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Exhibit 10.39
LOAN AND SECURITY AGREEMENT
Dated as of April 6, 2001
between
Unisphere Networks, Inc. (the "Lender")
and
BroadSoft, Inc. (the "Borrower")
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement, dated as of April 6, 2001, is between
Unisphere Networks, Inc., a Delaware corporation (the "Lender"), and BroadSoft,
Inc., a Delaware corporation having a principal place of business at 220 Perry
Parkway, Gaithersburg, Maryland 20877 (the "Borrower").
RECITALS:
WHEREAS, the Lender and Borrower have entered into an Agreement and Plan
of Merger, dated October 20, 2000 (as amended, the "Merger Agreement"), that
contemplates the merger of the Borrower into a wholly-owned subsidiary of the
Lender (the "Merger"); and
WHEREAS, pending consummation of the Merger, the Borrower may require
additional credit for the operation of its business; and
WHEREAS, Lender is willing to provide Borrower with such financing
arrangements on the terms and conditions hereafter provided.
NOW, THEREFORE, in consideration of the undertakings set forth herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Agreement" means this Loan and Security Agreement, as it may be amended
or modified and in effect from time to time.
"Authorized Officer" means the President, Vice President, Treasurer or
Secretary of the Borrower, acting singly.
"Base Rate" means the annual rate of interest published and in effect from
time to time in the "Money Rates" column of the Wall Street Journal, eastern
edition, as the "prime rate."
"Business Day" means, with respect to any borrowing or payment, a day
other than Saturday or Sunday on which banks are open for business in Boston,
Massachusetts.
"Change In Control" means the existing shareholders cease to own (either
directly or indirectly) at least sixty-seven percent (67%) of the voting stock
of the Borrower.
"Code" means the Uniform Commercial Code of the jurisdiction with respect
to which such term is used, as in effect from time to time.
"Collateral" shall have the meaning assigned to such term in Article IV
hereof.
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"Comdisco Subordination Agreement" means that certain subordination
agreement of even date herewith by and among the Lender, the Borrower and
Comdisco, Inc., as the same may be amended from time to time.
"Commitment Termination Date" means the earliest to occur of (a) 5:00
p.m., eastern daylight time, on August 31, 2001, (b) the Effective Time (within
the meaning of the Merger Agreement) and (c) the termination of the Merger
Agreement.
"Credit Commitment" means the obligation of Lender to make Loans to
Borrower in the aggregate amount not to exceed $9,000,000.
"Default" means an event described in Article VII.
"Effective Date" means the date of this Agreement.
"GAAP" shall have the meaning given to such term in the Merger
Agreement.
"Indebtedness" means all liabilities, obligations and indebtedness of
any and every kind and nature, including, without limitation, all liabilities
and all obligations to general creditors (other than trade payables), whether
now or hereafter owing, arising, due or payable, from Borrower to any Person,
and howsoever evidenced, created, incurred, acquired or owing, whether primary,
secondary, direct, contingent, fixed or otherwise.
"Intellectual Property Security Agreement" means the Intellectual
Property Agreement, substantially in the form attached hereto as Exhibit "D",
executed and delivered by Borrower in favor of the Lender.
"Intellectual Property Collateral" means all of the following, to the
extent owned, or ownership is hereafter acquired, by the Borrower:
(a) any and all copyrights, copyright rights, copyright
applications, copyright registrations and like protections in each work or
authorship and deviation 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) any and all patents, patent applications and like
protections including; without limitation, improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part of the
same ("the Patents");
(c) any and all 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 or symbolized by such trademarks;
(d) 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;
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(e) any and all design rights which may be available to Borrower now
or hereafter existing, created, acquired or held;
(f) any and all claims for damages by any of past, present and future
infringement of any of the rights included above, with the right, but not the
obligation, to sue for or collect such damages for said use or infringement of
the intellectual property rights identified above;
(g) all licenses or other rights to use any of the intellectual
property rights identified above, and all license fees and royalties arising
from such use to the extent permitted by such license or rights;
(h) all amendments, renewals and extensions of any of the
intellectual property rights identified above; and
(i) 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.
"Landlord Waiver" means that certain landlord waiver executed and delivered
by each landlord for the premises leased by the Borrower where any Collateral is
located, in substantially the form attached hereto as Exhibit "C".
"Loan" as defined in Section 2.1(a).
"Loan Documents" means this Agreement, the Note, the Intellectual Property
Security Agreement, the Landlord Waivers and any Supplemental Documentation.
"Loan Request" means a loan request in substantially the form attached
hereto as Exhibit "B".
"Material Adverse Effect" shall have the meaning given to the term "Company
Material Adverse Effect" in the Merger Agreement and shall also include any
material adverse effect on (i) the Borrower's ability to pay the Obligations in
accordance with the terms thereof, or (ii) the Collateral or the Lender's liens
on the Collateral or the priority of such liens.
"Material Adverse Change" shall have the meaning given to the term "Company
Material Adverse Change" in the Merger Agreement.
"Maturity Date" means the first anniversary of the date upon which the
Merger Agreement is terminated or the Merger is closed.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Note and all other obligations, interest, fees, charges and expenses of
the Borrower to the Lender arising under or in connection with the Loan
Documents.
"Permitted Indebtedness" means the indebtedness or obligations described in
Section 6.4(e)(1) of this Agreement.
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"Permitted Liens" means the liens, mortgages, encumbrances, pledges and
other security interests described in Section 6.4(e)(2) of this Agreement.
"Person" means any corporation, natural person, firm, joint venture,
partnership, trust, unincorporated organization, enterprise, government or any
department or agency of any government.
"Reasonable Best Efforts" shall have the meaning given to such term in the
Merger Agreement.
"Supplemental Documentation" means agreements, instruments, documents,
financing statements, warehouse receipts, bills of lading, notices of
assignment of accounts, schedules of accounts assigned, mortgages and other
written matter necessary or reasonably requested by the Lender to perfect and
maintain perfected the Lender's security interest in the Collateral.
"Subordination Agreements" means the SVB Subordination Agreement and the
Comdisco Subordination Agreement.
"SVB Subordination Agreement" means that certain subordination agreement
of even date herewith by and among the Lender, the Borrower and Silicon Valley
Bank, as the same may be amended from time to time.
All undefined terms contained in this Agreement shall, unless the context
indicates otherwise, have the meanings provided for by the Code as in effect in
the Commonwealth of Massachusetts to the extent the same are used or defined
therein. The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole, including the Exhibits and Schedules
hereto, as the same may from time to time be amended, modified or supplemented,
and not to any particular section, subsection or clause contained in this
Agreement.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter.
ARTICLE II
THE LOAN FACILITY
2.1 Loan Facility.
(a) Loans. Subject to satisfaction of the conditions set forth in
Article III hereof, the Lender agrees, on the terms and conditions set forth in
this Agreement, to make loans and advances (each, a "Loan") to the Borrower at
the Borrower's request either (i) for working capital purposes, from March 1,
2001 until the Commitment Termination Date, or (ii) for purposes of effecting
the redemption of up to 9,000,000 shares of the Borrower's Series A Preferred
Shares (as defined in the Merger Agreement) immediately prior to the Effective
Time (as defined in the Merger Agreement), as contemplated by Section 5.2 (s)
and elsewhere in the Merger Agreement, from the date of this Agreement until the
Commitment Termination Date, which loans and advances in an aggregate amount
outstanding from time to time do not exceed the Commitment. In no event
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shall the Borrower request, or the Lender be required to advance, loans or
advances for working capital purposes pursuant to clause (i) above in excess of
$1,500,000 during any calendar month. The Borrower shall repay the aggregate
outstanding principal amount of each such Loan, together with all interest due
thereon, and all other amounts owing under this Agreement or the Loan Documents
in connection with such Loan in full on the Maturity Date. If the aggregate
principal amount of all outstanding Loans shall at any time exceed the
Commitment, the Borrower shall immediately pay such excess to the Lender. The
obligation of the Borrower to repay the principal amount of each Loan, and any
and all interest which accrues thereon, shall be evidenced by a promissory note
in the original principal amount of the Commitment, executed and delivered by
the Borrower in substantially the form of Exhibit "A" hereto (the "Note").
(b) Making the Loans. Each Loan shall be made on notice of the
principal amount of each Loan given by the Borrower to Lender not later than
12:00 noon on the third Business Day prior to the date of the proposed Loan
(which shall also be on Business Day). Such notice shall be made by submitting
to the Lender a duly executed Loan Request (which specifies the amount of such
Loan). Each Loan shall comply with all of the provisions of this Agreement. The
Lender shall promptly, and in any event not later than the date specified in
the Loan Request for the proposed Loan, advance the requested amount to the
Borrower in immediately available funds to the deposit account specified by
the Borrower.
2.2 Interest.
(a) Interest Rates. The Borrower shall pay interest on the Loans at
a per annum rate equal to the Base Rate plus four percent (4%) (the "Applicable
Rate"), payable on the Maturity Date, provided, however, that while any Default
exists, amounts payable under the Loan Documents shall bear interest
(compounded monthly and payable on demand with respect to overdue amounts) at a
rate per annum equal to two percent (2%) above the Applicable Rate until such
amounts are paid in full.
(b) Interest Basis. Interest shall be calculated for actual days
elapsed on the basis of a 360-day year. Interest shall be payable for the day
the Loan is made but not for the day of any payment on the amount paid if
payment is received prior to noon (local time) at the place of payment. If any
payment of principal of or interest on the Loan shall become due on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day and, in the case of a principal payment, such extension of time
shall be included in computing interest in connection with such payment.
2.3 Method of Payment. All payments of principal, interest, and fees
hereunder shall be made in immediately available funds in United States Dollars
to the Lender at the Lender's address specified pursuant to Section 9.14, by
noon (local time) on the date when due. Any of the Loans outstanding at any
time under this Loan Agreement may be prepaid in whole or in part without
penalty. Amounts repaid or prepaid with respect to the Loans may not be
reborrowed, provided that the Borrower shall give the Lender written notice of
its intention to prepay any of the outstanding amounts, which notice shall
specify the amount to be so prepaid and the date of such prepayment, not less
than 2 days prior to such prepayment.
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ARTICLE III
CONDITIONS PRECEDENT
3.1 Conditions to Initial Loan. The Lender shall not be required to make
any Loans under this Agreement unless, on the date of the initial Loan Request
delivered by the Borrower to the Lender, the Borrower has furnished to the
Lender, or caused to be furnished to the Lender (unless otherwise waived by
Lender in writing), the following, in a form and substance reasonably
satisfactory to the Lender and its counsel, each dated as of the date of the
initial Loan Request (or such other date as shall be acceptable to the Lender);
(a) the Note; (b) the Intellectual Property Security Agreement; (c) a
certificate of the secretary of the Borrower; (1) certifying that attached
thereto are true and correct copies of the Borrower's charter documents,
by-laws, and documents evidencing all corporate action taken to authorize this
transaction and (2) giving the name, position and signature specimen of all
authorized officers; (d) the written opinion of counsel to the Borrower,
addressed to the Lender in form and substance reasonably satisfactory to Lender;
(e) written documentation satisfactory to Lender evidencing that Lender holds a
first priority perfected security interest in the Collateral, junior only to the
first priority lien in favor of Silicon Valley Bank and the subordinated lien in
favor of Comdisco and only with respect to any and all amounts now or hereafter
owed to either of them under credit facilities that exist on the Effective Date;
and (f) such other documents as Lender or its counsel may reasonably request.
3.2 Conditions To All Borrowings. The obligations of the Lender to make
any Loan whether or not after the Effective Date, shall also be subject to the
following conditions precedent that on the date such Loan is made and after
giving effect thereto:
(a) Each of the representations and warranties of the Borrower
contained in this Agreement, the Loan Documents or the Merger Agreement shall be
true and correct as of the date as of which they were made and, except to the
extent such representations and warranties are specifically made as of a
particular date (in which case such representations and warranties shall be true
and correct as of such date), shall also be true and correct as of the date the
Loan is made, except for any failure to be true and correct which has not
resulted in, and would not be reasonably likely to result in, a Material Adverse
Change, and no Default shall have occurred and be continuing;
(b) Borrower shall deliver to the Lender a Loan Request, executed by
the chief executive officer of Borrower, affirming compliance with the foregoing
Section 3.2(a) as of such date;
(c) The Merger Agreement shall not have been terminated;
(d) The Closing (as defined in the Merger Agreement) shall not have
occurred, and the failure of the Closing to have occurred shall not be
attributable to the failure of the Borrower to have satisfied the conditions to
closing set forth in Sections 5.1(a) and 5.2 of the Merger Agreement;
(e) The Lender shall not have the right (whether or not exercised) to
terminate the Merger Agreement under Section 7.1(b) thereof;
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(f) The Borrower shall comply with all other requirements under this
Agreement; and
(g) With respect to a loan or advance for purposes of effecting the
redemption of the Series A Preferred Shares under Section 2.1(a)(ii) above, all
conditions to closing under the Merger Agreement (excluding redemption of the
Series A Preferred Shares and delivery of any documents to be delivered at the
Closing (as defined in the Merger Agreement)) shall have been satisfied or
waived.
ARTICLE IV
GRANT OF SECURITY INTEREST
4.1 To secure payment and performance of all Obligations, the Borrower
hereby grants to the Lender a security interest in the following property
(collectively, the "Collateral"):
All of the Borrower's now owned or hereafter acquired, wherever
located:
(a) Inventory, including but not limited to all inventory, supplies,
raw materials, work in process, goods, merchandise, finished inventory and other
tangible personal property held by the Borrower for sale or for lease, furnished
or to be furnished under contracts of service, or used or consumed in the
Borrower's business, goods in transit, any and all returned or repossessed
inventory or merchandise and all documents of title (whether negotiable or
negotiable) representing any of the foregoing, and all proceeds thereof; and
(b) Accounts, including, but not limited to, all accounts, all rights
of the Borrower to payment for goods sold or leased or for services rendered,
all accounts receivable of the Borrower; all obligations owing to the Borrower
evidenced by an instrument or chattel paper; all rights of the Borrower to
payment under a contract not yet earned by performance; all obligations owing to
the Borrower of any kind or nature, including all writings, if any, evidencing
the same, including all instruments, drafts, acceptances and chattel paper; any
and all proceeds of any of the foregoing. Further included within the term
"Accounts" are all right, title and interest of Borrower in and to the Inventory
which gave rise to any Account, (including the right of stoppage in transit) all
guaranties of, and security and liens with respect to any Account, and all
Accounts, Documents and Contract Rights of Borrower as defined in the Uniform
Commercial Code; and
(c) Instruments, and Chattel Paper, including all instruments and
chattel paper as defined in the Uniform Commercial Code and all proceeds
thereof; and
(d) General Intangibles, including, but not limited to, all general
intangibles as defined in the Uniform Commercial Code, all Intellectual Property
Collateral and all proceeds thereof, including without limitation, any and all
rights of Borrower to any refund of any tax assessed against Borrower or paid by
Borrower, loss carry-back tax refunds, insurance premium rebates, unearned
premiums, insurance proceeds, choses in action, names, trade names, goodwill
(whether related to the business, any intellectual property, or otherwise),
trade secrets, computer programs, computer records, data, computer software,
customer lists, patents, patent rights, patent applications, patents pending,
patent licenses or assignments, development ideas and concepts,
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licenses, permits, franchises, telephone numbers, literary rights, rights to
performance, trademarks, trademark applications, trademark rights, logos,
intellectual property, copyrights, copyright applications, licenses,
proprietary or other processes, blueprints, drawings, designs, diagrams, plans,
reports, charts, catalogs, manuals, research, literature, proposals, cost
estimates, routes, and other reproductions on paper or otherwise, of any and
all concepts or ideas, whether or not related to the business or operations of
Borrower, and including the patents and trademarks listed on Schedule A hereto;
and
(e) Equipment, including but not limited to all equipment, vehicles,
machinery, tools, furniture, fixtures, trade fixtures and parts. Further
included within the term "Equipment" is all tangible personal property utilized
in the conduct of the Borrower's business (but excluding any property
hereinbefore defined as "Inventory") and all additions, accessions,
substitutions, components, and replacements thereto, therefor and thereof and
all proceeds thereof; and
(f) Other tangible and intangible property including, without
limitation, all investment property; and
(g) all products and proceeds of the above, including insurance
proceeds.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender that on the date
hereof, and on the date of each and every Loan made after the date hereof:
5.1 Executive Offices. The location of the Borrower's chief executive
office, principal place of business, other offices and places of business and
of the Borrower's Accounts and Inventory are set forth on Schedule 5.1 hereto,
and are the sole offices and places of business of Borrower. Borrower will
provide Lender with at least thirty (30) days' prior written notice of any
proposed change to the locations set forth on Schedule 5.1 hereof
5.2 Corporate Power; Authorization Enforceable Obligations. The
execution, delivery and performance by Borrower of the Loan Documents, to the
extent it is a party thereto, and the creation of all liens provided for herein
and therein: (i) are within Borrower's corporate power; (ii) have been and will
be duly authorized by all necessary or proper action; (iii) are not in
contravention of any provision of Borrower's by-laws or charter; (iv) will not
violate any law or regulation, or any order or decree of any court or
governmental instrumentality; (v) will not conflict with or result in the
breach or termination of, constitute a default under, or accelerate any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which Borrower is a party or by which Borrower
or any of its property is bound (except for such conflict, breach, termination,
default or acceleration as could not reasonably be expected to have a Material
Adverse Effect); (vi) will not result in the creation or imposition of any lien
upon any of the property of Borrower other than those in favor of the Lender,
all pursuant to the Loan Documents; and (vii) do not require the consent or
approval of any governmental body, agency, authority or any other Person,
except such consents as have been obtained. Each of the Loan Documents
delivered in connection herewith at such time shall have been duly executed and
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delivered for the benefit of or on behalf of Borrower, and each shall then
constitute a legal, valid and binding obligation of Borrower, enforceable
against it in accordance with its terms.
5.3 Title to Collateral. Except as disclosed to the Lender in writing,
including in the Merger Agreement or the disclosure schedule thereto, Borrower
owns all of its personal property and has good, clear and marketable title
thereto, free and clear of all liens and encumbrances, except (i) liens created
hereunder; and (ii) liens listed on Schedule 6.5 attached hereto. There are no
outstanding commitments of Borrower relative to the purchase, sale, mortgage or
lease of said property, other than in the usual course of business.
5.4 Intellectual Property Collateral. Borrower is the sole owner of the
Intellectual Property Collateral, except for non-exclusive licenses granted by
Borrower to its customers in the ordinary course of business. Each of the
Patents is valid and enforceable, and no part of the Intellectual Property
Collateral has been judged invalid or unenforceable, in whole or in part, and
no claim has been made that any part of the Intellectual Property Collateral
violates the rights of any third party.
ARTICLE VI
COVENANTS
6.1 Following the Effective Date and through the period ending on the
closing of the Merger or the termination of the Merger Agreement, Borrower
shall comply in all material respects with all of its covenants set forth in
the Merger Agreement and shall use its Reasonable Best Efforts to obtain
Landlord Waivers from each landlord where material assets of the Borrower are
located.
6.2 From and after the Effective Date and until all Obligations are paid
in full in cash, the Borrower will not borrow or permit to be outstanding any
principal amount in excess of (i) $449,923.91 under the Loan and Security
Agreement between Silicon Valley Bank and the Borrower, dated November 4, 1999,
and (ii) $2,353,061.80 under the Subordinated Loan and Security Agreement,
dated as of June 5, 2000, between Comdisco, Inc. and the Borrower (the
"Comdisco Loan Agreement"), plus, solely in the event the Merger Agreement is
terminated and only following such termination, an additional $3,000,000 under
the Comdisco Loan Agreement.
6.3 Amendment to Merger Agreement. Borrower shall enter into an
amendment to the Merger Agreement with Lender providing for the amendment of
certain sections of the Merger Agreement, including but not limited to Section
5.2(s), to state that the Series A Preferred Shares shall be redeemed, for the
consideration specified in the Company Charter (as defined in the Merger
Agreement), no sooner than immediately prior to the Effective Time.
6.4 Following the closing of the Merger or the termination of the Merger
Agreement and for the remainder of the term of this Agreement and for so long
as any loans to Borrower remain outstanding under this Agreement, unless the
Lender shall otherwise consent in writing:
(a) Reports and Notices. Borrower shall deliver, or cause to be
delivered, to the Lender:
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1. Within 90 days after the close of Borrower's fiscal year,
copies of the audited annual financial statements of Borrower and
statements of income and cash flows for such fiscal year audited by a
certified public accountant satisfactory to Lender and prepared on a
consistent basis and in accordance with GAAP.
2. As soon as practicable, but in any event within 2 Business
Days after Borrower becomes aware of the existence of any Default, or any
development or other information which could reasonably be expected to
have a Material Adverse Effect, telephonic or telecopy notice specifying
the nature of such Default or development or information, including the
anticipated effect thereof, which notice shall be promptly confirmed in
writing within 5 days.
3. Such other information respecting the Borrower's business,
financial condition or prospects as the Lender may, from time to time,
reasonably request.
(b) Transactions with Affiliates. Borrower shall not make any payments
or distributions of any kind to any shareholder of the Borrower or any
affiliates of such shareholder and Borrower shall not enter into any
transaction for the purchase, sale or exchange of property or the rendering of
any service to or for any shareholder or director of the Borrower, or any
affiliate of such person or entity unless such payments or transactions are in
the ordinary course of Borrower's business and are upon fair and reasonable
terms no less favorable to Borrower than Borrower would obtain in a comparable
arm's-length transaction with an unaffiliated person.
(c) Corporate Existence, etc. Borrower shall maintain its corporate
existence, business and assets, keep its business and assets adequately
insured, maintain its chief executive office at the location provided in
Section 5.2 hereof, continue to engage in the same lines of business, and
comply in all material respects with all requirements of law. Borrower will
maintain all of its assets and properties in good repair and working order.
Borrower will not relocate its chief executive office or permit any of its
assets or property to be kept at any locations other than as provided in
Section 5.2 hereof.
(d) Cooperation with Lender. Borrower shall cooperate with the Lender, take
such action, execute such documents, and provide such information as the Lender
may from time to time reasonably request in order further to effect the
transactions contemplated by and the purposes of the Loan Documents.
(e) Indebtedness and Liens.
1. The Borrower will not create, incur, assume, guarantee or
become liable, contingently or otherwise, with respect to any indebtedness
or obligation, except (i) Indebtedness to the Lender arising under the Loan
Documents; (ii) Indebtedness which is subordinated to the Obligations,
provided the terms of such Indebtedness, including the terms of
subordination thereof, are reasonably satisfactory to the Lender in all
respects; (iii) current liabilities of the Borrower not incurred through
the borrowing of money or the obtaining of credit (except credit on an open
account customarily extended); (iv) Indebtedness in respect of taxes or
other governmental charges which are being contested in good faith by the
appropriate
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proceedings; (v) operating or capital leases entered into by the
Borrower in the ordinary course, provided such operating or capital
leases shall not cause a Default herein; (vi) purchase money security
interests; and (vii) subject to the provisions of Section 6.2, such
other Indebtedness described on Schedule 6.4(e) hereto.
2. The Borrower will not create, incur, or allow to be created
or exist any lien, encumbrance, mortgage, pledge or other security
interest of any kind upon any of its assets, except (i) liens securing
the Obligations; (ii) liens securing taxes or governmental charges not
yet due; (iii) liens securing capital leases; (iv) purchase money
security interests; (v) liens to secure worker's compensation,
employment insurance and social security obligations incurred in the
ordinary course, (vi) liens to secure Indebtedness permitted under
Section 6.4(e)(1)(ii) or (vi) liens described on Schedule 6.4(e) hereto.
(f) Insurance. Borrower agrees to keep all the Collateral insured with
coverages in amounts not less than usually carried by one engaged in a like
business (and in any event not less than that required by Lender), naming the
Lender as a loss payee, and payable to the Lender and Borrower, as their
interests may appear. Borrower hereby appoints Lender as attorney-in-fact for
Borrower in obtaining, adjusting, settling and canceling such insurance and
endorsing any drafts. As further assurance for the payment and performance of
the Obligations, Borrower hereby assigns to Lender all sums, including returned
or unearned premiums, that may become payable under any policy of insurance on
the Collateral, and Borrower hereby directs each insurance company issuing any
such policy to make payment of such sums directly to Lender.
(g) Inspection. Borrower will keep accurate and complete records of the
Collateral, and Lender or any of its agents shall have the right, upon
reasonable notice, to inspect the Collateral wherever located and to visit
Borrower's place or places of business, at intervals to be determined by Lender
and without Borrower's hindrance or delay, to inspect, audit, check and make
extracts from any copies of books, records, journals, orders, receipts and
correspondence that relate to the Collateral or to the general financial
condition of Borrower. Lender may temporarily remove any of the Borrower's
records for the purpose of having copies made thereof.
(h) Taxes. Borrower will pay all real and personal property taxes,
assessments and charges as well as all franchise, income, unemployment, old age
benefit, withholding, sales and other taxes assessed against it, or payable by
it at such times and in such manner as to prevent any penalty from accruing or
any lien or charge from attaching to its property, and will furnish the Lender
upon request, receipts, or other evidence that deposits or payments have been
made.
(i) Sales or Mergers. Borrower will (i) not sell or dispose of any of
its assets, including the Collateral, except in the ordinary and usual course
of its business or (ii) merge or consolidate, or permit any of its subsidiaries
to merge or consolidate with or into any business or entity.
(j) Government Accounts. Borrower will immediately notify Lender if any
of Borrower's accounts arise out of contracts with the United States, any state
or municipality, or any department, agency or instrumentality thereof, and
execute any instruments and take any steps
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required by Lender in order that all monies due and to become due under such
contracts shall be assigned to Lender.
(k) Reimbursement. Borrower will reimburse Lender on demand for any sums
paid or advanced by Lender to satisfy any tax, lien or security interest or
other encumbrance on the Collateral, to provide insurance on the Collateral or
to pay for the maintenance and preservation of the Collateral; provided
however, that Lender shall not be obligated to make any such payments or
deposits. Any such sums paid or advanced by Lender shall be deemed secured by
the Collateral and constitute part of the Obligations.
(l) Repair. Borrower will maintain all of its assets and property in
good repair and working order.
(m) Registration of Intellectual Property Rights.
1. Borrower shall register or cause to be registered (to the extent
not already registered) with the United States Patent and Trademark Office or
the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, any additional intellectual property rights developed or
acquired by Borrower from time to time, including, without limitation, which
are material to the business of the Borrower and/or any of its subsidiaries,
revisions or additions to the intellectual property rights currently owned by
the Borrower, provided that Borrower shall not be required to make such
registration if it reasonably determines that there are valid business reasons
for not so doing. Borrower shall execute and deliver such instruments,
agreements and documents, including, without limitation, the Intellectual
Property Security Agreements, as Lender shall reasonably request from time to
time to perfect the Lender's security interests in the Borrower's intellectual
property rights.
2. Borrower shall (i) protect, defend and maintain the validity and
enforceability of the Intellectual Property Collateral, (ii) use its best
efforts to detect infringements of the Intellectual Property Collateral and
promptly advise Lender in writing of material infringements detected and (iii)
not allow any Intellectual Property Collateral to be abandoned, forfeited or
dedicated to the public without the written consent of Lender, which shall not
be unreasonably withheld.
3. Lender may audit Borrower's Intellectual Property Collateral to
confirm compliance with this Section 6.4(m), provided such audit may not occur
more often than once per year, unless an Event of Default has occurred and is
continuing. Lender shall have the right, but not the obligation, to take, at
Borrower's sole expense, any actions that Borrower is required under this
Section 6.4(m) to take, but which Borrower fails to take, after fifteen (15)
days' notice to Borrower. Borrower shall reimburse and indemnify Lender for all
reasonable costs and reasonable expenses incurred in the reasonable exercise of
its rights under this Section 6.4(m).
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ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall constitute
Default:
7.1 Any representation or warranty made in this Agreement or the Merger
Agreement by or on behalf of the Borrower to the Lender shall be materially
false on the date as of which made.
7.2 Nonpayment of principal or interest due under the Note within 7
calendar days following the date when due.
7.3 The breach by the Borrower of any of the covenants contained in this
Agreement or the Merger Agreement, which default shall not have been cured
within 20 calendar days after written notice thereof is given to the Borrower
by the Lender.
7.4 The occurrence of default or an event of default under any of the
Loan Documents, or under any other material agreement, instrument or document
with respect to borrowed money to which the Borrower is a party, which remains
uncured for 15 calendar days after written notice thereof is given to the
Borrower.
7.5 The Borrower shall (i) have an order for relief entered with respect to
it under the federal bankruptcy laws as now or hereafter in effect, (ii) make an
assignment for the benefit of creditors, (iii) apply for, seek, consent to,
acquiesce in, or have appointed for it or any substantial portion of its
property a receiver, custodian, trustee, examiner, liquidator or similar
official for it or any substantial part of its property, (iv) institute any
proceeding seeking an order for relief under the Federal bankruptcy laws as
now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent,
or seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate action to authorize or effect any of
the foregoing actions set forth in this Section 7.5.
7.6 This Agreement or the Intellectual Property Security Agreements shall
for any reason fail to create a valid and perfected security interest in any
collateral purported to be covered thereby, except as permitted by the terms of
such agreements, or this Agreement or any of the other Loan Documents shall
fail to remain in full force or effect or any action shall be taken to
discontinue or to assert the invalidity or unenforceability thereof.
7.7 A Change in Control (other than pursuant to the Merger Agreement)
shall have occurred.
7.8 Borrower shall make any payment to, or any payment shall be made on
account of any Indebtedness other that Indebtedness permitted under Section
6.4(e), except as may be agreed to by Lender.
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ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1 Acceleration. Subject to the terms of the Subordination Agreements, if
any Default described in Section 7.5 occurs with respect to the Borrower, the
Obligations shall immediately become due and payable without any election,
notice or action on the part of the Lender. If any other Default occurs, the
Lender may declare the Obligations to be due and payable, whereupon the
Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives.
8.2 Amendments. The Lender and the Borrower may enter into written
agreements supplemental hereto for the purpose of adding or modifying any
provisions to the Loan Documents or changing in any manner the rights of the
Lender or the Borrower hereunder or waiving any Default hereunder. To be
effective, any such amendment or waiver must be in writing and signed by the
Lender and the Borrower.
8.3 Preservation of Rights, No Adverse Impact. No delay or omission of the
Lender to exercise any right under this Agreement or any of the Loan Documents
shall impair such right or be construed to be a waiver of any Default or an
acquiescence therein. Any single or partial exercise of any such right shall
not preclude other or further exercise thereof or the exercise of any other
right, and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by the Lender, and then only to the extent in such writing specifically
set forth. All remedies contained in the Loan Documents, or by law afforded
shall be cumulative and all shall be available to the Lender until the
Obligations have been paid in full.
8.4 Remedies.
(a) Upon the occurrence and during the continuance of a Default, the
Lender may, subject to the terms of the Subordination Agreements, proceed
to protect and enforce to Lender's rights by suit in equity, action of law
and/or other appropriate proceeding either for specific performance of any
covenant or condition contained in this Agreement, any Loan Document or in
any instrument or document delivered to the Lender pursuant hereto, or in
the exercise of any rights, remedies or powers granted in this Agreement,
any Loan Document and/or any such instrument or document the Lender may
proceed to declare the obligations under this Agreement or any Loan
Document to be due and payable pursuant to Section 8.1 hereof and the
Lender proceed to enforce payment of such documents as provided herein, or
in any Loan Document, and may offset and apply toward the payment of such
amount any indebtedness of the Lender to the Borrower.
(b) Upon the occurrence and during the continuance of a Default, the
Lender may, subject to the terms of the Subordination Agreements, enter and
take possession of all Collateral and the premises on which they are
located, and in the Lender's sole discretion operate and use Borrower's
equipment, whether or not Collateral hereunder, complete work in process,
apply as Borrower's attorney-in-fact for domestic or foreign patents or
other intellectual property rights with respect to inventions and seek
registration or assignment, foreign and domestic, of any trademarks, trade
names, styles, logos or copyrights, and sell, lease or license the
Collateral to third persons or
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associations without being liable to Borrower on account of any losses, damage
or depreciation that may occur as a result thereof so long as Lender shall act
reasonably and in good faith; and at the Lender's option and without notice to
Borrower (except as specifically herein provided) Lender may sell, lease, assign
and deliver the whole or any part of the Collateral, or any substitute therefor
or any addition thereto, at public or private sale, for cash, upon credit, or
for future delivery, at such prices and upon such terms as Lender deems
advisable, including without limitation, the right to sell or lease in
conjunction with other property, real or personal, and allocate the sale or
lease proceeds among the items of property sold without the necessity of the
Collateral being present at any such sale or lease, or in view of prospective
purchasers thereof. Lender shall give Borrower at least ten (10) days' by hand
delivery at or by United States first-class mail, postage prepaid (in which
event notice shall be deemed to have been given when so deposited in the mail),
to the address specified herein, of the time and place of any public or private
sale or other disposition unless the Collateral is perishable, threatens to
decline speedily in value, or is the type customarily sold in a recognized
market. Upon such sale, Lender may become the purchaser of the whole or any part
of the Collateral, discharged from all claims and free from any right of
redemption. In case of any such sale by Lender of all or any of said Collateral
on credit or for future delivery, property so sold may be retained by Lender
until the selling price is paid by the purchaser. Lender shall incur no
liability in case of the failure of the purchaser to take up and pay for the
property so sold. In case of any such failure, the said property may again be
sold.
(c) The Lender for a term to commence on the date of this Agreement and
continuing thereafter until all debts and Obligations of any kind or character
owing from Borrower to Lender are fully paid and discharged, may enter and use
all premises or places of business which Borrower presently has or may hereafter
have and where any of said Collateral may be located, and the Lender may use all
machinery and equipment owned or leased by Borrower and all goodwill, patent
rights, trade names, or logos, whether or not Collateral hereunder.
(d) Borrower will assemble the Collateral in a single location at a place
to be designated by Lender and make the Collateral at all times secure and
available to Lender.
(e) At Borrower's expense the Lender in its own name or in the name of
others may communicate with account debtors in order to verify with them to
Lender's satisfaction the existence, amount and terms of any accounts or
contract rights and also notify account debtors that Collateral has been
assigned to Lender and that payments shall be made directly to Lender. Upon
request of Lender, Borrower will so notify such account debtors and will
indicate on all billings to such account debtors that their accounts must be
paid to Lender. Borrower does hereby appoint Lender and its agents as Borrower's
attorney-in-fact to collect, compromise, endorse, sell or otherwise deal with
the Collateral or proceeds thereof in its own name or in the name of the
Borrower; to endorse the Barrer upon any notes, checks, drafts, money orders, or
other instruments, documents, receipts or Collateral that may come into its
possession and to apply the same in full or part payment of any amounts owing to
Lender; to sign and endorse the Barrer upon any documents, instruments, drafts
against account debtors, assignments, verifications and notices in connection
with Accounts, and any instrument or document relating thereto or to Borrower's
rights therein; and to give written notice to any office and officials of the
United States Post Office to effect such change or changes of address that all
mail addressed to Borrower may be delivered directly to Lender. Borrower hereby
grants to its said attorney-in-fact full power to do any and all things
necessary to be done in and about the premises as fully and effectually as
Borrower might or could do, and hereby
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ratifies all that its attorney-in-fact shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and is
irrevocable for the term of this Agreement for all transactions hereunder and
thereafter as long as Borrower may be indebted to Lender.
8.5 Application of Proceeds. Any and all proceeds of any Collateral
realized or obtained by the Lender upon exercise of its rights and remedies
hereunder, shall be applied to the amounts outstanding under this Agreement or
any other Loan Document, after payment of any and all costs and expenses, fees
and commission and taxes of such sale, collection or other realization, in
accordance with the following:
(a) Any and all proceeds of any Collateral shall first be applied to
the payment of any and all expenses, charges or other amounts which may be due
and owing under this Agreement or the Loan Documents; and
(b) Any and all proceeds of any Collateral remaining after
application as provided in paragraph (a) above shall be applied to the payment
of principal, interest or charges outstanding with respect to the Loans or
under the Note; and
(c) Any surplus remaining after application as provided in
paragraphs (a) and (b) above, shall be paid to the Borrower, or its successors
or assigns, or to whomsoever may be lawfully entitled to receive the same.
ARTICLE IX
GENERAL PROVISIONS
9.1 Survival of Representations. All representations and warranties of the
Borrower contained in this Agreement shall survive delivery of the Notes and the
making of the Loan herein contemplated.
9.2 Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
9.3 Entire Agreement. The Loan Documents and the Merger Agreement embody
the entire agreement and understanding between the Borrower and the Lender and
supersede all prior agreements and understandings between the Borrower and the
Lender relating to the subject matter thereof.
9.4 No Third Party Beneficiary. This Agreement shall not be construed so
as to confer any right or benefit upon any Person other than the parties to
this Agreement and their respective successors and assigns.
9.5 Expenses. The Borrower agrees to pay, on demand, all of the Lender's
own out-of-pocket expenses (including reasonable attorneys' fees) incurred in
connection with preparing, executing and delivering this Agreement and the Loan
Documents and all related instruments and documents executed and delivered in
connection herewith, and in connection with any and all amendments and/or
modifications of the Loan Documents. Upon the occurrence of a Default, and so
long as a Default is continuing, Borrower shall pay to Lender on demand all
expenses incurred in
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connection with the collection and enforcement of all Obligations under the
Loan Documents including, without limitation, all reasonable attorneys' fees,
and all reasonable costs incurred by Lender in connection with the collection
and enforcement of the Obligations and in connection with any proceeding
commenced by or against Borrower under Title 11 of the U.S. Code.
9.6 Indemnity. Borrower hereby indemnifies the Lender and its
respective directors, officers, employees, affiliates and agents (collectively,
"Indemnified Persons") against, and agrees to hold each such Indemnified Person
harmless from, any and all losses, claims, damages and liabilities, including
claims brought by any officer, director or shareholder or former officer,
director or shareholder of Borrower, and related expenses including reasonable
counsel fees and expenses, incurred by such Indemnified Person arising out of
any claim, litigation, investigation or proceeding (whether or not such
Indemnified Person is a party thereto) relating to any transactions, services
or matters that are the subject of the Loan Documents; provided, however, that
such indemnity shall not apply to any such losses, claims, damages, or
liabilities or related expenses determined by a court of competent
jurisdiction to have arisen from the gross negligence or willful misconduct of
such Indemnified Person. All amounts due hereunder shall be payable on demand
and shall constitute Obligations hereunder.
9.7 Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
9.8 Nonliability of Lender. The relationship between the Borrower and
the Lender shall be solely that of borrower and lender. The Lender shall have
no fiduciary responsibilities to the Borrower. The Lender undertakes no
responsibility to the Borrower to review or inform the Borrower of any matter
in connection with any phase of the Borrower's business or operations.
9.9 CHOICE OF LAW. THIS AGREEMENT AND THE LOAN DOCUMENTS (OTHER THAN
THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE GOVERNED
BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE COMMONWEALTH OF MASSACHUSETTS.
9.10 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND THE
UNITED STATES DISTRICT COURTS SITTING THEREIN FOR THE PURPOSE OF ANY SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL
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PROCEEDING BY THE BORROWER AGAINST THE LENDER OR ANY AFFILIATE OF THE LENDER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY LOAN DOCUMENT SHALL BE
BROUGHT ONLY IN A COURT IN THE COMMONWEALTH OF MASSACHUSETTS.
9.11 WAIVER OF JURY TRIAL. THE BORROWER HEREBY WAIVES TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH THIS AGREEMENT OR ANY LOAN DOCUMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER.
9.12 Further Assurances. The Borrower, at its own expense, shall do, make,
execute and deliver all such additional and further acts, deeds, assurances,
documents, instruments and certificates as the Lender may reasonably require,
including, without limitation, (a) executing, delivering and filing financing
statements and continuation statements under the Uniform Commercial Code, (b)
obtaining governmental and other third party consents and approvals, and (c)
obtaining waivers from mortgagees and landlords.
9.13 Successors and Assigns. The terms and provisions of this Agreement
and the Loan Documents shall be binding upon and inure to the benefit of the
Borrower and the Lender and their respective successors and assigns, except
that the Borrower shall not have the right to assign its rights or obligations
under the Loan Documents.
9.14 Giving Notice. All notices and other communications provided to any
party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
their addresses as follows (unless otherwise designated in writing to the other
parties); (i) if to Borrower, at the address set forth below the Borrower's
name on the signature page hereto and (ii) if to Lender, at the address set
forth the Lender's name on the signature page hereto. Any notice, if mailed and
properly addressed with postage prepaid, shall be deemed given three Business
Days after being sent; any notice, if transmitted by telex or facsimile shall
be deemed given when transmitted (answer back confirmed in the case of
telexes).
9.15 Change of Address. The Borrower and the Lender may each change the
address for service of notice upon it by a notice in writing to the other
parties hereto.
9.16 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower and the Lender.
9.17 Revised Article 9 of the Uniform Commercial Code. The parties
acknowledge and agree to the following provisions in anticipation of the
possible application, in one or more jurisdictions, to the transactions
contemplated hereby of the revised Article 9 of the UCC in the form or
substantially in the form approved by the American Law Institute and the
National Conference of Commissioners on Uniform State Law and contained in the
1999 official text of Revised Article 9 ("Revised Article 9"). In applying the
law of any jurisdiction in which Revised Article 9 is in effect,
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the Collateral shall be and include all assets of the Borrower, whether or not
within the scope of Revised Article 9. The Collateral shall include, without
limitation, the following categories of assets (as defined in Revised Article 9)
belonging to the Borrower or in which the Borrower has any rights: goods
(including inventory, equipment and any accessions thereto), instruments
(including promissory notes), documents, accounts, chattel paper (whether
tangible or electronic), deposit accounts, letter-of-credit rights (whether or
not the letter of credit is evidenced by a writing), commercial tort claims,
securities and all other investment property, general intangibles (including
payment intangibles and software), supporting obligations and any and all
proceeds of any thereof, wherever located, whether now owned and hereafter
acquired. The Lender may at any time and from time to time file financing
statements, continuation statements and amendments thereto that describe the
Collateral as all assets of the Borrower or words of similar effect and which
contain any other information required by Part 5 of the Revised Article 9 for
the sufficiency or filing office acceptance of any financing statement,
continuation statement or amendment, including whether the Borrower is an
organization, the type of organization and any organization identification
number issued to the Borrower. The Borrower agrees to furnish any such
information to the Lender promptly upon request. Any such financing statements,
continuation statements or amendments may be signed by the Lender on behalf of
the Borrower and may be filed at any time in any jurisdiction whether or not
Revised Article 9 is then in effect in that jurisdiction. The Borrower shall at
all times and from time to time, whether or not Revised Article 9 is in effect
in any particular jurisdiction, take such steps as the lender may reasonably
request for the Lender to obtain an acknowledgement, in form and substance
satisfactory to the Lender, of any bailee having possession of any of the
Collateral that the bailee holds such Collateral for the Lender. Nothing
contained in this Section shall be construed to narrow the scope of the Lender's
security interest in any of the Collateral or the perfection or priority thereof
or to impair or otherwise limit any of the rights, powers, privileges or
remedies of the Lender hereunder except (and then only to the extent) mandated
by Revised Article 9 to the extent then applicable.
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IN WITNESS WHEREOF, the Borrower and the Lender have executed this
Agreement as of the date first above written.
Borrower: BROADSOFT, INC.
By: /s/ Michael Tessler
Name: Michael Tessler
Title: President & CEO
Address: 220 Perry Parkway
Gaithersburg, MD 20877
Lender: UNISPHERE NETWORKS, INC.
By: /s/ Mark Nasiff
Name: Mark Nasiff
Title: VP Finance & Admin
Address: Ten Technology Park Drive
Westford, MA 01886
Schedules
Schedule 5.1 - Executive Offices
Schedule 6.5 - Permitted Liens and Indebtedness
Exhibits
Exhibit "A" - Note
Exhibit "B" - Loan Request
Exhibit "C" - Landlord Waiver
Exhibit "D" - Intellectual Property Security Agreement
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EXHIBIT "A"
REPAYMENT OF THIS NOTE, AND THE ENFORCEMENT OF ANY RIGHTS
HEREUNDER, IS SUBJECT TO THE TERMS OF (A) THAT CERTAIN SUBORDINATION
AGREEMENT BY AND AMONG THE BORROWER, THE LENDER AND SILICON
VALLEY BANK AND (B) THAT CERTAIN SUBORDINATION AGREEMENT BY AND
AMONG THE BORROWER, THE LENDER AND COMDISCO, INC.
NOTE
$9,000,000.00 April 6, 2001
Boston, Massachusetts
FOR VALUE RECEIVED, on the Maturity Date, BroadSoft, Inc., a Delaware
corporation having a principal place of business at 220 Perry Parkway,
Gaithersburg, Maryland 20877 (the "Borrower"), promises to pay to Unisphere
Networks, Inc. (the "Lender"), or order, at One Executive Drive, Chelmsford,
Massachusetts 01824, or such other place as Lender or any holder hereof may
from time to time designate, the principal sum of Nine Million Dollars
($9,000,000.00) or, if less, the aggregate unpaid principal amount of all
Loans, in United States Dollars and in immediately available funds as provided
in the Loan and Security Agreement of even date between the Borrower and Lender
(the "Loan Agreement"), together with interest on the unpaid principal amount
hereof from time to time outstanding, at the rates and on the dates set forth
in the Loan Agreement. Interest shall be calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed.
This Note is issued pursuant to, and is entitled to the benefits of, the
Loan Agreement, as it may be amended from time to time. Reference is hereby
made thereto for a statement of the terms and conditions under which this Note
may be prepaid or its maturity date accelerated. This Note is secured pursuant
to the terms of the Loan Agreement and other Loan Documents certain, and
reference is made thereto for a statement of the terms and provisions thereof.
Capitalized terms used herein and not otherwise defined herein are used with
the meanings attributed to them in the Loan Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of the Loan and the date and amount of each principal
payment hereunder.
If any payment of principal or interest is not made when due hereunder, or
if any other Default shall occur for any reason, or if the Loan Agreement shall
be terminated or not renewed for any reason whatsoever, then and in any such
event, in addition to all rights and remedies of Lender under the Loan
Agreement or any Loan Document, applicable law or otherwise, all such rights
and remedies being cumulative and enforceable alternatively, successively and
concurrently, Lender may, at its option, declare any and all of the Borrower's
obligations, liabilities and indebtednesses owing by Borrower under this Note,
the Loan Agreement and any other Loan Document (collectively, the
"Obligations") to be due and payable, whereupon the then unpaid balance
thereof, together with all interest accrued thereon or expenses incurred in
connection therewith shall
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forthwith become due and payable, together with all interest accruing thereafter
at the rate set forth in the Loan Agreement until the indebtedness evidenced by
this Note is paid in full, plus all costs and expenses of collection hereof,
including, without limitation, reasonable attorneys' fees and expenses.
Borrower shall pay all Lender's costs and expenses (including, without
limitation, all reasonable attorneys' fees and expenses) incurred in connection
with the enforcement of or preservation of rights under this Note on the terms
provided in the Loan Agreement.
No delay or omission on the part of the Lender in exercising any right
hereunder shall operate as a waiver of such right or of any other right of
Lender, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Borrower and every indorser or guarantor of this Note regardless of the time,
order or place of signing waives presentment, demand, protest and notices of
every kind and assents to any extension or postponement of the time of payment
or any other indulgence, to any substitution, exchange or release of collateral,
and to the addition or release of any other party or person primarily or
secondarily liable.
None of the terms or provisions of this Note may be excluded, modified, or
amended except by a written instrument duly executed on behalf of the holder
expressly referring hereto and setting forth the provision so excluded, modified
or amended. This Note shall be binding upon the successors and assigns of the
Borrower and inure to the benefit of Lender and its successors, endorsees and
assigns. If any term or provision of this Note shall be held to be invalid or
unenforceable, in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall only effect such term or provision, and shall not effect
such term or provision in any other jurisdiction or any other term or provision
of this Note.
BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OF
THE OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURTS AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER AT THE ADDRESS PROVIDED BELOW THE BORROWER'S
EXECUTION HEREOF. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.
Borrower hereby waives its right to a jury trial with respect to any action
or claim arising out of any dispute in connection with this Note or any of the
other Loan Documents, any rights or obligations hereunder or thereunder or the
performance of such rights and obligations.
All rights and obligations hereunder shall be governed by the laws of the
Commonwealth of Massachusetts (without giving effect to principals of conflicts
or choice of laws) and this Note shall be deemed to be made under seal.
-22-
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ATTEST: BROADSOFT, INC.
By:
---------------------------------- -------------------------------
Secretary
Name:
-----------------------------
Title:
----------------------------
-23-
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SCHEDULE OF LOAN AND PAYMENTS OF PRINCIPAL
TO
NOTE OF BROADSOFT, INC.
DATED: April 6, 2001
<Table>
<Caption>
Principal
Amount Maturity Principal
of of Interest Amount Unpaid
Date Loan Period Paid Balance
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</Table>
-24-
26
EXHIBIT "B"
FORM OF LOAN REQUEST
BROADSOFT, INC.
[DATE]
Unisphere Networks, Inc.
1 Executive Drive
Chelmsford, MA 01824
Attn:
_________________________
Re: Loan Request
Ladies and Gentlemen:
The undersigned (the "Borrower") hereby requests that you make a Loan
pursuant to the terms and conditions set forth in the Loan and Security
Agreement dated as of ______________, 2001, by and between the Borrower and
Unisphere Networks, Inc. (the "Lender"), as the same may be amended and in
effect from time to time (the "Loan Agreement"), as set forth below. Capitalized
terms not otherwise defined herein shall have the meaning ascribed to them in
the Loan Agreement.
The Borrower hereby certifies that the conditions precedent to the Loan set
forth in Article III of the Loan Agreement have been complied with.
The Borrower hereby requests, pursuant to Section 2.1(h) of the Loan
Agreement, that the Lender make a Loan in the principal amount of $___________
on [Date], (the "Drawdown Date"). We understand that this request obligates us
to accept the requested Loan on the proposed Drawdown Date.
You are hereby directed to transfer the proceeds of the requested Loan to
Borrower in accordance with the following instructions: wire to: [WIRE
INSTRUCTIONS].
Very truly yours,
BROADSOFT, INC.
-25-
27
By:
-----------------------------
Title:
--------------------------
Duly Authorized
-26-
28
EXHIBIT "C"
LANDLORD WAIVER
WHEREAS, Unisphere Networks, Inc. ("Lender") has or is about to provide
certain financing arrangements to BroadSoft, Inc. ("Borrower") pursuant to
which Lender has been or will be granted a security interest in all of the
Borrower's personal property described on Schedule A attached hereto and made
a part hereof (hereafter "Collateral") and,
WHEREAS, the Collateral has or may become affixed to or be located on,
wholly or in part, the certain real estate located at ______________________,
as more fully described in the Lease (defined below), a true and correct copy
of which is attached hereto as Exhibit A (the "Premises") and,
WHEREAS, the undersigned has an interest in the Premises as owner and
lessor pursuant to a certain lease between Borrower, as tenant, and the
undersigned, as landlord, dated ____________ (together with any amendments or
modifications thereof, the "Lease"),
NOW, THEREFORE, for good and valuable considerations, the receipt and
sufficient of which are hereby acknowledge, the undersigned agrees as follows:
(a) That it waives and relinquishes any landlord's lien, all rights
of levy or distraint, security interest or other interest the undersigned may
now or hereafter have in any of the Collateral whether for rent or otherwise;
(b) That the Collateral may be installed in or located on the
Premises and shall not be deemed a fixture or part of the real estate but shall
at all times be considered personal property;
(c) That it disclaims any interest in the Collateral and agrees
neither to assert any claim to nor take any action with respect to the
Collateral while Borrower is indebted to Lender;
(d) That Lender or its representatives may, in accordance with the
terms of the Loan and Security Agreement between Borrower and Lender dated
__________, 2001 ("Loan"
-27-
29
Agreement"), enter upon the Premises at any time to inspect or remove the
Collateral and may advertise and conduct a public or private auction thereon;
(e) That Lender, at its option, may, in accordance with the Loan
Agreement, enter the Premises for the purpose of repossessing, removing,
selling or otherwise dealing with the Collateral, and such license shall be
irrevocable and shall continue from the date Lender enters the Premises for as
long as Lender deems necessary but not to exceed a period of sixty (60) days
after the receipt by Lender of written notice by the undersigned directing
removal of the Collateral; provided that during such sixty (60) day period,
Lender makes payment of rent at the rate set forth in the Lease, prorated on a
per diem basis to be determined on a thirty (30) day month, without incurring
any other obligations of Borrower. Lender may, subsequent to the sixty (60)
day period, remain on said Premises for an additional period not to exceed
ninety (90) days at the rental provided under the Lease, prorated on a per diem
basis to be determined on a thirty (30) day month, without incurring any other
obligation of Borrower. Lender shall promptly repair any damages to the
Premises caused directly by any repossession or removal by Lender or its agents
of the Collateral or Lender or its agents otherwise dealing with any of the
Collateral and shall indemnify, pay, protect, defend and hold harmless the
undersigned, its lender and their respective successors and assigns from and
against any loss, claim, damage, cost or expense arising directly out of
Lender's entry onto the Premises or Lender's repossession, removal, sale or
otherwise dealing with the Collateral; and
(f) The undersigned agrees to give notice in writing by certified or
registered mail to Lender of any Event of Default (as defined in the Lease) by
Borrower under the provisions of the Lease. Any such notice shall be promptly
sent to (or such address as Lender may specify in writing to the undersigned):
Unisphere Networks, Inc., at One Executive Drive, Chelmsford, MA 01824, Attn:
Suzanne Zabitchuck, Esq.
Upon receipt of said notice, Lender shall thereupon have the right, but
not the obligation, to cure any monetary Event of Default within five (5) days
thereafter and any non-monetary Event of Default within ten (10) days
thereafter. In no event shall Lender be permitted to cure any monetary Event of
Default more than twice in any Lease Year (as defined in the Lease). Any
payment made or act done by Lender to cure any such Event of Default shall not
constitute an assumption of the Lease or any obligations of Borrower or the
undersigned.
This waiver may not be changed or terminated orally and is binding upon
the undersigned and the heirs, personal representatives, successors and assigns
of the undersigned and inures to the benefit of Lender and the successors and
assigns of Lender.
-28-
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Dated this __________ day of _________, 2001,
[LANDLORD]
By: ______________________________________
Title:____________________________________
Address:__________________________________
__________________________________________
[ ]
COUNTY OF ______________
The foregoing instrument was acknowledged this ____ day of ______, 2001 by
__________________________ , the ___________ of _____________________________
(the "Landlord"), to be his free act and deed in said capacity and the free act
and deed of the Landlord, on behalf of said Landlord, before me.
_______________________________
Notary Public
My commission expires:
-29-
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Schedule A to UCC-1
All of the Borrower's now owned or hereafter acquired:
(a) Inventory, including but not limited to all inventory, supplies, raw
materials, work in process, goods, merchandise, finished inventory and other
tangible personal property held by the Borrower for sale or for lease, furnished
or to be furnished under contracts of service, or used or consumed in the
Borrower's business, goods in transit, any and all returned or repossessed
inventory or merchandise and all documents of title (whether negotiable or
negotiable) representing any of the foregoing, and all proceeds thereof; and
(b) Accounts including, but not limited to all accounts, all rights of the
Borrower to payment for goods sold or leased or for services rendered, all
accounts receivable of the Borrower; all obligations owing to the Borrower
evidenced by an instrument or chattel paper; all rights of the Borrower to
payment under a contract not yet earned by performance; all obligations owing to
the Borrower of any kind or nature, including all writings, if any, evidencing
the same, including all instruments, drafts, acceptances and chattel paper; any
and all proceeds of any of the foregoing. Further included within the term
"Accounts" are all right, title and interest of Borrower in and to the Inventory
which gave rise to any Account, (including the right of stoppage in transit) all
guaranties of, and security and liens with respect to any Account, and all
Accounts, Documents and Contract Rights of Borrower as defined in the Uniform
Commercial Code; and
(c) Instruments, and Chattel Paper, including all instruments and chattel
paper as defined in the Uniform Commercial Code and all proceeds thereof; and
(d) General Intangibles, including but not limited to all general
intangibles as defined in the Uniform Commercial Code, the Intellectual Property
Collateral described on the attached Schedule A-1 and all proceeds thereof,
including without limitation, any and all rights of Borrower to any refund of
any tax assessed against Borrower or paid by Borrower, loss carry-back tax
refunds, insurance premium rebates, unearned premiums insurance proceeds, choses
in action, names, trade names, goodwill, trade secrets, computer programs,
computer records, data, computer software, customer lists, patents, patent
rights, patent applications, patents pending, patent licenses or assignments,
development ideas and concepts, licenses, permits, franchises, telephone
numbers, literary rights, rights to performance, trademarks, trademark
applications, trademark rights, logos, intellectual property, copyrights,
proprietary or other processes, blueprints, drawings, designs, diagrams, plans,
reports, charts, catalogs, manuals, research, literature, proposals, cost
estimates,
-30-
32
routes, and other reproductions on paper or otherwise, of any and all concepts
or ideas, whether or not related to the business or operations of Borrower; and
(e) Equipment, including but not limited to all equipment, vehicles,
machinery, tools, furniture, fixtures, trade fixtures and parts. Further
included within the term "Equipment" is all tangible personal property utilized
in the conduct of the Borrower's business (but excluding any property
hereinbefore defined as "Inventory") and all additions, accessions,
substitutions, components, and replacements thereto, therefor and thereof and
all proceeds thereof; and
(f) Other tangible and intangible property; and
all products and proceeds of the above, including insurance proceeds.
-31-
33
EXHIBIT "D"
Intellectual Property Security Agreement
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This Intellectual Property Security Agreement is entered into as of _____,
2001 between Unisphere Networks, Inc. ("Lender") and BroadSoft, Inc.
("Grantor").
RECITALS
A. Lender has agreed to make certain advances of money and to extend
certain financial accommodations to Grantor (the "Loans") in the amounts and
manner set forth in that certain Loan and Security Agreement between Lender and
Grantor dated of even date herewith (as the same may be amended, modified or
supplemented from time to time, the "Loan Agreement"). Lender is willing to make
the Loans to grantor, but only upon the condition, among others, that Grantor
shall grant to Lender a security interest in, among other things, certain
Copyrights, Trademarks and Patents to secure the obligations of Grantor under
the Loan Agreement. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Loan Agreement.
B. Pursuant to the terms of the Loan Agreement, Grantor has granted to
Lender a security interest in all of Grantor's right, title and interest,
whether presently existing or hereafter acquired, in, to and under all of the
Collateral.
NOW, THEREFORE, for good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound,
as collateral security for the prompt and complete payment when due of its
obligations under the Loan Agreement, Grantor hereby represents, warrants,
covenants and agrees as follows:
AGREEMENT
To secure its obligations under the Loan Agreement, Grantor grants and
pledges to Lender a security interest in all of Grantor's right, title and
interest in, to and under its Intellectual Property Collateral (including
without limitation those Copyrights, Patents and Trademarks listed on Schedules
A, B and C hereto), together with all goodwill of the business symbolized by the
Trademarks, the right to sue for past, present and future infringements, all
rights corresponding thereto throughout the world and all re-issues, divisions
continuations, renewals, extensions and
-32-
34
continuations-in-part thereof, and all proceeds of each of the foregoing
(including, without limitation, all license royalties and proceeds of
infringement suits).
This security interest is granted in conjunction with the security
interest granted to Lender under the Loan Agreement. The rights and remedies of
Lender with respect to the security interest granted hereby are in addition to
those set forth in the Loan Agreement and the other Loan Documents, and those
which are now or hereafter available to Lender as a matter of law or equity.
Each right, power and remedy of Lender provided herein or in the Loan Agreement
or any of the Loan Documents, or now or hereafter existing at law or in equity
shall be cumulative and concurrent and shall be in addition to every right,
power or remedy provided for herein and the exercise by Lender of any one or
more of the rights, powers or remedies provided for in this Intellectual
Property Security Agreement, the Loan Agreement or any of the other Loan
Documents, or now or hereafter existing at law or in equity, shall not preclude
the simultaneous or later exercise by any person, including Lender, of any or
all other rights, powers or remedies.
IN WITNESS WHEREOF, the parties have cause this Intellectual Property
Security Agreement to be duly executed by its officers thereunto duly
authorized as of the first date written above.
GRANTOR:
Address of Grantor: BROADSOFT, INC.
220 Perry Parkway
Gaithersburg, MD 20877
By: _______________________
Name:
Title:
LENDER:
Address of Lender: UNISPHERE
NETWORKS, INC.
One Executive Drive
Chelmsford, MA 01824
By: _______________________
-33-
35
Name:
Title:
-34-
36
[ ]
COUNTY OF ____________
The foregoing instrument was acknowledged this __ day of _________, 2001 by
__________________________, the ____________ of BroadSoft, Inc. (the "Grantor"),
to be his free act and deed in said capacity and the free act and deed of the
Grantor, on behalf of said Grantor, before me,
______________________________
Notary Public
My commission expires:
[ ]
COUNTY OF ____________
The foregoing instrument was acknowledged this __ day of _________, 2001 by
__________________________, the ____________ of Unisphere Networks, Inc. (the
"Lender"), to be his free act and deed in said capacity and the free act and
deed of the Lender, on behalf of said Lender, before me,
______________________________
Notary Public
My commission expires:
EXHIBIT A
Copyright
Registration/ Registration/
Application Application
Description Number Date
----------- ------ ----
-35-
37
EXHIBIT B
Patents
Registration/ Registration/
Application Application
Description Number Date
----------- ------ ----
-36-
38
EXHIBIT C
Trademarks
Registration/ Registration/
Application Application
Description Number Date
----------- ------ ----
-37-
39
SCHEDULE A
TO LOAN AND SECURITY AGREEMENT
PATENTS
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------
DESCRIPTION REGISTRATION/APPLICATION NUMBER REGISTRATION/APPLICATION DATE
----------- ------------------------------- -----------------------------
- -----------------------------------------------------------------------------------------------
"Systems for Providing Docket No. 313333-130895 October 12, 1999
Services"
- -----------------------------------------------------------------------------------------------
</Table>
TRADEMARKS
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------
DESCRIPTION REGISTRATION/APPLICATION NUMBER REGISTRATION/APPLICATION DATE
----------- ------------------------------- -----------------------------
- -----------------------------------------------------------------------------------------------
BroadSoft (word mark) App. No. 75/621,168 1/15/99
- -----------------------------------------------------------------------------------------------
BroadSoft (design/logo) App. No. 76/025,061 4/12/00
- -----------------------------------------------------------------------------------------------
ServiceSwitch App. No. 76/025,060 4/12/00
- -----------------------------------------------------------------------------------------------
BroadWorks App. No. 75/719,107 5/28/99
- -----------------------------------------------------------------------------------------------
ServiceOS App. No. 76/033,416 4/24/00
- -----------------------------------------------------------------------------------------------
CommPilot App. No. 76/051,356 5/18/00
- -----------------------------------------------------------------------------------------------
BroadSoft logo and tag-line App. No. 76/119,107 8/29/00
"Enhanced Services for
NextGen Networks"
- -----------------------------------------------------------------------------------------------
The Service Creation App. No. 76/051,312 5/18/00
Company
- -----------------------------------------------------------------------------------------------
BroadSoft European Community 10/25/00
App. No. 1,919,562
- -----------------------------------------------------------------------------------------------
</Table>
www.BroadSoft.com (URL)
40
SCHEDULE 5.1
TO LOAN AND SECURITY AGREEMENT
EXECUTIVE OFFICES
CHIEF EXECUTIVE OFFICE AND PRINCIPAL PLACE OF BUSINESS:
220 Perry Parkway
Gaithersburg, MD 20877
OTHER PLACES OF BUSINESS:
1 Holiday Plaza, East Tower
Suite 115
Pointe-Claire, Quebec
Canada
41
SCHEDULE 6.4(E)
TO LOAN AND SECURITY AGREEMENT
PERMITTED LIENS AND INDEBTEDNESS
1. Other Indebtedness:
(a) Loan and Security Agreement dated November 4, 1999, and agreements and
documents related thereto (the "SVB Senior Loan").
(b) Subordinated Loan and Security Agreement dated June 5, 2000, and
agreements and documents related thereto (the "Comdisco Subordinated
Loan").
(c) The Borrower has obtained a Standby Letter of Credit for $700,000 from
Silicon Valley Bank, which is secured by a certificate of deposit, to
secure the Borrower's obligations under the Lease Agreement with BF
Saul Real Estate Investment Trust, dated April 12, 2000 (the "BF Saul
Lease").
(d) Under the BF Saul Lease, the Borrower is obligated to pay a
supplemental tenant allowance related to the build-out of this space in
the amount of approximately $210,000, amortized over the term of the BF
Saul Lease.
2. Other Liens:
(a) Liens securing the SVB Senior Loan.
(b) Liens securing the Comdisco Subordinated Loan.
(c) The Borrower has granted BF Saul a landlord's lien pursuant to Section
16(d) of the BF Saul Lease.