WAIVER AND FIFTH LOAN MODIFICATION AGREEMENT
Exhibit 10.6
This Waiver and Fifth Loan Modification Agreement (this “Loan Modification Agreement”) is
entered into as of August __, 2010, by and among SILICON VALLEY BANK, a California corporation,
with its principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a
loan production office located at 000 Xxxxxxxxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000
(“Bank”), TRUSTWAVE HOLDINGS, INC., a Delaware corporation (“Holdings”), TRUSTWAVE INTERMEDIATE,
INC., a Delaware corporation (“Intermediate”), and TW VERICEPT CORPORATION, a Delaware corporation
(formerly known as “TrustWave Acquisition, Inc.,” “Vericept” and individually and collectively,
jointly and severally, with Holdings, and Intermediate, “Existing Borrower”).
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and
obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan
arrangement dated as of August 19, 2009, evidenced by, among other documents, a certain Amended and
Restated Loan and Security Agreement dated as of August 19, 2009 between Borrower and Bank, as
amended by a First Loan Modification Agreement dated October 19, 2009 between Borrower and Bank, as
amended by a Consent and Second Loan Modification Agreement dated January 6, 2010 between Borrower
and Bank, as further amended by a Consent and Third Loan Modification Agreement dated March 1, 2010
between Borrower and Bank and as further amended by a Joinder and Fourth Loan Modification
Agreement dated April 7, 2010 between Borrower and Bank (as amended, the “Loan Agreement”).
Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan
Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as
described in the Loan Agreement and the Intellectual Property Collateral as described in a certain
Intellectual Property Security Agreement dated August 19, 2009, by Vericept in favor of Bank (the
“IP Security Agreement and together with any other collateral security granted to Bank, the
“Security Documents”). Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the “Existing Loan Documents”.
3. DESCRIPTION OF CHANGE IN TERMS.
| A. | Modifications to Loan Agreement. | ||
| The Loan Agreement shall be amended by deleting the following, appearing as Section 6.2(a)(ii) thereof, in its entirety: |
“(ii) as soon as available, but no later than one hundred fifty
(150) days after the last day of Borrower’s fiscal year (on or before
August 15, 2009 with respect Borrower’s fiscal year ending December
31, 2007 and on or before October 31, 2009 with respect Borrower’s
fiscal year ending December 31, 2008), audited consolidated financial
statements prepared under GAAP, consistently applied, together with
an unqualified opinion on the financial statements from an
independent certified public accounting firm acceptable to Bank in
its reasonable discretion;”
| and inserting in lieu thereof the following: |
“(ii) as soon as available, but no later than one hundred fifty
(150) days after the last day of Borrower’s fiscal year (on or before
August 15, 2009 with respect Borrower’s fiscal year ending December
31, 2007, and on or before October 31, 2009 with respect Borrower’s
fiscal year ending December 31,
2008,
and on or before September 15,
2010 with respect Borrower’s fiscal year ending December 31, 2009),
audited consolidated financial statements prepared
under GAAP, consistently applied, together with an unqualified
opinion on the financial statements from an independent certified
public accounting firm acceptable to Bank in its reasonable
discretion;”
4. WAIVER. Borrower acknowledges that it is currently in default under the Loan Agreement
by its failure to comply with the Liquidity covenant set forth in Section 6.7(a) thereof for the
compliance period ended May 31, 2010 (the “Existing Default”). In consideration of and in reliance
upon the representations, warranties and covenants of Borrower herein and in the Existing Loan
Documents, Bank hereby waives the Existing Default under the Loan Agreement. Bank’s waiver of the
Existing Default shall apply only to the foregoing specific compliance period referenced above.
5. REPRESENTATION AND WARRANTIES. To induce Bank to enter into this Loan Modification
Agreement, Borrower hereby represents and warrants to Bank as follows: Immediately after giving
effect to the waiver in Section 4 of this Loan Modification Agreement (a) the representations and
warranties of Borrower contained in the Existing Loan Documents are true, accurate and complete in
all material respects as of the date hereof (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and correct as of such date), and
(b) no Event of Default has occurred and is continuing and (b) Borrower has the power and authority
to execute and deliver this Loan Modification Agreement.
6. FEES. Borrower shall pay to Bank a modification fee equal to Five Thousand Dollars
($5,000.00), which fee shall be due on the date hereof and shall be deemed fully earned as of the
date hereof. Borrower shall also reimburse Bank for all reasonable legal fees and expenses
incurred in connection with the Existing Loan Documents and this amendment thereto.
7. RATIFICATION OF INTELLECTUAL PROPERTY SECURITY AGREEMENT. Vericept hereby ratifies,
confirms and reaffirms, all and singular, the terms and conditions of the IP Security Agreement,
and acknowledges, confirms and agrees that the IP Security Agreement contains an accurate and
complete listing of all Intellectual Property Collateral as defined in the IP Security Agreement,
and shall remain in full force and effect.
8. RATIFICATION OF PERFECTION CERTIFICATES. Holdings hereby ratifies, confirms and
reaffirms, all and singular, the terms and disclosures contained in a certain Perfection
Certificate dated as of August 19, 2009, by Holdings and delivered to Bank (the “Holdings
Perfection Certificate”), and acknowledges, confirms and agrees the disclosures and information
Holdings provided to Bank in the Holdings Perfection Certificate have not changed, as of the date
hereof. Intermediate hereby ratifies, confirms and reaffirms, all and singular, the terms and
disclosures contained in a certain Perfection Certificate dated as of August 19, 2009, by
Intermediate and delivered to Bank (the “Intermediate Perfection Certificate”), and acknowledges,
confirms and agrees the disclosures and information Intermediate provided to Bank in the
Intermediate Perfection Certificate have not changed, as of the date hereof. Vericept hereby
ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in a
certain Perfection Certificate dated as of August 19, 2009, by Vericept and delivered to Bank (the
“Intermediate Perfection Certificate”), and acknowledges, confirms and agrees the disclosures and
information Intermediate provided to Bank in the Intermediate Perfection Certificate have not
changed, as of the date hereof.
9. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary
to reflect the changes described above.
10. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all
terms and conditions of all security or other collateral granted to the Bank, and confirms that the
indebtedness secured thereby includes, without limitation, the Obligations.
11. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that Borrower has no
offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or
otherwise, and that if
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Borrower
now has, or ever did have, any offsets, defenses, claims, or
counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby
expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.
12. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing
Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan
Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force
and effect. Bank’s agreement to modifications to the existing Obligations pursuant to this Loan
Modification Agreement in no way shall obligate Bank to make any future modifications to the
Obligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the
Obligations. It is the intention of Bank and Borrower to retain as liable parties all makers of
Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker will
be released by virtue of this Loan Modification Agreement.
13. CONFIDENTIALITY. Bank may use confidential information for the development of
databases, reporting purposes, and market analysis, so long as such confidential information is
aggregated and anonymized prior to distribution unless otherwise expressly permitted by Borrower.
The provisions of the immediately preceding sentence shall survive the termination of the Loan
Agreement.
14. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER. Illinois law governs this Loan
Modification Agreement without regard to principles of conflicts of law. Borrower and Bank each
submit to the exclusive jurisdiction of the State and Federal courts in Illinois; provided,
however, that if for any reason Bank cannot avail itself of such courts in the State of Illinois,
Borrower accepts jurisdiction of the courts and venue in Santa Xxxxx County, California.
NOTWITHSTANDING THE FOREGOING, BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST
BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANK DEEMS NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE BANK’S RIGHTS AGAINST
BORROWER OR ITS PROPERTY.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING
OUT OF OR BASED UPON THIS LOAN MODIFICATION AGREEMENT, THE LOAN AGREEMENT OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS LOAN MODIFICATION AGREEMENT. EACH PARTY
HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
15. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only when it
shall have been executed by Borrower and Bank.
[The remainder of this page is intentionally left blank — Signature Pages to Follow]
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This Joinder and Fourth Loan Modification Agreement is executed as of the date first written above.
| BORROWER: | BANK: | |||||
| TRUSTWAVE HOLDINGS, INC. | SILICON VALLEY BANK | |||||
By:
|
/s/ Xxxxxx XxXxxxxx | By: | ||||
Name:
|
Xxxxxx XxXxxxxx | Name: | ||||
Title:
|
Chief Executive Officer | Title: | ||||
| TRUSTWAVE INTERMEDIATE, INC. | ||||||
By:
|
/s/ Xxxxxx X. XxXxxxxx | |||||
Name:
|
Xxxxxx X. XxXxxxxx | |||||
Title:
|
Chief Executive Officer | |||||
| TW VERICEPT CORPORATION | ||||||
By:
|
/s/ Xxxxxx X. XxXxxxxx | |||||
Name:
|
Xxxxxx X. XxXxxxxx | |||||
Title:
|
Chief Executive Officer | |||||
| TRUSTWAVE GOVERNMENT SOLUTIONS, INC. | ||||||
By:
|
/s/ Xxxxxx X. XxXxxxxx | |||||
Name:
|
Xxxxxx X. XxXxxxxx | |||||
Title:
|
Chief Executive Officer | |||||
The undersigned, TRUSTWAVE LIMITED, a company registered in England & Wales, ratifies,
confirms and reaffirms, all and singular, the terms and conditions of a certain Deed of Guarantee
in favor of Bank dated September 25, 2008 (the “Guarantee”) and acknowledges, confirms and agrees
that the Guarantee shall remain in full force and effect and shall in no way be limited by the
execution of this Loan Modification Agreement, or any other documents, instruments and/or
agreements executed and/or delivered in connection therewith.
| TRUSTWAVE LIMITED | ||||
By:
|
/s/ Xxxxxx X. XxXxxxxx | |||
Name:
|
Xxxxxx X. XxXxxxxx | |||
Title:
|
Chief Executive Officer and President | |||
The undersigned, TRUSTWAVE HOLDINGS LIMITED, a company registered in England & Wales,
ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Deed of
Guarantee in favor of Bank dated November 27, 2007 (the “Guarantee”) and acknowledges, confirms and
agrees that the Guarantee shall remain in full force and effect and shall in no way be limited by
the execution of this Loan Modification Agreement, or any other documents, instruments and/or
agreements executed and/or delivered in connection therewith.
| TRUSTWAVE HOLDINGS LIMITED | ||||
By:
|
/s/ Xxxxxx X. XxXxxxxx | |||
Name:
|
Xxxxxx X. XxXxxxxx | |||
Title:
|
Chief Executive Officer and President | |||