EXHIBIT 10.1
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "AGREEMENT")
dated as of the Effective Date between SILICON VALLEY BANK, a California
corporation ("BANK"), and CONCURRENT COMPUTER CORPORATION, a Delaware
corporation ("BORROWER"), provides the terms on which Bank shall lend to
Borrower and Borrower shall repay Bank. The parties agree as follows:
W I T N E S S E T H :
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WHEREAS, Borrower and the Bank are a party to that certain Loan and
Security Agreement dated as of December 23, 2004, as amended (as so amended, the
"EXISTING LOAN AGREEMENT") pursuant to which Bank made available to Borrower a
$10,000,000 revolving line of credit and made a term loan to Borrower in the
original principal amount of Three Million Dollars ($3,000,000) (the "EXISTING
TERM LOAN"); and
WHEREAS, Borrower and Bank desire to amend and restate the Existing Loan
Agreement to restructure the credit facilities outstanding under the Existing
Loan Agreement;
NOW THEREFORE, in consideration of the forgoing, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Borrower and Bank hereby agree as follows:
1. ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed following
GAAP. Calculations and determinations must be made following GAAP. Capitalized
terms not otherwise defined in this Agreement shall have the meanings set forth
in Section 13. All other terms contained in this Agreement, unless otherwise
indicated, shall have the meaning provided by the Code to the extent such terms
are defined therein.
2. LOAN AND TERMS OF PAYMENT
2.1 PROMISE TO PAY.
Borrower hereby unconditionally promises to pay Bank the outstanding
principal amount of all Credit Extensions and accrued and unpaid interest
thereon as and when due in accordance with this Agreement.
2.2 REVOLVING ADVANCES.
(a) Formula Loans Availability. Subject to the terms and
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conditions of this Agreement and to deduction of Reserves, Bank will make
Formula Advances to Borrower up to an amount ("NET BORROWING AVAILABILITY") not
to exceed the lesser of: (1) the Availability Amount; or (2) the amounts
available under the Borrowing Base.
(b) Non-Formula Loan Availability. Subject to the terms and
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conditions of this Agreement and provided that (x) a Streamline Period is then
in effect and (y) the Net Borrowing Availability is zero, Bank will make
Non-Formula Advances to Borrower in an amount not to exceed the lesser of (1)
the Availability Amount and (2) Two Million Dollars ($2,000,000) at any one time
outstanding.
(c) Termination; Repayment. The Revolving Line terminates on the
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Revolving Line Maturity Date, when the principal amount of all Formula Advances
and all Non-Formula Advances, the unpaid interest thereon, and all other
Obligations relating to the Revolving Line shall be immediately due and payable.
2.3 LETTERS OF CREDIT SUBLIMIT.
(a) As part of the Revolving Line, Bank shall issue or have issued
Letters of Credit for Borrower's account. The face amount of outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit and any
Letter of Credit Reserve) may not exceed Two Million Dollars ($2,000,000). Such
aggregate amounts utilized hereunder shall at all times reduce the amount
otherwise available for Advances under the Revolving Line. If, on the Revolving
Line Maturity Date, there are any outstanding Letters of Credit, then on such
date Borrower shall provide to Bank cash collateral in an amount equal to 102%
of the face amount of all such Letters of Credit plus all interest, fees, and
costs due or to become due in connection therewith (as estimated by Bank in its
good faith business judgment), to secure all of the Obligations relating to said
Letters of Credit. All Letters of Credit shall be in form and substance
acceptable to Bank in its sole discretion and shall be subject to the terms and
conditions of Bank's standard Application and Letter of Credit Agreement (the
"LETTER OF CREDIT APPLICATION"). Borrower agrees to execute any further
documentation in connection with the Letters of Credit as Bank may reasonably
request. Borrower further agrees to be bound by the regulations and
interpretations of the issuer of any Letters of Credit guarantied by Bank and
opened for Borrower's account or by Bank's interpretations of any Letter of
Credit issued by Bank for Borrower's account, and Borrower understands and
agrees that Bank shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following Borrower's instructions or those
contained in the Letters of Credit or any modifications, amendments, or
supplements thereto other than in connection with the Bank's gross negligence or
wilful misconduct.
(b) The obligation of Borrower to immediately reimburse Bank for
drawings made under Letters of Credit shall be absolute, unconditional, and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, such Letters of Credit, and the Letter of Credit Application.
(c) Borrower may request that Bank issue a Letter of Credit
payable in a Foreign Currency. If a demand for payment is made under any such
Letter of Credit, Bank shall treat such demand as an Advance to Borrower of the
equivalent of the amount thereof (plus fees and charges in connection therewith
such as wire, cable, SWIFT or similar charges) in Dollars at the then-prevailing
rate of exchange in San Francisco, California, for sales of the Foreign Currency
for transfer to the country issuing such Foreign Currency.
(d) To guard against fluctuations in currency exchange rates, upon
the issuance of any Letter of Credit payable in a Foreign Currency, Bank shall
create a reserve (the "LETTER OF CREDIT RESERVE") under the Revolving Line in an
amount equal to ten percent (10%) of the face amount of such Letter of Credit.
The amount of the Letter of Credit Reserve may be adjusted by Bank from time to
time to account for fluctuations in the exchange rate. The availability of
funds under the Revolving Line shall be reduced by the amount of such Letter of
Credit Reserve for as long as such Letter of Credit remains outstanding.
2.4 FOREIGN EXCHANGE SUBLIMIT. As part of the Revolving Line, Borrower
may enter into foreign exchange contracts with Bank under which Borrower commits
to purchase from or sell to Bank a specific amount of Foreign Currency (each, a
"FX FORWARD CONTRACT") on a specified date (the "SETTLEMENT DATE"). FX Forward
Contracts shall have a Settlement Date of at least one (1) FX Business Day after
the contract date and shall be subject to a reserve of ten percent (10%) of each
outstanding FX Forward Contract in a maximum aggregate amount equal
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to One Million Dollars ($1,000,000) (the "FX RESERVE"). The aggregate amount of
FX Forward Contracts at any one time may not exceed ten (10) times the amount of
the FX Reserve.
2.5 CASH MANAGEMENT SERVICES SUBLIMIT. Borrower may use up to One
Million Dollars ($1,000,000) (the "CASH MANAGEMENT SERVICES SUBLIMIT") of the
Revolving Line for Bank's cash management services which may include merchant
services, direct deposit of payroll, business credit card, and check cashing
services identified in Bank's various cash management services agreements
(collectively, the "CASH MANAGEMENT SERVICES"). Any amounts Bank pays on behalf
of Borrower or any amounts that are not paid by Borrower for any Cash Management
Services will be treated as Advances under the Revolving Line and will accrue
interest at the interest rate applicable to Advances.
2.6 OVERADVANCES. If at any time or for any reason the total of all
outstanding Formula Advances exceeds the Net Borrowing Availability (an
"Overadvance"), Borrower shall immediately pay the amount of the excess to Bank,
without notice or demand. If at any time that Non-Formula Advances are
outstanding at the end of a Streamline Period, Borrower shall immediately pay
the amount of such Non-Formula Advances to Bank, without notice or demand.
Without limiting Borrower's obligation to repay to Bank the amount of any
Non-Formula Advance upon the end of the Streamline Period or to pay any
Overadvance, Borrower agrees to pay Bank interest on the outstanding amount of
any such Non-Formula Advance or any Overadvance, on demand, at the Default Rate.
2.7 PAYMENT OF INTEREST ON THE CREDIT EXTENSIONS.
(a) Interest Rate; Formula Advances. Subject to Section 2.7(c),
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the principal amount of the Formula Advances amounts outstanding under the
Revolving Line shall accrue interest at a per annum rate equal to: (i) 1.50
percentage points above the Prime Rate, if a Streamline Period is not in effect;
and (ii) 0.50 percentage points above the Prime Rate during any Streamline
Period.
(b) Interest Rate; Non-Formula Advances. Subject to Section
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2.7(c), the principal amount of the Non-Formula Advances amounts outstanding
under the Revolving Line shall accrue interest at a per annum rate equal to 2.50
percentage points above the Prime Rate.
(c) Default Rate. Immediately upon the occurrence and during the
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continuance of an Event of Default, Obligations shall bear interest at a rate
per annum which is three percentage points above the rate effective immediately
before the Event of Default (the "DEFAULT RATE"). Payment or acceptance of the
increased interest rate provided in this Section 2.7(c) is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of Bank.
(d) Adjustment to Interest Rate. Changes to the interest rate of
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any Credit Extension based on changes to the Prime Rate shall be effective on
the effective date of any change to the Prime Rate and to the extent of any such
change.
(e) 360-Day Year. Interest shall be computed on the basis of a
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360-day year for the actual number of days elapsed.
(f) Debit of Accounts. Bank may debit any of Borrower's deposit
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accounts, including the Designated Deposit Account, for principal and interest
payments or any other amounts Borrower owes Bank when due. These debits shall
not constitute a set-off.
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(g) Minimum Monthly Interest. In the event the aggregate amount
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of interest earned by Bank in any month with respect to Advances (exclusive of
any collateral monitoring fees, or any other fees and charges hereunder) is less
than $10,000 (the "MINIMUM MONTHLY INTEREST"); provided, however, that upon
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closing of a Subsequent Equity Offering, the Minimum Monthly Interest shall be
automatically reduced to $5,000, Borrower shall pay Bank an amount, payable on
the last day of such month, in an amount equal to the (i) Minimum Monthly
Interest minus (ii) the aggregate amount of all interest earned by Bank
(exclusive of any collateral monitoring fees or any other fees and charges
hereunder) in such month.
(h) Payment; Interest Computation; Float Charge. Interest is
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payable monthly on the last calendar day of each month. In computing interest
on the Obligations, all Payments received after 12:00 p.m. Pacific time on any
day shall be deemed received on the next Business Day. In addition, so long as
any principal or interest with respect to any Advances remains outstanding, Bank
shall be entitled to charge Borrower a "float" charge in an amount equal to two
(2) Business Days interest, at the interest rate applicable to the Advances, on
all Payments received by Bank. Said float charge is not included in interest
for purposes of computing Minimum Monthly Interest (if any) under this
Agreement. The float charge for each month shall be payable on the last day of
the month. Bank shall not, however, be required to credit Borrower's account
for the amount of any item of payment which is unsatisfactory to Bank in its
good faith business judgment, and Bank may charge Borrower's Designated Deposit
Account for the amount of any item of payment which is returned to Bank unpaid.
2.8 FEES. Borrower shall pay to Bank:
(a) Facility Fee. A fully earned, non-refundable facility fee of
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$50,000, on the Effective Date;
(b) Renewal Fee. A fully earned, non-refundable renewal fee of
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$50,000, payable on the first anniversary of the Effective Date, if the
Revolving Line Maturity Date is extended to the second anniversary of the
Effective Date as set forth in the definition of "Revolving Line Maturity Date."
(c) Letter of Credit Fee. Bank's customary fees and expenses for
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the issuance or renewal of Letters of Credit, including, without limitation, a
Letter of Credit Fee of two percent (2.0%) per annum of the face amount of each
Letter of Credit issued, upon the issuance or renewal of such Letter of Credit
by Bank;
(d) Termination Fee. In the event Borrower prepays the Advances
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and terminates the Revolving Line of Credit, a termination fee equal to the
Minimum Monthly Interest that would have been payable for each month (pro rated
for any partial month) between the date of such termination and the Revolving
Line Maturity Date in effect prior to such termination; provided, however, that
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no such termination fee shall be payable if the credit facility hereunder is
replaced with a new facility from Silicon Valley Bank.
(e) Collateral Monitoring Fee. A monthly collateral monitoring
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fee of $1,000, payable in arrears on the last day of each month (prorated for
any partial month) at the beginning and upon termination of this Agreement;
provided, however, that Bank waives the payment of such fee during any
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Streamline Period; and
(f) Bank Expenses. All Bank Expenses (including reasonable
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attorneys' fees and reasonable expenses, plus expenses, for documentation and
negotiation of this Agreement) incurred through and after the Effective Date,
when due.
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3. CONDITIONS OF LOANS
3.1 Conditions Precedent to Effectiveness. The effectiveness of this
Agreement is subject to the condition precedent that Bank shall have received,
in form and substance satisfactory to Bank, such documents, and completion of
such other matters, as Bank may reasonably deem necessary or appropriate,
including, without limitation:
(a) Borrower shall have delivered duly executed original
signatures to the Loan Documents to which it is a party;
(b) Borrower and each Guarantor shall have delivered its Operating
Documents and a good standing certificate of Borrower certified by the Secretary
of State of its state of incorporation or formation, as of a date no earlier
than thirty (30) days prior to the Effective Date;
(c) Borrower shall have delivered duly executed original
signatures to the completed Borrowing Resolutions for Borrower and each
Guarantor shall have delivered duly executed original signatures for its
completed guaranteeing resolutions;
(d) Bank shall have received certified copies, dated as of a
recent date, of financing statement searches, as Bank shall request, accompanied
by written evidence (including any UCC termination statements) that the Liens
indicated in any such financing statements either constitute Permitted Liens or
have been terminated or released;
(e) Borrower shall have delivered the Perfection Certificates
executed by Borrower and each Guarantor;
(f) Borrower shall have delivered a landlord's consent in favor of
Bank executed by the landlord of Borrower's headquarters office;
(g) Borrower shall have delivered the duly executed original
signatures to the Guaranty, together with the completed Borrowing Resolutions
for each Guarantor;
(h) Borrower shall have delivered evidence satisfactory to Bank
that the insurance policies required by Section 6.7 hereof are in full force and
effect, together with appropriate evidence showing loss payable and/or
additional insured clauses or endorsements in favor of Bank; and
(i) Borrower shall have paid the fees and Bank Expenses then due
as specified in Section 2.8(f) hereof.
3.2 Conditions Precedent to all Credit Extensions. Bank's obligations
to make each Credit Extension, including the initial Credit Extension, is
subject to the following:
(a) except as otherwise provided in Section 3.4, timely receipt of
an executed Payment/Advance Form;
(b) the representations and warranties in Section 5 shall be true
in all material respects on the date of the Payment/Advance Form and on the
Funding Date of each Credit Extension; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date, and no Default or Event of Default shall have occurred and be
continuing or result from the Credit
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Extension. Each Credit Extension is Borrower's representation and warranty on
that date that the representations and warranties in Section 5 remain true in
all material respects; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date;
and
(c) in Bank's sole discretion, there has not been a Material
Adverse Change.
3.3 COVENANT TO DELIVER. Borrower agrees to deliver to Bank each item
required to be delivered to Bank under this Agreement as a condition to any
Credit Extension. Borrower expressly agrees that the extension of a Credit
Extension prior to the receipt by Bank of any such item shall not constitute a
waiver by Bank of Borrower's obligation to deliver such item, and any such
extension in the absence of a required item shall be in Bank's sole discretion.
3.4 PROCEDURES FOR BORROWING. Subject to the prior satisfaction of all
other applicable conditions to the making of an Advance set forth in this
Agreement, to obtain an Advance, Borrower shall notify Bank (which notice shall
be irrevocable) by electronic mail, facsimile, or telephone by 12:00 p.m.
Pacific time on the Funding Date of the Advance. Together with such
notification, Borrower must promptly deliver to Bank by electronic mail or
facsimile a completed Transaction Report executed by a Responsible Officer or
his or her designee. Bank shall credit Advances to the Designated Deposit
Account. Bank may make Advances under this Agreement based on instructions from
a Responsible Officer or his or her designee or without instructions if the
Advances are necessary to meet Obligations which have become due. Bank may rely
on any telephone notice given by a person whom Bank believes is a Responsible
Officer or designee.
4. CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants Bank, to secure
the payment and performance in full of all of the Obligations, a continuing
security interest in, and pledges to Bank, the Collateral, wherever located,
whether now owned or hereafter acquired or arising, and all proceeds and
products thereof. Borrower represents, warrants, and covenants that the
security interest granted herein is and shall at all times continue to be a
first priority perfected security interest in the Collateral (subject only to
Permitted Liens that may have superior priority to Bank's Lien under this
Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall
promptly notify Bank in a writing signed by Borrower of the general details
thereof and grant to Bank in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance reasonably satisfactory to Bank.
This Agreement may be terminated prior to the Revolving Line Maturity Date
by Borrower, effective three (3) Business Days after written notice of
termination is given to Bank or if Bank's obligation to fund Credit Extensions
terminates pursuant to the terms of Section 2.2(c). Notwithstanding any such
termination, Bank's lien and security interest in the Collateral shall continue
until Borrower fully satisfies its Obligations. If such termination is at
Borrower's election or at Bank's election due to the occurrence and continuance
of an Event of Default, Borrower shall pay to Bank, in addition to the payment
of any other expenses or fees then-owing, the termination fee set forth in
Section 2.8(d) provided that no termination fee shall be charged if
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the credit facility hereunder is replaced with a new facility from Silicon
Valley Bank. Upon payment in full of the Obligations and at such time as Bank's
obligation to make Credit Extensions has terminated, Bank shall release its
liens and security interests in the Collateral and all rights therein shall
revert to Borrower.
4.2 AUTHORIZATION TO FILE FINANCING STATEMENTS. Borrower hereby
authorizes Bank to file financing statements, without notice to Borrower, with
all appropriate jurisdictions to perfect or protect Bank's interest or rights
hereunder, including a notice that any disposition of the Collateral, by either
Borrower or any other Person, shall be deemed to violate the rights of Bank
under the Code.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION. Borrower and each of its
Subsidiaries are duly existing and in good standing as Registered Organizations
only in the States in their respective jurisdictions of formation and are
qualified and licensed to do business and are in good standing in any
jurisdiction in which the conduct of their business or their ownership of
property requires that they be qualified except where the failure to do so could
not reasonably be expected to cause a Material Adverse Change. In connection
with this Agreement, Borrower has delivered to Bank completed certificates
substantially in the form attached hereto as Exhibit C signed by Borrower and
each Guarantor, respectively, entitled "Perfection Certificate". Borrower
represents and warrants to Bank that (a) Borrower's exact legal name is that
indicated on the Perfection Certificate and on the signature page hereof; (b)
Borrower is an organization of the type and is organized in the jurisdiction set
forth in the Perfection Certificate; (c) the Perfection Certificate accurately
sets forth Borrower's organizational identification number or accurately states
that Borrower has none; (d) the Perfection Certificate accurately sets forth
Borrower's place of business, or, if more than one, its chief executive office
as well as Borrower's mailing address (if different than its chief executive
office); (e) Borrower (and each of its predecessors) has not, in the past five
(5) years, changed its jurisdiction of formation, organizational structure or
type, or any organizational number assigned by its jurisdiction; and (f) all
other information set forth on the Perfection Certificate pertaining to Borrower
and each of its Subsidiaries is accurate and complete in all material respects.
If Borrower is not now a Registered Organization but later becomes one, Borrower
shall promptly notify Bank of such occurrence and provide Bank with Borrower's
organizational identification number.
The execution, delivery and performance of the Loan Documents have
been duly authorized, and do not conflict with Borrower's organizational
documents, nor constitute an event of default under any material agreement by
which Borrower is bound. Borrower is not in default under any agreement to
which it is a party or by which it is bound in which the default could
reasonably be expected to cause a Material Adverse Change.
5.2 COLLATERAL. Borrower has good title to the Collateral, free of
Liens except Permitted Liens. Borrower has no deposit account other than the
deposit accounts with Bank and deposit accounts described in the Perfection
Certificate delivered to Bank in connection herewith.
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The Collateral is not in the possession of any third party bailee
(such as a warehouse). Except as hereafter disclosed to Bank in writing by
Borrower, none of the components of the Collateral shall be maintained at
locations other than as provided in the Perfection Certificate. In the event
that Borrower, after the date hereof, intends to store or otherwise deliver any
portion of the Collateral to a bailee, then Borrower will first receive the
written consent of Bank and such bailee must acknowledge in writing that the
bailee is holding such Collateral for the benefit of Bank.
All Inventory is in all material respects of good and marketable
quality, free from material defects.
Borrower is the sole owner of its Intellectual Property, except for
non-exclusive licenses granted to its customers in the ordinary course of
business. Each Patent is valid and enforceable and no part of the Intellectual
Property has been judged invalid or unenforceable, in whole or in part, and to
the best of Borrower's knowledge, no claim has been made that any part of the
Intellectual Property violates the rights of any third party.
Except as noted on the Perfection Certificate, Borrower is not a party
to, nor is bound by, any material license or other agreement with respect to
which Borrower is the licensee that prohibits or otherwise restricts Borrower
from granting a security interest in Borrower's interest in such license or
agreement or any other property. Borrower shall provide written notice to Bank
within ten (10) days of entering or becoming bound by any such license or
agreement which is reasonably likely to have a material impact on Borrower's
business or financial condition (other than over-the-counter software that is
commercially available to the public). Borrower shall take such steps as Bank
requests to obtain the consent of, or waiver by, any person whose consent or
waiver is necessary for all such licenses or contract rights to be deemed
"Collateral" and for Bank to have a security interest in it that might otherwise
be restricted or prohibited by law or by the terms of any such license or
agreement (such consent or authorization may include a licensor's agreement to a
contingent assignment of the license to Bank if Bank determines that is
necessary in its good faith judgment), whether now existing or entered into in
the future.
5.3 ACCOUNTS RECEIVABLE.
(a) For each Account with respect to which Advances are requested,
on the date each Advance is requested and made, such Account shall be an
Eligible Account.
(b) All statements made and all unpaid balances appearing in all
invoices, instruments and other documents evidencing the Accounts are and shall
be true and correct and all such invoices, instruments and other documents, and
all of Borrower's Books are genuine and in all respects what they purport to be.
All sales and other transactions underlying or giving rise to each Account shall
comply in all material respects with all applicable laws and governmental rules
and regulations. Borrower has no knowledge of any actual or imminent Insolvency
Proceeding of any Account Debtor whose accounts are an Eligible Account in any
Transaction Report. To the best of Borrower's knowledge, all signatures and
endorsements on all documents, instruments, and agreements relating to all
Accounts are genuine, and all such documents, instruments and agreements are
legally enforceable in accordance with their terms.
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5.4 LITIGATION. There are no actions or proceedings pending or, to the
knowledge of the Responsible Officers, threatened in writing by or against
Borrower or any of its Subsidiaries which could reasonably be expected to cause,
during the term of this Agreement, a Material Adverse Change.
5.5 NO MATERIAL DEVIATION IN FINANCIAL STATEMENTS. All consolidated
financial statements for Borrower and any of its Subsidiaries delivered to Bank
fairly present in all material respects Borrower's consolidated financial
condition and Borrower's consolidated results of operations. There has not been
any material deterioration in Borrower's consolidated financial condition since
the date of the most recent financial statements submitted to Bank.
5.6 SOLVENCY. The fair salable value of Borrower's assets (including
goodwill minus disposition costs) exceeds the fair value of its liabilities;
Borrower is not left with unreasonably small capital after the transactions in
this Agreement; and Borrower is able to pay its debts (including trade debts) as
they mature.
5.7 REGULATORY COMPLIANCE. Borrower is not an "investment company" or
a company "controlled" by an "investment company" under the Investment Company
Act. Borrower is not engaged as one of its important activities in extending
credit for margin stock (under Regulations T and U of the Federal Reserve Board
of Governors). Borrower has complied in all material respects with the Federal
Fair Labor Standards Act. Borrower has not violated any laws, ordinances or
rules, the violation of which could reasonably be expected to cause a Material
Adverse Change. None of Borrower's or any of its Subsidiaries' properties or
assets has been used by Borrower or any Subsidiary or, to the best of Borrower's
knowledge, by previous Persons, in disposing, producing, storing, treating, or
transporting any hazardous substance other than legally. Borrower and each of
its Subsidiaries have obtained all consents, approvals and authorizations of,
made all declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently conducted
except where the failure to so obtain could not reasonable be expected to cause
a Material Adverse Change.
5.8 SUBSIDIARIES; INVESTMENTS. Borrower does not own any stock,
partnership interest or other equity securities except for Permitted
Investments.
5.9 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has
timely filed all required federal tax returns and reports and all material
foreign, state and local tax returns and reports, and Borrower has timely paid
all foreign, federal, state and local taxes, assessments, deposits and
contributions owed by Borrower. Borrower may defer payment of any contested
taxes, provided that Borrower (a) in good faith contests its obligation to pay
the taxes by appropriate proceedings promptly and diligently instituted and
conducted, (b) notifies Bank in writing of the commencement of, and any material
development in, the proceedings, and (c) posts bonds or takes any other steps
required to prevent the governmental authority levying such contested taxes from
obtaining a Lien upon any of the Collateral that is other than a "Permitted
Lien". Borrower is unaware of any claims or adjustments proposed for any of
Borrower's prior tax years which could result in additional taxes becoming due
and payable by Borrower. Borrower has paid all amounts necessary to fund all
present pension, profit sharing and deferred compensation plans in accordance
with their terms, and Borrower has not withdrawn from participation in, and has
not permitted partial or complete termination of, or permitted the
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occurrence of any other event with respect to, any such plan which could
reasonably be expected to result in any liability of Borrower, including any
liability to the Pension Benefit Guaranty Corporation or its successors or any
other governmental agency.
5.10 USE OF PROCEEDS. Borrower shall use the proceeds of the Credit
Extensions solely as working capital and to fund its general business
requirements and not for personal, family, household or agricultural purposes.
5.11 FULL DISCLOSURE. No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank, as
of the date such representations, warranties, or other statements were made,
taken together with all such written certificates and written statements given
to Bank, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not viewed as facts and that actual results during the period or
periods covered by such projections and forecasts may differ from the projected
or forecasted results).
6. AFFIRMATIVE COVENANTS
Borrower shall do all of the following:
6.1 GOVERNMENT COMPLIANCE. Maintain its and all its Subsidiaries'
legal existence and good standing in their respective jurisdictions of formation
and maintain qualification in each jurisdiction in which the failure to so
qualify would reasonably be expected to cause a Material Adverse Change.
Borrower shall comply, and have each Subsidiary comply, with all laws,
ordinances and regulations to which it is subject, noncompliance with which
could cause a Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
Provide Bank with the following:
(a) a Transaction Report, delivered monthly during any Streamline
Period and otherwise delivered weekly and upon delivery of each request for an
Advance;
(b) within thirty (30) days after the end of each month (other
than the first month of Borrower's fiscal year, to the extent not prepared for
such month), (A) monthly accounts receivable agings, aged by invoice date, (B)
monthly accounts payable agings, aged by invoice date, and outstanding or held
check registers, if any, and (C) monthly reconciliations of accounts receivable
agings (aged by invoice date), transaction reports, and general ledger;
(c) as soon as available, and in any event within thirty (30) days
after the end of each month (other than the first month of Borrower's fiscal
year, to the extent not prepared for such month), monthly unaudited consolidated
and consolidating financial statements;
(d) within thirty (30) days after the end of each fiscal quarter,
a schedule of Deferred Revenue
(e) within thirty (30) days after the end of each month (other
than the first month of Borrower's fiscal year, to the extent Borrower does not
prepare financial statements for
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such month), a monthly Compliance Certificate signed by a Responsible Officer,
certifying that as of the end of such month, Borrower was in full compliance
with all of the terms and conditions of this Agreement, and setting forth
calculations showing compliance with the financial covenants set forth in this
Agreement and such other information as Bank shall reasonably request,
including, without limitation, a statement that at the end of such month there
were no held checks;
(f) within sixty (60) days after the first day of each fiscal year
of Borrower, (A) annual operating budgets (including income statements, balance
sheets and cash flow statements, by month) for such fiscal year of Borrower, and
(B) annual financial projections for such fiscal year (on a quarterly basis) as
approved by Borrower's board of directors, together with any related business
forecasts used in the preparation of such annual financial projections;
(g) as soon as available, and in any event within 120 days
following the end of Borrower's fiscal year, annual financial statements
certified by, and with an unqualified opinion of, independent certified public
accountants acceptable to Bank;
(h) within five (5) days after filing, all reports on Form 10-K,
10-Q and 8-K filed with the Securities and Exchange Commission or a link thereto
on Borrower's or another website on the Internet; and
(i) prompt written notice of (i) any material change in the
composition of the Intellectual Property, (ii) the registration of any
Copyright, including any subsequent ownership right of Borrower in or to any
Copyright, Patent or Trademark not shown in the IP Security Agreement, or (iii)
Borrower's knowledge of an event that materially adversely affects the value of
the Intellectual Property.
6.3 ACCOUNTS RECEIVABLE.
(a) Schedules and Documents Relating to Accounts. Deliver to Bank
--------------------------------------------
transaction reports and schedules of collections, as provided in Section 6.2, on
Bank's standard forms; provided, however, that Borrower's failure to execute and
deliver the same shall not affect or limit Bank's Lien and other rights in all
of Borrower's Accounts, nor shall Bank's failure to advance or lend against a
specific Account affect or limit Bank's Lien and other rights therein. If
requested by Bank, Borrower shall furnish Bank with copies (or, at Bank's
request, originals) of all contracts, orders, invoices, and other similar
documents, and all shipping instructions, delivery receipts, bills of lading,
and other evidence of delivery, for any goods the sale or disposition of which
gave rise to such Accounts. In addition, Borrower shall deliver to Bank, on its
request, the originals of all instruments, chattel paper, security agreements,
guarantees and other documents and property evidencing or securing any Accounts,
in the same form as received, with all necessary indorsements, and copies of all
credit memos.
(b) Disputes. Promptly notify Bank of all disputes or claims
--------
relating to Accounts involving more than $100,000 or which would result in an
Overadvance. Borrower may forgive (completely or partially), compromise, or
settle any Account for less than payment in full, or agree to do any of the
foregoing so long as (i) Borrower does so in good faith, in a commercially
reasonable manner, in the ordinary course of business, in arm's-length
transactions, and reports the same to Bank in the regular reports provided to
Bank; (ii) no Default or Event of Default has occurred and is continuing; and
(iii) after taking into account all such discounts, settlements and forgiveness,
the total outstanding Formula Advances will not exceed the Borrowing Base.
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(c) Collection of Accounts. Borrower shall have the right to
------------------------
collect all Accounts, unless and until a Default or an Event of Default has
occurred and is continuing. Whether or not an Event of Default has occurred and
is continuing, Borrower shall hold all payments on, and proceeds of, Accounts in
trust for Bank, and Borrower shall immediately deliver all such payments and
proceeds to Bank in their original form, duly endorsed, to be applied to the
Obligations pursuant to the terms of Section 9.4 hereof. Bank may, in its good
faith business judgment, require that all proceeds of Accounts be deposited by
Borrower into a lockbox account, or such other "blocked account" as Bank may
specify, pursuant to a blocked account agreement in such form as Bank may
specify in its good faith business judgment.
(d) Returns. Provided no Event of Default has occurred and is
-------
continuing, if any Account Debtor returns any Inventory to Borrower, Borrower
shall promptly (i) determine the reason for such return, (ii) issue a credit
memorandum to the Account Debtor in the appropriate amount, and (iii) provide a
copy of such credit memorandum to Bank, upon request from Bank. In the event
any attempted return occurs after the occurrence and during the continuance of
any Event of Default, Borrower shall hold the returned Inventory in trust for
Bank, and immediately notify Bank of the return of the Inventory.
(e) Verification. Bank may, from time to time, verify directly
------------
with the respective Account Debtors the validity, amount and other matters
relating to the Accounts, either in the name of Borrower or Bank or such other
name as Bank may choose.
(f) No Liability. Bank shall not be responsible or liable for any
------------
shortage or discrepancy in, damage to, or loss or destruction of, any goods, the
sale or other disposition of which gives rise to an Account, or for any error,
act, omission, or delay of any kind occurring in the settlement, failure to
settle, collection or failure to collect any Account, or for settling any
Account in good faith for less than the full amount thereof, nor shall Bank be
deemed to be responsible for any of Borrower's obligations under any contract or
agreement giving rise to an Account. Nothing herein shall, however, relieve
Bank from liability for its own gross negligence or willful misconduct.
6.4 REMITTANCE OF PROCEEDS. Deliver, in kind, all proceeds arising
from the disposition of any Collateral to Bank in the original form in which
received by Borrower not later than the following Business Day after receipt by
Borrower, to be applied to the Obligations pursuant to the terms of Section 9.4
hereof; provided that, if no Default or Event of Default has occurred and is
continuing, Borrower shall not be obligated to remit to Bank the proceeds of the
sale of worn out or obsolete Equipment disposed of by Borrower in good faith in
an arm's length transaction for an aggregate purchase price of $250,000 or less
(for all such transactions in any fiscal year). Borrower agrees that it will
not commingle proceeds of Collateral with any of Borrower's other funds or
property, but will hold such proceeds separate and apart from such other funds
and property and in an express trust for Bank. Nothing in this Section limits
the restrictions on disposition of Collateral set forth elsewhere in this
Agreement.
6.5 TAXES; PENSIONS. Timely file all required tax returns and reports
and timely pay all foreign, federal, state and local taxes, assessments,
deposits and contributions owed by Borrower except for deferred payment of any
taxes contested pursuant to the terms of Section 5.9 hereof, and pay all amounts
necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms.
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6.6 ACCESS TO COLLATERAL; BOOKS AND RECORDS. During normal business
hours, on five (5) Business Day's notice (provided no notice is required if an
Event of Default has occurred and is continuing), Bank, or its agents, shall
have the right to inspect the Collateral and the right to audit and copy
Borrower's Books. The foregoing inspections and audits shall be at Borrower's
expense, and the charge therefor shall be $750 per person per day (or such
higher amount as shall represent Bank's then-current standard charge for the
same), plus reasonable out-of-pocket expenses. In the event Borrower and Bank
schedule an audit more than ten (10) days in advance, and Borrower cancels or
seeks to reschedules the audit with less than ten (10) days written notice to
Bank, then (without limiting any of Bank's rights or remedies), Borrower shall
pay Bank a fee of $1,000 plus any out-of-pocket expenses incurred by Bank to
compensate Bank for the anticipated costs and expenses of the cancellation or
rescheduling.
6.7 INSURANCE. Keep its business and the Collateral insured for risks
and in amounts standard for companies in Borrower's industry and location and as
Bank may reasonably request. Insurance policies shall be in a form, with
companies, and in amounts that are satisfactory to Bank. All property policies
shall have a lender's loss payable endorsement showing Bank as the sole lender
loss payee and waive subrogation against Bank, and all liability policies shall
show, or have endorsements showing, Bank as an additional insured. All property
policies (or the loss payable) shall provide that the insurer must give Bank at
least thirty (30) days notice before canceling, amending, or declining to renew
its policy and all liability policies (or additional insured endorsements) shall
provide that the insurer will endeavor to give Bank at least thirty (30) days
notice before canceling, amending, or declining to renew its policy. At Bank's
request, Borrower shall deliver certified copies of policies and evidence of all
premium payments. Proceeds of more than $50,000 payable under any policy shall,
at Bank's option, be payable to Bank on account of the Obligations.
Notwithstanding the foregoing, (a) so long as no Event of Default has occurred
and is continuing, Borrower shall have the option of applying the proceeds of
any casualty policy up to $50,000, in the aggregate, toward the replacement or
repair of destroyed or damaged property; provided that any such replaced or
repaired property (i) shall be of equal or like value as the replaced or
repaired Collateral and (ii) shall be deemed Collateral in which Bank has been
granted a first priority security interest, and (b) after the occurrence and
during the continuance of an Event of Default, all proceeds payable under such
casualty policy shall, at the option of Bank, be payable to Bank on account of
the Obligations. If Borrower fails to obtain insurance as required under this
Section 6.7 or to pay any amount or furnish any required proof of payment to
third persons and Bank, Bank may make all or part of such payment or obtain such
insurance policies required in this Section 6.7, and take any action under the
policies Bank deems reasonably prudent.
6.8 OPERATING ACCOUNTS. Maintain its and its Domestic Subsidiaries'
primary depository and operating accounts and securities accounts with Bank and
Bank's affiliates which accounts shall include all accounts in the United States
and shall at all times represent not less than 35% of the dollar value of
Borrower's and all Subsidiaries' accounts at all financial institutions.
Additionally, Borrower shall at all times maintain not less than $1,000,000 in
its primary demand deposit operating account with the Bank.
6.9 FINANCIAL COVENANTS.
(a) Adjusted Quick Ratio. Borrower shall maintain at all times,
----------------------
to be tested as of the last day of each month, on a consolidated basis with
respect to Borrower and its
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Subsidiaries, a ratio of (i) Quick Assets to (ii) Current Liabilities minus the
current portion of Deferred Revenue of at least 1.25 to 1.00.
(b) Tangible Net Worth. Borrower shall maintain at all times, to
-------------------
be tested as of the last day of each quarter, on a consolidated basis with
respect to Borrower and its Subsidiaries, a Tangible Net Worth of at least
$10,000,000, during the fiscal quarter ending December 31, 2006, and of at least
$8,000,000 at all time thereafter, increasing by 50% of quarterly Net Income and
50% of issuances of equity, net of issuance costs, after the Effective Date and
the principal amount of Subordinated Debt.
6.10 PROTECTION AND REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.
Borrower shall: (a) protect, defend and maintain the validity and
enforceability of its intellectual property; (b) promptly advise Bank in writing
of material infringements of its intellectual property; and (c) not allow any
intellectual property material to Borrower's business to be abandoned, forfeited
or dedicated to the public without Bank's written consent. If Borrower decides
to register any copyrights or mask works in the United States Copyright Office,
Borrower shall: (x) provide Bank with at least fifteen (15) days prior written
notice of its intent to register such copyrights or mask works together with a
copy of the application it intends to file with the United States Copyright
Office (excluding exhibits thereto); (y) execute an intellectual property
security agreement or such other documents as Bank may reasonably request to
maintain the perfection and priority of Bank's security interest in the
copyrights or mask works intended to be registered with the United States
Copyright Office; and (z) record such intellectual property security agreement
with the United States Copyright Office contemporaneously with filing the
copyright or mask work application(s) with the United States Copyright Office.
Borrower shall promptly provide to Bank a copy of the application(s) filed with
the United States Copyright Office together with evidence of the recording of
the intellectual property security agreement necessary for Bank to maintain the
perfection and priority of its security interest in such copyrights or mask
works. Borrower shall provide written notice to Bank of any application filed
by Borrower in the United States Patent and Trademark Office for a patent or to
register a trademark or service mark within 30 days after any such filing.
6.11 LITIGATION COOPERATION. From the date hereof and continuing
through the termination of this Agreement, make available to Bank, without
expense to Bank, Borrower and its officers, employees and agents and Borrower's
books and records, to the extent that Bank may deem them reasonably necessary to
prosecute or defend any third-party suit or proceeding instituted by or against
Bank with respect to any Collateral or relating to Borrower.
6.12 FURTHER ASSURANCES. Borrower shall execute any further
instruments and take further action as Bank reasonably requests to perfect or
continue Bank's Lien in the Collateral or to effect the purposes of this
Agreement.
7. NEGATIVE COVENANTS
Borrower shall not do any of the following without Bank's prior written consent:
7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise dispose
of (collectively, "TRANSFER"), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, except for Transfers (a) of
Inventory in the ordinary course of business; (b) of worn-out or obsolete
Equipment; (c) of Equipment or other fixed assets having a value not in excess
of
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$500,000 in the aggregate during any fiscal year; and (d) of Equipment and other
fixed assets in connection with Permitted Liens and Permitted Investments; and
(e) of non-exclusive licenses for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business. The issuance by Borrower of
shares of its common stock shall not be subject to this Section 7.1.
7.2 CHANGES IN BUSINESS, MANAGEMENT OR BUSINESS LOCATIONS. (a) Engage
in or permit any of its Subsidiaries to engage in any business other than the
businesses currently engaged in by Borrower and such Subsidiary, as applicable,
or reasonably related or incidental thereto and reasonable extensions thereof;
(b) liquidate or dissolve; or (c) (i) if the Chief Executive Officer or Chief
Financial Officer ceases to hold such office with Borrower and replacements
satisfactory to Bank are not made within 90 days after his departure from
Borrower. Borrower shall not, without at least thirty (30) days prior written
notice to Bank: (1) add any new offices or business locations, including
warehouses (unless such new offices or business locations contain less than Ten
Thousand Dollars ($10,000) in Borrower's assets or property), (2) change its
jurisdiction of organization, (3) change its organizational structure or type,
(4) change its legal name, or (5) change any organizational number (if any)
assigned by its jurisdiction of organization.
7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any of
its Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.
7.4 INDEBTEDNESS. Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.
7.5 ENCUMBRANCE. Create, incur, or allow any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, permit any Collateral not to be subject to the first priority security
interest granted herein.
7.6 MAINTENANCE OF COLLATERAL ACCOUNTS. Maintain any Collateral
Account except pursuant to the terms of Section 6.8 hereof.
7.7 INVESTMENTS; DISTRIBUTIONS. (a) Directly or indirectly make any
Investment other than Permitted Investments and Investments in Subsidiaries, net
of returns on Investments received from Subsidiaries, not to exceed $1,000,000
during any fiscal year, or permit any of its Subsidiaries to do so; or (b) pay
any dividends or make any distribution or payment or redeem, retire or purchase
any capital stock provided that (i) Borrower may convert any of its convertible
securities into other securities pursuant to the terms of such convertible
securities or otherwise in exchange thereof, (ii) Borrower may pay dividends
solely in common stock; and (iii) Borrower may repurchase the stock of former
employees or consultants pursuant to stock repurchase agreements so long as an
Event of Default does not exist at the time of such repurchase and would not
exist after giving effect to such repurchase, provided such repurchase does not
exceed in the aggregate of $500,000 per fiscal year.
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
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ordinary course of Borrower's business, upon fair and reasonable terms that are
no less favorable to Borrower than would be obtained in an arm's length
transaction with a non-affiliated Person.
7.9 SUBORDINATED DEBT. (a) Make or permit any payment on any
Subordinated Debt, except under the terms of the subordination, intercreditor,
or other similar agreement to which such Subordinated Debt is subject, or (b)
amend any provision in any document relating to the Subordinated Debt which
would increase the amount thereof or adversely affect the subordination thereof
to Obligations owed to Bank.
7.10 COMPLIANCE. Become an "investment company" or a company
controlled by an "investment company", under the Investment Company Act of 1940
or undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur unless
such Reportable Event or Prohibited Transaction could not reasonably be expect
to cause a Material Adverse Change; fail to comply with the Federal Fair Labor
Standards Act or violate any other law or regulation, if the violation could
reasonably be expected to cause a Material Adverse Change, or permit any of its
Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from
participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any present pension, profit
sharing and deferred compensation plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental agency.
8. EVENTS OF DEFAULT
Any one of the following shall constitute an event of default (an "EVENT OF
DEFAULT") under this Agreement:
8.1 PAYMENT DEFAULT. Borrower or any Subsidiary fails to (a) make any
payment of principal or interest on any Credit Extension on its due date, or (b)
pay any other Obligations within three (3) Business Days after such Obligations
are due and payable. During the cure period, the failure to cure the payment
default is not an Event of Default (but no Credit Extension will be made during
the cure period);
8.2 COVENANT DEFAULT.
(a) Borrower or any Subsidiary fails or neglects to perform any
obligation in Sections 6.2, 6.7, 6.8, or 6.9 or violates any covenant in Section
7; or
(b) Borrower or any Subsidiary fails or neglects to perform, keep,
or observe any other term, provision, condition, covenant or agreement contained
in this Agreement, any Loan Documents, and as to any default (other than those
specified in Section 8.2(a) above) under such other term, provision, condition,
covenant or agreement that can be cured, has failed to cure the default within
ten (10) days after the occurrence thereof; provided, however, that if the
default cannot by its nature be cured within the ten (10) day period or cannot
after diligent attempts by Borrower or such Subsidiary be cured within such ten
(10) day period, and such default is likely to be cured within a reasonable
time, then Borrower shall have an additional
-16-
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 cure the
default shall not be deemed an Event of Default (but no Credit Extensions shall
be made during such cure period). Grace periods provided under this section
shall not apply, among other things, to financial covenants or any other
covenants set forth in subsection (a) above;
8.3 MATERIAL ADVERSE CHANGE. A Material Adverse Change occurs;
8.4 ATTACHMENT. (a) Any material portion of Borrower's or any
Subsidiary's assets is attached, seized, levied on, or comes into possession of
a trustee or receiver and the attachment, seizure or levy is not removed in ten
(10) days; (b) the service of process upon Borrower or any Subsidiary seeking to
attach, by trustee or similar process, any funds of Borrower or such Subsidiary
on deposit with Bank, or any entity under control of Bank (including a
subsidiary); (c) Borrower or any Subsidiary is enjoined, restrained, or
prevented by court order from conducting a material part of its business; or (d)
a notice of lien, levy, or assessment is filed against any of Borrower's or any
Subsidiary's assets by any government agency and not paid within ten (10) days
after Borrower or such Subsidiary receives notice. These are not Events of
Default if stayed or if a bond is posted pending contest by Borrower (but no
Credit Extensions shall be made during the cure period);
8.5 INSOLVENCY. Borrower or any Subsidiary is unable to pay its debts
(including trade debts) as they become due or otherwise becomes insolvent; (b)
Borrower or any Subsidiary begins an Insolvency Proceeding; or (c) an Insolvency
Proceeding is begun against Borrower or any Subsidiary and not dismissed or
stayed within thirty (30) days (but no Credit Extensions shall be made while of
any of the conditions described in clause (a) exist and/or until any Insolvency
Proceeding is dismissed);
8.6 OTHER AGREEMENTS. There is a default in any agreement to which
Borrower or any Subsidiary 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 Two Hundred Fifty
Thousand Dollars ($250,000) or that could cause a Material Adverse Change;
8.7 JUDGMENTS. 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) (not covered by independent third-party insurance) shall be
rendered against Borrower or any Subsidiary and shall remain unsatisfied and
unstayed for a period of thirty (30) days after the entry thereof (provided that
no Credit Extensions will be made prior to the satisfaction or stay of such
judgment);
8.8 MISREPRESENTATIONS. Borrower, any Subsidiary or any Person acting
for Borrower or any Subsidiary makes any representation, warranty, or other
statement now or later in this Agreement, any Loan Document or in any writing
delivered to Bank or to induce Bank to enter this Agreement or any Loan
Document, and such representation, warranty, or other statement is incorrect in
any material respect when made;
8.9 CHANGE OF CONTROL. There occurs a Change of Control.
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8.10 SUBORDINATED DEBT. A default or breach occurs under any agreement
between Borrower and any creditor of Borrower that signed a subordination,
intercreditor, or other similar agreement with Bank, or any creditor that has
signed such an agreement with Bank breaches any terms of such agreement; or
8.11 GUARANTY. (a) Any guaranty of any Obligations terminates or
ceases for any reason to be in full force and effect; (b) any Guarantor does not
perform any obligation or covenant under any guaranty of the Obligations; (c)
any circumstance described in Sections 8.3, 8.4, 8.5, 8.7 or 8.8 occurs with
respect to any Guarantor, or (d) the liquidation, winding up, or termination of
existence of any Guarantor; or (e) a material impairment in the perfection or
priority of Bank's Lien in the collateral provided by Guarantor or in the value
of such collateral.
9. BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES. While an Event of Default occurs and
continues Bank may, without notice or demand, do any or all of the following:
(a) declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);
(b) stop advancing money or extending credit for Borrower's
benefit under this Agreement or under any other agreement between Borrower and
Bank;
(c) demand that Borrower (i) deposits cash with Bank in an amount
equal to the aggregate amount of any Letters of Credit remaining undrawn, as
collateral security for the repayment of any future drawings under such Letters
of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii)
pay in advance all Letter of Credit fees scheduled to be paid or payable over
the remaining term of any Letters of Credit;
(d) terminate any FX Contracts;
(e) settle or adjust disputes and claims directly with Account
Debtors for amounts on terms and in any order that Bank considers advisable,
notify any Person owing Borrower money of Bank's security interest in such
funds, and verify the amount of such account;
(f) make any payments and do any acts it considers necessary or
reasonable to protect the Collateral and/or its security interest in the
Collateral. Borrower shall assemble the Collateral if Bank requests and make it
available as Bank designates. Bank may enter premises where the Collateral is
located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior
to its security interest and pay all expenses incurred. Borrower grants Bank a
license to enter and occupy any of its premises, without charge, to exercise any
of Bank's rights or remedies;
(g) apply to the Obligations any (i) balances and deposits of
Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or
the account of Borrower;
(h) ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby
granted a non-exclusive, royalty-free license or other right to use, without
charge, Borrower's labels, patents, copyrights, mask works, rights of use of any
name, trade secrets, trade names, trademarks, service marks, and advertising
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matter, or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section, Borrower's
rights under all licenses and all franchise agreements inure to Bank's benefit;
(i) place a "hold" on any account maintained with Bank and/or
deliver a notice of exclusive control, any entitlement order, or other
directions or instructions pursuant to any Control Agreement or similar
agreements providing control of any Collateral;
(j) demand and receive possession of Borrower's Books; and
(k) exercise all rights and remedies available to Bank under the
Loan Documents or at law or equity, including all remedies provided under the
Code (including disposal of the Collateral pursuant to the terms thereof).
9.2 POWER OF ATTORNEY. Borrower hereby irrevocably appoints Bank as its
lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower's name on any
checks or other forms of payment or security; (b) sign Borrower's name on any
invoice or bill of lading for any Account or drafts against Account Debtors; (c)
settle and adjust disputes and claims about the Accounts directly with Account
Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle,
and adjust all claims under Borrower's insurance policies; (e) pay, contest or
settle any Lien, charge, encumbrance, security interest, and adverse claim in or
to the Collateral, or any judgment based thereon, or otherwise take any action
to terminate or discharge the same; and (f) transfer the Collateral into the
name of Bank or a third party as the Code permits. Borrower hereby appoints
Bank as its lawful attorney-in-fact to sign Borrower's name on any documents
necessary to perfect or continue the perfection of any security interest
regardless of whether an Event of Default has occurred until all Obligations
have been satisfied in full and Bank is under no further obligation to make
Credit Extensions hereunder. Bank's foregoing appointment as Borrower's
attorney in fact, and all of Bank's rights and powers, coupled with an interest,
are irrevocable until all Obligations have been fully repaid and performed and
Bank's obligation to provide Credit Extensions terminates.
9.3 PROTECTIVE PAYMENTS. If Borrower fails to obtain the insurance
called for by Section 6.7 or fails to pay any premium thereon or fails to pay
any other amount which Borrower is obligated to pay under this Agreement or any
other Loan Document, Bank may obtain such insurance or make such payment, and
all amounts so paid by Bank are Bank Expenses and immediately due and payable,
bearing interest at the then highest applicable rate, and secured by the
Collateral. Bank will make reasonable efforts to provide Borrower with notice
of Bank obtaining such insurance at the time it is obtained or within a
reasonable time thereafter. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.
9.4 APPLICATION OF PAYMENTS AND PROCEEDS. Unless an Event of Default
has occurred and is continuing, Bank shall apply any funds in its possession,
whether from Borrower account balances, payments, or proceeds realized as the
result of any collection of Accounts or other disposition of the Collateral,
first, to the principal of the Obligations; second, to Bank Expenses, including
without limitation, the reasonable costs, expenses, liabilities, obligations and
attorneys' fees incurred by Bank in the exercise of its rights under this
Agreement; third, to the interest due upon any of the Obligations; and finally,
to any applicable fees and other charges, in
-19-
such order as Bank shall determine in its sole discretion. Any surplus shall be
paid to Borrower by credit to the Designated Deposit Account or other Persons
legally entitled thereto; Borrower shall remain liable to Bank for any
deficiency. If an Event of Default has occurred and is continuing, Bank may
apply any funds in its possession, whether from Borrower account balances,
payments, proceeds realized as the result of any collection of Accounts or other
disposition of the Collateral, or otherwise, to the Obligations in such order as
Bank shall determine in its sole discretion. Any surplus shall be paid to
Borrower by credit to the Designated Deposit Account or to other Persons legally
entitled thereto; Borrower shall remain liable to Bank for any deficiency. If
Bank, in its good faith business judgment, directly or indirectly enters into a
deferred payment or other credit transaction with any purchaser at any sale of
Collateral, Bank shall have the option, exercisable at any time, of either
reducing the Obligations by the principal amount of the purchase price or
deferring the reduction of the Obligations until the actual receipt by Bank of
cash therefor.
9.5 BANK'S LIABILITY FOR COLLATERAL. So long as Bank complies with
reasonable banking practices regarding the safekeeping of the Collateral in the
possession or under the control of Bank, Bank shall not be liable or responsible
for: (a) the safekeeping of the Collateral; (b) any loss or damage to the
Collateral; (c) any diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other Person. Borrower bears
all risk of loss, damage or destruction of the Collateral.
9.6 NO WAIVER; REMEDIES CUMULATIVE. Bank's failure, at any time or
times, to require strict performance by Borrower of any provision of this
Agreement or any other Loan Document shall not waive, affect, or diminish any
right of Bank thereafter to demand strict performance and compliance herewith or
therewith. No waiver hereunder shall be effective unless signed by Bank and
then is only effective for the specific instance and purpose for which it is
given. Bank's rights and remedies under this Agreement and the other Loan
Documents are cumulative. Bank has all rights and remedies provided under the
Code, by law, or in equity. Bank's exercise of one right or remedy is not an
election, and Bank's waiver of any Event of Default is not a continuing waiver.
Bank's delay in exercising any remedy is not a waiver, election, or
acquiescence.
9.7 DEMAND WAIVER. Borrower waives demand, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees held by Bank on which
Borrower is liable.
10. NOTICES
All notices, consents, requests, approvals, demands, or other communication
(collectively, "COMMUNICATION"), other than Advance requests made pursuant to
Section 3.4, by any party to this Agreement or any other Loan Document must be
in writing and be delivered or sent by facsimile at the addresses or facsimile
numbers listed below. Bank or Borrower may change its notice address by giving
the other party written notice thereof. Each such Communication shall be deemed
to have been validly served, given, or delivered: (a) upon the earlier of actual
receipt and three (3) Business Days after deposit in the U.S. mail, registered
or certified mail, return receipt requested, with proper postage prepaid; (b)
upon transmission, when sent by facsimile transmission (with such facsimile
promptly confirmed by delivery of a copy by personal delivery
-20-
or United States mail as otherwise provided in this Section 10); (c) one (1)
Business Day after deposit with a reputable overnight courier with all charges
prepaid; or (d) when delivered, if hand-delivered by messenger, all of which
shall be addressed to the party to be notified and sent to the address or
facsimile number indicated below. Advance requests made pursuant to Section 3.4
must be in writing and may be in the form of electronic mail, delivered to Bank
by Borrower at the e-mail address of Bank provided below and shall be deemed to
have been validly served, given, or delivered when sent (with such electronic
mail promptly confirmed by delivery of a copy by personal delivery or United
States mail as otherwise provided in this Section 10). Bank or Borrower may
change its address, facsimile number, or electronic mail address by giving the
other party written notice thereof in accordance with the terms of this Section
10.
If to Borrower: Concurrent Computer Corporation
4375 River Green Parkway
Duluth, Georgia 30096
Attn: Greg Wilson, Chief Financial Officer
Fax: (678) 258-4358
Email: greg.wilson@ccur.com
--------------------
With a copy, which shall not constitute notice, to:
King & Spalding
1180 Peachtree Street, N.E.
Atlanta, GA 30309
Attn: W. Todd Holleman, Esq.
Fax: (404) 572-5128
Email: tholleman@kslaw.com
-------------------
If to Bank: Silicon Valley Bank
3353 Peachtree Rd. N.E.
North Tower, Suite M10
Atlanta, GA 30326
Attn: J.C. Boyanton
Fax: (404) 467-4467
Email: jcboyanton@svbank.com
---------------------
With a copy, which shall not constitute notice, to:
Troutman Sanders LLP
Suite 5200
600 Peachtree Street, N.E.
Atlanta, GA 30308-2216
Attn: Hazen H. Dempster
Fax: (404) 962-6544
Email: hazen.dempster@comcast.net
--------------------------
11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
California law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Santa Clara County, California; provided,
however, that nothing in this Agreement shall be deemed to operate to preclude
Bank from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to
enforce a
-21-
judgment or other court order in favor of Bank. Borrower expressly submits and
consents in advance to such jurisdiction in any action or suit commenced in any
such court, and Borrower hereby waives any objection that it may have based upon
lack of personal jurisdiction, improper venue, or forum non conveniens and
hereby consents to the granting of such legal or equitable relief as is deemed
appropriate by such court. Borrower hereby waives personal service of the
summons, complaints, and other process issued in such action or suit and agrees
that service of such summons, complaints, and other process may be made by
registered or certified mail addressed to Borrower at the address set forth in
Section 10 of this Agreement and that service so made shall be deemed completed
upon the earlier to occur of Borrower's actual receipt thereof or three (3) days
after deposit in the U.S. mails, proper postage prepaid.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12. GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS. This Agreement binds and is for the
benefit of the successors and permitted assigns of each party. Borrower may not
assign this Agreement or any rights or obligations under it without Bank's prior
written consent (which may be granted or withheld in Bank's discretion). Bank
has the right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights, and benefits under this Agreement and the other Loan
Documents.
12.2 INDEMNIFICATION. Borrower agrees to indemnify, defend and hold
Bank and its directors, officers, employees, agents, attorneys, or any other
Person affiliated with or representing Bank harmless against: (a) all
obligations, demands, claims, and liabilities (collectively, "Claims") asserted
by any other party in connection with the transactions contemplated by the Loan
Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from,
following, or arising from transactions between Bank and Borrower (including
reasonable attorneys' fees and expenses), except for Claims and/or losses
directly caused by Bank's gross negligence or willful misconduct.
12.3 LIMITATION OF ACTIONS. Any claim or cause of action by Borrower
against Bank, its directors, officers, employees, agents, accountants,
attorneys, or any other Person affiliated with or representing Bank based upon,
arising from, or relating to this Loan Agreement or any other Loan Document, or
any other transaction contemplated hereby or thereby or relating hereto or
thereto, or any other matter, cause or thing whatsoever, occurred, done, omitted
or suffered to be done by Bank, its directors, officers, employees, agents,
accountants or attorneys, shall be barred unless asserted by Borrower by the
commencement of an action or proceeding in a court of competent jurisdiction by
the filing of a complaint within one year after the first act, occurrence or
omission upon which such claim or cause of action, or any part thereof, is
based, and the service of a summons and complaint on an officer of Bank, or on
any other person authorized to accept service on behalf of Bank, within thirty
(30) days thereafter. Borrower
-22-
agrees that such one-year period is a reasonable and sufficient time for
Borrower to investigate and act upon any such claim or cause of action. The
one-year period provided herein shall not be waived, tolled, or extended except
by the written consent of Bank in its sole discretion. This provision shall
survive any termination of this Loan Agreement or any other Loan Document.
12.4 TIME OF ESSENCE. Time is of the essence for the performance of
all Obligations in this Agreement.
12.5 SEVERABILITY OF PROVISIONS. Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.
12.6 AMENDMENTS IN WRITING; INTEGRATION. All amendments to this
Agreement must be in writing signed by both Bank and Borrower. This Agreement
and the Loan Documents represent the entire agreement about this subject matter
and supersede prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
into this Agreement and the Loan Documents.
12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, constitute
one Agreement.
12.8 SURVIVAL. All covenants, representations and warranties made in
this Agreement continue in full force until this Agreement has terminated
pursuant to its terms and all Obligations (other than inchoate indemnity
obligations and any other obligations which, by their terms, are to survive the
termination of this Agreement) have been satisfied. The obligation of Borrower
in Section 12.2 to indemnify Bank shall survive until the statute of limitations
with respect to such claim or cause of action shall have run.
12.9 CONFIDENTIALITY. In handling any confidential information, Bank
shall exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Bank's
Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any
interest in the Credit Extensions (provided, however, Bank shall use
commercially reasonable efforts to obtain such prospective transferee's or
purchaser's agreement to the terms of this provision); (c) as required by law,
regulation, subpoena, or other order; (d) to Bank's regulators or as otherwise
required in connection with Bank's examination or audit; and (e) as Bank
considers appropriate in exercising remedies under this Agreement. Confidential
information does not include information that either: (i) is in the public
domain or in Bank's possession when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank; or (ii) is disclosed to Bank by a third
party, if Bank does not know that the third party is prohibited from disclosing
the information.
12.10 ATTORNEYS' FEES, COSTS AND EXPENSES. In any action or proceeding
between Borrower and Bank arising out of or relating to the Loan Documents, the
prevailing party shall be entitled to recover its reasonable attorneys' fees and
other costs and expenses incurred, in addition to any other relief to which it
may be entitled.
-23-
13. DEFINITIONS
13.1 DEFINITIONS. As used in this Agreement, the following terms have
the following meanings:
"ACCOUNT" is any "account" as defined in the Code with such additions
to such term as may hereafter be made, and includes, without limitation, all
accounts receivable and other sums owing to Borrower.
"ACCOUNT DEBTOR" is any "account debtor" as defined in the Code with
such additions to such term as may hereafter be made.
"ADVANCE" or "ADVANCES" means either a Formula Advance or a
Non-Formula Advance.
"AFFILIATE" of any Person is a Person that owns or controls directly
or indirectly the Person, any Person that controls or is controlled by or is
under common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"AGREEMENT" is defined in the preamble hereof.
"AVAILABILITY AMOUNT" is (a) the Revolving Line minus (b) the amount
of all outstanding Letters of Credit (including drawn but unreimbursed Letters
of Credit) plus an amount equal to the Letter of Credit Reserves, minus (c) the
FX Reserve, and minus (d) the outstanding principal balance of any Advances
(including any amounts used for Cash Management Services).
"BANK" is defined in the preamble hereof.
"BANK EXPENSES" are all audit fees and expenses, costs, and reasonable
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including, without limitation, those incurred in connection with appeals or
Insolvency Proceedings) or otherwise incurred with respect to Borrower.
"BORROWER" is defined in the preamble hereof
"BORROWER'S BOOKS" are all Borrower's books and records including
ledgers, federal and state tax returns, records regarding Borrower's assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.
"BORROWING BASE" is an amount equal to (a) 80% of Eligible Accounts,
as determined by Bank from Borrower's most recent Transaction Report; provided,
however, that Bank may decrease the foregoing percentages in its good faith
business judgment based on events, conditions, contingencies, or risks which, as
determined by Bank, may adversely affect Collateral, less (b) the Designated
Reserves.
"BORROWING RESOLUTIONS" are, with respect to any Person, those
resolutions delivered by such Person to Bank approving the Loan Documents to
which such Person is a party and the transactions contemplated thereby, together
with a certificate executed by its secretary on behalf of such Person certifying
that (a) such Person has the authority to execute, deliver, and perform its
obligations under each of the Loan Documents to which it is a party, (b) that
attached as Exhibit A to such certificate is a true, correct, and complete copy
of the resolutions then in full
-24-
force and effect authorizing and ratifying the execution, delivery, and
performance by such Person of the Loan Documents to which it is a party, (c) the
name(s) of the Person(s) authorized to execute the Loan Documents on behalf of
such Person, together with a sample of the true signature(s) of such Person(s),
and (d) that Bank may conclusively rely on such certificate unless and until
such Person shall have delivered to Bank a further certificate canceling or
amending such prior certificate].
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which Bank is closed.
"CASH EQUIVALENTS" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor's Ratings
Group or Moody's Investors Service, Inc., (c) Bank's certificates of deposit
issued maturing no more than one (1) year after issue; and (d) money market
funds at least ninety-five percent (95%) of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (c) of this
definition.
"CASH MANAGEMENT SERVICES" is defined in Section 2.5.
"CASH MANAGEMENT SERVICES SUBLIMIT" is defined in Section 2.5.
"CHANGE IN CONTROL" means any event, transaction, or occurrence as a
result of which (a) any "person" (as such term is defined in Sections 3(a)(9)
and 13(d)(3) of the Securities Exchange Act of 1934, as an amended (the
"EXCHANGE ACT")), other than a trustee or other fiduciary holding securities
under an employee benefit plan of Borrower, is or becomes a beneficial owner
(within the meaning Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of Borrower, representing twenty-five percent (25%) or
more of the combined voting power of Borrower's then outstanding securities; or
(b) during any period of twelve consecutive calendar months, individuals who at
the beginning of such period constituted the Board of Directors of Borrower
(together with any new directors whose election by the Board of Directors of
Borrower was approved by a vote of at least two-thirds of the directors then
still in office who either were directions at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason other than death or disability to constitute a majority of the
directors then in office.
"CODE" is the Uniform Commercial Code, as the same may, from time to
time, be enacted and in effect in the State of Georgia; provided, that, to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in Article or Division 9 shall
govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, or priority of, or
remedies with respect to, Bank's Lien on any Collateral is governed by the
Uniform Commercial Code in effect in a jurisdiction other than the State of
California, the term "CODE" shall mean the Uniform Commercial Code as enacted
and in effect in such other jurisdiction solely for purposes on the provisions
thereof relating to such attachment, perfection, priority, or remedies and for
purposes of definitions relating to such provisions.
-25-
"COLLATERAL" is any and all properties, rights and assets of Borrower
described on Exhibit A.
----------
"COLLATERAL ACCOUNT" is any Deposit Account, Securities Account, or
Commodity Account.
"COMMODITY ACCOUNT" is any "commodity account" as defined in the Code
with such additions to such term as may hereafter be made.
"COMMUNICATION" is defined in Section 10.
"COMPLIANCE CERTIFICATE" is that certain certificate in the form
attached hereto as Exhibit E.
----------
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (a) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (b) any obligations for undrawn letters of credit for the account of
that Person; and (c) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under any guarantee or other support arrangement.
"CONTROL AGREEMENT" is any control agreement entered into among the
depository institution at which Borrower maintains a Deposit Account or the
securities intermediary or commodity intermediary at which Borrower maintains a
Securities Account or a Commodity account, Borrower, and Bank pursuant to which
Bank obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.
"CREDIT EXTENSION" is any Advance, Letter of Credit, FX Forward
Contract, amount utilized for Cash Management Services or any other extension of
credit by Bank for Borrower's benefit.
"CURRENT ASSETS" are amounts that under GAAP should be included on
that date as current assets on Borrower's consolidated balance sheet.
"CURRENT LIABILITIES" are all obligations and liabilities of Borrower
to Bank, plus, without duplication, the aggregate amount of Borrower's Total
Liabilities that mature within one (1) year.
"DEFAULT" means any event which with notice or passage of time or
both, would constitute an Event of Default.
"DEFAULT RATE" is defined in Section 2.7(c).
"DEFERRED REVENUE" is all amounts received or invoiced in advance of
performance under contracts and not yet recognized as revenue.
"DESIGNATED RESERVES" is, collectively, an amount equal to the sum of
(a) the amount of all outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit)
-26-
plus an amount equal to the Letter of Credit Reserves, plus (b) the FX Reserve,
----
plus (c) the outstanding principal balance of any Advances used for Cash
- ----
Management Services.
"DEPOSIT ACCOUNT" is any "deposit account" as defined in the Code with
such additions to such term as may hereafter be made.
"DESIGNATED DEPOSIT ACCOUNT" is Borrower's deposit account, account
number 3300446962, maintained with Bank.
----------
"DOLLARS," "DOLLARS" and "$" each mean lawful money of the
placecountry-regionUnited States.
"DOMESTIC SUBSIDIARY" means a Subsidiary organized under the laws of
the placecountry-regionUnited States or any state or territory thereof or the
placeStateDistrict of Columbia.
"EBITDA" shall mean (a) Net Income, plus (b) Interest Expense, plus
(c) to the extent deducted in the calculation of Net Income, depreciation
expense and amortization expense, plus (d) income tax expense.
"EFFECTIVE DATE" is the date Bank executes this Agreement and as
indicated on the signature page hereof.
"ELIGIBLE ACCOUNTS" are Accounts which arise in the ordinary course of
Borrower's business that meet all Borrower's representations and warranties in
Section 5.3. Bank reserves the right at any time and from time to time after
the Effective Date, to adjust any of the criteria set forth below and to
establish new criteria in its good faith business judgment. Unless Bank agrees
otherwise in writing, Eligible Accounts shall not include:
(a) Accounts that the Account Debtor has not paid within ninety
(90) days of invoice date;
(b) Accounts owing from an Account Debtor, fifty percent (50%) or
more of whose Accounts have not been paid within ninety (90) days of invoice
date;
(c) Credit balances over ninety (90) days from invoice date;
(d) Accounts owing from an Account Debtor, including Affiliates,
whose total obligations to Borrower exceed thirty percent (30%) of all Accounts,
except for Time Warner, Inc., Comcast Cable Communications, Inc., Lockheed
Martin Corporation and Cox Communications, Inc., for which such percentage is
thirty-five percent (35%), for the amounts that exceed that percentage, unless
Bank approves in writing;
(e) Accounts owing from an Account Debtor which does not have its
principal place of business in the placecountry-regionUnited States or
placecountry-regionCanada;
(f) Accounts owing from the placecountry-regionUnited States or
any department, agency, or instrumentality unless Borrower has assigned its
payment rights to Bank and the assignment has been acknowledged under the
Federal Assignment of Claims Act of 1940, as amended;
(g) Accounts owing from an Account Debtor to the extent that
Borrower is indebted or obligated in any manner to the Account Debtor (as
creditor, lessor, supplier or otherwise - sometimes called "contra" accounts,
accounts payable, customer deposits or credit accounts), with the exception of
customary credits, adjustments and/or discounts given to an Account Debtor by
Borrower in the ordinary course of its business;
-27-
(h) Accounts for demonstration or promotional equipment, or in
which goods are consigned, or sold on a "sale guaranteed", "sale or return",
"sale on approval", "bill and hold", or other terms if Account Debtor's payment
may be conditional;
(i) Accounts for which the Account Debtor is Borrower's Affiliate,
officer, employee, or agent;
(j) Accounts in which the Account Debtor disputes liability or
makes any claim (but only up to the disputed or claimed amount), or if the
Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or
goes out of business; and
(k) Accounts for which Bank in its good faith business judgment
determines collection to be doubtful; and
(l) other Accounts Bank deems ineligible in the exercise of its
good faith business judgment.
"EQUIPMENT" is all "equipment" as defined in the Code with such
additions to such term as may hereafter be made, and includes without limitation
all machinery, fixtures, goods, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing.
"ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.
"EVENT OF DEFAULT" is defined in Section 8.
"FOREIGN CURRENCY" means lawful money of a country other than the
placecountry-regionUnited States.
"FOREIGN SUBSIDIARY" means any Subsidiary which is not a Domestic
Subsidiary.
"FORMULA ADVANCE" or "FORMULA ADVANCES" means an advance (or advances)
made pursuant to Section 2.2(a) hereof.
"FUNDING DATE" is any date on which a Credit Extension is made to or
on account of Borrower which shall be a Business Day.
"FX BUSINESS DAY" is any day when (a) Bank's Foreign Exchange
Department is conducting its normal business and (b) the Foreign Currency being
purchased or sold by Borrower is available to Bank from the entity from which
Bank shall buy or sell such Foreign Currency.
"FX FORWARD CONTRACT" is defined in Section 2.4.
"FX RESERVE" is defined in Section 2.4.
"GAAP" is generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other Person as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
-28-
"GENERAL INTANGIBLES" is all "general intangibles" as defined in the
Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation, all copyright rights,
copyright applications, copyright registrations and like protections in each
work of authorship and derivative work, whether published or unpublished, any
patents, trademarks, service marks and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, any trade secret
rights, including any rights to unpatented inventions, payment intangibles,
royalties, contract rights, goodwill, franchise agreements, purchase orders,
customer lists, route lists, telephone numbers, domain names, claims, income and
other tax refunds, security and other deposits, options to purchase or sell real
or personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.
"GUARANTOR" is any present or future guarantor of the Obligations,
including Eversteam, Inc., Everstream Holding, Inc. and EHI Patent Co. LLC.,
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services (other than trade accounts payable not more than
sixty (60) days past due), such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" is any proceeding by or against any Person
under the United States Bankruptcy Code, or any other bankruptcy or insolvency
law, including assignments for the benefit of creditors, compositions,
extensions generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INTEREST EXPENSE" means for any fiscal period, interest expense
(whether cash or non-cash) determined in accordance with GAAP for the relevant
period ending on such date, including, in any event, interest expense with
respect to any Credit Extension and other Indebtedness of Borrower and its
Subsidiaries, including, without limitation or duplication, all commissions,
discounts, or related amortization and other fees and charges with respect to
letters of credit and bankers' acceptance financing and the net costs associated
with interest rate swap, cap, and similar arrangements, and the interest portion
of any deferred payment obligation (including leases of all types).
"INVENTORY" is all "inventory" as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and
includes without limitation all merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products, including
without limitation such inventory as is temporarily out of Borrower's custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.
"INVESTMENT" is any beneficial ownership interest in any Person
(including stock, partnership interest or other securities), and any loan,
advance or capital contribution to any Person.
"INVESTOR SUPPORT" means it is the clear intention of Borrower's
investors to continue to fund the Borrower in the amounts and timeframe
necessary to enable Borrower to satisfy the Obligations as they become due and
payable.
-29-
"LETTER OF CREDIT" means a standby letter of credit issued by Bank or
another institution based upon an application, guarantee, indemnity or similar
agreement on the part of Bank as set forth in Section 2.3.
"LETTER OF CREDIT APPLICATION" is defined in Section 2.3(a)
"LETTER OF CREDIT RESERVE" has the meaning set forth in Section
2.3(d).
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, the Perfection
Certificate, any note, or notes, security agreement, pledge agreement or
guaranties executed by Borrower or any Guarantor, and any other present or
future agreement between Borrower any Guarantor and/or for the benefit of Bank
in connection with this Agreement, all as amended, restated, or otherwise
modified.
"MATERIAL ADVERSE CHANGE" is (a) a material impairment in the
perfection or priority of Bank's Lien in the Collateral or in the value of such
Collateral; (b) a material adverse change in the business, operations, or
condition (financial or otherwise) of Borrower; or (c) a material impairment of
the ability of Borrower to repay any portion of the Obligations.
"NET INCOME" means, as calculated on a consolidated basis for Borrower
and its Subsidiaries for any period as at any date of determination, the net
profit (or loss), after provision for taxes, of Borrower and its Subsidiaries
for such period taken as a single accounting period.
"NON-FORMULA ADVANCE" or "NON-FORMULA ADVANCES" means an advance (or
advances) made pursuant to Section 2.2(b) hereof.
"OBLIGATIONS" are Borrower's obligation to pay when due any debts,
principal, interest, Bank Expenses and other amounts Borrower owes Bank now or
later, whether under this Agreement, the Loan Documents, or otherwise,
including, without limitation, all obligations relating to letters of credit,
cash management services, and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank, and the performance of Borrower's
duties under the Loan Documents.
"OPERATING DOCUMENTS" are, for any Person, such Person's formation
documents, as certified with the Secretary of State of such Person's state of
formation on a date that is no earlier than 30 days prior to the Effective Date,
and, (a) if such Person is a corporation, its bylaws in current form, (b) if
such Person is a limited liability company, its limited liability company
agreement (or similar agreement), and (c) if such Person is a partnership, its
partnership agreement (or similar agreement), each of the foregoing with all
current amendments or modifications thereto.
"PAYMENT/ADVANCE FORM" is that certain form attached hereto as Exhibit
-------
B.
- --
"PERFECTION CERTIFICATE" is defined in Section 5.1.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's Indebtedness to Bank under this Agreement and the
other Loan Documents;
-30-
(b) Indebtedness existing on the Effective Date and shown on the
Perfection Certificate;
(c) Subordinated Debt;
(d) unsecured Indebtedness to trade creditors and with respect to
surety bonds and similar obligations incurred in the ordinary course of
business;
(e) Indebtedness incurred as a result of endorsing negotiable
instruments received in the ordinary course of business;
(f) Indebtedness incurred by Foreign Subsidiaries of the Borrower
for working capital of such Subsidiaries in an aggregate principal amount that
does not exceed, as to all such Subsidiaries, $500,000 at any one time
outstanding;
(g) Indebtedness in an aggregate principal amount not to exceed
$1,000,000 secured by Permitted Liens;
(h) Indebtedness owing by a Subsidiary to Borrower or Contingent
Obligations incurred by Borrower with respect to Indebtedness or other
obligations of a Subsidiary, in each case to the extent constituting an
Investment permitted by Section 7.7 hereof;
(h) Indebtedness in respect of insurance premium financing
arrangements incurred in the ordinary course of business provided that such
Indebtedness does not exceed the unpaid amount of such premiums; and
(j) all extensions, renewals and refinancings of Indebtedness
permitted by (b) through (d) above provided that (i) any such extension, renewal
and refinancing does not increase the outstanding principal amount of
Indebtedness so extended, renewed or refinanced, (ii) any such extension,
renewal and refinancing does mature earlier than Indebtedness so extended,
renewed or refinanced and (iii) if the Indebtedness so extended, renewed or
refinanced is Subordinated Debt, such extension, renewal or refinancing
Indebtedness is subordinated in right of payment to the Obligations on terms no
less favorable to Bank than the Subordinated Debt so extended, renewed or
refinanced.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Perfection Certificate and existing
on the Effective Date;
(b) Investments consisting of (i) marketable direct obligations
issued or unconditionally guaranteed by the United States or its agency or any
State maturing within 1 year from its acquisition, (ii) commercial paper
maturing no more than 1 year after its creation and having the highest rating
from either Standard & Poor's Corporation or Moody's Investors Service, Inc.,
and (iii) Bank's certificates of deposit issued maturing no more than 1 year
after issue;
(c) Promissory notes received as non-cash consideration for
dispositions of assets otherwise permitted by this Agreement;
-31-
(d) Investments received in connection with bankruptcies,
reorganizations or settlement of delinquent accounts and disputes with customers
or suppliers, in the ordinary course of business; and
(e) Investments in the forms of loans and advances made to
employees of Borrower (i) that do not exceed $25,000 in principal amount at any
one time outstanding or (ii) are made for travel, entertainment or similar
expenses incurred in the ordinary course of business.
"PERMITTED LIENS" are:
(a) Liens existing on the Effective Date and shown on the
Perfection Certificate or arising under this Agreement and the other Loan
Documents;
(b) Liens for taxes, fees, assessments or other government charges
or levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
--
any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by
Borrower or its Subsidiaries incurred for financing the acquisition of the
Equipment or incurred within one hundred twenty (120) days after such
acquisitions, provided that the aggregate principal amount of Indebtedness
secured by such Liens does not exceed $1,000,000 at any one time outstanding, or
(ii) existing on Equipment when acquired, if the Lien is confined to the
--
property and improvements and the Proceeds of the Equipment;
(d) Licenses or sublicenses granted in the ordinary course of
Borrower's business and any interest or title of a licensor or under any license
or sublicense, if the licenses and sublicenses permit granting Bank a security
--
interest;
(e) Leases or subleases granted in the ordinary course of
Borrower's business, including in connection with Borrower's leased premises or
leased property;
(f) Liens on the property of Subsidiaries organized in
jurisdictions other than the placecountry-regionUnited States and securing
Indebtedness described in clause (f) of the definition of Permitted
Indebtedness;
(g) Liens on insurance policy refunds securing Indebtedness
permitted by clause (h) of the definition of "Permitted Indebtedness"; and
(h) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
---
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if
it is not Bank's lowest rate.
-32-
"QUICK ASSETS" is, on any date, Borrower's consolidated, unrestricted
cash, Cash Equivalents, net billed accounts receivable and investments with
maturities of fewer than 12 months determined according to GAAP.
"REGISTERED ORGANIZATION" is any "registered organization" as defined
in the Code with such additions to such term as may hereafter be made.
"RESERVES" are means, as of any date of determination, such amounts as
Bank may from time to time establish and revise in its good faith business
judgment, reducing the amount of Loans, Letters of Credit and other financial
accommodations which would otherwise be available to Borrower under Section 2.2
hereof: (a) to reflect events, conditions, contingencies or risks which, as
determined by Bank in its good faith business judgment, do or may adversely
affect (i) the Collateral or any other property which is security for the
Obligations or its value (including without limitation any increase in
delinquencies of Accounts), (ii) the assets, business or prospects of Borrower
or any guarantor of the Obligations, or (iii) the security interests and other
rights of Bank in the Collateral (including the enforceability, perfection and
priority thereof); or (b) to reflect Bank's good faith belief that any
collateral report or financial information furnished by or on behalf of Borrower
or any Guarantor to Bank is or may have been incomplete, inaccurate or
misleading in any material respect; or (c) in respect of any state of facts
which Bank determines in good faith constitutes an Event of Default or may, with
notice or passage of time or both, constitute an Event of Default.
"RESPONSIBLE OFFICER" is any of the Chief Executive Officer,
President, Chief Financial Officer and Controller of Borrower.
"REVOLVING LINE" is an Advance or Advances in an aggregate amount of
up to $10,000,000 outstanding at any time.
"REVOLVING LINE MATURITY DATE" is the earlier of (a) 364 days from the
Effective Date; provided, however, that upon the closing of a Subsequent Equity
Offering, the Revolving Line Maturity Date shall be automatically extended to
the second anniversary of the Effective Date or (b) the acceleration of the
Obligations pursuant to Section 9.1(a) hereof.
"SECURITIES ACCOUNT" is any "securities account" as defined in the
Code with such additions to such term as may hereafter be made.
"STREAMLINE PERIOD" means any period during which the cash and cash
equivalents maintained by Borrower and its Subsidiaries on deposit with Bank and
its affiliates (the "Cash Deposits") is greater than the aggregate outstanding
principal amount of the Credit Extensions. Except as provided below a
Streamline Period (a) begins when the Cash Deposits have exceeded the aggregate
outstanding principal amount of the Credit Extensions for a period of thirty
(30) consecutive days and (b) ends on the earlier to occur of (i) the date on
which the aggregate outstanding principal amount of the Credit Extensions
exceeds the amount of Cash Deposits by more than $1,000,000 or (ii) the date on
which the aggregate outstanding principal amount of the Credit Extensions have
exceeded the Cash Deposits for ten (10) consecutive Business Days.
"SETTLEMENT DATE" is defined in Section 2.4.
"SUBORDINATED DEBT" is indebtedness incurred by Borrower subordinated
to all of Borrower's now or hereafter indebtedness to Bank (pursuant to a
subordination, intercreditor, or other similar agreement in form and substance
satisfactory to Bank entered into between Bank and the other creditor), on terms
acceptable to Bank.
-33-
"SUBSEQUENT EQUITY OFFERING" means an issuance (whether private or
public) of common equity of Borrower in which Borrower receives, in the
aggregate, at least $10,000,000 of net proceeds excluding any bridge debt
financing except to the extent actually converted to equity in Borrower.
"SUBSIDIARY" means, with respect to any Person, any Person of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by such Person or one or more Affiliates of
such Person.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus (a) any amounts attributable to (i)
-----
goodwill, (ii) intangible items including unamortized debt discount and expense,
patents, trade and service marks and names, copyrights and research and
development expenses except prepaid expenses, (iii) notes, accounts receivable
and other obligations owing to Borrower from its officers or other Affiliates
(other than Subsidiaries), and (iv) reserves not already deducted from assets,
minus (b) Total Liabilities, plus (c) Subordinated Debt.
- ----- ----
"TOTAL LIABILITIES" is on any day, obligations that should, under
GAAP, be classified as liabilities on Borrower's consolidated balance sheet,
including all Indebtedness, and current portion of Subordinated Debt permitted
by Bank to be paid by Borrower, but excluding all other Subordinated Debt.
"TRANSACTION REPORT" is that certain form attached hereto as Exhibit
-------
D.
- -
"TRANSFER" is defined in Section 7.1.
[Signature page follows.]
-34-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the Effective Date.
BORROWER:
CONCURRENT COMPUTER CORPORATION
By /s/ Greg Wilson
---------------------------------
Name: Greg Wilson
Title: CFO
BANK:
SILICON VALLEY BANK
By /s/ JC Boyanton
--------------------------------------
Name: JC Boyanton
Title: VP
Effective Date: December 22, 2006
[Signature page to Loan and Security Agreement]
EXHIBIT A
---------
The Collateral consists of all of Borrower's right, title and interest in
and to the following personal property:
All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles, commercial tort claims, documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, [all Pledged CDs,] fixtures, letters of
credit rights (whether or not the letter of credit is evidenced by a writing),
securities, and all other investment property, supporting obligations, and
financial assets, whether now owned or hereafter acquired, wherever located;
[and]
all Borrower's Books relating to the foregoing, and any and all claims, rights
and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.
1
EXHIBIT B
---------
LOAN PAYMENT/ADVANCE REQUEST FORM
---------------------------------
DEADLINE FOR SAME DAY PROCESSING IS NOON P.S.T.
Fax To: (404) 467-1471 Date: _____________________
- --------------------------------------------------------------------------------
LOAN PAYMENT:
From Account #________________________ To Account #_________________________
(Deposit Account #) (Loan Account #)
Principal $_____________________ and/or Interest $______________________________
AUTHORIZED SIGNATURE: _____________________ Phone Number: ___________________
Print Name/Title: _____________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN ADVANCE:
Complete Outgoing Wire Request section below if all or a portion of the funds
from this loan advance are for an outgoing wire.
From Account #________________________ To Account #_________________________
(Loan Account #) (Deposit Account #)
Amount of Advance $___________________________
All Borrower's representations and warranties in the Loan and Security
Agreement are true, correct and complete in all material respects on the date of
the request for an advance; provided, however, that such materiality qualifier
shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date:
AUTHORIZED SIGNATURE: _____________________ Phone Number: ___________________
Print Name/Title: _____________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OUTGOING WIRE REQUEST:
COMPLETE ONLY IF ALL OR A PORTION OF FUNDS FROM THE LOAN ADVANCE ABOVE IS TO BE
WIRED.
Deadline for same day processing is noon, P.S.T.
Beneficiary Name: _______________________ Amount of Wire: $____________________
Beneficiary Bank: _______________________ Account Number: _____________________
City and State: _________________________ Beneficiary Bank
Transit (ABA) #: ____________________
Beneficiary Bank Code (Swift, Sort, Chip, etc.): _______________________________
(FOR INTERNATIONAL WIRE ONLY)
Intermediary Bank: _______________________ Transit (ABA) #: ____________________
For Further Credit to: _________________________________________________________
Special Instruction: ___________________________________________________________
By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).
Authorized Signature: ___________________ 2nd Signature
(if required): ______________________
Print Name/Title: _______________________ Print Name/Title: ___________________
Telephone #: ____________________________ Telephone #: ________________________
- --------------------------------------------------------------------------------
1
EXHIBIT D
----------
TRANSACTION REPORT
EXHIBIT E
---------
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK Date: ___________________
FROM: CONCURRENT COMPUTER CORPORATION
The undersigned authorized officer of CONCURRENT COMPUTER CORPORATION
("Borrower") certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (1) Borrower is
in complete compliance for the period ending _______________ with all required
covenants except as noted below, (2) there are no Events of Default, (3) all
representations and warranties in the Agreement are true and correct in all
material respects on this date except as noted below; provided, however, that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, (4) Borrower, and each of its
Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise
permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no
Liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Bank. Attached are the
required documents supporting the certification. The undersigned certifies that
these are prepared in accordance with generally GAAP consistently applied from
one period to the next except as explained in an accompanying letter or
footnotes. The undersigned acknowledges that no borrowings may be requested at
any time or date of determination that Borrower is not in compliance with any of
the terms of the Agreement, and that compliance is determined not just at the
date this certificate is delivered. Capitalized terms used but not otherwise
defined herein shall have the meanings given them in the Agreement.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
- -------------------------------------------------------------------------------------------------------
REPORTING COVENANT REQUIRED COMPLIES
- -------------------------------------------------------- ----------------------------------- --------
Transaction Report Monthly during a Streamline Period Yes No
and otherwise weekly and upon
delivery of each advance request
- -------------------------------------------------------- ----------------------------------- --------
Monthly financial statements with Compliance Certificate Monthly within 30 days Yes No
- -------------------------------------------------------- ----------------------------------- --------
Annual audited financial statement FYE within 120 days Yes No
- -------------------------------------------------------- ----------------------------------- --------
10-Q, 10-K and 8-K Within 5 days after filing with SEC Yes No
- -------------------------------------------------------- ----------------------------------- --------
Transaction Report, A/R and A/P aging Monthly within 30 days Yes No
- -------------------------------------------------------- ----------------------------------- --------
Def. Revenue Schedule Quarterly within 30 days Yes No
- -------------------------------------------------------------------------------------------------------
The following Intellectual Property was registered after the Effective Date (if no registrations,
state "None")
____________________________________________________________________________________
- -------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
- ------------------------------------ ------------------- ------------------ --------
Minimum Monthly Quick Ratio 1.25:1.00 _________:1.00 Yes No
- ------------------------------------ ------------------- ------------------ --------
Minimum Quarterly Tangible Net Worth
$__________________ $_________________ Yes No
- ---------------------------------------------------------------------------------------
The following financial covenant analyses and information set forth in
Schedule 1 attached hereto are true and accurate as of the date of this
Certificate.
The following are the exceptions with respect to the certification above:
(If no exceptions exist, state "No exceptions to note.")
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONCURRENT COMPUTER CORPORATION BANK USE ONLY
By: ___________________________________ Received by: _______________________
Name: _________________________________ Date: ______________________________
Title: ________________________________ Verified: __________________________
Date: ______________________________
Compliance Status: Yes No
SCHEDULE 1 TO COMPLIANCE CERTIFICATE
------------------------------------
FINANCIAL COVENANTS OF BORROWER
-------------------------------
Dated: ____________________
I. ADJUSTED QUICK RATIO (Section 6.9(a))
Required: 1.25:1.00
Actual:
A. Aggregate value of the unrestricted cash and cash equivalents of Borrower and its Subsidiaries $_____________
B. Aggregate value of the net billed accounts receivable of Borrower and its Subsidiaries $_____________
C. Quick Assets (the sum of lines A and B) $_____________
D. Aggregate value of current liabilities of Borrower and its Subsidiaries (including all amounts
outstanding on the Revolving Line) $_____________
E. Aggregate value of current deferred revenue $_____________
F. Adjusted Current Liabilities (line D minus line E) $_____________
G. Adjusted Quick Ratio (line C divided by line F) $_____________
Is line G equal to or greater than 1.25:1:00? ______ No, not in compliance
______ Yes, in compliance
II. TANGIBLE NET WORTH (Section 6.9(b))
Required: $_________________
Actual:
A. Aggregate value of liabilities of Borrower and its Subsidiaries $_____________
B. Aggregate value of Subordinated Debt of Borrower and its Subsidiaries $_____________
C. Adjusted Liabilities (line A minus line B) $_____________
D. Aggregate value of total assets of Borrower and its Subsidiaries $_____________
E. Aggregate value of goodwill of Borrower and its Subsidiaries $_____________
F. Aggregate value of intangible assets of Borrower and its Subsidiaries $_____________
G. Aggregate value of any reserves not already deducted from assets $_____________
H. Adjusted Assets (line D minus line E minus line F minus line G) $_____________
I. Tangible Net Worth (line H minus line D) $_____________
Is line I equal to or greater than Required Tangible Net Worth?
______ No, not in compliance
______ Yes, in compliance