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EXHIBIT 10.46
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement") is made and entered into
as of March 27, 1998, by and among ARDENT SOFTWARE, INC. , a Delaware
corporation with its chief executive office at 50 Washington Street,
Westborough, Massachusetts ("Borrower"), and SILICON VALLEY BANK, a
California-chartered bank, with its principal place of business at 3003 Tasman
Drive, Santa Clara, California 95054 and with a loan production office located
at Wellesley Office Park, 40 William Street, Suite 350, Wellesley, Massachusetts
02181, doing business under the name "Silicon Valley East" (the "Lender").
RECITALS
Borrower wishes to obtain credit from time to time from Lender, and
Lender desires to extend credit to Borrower. This Agreement sets forth the terms
on which Lender will advance credit to Borrower, and Borrower will repay the
amounts owing to Lender.
AGREEMENT
The parties agree as follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"Accounts" means all presently existing and hereafter arising accounts,
contract rights, and all other forms of obligations owing to Borrower arising
out of the sale or lease of goods (including, without limitation, the licensing
of software and other technology) or the rendering of services by Borrower,
whether or not earned by performance, and any and all credit insurance,
guaranties, and other security therefor, as well as all merchandise returned to
or reclaimed by Borrower and Borrower's Books relating to any of the foregoing.
"Advance" or "Advances" means an advance under the Committed Revolving
Line or otherwise made hereunder.
"Affiliate" means, with respect to any Person, any Person that owns or
controls directly or indirectly such Person, any Person that controls or is
controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, partners and, for any Person that
is a limited liability company, such Persons, managers and members.
"Borrower's Books" means all of Borrower's books and records including
ledgers; records concerning Borrower's assets or liabilities, the Collateral,
business operations or financial condition; and all computer programs, or tape
files, and the equipment containing such information.
"Borrowing Base" has the meaning set forth in Section 2.1 hereof.
"Business Day" means any day that is not a Saturday, Sunday, or other
day on which banks in Boston, Massachusetts, or Santa Clara, California are
authorized or required by law or other governmental actions to close.
"Closing Date" means the date of this Agreement.
"Code" means the Massachusetts Uniform Commercial Code.
"Collateral" means the property described on EXHIBIT A attached hereto.
"Committed Revolving Line" means Twelve Million Five Hundred Thousand
Dollars ($12,500,000.00).
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"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to (i)
any indebtedness, lease, dividend, letter of credit or other obligation of
another, including, without limitation, any such obligation directly or
indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by
that Person, or in respect of which that Person is otherwise directly or
indirectly liable; (ii) any obligations with respect to undrawn letters of
credit issued for the account of that Person; and (iii) all obligations arising
under any interest rate, currency or commodity swap agreement, interest rate cap
agreement, interest rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; provided, however, that the term "Contingent
Obligation" shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith; provided, however, that such
amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement.
"Credit Extension" means each Advance or any other extension of credit
by Lender for the benefit of Borrower hereunder.
"Current Assets" means, as of any applicable date, all amounts that
should, in accordance with GAAP, be included as current assets on the
consolidated balance sheet of Borrower at such date.
"Current Liabilities" means, as of any applicable date, all amounts
that should, in accordance with GAAP, be included as current liabilities on the
consolidated balance sheet of Borrower at such date, plus, to the extent not
already included therein, all outstanding Credit Extensions made under this
Agreement, including, without limitation, all Indebtedness that is payable upon
demand or within one year from the date of determination thereof unless such
Indebtedness is renewable or extendable at the option of Borrower or any
Subsidiary to a date more than one year from the date of determination, but
EXCLUDING: (i) Subordinated Debt, and (ii) deferred maintenance revenue.
"Daily Balance" means the amount of the Obligations owed at the end of
a given day.
"Default" means an Event of Default or event or condition that, but for
the requirement that time elapse or notice be given, would constitute an Event
of Default.
"Dollars", "dollars" or "$" each means dollars in lawful currency of
the United States of America.
"Eligible Accounts" means those Accounts that arise in the ordinary
course of Borrower's business that comply with all of Borrower's representations
and warranties to Lender set forth in Section 5.4; provided that standards of
eligibility may be fixed and revised from time to time by Lender in its
reasonable judgment and upon notification thereof to Borrower in accordance with
the provisions hereof. Unless otherwise agreed in writing to by Lender, Eligible
Accounts shall not include the following:
(a) Accounts which the account debtor has failed to pay within
ninety (90) days of invoice date;
(b) Accounts with respect to an account debtor, fifty percent
(50%) of whose Accounts the account debtor has failed to pay within ninety (90)
days of invoice date;
(c) Accounts with respect to which the account debtor is an
officer, employee, or agent of Borrower;
(d) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, bill and hold,
or other terms by reason of which the payment by the account debtor may be
conditional;
(e) Accounts with respect to which the account debtor is an
Affiliate (other than by virtue of being directly or indirectly under common
ownership or control with Borrower) of Borrower;
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(f) Accounts with respect to which the account debtor does not
have its principal place of business in the United States, except for Eligible
Foreign Accounts, and Accounts arising from products shipped to or services
provided to branches or offices located in the United States of any account
debtor that does not have its principal place of business in the United States;
(g) Accounts with respect to which the account debtor is a
federal, state, or local governmental entity or any department, agency, or
instrumentality thereof.
(h) Accounts with respect to which Borrower is liable to the
account debtor for goods sold or services rendered by the account debtor to
Borrower, but only to the extent of any amounts owing to the account debtor
against amounts owed to Borrower;
(i) Accounts with respect to an account debtor, including
Subsidiaries and Affiliates, whose total obligations to Borrower exceed
twenty-five percent (25%) of all Accounts, to the extent such obligations exceed
the aforementioned percentage, except as approved in writing by Lender;
(j) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Lender believes,
in its sole discretion, that there may be a basis for dispute (but only to the
extent of the amount subject to such dispute or claim), or is subject to any
Insolvency Proceeding, or becomes insolvent, or goes out of business; and
(k) Accounts the collection of which Lender reasonably
determines to be doubtful.
"Eligible Foreign Accounts" means Accounts with respect to which the
account debtor does not have its principal place of business in the United
States and which are: (1) covered by credit insurance in form and amount, and by
an insurer satisfactory to Lender less the amount of any deductible(s) which may
be or become owing thereon; or (2) supported by one or more letters of credit in
favor of Lender, as beneficiary, in an amount and of a tenor, and issued by a
financial institution, acceptable to Lender; or (3) which Lender approves on a
case-by-case basis.
Eligible Non-Insured Foreign Accounts" means accounts with respect to
which the account debtor does not have its principal place of business in the
United States and which Lender approves on a case-by-case basis, and which
Lender has perfected a first priority security interest in form and substances
acceptable to Lender, and pursuant to terms acceptable to Lender.
"Equipment" means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"Event of Default" has the meaning set forth in Section 8 hereof.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Indebtedness" means (a) all indebtedness for borrowed money or the
deferred purchase price of property or services including, without limitation,
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.
"Insolvency Proceeding" means any proceeding commenced by or against
any person or entity under any provision of the United States Bankruptcy Code,
as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
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"Inventory" means all present and future inventory in which Borrower
has any interest, including merchandise, raw materials, parts, supplies, packing
and shipping materials, work in process and finished products intended for sale
or lease or to be furnished under a contract of service, of every kind and
description now or at any time hereafter owned by or in the custody or
possession, actual or constructive, of Borrower, including such inventory as is
temporarily out of its custody or possession or in transit and including any
returns upon any accounts or other proceeds, including insurance proceeds,
resulting from the sale or disposition of any of the foregoing and any documents
of title representing any of the above, and Borrower's Books relating to any of
the foregoing.
"Investment" means any beneficial ownership of (including stock,
partnership interest or other interests or securities) any Person, or any loan,
advance or capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"Lender's Expenses" means all reasonable costs or expenses (including
reasonable attorneys' fees and expenses and reasonable expenses of other
advisors) incurred in connection with the preparation, negotiation,
administration, and enforcement of the Loan Documents; and Lender's reasonable
attorneys' fees and expenses incurred in amending, enforcing or defending the
Loan Documents, whether or not suit is brought.
"Lien" means any mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.
"Loan Documents" means, collectively, this Agreement, any note or notes
executed by Borrower, and any and all other agreements, documents and
instruments executed and delivered by or on behalf or in support of Borrower to
Lender or its authorized designee evidencing or otherwise relating to the
Advances and the Liens granted to Lender, as the same may from time to time be
amended, modified, supplemented or restated.
"Material Adverse Effect" means a material adverse effect on (i) the
business operations or condition (financial or otherwise) of Borrower and its
Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents.
"Maturity Date" means the date which is one day prior to the date which
is twenty-four (24) months from the Closing Date.
"Negotiable Collateral" means all of Borrower's present and future
letters of credit of which it is a beneficiary, notes, drafts, instruments,
securities, documents of title, and chattel paper, and Borrower's Books relating
to any of the foregoing.
"Obligations" means all Credit Extensions, including, without
limitation, all debt, principal, interest, Lender's Expenses and other amounts
owed to Lender by Borrower pursuant to this Agreement or any other agreement,
whether absolute or contingent, due or to become due, now existing or hereafter
arising, including any interest that accrues after the commencement of an
Insolvency Proceeding and including any debt, liability, or obligation owing
from Borrower to others that Lender may have obtained by assignment or
otherwise.
"Periodic Payments" means all installments or similar recurring
payments that Borrower may now or hereafter become obligated to pay to Lender
pursuant to the terms and provisions of any instrument, or agreement now or
hereafter in existence between or among Borrower or Lender.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Lender arising under
this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed in
the Schedule;
(c) Subordinated Debt; and
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(d) Indebtedness to trade creditors incurred in the ordinary
course of business.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in the
Schedule;
(b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Corporation or Moody's Investors Service, Inc., and (iii)
certificates of deposit maturing no more than one (1) year from the date of
investment therein issued by Lender; and
(c) Investments made by Borrower, up to the aggregate amount
of $200,000.00, in Subsidiaries, or other entities.
"Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and disclosed in
the Schedule or arising under this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over any of Lender's
security interests;
(c) Liens (i) upon or in any equipment acquired or held by
Borrower or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time of
its acquisition, provided that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;
(d) Liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (c) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase.
"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.
"Prime Rate" means the variable rate of interest, per annum, most
recently announced by Lender, as its "prime rate," whether or not such announced
rate is the lowest rate available from Lender.
"Quick Assets" means, at any date as of which the amount thereof shall
be determined, which determination shall be in accordance with GAAP, the
consolidated cash, cash-equivalents, accounts receivable and the following
investments: (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency or any State thereof
maturing within one (1) year from the date of acquisition thereof, (ii)
commercial paper maturing no more than one (1) year from the date of creation
thereof and currently having the highest rating obtainable from either Standard
& Poor's Corporation or Moody's Investors Service, Inc., and (iii) certificates
of deposit maturing no more than one (1) year from the date of investment
therein issued by Lender.
"Responsible Officer" means each of the Chief Executive Officer, the
Chief Financial Officer and the Controller of Borrower.
"Revolving Advance" means an Advance made to Borrower pursuant to
Section 2.1 of this Agreement.
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"Schedule" means the disclosure schedule prepared by Borrower attached
hereto.
"Subordinated Debt" means any debt incurred by Borrower that is
subordinated to the debt owing by Borrower to Lender on terms approved by Lender
in writing.
"Subsidiary" means any Person which is an entity in which (i) any
general partnership interest or (ii) more than 50% of the stock or other equity
interest of which by the terms thereof ordinary voting power to elect the Board
of Directors, managing members, managers or trustees of the entity shall, at the
time as of which any determination is being made, be owned by Borrower, either
directly or through an Affiliate.
"Tangible Net Worth" means, as of any date of determination, the
consolidated total assets of Borrower and its Subsidiaries minus, without
duplication, (i) the sum of any amounts attributable to (a) goodwill, (b) other
intangible items such as unamortized debt discount and expense, patents, trade
and service marks and names, copyrights and capitalized research and development
expenses except prepaid expenses, and (c) all reserves not already deducted from
assets, and (ii) Total Liabilities.
"Total Liabilities" means at any date as of which the amount thereof
shall be determined, all obligations that should, in accordance with GAAP, be
classified as liabilities on the consolidated balance sheet of Borrower,
including, in any event, all Indebtedness, but specifically excluding
Subordinated Debt.
1.2 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all calculations
made hereunder shall be made in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto.
SECTION 2. CREDIT FACILITY AND TERMS OF PAYMENT
2.1 THE CREDIT FACILITY. Subject to and upon the terms and
conditions hereof, and in reliance upon the representations and warranties of
Borrower set forth herein, Lender agrees to make Advances to Borrower up to the
amount of the Committed Revolving Line from time to time until the close of
business on the Maturity Date, in such sums as Borrower may request, provided
that the aggregate principal amount of all Revolving Advances at any one time
outstanding shall not exceed the lesser of the Committed Revolving Line and the
Borrowing Base. For purposes of this Agreement, "Borrowing Base" shall mean an
amount equal to (i) seventy five percent (75%) of Eligible Accounts plus (ii)
eighty percent (80%) of Eligible Foreign Accounts, plus (iii) seventy percent
(70%) of Eligible Non-Insured Foreign Accounts. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties set forth herein, amounts borrowed pursuant to this Section 2.1 may
be repaid and reborrowed at any time during the term of this Agreement.
Borrower promises to pay to Lender, in lawful money of the United
States of America, the aggregate unpaid principal amount of all Revolving
Advances made by Lender to Borrower. Borrower shall also pay Lender's Expenses
and interest on the aggregate unpaid principal amount of such Advances at the
rates and in accordance with the terms hereof.
The Committed Revolving Line shall terminate on the Maturity Date, at
which time all Advances under this Section 2.1 and other amounts due under this
Agreement (except as otherwise expressly specified herein) shall be immediately
due and payable.
2.2 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Borrower under the Committed Revolving Line exceeds the
lesser of (i) the Committed Revolving Line or (ii) the Borrowing Base, Borrower
shall immediately pay to Lender, in cash, the amount of such excess.
2.3 INTEREST RATES, PAYMENTS, CALCULATIONS, BORROWING PROCEDURES.
2.3.1 INTEREST RATE. Except as set forth in Section 2.3.2,
any Credit Extension shall bear interest on the average Daily Balance at a rate
equal to (i) one and one quarter percentage point (1.25%) above the Prime Rate
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while the Borrower's Tangible Net Worth for the prior quarter was less than or
equal to $17,500,000.00, and (ii) three quarters of one percentage point (.75%)
above the Prime Rate while the Borrower's Tangible Net Worth for the prior
quarter was greater than $17,500,000.00 but less than or equal to
$25,000,000.00, and (iii) one quarter percentage point (.25%) above the Prime
Rate when the Borrower's Tangible Net Worth for the prior quarter exceeded
$25,000,000.00. Such interest shall be payable on the 5th of each month. Any
decreases in the interest rate as provided above shall be effective on the first
day of the month following the receipt by Lender of a Compliance Certificate
reporting the above information. Any increases in the interest rate as provided
above shall be effective, at the option of the Lender, as of the first day of
the quarter following the relevant change in Tangible Net Worth.
2.3.2 DEFAULT RATE. All Obligations shall bear interest,
from and after the occurrence of an Event of Default, at a rate equal to the
lesser of (i) five (5) percentage points above the interest rate applicable
immediately prior to the occurrence of the Event of Default, or (ii) the maximum
rate permitted by law.
2.3.3 PAYMENTS. Interest hereunder shall be due and payable
on the Payment Date of each month during the term hereof. Borrower hereby
authorizes Lender to debit any accounts with Lender, including, without
limitation, Account Number _____________________ for payments of principal and
interest due on the Obligations and any other amounts owing by Borrower to
Lender. Lender shall notify Borrower of all debits which Lender makes against
Borrower's accounts. Any such debits against Borrower's accounts in no way shall
be deemed a set-off. Any interest not paid when due shall be compounded by
becoming a part of the Obligations (to the extent permitted by law), and such
interest shall thereafter accrue interest at the rate then applicable hereunder.
2.3.4 COMPUTATION. In the event the Prime Rate is changed
from time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased effective as of 12:01 a.m. on the day the Prime Rate is
changed, by an amount equal to such change in the Prime Rate. All interest
chargeable under the Loan Documents shall be computed on the basis of a three
hundred sixty (360) day year for the actual number of days elapsed.
2.3.5 BORROWING PROCEDURES. Whenever Borrower desires an
Advance hereunder, Borrower shall notify Lender by facsimile transmission or
telephone no later than 11:00 a.m. California time, on the Business Day on which
an Advance is to be made. Each such notification shall be promptly confirmed by
a Payment/Advance Form in substantially the form of EXHIBIT B hereto. Lender
shall be entitled to rely on any telephonic notice given by an individual whom
Lender reasonably believes to be a Responsible Officer, and Borrower shall
indemnify and hold Lender harmless for any damages or loss suffered by Lender as
a result of such reliance. Lender will wire or credit, as appropriate, the
amount of Advances in United States Dollars made under Section 2.1 to a
Borrower's deposit account held by Lender, as specified by Borrower.
(a) Advances. Each Advance shall be in an amount not
less than Twenty Five Thousand Dollars ($25,000). The outstanding principal
balance of each Advance shall bear interest until principal is due (computed
daily on the basis of a 360 day year and actual days elapsed), at the rate per
annum set forth in Section 2.3.1. Borrower shall pay the entire outstanding
principal amount of each Advance on the Maturity Date.
(d) Prepayment of the Advances. Borrower may at any
time prepay any Advance in full or in part. Each prepayment shall be made upon
the irrevocable written or telephone notice of Borrower received by Lender not
later than 10:00 a.m. California time on the date of the prepayment. The notice
of prepayment shall specify the date of the prepayment, the amount of the
prepayment, and the Advance or Advances to be prepaid.
2.4 CREDITING PAYMENTS. Prior to the occurrence of an Event of
Default, Lender shall credit a wire transfer of funds, check or other item of
payment paid by Borrower to Lender to such deposit account or Obligation as
Borrower specifies. After the occurrence of an Event of Default, the receipt by
Lender of any wire transfer of funds, check, or other item of payment shall be
immediately applied to conditionally reduce Obligations, but shall not be
considered a payment on account unless such payment is of immediately available
federal funds or unless and until such check or other item of payment is honored
when presented for payment. Notwithstanding anything to the contrary contained
herein, any wire transfer or payment received by Lender after 12:00 noon
California time shall be deemed to have been received by Lender as of the
opening of business on the immediately following Business Day. Whenever any
payment to Lender under the Loan Documents would otherwise be due (except by
reason of acceleration) on a date
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which is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as applicable, shall accrue and
be payable for the period of such extension.
2.5 FEES. Borrower shall pay to Lender the following:
2.5.1 FACILITY FEE. A Facility Fee equal to Thirty Seven
Thousand Five Hundred Dollars ($37,500.00), which fee shall be due on the
Closing Date and shall be fully earned and non-refundable;
2.5.2 FINANCIAL EXAMINATION AND APPRAISAL FEES. Each
Lender's customary fees and out-of-pocket expenses for its audits of Borrower's
Accounts, and for each appraisal of Collateral and financial analysis and
examination of Borrower performed from time to time by Lender;
2.5.3 LENDER'S EXPENSES. Upon the date hereof, all Lender's
Expenses incurred through the date hereof, including reasonable attorneys' fees
and expenses.
2.6 ADDITIONAL COSTS. In case any law, regulation, treaty or
official directive or the interpretation or application thereof by any court or
any governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):
2.6.1 subjects Lender to any tax with respect to payments
of principal or interest or any other amounts payable hereunder by
Borrower or otherwise with respect to the transactions contemplated
hereby (except for taxes on the overall net income of Lender imposed by
the United States of America or any political subdivision thereof);
2.6.2 imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against
assets held by, or deposits in or for the account of, or loans by
Lender; or
2.6.3 imposes upon Lender any other condition with respect
to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to Lender, reduce
the income receivable by Lender or impose any expense upon Lender with respect
to any loans Lender shall notify Borrower thereof. Borrower agrees to pay to
Lender the amount of such increase in cost, reduction in income or additional
expense as and when such cost, reduction or expense is incurred or determined,
upon presentation by Lender of a statement of the amount and setting forth
Lender's calculation thereof, all in reasonable detail, which statement shall be
deemed true and correct absent manifest error.
2.7 TERM. Except as otherwise set forth herein, this Agreement
shall become effective on the Closing Date and, subject to Sections 12.2.4 and
12.7, shall continue in full force and effect for a term ending on the Maturity
Date. Notwithstanding the foregoing, Lender shall have the right to terminate
its obligation to make Advances under this Agreement immediately and without
notice upon the occurrence and during the continuance of an Event of Default.
Notwithstanding termination, Lender's Lien on the Collateral shall remain in
effect for so long as any Obligations are outstanding.
SECTION 3. CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of
Lender to make the initial Advance is subject to the condition precedent that
Lender shall have received, in form and substance satisfactory to Lender, the
following:
(a) this Agreement;
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(b) a certificate of the Secretary of Borrower with
respect to incumbency and resolutions authorizing the execution and delivery of
this Agreement;
(c) certificates of the Secretary of State of Delaware
with respect to Borrower's standing (and foreign qualification);
(d) an Intellectual Property Security Agreement;
(e) an opinion of Borrower's counsel;
(f) financing statements (Forms UCC-1) for Borrower;
(g) insurance certificate;
(h) payment of the fees and expenses (including, without
limitation, Lender's Expenses) then due specified in Section 2.5 hereof;
(i) such other documents, and completion of such other
matters, as Lender may reasonably deem necessary or appropriate.
3.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of Lender
to make each Advance, including the initial Advance, is further subject to the
following conditions:
(a) timely receipt by Lender of the Payment/Advance Form
as provided in Section 2.1; and
(b) the representations and warranties contained in
Section 5 shall be true and correct in all material respects on and as of the
date of such Payment/Advance Form and on the effective date of each Advance as
though made at and as of each such date, and no Event of Default shall have
occurred and be continuing, or would result from such Advance. The making of
each Advance shall be deemed to be a representation and warranty by Borrower on
the date of such Advance as to the accuracy of the facts referred to in this
Section 3.2(b).
SECTION 4. CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST. Borrower grants and pledges to
Lender, a continuing security interest in all presently existing and hereafter
acquired or arising Collateral in order to secure prompt repayment of any and
all Obligations and in order to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents. Except as set forth in the
Schedule, such security interest constitutes a valid, first priority security
interest in the presently existing Collateral, and will constitute a valid,
first priority security interest in Collateral acquired after the date hereof,
with the exception of valid purchase money security interests securing Permitted
Indebtedness.
4.2 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time and
from time to time Borrower shall, and shall cause each of its Subsidiaries to,
execute and deliver all Negotiable Collateral, all financing statements and
other documents and take such further action as Lender may reasonably request,
in form satisfactory to Lender, to perfect and continue perfected Lender's
security interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Documents.
4.3 RIGHT TO INSPECT. Lender (through any of its officers,
employees, or agents) shall have the right, provided Credit Extensions are
outstanding hereunder, upon reasonable prior notice, from time to time during
Borrower's usual business hours, to inspect Borrower's Books and to make copies
thereof and to check, test, and after the occurrence of an Event of Default, to
appraise the Collateral in order to verify Borrower's financial condition or the
amount, condition of, or any other matter relating to, the Collateral.
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4.4 SINGLE LOAN. All of the Obligations of Borrower to Lender
arising under or in connection with this Agreement, or any of the Loan
Documents, shall constitute one general obligation of Borrower and shall be
secured by all of the Collateral.
SECTION 5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND QUALIFICATION. Borrower is a corporation
duly existing and in good standing under the laws of its state of organization
and qualified and licensed to do business in, and is in good standing in, any
state in which the conduct of its business or its ownership of property requires
that it be so qualified.
5.2 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Articles of Incorporation or Bylaws (or
similar constituent documents), nor will they constitute an event of default
under any material agreement to which Borrower is a party or by which Borrower
is bound. Borrower is not in default under any agreement to which it is a party
or by which it is bound, which default could have a Material Adverse Effect.
5.3 NO PRIOR ENCUMBRANCES. Borrower has good and indefeasible
title to the Collateral, free and clear of Liens, except for Permitted Liens.
5.4 BONA FIDE ELIGIBLE ACCOUNTS. The Eligible Accounts are bona
fide existing obligations. Each Eligible Account has arisen from a bona fide
completed sale of goods or performance of services, which goods or services have
been delivered to, or performed for, and in either case accepted by, the account
debtor. Borrower has not received notice of an actual or imminent Insolvency
Proceeding of any account debtor for any Account which is included in any
Borrowing Base Certificate as an Eligible Account.
5.5 NAME; LOCATION OF CHIEF EXECUTIVE OFFICE. Except as disclosed
in the Schedule, Borrower has not done business under any name other than that
specified on the signature page hereof. The chief executive office of Borrower
is located at the address indicated in Section 10 hereof.
5.6 LITIGATION. Except as set forth in the Schedule, there are no
actions or proceedings pending by or against Borrower or any Subsidiary before
any court or administrative agency in which an adverse decision could have a
Material Adverse Effect or a material adverse effect on Borrower's interest or
Lender's security interests in the Collateral. Borrower does not have knowledge
of any such pending or threatened actions or proceedings.
5.7 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All
consolidated financial statements related to Borrower and any Subsidiary which
have been delivered by Borrower to Lender fairly present in all material
respects Borrower's consolidated financial condition as of the date thereof and
Borrower's consolidated results of operations for the period then ended. There
has not been a material adverse change in the consolidated financial condition
of Borrower since the date of the most recent of such financial statements
submitted to Lender.
5.8 SOLVENCY. Borrower is solvent and able to pay its debts
(including trade debts) as they mature.
5.9 REGULATORY COMPLIANCE. Borrower and each Subsidiary has met
the minimum funding requirements of ERISA with respect to any employee benefit
plans subject to ERISA. No event has occurred resulting from Borrower's failure
to comply with ERISA that is reasonably likely to result in Borrower's incurring
any liability that could have a Material Adverse Effect. Borrower is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940. Borrower is not engaged
principally, or as one of the important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations G, T and U of the Board of Governors of the Federal
Reserve System). Borrower has complied with all the provisions of the Federal
Fair Labor Standards Act. Borrower has not violated any statutes, laws,
ordinances or rules applicable to it, violation of which could have a Material
Adverse Effect.
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5.10 ENVIRONMENTAL CONDITION. None of Borrower's or any
Subsidiary's properties or assets has ever been used by Borrower or any
Subsidiary or, to the best of Borrower's knowledge, by previous owners or
operators, in the disposal of, or to produce, store, handle, treat, release, or
transport, any hazardous waste or hazardous substance other than in accordance
with applicable law; to the best of Borrower's knowledge, none of Borrower's
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for closure pursuant to any
environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste
or hazardous substances into the environment.
5.11 TAXES. Borrower and each Subsidiary has filed or caused to be
filed all tax returns required to be filed, and has paid, or has made adequate
provision for the payment of, all taxes reflected therein.
5.12 SUBSIDIARIES. Borrower does not own any stock, partnership
interest or other equity securities of any Person, except for Permitted
Investments.
5.13 GOVERNMENT CONSENTS. Borrower and each Subsidiary has obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities which are necessary
for the continued operation of Borrower's business as currently conducted.
5.14 FULL DISCLOSURE. No representation, warranty or other
statement made by Borrower in any certificate or written statement furnished to
Lender contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained in such
certificates or statements not misleading.
SECTION 6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Lender may have any commitment to
make an Advance hereunder, Borrower shall do all of the following:
6.1 GOOD STANDING. Borrower shall maintain its and each of its
Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation or formation and maintain qualification in each jurisdiction in
which the failure to so qualify could have a Material Adverse Effect. Borrower
shall maintain, and shall cause each of its Subsidiaries to maintain, to the
extent consistent with prudent management of Borrower's business, in force all
licenses, approvals and agreements, the loss of which could have a Material
Adverse Effect.
6.2 GOVERNMENT COMPLIANCE. Borrower shall meet, and shall cause
each Subsidiary to meet, the minimum funding requirements of ERISA with respect
to any employee benefit plans subject to ERISA. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which could have a Material Adverse Effect or a material adverse effect on the
Collateral or the priority of Lender's Lien on the Collateral.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower shall
deliver to Lender: (a) as soon as available, but in any event within forty five
(45) days after the end of each quarter, a company-prepared consolidated balance
sheet and income statement covering Borrower's consolidated operations during
each such period, certified by an officer of Borrower reasonably acceptable to
Lender; (b) as soon as available, but in any event within ninety (90) days after
the end of Borrower's fiscal year, audited consolidated financial statements of
Borrower prepared in accordance with GAAP, consistently applied, together with
an unqualified opinion of an independent certified public accounting firm with
respect to such financial statements, reasonably acceptable to Lender; (c)
within five (5) days of filing, copies of all statements, reports and notices
sent or made available generally by Borrower to its security holders or to any
holders of Subordinated Debt and all reports on Forms 10-K, 10-Q or 8-K filed
with the Securities and Exchange Commission; (d) promptly upon receipt of notice
thereof, a report of any legal actions pending or threatened against Borrower or
any Subsidiary which could result in damages or costs to Borrower or such
Subsidiary of One
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Hundred Thousand Dollars ($100,000) or more; and (e) such budgets, sales
projections, operating plans or other financial information as Lender may
reasonably request from time to time.
Within twenty five (25) days after the last day of each month for which
amounts were advanced or Credit Extensions are outstanding, Borrower shall
deliver to Lender a Borrowing Base Certificate signed by a Responsible Officer
in substantially the form of EXHIBIT C hereto, together with aged listings of
accounts receivable.
Borrower shall deliver to Lender with the quarterly financial
statements a Compliance Certificate signed by a Responsible Officer in
substantially the form of EXHIBIT D hereto, within forty-five days after the
last day of each quarter.
Lender shall have a right from time to time hereafter to audit
Borrower's Accounts at Borrower's expense, provided that such audits will be
conducted no more often than every twelve (12) months unless an Event of Default
has occurred and is continuing.
6.4 TAXES. Borrower shall make, and shall cause each Subsidiary to
make, due and timely payment or deposit of all material foreign, federal, state,
and local taxes, assessments, duties or contributions required of Borrower or
such Subsidiary by law, and will execute and deliver to Lender, on demand,
appropriate certificates attesting to the payment or deposit thereof; and
Borrower shall make, and shall cause each Subsidiary to make, timely payment or
deposit of all material tax payments and withholding taxes required of Borrower
or such Subsidiary by applicable laws, including, but not limited to, those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, federal and
foreign income taxes, and will, upon request, furnish Lender with proof
satisfactory to Lender indicating that Borrower or such Subsidiary has made such
payments or deposits; provided that Borrower or such Subsidiary need not make
any payment if the amount or validity of such payment is contested in good faith
by appropriate proceedings and is reserved against by Borrower to the extent
required by GAAP.
6.5 INSURANCE.
6.5.1 Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts as are ordinarily insured against
by other owners in similar businesses conducted in the locations where
Borrower's business is conducted on the date hereof. Borrower shall also
maintain insurance relating to Borrower's ownership and use of the Collateral in
amounts and types as are customary to businesses similar to Borrower's.
6.5.2 All such policies of insurance shall be in such form,
with such companies, and in such amounts as reasonably satisfactory to Lender.
All such policies of property insurance shall provide that the proceeds of such
policies shall be payable solely to Lender, pursuant to a standard first
mortgage endorsement substantially equivalent to the Lender Loss Payable
Endorsement 438BFU, in form satisfactory to Lender and all liability insurance
policies shall name Lender, as additional insured, and shall specify that the
insurer must give at least twenty (20) days' notice to Lender before canceling
its policy for any reason. Borrower shall deliver to Lender certified copies of
such policies of insurance and evidence of the payments of all premiums
therefor. All proceeds payable under any such policy shall, at the option of
Lender, be payable to Lender to be applied on account of the Obligations.
6.6 DEPOSITORY. Borrower shall maintain depository and operating
accounts with Lender.
6.7 QUICK RATIO. Borrower shall maintain a ratio of Quick Assets
to Current Liabilities of at least (i) .75 to 1.0 as of the last day of quarters
ending March 31, 1998, and June 30, 1998, (ii) 1.0 to 1.0 as of the last day of
the quarter ending September 30, 1998, (iii) 1.25 to 1.0 as of the last day of
the quarter ending December 31, 1998, (iv) 1.5 to 1.0 as of the last day of the
quarter ending March 31, 1999, and as of the last day of each subsequent
quarter. All deferred maintenance revenues shall be excluded for purposes of
calculating the Quick Ratio.
6.8 TANGIBLE NET WORTH. Borrower shall maintain, a Tangible Net
Worth of not less than (a) (i) Three Million Dollars ($3,000,000.00) as of the
last day of quarter ending March 31, 1998, (ii) Six Million Dollars
($6,000,000.00) as of the last day of the quarter ending June 30, 1998, (iii)
Nine Million Dollars ($9,000,000.00) as
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of the last day of the quarter ending September 30, 1998, (iv) Fifteen Million
Dollars ($15,000,000.00) as of the last day of the quarter ending December 31,
1998, and as of the last day of each subsequent quarter, PLUS (b) seventy-five
percent (75.0%) of any capital received by Borrower after the Closing Date.
6.9 PROFITABILITY. Borrower shall have a minimum net profit of (i)
One Million Dollars ($1,000,000.00) (excluding a one-time change for
merger-related expenses) for the first quarter of the Borrower's fiscal year
1998, (ii) Two Million Dollars ($2,000,000.00) for the second quarter of the
Borrower's fiscal year 1998, (iii) Two Million Dollars ($2,000,000.00)) for the
third quarter of the Borrower's fiscal year 1998, (iv) Three Million Five
Hundred Thousand Dollars ($3,500,000.00)) for the fourth quarter of the
Borrower's fiscal year 1998, and (v) Two Million Dollars ($2,000,000.00) for
each subsequent quarter.
6.10 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS. 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 Copyright
Office, as applicable, those intellectual property rights listed on EXHIBITS A,
B and C to the Intellectual Property Security Agreement delivered to Lender by
Borrower in connection with this Agreement within thirty (30) days of the date
of this Agreement. Borrower shall register or cause to be registered with the
United States Patent and Trademark Office or the United States Copyright Office,
as applicable, those additional intellectual property rights developed or
acquired by Borrower from time to time in connection with any product prior to
the sale or licensing of such product to any third party including, without
limitation, revisions or additions to the intellectual property rights listed on
such EXHIBITS A, B and C. Borrower shall execute and deliver such additional
instruments and documents from time to time as Lender shall reasonably request
to perfect Lender's security interests in such additional intellectual property
rights.
6.11 FURTHER ASSURANCES. At any time and from time to time Borrower
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Lender to effect the purposes of this
Agreement.
SECTION 7. NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the outstanding Obligations or
for so long as Lender may have any commitment to make any Advances, Borrower
will not do any of the following:
7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise
dispose of (collectively, a "Transfer"), or permit any of its Subsidiaries to
Transfer, all or any part of their respective businesses or properties, other
than: (i) Transfers of Inventory in the ordinary course of business; (ii)
Transfers of licenses or similar arrangements for the use of the property of
Borrower or its Subsidiaries; or (iii) Transfers of worn-out or obsolete
Equipment.
7.2 CHANGE IN BUSINESS. Engage in any business, or permit any of
its Subsidiaries to engage in, any business, other than (i) the businesses
currently engaged in by Borrower or its Subsidiaries and (ii) any business
substantially similar or related thereto (or incidental thereto), or suffer a
material change in Borrower's management or directors. Borrower shall not,
without thirty (30) days prior written notification to Lender, relocate its
chief executive office or change its name.
7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any
of its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person, UNLESS:
(i) there is no Event of Default hereunder, and (ii) that such merger,
consolidation or acquisition will not result, on a prospective basis, in the
breach of any of the covenants, terms and conditions hereunder, and (iii) that
such merger, consolidation or acquisition is in the same or similar line of
business as the Borrower, and (iv) the purchase price for each transaction will
be a maximum amount of $5,000,000.00 for each transaction, or $20,000,000.00 in
the aggregate for all such transactions, and (v) the Borrower is the surviving
legal entity, and (vi) the Borrower does not assume any indebtedness (either
direct or contingent) in connection with such transaction.
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7.4 INDEBTEDNESS. Create, incur, assume or be or remain liable
with respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.
7.5 ENCUMBRANCES. Create, incur, assume or suffer to exist any
Lien with respect to any of its property, or assign or otherwise convey any
right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries so to do, except for Permitted Liens.
7.6 DISTRIBUTIONS. Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock.
7.7 INVESTMENTS. Directly or indirectly acquire or own, or make
any Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments.
7.8 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter
into or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a nonaffiliated Person.
7.9 SUBORDINATED DEBT. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Lender's prior written consent.
7.10 COMPLIANCE. Become an "investment company" or a Person
controlled by an "investment company," within the meaning of the Investment
Company Act of 1940, or become principally engaged in, or undertake as one of
its important activities, the business of extending credit for the purpose of
purchasing or carrying margin stock, or use the proceeds of any Credit Extension
for such purpose or fail to meet the minimum funding requirements of ERISA, or
permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to
occur, or fail to comply with the Federal Fair Labor Standards Act or violate
any law or regulation, which violation could have a Material Adverse Effect or a
material adverse effect on the Collateral or the priority of Lender's Lien on
the Collateral, or permit any of its Subsidiaries to do any of the foregoing.
SECTION 8. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an event of
default by Borrower under this Agreement (an "Event of Default"):
8.1 PAYMENT DEFAULT. If Borrower fails to pay, when due, any of
the Obligations.
8.2 COVENANT DEFAULT.
8.2.1 If Borrower fails to perform any obligation under
Sections 6.7, 6.8, 6.9, 6.10, 6.11, or violates any of the covenants contained
in Article 7 of this Agreement, or
8.2.2 If Borrower fails or neglects to perform, keep, or
observe any other material term, provision, condition or covenant contained in
this Agreement or in any of the other Loan Documents, and as to any default of
such other term, provision, condition or covenant which can be cured, has failed
to cure such default within thirty (30) days after Borrower receives notice
thereof or any officer of Borrower becomes aware thereof; provided, however,
that if such default cannot by its nature be cured within the thirty (30) day
period or cannot, after diligent attempts by Borrower, be cured within such
thirty (30) day period, and such default is likely to be cured within a
reasonable time, then Borrower shall have an additional reasonable period (which
shall not in any case exceed thirty (30) days) to attempt to cure such default,
and within such reasonable time period the failure to have cured such default
shall not be deemed an Event of Default (provided that no Advance will be
required to be made during such cure period);
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8.3 MATERIAL ADVERSE CHANGE. If there occurs a material adverse
change in Borrower's business or financial condition, or if there is a material
impairment of the prospect of repayment of any portion of the Obligations or a
material impairment of the value or priority of Lender's security interests in
the Collateral;
8.4 ATTACHMENT. If any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within thirty (30) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within thirty (30)
days after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Advances will be required to be made during such cure period);
8.5 INSOLVENCY. If Borrower becomes insolvent, or if an Insolvency
Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced
against Borrower and is not dismissed or stayed within thirty (30) days
(provided that no Advances will be made prior to the dismissal of such
Insolvency Proceeding);
8.6 OTHER AGREEMENTS. If there is a default in any agreement to
which Borrower is a party with a third party or parties resulting in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of One Hundred Thousand
Dollars ($100,000) or which could have a Material Adverse Effect;
8.7 SUBORDINATED DEBT. If Borrower makes any payment on account of
Subordinated Debt, except to the extent such payment is allowed under any
subordination agreement entered into with Lender;
8.8 JUDGMENTS. If a judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least Two Hundred Fifty
Thousand Dollars ($250,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of thirty (30) days (provided that no
Advances will be made prior to the satisfaction or stay of such judgment); or
8.9 MISREPRESENTATIONS. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Lender by any Responsible
Officer pursuant to this Agreement or to induce Lender to enter into this
Agreement or any other Loan Document.
SECTION 9. LENDER'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES. Upon the occurrence and during the
continuance of a Default or Event of Default, Lender shall NOT have any further
obligation to advance money or extend other credit to or for the benefit of
Borrower under this Agreement or under any other agreement between Borrower or
Lender. In addition, upon the occurrence and during the continuance of an Event
of Default, Lender may, without notice of its election and without demand, do
any one or more of the following, all of which are authorized by Borrower:
9.1.1 Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, immediately due and payable
(provided that upon the occurrence of an Event of Default described in SECTION
8.5 all Obligations shall become immediately due and payable without any action
by Lender);
9.1.2 Settle or adjust disputes and claims directly with
account debtors for amounts, upon terms and in whatever order Lender reasonably
considers advisable;
9.1.3 Without notice to or demand upon Borrower, make such
payments and do such acts as Lender considers necessary or reasonable to protect
Lender's security interest in the Collateral. Borrower agrees to
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assemble the Collateral if Lender so requires, and to make the Collateral
available to Lender in such a manner as Lender may designate. Borrower
authorizes Lender to enter the premises where the Collateral is located, to take
and maintain possession of the Collateral, or any part of it, and to pay,
purchase, contest, or compromise any encumbrance, charge, or Lien which in
Lender's determination appears to be prior or superior to its security interest
and to pay all expenses incurred in connection therewith. With respect to any
premises owned by Borrower, Borrower hereby grants to Lender a license to enter
into possession of such premises and to occupy the same, without charge, for up
to one hundred twenty (120) days in order to exercise any of Lender's rights or
remedies provided herein, at law, in equity, or otherwise;
9.1.4 Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Lender is hereby granted a license or other right,
solely pursuant to the provisions of this SECTION 9.1, to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Lender's exercise of its rights under this SECTION 9.1,
Borrower's rights under all licenses and all franchise agreements shall inure to
Lender's benefit;
9.1.5 Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as
Lender determines to be commercially reasonable;
9.1.6 Lender may credit bid and purchase at any public
sale; and
9.1.7 Any deficiency that exists after disposition of the Collateral
as provided above will be paid immediately by Borrower.
9.2 POWER OF ATTORNEY. Effective only upon the occurrence and
during the continuance of an Event of Default, Borrower hereby irrevocably
appoints Lender, (and any of Lender's designated officers, or employees) as
Borrower's true and lawful attorney to: (a) send requests for verification of
Accounts or notify account debtors of Lender's security interest in the
Accounts; (b) endorse Borrower's name on any checks or other forms of payment or
security that may come into Lender's possession; (c) sign Borrower's name on any
invoice or bill of lading relating to any Account, drafts against account
debtors, schedules and assignments of Accounts, verifications of Accounts, and
notices to account debtors; (d) make, settle, and adjust all claims under and
decisions with respect to Borrower's policies of insurance; and (e) settle and
adjust disputes and claims respecting the accounts directly with account
debtors, for amounts and upon terms which Lender determines to be reasonable;
provided Lender may exercise such power of attorney to sign the name of Borrower
on any of the documents described in SECTION 4.2 regardless of whether an Event
of Default has occurred. The appointment of Lender as Borrower's attorney in
fact, and each and every one of Lender's rights and powers, being coupled with
an interest, is irrevocable until all of the Obligations have been fully repaid
and performed and Lender's obligation to provide Advances hereunder is
terminated.
9.3 SETOFF.
9.3.1 Regardless of the adequacy of any collateral or other
means of obtaining repayment of the Obligations, any deposits, balances or other
sums credited by or due from the head office of Lender or any of its branch
offices to Borrower may, at any time and from time to time after the occurrence
and during the continuance of an Event of Default hereunder, without notice to
Borrower or compliance with any other condition precedent now or hereafter
imposed by statute, rule of law, or otherwise (all of which are hereby expressly
waived) be set off, appropriated, and applied by Lender against any and all
obligations of Borrower to Lender or any of its Affiliates in such manner as the
head offices of Lender or any of its branch offices in its sole discretion may
determine, and Borrower hereby grants Lender a continuing security interest in
such deposits, balances or other sums for the payment and performance of all
such obligations.
9.4 ACCOUNTS COLLECTION. At any time from the date of this
Agreement, Lender may notify any Person owing funds to Borrower of Lender's
security interest in such funds and verify the amount of such Account. After the
occurrence of an Event of Default, Borrower shall collect all amounts owing to
Borrower on behalf of Lender, receive
16.
17
in trust all payments as Lender's trustee, and immediately deliver such payments
to Lender, in their original form as received from the account debtor, with
proper endorsements for deposit.
9.5 LENDER'S EXPENSES. If Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Lender may do any or all of the
following: (a) make payment of the same or any part thereof; (b) set up such
reserves under the Committed Revolving Line as Lender deems necessary to protect
Lender from the exposure created by such failure; or (c) obtain and maintain
insurance policies of the type discussed in Section 6.5 of this Agreement, and
take any action with respect to such policies as Lender deems prudent. Any
amounts so paid or deposited by Lender shall constitute Lender's Expenses, shall
be immediately due and payable, and shall bear interest at the then applicable
rate hereinabove provided, and shall be secured by the Collateral. Any payments
made by Lender shall not constitute an agreement by Lender to make similar
payments in the future or a waiver by Lender of any Event of Default under this
Agreement.
9.6 LENDER'S LIABILITY FOR COLLATERAL. So long as Lender complies
with reasonable banking practices, Lender shall NOT in any way or manner be
liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss
or damage thereto occurring or arising in any manner or fashion from any cause;
(c) any diminution in the value thereof; or (d) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person whomsoever.
All risk of loss, damage or destruction of the Collateral shall be borne by
Borrower.
9.7 REMEDIES CUMULATIVE. Lender's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Lender shall have all other rights and remedies not inconsistent herewith as
provided under the Code, at law, or in equity. No exercise by Lender of one
right or remedy shall be deemed an election, and no waiver by Lender of any
Event of Default on Borrower's part shall be deemed a continuing waiver. No
delay by Lender shall constitute a waiver, election, or acquiescence by it. No
waiver by Lender shall be effective unless made in a written document signed by
Lender and then shall be effective only in the specific instance and for the
specific purpose for which it was given.
9.8 DEMAND; PROTEST. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guaranties at any time held by Lender on which Borrower may in any way be
liable.
SECTION 10. NOTICES
Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by a recognized overnight
delivery service, certified mail, postage prepaid, return receipt requested, or
by telecopy to Borrower or to Lender, as the case may be, at its addresses set
forth below:
If to Borrower: ARDENT Software, Inc.
50 Washington Street
Westborough, MA 01581
Attn: Chief Financial Officer
Fax:(508) 389-8767
If to Lender: SILICON VALLEY BANK
3003 Tasman Drive
Santa Clara, CA 95054
Attn: Mr. Andrew H. Tsao, Vice President
Fax: 408/496-2419
17.
18
With a copy to: Riemer & Braunstein
Three Center Plaza
Boston, MA 02108
Attn: David A. Ephraim, Esquire
Fax: 617/723-6831
If to Lender, at its address specified on the signature pages hereto,
or at any other address specified by Lender.
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
SECTION 11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
The laws of the Commonwealth of Massachusetts shall apply to this
Agreement. BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT,
OR PROCEEDING OF ANY KIND, AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS
AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY REASON LENDER CANNOT AVAIL ITSELF
OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS, BORROWER ACCEPTS
JURISDICTION OF THE COURTS AND VENUE IN SANTA CLARA COUNTY, CALIFORNIA.
BORROWER AND LENDER EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH
PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
SECTION 12. GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
may be assigned by Borrower without Lender's prior written consent, which
consent may be granted or withheld in Lender's sole discretion. Lender shall
have the right without the consent of or notice to Borrower to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Lender's obligations, rights and benefits hereunder.
12.2 EXPENSES; TAXES; INDEMNIFICATION; SURVIVAL.
12.2.1 EXPENSES. Borrower shall pay on demand all expenses
of Lender in connection with the preparation, waiver or amendment of this
Agreement, the Loan Documents or other documents executed in connection
therewith, or the administration, default or collection of the Advances or other
Obligations or administration, default, collection in connection with Lender's
exercise, preservation or enforcement of any of its rights, remedies or options
thereunder, including, without limitation, fees of outside legal counsel or the
allocated costs of in-house legal counsel, accounting, consulting, brokerage or
other similar professional fees or expenses, and any fees or expenses associated
with any travel or other costs relating to any appraisals or examinations
conducted in connection with the Obligations or any collateral therefor, and the
amount of all such expenses shall, until paid, bear interest at the rate
applicable to principal hereunder (including any default rate).
18.
19
12.2.2 TAXES, ETC. Borrower agrees to pay all governmental
taxes, assessments and other charges (except income, gross receipts, ad valorem,
intangibles, franchise or other similar taxes imposed on Lender), including any
interest or penalties thereon, at any time payable or ruled to be payable in
respect of the existence, execution or delivery of the Loan Documents or the
issuance of the notes hereunder by reason of any existing or hereafter enacted
federal, state, local or foreign statute, and to indemnify and hold Lender and
its successors and assigns harmless against liability in connection with any
such taxes, assessments or other charges.
12.2.3 GENERAL INDEMNITY. Borrower shall pay, indemnify, and
hold Lender, and each of its officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses or disbursements (including
reasonable attorneys' fees and costs) of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement and any other Loan Documents, or the transactions contemplated
hereby and thereby, and with respect to any investigation, litigation or
proceeding (including any proceeding in bankruptcy or appellate proceeding)
related to this Agreement or the Advances or the use of the proceeds thereof,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided that Borrower shall have
no obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of such
Indemnified Person.
12.2.4 SURVIVAL; DEFENSE. The obligations in SECTIONS 12.2.2
and 12.2.3 shall survive payment of all other Obligations. At the election of
any Indemnified Person, Borrower shall defend such Indemnified Person using
legal counsel satisfactory to such Indemnified Person in such person's sole
discretion, at the sole cost and expense of Borrower. All amounts owing under
SECTION 12.2 shall be paid within thirty (30) days after demand.
12.3 TIME OF ESSENCE. Time is of the essence for the performance of
all obligations set forth in this Agreement.
12.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
12.5 AMENDMENTS; INTEGRATION. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by Borrower therefrom, shall be effective unless the
same shall be in writing and signed by Lender and Borrower and then such waiver
shall be effective only in the specific instance and for the specific purpose
for which given.
As between Borrower, on the one hand, and Lender on the other hand, all
prior agreements, understandings, representations, warranties, and negotiations
between the parties hereto with respect to the subject matter of this Agreement,
if any, are merged into this Agreement and the Loan Documents.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
12.7 SURVIVAL; RELEASE OF SECURITY INTEREST. All covenants,
representations and warranties made in this Agreement shall continue in full
force and effect so long as any Obligations remain outstanding. Upon the
indefeasible payment or other complete satisfaction of the Obligations and
provided that Lender shall then have no commitment to make any Advances or to
make any other loans to Borrower, Lender shall release all security interests
granted hereunder and redeliver all Collateral held by it in accordance with
applicable law.
12.8 CONFIDENTIALITY. In handling any confidential information
Lender shall exercise the same degree of care that it exercises with respect to
its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this Agreement except that disclosure of such information may be
made (i) to the subsidiaries or Affiliates of Lender in connection with its
present or prospective business relations with Borrower, (ii) to prospective
transferees or purchasers of any interest in the Loans, provided that they have
entered into a comparable confidentiality agreement in favor of Borrower and
have delivered a copy to
19.
20
Borrower, (iii) as required by law, regulations, rule or order, subpoena,
judicial order or similar order and (iv) as may be required in connection with
the examination, audit or similar investigation of Lender. Confidential
information hereunder shall not include information that either: (a) is in the
public domain or in the knowledge or possession of Lender when disclosed to
Lender, or becomes part of the public domain after disclosure to Lender through
no fault of Lender; or (b) is disclosed to Lender by a third party, provided
Lender does not have actual knowledge that such third party is prohibited from
disclosing such information.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
BORROWER:
ARDENT SOFTWARE, INC.
By: /s/ Charles F. Kane
---------------------------------
Title: VP Finance and CFO
------------------------------
LENDER:
SILICON VALLEY BANK
By: /s/ Michelle Giannini
---------------------------------
Title: Assistant Vice President
------------------------------
SILICON VALLEY BANK D/B/A
SILICON VALLEY EAST
BY: /s/ Andrew H. Tsao
---------------------------------
Title: Vice President
------------------------------
20.
21
SCHEDULES
TO
ARDENT SOFTWARE, INC.
LOAN AND SECURITY AGREEMENT
DISCLOSURES
22
EXHIBIT A
The Collateral shall consist of all right, title and interest of
Borrower in and to the following:
(a) All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and
Borrower's Books relating to any of the foregoing;
(c) All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
(d) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower and Borrower's Books
relating to any of the foregoing;
(e) All documents, cash, deposit accounts, securities, letters of
credit, certificates of deposit, investment property, instruments and chattel
paper now owned or hereafter acquired and Borrower's Books relating to the
foregoing;
(f) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter acquired;
all trade secret rights, including all rights to unpatented inventions,
know-how, operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or similar rights
available for the protection of semiconductor chips, now owned or hereafter
acquired; all claims for damages by way of any past, present and future
infringement of any of the foregoing;
(g) All Investment Property; and
(h) Any and all claims, rights and interests in any of the above and
all substitutions for, additions and accessions to and proceeds thereof.
23
EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY
- --------------------------------------------------------------------------------
FROM: ARDENT SOFTWARE, INC.
----------------------------------------------------------------
CLIENT NAME (BORROWER)
REQUESTED BY:
--------------------------------------------------------
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE: ________________________________________________
PHONE NUMBER: ________________________________________________________
FROM ACCOUNT #___________________ TO ACCOUNT #__________________
Date to be made
REQUESTED TRANSACTION TYPE REQUESTED DOLLAR AMOUNT
- -------------------------- -----------------------
PRINCIPAL INCREASE (ADVANCE) $
PRINCIPAL PAYMENT (ONLY) $
INTEREST PAYMENT (ONLY) $
PRINCIPAL AND INTEREST (PAYMENT) $
CONVERSION/CONTINUATION (SPECIFY) $
Date to be made
OTHER INSTRUCTIONS:
(Specify Prime/LIBOR (and Interest Period)/CD/Fixed Rate)
((if requesting Optional Currency Advance, specify currency)
- --------------------------------------------------------------------------------
PROCESSING IS 11:00 A.M., CALIFORNIA TIME
TO: CENTRAL CLIENT SERVICE DIVISION DATE:
FAX#: (408) 432-3249 TIME:
- --------------------------------------------------------------------------------
BANK USE ONLY
TELEPHONE REQUEST:
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
_______________________________________ Phone #___________________
Authorized Requester
_______________________________________ Phone #___________________
Received By (Bank)
----------------------------------------
Authorized Signature (Bank)
- --------------------------------------------------------------------------------
24
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: ARDENT SOFTWARE, INC.
Lender: SILICON VALLEY BANK
Commitment Amount: $12,500,000.00
- --------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE
1. Eligible Accounts book value as of __________ $
2. Eligible Foreign Accounts book value as of __________ $
3. Eligible Non-Insured Foreign Accounts book value as
of _________ $
4. Additions (please explain on reverse) $
5. TOTAL ACCOUNTS RECEIVABLE $
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
6. Amounts over 90 days due $
7. Balance of 50% over 90 day accounts $
8. Concentration Limits $
9. Ineligible Foreign Accounts $
10. Governmental Accounts $
11. Contra Accounts $
12. Promotion or Demo Accounts $
13. Intercompany/Employee Accounts $
14. Other (please explain on reverse) $
15. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $
16. Eligible Accounts (#5 minus #15) $
17. LOAN VALUE OF ACCOUNTS
a. (70% of #3) $
b. (80% of #16) $
c. (80% of #2) $
BALANCES
18. Maximum Loan Amount $
19. Total Funds Available [Lesser of #18 or #17] $12,500.000.00
20. Present balance owing on Line of Credit $
21. RESERVE POSITION (#19 minus #20) $
The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement among the undersigned, Silicon Valley Bank, Lender.
--------------------------
COMMENTS: BANK USE ONLY
---- --- ----
________________________________ Rec'd By: ________________
Auth. Signer
Date: ____________________
By: ____________________________ Verified: ________________
Authorized Signer Auth. Signer
Date: ____________________
--------------------------
25
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: ARDENT SOFTWARE, INC.
The undersigned authorized officer of ARDENT SOFTWARE, INC. hereby certifies
that in accordance with the terms and conditions of the Loan and Security
Agreement among Borrower, Lender (the "Agreement"), (i) Borrower is in complete
compliance for the period ending with all required covenants except as noted
below and (ii) all representations and warranties of Borrower stated in the
Agreement are true and correct in all material respects as of the date hereof.
Attached herewith are the required documents supporting the above certification.
The Officer further certifies that these are prepared in accordance with
Generally Accepted Accounting Principles (GAAP) and are consistently applied
from one period to the next except as explained in an accompanying letter or
footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Quarterly financial statements Quarterly within 45 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
Borrowing Base Certificate
A/R Agings Monthly within 25 days Yes No
A/R Audit Annually Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Quarterly Basis:
Minimum Quick Ratio :1.0 :1.0 Yes No
----- -----
Minimum Tangible Net Worth $ $ Yes No
------ ------
Profitability: Quarterly $ $ Yes No
------ ------
$ $ Yes No
------ ------
--------------------------
BANK USE ONLY
Comments Regarding Exceptions: See Attached.
Received by: _____________
Sincerely, AUTHORIZED
SIGNER
______________________________ Date: ____________________
SIGNATURE
Verified: ________________
AUTHORIZED
--------------------------
2.