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Exhibit 10.2 - Second Amended and Restated Loan and Security Agreement
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
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TABLE OF CONTENTS
Page
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1 ACCOUNTING AND OTHER TERMS........................................... 4
2 LOAN AND TERMS OF PAYMENT............................................ 4
2.1 Advances...................................................... 4
2.2 Overadvances.................................................. 5
2.3 Interest Rate, Payments....................................... 5
2.4 Fees.......................................................... 5
3 CONDITIONS OF LOANS.................................................. 6
3.1 Conditions Precedent to Initial Advance....................... 6
3.2 Conditions Precedent to all Advances.......................... 6
4 CREATION OF SECURITY INTEREST........................................ 6
4.1 Grant of Security Interest.................................... 6
5 REPRESENTATIONS AND WARRANTIES....................................... 6
5.1 Due Organization and Authorization............................ 6
5.2 Collateral.................................................... 7
5.3 Litigation.................................................... 7
5.4 No Material Adverse Change in Financial Statements............ 7
5.5 Solvency...................................................... 7
5.6 Regulatory Compliance......................................... 7
5.7 Subsidiaries.................................................. 7
5.8 Full Disclosure............................................... 8
6 AFFIRMATIVE COVENANTS................................................ 8
6.1 Government Compliance......................................... 8
6.2 Financial Statements, Reports, Certificates................... 8
6.3 Inventory; Returns............................................ 8
6.4 Taxes......................................................... 9
6.5 Insurance..................................................... 9
6.6 Primary Accounts.............................................. 9
6.7 Financial Covenants........................................... 9
6.8 Registration of Intellectual Property Rights.................. 9
6.9 Further Assurances........................................... 10
7 NEGATIVE COVENANTS.................................................. 10
7.1 Dispositions................................................. 10
7.2 Changes in Business, Ownership, Management or
Business Locations........................................... 10
7.3 Mergers or Acquisitions...................................... 10
7.4 Indebtedness................................................. 10
7.5 Encumbrance.................................................. 10
7.6 Distributions; Investments................................... 10
7.7 Transactions with Affiliates................................. 11
7.8 Subordinated Debt............................................ 11
7.9 Compliance................................................... 11
8 EVENTS OF DEFAULT................................................... 11
8.1 Payment Default.............................................. 11
8.2 Covenant Default............................................. 11
8.3 Material Adverse Change...................................... 11
8.4 Attachment................................................... 11
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8.5 Insolvency................................................... 12
8.6 Other Agreements............................................. 12
8.7 Judgments.................................................... 12
8.8 Misrepresentations........................................... 12
9 BANK'S RIGHTS AND REMEDIES.......................................... 12
9.1 Rights and Remedies.......................................... 12
9.2 Power of Attorney............................................ 13
9.3 Accounts Collection.......................................... 13
9.4 Bank Expenses................................................ 13
9.5 Bank's Liability for Collateral.............................. 13
9.6 Remedies Cumulative.......................................... 13
9.7 Demand Waiver................................................ 14
10 NOTICES............................................................. 14
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER.......................... 14
12 GENERAL PROVISIONS.................................................. 14
12.1 Successors and Assigns....................................... 14
12.2 Indemnification.............................................. 14
12.3 Time of Essence.............................................. 14
12.4 Severability of Provision.................................... 14
12.5 Amendments in Writing, Integration........................... 15
12.6 Counterparts................................................. 15
12.7 Survival..................................................... 15
12.8 Confidentiality.............................................. 15
12.9 Effect of Amendment and Restatement.......................... 15
13 DEFINITIONS......................................................... 15
13.1 Definitions.................................................. 15
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THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated
December 2, 1997, between SILICON VALLEY BANK ("Bank"), whose corporate
headquarters is located at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, XX 00000 with a loan
production office located at East 0000 Xxxxxxxxx Xxxx, Xxxxx X - 000, Xxxxxxx,
XX 00000 and SALESLOGIX CORPORATION ("Borrower"), whose address is 0000 Xxxxx
Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000.
RECITALS
A. Bank and Borrower are parties to that certain QuickStart Loan and
Security Agreement dated September 27, 1996, and all schedules and attachments
thereto, as amended from time to time, including, without limitation, by the
Amended and Restated Loan and Security Agreement dated July 3, 1997, and all
schedules and attachments thereto, as may be further amended from time to time
(the "Original Agreement").
B. Borrower and Bank desire in this Agreement to set forth their
agreement with respect to a working capital line and an acquisition loan and to
amend and restate in its entirety without novation the Original Agreement in
accordance with the provisions herein.
AGREEMENT
The parties agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement will be construed
following GAAP Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document. This Agreement shall be construed to
impart upon Bank a duty to act reasonably at all times.
2 LOAN AND TERMS OF PAYMENT
2.1 ADVANCES.
Borrower will pay Bank the unpaid principal amount of all Advances and
interest on the unpaid principal amount of the Advances.
2.1.1 REVOLVING ADVANCES.
(a) Bank will make Advances not exceeding the lesser of (A) the
Committed Revolving Line or (B) the Borrowing Base, whichever is less. Advances
may be repaid and reborrowed during the term of this Agreement.
(b) To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 3:00 p.m. Pacific time on the Business Day the Advance is to be
made. Borrower must promptly confirm the notification by delivering to Bank the
Payment/Advance Form attached as Exhibit B. Bank will credit Advances to
Borrower's deposit account. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become
due. Bank may rely on any telephone notice given by a person whom Bank believes
is a Responsible Officer or designee. Borrower will indemnify Bank for any loss
Bank suffers due to reliance.
(c) The Committed Revolving Line terminates on the Revolving Maturity
Date, when all Advances and other amounts due under this Agreement are
immediately payable.
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2.1.2 ACQUISITION ADVANCE.
(a) Through December 31, 1997, Bank will make advances (each, an
"Acquisition Advance" and collectively, "Acquisition Advances") not exceeding
the Committed Acquisition Loan. The Acquisition Advances may only be used to
pay-off existing long term debt acquired by Borrower as well as additional
direct acquisition costs pursuant to Borrower's acquisition of Opis Corporation.
(b) Interest accrues from the date of each Acquisition Advance at the
rate in Section 2.3(a) and is payable in 48 equal monthly installments of
principal, plus accrued interest, beginning on the last day of January, 1998 and
ending on December 31, 2001 (the "Acquisition Loan Maturity Date"). Any
Acquisition Advance when repaid may not be reborrowed.
(c) To obtain an Acquisition Advance, Borrower must notify Bank (the
notice is irrevocable) by facsimile no later than 3:00 p.m. Pacific time 1
Business Day before the day on which the Acquisition Advance is to be made. The
notice in the form of Exhibit B (Payment/Advance Form) must be signed by a
Responsible Officer or designee.
2.2 OVERADVANCES.
If Borrower's Obligations under Section 2.1.1 exceed the lesser of
either (i) the Committed Revolving Line or (ii) the Borrowing Base, Borrower
must immediately pay Bank the excess.
2.3 INTEREST RATE, PAYMENTS.
(a) Interest Rate. (i) Advances accrue interest on the outstanding
principal balance at a per annum rate of 1.00 percentage point above the Prime
Rate; and (ii) Acquisition Advances accrue interest on the outstanding principal
balance at a per annum rate of 1.00 percentage point above the Prime Rate. After
an Event of Default Obligations accrue interest at 5.00 percentage points above
the rate effective immediately before the Event of Default. The interest rate
increases or decreases when the Prime Rate changes. Interest is computed on a
360 day year for the actual number of days elapsed.
(b) Payments. Interest due on the Committed Revolving Line is payable
on the 1st of each month. Interest due on the Acquisition Advances is payable as
set-forth in Section 2.1.2 (b). Bank may debit any of Borrower's deposit
accounts including Account Number ____________________________ for principal and
interest payments or any amounts Borrower owes Bank. Bank will notify Borrower
when it debits Borrower's accounts. These debits are not a set-off. Payments
received after 12:00 noon Pacific time are considered received at the opening of
business on the next Business Day. When a payment is due on a day that is not a
Business Day, the payment is due the next Business Day and additional fees or
interest accrue.
2.4 FEES.
Borrower will pay:
(a) Facility Fee. A fully earned, non-refundable Facility Fee of $2,000
for the Committed Revolving Line and the Committed Acquisition Loan due on the
Closing Date; and
(b) Bank Expenses. All Bank Expenses (including reasonable attorneys'
fees and expenses) incurred through and after the date of this Agreement, are
payable when due.
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3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE.
Bank's obligation to make the initial Advance is subject to the
condition precedent that it receive the agreements, documents and fees it
requires.
3.2 CONDITIONS PRECEDENT TO ALL ADVANCES.
Bank's obligations to make each Advance, including the initial Advance,
is subject to the following:
(a) Bank's receipt and review of the results of an accounts receivable
audit which results shall be satisfactory to Bank;
(b) timely receipt of any Payment/Advance Form; and
(c) the representations and warranties in Section 5 must be materially
true on the date of the Payment/Advance Form and on the effective date of each
Advance and no Event of Default may have occurred and be continuing, or result
from the Advance. Each Advance is Borrower's representation and warranty on that
date that the representations and warranties of Section 6 remain true.
4 CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST.
Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank may place a "hold" on any deposit account pledged as
Collateral. All prior agreements, understandings, representations, warranties
and negotiations between the parties hereto with respect to the subject matter
of this Agreement if any, are merged into this Agreement provided, that any
UCC-1 financing statements, or amendments thereto, or filings with respect to
Borrower's Intellectual Property, filed by Bank to secure the Obligations of
Borrower shall remain in full force and effect. All security interests granted
under the Original Agreement are hereby confirmed and ratified and shall
continue to secure all Obligations under this Agreement.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION.
Borrower and each Subsidiary is duly existing and in good standing in
its state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the default could cause a Material Adverse Change.
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5.2 COLLATERAL.
Borrower has good title to the Collateral, free of Liens except
Permitted Liens. The Accounts are bona fide, existing obligations, and the
service or property has been performed or delivered to the account debtor or its
agent for immediate shipment to and unconditional acceptance by the account
debtor. Borrower has no notice of any actual or imminent Insolvency Proceeding
of any account debtor whose accounts are an Eligible Account in any Borrowing
Base Certificate. All Inventory is in all material respects of good and
marketable quality, free from material defects. Borrower is the sole owner of
the Intellectual Property, except for non-exclusive licenses granted to its
customers in the ordinary course of business. Each Patent is valid and
enforceable and no part of the Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Intellectual Property violates the rights of any third party.
5.3 LITIGATION.
Except as shown in the Schedule, there are no actions or proceedings
pending or, to Borrower's knowledge, threatened by or against Borrower or any
Subsidiary in which an adverse decision could cause a Material Adverse Change.
5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.
All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations. There has not been any material deterioration in Borrower's
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.
5.5 SOLVENCY.
The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.
5.6 REGULATORY COMPLIANCE.
Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations G, T and U of the Federal Reserve Board of Governors). Borrower has
complied with the Federal Fair Labor Standards Act. Borrower has not violated
any laws, ordinances or rules, the violation of which could cause a Material
Adverse Change. None of Borrower's or any Subsidiary's properties or assets has
been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge,
by previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally. Borrower and each Subsidiary has
timely filed all required tax returns and paid, or made adequate provision to
pay, all taxes, except those being contested in good faith with adequate
reserves under GAAP. Borrower and each Subsidiary has obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all government authorities that are necessary to continue
its business as currently conducted.
5.7 SUBSIDIARIES.
Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments.
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5.8 FULL DISCLOSURE.
No representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained in the certificates or statements misleading.
6 AFFIRMATIVE COVENANTS
Borrower will do all of the following:
6.1 GOVERNMENT COMPLIANCE.
Borrower will maintain its and all Subsidiaries' legal existence and
good standing in its jurisdiction of formation and maintain qualification in
each jurisdiction in which the failure to so qualify could have a material
adverse effect on Borrower's business or operations. Borrower will comply, and
have each Subsidiary comply, with all laws, ordinances and regulations to which
it is subject, noncompliance with which could have a material adverse effect on
Borrower's business or operations or cause a Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower will deliver to Bank: (i) as soon as available, but no
later than 30 days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower's consolidated
operations during the period, in a form and certified by a Responsible Officer
acceptable to Bank; (ii) as soon as available, but no later than 90 days after
the last day of Borrower's fiscal year, 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; (iii) within 5 days of filing, copies
of all statements, reports and notices made available to Borrower's security
holders or to any holders of Subordinated Debt and all reports on Form 10-K,
10-Q and 8-K filed with the Securities and Exchange Commission; (iv) a prompt
report of any legal actions pending or threatened against Borrower or any
Subsidiary that could result in damages or costs to Borrower or any Subsidiary
of $100,000 or more; (v) budgets, sales projections, operating plans or other
financial information Bank requests; and (vi) prompt notice of any material
change in the composition of the Intellectual Property, including any subsequent
ownership right of Borrower in or to any Copyright, Patent or Trademark not
shown in any intellectual property security agreement between Borrower and Bank
or knowledge of an event that materially adversely affects the value of the
Intellectual Property.
(b) Within 20 days after the last day of each month, Borrower will
deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in
the form of Exhibit C, with aged listings of accounts receivable and accounts
payable.
(c) Within 30 days after the last day of each month, Borrower will
deliver to Bank with the monthly financial statements a Compliance Certificate
signed by a Responsible Officer in the form of Exhibit D.
(d) Bank has the right to audit Borrower's Accounts at Borrower's
expense, but the audits will be conducted no more often than every 6 months
unless an Event of Default has occurred and is continuing.
6.3 INVENTORY; RETURNS.
Borrower will keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary
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practices as they exist at execution of this Agreement. Borrower must promptly
notify Bank of all returns, recoveries, disputes and claims, that involve more
than $50,000.
6.4 TAXES.
Borrower will make, and cause each Subsidiary to make, timely payment
of all material federal, state, and local taxes or assessments and will deliver
to Bank, on demand, appropriate certificates attesting to the payment.
6.5 INSURANCE.
Borrower will keep its business and the Collateral insured for risks
and in amounts, as Bank requests. Insurance policies will be in a form, with
companies, and in amounts that are satisfactory to Bank. All property policies
will have a lender's loss payable endorsement showing Bank as an additional loss
payee and all liability policies will show the Bank as an additional insured and
provide that the insurer must give Bank at least 20 days notice before canceling
its policy. At Bank's request, Borrower will deliver certified copies of
policies and evidence of all premium payments. Proceeds payable under any policy
will, at Bank's option, be payable to Bank on account of the Obligations.
6.6 PRIMARY ACCOUNTS.
Borrower will maintain its primary depository and operating accounts
with Bank.
6.7 FINANCIAL COVENANTS.
Borrower will maintain as of the last day of each month:
(i) QUICK RATIO [ADJUSTED]. A ratio of Quick Assets to Current
Liabilities minus Deferred Maintenance Revenue (maintenance and support) of at
least 1.75 to 1.00.
(ii) LIQUIDITY COVERAGE. Unrestricted cash (and equivalents) plus 50%
of net trade accounts receivable less than 90 days from the invoice of at least
2 times the outstanding Acquisition Advance through the month ended November 30,
1997. Beginning with the month ending December 31, 1997, unrestricted cash (and
equivalents) plus eligible borrowings under the Committed Revolving Line less
any outstanding Advance of at least 2 times the outstanding Acquisition Advance.
Once Borrower had maintained a Debt Service Coverage of 1.50 to 1.00 for 2
consecutive quarters, the Liquidity Coverage covenant will be replaced with the
following Debt Service Coverage covenant
(iii) DEBT SERVICE COVERAGE. A ratio of earnings before interest,
taxes, depreciation and amortization less capital expenditures and capitalized
software to current maturities of long term debt of at least 1.50 to 1.00. To be
maintained by Borrower upon replacement of the Liquidity Coverage covenant.
(iv) PROFITABILITY. Borrower will be profitable each quarter, except
that Borrower may suffer Maximum Losses not to exceed: $1,200,000 for the
quarter ending December 31, 1997; $300,000 for the quarter ending March 31,
1998; and $200,000 for the quarter ending June 30, 1998.
6.8 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.
Borrower will register with the United States Patent and Trademark
Office or the United States Copyright Office Intellectual Property rights on
Exhibits A, B, C, and D to the Intellectual Property Security Agreement within
30 days of the date of this Agreement, and additional Intellectual Property
rights developed or acquired including revisions or additions with any product
before the sale or licensing of the product to any third party; provided that
such registration shall only be required one (1) time every six (6) months
through the term of this Agreement.
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Borrower will (i) protect, defend and maintain the validity and
enforceability of the Intellectual Property and promptly advise Bank in writing
of material infringements and (ii) not allow any Intellectual Property to be
abandoned, forfeited or dedicated to the public without Bank's written consent.
6.9 FURTHER ASSURANCES.
Borrower will execute any further instruments and take further action
as Bank requests to perfect or continue Bank's security interest in the
Collateral or to effect the purposes of this Agreement.
7 NEGATIVE COVENANTS
Borrower will not do any of the following:
7.1 DISPOSITIONS.
Convey, sell, lease, transfer or otherwise dispose of (collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its- business or property, other than Transfers (i) of Inventory in the ordinary
course of business, (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business, or (iii) of worn-out or obsolete Equipment.
7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.
Other than the acquisition of all or substantially all of the capital
stock and assets of Opis Corporation, engage in or permit any of its
Subsidiaries to engage in any business other than the businesses currently
engaged in by Borrower or have a material change in its ownership of greater
than 25%. Borrower will not without at least 30 days prior written notice,
relocate its chief executive office or add any new offices or business
locations.
7.3 MERGERS OR ACQUISITIONS.
Other than the acquisition of the assets of Opis Corporation (i) Merge
or consolidate, or permit any of its Subsidiaries to merge or consolidate, with
any other Person, or acquire, or permit any of its Subsidiaries to acquire, all
or substantially all of the capital stock or property of another Person or (ii)
merge or consolidate a Subsidiary into another Subsidiary or into Borrower.
7.4 INDEBTEDNESS.
Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.
7.5 ENCUMBRANCE.
Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
here.
7.6 DISTRIBUTIONS; INVESTMENTS.
Directly or indirectly acquire or own any Person, or make any
Investment in any Person, other than Permitted Investments, or permit any of its
Subsidiaries to do so. Pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock.
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7.7 TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter or permit any material transaction with
any Affiliate except transactions that are in the ordinary course of Borrower's
business, on terms less favorable to Borrower than would be obtained in an arm's
length transaction with a non-affiliated Person.
7.8 SUBORDINATED DEBT.
Make or permit any payment on any Subordinated Debt, except under the
terms of the Subordinated Debt, or amend any provision in any document relating
to the Subordinated Debt without Bank's prior written consent.
7.9 COMPLIANCE.
Become an "investment company" or a company controlled by an
"investment company," under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Advance for that purpose; fail to meet the
minimum funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair
Labor Standards Act or violate any other law or regulation, if the violation
could have a material adverse effect on Borrower's business or operations or
cause a Material Adverse Change, or permit any of its Subsidiaries to do so.
8 EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1 PAYMENT DEFAULT.
If Borrower fails to pay any of the Obligations;
8.2 COVENANT DEFAULT.
If Borrower does not perform any obligation in Section 6 or violates
any covenant in Section 7 or does not perform or observe any other material
term, condition or covenant in this Agreement, any Loan Documents, or in any
agreement between Borrower and Bank and as to any default under a term,
condition or covenant that can be cured, has not cured the default within 10
days after it occurs, or if the default cannot be cured within 10 days or cannot
be cured after Borrower's attempts within 10 day period, and the default may be
cured within a reasonable time, then Borrower has an additional period (of not
more than 30 days) to attempt to cure the default. During the additional time,
the failure to cure the default is not an Event of Default (but no Advances will
be made during the cure period);
8.3 MATERIAL ADVERSE CHANGE.
(i) If there occurs a material impairment in the perfection or priority
of the Bank's security interest in the Collateral or in the value of such
Collateral which is not covered by adequate insurance or (ii) if the Bank
determines, based upon information available to it and in its reasonable
judgment, that there is a reasonable likelihood that Borrower will fail to
comply with one or more of the financial covenants in Section 6 during the next
succeeding financial reporting period.
8.4 ATTACHMENT.
If any material portion of Borrower's assets is attached, seized,
levied on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrowers assets, or if a
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notice of lien, levy, or assessment is filed against any of Borrower's assets by
any government agency and not paid within 10 days after Borrower receives
notice. These are not Events of Default if stayed or if a bond is posted pending
contest by Borrower (but no Advances will be made during the cure period);
8.5 INSOLVENCY.
If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Advances will be made before any
Insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS.
If there is a default in any agreement between Borrower and a third
party that gives the third party the right to accelerate any Indebtedness
exceeding $100,000 or that could cause a Material Adverse Change;
8.7 JUDGMENTS.
If a money judgment(s) in the aggregate of at least $50,000 is rendered
against Borrower and is unsatisfied and unstayed for 10 days (but no Advances
will be made before the judgment is stayed or satisfied); or
8.8 MISREPRESENTATIONS.
If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document.
9 BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES.
When an Event of Default occurs and continues Bank may, without notice
or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's benefit
under this Agreement or under any other agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account debtors
for amounts, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrower will
assemble the Collateral if Bank requires and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank's rights
or remedies;
(e) Apply to the Obligations any (i) balances and deposits of Borrower
it holds, or (ii) any amount held by Bank owing to or for the credit or the
account of Borrower;
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(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral. Bank is granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower's labels, Patents, Copyrights, Mask Works, rights of use of any name,
trade secrets, trade names, Trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section, Borrower's
rights under all licenses and all franchise agreements inure to Bank's benefit;
and
(g) Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY.
Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or xxxx of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Advances terminates.
9.3 ACCOUNTS COLLECTION.
When an Event of Default occurs and continues, Bank may notify any
Person owing Borrower money of Bank's security interest in the funds and verify
the amount of the Account. Borrower must collect all payments in trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank in the form
received from the account debtor, with proper endorsements for deposit.
9.4 BANK EXPENSES.
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.
9.5 BANK'S LIABILITY FOR COLLATERAL.
If Bank complies with reasonable banking practices it is not liable:
for (a) the safekeeping of the Collateral; (b) any loss or damage to the
Collateral; (c) any diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other person. Borrower bears
all risk of loss, damage or destruction of the Collateral.
9.6 REMEDIES CUMULATIVE.
Bank's rights and remedies under this Agreement, the Loan Documents,
and all other agreements are cumulative. Bank has all rights and remedies
provided under the Code, by law, or in equity. Bank's exercise of one right or
remedy is not an election, and Bank's waiver of any Event of Default is not a
continuing waiver. Bank's delay is not a waiver, election, or acquiescence. No
waiver is effective unless signed by Bank and then is only effective for the
specific instance and purpose for which it was given.
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9.7 DEMAND WAIVER.
Borrower waives demand, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.
10 NOTICES
All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A Party may change its notice address by giving the other Party
written notice.
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
California law governs the Loan Documents without regard to principles
of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Santa Xxxxx County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS.
This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any
rights under it without Bank's prior written consent which may be granted or
withheld in Bank's discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank's obligations, rights and benefits
under this Agreement.
12.2 INDEMNIFICATION.
Borrower will indemnify, defend and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands, claims,
and liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE.
Time is of the essence for the performance of all obligations in this
Agreement.
12.4 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other
provision in determining the enforceability of any provision.
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12.5 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing. This Agreement
represents the entire agreement about this subject matter, and supersedes prior
negotiations or agreements. All prior agreements, understandings,
representations, warranties, and negotiations between the parties about the
subject matter of this Agreement merge 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, are an original, and all taken together, constitute one Agreement.
12.7 SURVIVAL.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.
12.8 CONFIDENTIALITY.
In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates
in connection with their business with Borrower, (ii) to prospective transferees
or purchasers of any interest in the Loans, (iii) as required by law,
regulation, subpoena, or other order, (iv) as required in connection with Bank's
examination or audit and (v) as Bank considers appropriate exercising remedies
under this Agreement. Confidential information does not include information that
either: (a) is in the public domain or in Bank's possession when disclosed to
Bank, or becomes part of the public domain after disclosure to Bank; or (b) is
disclosed to Bank by a third party, if Bank does not know that the third party
is prohibited from disclosing the information.
12.9 EFFECT OF AMENDMENT AND RESTATEMENT.
This Agreement is intended to and does completely amend and restate,
without novation, the Original Agreement. All advances or loans outstanding
under the Original Agreement are and shall continue to be outstanding under this
Agreement. All security interests granted under the Original Agreement are
hereby confirmed and ratified and shall continue to secure all Obligations under
this Agreement.
13 DEFINITIONS
13.1 DEFINITIONS.
In this Agreement:
"ACCOUNTS" are all existing and later arising accounts, contract
rights, and other obligations owed Borrower in connection with its sale or lease
of goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
"ACQUISITION ADVANCE" is defined in Section 2.1.2.
"ACQUISITION LOAN MATURITY DATE" means the 48h month following the date
of the Acquisition Advance.
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"ADVANCE" or "ADVANCES" is a loan advance (or advances) under the
Committed Revolving Line.
"AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs or
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"BORROWER'S BOOKS" are all Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs or
any equipment containing the information.
"BORROWING BASE" is 75% of Eligible Accounts as determined by Bank from
Borrower's most recent Borrowing Base Certificate.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which the Bank is closed.
"CAPITALIZED PRODUCT DEVELOPMENT COSTS" are all costs associated with
the development of Borrower's product, including, but not limited to software,
that are not recorded as an expense and have been classified as an asset
account.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the California Uniform Commercial Code.
"COLLATERAL" is the property described on Exhibit A.
"COMMITTED ACQUISITION LOAN" is a Credit Extension of up to $1,500,000
for the sole purpose of financing Borrower's acquisition of Opis Corporation.
"COMMITTED REVOLVING LINE" is a Credit Extension of up to $1,500,000.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"COPYRIGHTS" are all copyright rights, applications or registrations
and like protections in each work or authorship or derivative work owned by
Borrower, whether published or not (whether or not it is a trade secret) now or
later existing, created, acquired or held.
"CREDIT EXTENSION" means each Advance, Acquisition Advance or any other
extension of credit by Bank for the benefit of Borrower.
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"CURRENT LIABILITIES" are the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year.
"ELIGIBLE ACCOUNTS" are Accounts in the ordinary course of Borrower's
business that meet all Borrower's representations and warranties in Section 5.2;
but Bank may change eligibility standards by giving Borrower notice. Unless Bank
agrees otherwise in writing, Eligible Accounts will not include:
(a) Accounts that the account debtor has not paid within 90 days of
invoice date;
(b) Accounts for an account debtor, 50% or more of whose Accounts have
not been paid within 90 days of invoice date;
(c) Credit balances over 90 days from invoice date;
(d) Accounts for an account debtor, including Affiliates, whose total
obligations to Borrower exceed 25% of all Accounts, for the amounts
that exceed that percentage, unless Bank approves in writing;
(e) Accounts for which the account debtor does not have its principal
place of business in the United States;
(f) Accounts for which the account debtor is a federal, state or local
government entity or any department, agency, or instrumentality;
(g) Accounts for which Borrower owes the account debtor, but only up to
the amount owed (sometimes called "contra" accounts, accounts payable,
customer deposits or credit accounts);
(h) Accounts for demonstration or promotional equipment, or in which
goods are consigned, sales guaranteed, sale or return, sale on
approval, xxxx and hold, or other terms if account debtor's payment may
be conditional;
(i) Accounts for which the account debtor is Borrower's Affiliate,
officer, employee, or agent;
(j) Accounts in which the account debtor disputes liability or makes
any claim and Bank believes there may be a basis for dispute (but only
up to the disputed or claimed amount), or if the Account Debtor is
subject to an Insolvency Proceeding, or becomes insolvent, or goes out
of business;
(k) Accounts for which Bank reasonably determines collection to be
doubtful.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.
"GAAP" is generally accepted accounting principles.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
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"INTELLECTUAL PROPERTY" shall be all of the following rights that are
owned by Borrower:
(a) Copyrights, Trademarks, Patents, and Mask Works including
amendments, renewals, extensions, and all licenses or other rights to use and
all license fees and royalties from the use;
(b) Any trade secrets and any intellectual property rights in computer
software and computer software products now or later existing, created, acquired
or held;
(c) All design rights which may be available to Borrower now or later
created, acquired or held;
(d) Any claims for damages (past, present or future) for infringement
of any of the rights above, with the right, but not the obligation, to xxx and
collect damages for use or infringement of the intellectual property rights
above;
All proceeds and products of the foregoing, including all insurance,
indemnity or warranty payments.
"INVENTORY" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes
or guaranties executed by Borrower, and any other present or future agreement
between Borrower and/or for the benefit of Bank in connection with this
Agreement, all as amended, extended or restated.
"MASK WORKS" are all mask works or similar rights available for the
protection of semiconductor chips, now owned or later acquired owned by
Borrower.
"MATERIAL ADVERSE CHANGE" is defined in Section 8.3.
"MAXIMUM LOSSES" means net income plus non-cash charges from the
write-off of in-process technology related to the acquisition of Opis
Corporation minus any increases in capitalized software.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including letters of credit and
exchange contracts and including interest accruing after Insolvency Proceedings
begin and debts, liabilities, or obligations of Borrower assigned to Bank.
"ORIGINAL AGREEMENT" has the meaning set forth in recital paragraph A.
"PATENTS" are all patents, patent applications and like protections,
including improvements, divisions, continuations, renewals, reissues, extensions
and continuations-in-part of the same owned by Borrower.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Bank under this Agreement or any other
Loan Document;
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(b) Indebtedness existing on the Closing Date and shown on the
Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary course of
business;
(e) Indebtedness incurred in the acquisition of Opis Corporation; and
(f) Indebtedness secured by Permitted Liens.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Closing
Date;
(b) Investments consisting of the acquisition of Opis Corporation,
including SLX Acquisition Corporation, a wholly owned subsidiary of Borrower
formed to facilitate the acquisition of Opis Corporation; and
(c) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard & Poor's
Corporation or Xxxxx'x Investors Service, Inc., and (iii) Bank's certificates of
deposit issued maturing no more than 1 year after issue.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the equipment;
(d) Leases or subleases and licenses or sublicenses granted in the
ordinary course of Borrower's business and any interest or title of a lessor,
licensor or under any lease or license, if the leases, subleases, licenses and
sublicenses permit granting Bank a security interest;
(e) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase;
(f) Liens arising by statutory rule.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it
is not Bank's lowest rate.
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"QUICK ASSETS" is, on any date, the Borrower's consolidated,
unrestricted cash, cash equivalents, net billed accounts receivable and
investments with maturities of fewer than 12 months determined according to
GAAP.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President and the Chief Financial Officer.
"REVOLVING MATURITY DATE" is December 1, 1998.
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's debt to Bank (and identified as subordinated by Borrower and Bank).
"SUBSIDIARY" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus, (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
Patents, trade and service marks and names, Copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities plus Subordinated Debt.
"TRADEMARKS" are all trademark and servicemark rights, registered or
not, applications to register and registrations and like protections, and the
entire goodwill of the business of Borrower connected with the trademarks owned
by Borrower.
BORROWER:
SALESLOGIX CORPORATION
By: /s/Xxxx X. Xxxxx
-------------------------------------------------
Title: CFO
-------------------------------------------------
BANK:
SILICON VALLEY BANK
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------------------
Title: Sr. Vice President
-------------------------------------------------
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EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest
in and to the following:
All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;
All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, letters of credit,
certificates of deposit, instruments and chattel paper now owned or hereafter
acquired and Borrower's Books relating to the foregoing;
All copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work thereof,
whether published or unpublished, now owned or hereafter acquired; all trade
secret rights, including all rights to unpatented inventions, know-how,
operating manuals, license rights and agreements and confidential information,
now owned or hereafter acquired; all mask work or similar rights available for
the protection of semiconductor chips, now owned or hereafter acquired; all
claims for damages by way of any past, present and future infringement of any of
the foregoing; and
All Borrower's Books relating to the foregoing and any and all claims, rights
and interests in any of the above and all substitutions for, additions and
accessions to and proceeds thereof.
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EXHIBIT C
BORROWING BASE CERTIFICATE
--------------------------------------------------------------------------------
Borrower: SALESLOGIX CORPORATION Lender: Silicon Valley Bank
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Commitment Amount: $1,500,000
--------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of ____ $____________
2. Additions (please explain on reverse) $____________
3. TOTAL ACCOUNTS RECEIVABLE $____________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $____________
5. Balance of 50% over 90 day accounts $____________
6. Credit balances over 90 day $____________
7. Concentration Limits $____________
8. Foreign Accounts $____________
9. Government Accounts $____________
10. Contra Accounts $____________
11. Promotion or Demo Accounts $____________
12. Intercompany/Employee Accounts $____________
13. Other (please explain on reverse) $____________
14. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $____________
15. Eligible Accounts (#3 minus #14) $____________
16. LOAN VALUE OF ACCOUNTS (75% of #15) $____________
BALANCES
17. Maximum Loan Amount $____________
18. Total Funds Available [Lesser of #17 or #16] $____________
19. Present balance owing on Line of Credit $____________
20. Outstanding under Sublimits ( ) $____________
21. RESERVE POSITION (#18 minus #19 and #20) $____________
The undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Second Amended and Restated Loan and
Security Agreement between the undersigned and Silicon Valley Bank.
------------------------
COMMENTS:
BANK USE ONLY
Rec'd By: ____________
Auth. Signer
SALESLOGIX CORPORATION Date: ________________
Verified:_____________
By: ____________________ Auth. Signer
Authorized Signer Date: ________________
______________________
------------------------
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EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
FROM: SALESLOGIX CORPORATION
The undersigned authorized officer of SALESLOGIX CORPORATION certifies
that under the terms and conditions of the Second Amended and Restated Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending ____________ with all required
covenants except as noted below and (ii) all representations and warranties in
the Agreement are true and correct in all material respects on this date.
Attached are the required documents supporting the certification. The Officer
certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) consistently applied from one period to the next
except as explained in an accompanying letter or footnotes. The Officer
acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES"
COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Monthly financial statements+CC Monthly within 30 days Yes No
Annual (Audited) FYE within 90 days Yes No
10-Q, 10-K and 8-K Within 5 days after filing with SEC Yes No
A/R & A/P Agings +BBC Monthly within 20 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Monthly Basis beginning with the month ending December 31, 1997:
Minimum Quick Ratio* 1.75:1.00 _____:1.0 Yes No
Minimum Liquidity Coverage** 2 times the outstanding $_______ Yes No
Acquisition Advance
Minimum Debt Service*** 1.50:1.00 _____:1.00 Yes No
Profitability: Quarterly $_______ Yes No
Maximum Losses not to
exceed ****: $1,200,000 for the quarter ending December
31, 1997; $300,000 for the quarter ending
March 31, 1998; and $200,000 for the quarter
ending June 30, 1998.
*net of deferred revenue (maintenance and support)
**Through the period ending November 30, 1997, Liquidity to be defined as
unrestricted cash (and equivalents) plus 50% of net trade accounts receivable
less than 90 days from the invoice date. Beginning with the period ending
December 31, 1997, Liquidity to be defined as unrestricted cash (and
equivalents) plus eligible borrowings under the Committed Revolving Line less
any Advances. Once Borrower has maintained a Debt Service Coverage ratio of 1.50
to 1.00 for 2 consecutive quarters, the Liquidity Coverage covenant will be
replaced with the Debt Service Coverage covenant.
***To be maintained upon replacement of the Liquidity Coverage covenant. Debt
Service Coverage is defined as earnings before interest, taxes, depreciation and
amortization minus capital expenditures and capitalized software divided by
current maturities of long term debt.
****Maximum Losses defined as net income plus non-cash charges from the
write-off of in-process technology related to the acquisition of Opis
Corporation minus any increases in capitalized software.
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---------------------------------
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY
Sincerely, RECEIVED BY:___________________
AUTHORIZED SIGNER
DATE:__________________________
VERIFIED:______________________
AUTHORIZED SIGNER
SALESLOGIX CORPORATION
DATE:__________________________
______________________________ COMPLIANCE STATUS: YES NO
SIGNATURE
______________________________
TITLE
---------------------------------
______________________________
DATE
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25
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of December 1,
1998, by and between SalesLogix Corporation ("Borrower") and Silicon Valley Bank
("Bank").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, a Second Amended and Restated Loan and Security Agreement, dated
December 2, 1997, as may be amended from time to time, (the "Loan Agreement").
The Loan Agreement provided for, among other things, a Committed Acquisition
Loan in the original principal amount of One Million Five Hundred Thousand
Dollars ($1,500,000) (the "Acquisition Loan") and a Committed Revolving Line in
the original principal amount of One Million Five Hundred Thousand Dollars
($1,500,000) (the "Revolving Line"). Defined terms used but not otherwise
defined herein shall have the same meanings as in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
secured by the Collateral as described in the Loan Agreement and by an
Intellectual Property Security Agreement, dated July 3, 1997.
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Loan Agreement.
1. The Profitability covenant as described in Section 6.7 entitled
"Financial Covenants" is hereby amended to read as follows:
(iv) PROFITABILITY. Borrower will be profitable each quarter, except
that Borrower may suffer Maximum Losses not to exceed: $2,100,000 for
the quarter ended June 30, 1998; $2,000,000 for the quarter ended
September 30, 1998; $1,800,000 for the quarter ending December 31,
1998; and $1,000,000 for the quarter ending March 31, 1999. Borrower
shall achieve a minimum quarterly profits of $1 beginning with the
quarter ending June 30, 1999 and each quarter ending thereafter.
2. Notwithstanding the terms and conditions contained in Section 7.6
entitled "Distributions; Investments", Borrower shall be allowed a one
time repurchase of stock from a former employee of Borrower in
accordance with the terms of repurchase resulting from litigation with
such employee in an aggregate amount not to exceed $2,510,000,
provided, however, that immediately prior to and following such
repurchase there exists no Event of Default under the Loan Documents.
3. The term "Revolving Maturity Date" as defined in Section 13.1 entitled
"Definitions" is hereby amended to mean March 31, 1999.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE. Borrower shall pay to Bank a fee in the amount of Two
Thousand Dollars ($2,000) (the "Loan Fee") plus all out-of-pocket expenses.
26
6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of the date hereof, it has no defenses against the
obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Indebtedness, 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 Indebtedness pursuant to this Loan Modification Agreement in no
way shall obligate Bank to make any future modifications to the Indebtedness.
Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Indebtedness. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. No maker, endorser, or guarantor will be
released by virtue of this Loan Modification Agreement. The terms of this
paragraph apply not only to this Loan Modification Agreement, but also to all
subsequent loan modification agreements.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon Borrower's payment of the Loan Fee.
This Loan Modification Agreement is executed as of the date first written
above.
BORROWER: BANK:
SALESLOGIX CORPORATION SILICON VALLEY BANK
By: /s/ X. Xxxxxxxxxx By: /s/ Xxx Xxx Xxxxx
------------------- -------------------------
Name: Xxxxx X. Xxxxxxxxxx Name: Xxx Xxx Xxxxx
------------------- -------------------------
Title: VP Finance Title: Assistant Vice President
------------------- -------------------------
27
[LOGO]
SILICON VALLEY BANK
PRO FORMA INVOICE FOR LOAN CHARGES
BORROWER: SALESLOGIX CORPORATION
LOAN OFFICER: XXX XXXXX
DATE: DECEMBER 29,1998
LOAN FEE $2,000.00
DOCUMENTATION FEE 250.00
TOTAL FEE DUE $2,250.00
------------- =========
{ } A CHECK FOR THE TOTAL AMOUNT IS ATTACHED.
{X} DEBIT DDA# 3300016396 FOR THE TOTAL AMOUNT.
BORROWER:
BY: /S/XXXXX X. XXXXXXXXXX
-----------------------------------
(AUTHORIZED SIGNER)
BANK:
/S/ XXX XXX XXXXX 12/30/98
----------------------------------------
SILICON VALLEY BANK (DATE)
ACCOUNT OFFICER'S SIGNATURE
28
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
Credit Department
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
FROM: SALESLOGIX CORPORATION
The undersigned authorized Officer of SALESLOGIX CORPORATION ("Borrower"),
hereby certifies that in accordance with the terms and conditions of the Second
Amended and Restated Loan and Security Agreement, as modified from time to time,
the Borrower is in complete compliance for the period ending
_____________________ of all required conditions and terms except as noted
below. Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistent from one period to the next except as explained in an accompanying
letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Interim Financial Statements + CC Monthly within 30 days YES / NO
Annual F/S (AUDITED) FYE within 90 days YES / XX
00-X, 00-X & 0-X Xxxxxx 0 days after filing with SEC YES / NO
AR & AP Agings + BBC Monthly within 20 days YES / NO
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
TO BE TESTED ON A MONTHLY BASIS, UNLESS OTHERWISE NOTED:
Minimum Quick Ratio* 1.50:1.00 ____:1.00 YES / NO
Minimum Liquidity Coverage** 1.40 times the outstanding ____:1.00 YES / NO
Acquisition Advance
Minimum Debt Service*** 1.50:1.00 ____:1.00 YES / NO
Profitability (Quarterly) $1 $___________ YES / NO
Maximum Losses not to exceed****: $2,100,000
for the quarter ended June 30, 1998;
$2,000,000 for the quarter ended September
30,1998; $1,800,000 for the quarter ending
December 31, 1998; and $1,000,000 for the
quarter ending March 31, 1999.
*net of deferred revenue (maintenance and support)
**Liquidity to be defined as unrestricted cash (and equivalents) plus eligible
borrowings under the Committed Revolving Line less any Advances. Once Borrower
has maintained a Debt Service Coverage ratio of 1.50 to 1.00 for 2 consecutive
quarters, the Liquidity Coverage covenant will be replaced with the Debt Service
Coverage covenant.
***To be maintained upon replacement of the Liquidity Coverage covenant. Debt
Service Coverage is defined as earnings before interest, taxes, depreciation and
amortization minus capital expenditures and capitalized software divided by
current maturities of long term debt.
****Maximum Losses defined as net income plus non-cash charges from the
write-off of in-process technology related to the acquisition of Opis
Corporation minus any increases in capitalized software.
COMMENTS REGARDING FINANCIAL COVENANTS:
================================
BANK USE ONLY
RECEIVED BY: _________________
DATE: ________________________
REVIEWED BY: _________________
COMPLIANCE STATUS: YES / NO
================================
Very truly yours,
SALESLOGIX CORPORATION
By: ______________________________
Name: ____________________________
Title: ___________________________
29
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of April 6, 1998,
by and between SalesLogix Corporation ("Borrower") whose address is 0000 Xxxxx
Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000 and Silicon Valley Bank
("Bank") whose corporate headquarters is located at 0000 Xxxxxx Xxxxx, Xxxxx
Xxxxx, XX 00000 with a loan production office located at 0000 Xxxx Xxxxxxxxx
Xxxx, Xxxxx X - 000, Xxxxxxx, XX 00000.
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, a Second Amended and Restated Loan and Security Agreement, dated
December 2, 1997, as may be amended from time to time, (the "Loan Agreement").
The Loan Agreement provided for, among other things, a Committed Acquisition
Loan in the original principal amount of One Million Five Hundred Thousand and
00/100 Dollars ($1,500,000.00),(the "Acquisition Loan") and a Committed
Revolving Line in the original principal amount of One Million Five Hundred
Thousand and 00/100 Dollars ($1,500,000.00) (the "Revolving Line"). Defined
terms used but not otherwise defined herein shall have the same meanings as in
the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
secured by the Collateral as described in the Loan Agreement.
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Loan Agreement.
1. Section 2.1.2 entitled "Acquisition Advance" is hereby amended in
part to provide that Borrower hereby acknowledges that any
payment under this Section 2.1.2 of all or a portion of the
amount owed earlier than it is due through the period ending
September 30, 1998, will be subject to a prepayment fee in an
amount equal to 2% of any prepaid amount.
2. Section 6.7 entitled "Financial Covenants" is hereby amended in
its entirety to read as follows:
(i) QUICK RATIO (ADJUSTED). A ratio of Quick Assets to Current
Liabilities minus Deferred Maintenance Revenue (maintenance and
support) of at least 1.50 to 1.00.
(ii) LIQUIDITY COVERAGE. Unrestricted cash (and equivalents) plus
eligible borrowings under the Committed Revolving Line less any
outstanding Advance of at least 1.40 times the outstanding
Acquisition Advance.
(iii) DEBT SERVICE COVERAGE. A ratio of earnings before interest,
taxes, depreciation and amortization less capital expenditures
and capitalized software to current maturities of long term debt
of at least 1.50 to 1.00. To be maintained by Borrower upon
replacement of the Liquidity Coverage covenant.
30
(iv) PROFITABILITY. Borrower will be profitable each quarter,
except that Borrower may suffer Maximum Losses not to exceed:
$1,200,000 for the quarter ending December 31, 1997; $1,000,000
for the quarter ending March 31, 1998; and $800,000 for the
quarter ending June 30, 1998 (provided that Borrower's closes its
pending equity round prior to June 30, 1998).
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of the date hereof, it has no defenses against the
obligations to pay any amounts under the Indebtedness.
6. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing below)
understands and agrees that in modifying the existing Indebtedness, 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 Indebtedness pursuant to this Loan Modification Agreement in no
way shall obligate Bank to make any future modifications to the Indebtedness.
Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Indebtedness. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. No maker, endorser, or guarantor will be
released by virtue of this Loan Modification Agreement. The terms of this
paragraph apply not only to this Loan Modification Agreement, but also to all
subsequent loan modification agreements.
This Loan Modification Agreement is executed as of the date first written
above.
BORROWER: BANK:
SALESLOGIX CORPORATION SILICON VALLEY BANK
By: /s/ Xxxx X. Xxxxx By: /s/ Xxx Xxx Xxxxx
--------------------- -------------------------
Name: Xxxx X. Xxxxx Name: Xxx Xxx Xxxxx
--------------------- -------------------------
Title: CFO Title: Assistant Vice President
--------------------- -------------------------
2
31
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
Credit Department
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
FROM: SALESLOGIX CORPORATION
The undersigned authorized Officer of SALESLOGIX CORPORATION ("Borrower"),
hereby certifies that in accordance with the terms and conditions of the Second
Amended and Restated Loan and Security Agreement, as modified from time to time,
the Borrower is in complete compliance for the period ending
____________________ of all required conditions and terms except as noted below.
Attached herewith are the required documents supporting the above certification.
The Officer further certifies that these are prepared in accordance with
Generally Accepted Accounting Principles (GAAP) and are consistent from one
period to the next except as explained in an accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Interim Financial Statements + CC Monthly within 30 days YES / NO
Annual F/S (AUDITED) FYE within 90 days YES / XX
00-X, 00-X & 0-X Xxxxxx 0 days after filing with SEC YES / NO
AR & AP Agings + BBC Monthly within 20 days YES / NO
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
TO BE TESTED ON A MONTHLY BASIS, UNLESS OTHERWISE NOTED:
Minimum Quick Ratio* 1.50:1.00 ____:1.00 YES / NO
Minimum Liquidity Coverage** 1.40 times the outstanding ____: 1.00 YES / NO
Acquisition Advance
Minimum Debt Service*** 1.50:1.00 ____ :1.00 YES / NO
Profitability Quarterly $___________ YES / NO
Maximum Losses
not to exceed****: $1,200,000 for the quarter ended December 31,
1997; $1,000,000 for the quarter ending
march 31, 1998; $800,000 for the quarter
ending June 30, 1998 (provided Borrower
closes its pending Series C round of equity
prior to June 30, 1998).
*net of deferred revenue (maintenance and support)
**Liquidity to be defined as unrestricted cash (and equivalents) plus eligible
borrowings under the Committed Revolving Line less any Advances. Once Borrower
has maintained a Debt Service Coverage ratio of 1.50 to 1.00 for 2 consecutive
quarters, the Liquidity Coverage covenant will be replaced with the Debt Service
Coverage covenant.
***To be maintained upon replacement of the Liquidity Coverage covenant. Debt
Service Coverage is defined as earnings before interest, taxes, depreciation and
amortization minus capital expenditures and capitalized software divided by
current maturities of long term debt.
****Maximum Losses defined as net income plus non-cash charges from the
write-off of in-process technology related to the acquisition of Opis
Corporation minus any increases in capitalized software.
COMMENTS REGARDING FINANCIAL COVENANTS:
================================
BANK USE ONLY
RECEIVED BY: _________________
DATE: ________________________
REVIEWED BY: _________________
COMPLIANCE STATUS: YES / NO
================================
32
Very truly yours,
SALESLOGIX CORPORATION
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
33
[LOGO]
SILICON VALLEY BANK
PRO FORMA INVOICE FOR LOAN CHARGES
BORROWER: SALESLOGIX CORPORATION
LOAN OFFICER: XXX XXXXX
DATE: APRIL 6, 1998
DOCUMENTATION FEE 200.00
TOTAL FEES $200.00
---------- =======
{ } A CHECK FOR THE TOTAL AMOUNT IS ATTACHED.
{X} DEBIT DDA# 3300016396 FOR THE TOTAL AMOUNT.
{ } LOAN PROCEEDS
BORROWER:
BY: /S/ XXXX XXXXX 5/22/98
-----------------------------------------
BORROWER (DATE)
/S/ XXX XXX XXXXX 5/26/98
-----------------------------------------
SILICON VALLEY BANK (DATE)
ACCOUNT OFFICER'S SIGNATURE
