This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into as of
February 11, 2020, by and between PACIFIC WESTERN BANK, a California state chartered bank (“Bank”), and Olo, Inc., a Delaware corporation (“Borrower”).
Borrower (formerly known as
MOBO SYSTEMS, INC.) and Bank (as successor in interest by merger to SQUARE 1 BANK) are parties to that certain Loan and Security Agreement dated as of May 16, 2012, as amended by that certain First Amendment to Loan and Security Agreement dated
as of April 8, 2013, that certain Second Amendment to Loan and Security Agreement dated as of July 31, 2014, that certain Third Amendment to Loan and Security Agreement dated as of June 1, 2015, that certain Fourth Amendment to Loan
and Security Agreement dated as of August 5, 2015, that certain Fifth Amendment to Loan and Security Agreement dated as of April 26, 2016, that certain Sixth Amendment to Loan and Security Agreement dated as of July 26, 2016, that
certain Seventh Amendment to Loan and Security Agreement dated as of January 20, 2017, that certain Eighth Amendment to Loan and Security Agreement dated as of January 10, 2018, that certain Ninth Amendment to Loan and Security Agreement
dated as of March 16, 2018, that certain Tenth Amendment to Loan and Security Agreement dated as of December 1, 2018, that certain Eleventh Amendment to Loan and Security Agreement dated as of April 4, 2019, that certain Twelfth
Amendment to Loan and Security Agreement dated as of May 6, 2019, and that certain Thirteenth Amendment to Loan and Security Agreement dated as of November 12, 2019 (the “Original Agreement”). Borrower and Bank wish to amend and
restate the terms of the Original Agreement in accordance with the terms hereof in order for Borrower to obtain additional credit from time to time from Bank. This Agreement sets forth the terms on which Bank will advance credit to Borrower and
Borrower will repay the amounts owing to Bank.
The parties agree as follows:
DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, all capitalized tenns shall have the definitions set forth on Exhibit A. Any term
used in the Code and not defined herein shall have the meaning given to the term in the Code.
1.2 Accounting Terms. Any
accounting term not specifically defined on Exhibit A shall be construed in accordance with GAAP and all calculations shall be made in accordance with GAAP (except for non-compliance with FAS 123 in monthly
reporting). The term “financial statements” shall include the accompanying notes and schedules.
LOAN AND TERMS OF PAYMENT.
(a) Promise to Pay. Borrower promises to pay to Bank, in lawful money of the United States of America, the aggregate unpaid
principal amount of all Credit Extensions made by Bank to Borrower, together with interest on the unpaid principal amount of such Credit Extensions at rates in accordance with the terms hereof
(b) Advances Under Formula Revolving Line.
(i) Amount. Subject to and upon the terms and conditions of this Agreement, including without limitation the Aggregate Borrowing
Limit set forth in Section 2.2 hereof, Borrower may request Formula Advances in an aggregate outstanding principal amount not to exceed the lesser of: (A) the Formula Revolving Line; or (B) the Borrowing Base, in each case less any
Ancillary Services reducing the Formula Revolving Line under clauses (A)-(E) of subsection 2.l(b)(iii) below. Amounts borrowed pursuant to this Section 2.l(b) may be repaid and reborrowed at any time prior to the Formula Revolving Maturity
Date, at which time all Formula Advances under this Section 2.l(b) shall be immediately due and payable. Borrower may prepay any Formula Advances without penalty or premmm.
(ii) Form of Request. Whenever Borrower desires a Formula Advance, Borrower will notify Bank by email no later than 3:30 p.m.
Eastern time (2:30 p.m. Eastern time for wire transfers), on the Business Day that the Formula Advance is to be made. Each such notification shall be given by a Loan Advance/Paydown Request Form in substantially the form of Exhibit C. Bank is
authorized to make Formula Advances under this Agreement, based upon instructions received from an Authorized Officer, or without instructions if in Bank’s discretion such Formula Advances are necessary to meet Obligations which have become due
and remain unpaid. Bank shall be entitled to rely on any notice given by a Person whom Bank reasonably believes to be an Authorized Officer, and Borrower shall indemnify and hold Bank harmless for any damages, loss, costs and expenses suffered by
Bank as a result of such reliance. Bank will credit the amount of Formula Advances made under this Section 2.l(b) to Borrower’s deposit account.
(iii) Ancillary Services Sublimit. Subject to the availability under the Formula Revolving Line, at any time and from time to
time from the date hereof through the Business Day immediately prior to the Formula Revolving Maturity Date, Borrower may request the provision of Ancillary Services from Ban1c. The aggregate limit of the Ancillary Services shall not exceed the
Ancillary Services Sublimit, provided that availability under the Formula Revolving Line shall be reduced by (A) the Letter of Credit Exposure, (B) the aggregate limits of corporate credit card services provided to Borrower, (C) the
total amount of any Automated Clearing House processing reserves, (D) the applicable Foreign Exchange Reserve Percentage, and (E) any other reserves taken by Bank in connection with other treasury management services requested by Borrower
and approved by Ban1c. In addition, Ban1c may, in its sole discretion, charge as Formula Advances any amounts for which Ban1c becomes liable to third parties in connection with the provision of the Ancillary Services. The terms and conditions
(including repayment and fees) of such Ancillary Services shall be subject to the terms and conditions of Ban1c’s standard forms of application and agreement for the applicable Ancillary Services, which Borrower hereby agrees to execute.
(iv) Collateralization of Obligations Extending Beyond Maturity. If Borrower
has not secured to Bank’s satisfaction its obligations with respect to any Ancillary Services by the Fonnula Revolving Maturity Date, then, effective as of such date, the balance in any deposit accounts held by Bank and the certificates of
deposit or time deposit accounts issued by Bank in Borrower’s name (and any interest paid thereon or proceeds thereof, including any amounts payable upon the maturity or liquidation of such certificates or accounts), shall automatically secure
such obligations to the extent of the then continuing or outstanding Ancillary Services. Borrower authorizes Bank to hold such balances in pledge and to decline to honor any drafts thereon or any requests by Borrower or any other Person to pay or
otherwise transfer any part of such balances for so long as the applicable Ancillary Services are outstanding or continue.
Advances Under Non-Formula Revolving Line.
(i) Amount. Subject to and upon the
terms and conditions of this Agreement, including without limitation the Aggregate Borrowing Limit set forth in Section 2.2 hereof, Borrower may request Non-Fonnula Advances in an aggregate outstanding
principal amount not to exceed the Non-Formula Revolving Line. Amounts borrowed pursuant to this Section 2. l(c) may be repaid and re-borrowed at any time prior to
the Non-Formula Revolving Maturity Date, at which time all Non-Formula Advances under this Section 2.l(c) shall be immediately due and payable.· Borrower may
prepay any Non-Formula Advances without penalty or premium.
(ii) Form of Request.
Whenever Borrower desires a Non-Formula Advance, Borrower will notify Bank by email no later than 3:30 p.m. Eastern time (2:30 p.m. Eastern time for wire transfers), on the Business Day that the Non-Formula Advance is to be made. Each such notification shall be given by a Loan Advance/Paydown Request Form in substantially the form of Exhibit C. Bank is authorized to make
Non-Formula Advances under this Agreement, based upon instructions received from an Authorized Officer, or without instructions if in Bank’s discretion such
Non-Formula Advances are necessary to meet Obligations which have become due and remain unpaid. Bank shall be entitled to rely on any notice given by a Person whom Bank reasonably believes to be an Authorized
Officer, and Borrower shall indemnify and hold Ban1c harmless for any damages, loss, costs and expenses suffered by Ban1c as a result of such reliance. Bank will credit the amount of Non-Fonnula Advances made
under this Section 2.l(c) to Borrower’s deposit account.
2.2 Aggregate Borrowing Limit; Overadvances. The
aggregate amount of outstanding Credit Extensions hereunder shall at no time exceed the Aggregate Borrowing Limit. If the aggregate amount of the outstanding Fonnula Advances exceeds the lesser of the Fonnula Revolving Line or the Borrowing Base at
any time, Borrower shall immediately pay to Ban1c, in Cash, the amount of such excess. If the aggregate amount of the outstanding Non-Formula Advances exceeds the
Non-Formula Revolving Line at any time, Borrower shall immediately pay to Ban1c, in Cash, the amount of such excess. If the aggregate amount of outstanding Credit Extensions hereunder exceeds the Aggregate
Borrowing Limit at any time, Borrower shall immediately pay to Bank, in Cash, the amount of such excess.
2.3 Interest Rates, Payments, and Calculations.
(a) Interest Rates.
(i) Formula Advances. Except as set forth in Section 2.3(b), the Formula Advances shall bear interest, on the outstanding
daily balance thereof, at a variable annual rate equal to the greater of: (A) 0.20% above the Prime Rate then in effect or (B) 4.50%.
(ii) Non-Formula Advances. Except as set forth in Section 2.3(b), the Non-Formula Advances shall bear interest, on the outstanding daily balance thereof, at a variable annual rate equal to the greater of (A) 0.75% above the Prime Rate then in effect; or (B) 5.00%.
(b) Late Fee; Default Rate. If any payment is not made within 15 days after the date such payment is due, Borrower shall pay
Bank a late fee equal to the lesser of (i) 5% of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged under applicable law. All Obligations shall bear interest, from and after the occurrence and during the
continuance of an Event of Default, at a rate equal to 5 percentage points above the interest rate applicable immediately prior to the occurrence of the Event of Default (such rate, the “Default Rate”); provided that, Bank shall provide
written notice to Borrower of such increase prior to implementing the Default Rate except for an Event of Default described in Section 8.5, for which such increase shall be automatic without the requirement of notice. In all such events, and
notwithstanding the date on which application of the Default Rate is communicated to Borrower, the Default Rate may be accrued (at the election of Bank) from the initial date of any Event of Default until all existing Events of Default are waived in
writing in accordance with the terms of this Agreement.
(c) Payments. Interest under the Formula Revolving Line and under
the Non-F01mula Revolving Line shall be due and payable on the 14th calendar day of each month during the tenn hereof and on the Formula Revolving Maturity
Date and on the Non-Formula Revolving Maturity Date. Bank shall, at its option, charge such interest, all Bank Expenses, and all Periodic Payments against any of Borrower’s deposit accounts or against the
Formula Revolving Line and the Non-Formula Revolving Line, in which case those amounts shall thereafter accrue interest at the rate then applicable hereunder. Any interest not paid when due shall be compounded
by becoming a part of the Obligations, and such interest shall thereafter accrue interest at the rate then applicable hereunder.
(d) Computation. In the event the Prime Rate is changed from time to time hereafter, the applicable rate of interest hereunder
shall be increased or decreased, effective as of the day the Prime Rate is changed, by an amount equal to such change in the Prime Rate. All interest chargeable under the Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed.
2.4 Crediting Payments. While no Event of Default has occurred and is
continuing, Ban1c shall credit a wire transfer of funds, check or other item of payment to such deposit account or Obligation as Borrower specifies. After the occurrence and during the continuance of an Event of Default, Bank shall have the right,
in its sole discretion, to immediately apply any wire transfer of funds, check, or other item of payment Bank may receive to conditionally reduce Obligations, but such application of funds shall not be considered a payment on account unless such
payment is of immediately available federal funds or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by Bank
after 3:30 p.m. Eastern time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day. Whenever any payment to Bank under the Loan Documents would otherwise be due (except by reason of
acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for the period of such extension.
2.5 Fees. Borrower shall pay to Bank the following:
(a) Facility Fee. On or before the Closing Date, a fee equal to $3,500, which shall be nonrefundable;
(b) Bank Expenses. On the Closing Date, all Bank Expenses incurred through the Closing Date, and, after the Closing Date, all
Banl<: Expenses, as and when they become due;
(c) Success Fee/Final Payment Fee. Upon the earlier to occur of (i) an
Acquisition of Borrower or (ii) tennination of this Agreement, whether in connection with acceleration, prepayment in full, or otherwise, a nonrefundable fee equal to 2.5% of the difference between (x) the highest Aggregate Borrowing Limit
in effect during the term of this Agreement and (y) $1,000,000. This Section 2.5(c) shall survive any tennination of this Agreement; and
(d) Liquidity Event Fee. Upon a Liquidity Event, a nonrefundable fee equal to 1.0% of the difference between (i) the
highest outstanding principal balance during the term of this Agreement and (ii) $3,500,000 (the “Liquidity Event Fee”). This Section 2.5(d) shall survive until the later of (x) twenty-four (24) months after any tennination
of this Agreement or (y) January 31, 2024. If this Agreement is tenninated prior to payment of the Liquidity Event Fee, Borrower shall give Bank written notice of the first Liquidity Event to occur thereafter and shall pay the Liquidity Event
Fee upon the closing of such Liquidity Event.
2.6 Term. This Agreement shall become effective on the Closing Date and,
subject to Section 12.7, shall continue in full force and effect for so long as any Obligations (other than inchoate indemnity obligations) remain outstanding or Bank has any obligation to make Credit Extensions under this Agreement.
Notwithstanding the foregoing, Banl<: shall have the right to tenninate its obligation to make Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default. Borrower
may tenninate the Non-Formula Revolving Line at any time prior to the Non-Fonnula Revolving Maturity Date, upon two Business Days written notice to Bank, at which time
the principal amount of all Non-Formula Advances, the unpaid interest thereon, and all other
Obligations (other than inchoate indemnity obligations) relating to the Non-Formula Revolving Line shall be immediately due and payable. Borrower may
terminate the Formula Revolving Line at any time prior to the Formula Revolving Maturity Date, upon two Business Days written notice to Bank, at which time the principal amount of all Formula Advances, the unpaid interest thereon, and all other
Obligations (other than inchoate indemnity obligations) relating to the Formula Revolving Line shall be immediately due and payable.
3.1 Conditions Precedent to Closing. The agreement of Bank to enter into this Agreement on the Closing Date is subject to the
condition precedent that Bank shall have received, in form and substance satisfactory to Bank, each of the following items and completed each of the following requirements:
(a) this Agreement;
(b) an officer’s certificate of Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this
(d) current SOS Reports indicating that except for Permitted Liens, there are no other security interests or Liens of record in the
(e) a Borrower Information Certificate;
(f) payment of the fees and Bank Expenses then due specified in Section 2.5, which may be debited from any of Borrower’s
accounts with Bank; and
(g) such other documents or certificates, and completion of such other matters, as Bank may
3.2 Conditions Precedent to all Credit Extensions. The obligation of Bank to make each Credit Extension,
including the initial Credit Extension, is contingent upon the Borrower’s compliance with Section 3.1 above, and is further subject to the following conditions:
(a) timely receipt by Bank of the Loan Advance/Paydown Request Form as provided in Section 2.1;
(b) Borrower shall be in compliance with Section 6.6 hereof;
(c) Bank shall have received (i) a company prepared consolidated and consolidating balance sheet, income statement, and statement
of cash flows covering Borrower’s operations, in a form reasonably acceptable to Bank and certified by a Responsible Officer, (ii) a Compliance Certificate and (iii) a Borrowing Base Certificate, in each case for the month most
recently ended prior to the date 30 days preceding the date of the Loan Advance/Paydown Request Form described in Section 3.2(a) above; and
(d) the representations and warranties contained in Section 5 shall be true and
correct in all material respects on and as of the date of such Loan Advance/Paydown Request Form and on the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default shall have occurred and be
continuing, or would exist after giving effect to such Credit Extension (provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date).
The making of each Credit Extension shall be deemed to be a representation and warranty by Borrower on the date of such Credit Extension as to the accuracy of the facts referred to in this Section 3.2.
CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Borrower grants and pledges to Bank a continuing security interest in the Collateral to secure
prompt repayment of any and all Obligations and to secure prompt perfonnance by Borrower of each of its covenants and duties under the Loan Documents (other than the Warrant). Except for Pennitted Liens or as disclosed in the Schedule, such security
interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first priority security interest in later-acquired Collateral. Borrower also hereby agrees not to sell, transfer,
assign, mortgage, pledge, lease, grant a security interest in, or encumber any of its Intellectual Property except for Pennitted Liens and Pennitted Transfers. Notwithstanding any tennination of this Agreement or of any filings undertaken related to
Bank’s rights under the Code, Bank’s Lien on the Collateral shall remain in effect for so long as any Obligations (other than inchoate indemnity obligations) are outstanding. Upon indefeasible payment in full in Cash of the Obligations
(other than inchoate indemnity obligations) in their entirety and at such time as Bank’s obligation to make Credit Extensions has tenninated, Bank shall, at Borrower’s sole cost and expense, and upon receipt of a written request from
Borrower to do so and pursuant to a payoff letter between Bank and Borrower, release its Liens in the Collateral and all rights therein shall revert to Borrower.
4.2 Perfection of Security Interest. Borrower authorizes Bank to file at any time financing statements, continuation statements,
and amendments thereto that (i) either specifically describe the Collateral or describe the Collateral as all assets of Borrower of the kind pledged hereunder, and (ii) contain any other infonnation required by the Code for the sufficiency
of filing office acceptance of any financing statement, continuation statement, or amendment, including whether Borrower is an organization, the type of organization and any organizational identification number issued to Borrower, if applicable.
Borrower shall have possession of the Collateral, except where expressly otherwise provided in this Agreement or where Bank chooses to perfect its security interest by possession in addition to the filing of a financing statement. Where Collateral
is in possession of a third party bailee, Borrower shall take such steps as Ban1c reasonably requests for Ban1c to, subject to Section 7.10 below, obtain an aclmowledgment, in fonn and substance reasonably satisfactory to Ban1c, of the bailee
that the bailee holds such Collateral for the benefit of Ban1c. Where Collateral consists of investment property, deposit accounts, letter-of-credit rights or electronic
chattel paper (as such items and the term “control” are defined in Revised Article 9 of the Code), Borrower shall take such steps
as Bank requests for Bank to obtain “control” of such Collateral by causing the securities intennediary or depositary institution or issuing bank to execute a control agreement (or
similar arrangement) in form and substance reasonably satisfactory to Bank. Borrower will not create any chattel paper without placing a legend on the chattel paper acceptable to Bank indicating that Bank has a security interest in the chattel
paper. Borrower from time to time may deposit with Bank specific cash collateral to secure specific Obligations; Borrower authorizes Bank to hold such specific balances in pledge and to decline to honor any drafts thereon or any request by Borrower
or any other Person to pay or otherwise transfer any part of such balances for so long as the specific Obligations are outstanding. Borrower shall take such other actions as Bank reasonably requests to perfect its security interests granted under
REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Borrower and each Subsidiary is duly existing under the laws of the state in which it is
organized and qualified and licensed to do business in any state in which the conduct of its business or its ownership of property requires that it be so qualified, except where the failure to do so would not reasonably be expected to cause a
Material Adverse Effect.
5.2 Due Authorization; No Conflict. The execution, delivery, and performance of the Loan Documents
are within Borrower’s powers, have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower’s Certificate of Incorporation or Bylaws, nor will they constitute an event of default
under any material agreement by which Borrower is bound. Borrower is not in default under any agreement by which it is bound, except to the extent such default would not reasonably be expected to cause a Material Adverse Effect.
5.3 Collateral. Borrower has rights in or the power to transfer the Collateral, and its title to the Collateral is free and clear
of Liens, adverse claims, and restrictions on transfer or pledge except for Permitted Liens. Other than movable items of personal property such as laptop computers, all tangible personal property Collateral, except such Collateral having an
aggregate book value not in excess of $500,000 is located solely in the Collateral State. The contracts that generate fees included in the calculation of Recurring Revenue are in full force and effect as of the date of such inclusion. Borrower has
not received notice of actual or imminent Insolvency Proceeding of any counterparty to a contract that generates fees included in the calculation of Recurring Revenue. All Inventory is in all material respects of good and merchantable quality, free
from all material defects, except for Inventory for which adequate reserves have been made. Except as set forth in the Schedule or as otherwise permitted hereunder, none of Borrower’s Cash is maintained or invested with a Person other than Bank
or Bank’s affiliates.
5.4 Intellectual Property. Borrower is the sole owner of the intellectual
property created or purchased by B01Tower, except for licenses granted by Borrower to third parties in the ordinary course of business. To the best of Borrower’s lmowledge, each of the Copyrights, Trademarks and Patents created or purchased by
Borrower is valid and enforceable, and no part of the intellectual property created or purchased by Borrower has been judged invalid or unenforceable, in whole or in part, and no claim has been made to Borrower that any part of the intellectual
property created or purchased by Borrower violates the rights of any third party except to the extent such claim would not reasonably be expected to cause a Material Adverse Effect.
5.5 Name; Location of Chief Executive Office. Except as disclosed in the Schedule and except for changes for which notice has
been given to Bank pursuant to Section 7.2, Borrower has not done business under any name other than that specified on the signature page hereof, and its exact legal name is as set forth in the first paragraph of this Agreement. Except for
changes for which notice has been given to Bank pursuant to Section 7.2, the chief executive office of Borrower is located at the address indicated in Article 10 hereof
5.6 Litigation. Except as set forth in the Schedule, there are no actions or proceedings pending by or against Borrower or any
Subsidiary before any court or administrative agency in which a likely adverse decision would reasonably be expected to have a Material Adverse Effect.
5.7 No Material Adverse Change in Financial Statements. All consolidated and consolidating financial statements related to
Borrower and any Subsidiary that are delivered by Borrower to Bank fairly present in all material respects Borrower’s consolidated and consolidating financial condition as of the date thereof and Borrower’s consolidated and consolidating
results of operations for the period then ended. There has not been a material adverse change in the consolidated or in the consolidating fmancial condition of Borrower since the date of the most recent of such financial statements submitted to
5.8 Solvency, Payment of Debts. Borrower is able to pay its debts (including trade debts) as they mature; the fair
saleable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; and Borrower is not left with unreasonably small capital after the transactions contemplated by this Agreement.
5.9 Compliance with Laws and Regulations. Borrower and each Subsidiary have met the minimum funding requirements of BRISA with
respect to any employee benefit plans subject to BRISA. No event has occurred resulting from Borrower’s failure to comply with BRISA that is reasonably likely to result in Borrower’s incurring any liability that could have a Material
Adverse Effect. Borrower is not an “investment company’’ or a company “controlled” by an “investment company’’ within the meaning of the Investment Company Act of 1940. Borrower is not engaged principally, or
as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System). Borrower has not
violated any statutes, laws, ordinances or rules applicable to it, including any Environmental Laws, the violation of which would reasonably be expected to have a Material Adverse Effect. Borrower and each Subsidiary have filed or caused to be filed
all tax returns required to be filed, and have paid, or have made adequate provision for the payment of, all taxes reflected therein except those being contested in good faith with adequate reserves under GAAP or where the failure to file such
returns or pay such taxes would not reasonably be expected to have a Material Adverse Effect.
5.10 Subsidiaries. Borrower does not own any stock, partnership interest or
other equity securities of any Person, except for Permitted Investments.
5.11 Government Consents. Borrower and each
Subsidiary have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower’s business as
currently conducted, except where the failure to do so would not reasonably be expected to cause a Material Adverse Effect.
Inbound Licenses. Except as disclosed on the Schedule (as the same may be updated from time to time pursuant to Section 6.8), Borrower is not a party to, nor is bound by, any material inbound license or other agreement important for the
conduct of Borrower’s business that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or other agreement or any other property important for the conduct of Borrower’s
business, other than this Agreement or the other Loan Documents.
5.13 Full Disclosure. No representation, warranty or other
statement made by Borrower in any certificate or written statement furnished to Bank taken together with all such certificates and written statements furnished to Bank contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates or statements not misleading in light of the circumstances in which they were made, it being recognized by Bank that the projections and forecasts provided by Borrower in
good faith and based upon reasonable assumptions are not to be viewed as facts and that actual results during the period or periods covered by any such projections and forecasts may differ from the projected or forecasted results.
Borrower covenants that, until payment in full of all outstanding Obligations (other than inchoate indemnity obligations), and for so long as
Bank may have any commitment to make a Credit Extension hereunder, Borrower shall do all of the following:
6.1 Good Standing and
Government Compliance. Borrower shall maintain its and each of its Subsidiaries’ corporate existence and good standing in the respective states of fonnation, shall maintain qualification and good standing in each other jurisdiction in which
the failure to so qualify would reasonably be expected to have a Material Adverse Effect, and shall furnish to Bank the organizational identification number issued to Borrower by the authorities of the state in which Borrower is organized, if
applicable. Borrower shall meet, and shall cause each Subsidiary to meet, the minimum funding requirements of BRISA with respect to any employee benefit plans subject to BRISA. Borrower shall comply, and shall cause each Subsidiary to comply, with
all statutes, laws, ordinances and government rules and regulations to which it is subject, including all Enviromnental Laws, and shall maintain, and shall cause each of its Subsidiaries to maintain, in force all licenses, approvals and agreements,
the loss of which or failure to comply with which would reasonably be expected to have a Material Adverse Effect.
6.2 Financial Statements, Reports, Certificates. Borrower shall deliver to
Banlc (i) as soon as available, but in any event within 30 days after the end of each fiscal quarter ending March 31, June 30, September 30, and December 31, a company prepared consolidated and consolidating balance sheet,
income statement, and statement of cash flows covering Borrower’s operations during such period, in a form reasonably acceptable to Banlc and certified by a Responsible Officer; provided, however, that if Borrower has any outstanding Credit
Extensions, all quarterly reporting requirements set forth in this Section 6.2(i) shall instead be delivered to Banlc on a monthly basis, within 30 days after the last day of each calendar month; (ii) as soon as available, but in any event
within 180 days after the end of Borrower’s fiscal year, audited (or such other level as is required by the Investment Agreement) consolidated and consolidating financial statements of Borrower prepared in accordance with GAAP, consistently
applied, together with an opinion which is either unqualified, qualified only for going concern so long as Borrower’s investors provide additional equity as needed or otherwise consented to in writing by Bank on such financial statements of an
independent certified public accounting firm reasonably acceptable to Banlc; (iii) an annual budget approved by Borrower’s Board of Directors as soon as available but not later than February 1 of each year during the term of this
Agreement; (iv) if applicable, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders or to any holders of Subordinated Debt and all reports on Forms
10-K and 10-Q filed with the Securities and Exchange Commission; (v) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened
against Borrower or any Subsidiary that could reasonably be expected to result in damages or costs to Borrower or any Subsidiary of $500,000 or more; (vi) promptly upon receipt, each management letter prepared by Borrower’s independent
certified public accounting firm regarding Borrower’s management control systems, (vii) such budgets, sales projections, operating plans or other financial information generally prepared by Borrower in the ordinary course of business as
Bank may reasonably request from time to time.
(a) Within 30 days after the end of each fiscal quarter ending March 31,
June 30, September 30, and December 31, Borrower shall deliver to Banlc a Borrowing Base Certificate calculated as of the last day of the applicable fiscal quarter and signed by a Responsible Officer in substantially the form of
Exhibit D hereto, together with (i) detailed aged listings by invoice date of accounts receivable and accounts payable and (ii) a Chum report; provided, however, that if Borrower has any outstanding Credit Extensions, all quarterly
reporting requirements set forth in this Section 6.2(a) shall instead be delivered to Banlc on a monthly basis, within 30 days after the last day of each calendar month.
(b) Within 30 days after the end of each fiscal quarter ending March 31, June 30, September 30, and December 31,
Borrower shall deliver to Banlc with the applicable financial statements a Compliance Certificate certified as of the last day of the applicable quarter and signed by a Responsible Officer in substantially the form of Exhibit E hereto; provided,
however, that if Borrower has any outstanding Credit Extensions, all quarterly reporting requirements set forth in this Section 6.2(b) shall instead be delivered to Bank on a monthly basis, within 30 days after the last day of each calendar
(c) As soon as possible and in any event within three Business Days after becoming
aware of the occurrence or existence of an Event of Default hereunder, a written statement of a Responsible Officer setting forth details of the Event of Default, and the action which Borrower has taken or proposes to take with respect thereto.
(d) Bank (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time
during Borrower’s usual business hours but no more than twice a year (unless an Event of Default has occurred and is continuing), to inspect Borrower’s Books and to make copies thereof and to check, test, inspect, audit and appraise the
Collateral at Borrower’s expense in order to verify Borrower’s financial condition or the amount, condition of, or any other matter relating to, the Collateral.
Borrower may deliver to Bank on an electronic basis any certificates, reports or information required pursuant to this Section 6.2, and
Bank shall be entitled to rely on the information contained in the electronic files, provided that Bank in good faith believes that the files were delivered by a Responsible Officer. Borrower shall include a submission date on any certificates and
reports to be delivered electronically.
6.3 Inventory and Equipment; Returns. Borrower shall keep all Inventory and
Equipment in good and merchantable condition, free from all material defects, except for Inventory and Equipment (i) sold in the ordinary course of business, and (ii) for which adequate reserves have been made, in all cases in the United
States and such other locations as to which Borrower gives prior written notice. Returns and allowances, if any, as between Borrower and its account debtors shall be on the same basis and in accordance with the usual customary practices of Borrower,
as they exist on the Closing Date. Borrower shall promptly notify Bank of all returns and recoveries and of all disputes and claims involving inventory having a book value of more than $500,000.
6.4 Taxes. Borrower shall make, and cause each Subsidiary to make, due and timely payment or deposit of all material federal,
state, and local taxes, assessments, or contributions required of it by law, including, but not limited to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state disability, and will execute and deliver to Bank, on demand, proof
satisfactory to Bank indicating that Borrower or a Subsidiary has made such payments or deposits and any appropriate certificates attesting to the payment or deposit thereof; provided that Borrower or a Subsidiary need not make any payment if the
amount or validity of such payment is contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower or such Subsidiary.
6.5 Insurance. Borrower, at its expense, shall (i) keep the Collateral insured against loss or damage, and
(ii) maintain liability and other insurance, in each case as ordinarily insured against by other owners in businesses similar to Borrower’s. All such policies of insurance shall be in such form, with such companies, and in such amounts as
reasonably satisfactory to Bank. All policies of property insurance shall contain a lender’s loss payable endorsement, in a form reasonably satisfactory to Bank, showing Bank as lender’s loss payee, and all liability insurance policies
shall show, or have endorsements showing, Bank as an additional insured and specify that the insurer must give at least 20 days’ (10 days for non-payment of premium) notice to Bank before canceling its
policy for any reason. Upon
Bank’s reasonable request (but no more than once per calendar year so long as no Event of Default has occurred and is continuing), Borrower shall furnish to Bank a copy of its policies or
certificate of insurance including any endorsements covering Bank or showing Bank as an additional insured, and 30 days prior to expiration of any policy of insurance, Borrower shall furnish to Bank a copy of its renewal policy and certificate of
insurance including any endorsements covering Bank or showing Bank as an additional insured. Upon Bank’s request, Borrower shall deliver to Bank certified copies of the policies of insurance and evidence of all premium payments. Proceeds
payable under any casualty policy will, at Borrower’s option, be payable to Borrower to replace the property subject to the claim, provided that any such replacement property shall be deemed Collateral in which Bank has been granted a first
priority security interest (subject to Permitted Liens), provided that if an Event of Default has occurred and is continuing, all proceeds payable under any such policy shall, at Bank’s option, be payable to Bank to be applied on account of the
6.6 Primary Depository. Borrower shall maintain all of its depository and operating accounts with Bank and its
primary investment accounts with Bank or Bank’s affiliates; provided that, prior to Borrower maintaining any investment accounts with Bank’s affiliates, Borrower, Bank and any such affiliate shall have entered into a securities account
control agreement with respect to any such investment accounts, in form and substance satisfactory to Bank.
Covenants. Borrower shall at all times maintain the following financial ratios and covenants:
(a) Minimum EBITDA.
Measured monthly and calculated on a trailing-three-months basis, Borrower shall achieve EBITDA of at least the amounts shown in the table immediately below for the corresponding reporting periods.
Reporting Period Ending
January 31, 2020
February 28, 2020
March 31, 2020
April 30, 2020
May 31, 2020
June 30, 2020
July 31, 2020
August 31, 2020
September 30, 2020
October 31, 2020
November 30, 2020
December 31, 2020
(b) Minimum Revenue. Measured monthly and calculated on a cumulative basis beginning
January 1, 2020, Borrower shall achieve Revenue of at least the amounts shown in the table immediately below for the corresponding reporting periods.
Reporting Period Ending
January 31, 2020
February 28, 2020
March 31, 2020
April 30, 2020
May 31, 2020
June 30, 2020
July 31, 2020
August 31, 2020
September 30, 2020
October 31, 2020
November 30, 2020
December 31, 2020
For subsequent reporting periods, Bank and Borrower hereby agree that, on or before February 1 of each year during the
terms of this Agreement, Borrower shall provide Bank with a budget for such year, which shall be approved by Borrower’s Board of Directors, and Bank shall use that budget to establish the minimum EBITDA and minimum Revenue amounts for such
year, with such amounts being incorporated herein by an amendment, which Borrower hereby agrees to execute.
6.8 Consent of
Inbound Licensors. Prior to entering into or becoming bound by any material inbound license or agreement after the Closing Date, Borrower shall: (i) provide written notice to Banlc of the material terms of such license or agreement with a
description of its likely impact on Borrower’s business or financial condition; and (ii) in good faith use commercially reasonable efforts to obtain the consent of, or waiver by, any Person whose consent or waiver is necessary for
Borrower’s interest in such licenses or contract rights to be deemed Collateral and for Banlc to have a security interest in it that might otherwise be restricted by the terms of the applicable license or agreement, whether now existing or
entered into in the future, provided, however, that the failure to obtain any such consent or waiver shall not constitute a default under this Agreement.
6.9 Creation/Acquisition of Subsidiaries. In the event that Borrower or any Subsidiary of Borrower creates or acquires any
Subsidiary, Borrower or such Subsidiary shall promptly notify Banlc of such creation or acquisition, and Borrower or such Subsidiary shall take all actions reasonably requested by Banlc to achieve any of the following with respect to such
“New Subsidiary” (defined as a Subsidiary formed after the date hereof during the Term of this Agreement): (i) if such New Subsidiary is organized under the laws of the United States, to cause New Subsidiary to become either
a co-Borrower hereunder or a secured guarantor with respect to the Obligations; and (ii) to grant and pledge to Banlc a perfected security interest in the Shares of such New Subsidiary.
6.10 Further Assurances. At any time and from time to time Borrower shall
execute and deliver such further instruments and take such further action as may reasonably be requested by Bank to effect the purposes of this Agreement.
Borrower covenants and agrees that, for so long as any credit hereunder shall be available and until the outstanding Obligations (other than
inchoate indemnity obligations) are paid in full or for so long as Bank may have any commitment to make any Credit Extensions, Borrower will not do any of the following without Bank’s prior written consent, which shall not be unreasonably
7.1 Dispositions. Convey, sell, lease, license, transfer or otherwise dispose of (collectively, to
“Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, or move cash balances on deposit with Bank to accounts opened at another financial institution, other than Permitted Transfers and
7.2 Change in Name, Location, Executive Office, or Executive Management; Change in Business; Change in
Fiscal Year; Change in Control. Change its name or the state of Borrower’s formation or relocate its chief executive office without 30 days prior written notification to Bank; replace or suffer the departure of its chief executive officer
or chief financial officer without delivering written notification to Bank within 10 days; fail to appoint an interim replacement or fill a vacancy in the position of chief executive officer or chief financial officer for more than 30 consecutive
days; suffer a change on its board of directors which results in the failure of at least one partner of RRE Ventures or its Affiliates to serve as a voting member, or suffer the resignation of one or more directors from its board of directors in
anticipation of Borrower’s insolvency, in each case without the prior written consent of Bank which may be withheld in Bank’s sole discretion; take action to liquidate, wind up, or otherwise cease to conduct business in the ordinary
course; engage in any business, or permit any of its Subsidiaries to engage in any business, other than as reasonably related or incidental to the businesses currently engaged in by Borrower; change its fiscal year end; convert to another form of
incorporation or unincorporated business or entity; have a Change in Control; Divide.
7.3 Mergers or Acquisitions. Merge or
consolidate, or pennit any of its Subsidiaries to merge or consolidate, with or into any other business organization (other than mergers or consolidations of a Subsidiary into another Subsidiary or into Borrower), or acquire, or pennit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person except where (a) each of the following conditions is applicable: (i) the consideration paid in connection with such transactions
(including assumption of liabilities) does not in the aggregate exceed $500,000 during any fiscal year, (ii) no Event of Default has occurred, is continuing or would exist after giving effect to such transactions, (iii) such transactions
do not result in a Change in Control, and (iv) Borrower is the surviving entity; or (b) the Obligations (other than inchoate indemnity obligations) are repaid in full concurrently with the closing of any merger or consolidation of Borrower
which does not meet the conditions set forth in clause (a) above; provided however, that Borrower shall not, without Bank’s prior written consent, enter into any binding contractual arrangement with any Person to attempt to facilitate a
merger or acquisition of Borrower; provided however, Borrower may enter into any
such arrangement without Bank’s prior written consent so long as (i) no Event of Default exists when such arrangement is entered into by Borrower, (ii) such arrangement does not
give such Person the right to claim any fee, payment or damages from any parties, other than from Borrower or Borrower’s investors, in connection with a sale of Borrower’s stock or assets pursuant to or resulting from an assignment for the
benefit of creditors, an asset turnover to Borrower’s creditors (including, without limitation, Bank), foreclosure, bankruptcy or similar liquidation, and (iii) Borrower notifies Bank in advance of entering into such an arrangement
(provided, the failure to give such notification shall not be deemed a material breach of this Agreement).
Create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation
to prepay any Indebtedness, except Indebtedness to Bank.
7.5 Encumbrances. Create, incur, assume or allow any Lien with
respect to its property, or assign or otherwise convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries so to do, except for Pennitted Liens, or covenant to any other Person (other than (i) the
licensors of in-licensed property with respect to such property, or (ii) the lessors of specific equipment or lenders financing specific equipment with respect to such leased or financed equipment) that
Borrower in the future will refrain from creating, incurring, assuming or allowing any Lien with respect to any of Borrower’s property.
7.6 Distributions. Pay any dividends or make any other distribution or payment on account of or in redemption, retirement or
purchase of any capital stock, except that Borrower may (i) repurchase the stock of fonner employees, consultants or directors pursuant to stock repurchase agreements as long as an Event of Default does not exist prior to such repurchase or
would not exist after giving effect to such repurchase, and (ii) repurchase the stock of former employees, consultants or directors pursuant to stock repurchase agreements by the cancellation of indebtedness owed by such former employees,
consultants or directors to Borrower regardless of whether an Event of Default exists.
7.7 Investments. Directly or
indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Pennitted Investments, or maintain or invest any of its Investment Property (as defined in the Code) with a Person other
than Bank or Bank’s Affiliates or permit any Subsidiary to do so unless such Person has entered into a control agreement with Bank, in form and substance satisfactory to Bank, or suffer or pennit any Subsidiary to be a party to, or be bound by,
an agreement that restricts such Subsidiary from paying dividends or otherwise distributing property to Borrower.
Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for (a) transactions that are in the ordinary course of Borrower’s business, upon fair
and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person, (b) Investments permitted under sub-clauses (e) or (f) of the definition of Permitted Investments, and (c) bona fide equity and Subordinated Debt financings from Borrower’s investors or their Affiliates.
7.9 Subordinated Debt. Make any payment in respect of any Subordinated Debt,
or pennit any of its Subsidiaries to make any such payment, except in compliance with the terms of such Subordinated Debt, or amend any provision affecting Bank’s rights contained in any documentation relating to the Subordinated Debt without
Bank’s prior written consent.
7.10 Inventory and Equipment. Store the Inventory or the Equipment of a book value in
excess of $500,000 with a bailee, warehouseman, collocation facility or similar third party unless the third party has been notified of Bank’s security interest and Bank (a) has received an aclmowledgment from the third party that it is
holding or will hold the Inventory or Equipment for Bank’s benefit or (b) is in possession of the warehouse receipt, where negotiable, covering such Inventory or Equipment. Except for Inventory sold in the ordinary course of business,
movable items of personal property having an aggregate book value not in excess of $500,000, and wom-out, surplus or obsolete Equipment, and except for such other locations as Bank may approve in writing,
Borrower shall keep the Inventory and Equipment only at the location set forth in Article 10 and such other locations of which Borrower gives Bank prior written notice and as to which Bank is able to take such actions as may be necessary to perfect
its security interest or to obtain a bailee’s acknowledgment of Banlc’s rights in the Collateral.
7.11 No Investment
Company; Margin Regulation. Become or be controlled by an “investment company,” within the meaning of the Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business
of extending credit for the purpose of purchasing or carrying margin stock, or use the proceeds of any Credit Extension for such purpose.
Any one or more of the following events shall constitute an Event of Default by Borrower under this Agreement:
8.1 Payment Default. If Borrower fails to pay any of the Obligations when due;
8.2 Covenant Default.
(a) If Borrower fails to perform any obligation under Sections 6.2 (financial reporting), 6.4 (taxes), 6.5 (insurance), 6.6 (primary
depository) or 6.7 (financial covenants), or violates any of the covenants contained in Article 7 of this Agreement; or
Borrower fails or neglects to perform or observe any other material term, provision, condition, covenant contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any
default under such other term, provision, condition or covenant that can be cured, has failed to cure such default within 10 days after Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if the
default cannot by its nature be
cured within the 10 day period or cannot after diligent attempts by Borrower be cured within such 10 day period, and such default is likely to be cured within a reasonable time, then Borrower
shall have an additional reasonable period (which shall not in any case exceed 30 days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default but no
Credit Extensions will be made.
8.3 Material Adverse Change. If there occurs any circumstance or any circumstances which
would reasonably be expected to have a Material Adverse Effect;
8.4 Attachment. If any material portion of Borrower’s
assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or Person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has
not been removed, discharged or rescinded within 10 days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim
becomes a lien or encumbrance upon any material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any material portion of Borrower’s assets by the United States Government, or any
department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within 10 days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event
of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower (provided that no Credit Extensions will be made during such cure period);
8.5 Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency
Proceeding is c01mnenced against Borrower and is not dismissed or stayed within 30 days (provided that no Credit Extensions will be made prior to the dismissal of such Insolvency Proceeding);
8.6 Other Agreements. If there is a default or other failure to perform in any agreement to which Borrower is a party with a
third party or parties (a) 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 $500,000, (b) in connection with any lease of real property
(after giving effect to any grace or cure period), or (c) that would reasonably be expected to have a Material Adverse Effect;
8.7 Judgments. If a final, uninsured judgment or judgments for the payment of money in an amount, individually or in the
aggregate, of at least $500,000 shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of 10 days (provided that no Credit Extensions will be made prior to the satisfaction or stay of the judgment); or
8.8 Misrepresentations. If any material misrepresentation or material misstatement exists now or hereafter in any warranty or
representation set forth herein or in any certificate delivered to Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter into this Agreement or any other Loan Document.
BANK’S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, at its election,
without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in Section 8.5 (insolvency), all Obligations shall become immediately due and payable without any action by Bank);
(b) Demand that Borrower (i) deposit cash with Bank in an amount equal to the amount of any Letters of Credit remaining undrawn,
as collateral security for the repayment of any future drawings under such Letters of Credit, and (ii) pay in advance all Letter of Credit fees scheduled to be paid or payable over the remaining term of the Letters of Credit, and Borrower shall
promptly deposit and pay such amounts;
(c) Cease advancing money or extending credit to or for the benefit of Borrower under this
Agreement or under any other agreement between Borrower and Bank;
(d) Settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that Bank reasonably considers advisable;
(e) Make such payments and do such
acts as Bank considers necessary or reasonable to protect its security interest in the Collateral. Borrower agrees to assemble the Collateral if Bank so requires, and to make the Collateral available to Bank as Bank may designate. Borrower
authorizes Bank to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Bank’s
detennination appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith. With respect to any of Borrower’s owned premises, Borrower hereby grants Bank a license to enter into possession of
such premises and to occupy the same, without charge, in order to exercise any of Bank’s rights or remedies provided herein, at law, in equity, or otherwise;
(f) Set off and apply to the Obligations any and all (i) balances and deposits of Borrower held by Bank, and
(ii) indebtedness at any time owing to or for the credit or the account of Borrower held by Bank;
(g) Ship, reclaim, recover,
store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Bank is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use,
without charge, Borrower’s labels, Patents, Copyrights, rights of use of any name, trade secrets, trade names, Trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in
completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section 9.1, Borrower’s rights under all licenses and all franchise agreements shall inure to
(h) Sell the Collateral at either a public or private sale, or both, by way of one
or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower’s premises) as Bank determines is commercially reasonable, and apply any proceeds to the Obligations in whatever manner or order Bank
deems appropriate. Bank may sell the Collateral without giving any warranties as to the Collateral. Bank may specifically disclaim any warranties of title or the like. This procedure will not be considered adversely to affect the commercial
reasonableness of any sale of the Collateral. If Bank sells any of the Collateral upon credit, Borrower will be credited only with payments actually made by the purchaser, received by Bank, and applied to the indebtedness of the purchaser. If the
purchaser fails to pay for the Collateral, Bank may resell the Collateral and Borrower shall be credited with the proceeds of the sale;
(i) Credit bid and purchase at any public sale;
(j) Apply for the appointment of a receiver, trustee, liquidator or conservator of the Collateral, without notice and without regard to
the adequacy of the security for the Obligations and without regard to the solvency of Borrower, any guarantor or any other Person liable for any of the Obligations; and
(k) Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.
Bank may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will
not be considered adversely to affect the commercial reasonableness of any sale of the Collateral.
9.2 Power of Attorney. Effective
only upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably appoints Bank (and any of Bank’s designated officers, or employees) as Borrower’s true and lawful attorney to: (a) send requests
for verification of Accounts or notify account debtors of Banlc’s security interest in the Accounts; (b) endorse Borrower’s name on any checks or other forms of payment or security that may come into Bank’s possession;
(c) sign Borrower’s name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and assigmnents of Accounts, verifications of Accounts, and notices to account debtors; (d) dispose of any
Collateral; (e) make, settle, and adjust all claims under and decisions with respect to Borrower’s policies of insurance; (f) settle and adjust disputes and claims respecting the accounts directly with account debtors, for amounts and upon
terms which Banlc detennines to be reasonable; and (g) file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Collateral; provided Banlc may exercise such power of attorney
to sign the name of Borrower on any of the documents described in clause (g) above, regardless of whether an Event of Default has occurred. The appointment of Banlc as Borrower’s attorney in fact, and each and every one of Bank’s
rights and powers, being coupled with an interest, is irrevocable until all of the Obligations (other than inchoate indemnity obligations) have been fully repaid and perfonned and Bank’s obligation to provide advances hereunder is terminated.
9.3 Accounts Collection. At any time after the occurrence and during the continuation
of an Event of Default, Bank may notify any Person owing funds to Borrower of Bank’s security interest in such funds and verify the amount of such Account. At any time after the occurrence and during the continuation of an Event of Default,
Borrower shall collect all amounts owing to Borrower for Bank, receive in trust all payments as Bank’s trustee, and immediately deliver such payments to Bank in their original fonn as received from the account debtor, with proper endorsements
9.4 Bank Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third Persons
or entities, as required under the tenns of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrower: (a) make payment of the same or any part thereof; and/or (b) set up such reserves under the Formula
and Non-Formula Revolving Line as Bank deems necessary to protect Bank from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type discussed in Section 6.5 of
this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at the then applicable
rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this Agreement.
9.5 Bank’s Liability for Collateral. Bank has no obligation to clean up or otherwise prepare the Collateral for sale. All risk
ofloss, damage or destruction of the Collateral shall be borne by Borrower.
9.6 No Obligation to Pursue Others. Bank has no
obligation to attempt to satisfy the Obligations by collecting them from any other Person liable for them and Bank may release, modify or waive any collateral provided by any other Person to secure any of the Obligations, all without affecting
Bank’s rights against Borrower. Borrower waives any right it may have to require Bank to pursue any other Person for any of the Obligations.
9.7 Remedies Cumulative. Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be
cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Borrower’s part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it. No waiver by Bank shall be effective unless made in a written document signed on behalf of Bank and
then shall be effective only in the specific instance and for the specific purpose for which it was given. Borrower expressly agrees that this Section 9.7 may not be waived or modified by Bank by course of performance, conduct, estoppel or
9.8 Demand; Protest. Except as otherwise provided in this Agreement, Borrower waives
demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment and any other notices relating to the Obligations.
Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into
in connection herewith shall be in writing and (except for financial statements and other reporting required pursuant to Section 6.2 of this Agreement, which shall be sent as directed in the quarterly or monthly reporting forms provided by
Bank) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by electronic mail to Borrower or to Banlc, as the case may be, at its address set forth below:
|If to Borrower:
||One World Trade Center|
||285 Fulton Street, 82nd Floor|
||New York, NY 10007|
||Attn: Peter Benevides|
406 Blackwell Street,
||Durham, North Carolina 27701|
||Attn: Loan Operations Manager|
|with a copy to:
Pacific Western Banlc
475 Fifth Avenue, 18th Floor
||New York, NY 10017|
||Attn: James Londono|
The parties hereto may change the address at which they are to receive notices hereunder, by notice in
writing in the foregoing manner given to the other.
CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of North Carolina, without regard to principles of
conflicts oflaw. Jurisdiction shall lie in the State of North Carolina. All disputes, controversies, claims, actions and similar proceedings arising with respect to Borrower’s account or any related agreement or transaction shall be brought in
the General Court of Justice of North Carolina sitting in Durham County, North Carolina or the United States District Court for the Middle District of North Carolina, except as provided below with respect to arbitration of such matters. BANK AND
BORROWER EACH ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY illRY IS A CONSTITUTIONAL
ONE, BUT THAT IT MAY BE WAIVED. EACH OF THEM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
ANY OF THEM MAY HAVE TO A TRIAL BY mRY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY OF THEM. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM. If the jury
waiver set forth in this Article 11 is not enforceable, then any dispute, controversy, claim, action or similar proceeding arising out of or relating to this Agreement, the Loan Documents or any of the transactions contemplated therein shall be
settled by final and binding arbitration held in Durham County, North Carolina in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed in accordance with those rules. The
arbitrator shall apply North Carolina law to the resolution of any dispute, without reference to rules of conflicts of law or rules of statutory arbitration. Judgment upon any award resulting from arbitration may be entered into and enforced by any
state or federal court having jurisdiction thereof Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this Article. The
costs and expenses of the arbitration, including without limitation, the arbitrator’s fees and expert witness fees, and reasonable attorneys’ fees, incurred by the parties to the arbitration may be awarded to the prevailing party, in the
discretion of the arbitrator, or may be apportioned between the parties in any manner deemed appropriate by the arbitrator. Unless and until the arbitrator decides that one party is to pay for all (or a share) of such costs and expenses, both
parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator.
12.1 Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted
assigns of each of the parties and shall bind all Persons who become bound as a debtor to this Agreement; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Banlc’s prior written consent,
which consent may be granted or withheld in Banlc’s sole discretion. Bank shall have the right without the consent of or notice to Borrower to sell, assign, transfer, negotiate, or grant participation in all or any part of, or any interest in,
Banlc’s obligations, rights and benefits hereunder.
12.2 Indemnification. Borrower shall defend, indemnify and hold
hannless Bank and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement (collectively,
“Claims”); and (b) all losses or Banlc Expenses in any way suffered, incurred, or paid by Banlc, its officers, employees and agents as a result of or in any way arising out of, following, or consequential to transactions between Banlc
and Borrower whether under this Agreement, or otherwise (including without limitation reasonable attorneys’ fees and expenses), except as to (a) and (b) for Claims, losses or Bank Expenses caused by Bank’s gross negligence or willful
12.3 Time of Essence. Time is of the essence for the performance of all
obligations set forth in this Agreement.
12.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.
12.5 Amendments in Writing, Integration. All amendments to or terminations of this Agreement or the other Loan Documents must be
in writing. All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement and the other Loan Documents, if any, are merged into this Agreement and
the Loan Documents.
12.6 Counterparts. This Agreement may be executed in any number of counterparts and by different parties
on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Executed copies of the signature pages of this Agreement
sent by facsimile or transmitted electronically in Portable Document Format (“PDF”), or any similar format, shall be treated as originals, fully binding and with full legal force and effect, and the parties waive any rights they may have
to object to such treatment.
12.7 Survival. All covenants, representations and warranties made in this Agreement shall
continue in full force and effect so long as any Obligations (other than inchoate indemnity obligations) remain outstanding or Bank has any obligation to make any Credit Extension to Borrower. The obligations of Borrower to indemnify Bank with
respect to the expenses, damages, losses, costs and liabilities described in Section 12.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Bank have rnn.
12.8 Confidentiality. In handling any confidential information, Bank and Borrower and all employees and agents of such party
shall exercise the same degree of care that such party exercises with respect to its own proprietary infonnation of the same types to maintain the confidentiality of any non-public infonnation thereby received
or received pursuant to this Agreement except that disclosure of such information may be made (i) in the case of Bank, to the subsidiaries or Affiliates of Bank or Borrower in connection with their present or prospective business relations with
Borrower, (ii) in the case of Bank, to prospective transferees or purchasers of any interest in the Credit Extensions, provided that they have entered into a comparable confidentiality agreement in favor of Borrower and have delivered a copy to
Borrower, (iii) as required by law, regulation, rnle or order, subpoena, judicial order or similar order, (iv) in the case of Bank, as may be required in connection with the examination, audit or similar investigation of Bank and
(v) as Bank may determine in connection with the enforcement of any remedies hereunder. Confidential information hereunder shall not include information that either: (a) is in the public domain or in the knowledge or possession of the
receiving party when disclosed to such party, or becomes part of the public domain after disclosure to such receiving party through no fault of such receiving party; or (b) is disclosed to such receiving party by a third party, provided such
receiving party does not have actual knowledge that such third party is prohibited from disclosing such information.
12.9 Termination of Warrant. That certain Second Warrant to Purchase Stock
issued as of December 20, 2017 by Borrower to Bank is hereby terminated and is of no further force and effect.
of Amendment and Restatement. This Agreement is intended to and does completely amend and restate, without novation, the Original Agreement. All security interests granted by Borrower under the Original Agreement are hereby confirmed and
ratified and shall continue to secure all Obligations under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above
/s/ Matthew S.Tuker
|Name: Matthew S.Tuker|
|Title: President & Chief Operating Officer|
|PACIFIC WESTERN BANK|
/s/ James Londono
|Name: James Londono|
|Title: Senior VP|
“Accounts” means all presently existing
and hereafter arising accounts, contract rights, payment intangibles and all other forms of obligations owing to Borrower arising out of the sale or lease of goods (including, without limitation, the licensing of software and other technology) or
the rendering of services by Borrower and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower’s Books relating to any of the foregoing.
“Acquisition” means (a) any sale, license, or other disposition of all or substantially all of the assets (including intellectual property) of
Borrower, or (b) any reorganization, consolidation, merger or sale of the voting securities of Borrower or any other transaction where the holders of Borrower’s securities before the transaction beneficially own less than 50% of the
outstanding voting securities of the surviving entity after the transaction.
“Advance” or “Advances” means a cash advance or cash
advances under the Formula Revolving Line and/or the Non-Formula Revolving Line.
with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is controlled by or is under common control with such Person, and each of such Person’s senior executive officers,
directors, and general partners.
“Aggregate Borrowing Limit” means $25,000,000; provided that, upon the occurrence of the Increase Milestone
and Borrower’s election to exercise the Increase Option, the tenn Aggregate Borrowing Limit” shall instead mean $35,000,000.
Services” means any products or services requested by Borrower and approved by Bank under the Formula Revolving Line, including and without limitation, corporate credit card services, Automated Clearing House transactions, FX Contracts, Letters
of Credit, or other treasury management services.
“Ancillary Services Sublimit” means a sublimit for Ancillary Services under the Formula
Revolving Line not to exceed $5,000,000.
“Annualized Chum” means the average monthly Chum for the preceding six months, multiplied by 12.
“Authorized Officer” means someone designated as such in the corporate resolution provided by Borrower to Bank in which this Agreement and the
transactions contemplated hereunder are authorized by Borrower’s board of directors. If Borrower provides subsequent corporate resolutions to Bank after the Closing Date, the individual(s) designated as “Authorized Officer(s)” in the
most-recently provided resolution shall be the only “Authorized Officers” for purposes of this Agreement.
“Banlc Expenses” means all
reasonable costs or expenses (including reasonable attorneys’ fees and expenses) incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents; reasonable Collateral audit fees; and Banlc’s
reasonable attorneys’ fees and expenses (whether generated in-house or by outside counsel) incurred in amending, enforcing or defending the Loan Documents (including fees and expenses of appeal), incurred
before, during and after an Insolvency Proceeding, whether or not suit is brought.
“Borrower’s Books” means all of Borrower’s books and records including: ledgers; records
concerning Borrower’s assets or liabilities, the Collateral, business operations or :financial condition; and all computer programs, or tape files, and the equipment, containing such information.
“Borrowing Base” means an amount equal to (a) five (5) (the “Advance Rate”), multiplied by (b) Borrower’s Recurring Revenue
for the previous month, as determined by Bank with reference to the most recent Borrowing Base Certificate delivered by Borrower pursuant to Section 6.2(a) of this Agreement; provided that if Borrower’s most recently calculated Annualized
Churn exceeds 12.5%, then Bank may change the Advance Rate in its discretion.
“Borrowing Base Certificate” means a borrowing base certificate,
in substantially the fonn of Exhibit D attached hereto, executed by a Responsible Officer of Borrower.
“Business Day” means any day that is not
a Saturday, Sunday, or other day on which banks in the State of North Carolina are authorized or required to close.
“Cash” means unrestricted
cash and cash equivalents.
“Change in Control” means a transaction other than a bona fide equity :financing or series of :financings on tenns
and from investors reasonably acceptable to Bank in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined
in Rule l 3d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the
election of directors, empowering such “person” or “group” to elect a majority of the Board of Directors of Borrower, who did not have such power before such transaction.
“Churn” means, with respect to contracts that generate fees included in Recurring Revenue,
(a) the monthly dollar value of Recurring Revenue attributable to such contracts that were cancelled, terminated, or expired and not renewed in
a particular month; divided by
(b) the monthly dollar value of Recurring Revenue attributable to such contracts that were in effect at the
beginning of that month;
expressed as a percentage.
“Closing Date” means the date of this Agreement.
“Code” means the North Carolina Uniform Commercial Code as amended or supplemented from time to time.
“Collateral” means the property described on Exhibit B attached hereto and all Negotiable Collateral to the extent not described on Exhibit B,
except to the extent any such property (a) is non-assignable by its terms without the consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable
under applicable law, including, without limitation, §25-9-406 and §25-9-408 of
the Code), (b) is property for which the granting of a security interest therein is contrary to applicable law, provided that, upon
the cessation of any such restriction or prohibition, such property shall automatically become part of the Collateral, (c) constitutes the capital stock of a controlled foreign corporation
(as defined in the IRC), in excess of 65% of the voting power of all classes of capital stock of such controlled foreign corporations entitled to vote, if the grant of a security interest in such capital stock pursuant to this Agreement would result
in material adverse “deemed dividend” tax consequences to Borrower due to the application of IRC §956, or (d) property (including any attachments, accessions or replacements) that is subject to a Lien that is permitted pursuant
to clause (c) of the definition of Permitted Liens, if the grant of a security interest with respect to such property pursuant to this Agreement would be prohibited by the agreement creating such Permitted Lien or would otherwise constitute a
default thereunder, provided, that such property will be deemed “Collateral” hereunder upon the termination and release of such Permitted Lien.
“Collateral State” means the state or states where the Collateral is located, which is New York.
“Compliance Certificate” means a compliance certificate, in substantially the form of Exhibit E attached hereto, executed by a Responsible Officer
“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person
with respect to (a) any indebtedness, lease, dividend, letter of credit or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed,
co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (b) any obligations with respect to undrawn letters of credit,
corporate credit cards or merchant services issued for the account of that Person; and (c) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or
other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or detennined amount of the primary obligation in respect of which such Contingent Obligation is
made or, if not stated or detenninable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the
obligations under the guarantee or other support arrangement.
“Copyrights” means any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held.
“Credit Extension” means each Fonnula Advance, Non Formula Advance or any other extension of credit, by Bank to or for the benefit of Borrower
“Divide” means, with respect to any Person that is an entity, the dividing of such Person into two or more separate Persons, with
the dividing Person either continuing or tenninating its existence as part of such division, including as contemplated under Section 18-217 of the Delaware Limited Liability Company Act for limited
liability companies fanned under Delaware law, or any analogous action taken pursuant to any other statute with respect to any corporation, limited liability company, partnership or other entity.
“EBITDA” means, with respect to any fiscal period, an amount equal to earnings before the sum of
(a) tax, plus (b) depreciation and amortization, plus (c) interest and non-Cash expenses, plus (d) any non-Cash stock compensation expenses.
“Environmental Laws” means all laws, rules, regulations, orders and the like issued by any federal, state, local, foreign or other governmental or
quasi-governmental authority or any agency pertaining to the environment or to any hazardous materials or wastes, toxic substances, flammable, explosive or radioactive materials, asbestos or other similar materials.
“Equipment” means all present and future machinery, equipment, tenant improvements, furniture, :fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
“BRISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.
“Event of Default” has the meaning assigned in Article 8.
“Foreign Exchange Reserve Percentage” means a percentage of reserves for FX Contracts as determined by Bank, in its sole discretion from time to
“Formula Advance” or “Formula Advances” means a cash advance or cash advances under the Formula Revolving Line.
“Formula Revolving Line” means one or more Credit Extensions of up to $25,000,000 in the aggregate at any time outstanding (inclusive of any
Ancillary Services reducing the Fonnula Revolving Line under clauses (A)-(E) of subsection 2.l(b)(iii) hereof); provided that, upon the occurrence of the Increase Milestone and Borrower’s election to exercise the Increase Option, the term
“Formula Revolving Line” shall instead mean one or more Credit Extensions of up to $35,000,000 in the aggregate at any time outstanding (inclusive of any Ancillary Services reducing the Formula Revolving Line under clauses (A)-(E) of
subsection 2.l(b)(iii) hereof).
“Formula Revolving Maturity Date” means February 11, 2022.
“FX Contracts” means contracts between Borrower and Bank for foreign exchange transactions.
“GAAP” means generally accepted accounting principles, consistently applied, as in effect from time to time in the United States.
“Increase Milestone” means Borrower’s achievement of Revenue of at least $75,000,000 in fiscal year 2020, as detennined by Bank with reference
to the :financial information provided by Borrower under Section 6.2(i) hereof.
“Increase Option” means, subject to the occurrence of the
Increase Milestone, Borrower has delivered written notification to Bank that Borrower is exercising its option to increase each of the Aggregate Borrowing Limit and the Formula Revolving Line to $35,000,000.
“Insolvency Proceeding” means any proceeding commenced by or against any Person or entity under
any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assigmnents for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors,
or proceedings seeking reorganization, arrangement, or other relief.
“Intellectual Property” means all of a Borrower’s right, title, and
interest in and to the following:
(a) Copyrights, Trademarks and Patents;
(b) Any and all trade secrets, and any and all intellectual property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
(c) Any and all design rights which may be available to a Borrower now or hereafter
existing, created, acquired or held;
(d) Any and all claims for damages by way of past, present and future infringement of any of
the rights included above, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the intellectual property rights identified above;
(e) All licenses or other rights to use any of the Copyrights, Patents or Trademarks, and all license fees and royalties arising from
such use to the extent permitted by such license or rights; and
(f) All amendments, renewals and extensions of any of the
Copyrights, Trademarks or Patents. “Inventory’’ means all present and future inventory in which Borrower has any interest.
“Investment” means any beneficial ownership of (including stock, partnership or limited liability company interest or other securities) any Person,
or any loan, advance or capital contribution to any Person.
“Investment Agreement” means, collectively, Borrower’s stock purchase and
other agreement(s) pursuant to which Borrower most recently issued its preferred stock.
“IRC” means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
“Letter of Credit” means a commercial or standby letter of credit or similar undertaking issued by
Bank at Borrower’s request.
“Letter of Credit Exposure” means, as of any date of determination, the sum, without duplication, of
(a) the aggregate undrawn amount of all outstanding Letters of Credit and any obligations of Bank related to purchased participations or indemnity or reimbursement obligations with respect to Letters of Credit, plus (b) the
aggregate unreimbursed amount of all drawn Letters of Credit until such amount becomes an Advance under the tenns of this Agreement.
means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.
“Liquidity Event” means (a) any sale,
license or other disposition of all or substantially all of the assets (including intellectual property) of Borrower, (b) any reorganization, consolidation, merger or sale of the voting securities of Borrower or any other transaction where the
holders of Borrower’s securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction, or (c) an initial public offering of Borrower’s equity
securities, in each case that occurs after June 30, 2021.
“Loan Documents” means, collectively, this Agreement, any note or notes executed by Borrower, and
any other document, instrument or agreement entered into in connection with this Agreement, all as amended or extended from time to time.
Adverse Effect” means a material adverse effect on: (a) the operations, business or financial condition of Borrower and its Subsidiaries taken as a whole; (b) the ability of Borrower to repay the Obligations or otherwise perform its
obligations under the Loan Documents; or (c) Borrower’s interest in, or the value, perfection or priority of Bank’s security interest in the Collateral.
“Negotiable Collateral” means all of Borrower’s present and future letters of credit of which it is a beneficiary, drafts, instruments
(including promissory notes), securities, documents of title, and chattel paper, and Borrower’s Books relating to any of the foregoing.
“Non-Formula Advance” or “Non-Formula Advances” means a cash advance or cash advances under the Non-Formula
“Non-Formula Revolving Line” means a Credit Extension of up to $5,000,000.
“Non-Formula Revolving Maturity Date” means February 11, 2022.
“Obligations” means all debt, principal, interest, Bank Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement or any other
agreement, whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing from
Borrower to others that Bank may have obtained by assignment or otherwise. Notwithstanding the foregoing, the “Obligations” shall not include the Warrant.
“Patents” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same.
“Periodic Payments” means all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to Bank pursuant
to the terms and provisions of any instrument, or agreement now or hereafter in existence between Borrower and Bank.
(a) Indebtedness of Borrower m favor of Bank arising under this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed in the Schedule;
(c) Indebtedness not to exceed $500,000 in the aggregate in any fiscal year of B01rnwer secured by a lien described in clause
(c) of the defined term “Pennitted Liens,” provided such Indebtedness does not exceed at the time it is incurred the lesser of the cost or fair market value of the property :financed with such Indebtedness;
(d) Subordinated Debt;
(e) Indebtedness not exceeding $500,000 in the aggregate with respect to surety bonds and similar obligations incurred
in the ordinary course of business;
(f) Indebtedness to trade creditors incurred in the ordinary course of
(g) Extensions, re:financings and renewals of any items of Permitted Indebtedness, provided that the
principal amount is not increased or the terms modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.
“Pennitted Investment” means:
Investments existing on the Closing Date disclosed in the Schedule;
(b) (i) Marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof
and currently having rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, (iii) Bank’s
certificates of deposit maturing no more than one year from the date of investment therein, (iv) Bank’s money market accounts; (v) Investments in regular deposit or checking accounts held with Bank or subject to a control agreement in
favor of Bank; and (vi) Investments consistent with any investment policy adopted by the Borrower’s board of directors;
(c) Repurchases of stock from former employees, consultants or directors of Borrower under the terms of applicable repurchase agreements
(i) in an aggregate amount not to exceed $500,000 in any fiscal year, provided that no Event of Default has occurred, is continuing or would exist after giving effect to the repurchases, or (ii) in any amount where the consideration for
the repurchase is the cancellation of indebtedness owed by such former employees, consultants or directors to Borrower regardless of whether an Event of Default exists;
(d) Investments accepted in connection with Permitted Transfers;
(e) Investments of Subsidiaries in or to other Subsidiaries or Borrower and Investments by Borrower in Subsidiaries not to exceed
$500,000 in the aggregate in any fiscal year;
(f) Investments not to exceed $500,000 outstanding in the aggregate at any time
consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of
Borrower or its Subsidiaries pursuant to employee stock purchase plan agreements approved by Borrower’s Board of Directors;
Investments in un:financed capital expenditures in any fiscal year, not to exceed $500,000;
(h) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s business;
(i) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are
not Affiliates, in the ordinary course of business, provided that this subparagraph (i) shall not apply to Investments of Borrower in any Subsidiary;
(j) Joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments by Borrower do not exceed $500,000 in the aggregate in any fiscal year;
(k) Investments permitted under Section 7.3. “Permitted Liens” means the following:
(a) Any Liens existing on the Closing Date and disclosed in the Schedule (excluding Liens to be satisfied with the proceeds of the
Credit Extensions) or arising under this Agreement, the other Loan Documents, or any other agreement in favor of Bank;
for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings and for which Borrower maintains adequate reserves;
(c) Liens not to exceed $500,000 in the aggregate in any fiscal year of Borrower (i) upon or in any Equipment acquired or held by
Borrower or any of its Subsidiaries to secure the purchase price of such Equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such Equipment, or (ii) existing on such Equipment at the time of its
acquisition, in each case provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such Equipment;
(d) Liens arising from leases, subleases, licenses, or sublicenses granted to others in the ordinary course of Borrower’s business
that do not interfere in any material respect with the business of Borrower and its Subsidiaries taken as a whole;
under worker’s compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, perfonnance or
other similar bonds for the perfonnance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than liens arising under BRISA or environmental liens) or surety or appeal bonds, or to
secure indemnity, performance or other similar bonds; all, in the ordinary course of Borrower’s or any Subsidiary’s business;
(f) Liens ofmaterialmen, mechanics, warehousemen, carriers, artisans or other similar liens arising in the ordinary course of
Borrower’s business or by operation of law, which are not past due or which are being contested in good faith by appropriate proceedings and for which reserves have been established to the extent required in accordance with GAAP;
(g) Easements, reservations, rights-of-way, restrictions, minor defects or irregularities in title and other similar liens affecting real property that do not interfere, individually or collectively, in any material respect with the
ordinary conduct of the business of Borrower;
(h) Liens incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by Liens of the type described in clauses (a) through (c) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase;
(i) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Sections 8.4 (attachment) or 8.7 (judgments); and
(j) Liens securing
Subordinated Debt, provided that such Liens do not encumber assets beyond those assets comprising the Collateral.
Transfer” means the conveyance, sale, lease, transfer or disposition by Borrower or any Subsidiary of:
(a) Inventory in the
ordinary course of business;
(b) licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in
the ordinary course of business;
(c) worn-out, surplus or obsolete Equipment;
(d) grants of security interests and other Liens that constitute Permitted Liens; and
(e) other assets of Borrower or its Subsidiaries that do not in the aggregate exceed $500,000 during any fiscal year.
“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency.
Rate” means the variable rate of interest, per annum, most recently announced by Ban1c, as its “prime rate,” whether or not such announced rate is the lowest rate available from Ban1c.
“Recurring Revenue” means the sum of contractually-obligated monthly recurring Revenue with respect to Borrower’s “Ordering” and
“Rails” products; in all cases such Revenue being derived from contracts that arise in the ordinary course of Borrower’s business and that comply with all of Borrower’s representations and warranties to Bank set forth in
“Responsible Officer” means each of the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer,
Vice President of Finance and the Controller of Borrower, as well as any other officer or employee identified as an Authorized Officer in the corporate resolution delivered by Borrower to Ban1c in connection with this Agreement.
“Revenue” means revenue recognized in accordance with GAAP.
“Schedule” means the schedule of exceptions attached hereto and approved by Bank, if any.
“Shares” means (a) 65% of the issued and outstanding capital stock, membership units or other securities owned or held of record by Borrower in any
Subsidiary of Borrower that constitutes the capital stock of a controlled foreign corporation (as defined in the IRC), if the grant of a security interest in such capital stock pursuant to this Agreement in excess of 65% would result in material
adverse “deemed dividend” tax consequences to Borrower due to the application of IRC §956, and (b) 100% of the issued and outstanding capital stock, membership units or other securities owned or held of record by Borrower in any other
Subsidiary of Borrower.
“SOS Reports” means the official reports from the Secretaries of State of each Collateral State, the state where
Borrower’s chief executive office is located, the state of Borrower’s fonnation and other applicable federal, state or local government offices identifying all current security interests filed in the Collateral and Liens of record as of
the date of such report.
“Subordinated Debt” means any debt incurred by Borrower that is subordinated in writing to the debt owing by Borrower
to Bank on tenns reasonably acceptable to Bank (and identified as being such by Borrower and Ban1c).
“Subsidiary” means any corporation,
partnership or limited liability company or joint venture in which (i) any general partnership interest or (ii) more than 50% of the stock, limited liability company interest or joint venture of which by the terms thereof having ordinary
voting power to elect the Board of Directors, managers or trustees of the entity, at the time as of which any detennination is being made, is owned by Borrower, either directly or through an Affiliate.
“Trademarks” means any trademark and service mark rights, whether registered or not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.
||PACIFIC WESTERN BANK
COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT
All personal property of Borrower (herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created or
acquired, and wherever located, including, but not limited to:
(a) all accounts (including health-care-insurance receivables),
chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), :financial assets, general intangibles (including patents,
trademarks, copyrights, goodwill, payment intangibles, domain names, and software), goods (including :fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of
service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and records with respect to any of the foregoing, and the
computers and equipment containing said books and records;
(b) any and all cash proceeds and/or noncash proceeds of any of the
foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment. All terms above have the meanings given to them in the North Carolina Unifonn Commercial Code, as
amended or supplemented from time to time, including revised Article 9 of the Uniform Commercial Code-Secured Transactions.
Notwithstanding the foregoing, the Collateral shall not include any of the intellectual property, in any medium, of any kind or nature
whatsoever, now or hereafter owned or acquired or received by Borrower, or in which Borrower now holds or hereafter acquires or receives any right or interest (collectively, the “Intellectual Property”; provided, however, that the
Collateral shall include all accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the “Rights to Payment”).
Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying
Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of May 16, 2012, include the Intellectual Property to the extent and only to the extent necessary
to pennit perfection of Bank’s security interest in the Rights to Payment, and further provided, however, that Bank’s enforcement rights with respect to any security interest in the Intellectual Property shall be absolutely limited to the
Rights to Payment only, and Banl<- shall have no recourse whatsoever with respect to the underlying Intellectual Property.
LOAN ADVANCE/PAYDOWN REQUEST FORM
[Please refer to New Borrower Kit]
[Please refer to New Borrower Kit]
[Please refer to New Borrower Kit]
SCHEDULE OF EXCEPTIONS
Permitted Indebtedness (Exhibit A)-None
Permitted Investments (Exhibit A)- None
Permitted Liens (Exhibit A)-None
(Section 5.5) - Mobo Systems, Inc.; OLO and GoMobo (both are registered d/b/a’s)
Litigation (Section 5.6) - None
Inbound Licenses (Section 5.12) - None