the Alternate Base Rate in effect from time to
time (the "Effective Alternate Base Rate"); or (ii) the Highest Lawful Rate.
Accrued interest on each Alternate Base Rate Loan is due and payable on the last
day of each month and at the Maturity Date.
Borrower shall pay interest on the unpaid principal amount of each LIBOR Loan
for the Interest Period with respect thereto at a rate per annum equal to the
lesser of: (i) the LIBOR Rate plus the LIBOR Spread (the "Ratio Effective LIBOR
Rate") (the Initial Effective LIBOR Rate or the Ratio Effective LIBOR Rate,
whichever applies, is hereinafter sometimes the "Effective LIBOR Rate"); or (ii)
the Highest Lawful Rate. Accrued interest on each LIBOR Loan is due on the last
day of each Interest Period applicable thereto and on any prepayment (on the
amount prepaid).
If at any time the effective rate of interest which would otherwise be payable
on any Loan evidenced by this Note exceeds the Highest Lawful Rate, the rate of
interest to accrue on the unpaid principal balance of such Loan during all such
times shall be limited to the Highest Lawful Rate, but any subsequent reductions
in such interest rate shall not become effective to reduce such interest rate
below the Highest Lawful Rate until the total amount of interest accrued on the
unpaid principal balance of such Loan equals the total amount of interest which
would have accrued if the Effective Alternate Base Rate, or Effective LIBOR
Rate, whichever is applicable, had at all times been in effect.
Page 2 of 5 Pages
Each LIBOR Loan shall be in an amount not less than $500,000.00 and an
integral multiple of $100,000.00.
Interest shall be computed on the basis of the actual number of days elapsed
and a year comprised of 360 days.
The unpaid principal balance of this Note at any time will be the total
amounts advanced by Bank, less the amount of all payments or prepayments of
principal. Absent manifest error, the records of Bank will be conclusive as to
amounts owed.
Loans shall be made on Borrower's irrevocable notice to Bank, given not later
than 10:00 A.M. (Houston time) on, in the case of LIBOR Loans, the third
Business Day prior to the proposed Borrowing Date or, in the case of Alternate
Base Rate Loans, the Business Day of the proposed Borrowing Date. Each notice
of a requested borrowing (a "Notice of Requested Borrowing") under this
paragraph may be oral or written, and shall specify: (i) the requested amount;
(ii) proposed Borrowing Date; (iii) whether the requested Loan is to be an
Alternate Base Rate Loan or LIBOR Loan; and (iv) Interest Period for the LIBOR
Loan. If any Notice of Requested Borrowing shall be oral, Borrower shall
deliver to Bank prior to the Borrowing Date a confirmatory written Notice of
Requested Borrowing.
Borrower may on any Business Day prepay the outstanding principal amount of
any Alternate Base Rate Loan, in whole or in part, without penalty or premium.
Borrower shall have the right to prepay any LIBOR Loan, subject to Borrower's
indemnity and reimbursement set out hereinafter.
Provided that no Event of Default has occurred and is continuing, Borrower may
elect to continue all or any part of any LIBOR Loan beyond the expiration of the
then current Interest Period relating thereto by providing Bank at least three
Business Day's written or telecopy notice of such election, specifying the Loan
or portion thereof to be continued and the Interest Period therefor and whether
it is to be an Alternate Base Rate Loan or LIBOR Loan provided that any
continuation as a LIBOR Loan shall not be less than $500,000.00 and shall be in
an integral multiple of $100,000.00. If an Event of Default shall have occurred
and be continuing, the Borrower shall not have the option to elect to continue
any such LIBOR Loan or to convert Alternate Base Rate Loans into LIBOR Loans.
Provided that no Event of Default has occurred and is continuing, Borrower may
elect to convert any Alternate Base Rate Loan at any time or from time to time
to a LIBOR Loan by providing Bank at least three Business Day's written or
telecopy notice of such election, specifying each Interest Period therefor. Any
conversion of Alternate Base Rate Loans shall not result in a borrowing of LIBOR
Loans in an amount less than $500,000.00 and in integral multiples of
$100,000.00.
If at any time Bank determines in good faith (which determination shall be
conclusive) that any change in any applicable law, rule or regulation or in the
interpretation, application or administration thereof makes it unlawful, or any
central bank or other governmental authority asserts that it is unlawful, for
Bank or its foreign branch or branches to maintain any LIBOR Loan by means of
dollar deposits obtained in the London interbank market (any of the above being
described as a "LIBOR Event"), then, at the option of Bank, the aggregate
principal amount of all LIBOR Loans outstanding shall be prepaid; however the
prepayment may be made with an Alternate Base Rate Loan. Upon the occurrence of
any LIBOR Event, and at any time thereafter so long as such LIBOR Event shall
continue, the Bank may exercise its aforesaid option by giving written notice
thereof to Borrower within 30 days after Bank's determination that a LIBOR Event
has occurred).
If any domestic or foreign law, treaty, rule or regulation (whether now in
effect or hereinafter enacted or promulgated, including Regulation D of the
Board) or any interpretation or administration thereof by any governmental
authority charged with the interpretation or administration thereof (whether or
not having the force of law): (a) changes, imposes, modifies, applies or deems
applicable any reserve, special deposit or similar requirements in respect of
any LIBOR Loan; or (b) imposes on Bank or the interbank eurocurrency deposit and
transfer market or the market for domestic bank certificates or deposit any
other condition affecting any such LIBOR Loan; and the result of any of the
foregoing is to impose a cost to Bank of agreeing to make, funding or
maintaining any such LIBOR Loan or to reduce the amount of any sum receivable by
Bank in respect of any such Loan, then Bank may notify Borrower in writing of
the happening of such event and Borrower shall upon demand pay to Bank such
additional amounts as will compensate Bank for such costs as determined by Bank.
In no event shall the additional costs exceed the costs of an Alternate Base
Rate loan. Without prejudice to the survival of any other agreement of Borrower
under this Note, the obligations of Borrower under this paragraph shall survive
the termination of this Note.
Borrower will indemnify Bank against, and reimburse Bank on demand for, any
loss, cost or expense incurred or sustained by Bank (including without
limitation any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by Bank to fund or maintain
LIBOR Loans) as a result of: (a) any payment or prepayment (whether permitted by
Bank or required hereunder or otherwise) of all or a portion of any LIBOR Loan
on a day other than the Maturity Date of such Loan; (b) any payment or
prepayment, whether required hereunder or otherwise, of any LIBOR Loan made
after the delivery of a Notice of Requested Borrowing but before the applicable
Borrowing Date if such payment or prepayment prevents the proposed Loan from
becoming fully effective; or (c) the failure of any LIBOR Loan to be made by
Bank due to any action or inaction of Borrower. Such funding losses and other
costs and expenses shall be calculated and billed by Bank and such bill shall,
as to the costs incurred, be conclusive absent manifest error.
Page 3 of 5 Pages
All past-due principal and interest on this Note, will, at Bank's option, bear
interest at the lesser of Highest Lawful Rate, or a rate per annum equal to the
Alternate Base Rate plus three percent (3%).
In addition to all principal and accrued interest on this Note, Borrower
agrees to pay: (a) all reasonable costs and expenses incurred by Bank and all
owners and holders of this Note in collecting this Note through probate,
reorganization, bankruptcy or any other proceeding; and (b) reasonable
attorney's fees if and when this Note is placed in the hands of an attorney for
collection.
Borrower and Bank intend to conform strictly to applicable usury laws.
Therefore, the total amount of interest (as defined under applicable law)
contracted for, charged or collected under this Note will never exceed the
Highest Lawful Rate. If Bank contracts for, charges or receives any excess
interest, it will be deemed a mistake. Bank will automatically reform the
contract or charge to conform to applicable law, and if excess interest has been
received, Bank will either refund the excess to Borrower or credit the excess on
the unpaid principal amount of this Note. All amounts constituting interest
will be spread throughout the full term of this Note in determining whether
interest exceeds lawful amounts.
If any Event of Default (as defined in the Credit Agreement) occurs, then Bank
may do any or all of the following: (i) cease making Loans hereunder; (ii)
declare the Obligations to be immediately due and payable, without notice of
acceleration or of intention to accelerate, presentment and demand or protest or
notice of any kind, all of which are hereby expressly waived; (iii) set off, in
any order, against the Obligations any debt owing by Bank to any Obligor,
including, but not limited to, any deposit account, which right is hereby
granted by each Obligor to Bank; and (iv) exercise any and all other rights
under the Loan Documents, at law, in equity or otherwise.
No waiver of any default is a waiver of any other default. Bank's delay in
exercising any right or power under any Loan Document is not a waiver of such
right or power.
Each Obligor severally waives notice, demand, presentment for payment, notice
of nonpayment, notice of intent to accelerate, notice of acceleration, protest,
notice of protest, and the filing of suit and diligence in collecting this Note
and all other demands and notices, and consents and agrees that its liabilities
and obligations will not be released or discharged by any or all of the
following, whether with or without notice to it or any other Obligor, and
whether before or after the stated maturity hereof: (i) extensions of the time
of payment; (ii) renewals; (iii) acceptances of partial payments; (iv) releases
or substitutions of any collateral or any Obligor; and (v) failure, if any, to
perfect or maintain perfection of any security interest in any collateral. Each
Obligor agrees that acceptance of any partial payment will not constitute a
waiver and that waiver of any default will not constitute waiver of any prior or
subsequent default.
Where appropriate the neuter gender includes the feminine and the masculine
and the singular number includes the plural number.
Borrower represents and agrees that: all Loans evidenced by this Note are and
will be for business, commercial, investment or other similar purpose and not
primarily for personal, family, or household use as such terms are used in the
Texas Finance Code. Borrower represents and agrees that each of the following
statements is true unless the box preceding that statement is checked and
initialed by Borrower and Bank: ( (i) No advances will be used primarily for
agricultural purposes as such term is used in the Texas Credit Code. ( (ii) No
advances will be used for the purpose of purchasing or carrying any margin stock
as that term is defined in Regulation U of the Board. Notwithstanding anything
contained herein or in any other Loan Document, if this is a consumer credit
obligation (as defined or described in 12 C.F.R. 227, Regulation AA, promulgated
by the Board), the security for this credit obligation will not extend to any
non-possessory security interest in household goods (as defined in Regulation
AA) other than a purchase money security interest, and no waiver of any notice
contained herein or therein will extend to any waiver of notice prohibited by
Regulation AA.
Chapter 346 of the Texas Finance Code (and any successor enactment) shall not
apply to this Note or to any Loan evidenced by this Note.
This Note is governed by Texas law. If any provision of this Note is illegal
or unenforceable, that illegality or unenforceability will not affect the
remaining provisions of this Note. BORROWER AND BANK AGREE THAT THE COUNTY IN
WHICH BANK'S PRINCIPAL OFFICE IS LOCATED IN TEXAS IS PROPER VENUE FOR ANY ACTION
OR PROCEEDING BROUGHT BY BORROWER OR BANK, WHETHER IN CONTRACT, TORT, OR
OTHERWISE. ANY ACTION OR PROCEEDING AGAINST BORROWER MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT IN SUCH COUNTY TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW. TO THE EXTENT PERMITTED BY APPLICABLE LAW BORROWER HEREBY IRREVOCABLY (A)
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (B) WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY SUCH COURT IS AN INCONVENIENT
FORUM. BORROWER AGREES THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED
OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED BELOW.
BANK MAY SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW AND MAY BRING ANY
ACTION OR PROCEEDING AGAINST BORROWER OR WITH RESPECT TO ANY OF ITS PROPERTY IN
COURTS IN OTHER PROPER JURISDICTIONS OR VENUES.
Page 4 of 5 Pages
For purposes of this Note, any assignee or subsequent holder of this Note will
be considered the "Bank," and each successor to Borrower will be considered the
"Borrower."
Each Borrower and cosigner represents that if it is not a natural person, it
is duly organized and validly existing and in good standing under the laws of
the state of its incorporation or organization; has full power to own its
properties and to carry on its business as now conducted; is duly qualified to
do business and is in good standing in each jurisdiction in which the nature of
the business conducted by it makes such qualification desirable; and has not
commenced any dissolution proceedings. Each Borrower and cosigner that is
subject to the Texas Revised Partnership Act ("TRPA") agrees that Bank is not
required to comply with Section 3.05(d) of the TRPA and agrees that Bank may
proceed directly against one or more partners or their property without first
seeking satisfaction from partnership property. Each Borrower and cosigner
represents that if it conducts business under an assumed business or
professional name it has properly filed Assumed Name Certificate(s) in the
office(s) required by Chapter 36 of the Texas Business and Commerce Code. Each
of the persons signing below as Borrower or cosigner represents that he/she has
full requisite power and authority to execute and deliver this Note to Bank on
behalf of the party for whom he/she signs and to bind such party to the terms
and conditions of this Note and that this Note is enforceable against such
party.
NO COURSE OF DEALING BETWEEN BORROWER AND BANK, NO COURSE OF PERFORMANCE, NO
TRADE PRACTICES, AND NO EXTRINSIC EVIDENCE OF ANY NATURE MAY BE USED TO
CONTRADICT OR MODIFY ANY TERM OF THIS NOTE OR ANY OTHER LOAN DOCUMENT.
THIS NOTE AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, Borrower has executed this Note effective the day,
month and year first aforesaid.
BORROWER: PERVASIVE SOFTWARE INC.
By: /s/ James R. Offerdahl
-----------------------------------------------
Name: James R. Offerdahl
---------------------------------------------
Title: Chief Operating Officer and Chief Financial Officer
----------------------------------------------------
(Bank's signature is provided as its acknowledgment of the above as the final
written agreement between the parties and as its agreement with each Borrower
subject to TRPA that Bank is not required to comply with Section 3.05(d) of
TRPA.)
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
By: /s/ Donna Day
------------------------------------------------
Name: Donna Day
----------------------------------------------
Title: Vice President
---------------------------------------------
Page 5 of 5 Pages
EXHIBIT A to Promissory Note between
PERVASIVE SOFTWARE INC. ("Borrower") and Chase Bank of Texas,
National Association ("Bank")
dated as of October 22, 1998.
CALCULATION CERTIFICATE FOR DETERMINATION OF LIBOR SPREAD.
THIS CALCULATION IS FOR THE QUARTER ENDING ______________________, 199___ .
====================================================================================================================================
Total Funded Liabilities to EBITDA for the 12 Most + YTD this - YTD last Total
months ending at each fiscal quarter End Date Recent Year Year
FYE
Net income $___________ $__________ $___________ $_______
-
Plus: Depreciation $___________ $__________ $___________ $_______
-
Amortization $___________ $__________ $___________ $_______
-
Interest Expense $___________ $__________ $___________ $_______
-
Tax Expense $___________ $__________ $___________ $_______
-
Specified Non-
Cash Charges $___________ $__________ $___________ $_______
-
Equals: EBITDA = $___________ $__________ $___________ $_______
=
As of fiscal quarter End Date:
Loans from Bank $___________
Plus: Other Liabilities
for borrowed money
(excluding normal trade debts) $___________
Equals: Total Funded Liabilities = $
===========
$_________________________ / $______________ = ________
Total Funded Liabilities EBITDA Ratio
===================================================================================================================================
The undersigned certifies that the above information and computations are
true and correct and not misleading as of the date hereof, and that since the
date of the Borrower's most recent Calculation Certificate (if any):
No default or Event of Default has occurred under the Agreement during the
current Reporting Period, or been discovered from a prior period, and not
reported.
A default or Event of Default (as described below) has occurred during the
current Reporting Period or has been discovered from a prior period and is
being reported for the first time and:
was cured on ___________________________________.
was waived by Bank in writing on ______________________________.
is continuing.
Description of Event of Default: __________________________________________
________________________________________________________________________________
________________________________________________________________________________
Executed ____________________________, 19_______________.
BORROWER: PERVASIVE SOFTWARE INC.
SIGNATURE:
----------------------------------------------------------------------
NAME:
---------------------------------------------------------------------------
TITLE: (CFO, Director of Finance, Controller or President)
--------------------------------------------------------------------------
ADDRESS:
------------------------------------------------------------------------
EXHIBIT A Page 1 of 1