Exhibit 10.17
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "AGREEMENT") dated as of January 31,
2007 (the "EFFECTIVE DATE") between SILICON VALLEY BANK, a California
corporation with a loan production office located at One Newton Executive Park,
Suite 200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 ("BANK"), and
NETEZZA CORPORATION, a Delaware corporation ("BORROWER"), provides the terms on
which Bank shall lend to Borrower and Borrower shall repay Bank. The parties
agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed following
GAAP. Calculations and determinations must be made following GAAP. Capitalized
terms not otherwise defined in this Agreement shall have the meanings set forth
in Section 13. All other terms contained in this Agreement, unless otherwise
indicated, shall have the meaning provided by the Code to the extent such terms
are defined therein.
2 LOAN AND TERMS OF PAYMENT
2.1 PROMISE TO PAY. Borrower hereby unconditionally promises to pay Bank
the outstanding principal amount of all Credit Extensions and accrued and unpaid
interest thereon as and when due in accordance with this Agreement.
2.1.1 REVOLVING ADVANCES.
(a) Availability. Subject to the terms and conditions of this
Agreement, Bank shall make Advances not exceeding the Availability Amount.
Amounts borrowed under the Revolving Line may be repaid and, prior to the
Revolving Line Maturity Date, reborrowed, subject to the applicable terms and
conditions precedent herein.
(b) Termination; Repayment. The Revolving Line terminates on the
Revolving Line Maturity Date, when the principal amount of all Advances, the
unpaid interest thereon, and all other Obligations relating to the Revolving
Line shall be immediately due and payable.
2.1.2 LETTERS OF CREDIT SUBLIMIT.
(a) As part of the Revolving Line, Bank shall issue or have issued
Letters of Credit for Borrower's account. The undrawn face amount of outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit and any
Letter of Credit Reserve) may not exceed Fifteen Million Dollars
($15,000,000.00), inclusive of Credit Extensions relating to Sections 2.1.1,
2.1.3 and 2.1.4. Such aggregate amounts utilized hereunder shall at all times
reduce the amount otherwise available for Advances under the Revolving Line. If,
on the Revolving Line Maturity Date, there are any outstanding Letters of
Credit, then on such date Borrower shall provide to Bank cash collateral in an
amount equal to 105% of the face amount of all such Letters of Credit plus all
interest, fees, and costs due or to become due in connection therewith (as
estimated by Bank in its good faith business judgment), to secure all of the
Obligations relating to said Letters of Credit. All Letters of Credit shall be
in form and substance acceptable to Bank in its sole discretion and shall be
subject to the terms and conditions of Bank's standard Application and Letter of
Credit Agreement (the "LETTER OF CREDIT APPLICATION"). Borrower agrees to
execute any further documentation in connection with the Letters of Credit as
Bank may reasonably request. Borrower further agrees to be bound by the
regulations and interpretations of the issuer of any Letters of Credit
guarantied by Bank and opened for Borrower's account or by Bank's
interpretations of any Letter of Credit issued by Bank for Borrower's account,
and Borrower understands and agrees that Bank shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrower's instructions or those contained in the Letters of Credit or any
modifications, amendments, or supplements thereto.
(b) The obligation of Borrower to immediately reimburse Bank for
drawings made under Letters of Credit shall be absolute, unconditional, and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, such Letters of Credit, and the Letter of Credit Application.
(c) Borrower may request that Bank issue a Letter of Credit payable in
a Foreign Currency. If a demand for payment is made under any such Letter of
Credit, Bank shall treat such demand as an Advance to Borrower of the equivalent
of the amount thereof (plus fees and charges in connection therewith such as
wire, cable, SWIFT or similar charges) in Dollars at the then-prevailing rate of
exchange in San Francisco, California, for sales of the Foreign Currency for
transfer to the country issuing such Foreign Currency.
(d) To guard against fluctuations in currency exchange rates, upon the
issuance of any Letter of Credit payable in a Foreign Currency, Bank shall
create a reserve (the "LETTER OF CREDIT RESERVE") under the Revolving Line in an
amount equal to ten percent (10.0%) of the face amount of such Letter of Credit.
The amount of the Letter of Credit Reserve may be adjusted by Bank from time to
time, with prior notice to Borrower, to account for fluctuations in the exchange
rate. The availability of funds under the Revolving Line shall be reduced by the
amount of such Letter of Credit Reserve for as long as such Letter of Credit
remains outstanding.
2.1.3 FOREIGN EXCHANGE SUBLIMIT. As part of the Revolving Line, Borrower
may enter into foreign exchange contracts with Bank under which Borrower commits
to purchase from or sell to Bank a specific amount of Foreign Currency (each, a
"FX FORWARD CONTRACT") on a specified date (the "SETTLEMENT DATE"). FX Forward
Contracts shall have a Settlement Date of at least one (1) FX Business Day after
the contract date and shall be subject to a reserve of ten percent (10%) of each
outstanding FX Forward Contract in a maximum aggregate amount equal to One
Million Five Hundred Thousand Dollars ($1,500,000.00) (the "FX RESERVE"). The
aggregate amount of FX Forward Contracts at any one time may not exceed ten (10)
times the amount of the FX Reserve and the aggregate amount of FX Forward
Contracts may not exceed Fifteen Million Dollars ($15,000,000.00), inclusive of
Credit Extensions relating to Sections 2.1.1, 2.1.2 and 2.1.4.
2.1.4 CASH MANAGEMENT SERVICES SUBLIMIT. Borrower may use up to Fifteen
Million Dollars ($15,000,000.00) (the "CASH MANAGEMENT SERVICES SUBLIMIT"),
inclusive of Credit
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Extensions relating to Sections 2.1.1, 2.1.2 and 2.1.3 of the Revolving Line for
Bank's cash management services which may include merchant services, direct
deposit of payroll, business credit card, and check cashing services identified
in Bank's various cash management services agreements (collectively, the "CASH
MANAGEMENT SERVICES"). Any amounts Bank pays on behalf of Borrower or any
amounts that are not paid by Borrower for any Cash Management Services will be
treated as Advances under the Revolving Line and will accrue interest at the
interest rate applicable to Advances.
2.2 OVERADVANCES. If, at any time, the Credit Extensions under Sections
2.1.1, 2.1.2, 2.1.3 and 2.1.4 exceed the lesser of either (a) the Revolving Line
or (b) the Borrowing Base, Borrower shall immediately pay to Bank in cash such
excess (the "Overadvance"). To the extent that the Overadvance exists as a
result of Bank decreasing the percentages of the Borrowing Base, or adjustment
of the criteria for Eligible Accounts or Eligible Inventory, Borrower shall have
five (5) Business Days to pay such portion of the Overadvance.
2.3 PAYMENT OF INTEREST ON THE CREDIT EXTENSIONS.
(a) Interest Rate. Subject to Section 2.3(b), the principal amount
outstanding under the Revolving Line shall accrue interest at a floating per
annum rate equal to one percentage point (1.0%) below the Prime Rate, which
interest shall be payable monthly in accordance with Section 2.3(f) below.
(b) Default Rate. Immediately upon the occurrence and during the
continuance of an Event of Default, Obligations shall bear interest at a rate
per annum which is five percentage points above the rate effective immediately
before the Event of Default (the "DEFAULT RATE"). Payment or acceptance of the
increased interest rate provided in this Section 2.3(b) is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of Bank.
(c) Adjustment to Interest Rate. Changes to the interest rate of any
Credit Extension based on changes to the Prime Rate shall be effective on the
effective date of any change to the Prime Rate and to the extent of any such
change.
(d) 360-Day Year. Interest shall be computed on the basis of a 360-day
year for the actual number of days elapsed.
(e) Debit of Accounts. Bank may debit any of Borrower's deposit
accounts, including the Designated Deposit Account, for principal and interest
payments or any other amounts Borrower owes Bank when due hereunder. These
debits shall not constitute a set-off.
(f) Payments. Unless otherwise provided, interest is payable monthly
on the first calendar day of each month. Payments of principal and/or interest
received after 3:00 p.m. Eastern 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, as applicable, shall continue to accrue.
2.4 EARLY TERMINATION. This Agreement may be terminated prior to the
Revolving Line Maturity Date as follows: (i) by Borrower, effective three
Business Days after written
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notice of termination is given to Bank; or (ii) by Bank at any time after the
occurrence and during the continuance of an Event of Default, without notice,
effective immediately. If this Agreement is terminated (A) by Bank in accordance
with clause (ii) in the foregoing sentence, or (B) by Borrower for any reason,
Borrower shall pay to Bank a termination fee in an amount equal to One Hundred
Fifty Thousand Dollars ($150,000.00) (the "Early Termination Fee"). The Early
Termination Fee shall be due and payable on the effective date of such
termination and thereafter shall bear interest at a rate equal to the highest
rate applicable to any of the Obligations. Notwithstanding the foregoing, Bank
agrees to waive the Early Termination Fee if Bank agrees to refinance and
redocument this Agreement under another division of Bank (in its sole and
exclusive discretion) prior to the Revolving Line Maturity Date.
2.5 FEES. Borrower shall pay to Bank:
(a) Commitment Fee. A fully earned, non-refundable commitment fee of
Thirty Seven Thousand Five Hundred Dollars ($37,500.00), on the Effective Date;
(b) Letter of Credit Fee. Bank's customary fees and expenses for the
issuance or renewal of Letters of Credit, upon the issuance, each anniversary of
the issuance, and the renewal of such Letter of Credit;
(c) Unused Revolving Line Facility Fee. A fee (the "UNUSED REVOLVING
LINE FACILITY FEE"), payable quarterly, in arrears, on a calendar year basis, in
an amount equal to one-fifth of one percent (0.20%) per annum of the average
unused portion of the Revolving Line, as reasonably determined by Bank. Borrower
shall not be entitled to any credit, rebate or repayment of any Unused Revolving
Line Facility Fee previously earned by Bank pursuant to this Section
notwithstanding any termination of the Agreement or the suspension or
termination of Bank's obligation to make loans and advances hereunder; and
(d) Bank Expenses. All Bank Expenses (including reasonable attorneys'
fees and expenses, plus expenses, for documentation and negotiation of this
Agreement) incurred and billed through and after the Effective Date, when due.
3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION. Bank's obligation to
make the initial Credit Extension is subject to the condition precedent that
Bank shall have received, in form and substance satisfactory to Bank, such
documents, and completion of such other matters, as Bank may reasonably deem
necessary or appropriate, including, without limitation:
(a) Duly executed original signatures to the Loan Documents to which
it is a party;
(b) Duly executed original signatures to the Control Agreement[s];
(c) Borrower shall have delivered its Operating Documents and a good
standing certificate of Borrower certified by the Secretary of State of the
State of Delaware as of a date no earlier than thirty (30) days prior to the
Effective Date;
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(d) Guarantor shall have delivered its Operating Documents and a good
standing certificate of Guarantor certified by the Secretary of State of the
State of Delaware as of a date no earlier than thirty (30) days prior to the
Effective Date;
(e) Duly executed original signatures to the completed Borrowing
Resolutions for Borrower;
(f) Duly executed original signatures to the following documents with
respect to Guarantor: (i) Guaranty, (ii) Security Agreement, (iii) Securities
Account Control Agreement, (iv) Control Agreements and (v) Borrowing
Resolutions.
(g) Bank shall have received certified copies, in respect of both
Borrower and Guarantor, dated as of a recent date, of financing statement
searches, as Bank shall request, accompanied by written evidence (including any
UCC termination statements) that the Liens indicated in any such financing
statements either constitute Permitted Liens or have been or, in connection with
the initial Credit Extension, will be terminated or released;
(h) Borrower shall have delivered a legal opinion of Borrower's
counsel dated as of the Effective Date together with the duly executed original
signatures thereto;
(i) Guarantor shall have delivered a legal opinion of Guarantor's
counsel dated as of the Effective Date together with the duly executed original
signatures thereto;
(j) Borrower shall have delivered the duly executed original
signatures to the Guaranty, together with the completed Borrowing Resolutions
for Guarantor;
(k) Borrower shall have established the Lockbox;
(l) Borrower shall have delivered evidence satisfactory to Bank that
the insurance policies required by Section 6.5 hereof are in full force and
effect, together with appropriate evidence showing loss payable and/or
additional insured clauses or endorsements in favor of Bank; and
(m) Borrower shall have paid the fees and Bank Expenses then due as
specified in Section 2.5 hereof.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Bank's obligations to
make each Credit Extension, including the initial Credit Extension, is subject
to the following:
(a) except as otherwise provided in Section 3.4, timely receipt of an
executed Payment/Advance Form;
(b) the representations and warranties in Section 5 shall be true in
all material respects on the date of the Payment/Advance Form and on the Funding
Date of each Credit Extension; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date, and no
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Default or Event of Default shall have occurred and be continuing or result from
the Credit Extension. Each Credit Extension is Borrower's representation and
warranty on that date that the representations and warranties in Section 5
remain true in all material respects; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date; and
(c) if a Key Person departs from Borrower and a replacement acceptable
to Borrower's Board of Directors is not named within ninety (90) days of such
departure.
3.3 COVENANT TO DELIVER.
Borrower agrees to deliver to Bank each item required to be delivered to
Bank under this Agreement as a condition to any Credit Extension. Borrower
expressly agrees that the extension of a Credit Extension prior to the receipt
by Bank of any such item shall not constitute a waiver by Bank of Borrower's
obligation to deliver such item, and any such extension in the absence of a
required item shall be in Bank's sole discretion.
3.4 PROCEDURES FOR BORROWING. Subject to the prior satisfaction of all
other applicable conditions to the making of an Advance set forth in this
Agreement, to obtain an Advance (other than Advances under Sections 2.1.2 or
2.1.4), Borrower shall notify Bank (which notice shall be irrevocable) by
electronic mail, facsimile, or telephone by 3:00 p.m. Eastern time on the
Funding Date of the Advance. Together with any such electronic or facsimile
notification, Borrower shall deliver to Bank by electronic mail or facsimile a
completed Payment/Advance Form executed by a Responsible Officer or his or her
designee. Bank may rely on any telephone notice given by a person whom Bank
reasonably believes is a Responsible Officer or designee. Bank shall credit
Advances to the Designated Deposit Account. Bank may make Advances under this
Agreement based on instructions from a Responsible Officer or his or her
designee or without instructions if the Advances are necessary to meet
Obligations which have become due.
4 CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants Bank, to secure the
payment and performance in full of all of the Obligations, a continuing security
interest in, and pledges to Bank, the Collateral, wherever located, whether now
owned or hereafter acquired or arising, and all proceeds and products thereof.
Borrower represents, warrants, and covenants that the security interest granted
herein is and shall at all times continue to be a first priority perfected
security interest in the Collateral (subject only to Permitted Liens that may
have superior priority to Bank's Lien under this Agreement). If Borrower shall
acquire a commercial tort claim in an amount in excess of Two Hundred Thousand
Dollars ($200,000.00), Borrower shall promptly notify Bank in a writing signed
by Borrower of the general details thereof and, upon request by Bank, grant to
Bank in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and
substance reasonably satisfactory to Bank.
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If this Agreement is terminated, Bank's Lien in the Collateral shall
continue until the Obligations (other than inchoate indemnity obligations) are
repaid in full in cash. Upon payment in full in cash of the Obligations and at
such time as Bank's obligation to make Credit Extensions has terminated, Bank
shall, at Borrower's sole cost and expense, release its Liens in the Collateral
and all rights therein shall revert to Borrower.
4.2 AUTHORIZATION TO FILE FINANCING STATEMENTS. Borrower hereby authorizes
Bank to file financing statements, without notice to Borrower, with all
appropriate jurisdictions to perfect or protect Bank's interest or rights
hereunder, including a notice that any disposition of the Collateral, by either
Borrower or any other Person, shall be deemed to violate the rights of Bank
under the Code.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION. Borrower and each of its
Subsidiaries are duly existing and in good standing, as Registered Organizations
in their respective jurisdictions of formation and are qualified and licensed to
do business and are in good standing in any jurisdiction in which the conduct of
their business or their ownership of property requires that they be qualified
except where the failure to do so could not reasonably be expected to have a
material adverse effect on Borrower's business. In connection with this
Agreement, Borrower has delivered to Bank completed perfection certificates
signed by Borrower and Guarantor, respectively (the "PERFECTION CERTIFICATE").
Borrower represents and warrants to Bank that (a) Borrower's exact legal name is
that indicated on the Perfection Certificate and on the signature page hereof;
(b) Borrower is an organization of the type and is organized in the jurisdiction
set forth in the Perfection Certificate; (c) the Perfection Certificate
accurately sets forth Borrower's organizational identification number or
accurately states that Borrower has none; (d) the Perfection Certificate
accurately sets forth Borrower's place of business, or, if more than one, its
chief executive office as well as Borrower's mailing address (if different than
its chief executive office); (e) Borrower (and each of its predecessors) has
not, in the past five (5) years, changed its jurisdiction of formation,
organizational structure or type, or any organizational number assigned by its
jurisdiction; and (f) all other information set forth on the Perfection
Certificate pertaining to Borrower and each of its Subsidiaries is accurate and
complete in all material respects. If Borrower is not now a Registered
Organization but later becomes one, Borrower shall promptly notify Bank of such
occurrence and provide Bank with Borrower's organizational identification
number.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's organizational documents,
nor constitute an event of default under any material agreement by which
Borrower is bound. Borrower is not in default under any agreement to which it is
a party or by which it is bound in which the default could have a material
adverse effect on Borrower's business.
5.2 COLLATERAL. Borrower has good title to, and has rights in or the power
to transfer, each item of the Collateral upon which it purports to xxxxx x Xxxx
hereunder, free and clear of any and all Liens except Permitted Liens. As of the
Effective Date, Borrower has no deposit
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accounts other than the deposit accounts with Bank, the deposit accounts, if
any, described in the Perfection Certificate delivered to Bank in connection
herewith, or of which Borrower has given Bank notice and taken such actions as
are necessary to give Bank a perfected security interest therein. The Accounts
are bona fide, existing obligations of the Account Debtors.
Except as disclosed in the Perfection Certificate, except for co-location
arrangements and except for equipment at prospective customer or customer sites,
no portion of the Collateral with a value in excess of Two Hundred Thousand
Dollars ($200,000.00) is in the possession of any third party bailee (such as a
warehouse). None of the components of the Collateral with a value in excess of
Two Hundred Thousand Dollars ($200,000.00) shall be maintained at locations
other than as provided in the Perfection Certificate or at co-locations or at
prospective customer or customer sites or as Borrower has given Bank notice
pursuant to Section 7.2. In the event that Borrower, after the date hereof,
intends to store or otherwise deliver any portion of the Collateral with a value
in excess of Two Hundred Thousand Dollars ($200,000.00) in the aggregate to a
bailee, then Borrower will first receive the written consent of Bank and such
bailee must execute and deliver a bailee agreement in form and substance
satisfactory to Bank in its sole discretion. Notwithstanding the foregoing, to
the extent such portion of the Collateral is located at the premises of existing
or potential customers of Borrower, and no services or property shall be
provided to Borrower by such customers in connection with such Collateral, then
no consent shall be required.
All Inventory is in all material respects of good and marketable quality,
free from material defects.
Except as noted on the Perfection Certificate as of the date hereof,
Borrower is not a party to, nor is bound by, any material license or other
agreement with respect to which Borrower is the licensee that prohibits or
otherwise restricts Borrower from granting a security interest in Borrower's
interest in such license or agreement or any other property. Borrower shall
provide written notice to Bank within ten (10) days of entering or becoming
bound by any such license or agreement which is reasonably likely to have a
material impact on Borrower's business or financial condition (other than
over-the-counter software that is commercially available to the public).
Borrower shall take such steps as Bank requests to obtain the consent of, or
waiver by, any person whose consent or waiver is necessary for all such licenses
or contract rights to be deemed "Collateral" and for Bank to have a security
interest in it that might otherwise be restricted or prohibited by law or by the
terms of any such license or agreement (such consent or authorization may
include a licensor's agreement to a contingent assignment of the license to Bank
if Bank determines that is necessary in its good faith judgment), whether now
existing or entered into in the future.
5.3 ACCOUNTS RECEIVABLE. For any Eligible Account in any Borrowing Base
Certificate, all statements made and all unpaid balances appearing in all
invoices, instruments and other documents evidencing such Eligible Accounts are
and shall be true and correct in all material respects and all such invoices,
instruments and other documents, and all of Borrower's Books are genuine and in
all respects what they purport to be. All sales and other transactions
underlying or giving rise to each Eligible Account shall comply in all material
respects with all applicable laws and governmental rules and regulations.
Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any
Account Debtor whose accounts are an
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Eligible Account in any Borrowing Base Certificate. To the best of Borrower's
knowledge, all signatures and endorsements on all documents, instruments, and
agreements relating to all Eligible Accounts are genuine, and all such
documents, instruments and agreements are legally enforceable in accordance with
their terms.
5.4 LITIGATION. There are no actions or proceedings pending or, to the
knowledge of the Responsible Officers, threatened in writing by or against
Borrower or any of its Subsidiaries involving more than Two Hundred Thousand
Dollars ($200,000.00).
5.5 NO MATERIAL DETERIORATION IN FINANCIAL STATEMENTS. All consolidated
financial statements for Borrower and any of its Subsidiaries delivered to Bank
fairly present in all material respects Borrower's consolidated financial
condition and Borrower's consolidated results of operations, subject to year end
adjustments and the absence of footnotes. As of the date hereof, there has not
been any material deterioration in Borrower's consolidated financial condition
since the date of the most recent financial statements submitted to Bank.
5.6 SOLVENCY. The fair salable value of Borrower's assets (including
goodwill minus disposition costs) exceeds the fair value of its liabilities;
Borrower is not left with unreasonably small capital after the transactions in
this Agreement; and Borrower is able to pay its debts (including trade debts) as
they mature.
5.7 REGULATORY COMPLIANCE. Borrower is not an "investment company" or a
company "controlled" by an "investment company" under the Investment Company Act
of 1940. Borrower is not engaged as one of its important activities in extending
credit for margin stock (under Regulations T and U of the Federal Reserve Board
of Governors). Borrower has complied in all material respects with the Federal
Fair Labor Standards Act. Borrower has not violated any laws, ordinances or
rules, the violation of which would reasonably be expected to have a material
adverse effect on its business. None of Borrower's or any of its Subsidiaries'
properties or assets has been used by Borrower or any Subsidiary or, to the best
of Borrower's knowledge, by previous Persons, in disposing, producing, storing,
treating, or transporting any hazardous substance other than legally. Borrower
and each of its Subsidiaries have obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all government authorities that are necessary to continue its business as
currently conducted, except where the failure to do so would not reasonably be
expected to have a material adverse effect on Borrower's business or operation.
5.8 SUBSIDIARIES; INVESTMENTS. Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments.
5.9 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower timely filed
all material required tax returns and reports (or extensions thereof), and
Borrower and its Subsidiaries have timely paid all foreign, federal, state and
local taxes, assessments, deposits and contributions owed by Borrower. Borrower
may defer payment of any contested taxes, provided that Borrower (a) in good
faith contests its obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (b) notifies Bank in writing
of the commencement of, and any material development in, the proceedings, (c)
posts bonds or takes any other steps required to prevent the governmental
authority levying such contested taxes from
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obtaining a Lien upon any of the Collateral that is other than a "Permitted
Lien". Borrower is unaware of any claims or adjustments proposed for any of
Borrower's prior tax years which could result in additional taxes becoming due
and payable by Borrower. Borrower has paid all amounts necessary to fund all
present pension, profit sharing and deferred compensation plans in accordance
with their terms, and Borrower has not withdrawn from participation in, and has
not permitted partial or complete termination of, or permitted the occurrence of
any other event with respect to, any such plan which could reasonably be
expected to result in any liability of Borrower, including any liability to the
Pension Benefit Guaranty Corporation or its successors or any other governmental
agency.
5.10 USE OF PROCEEDS. Borrower shall use the proceeds of the Credit
Extensions solely as working capital and to fund its general business
requirements and not for personal, family, household or agricultural purposes.
5.11 FULL DISCLOSURE. No written representation, warranty or other
statement of Borrower in any certificate or instrument delivered to Bank, as of
the date such representations, warranties, or other statements were made, taken
together with all such written certificates and written instruments 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
instruments not misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not viewed as facts and that actual results during the period or
periods covered by such projections and forecasts may differ from the projected
or forecasted results).
6 AFFIRMATIVE COVENANTS
Borrower shall do all of the following:
6.1 GOVERNMENT COMPLIANCE. Maintain its and all its Subsidiaries' legal
existence and good standing in their respective jurisdictions of formation and
maintain qualification in each jurisdiction in which the failure to so qualify
would reasonably be expected to have a material adverse effect on Borrower's
business or operations. Borrower shall comply, and have each Subsidiary comply,
with all laws, ordinances and regulations to which it is subject, the
noncompliance with which would reasonably be expected to have a material adverse
effect on Borrower's business.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Deliver to Bank: (i) as soon as available, but no later than
thirty (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 certified by a Responsible Officer and in a form
acceptable to Bank; (ii) as soon as available, but no later than one hundred
eighty (180) 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 in its
reasonable discretion; (iii) within five (5) days of delivery, copies of all
statements, reports and notices made available to Borrower's security holders or
to any holders
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of Subordinated Debt; (iv) in the event that Borrower becomes subject to the
reporting requirements under the Securities Exchange Act of 1934, as amended,
within five (5) days of filing, all reports on Form 10-K, 10-Q and 8-K filed
with the Securities and Exchange Commission or a link thereto on Borrower's or
another website on the Internet; (v) a prompt report of any legal actions
pending or, to Borrower's knowledge, threatened against Borrower or any of its
Subsidiaries that would reasonably be expected to result in damages or costs to
Borrower or any of its Subsidiaries of Two Hundred Fifty Thousand Dollars
($250,000.00) or more; and (vi) budgets, sales projections, operating plans and
other financial information reasonably requested by Bank.
(b) Within twenty (30) days after the last day of each month, deliver
to Bank a duly completed Borrowing Base Certificate signed by a Responsible
Officer, with (i) aged listings of accounts receivable and accounts payable (by
invoice date) and a deferred revenue report, and (ii) perpetual inventory
reports for the Inventory valued on a first-in, first-out basis at the lower of
cost or market (in accordance with GAAP) or such other inventory reports as are
requested by Bank in its good faith business judgment.
(c) Within thirty (30) days after the last day of each month, deliver
to Bank with the monthly financial statements, a duly completed Compliance
Certificate signed by a Responsible Officer setting forth calculations showing
compliance with the financial covenants set forth in this Agreement.
(d) Allow Bank to audit Borrower's Collateral at Borrower's expense.
Such audits shall be conducted no more often than once every twelve (12) months
unless a Default or an Event of Default has occurred and is continuing.
6.3 INVENTORY; RETURNS. Keep all Inventory in good and marketable
condition, free from material defects. Returns and allowances between Borrower
and its Account Debtors shall follow Borrower's customary practices as they
exist at the Effective Date. Borrower must promptly notify Bank of all returns,
recoveries, disputes and claims that involve more than Three Hundred Fifty
Thousand Dollars ($350,000.00).
6.4 TAXES; PENSIONS. Make, and cause each of its Subsidiaries to make,
timely payment of all foreign, federal, state, and local taxes or assessments
(other than taxes and assessments which Borrower is contesting pursuant to the
terms of Section 5.9 hereof) and shall deliver to Bank, on demand, appropriate
certificates attesting to such payments, and pay all amounts necessary to fund
all present pension, profit sharing and deferred compensation plans in
accordance with their terms.
6.5 INSURANCE. Keep its business and the Collateral insured for risks and
in amounts standard for companies in Borrower's industry and location and as
Bank may reasonably request. Insurance policies shall be in a form, with
companies, and in amounts that are satisfactory to Bank. All property policies
shall have a lender's loss payable endorsement showing Bank as lender loss payee
and waive subrogation against Bank, and all liability policies shall show, or
have endorsements showing, Bank as an additional insured. All policies (or the
loss payable and additional insured endorsements) shall provide that the insurer
must give Bank at least twenty (20) days notice before canceling, amending, or
declining to renew its policy. At Bank's request,
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Borrower shall deliver certified copies of policies and evidence of all premium
payments. Proceeds payable under any policy shall, at Bank's option, be payable
to Bank on account of the Obligations. Notwithstanding the foregoing, (a) so
long as no Event of Default has occurred and is continuing, Borrower shall have
the option of applying the proceeds of any casualty policy up to Five Hundred
Thousand Dollars ($500,000.00), in the aggregate, toward the replacement or
repair of destroyed or damaged property; provided that any such replaced or
repaired property (i) shall be of equal or like value as the replaced or
repaired Collateral and (ii) shall be deemed Collateral in which Bank has been
granted a first priority security interest, and (b) after the occurrence and
during the continuance of an Event of Default, all proceeds payable under such
casualty policy shall, at the option of Bank, be payable to Bank on account of
the Obligations. If Borrower fails to obtain insurance as required under this
Section 6.5 or to pay any amount or furnish any required proof of payment to
third persons and Bank, Bank may make all or part of such payment or obtain such
insurance policies required in this Section 6.5, and take any action under the
policies Bank deems prudent.
6.6 OPERATING ACCOUNTS.
(a) Maintain an operating account with Bank. Any Guarantor shall
maintain all depository, operating and securities accounts with Bank, or SVB
Securities; provided that Guarantor may maintain an account with State Street
Bank, so long as such account is subject to a control agreement acceptable to
Bank.
(b) Provide Bank five (5) days prior written notice before Borrower or
Guarantor establishes any Collateral Account at or with any bank or financial
institution other than Bank or its Affiliates. In addition, for each Collateral
Account that Borrower or Guarantor at any time maintains, Borrower shall cause
the applicable bank or financial institution (other than Bank) at or with which
any Collateral Account is maintained to execute and deliver a Control Agreement
or other appropriate instrument with respect to such Collateral Account to
perfect Bank's Lien in such Collateral Account in accordance with the terms
hereunder. The provisions of the previous sentence shall not apply to deposit
accounts exclusively used for payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of Borrower's employees and identified to
Bank by Borrower as such.
6.7 FINANCIAL COVENANTS.
Borrower shall maintain at all times, to be tested as of the last day of
each of Borrower's fiscal quarters, unless otherwise noted, on a consolidated
basis with respect to Borrower and its Subsidiaries:
(a) Minimum Revenue. Minimum Revenue of at least: (i) Nineteen Million
Eighty Thousand Dollars ($19,080,000.00) as of and for the quarter ending
January 31, 2007, (ii) Seventeen Million Six Hundred Thousand Dollars
($17,600,000.00) as of and for the quarter ending April 30, 2007, (iii) Nineteen
Million Four Hundred Thousand Dollars ($19,400,000.00) as of and for the quarter
ending July 31, 2007, (iv) Twenty Two Million Four Hundred Thousand Dollars
($22,400,000.00) as of and for the quarter ending October 31, 2007, (v) Twenty
Four Million Eight Hundred Thousand Dollars ($24,800,000.00) as of and for the
quarter ending
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January 31, 2008, and (vi) Seventeen Million Dollars ($17,000,000.00) as of and
for the quarter ending April 30, 2008 and as of and for each quarter ending
thereafter.
6.8 PROTECTION OF INTELLECTUAL PROPERTY RIGHTS. Borrower shall, to the
extent Borrower determines, in the exercise of its reasonable business judgment,
that it is prudent to do the following: (a) protect, defend and maintain the
validity and enforceability of its intellectual property of which it has
knowledge; (b) promptly advise Bank in writing of material infringements of its
intellectual property; and (c) not allow any intellectual property material to
Borrower's business to be abandoned, forfeited or dedicated to the public
without Bank's written consent.
6.9 LITIGATION COOPERATION. From the date hereof and continuing through the
termination of this Agreement, make available to Bank, without expense to Bank,
Borrower and its officers, employees and agents and Borrower's books and
records, to the extent that Bank may deem them reasonably necessary to prosecute
or defend any third-party suit or proceeding instituted by or against Bank with
respect to any Collateral or relating to Borrower.
6.10 LOCK BOX AGREEMENT. With respect to Accounts billed after the
Effective Date, Borrower shall direct each Account Debtor (and each depository
institution where proceeds of accounts receivable are on deposit) to make
payments with respect to all receivables to one or more lockbox accounts
established with the Bank ("Lockbox") or to wire transfer payments to a cash
collateral account that Bank controls, as and when directed by the Bank from
time to time, at its option and at the sole and exclusive discretion of the
Bank.
6.11 FURTHER ASSURANCES. Execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank's Lien in the
Collateral or to effect the purposes of this Agreement.
7 NEGATIVE COVENANTS
Borrower shall not do any of the following without Bank's prior written
consent:
7.1 DISPOSITIONS. Convey, sell, lease, transfer, assign, or otherwise
dispose of (collectively, "Transfer"), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, except for Transfers (a)
of Inventory in the ordinary course of business; (b) of worn-out, excess, or
obsolete Equipment; (c) in connection with Permitted Liens and Permitted
Investments; and (d) of non-exclusive licenses and similar arrangements for the
use of the property of Borrower or its Subsidiaries in the ordinary course of
business.
7.2 CHANGES IN BUSINESS, MANAGEMENT, OWNERSHIP, CONTROL, OR BUSINESS
LOCATIONS. (a) Without the consent of Bank, which shall not be unreasonably
withheld, conditioned or delayed, engage in or permit any of its Subsidiaries to
engage in any business other than the businesses currently engaged in by
Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b)
liquidate or dissolve; or (c) (i) the departure of any Key Person, who is not
replaced within ninety (90) days by an officer reasonably acceptable to Bank, or
(ii) enter into any transaction or series of related transactions in which the
stockholders of Borrower immediately prior to the first such transaction own
less than 50% of the voting stock of Borrower immediately after giving effect to
such transaction or related series of such transactions (other
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than by the sale of Borrower's equity securities in a public offering or to
venture capital investors so long as Borrower identifies to Bank the venture
capital investors prior to the closing of the transaction). Borrower shall not,
without at least thirty (30) days prior written notice to Bank: (1) add any new
offices or business locations, including warehouses (unless such new offices or
business locations contain less than One Hundred Thousand Dollars ($100,000.00)
in Borrower's assets or property and for co-location arrangements and equipment
at customer and prospective customer sites as set forth in Section 5.2), (2)
change its jurisdiction of organization, (3) change its organizational structure
or type, (4) change its legal name, or (5) change any organizational number (if
any) assigned by its jurisdiction of organization.
7.3 MERGERS OR ACQUISITIONS. Without the consent of Bank, which shall not
be unreasonably withheld, conditioned or delayed, merge or consolidate, or
permit any of its Subsidiaries to merge or consolidate, with any other Person,
or acquire, or permit any of its Subsidiaries to acquire, all or substantially
all of the capital stock or property of another Person. A Subsidiary may merge
or consolidate into another Subsidiary or into Borrower.
7.4 INDEBTEDNESS. Create, incur, assume, or be liable for any Indebtedness,
or permit any Subsidiary to do so, other than Permitted Indebtedness.
7.5 ENCUMBRANCE. Create, incur, or allow any Lien on any of its property,
or assign or convey any right to receive income, including the sale of any
Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interest granted herein, or enter into any agreement, document, instrument or
other arrangement (except with or in favor of Bank) with any Person which
directly or indirectly prohibits or has the effect of prohibiting Borrower or
any Subsidiary from assigning, mortgaging, pledging, granting a security
interest in or upon, or encumbering any of Borrower's or any Subsidiary's
intellectual property, except as is otherwise permitted in Section 7.1 hereof
and the definition of "Permitted Liens" herein.
7.6 MAINTENANCE OF COLLATERAL ACCOUNTS. Maintain any Collateral Account
except pursuant to the terms of Section 6.6(b) hereof.
7.7 DISTRIBUTIONS; INVESTMENTS. (a) Directly or indirectly make any
Investment other than Permitted Investments, or permit any of its Subsidiaries
to do so; or (b) other than those payable in common stock or preferred stock,
pay any dividends or make any distribution or payment on or redeem, retire or
purchase any capital stock, except for repurchases of stock from former
employees or directors of Borrower under the terms of applicable repurchase
agreements in an aggregate amount not to exceed Two Hundred Fifty Thousand
Dollars ($250,000.00) in the aggregate in any fiscal year, provided that no
Event of Default has occurred, is continuing or would exist after giving effect
to the repurchases.
7.8 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower, except
for transactions that are in the ordinary course of Borrower's business, upon
fair and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm's length transaction with a non-affiliated Person.
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7.9 SUBORDINATED DEBT. (a) Make or permit any payment on any Subordinated
Debt, except under the terms of the subordination, intercreditor, or other
similar agreement to which such Subordinated Debt is subject, or (b) amend any
provision in any document relating to the Subordinated Debt which would increase
the amount thereof or adversely affect the subordination thereof to Obligations
owed to Bank.
7.10 COMPLIANCE. Become an "investment company" or a company controlled by
an "investment company", under the Investment Company Act of 1940 or undertake
as one of its important activities extending credit to purchase or carry margin
stock (as defined in Regulation U of the Board of Governors of the Federal
Reserve System), or use the proceeds of any Credit Extension for that purpose;
fail to meet the minimum funding requirements of ERISA, permit a Reportable
Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply
with the Federal Fair Labor Standards Act or violate any other law or
regulation, in any event if such failure or violation would reasonably be
expected to have a material adverse effect on Borrower's business, or permit any
of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from
participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any present pension, profit
sharing and deferred compensation plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental agency.
8 EVENTS OF DEFAULT
Any one of the following shall constitute an event of default (an "EVENT OF
DEFAULT") under this Agreement:
8.1 PAYMENT DEFAULT. Borrower fails to pay any Obligations within three (3)
Business Days after such Obligations are due and payable (which three (3)
Business Day grace period will not apply to payments due on the Revolving Line
Maturity Date or acceleration of the Obligations). During the cure period, the
failure to cure the payment default is not an Event of Default (but no Credit
Extension will be made during the cure period);
8.2 COVENANT DEFAULT.
(a) Borrower fails or neglects to perform any obligation in Sections
6.2, 6.6, 6.7, or violates any covenant in Section 7; or
(b) Borrower fails or neglects to perform, keep, or observe, in any
material respect, any other term, provision, condition, covenant or agreement
contained in this Agreement, any Loan Documents and as to any default (other
than those specified in this Section 8) under such other term, provision,
condition, covenant or agreement that can be cured, has failed to 'cure the
default within ten (10) days after the occurrence thereof; provided, however,
that if the default cannot by its nature be cured within the ten (10) day period
or cannot after diligent attempts by Borrower be cured within such ten (10) day
period, and such default is likely to be cured within a reasonable time, then
Borrower shall have an additional period (which shall not in any case exceed
thirty (30) days) to attempt to cure such default, and within such reasonable
time period the failure to cure the default shall not be deemed an Event of
Default
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(but no Credit Extensions shall be made during such cure period). Grace periods
provided under this Section shall not apply, among other things, to financial
covenants or any other covenants set forth in subsection (a) above;
8.3 MATERIAL ADVERSE CHANGE. A Material Adverse Change occurs;
8.4 ATTACHMENT. (a) Any material portion of Borrower's assets is attached,
seized, levied on, or comes into possession of a trustee or receiver and the
attachment, seizure or levy is not removed in ten (10) days; (b) the service of
process seeking to attach, by trustee or similar process, any funds of Borrower,
or of any entity under control of Borrower (including a Subsidiary), on deposit
with Bank or Bank's Affiliate; (c) Borrower is enjoined, restrained, or
prevented by court order from conducting a material part of its business; (d) a
judgment or other claim in excess of Two Hundred Thousand Dollars ($200,000.00)
becomes a Lien on any of Borrower's assets; or (e) a notice of lien, levy, or
assessment is filed against any of Borrower's assets by any government agency
and not paid within ten (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 Credit Extensions shall be made during the cure period);
8.5 INSOLVENCY (a) Borrower is unable to pay its debts (including trade
debts) as they become due or otherwise becomes insolvent; (b) Borrower begins an
Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower
and not dismissed or stayed within forty-five (45) days (but no Credit
Extensions shall be made while of any of the conditions described in clause (a)
exist and/or until any Insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS. There is a default in any agreement for borrowed
money to which Borrower or any Guarantor is a party with a third party or
parties resulting in the acceleration of the maturity of any Indebtedness in an
amount in excess of Five Hundred Thousand Dollars ($500,000.00) or that could
reasonably be expected to have a material adverse effect on Borrower's business;
8.7 JUDGMENTS. A judgment or judgments for the payment of money in an
amount, individually or in the aggregate, of at least Two Hundred Thousand
Dollars ($200,000.00) (not covered by independent third-party insurance) shall
be rendered against Borrower and shall remain unsatisfied and unstayed for a
period of thirty (30) days after the entry thereof (provided that no Credit
Extensions will be made prior to the satisfaction or stay of such judgment);
8.8 MISREPRESENTATIONS. Borrower or any Person acting for Borrower makes
any representation, warranty, or other statement now or later in this Agreement,
any Loan Document or in any writing delivered to Bank or to induce Bank to enter
this Agreement or any Loan Document, and such representation, warranty, or other
statement is incorrect in any material respect when made;
8.9 SUBORDINATED DEBT. Any creditor of Borrower that has signed a
subordination, intercreditor, or other similar agreement with Bank breaches any
terms of such agreement; or
8.10 GUARANTY. (a) Any guaranty of any Obligations terminates or ceases for
any reason to be in full force and effect; (b) any Guarantor does not perform
any obligation or covenant under any guaranty of the Obligations; (c) any
circumstance described in Sections 8.3,
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8.4, 8.5, 8.7, or 8.8. occurs with respect to any Guarantor, (d) the
liquidation, winding up, or termination of existence of any Guarantor; or (e) a
material impairment in the perfection or priority of Bank's Lien in the
collateral provided by Guarantor or in the value of such collateral.
8.11 GROWTH CAPITAL LOAN ARRANGEMENT. The occurrence of an Event of Default
under the Growth Capital Loan Agreement (as defined in the documentation related
thereto).
9 BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES. While an Event of Default occurs and continues
Bank may, without notice or demand, do any or all of the following:
(a) declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);
(b) stop advancing money or extending credit for Borrower's benefit
under this Agreement or under any other agreement between Borrower and Bank;
(c) demand that Borrower (1) deposits cash with Bank in an amount
equal to the aggregate amount of any Letters of Credit remaining undrawn, as
collateral security for the repayment of any future drawings under such Letters
of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii)
pay in advance all Letter of Credit fees scheduled to be paid or payable over
the remaining term of any Letters of Credit;
(d) terminate any FX Forward Contracts;
(e) settle or adjust disputes and claims directly with Account Debtors
for amounts on terms and in any order that Bank considers advisable, notify any
Person owing Borrower money of Bank's security interest in such funds, and
verify the amount of such account;
(f) make any payments and do any acts it considers necessary or
reasonable to protect the Collateral and/or its security interest in the
Collateral. Borrower shall assemble the Collateral if Bank requests and make it
available as Bank designates, subject to the rights of third parties (if any).
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, subject to the rights of third parties
(if any). Borrower grants Bank a license to enter and occupy any of its
premises, without charge, to exercise any of Bank's rights or remedies;
(g) apply to the Obligations any (i) balances and deposits of Borrower
it holds, or (ii) any amount held by Bank owing to or for the credit or the
account of Borrower;
(h) ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral. Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower's labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising
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matter, or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section, Borrower's
rights under all licenses and all franchise agreements inure to Bank's benefit;
(i) Deliver a notice of exclusive control, any entitlement order, or
other directions or instructions pursuant to any Control Agreement or similar
agreements providing control of any Collateral;
(j) demand and receive possession of Borrower's Books; and
(k) exercise all rights and remedies available to Bank under the Loan
Documents or at law or equity, including all remedies provided under the Code
(including disposal of the Collateral pursuant to the terms thereof).
9.2 POWER OF ATTORNEY. Borrower hereby irrevocably appoints Bank as its
lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower's name on any
checks or other forms of payment or security; (b) sign Borrower's name on any
invoice or xxxx of lading for any Account or drafts against Account Debtors; (c)
settle and adjust disputes and claims about the Accounts directly with Account
Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle,
and adjust all claims under Borrower's insurance policies; (e) pay, contest or
settle any Lien, charge, encumbrance, security interest, and adverse claim in or
to the Collateral, or any judgment based thereon, or otherwise take any action
to terminate or discharge the same; and (f) transfer the Collateral into the
name of Bank or a third party as the Code permits. Borrower hereby appoints Bank
as its lawful attorney-in-fact to sign Borrower's name on any documents
necessary to perfect or continue the perfection of Bank's security interest in
the Collateral regardless of whether an Event of Default has occurred until all
Obligations have been satisfied in full and Bank is under no further obligation
to make Credit Extensions hereunder. Bank's foregoing appointment as Borrower's
attorney in fact, and all of Bank's rights and powers, coupled with an interest,
are irrevocable until all Obligations have been fully repaid and performed and
Bank's obligation to provide Credit Extensions terminates.
9.3 ACCOUNTS VERIFICATION; COLLECTION. Whether or not an Event of Default
has occurred and is continuing, Bank may notify any Person owing Borrower money
of Bank's security interest in such funds and verify the amount of such account.
After the occurrence of an Event of Default, any amounts received by Borrower
shall be held in trust by Borrower for Bank, and, if requested by Bank, Borrower
shall immediately deliver such receipts to Bank in the form received from the
Account Debtor, with proper endorsements for deposit.
9.4 PROTECTIVE PAYMENTS. If Borrower fails to obtain the insurance called
for by Section 6.5 or fails to pay any premium thereon or fails to pay any other
amount which Borrower is obligated to pay under this Agreement or any other Loan
Document, Bank may obtain such insurance or make such payment, and all amounts
so paid by Bank are Bank Expenses and immediately due and payable, bearing
interest at the then highest applicable rate, and secured by the Collateral.
Bank will make reasonable efforts to provide Borrower with notice of Bank
obtaining such insurance at the time it is obtained or within a reasonable time
thereafter. No
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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 APPLICATION OF PAYMENTS AND PROCEEDS. Unless an Event of Default has
occurred and is continuing, Bank shall apply any funds in its possession,
whether from Borrower account balances, payments, or proceeds realized as the
result of any collection of Accounts or other disposition of the Collateral,
first, to Bank Expenses, including without limitation, the reasonable costs,
expenses, liabilities, obligations and attorneys' fees incurred by Bank in the
exercise of its rights under this Agreement; second, to the interest due upon
any of the Obligations; and third, to the principal of the Obligations and any
applicable fees and other charges, in such order as Bank shall determine in its
sole discretion. Any surplus shall be paid to Borrower or other Persons legally
entitled thereto; Borrower shall remain liable to Bank for any deficiency. If an
Event of Default has occurred and is continuing, Bank may apply any funds in its
possession, whether from Borrower account balances, payments, proceeds realized
as the result of any collection of Accounts or other disposition of the
Collateral, or otherwise, to the Obligations in such order as Bank shall
determine in its sole discretion. Any surplus shall be paid to Borrower or other
Persons legally entitled thereto; Borrower shall remain liable to Bank for any
deficiency. If Bank, in its good faith business judgment, directly or indirectly
enters into a deferred payment or other credit transaction with any purchaser at
any sale of Collateral, Bank shall have the option, exercisable at any time, of
either reducing the Obligations by the principal amount of the purchase price or
deferring the reduction of the Obligations until the actual receipt by Bank of
cash therefor.
9.6 BANK'S LIABILITY FOR COLLATERAL. So long as Bank complies with
reasonable banking practices regarding the safekeeping of the Collateral in the
possession or under the control of Bank, Bank shall not be liable or responsible
for: (a) the safekeeping of the Collateral; (b) any loss or damage to the
Collateral; (c) any diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other Person. Borrower bears
all risk of loss, damage or destruction of the Collateral.
9.7 NO WAIVER; REMEDIES CUMULATIVE. Bank's failure, at any time or times,
to require strict performance by Borrower of any provision of this Agreement or
any other Loan Document shall not waive, affect, or diminish any right of Bank
thereafter to demand strict performance and compliance herewith or therewith. No
waiver hereunder shall be effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it is given. Bank's
rights and remedies under this Agreement and the other Loan Documents are
cumulative. Bank has all rights and remedies provided under the Code, by law, or
in equity. Bank's exercise of one right or remedy is not an election, and Bank's
waiver of any Event of Default is not a continuing waiver. Bank's delay in
exercising any remedy is not a waiver, election, or acquiescence.
9.8 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.
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10 NOTICES
All notices, consents, requests, approvals, demands, or other communication
(collectively, "COMMUNICATION") by any party to this Agreement or any other Loan
Document must be in writing and shall be deemed to have been validly served,
given, or delivered: (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the U.S. mail, first class, registered or
certified mail return receipt requested, with proper postage prepaid; (b) upon
transmission, when sent by electronic mail or facsimile transmission; (c) one
(1) Business Day after deposit with a reputable overnight courier with all
charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of
which shall be addressed to the party to be notified and sent to the address,
facsimile number, or email address indicated below. Bank or Borrower may change
its address or facsimile number by giving the other party written notice thereof
in accordance with the terms of this Section 10.
If to Borrower: Netezza Corporation
000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn. Chief Financial Officer
Fax: (000) 000-0000
Email: xxxxxxxxx@xxxxxxx.xxx
with a copy to: Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx, Esquire
FAX: (000) 000-0000
Email: xxxxxxx.xxxxxxx@xxxxxxxxxx.xxx
If to Bank: Silicon Valley Bank
One Xxxxxx Executive Park, Suite 200
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Mr. Xxxx Xxxxxxxxx
Fax: (000) 000-0000
Email: XXxxxxxxxx@xxx.xxx
with a copy to: Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esquire
Fax: (000) 000-0000
Email: XXxxxxxx@xxxxxxxxx.xxx
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
Massachusetts 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
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courts in Massachusetts; provided, however, that if for any reason Bank cannot
avail itself of such courts in the Commonwealth of Massachusetts, 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.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR
RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED
UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY
HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS. This Agreement binds and is for the benefit of
the successors and permitted assigns of each party. Borrower may not assign this
Agreement or any rights or obligations under it without Bank's prior written
consent (which may be granted or withheld in Bank's reasonable discretion). Bank
has the right, without the consent of or notice to Borrower, to sell, transfer,
assign, negotiate, or grant participation in all or any part of, or any interest
in, Bank's obligations, rights, and benefits under this Agreement and the other
Loan Documents.
12.2 INDEMNIFICATION. Borrower agrees to indemnify, defend and hold Bank
and its directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Bank harmless against: (a) all obligations,
demands, claims, and liabilities (collectively, "CLAIMS") asserted by any other
party in connection with the transactions contemplated by the Loan Documents;
and (b) all losses or Bank Expenses incurred, or paid by Bank from, following,
or arising from transactions between Bank and Borrower (including reasonable
attorneys' fees and expenses), except for Claims and/or losses directly caused
by Bank's gross negligence or willful misconduct.
12.3 LIMITATION OF ACTIONS. Any claim or cause of action by Borrower
against Bank, its directors, officers, employees, agents, accountants,
attorneys, or any other Person affiliated with or representing Bank based upon,
arising from, or relating to this Loan Agreement or any other Loan Document, or
any other transaction contemplated hereby or thereby or relating hereto or
thereto, or any other matter, cause or thing whatsoever, occurred, done, omitted
or suffered to be done by Bank, its directors, officers, employees, agents,
accountants or attorneys, shall be barred unless asserted by Borrower by the
commencement of an action or proceeding in a court of competent jurisdiction by
(a) the filing of a complaint within two years from the earlier of (i) the date
any of Borrower's officer or directors had knowledge of the first act, the
occurrence or omission upon which such claim or cause of action, or any part
thereof, is based, or (ii) the date
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this Agreement is terminated, and (b) the service of a summons and complaint on
an officer of Bank, or on any other person authorized to accept service on
behalf of Bank, within thirty (30) days thereafter. Borrower agrees that such
two-year period is a reasonable and sufficient time for Borrower to investigate
and act upon any such claim or cause of action. The two-year period provided
herein shall not be waived, tolled, or extended except by the written consent of
Bank in its sole discretion. This provision shall survive any termination of
this Agreement or any other Loan Document.
12.4 TIME OF ESSENCE. Time is of the essence for the performance of all
Obligations in this Agreement.
12.5 SEVERABILITY OF PROVISIONS. Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.
12.6 AMENDMENTS IN WRITING; INTEGRATION. All amendments to this Agreement
must be in writing signed by both Bank and Borrower. This Agreement and the Loan
Documents represent the entire agreement about this subject matter and supersede
prior negotiations or agreements. All prior agreements, understandings,
representations, warranties, and negotiations between the parties about the
subject matter of this Agreement and the Loan Documents merge into this
Agreement and the Loan Documents.
12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, constitute
one Agreement.
12.8 SURVIVAL. All covenants, representations and warranties made in this
Agreement continue in full force until this Agreement has terminated pursuant to
its terms and all Obligations (other than inchoate indemnity obligations and any
other obligations which, by their terms, are to survive the termination of this
Agreement) have been satisfied. The obligation of Borrower in Section 12.2 to
indemnify Bank shall survive until the statute of limitations with respect to
such claim or cause of action shall have run.
12.9 CONFIDENTIALITY. In handling any confidential information, Bank shall
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Bank's
Subsidiaries or Affiliates (provided, however, Bank shall use commercially
reasonable efforts in obtaining such Subsidiary's or Affiliate's agreement to
the terms of this provision); (b) to prospective transferees or purchasers of
any interest in the Credit Extensions (provided, however, Bank shall use
commercially reasonable efforts to obtain such prospective transferee's or
purchaser's agreement to the terms of this provision); (c) as required by law,
regulation, subpoena, or other order; (d) to Bank's regulators or as otherwise
required in connection with Bank's examination or audit; and (e) as Bank
considers appropriate in exercising remedies under this Agreement. Confidential
information does not include information that either: (i) is in the public
domain or in Bank's possession when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank; or (ii) is disclosed to Bank by a third
party, if Bank does not know that the third party is prohibited from disclosing
the information.
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12.10 RIGHT OF SET OFF. Borrower hereby grants to Bank, a lien, security
interest and right of set off as security for all Obligations to Bank, whether
now existing or hereafter arising upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of Bank
(including a Bank subsidiary) or in transit to any of them. At any time after
the occurrence and during the continuance of an Event of Default, without demand
or notice, Bank may set off the same or any part thereof and apply the same to
any liability or obligation of Borrower even though unmatured and regardless of
the adequacy of any other collateral securing the Obligations. ANY AND ALL
RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
13 DEFINITIONS
13.1 DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"ACCOUNT" is any "account" as defined in the Code and includes, without
limitation, all accounts receivable and other sums owing to Borrower.
"ACCOUNT DEBTOR" is any "account debtor" as defined in the Code with such
additions to such term as may hereafter be made.
"ADVANCE" or "ADVANCES" means an advance (or advances) under the Revolving
Line.
"AFFILIATE" of any Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"AGREEMENT" is defined in the preamble hereof.
"AVAILABILITY AMOUNT" is (a) the lesser of (i) the Revolving Line or (ii)
the Borrowing Base minus (b) the undrawn amount of all outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit) plus an amount equal
to the Letter of Credit Reserves, minus (c) the FX Reserve, and minus (d) the
outstanding principal balance of any Advances (including any amounts used for
Cash Management Services).
"BANK" is defined in the preamble hereof.
"BANK EXPENSES" are all reasonable audit fees and expenses, reasonable
costs, and expenses (including reasonable attorneys' fees and expenses) for
preparing, negotiating, administering, defending and enforcing the Loan
Documents (including, without limitation, those incurred in connection with
appeals or Insolvency Proceedings) or otherwise incurred with respect to
Borrower.
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"BORROWER" is defined in the preamble hereof.
"BORROWER'S BOOKS" are all Borrower's books and records including ledgers,
federal and state tax returns, records regarding Borrower's assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.
"BORROWING BASE" is (a) eighty percent (80.0%) of Eligible Accounts, plus
(b) the lesser of twenty-five percent (25.0%) of the value of Borrower's
Eligible Inventory (valued at the lower of cost or wholesale fair market value)
or Four Million Dollars ($4,000,000.00), plus (c) an amount equal to the
Accounts which are due and owing to Netezza Corporation Limited from an Account
Debtor which is a "Fortune 500" company, which are billed and collected in the
United Kingdom and which would otherwise be Eligible Accounts, in an amount up
to ten percent (10.0%) of the principal amount of Advances outstanding at any
time, as determined (in the case of (a), (b) and (c) above) by Bank from
Borrower's most recent Borrowing Base Certificate; provided, however, that Bank
may, upon notice to Borrower, decrease the foregoing percentages in its good
faith business judgment based on events, conditions, contingencies, or risks
which, as determined by Bank, may adversely affect Collateral.
"BORROWING BASE CERTIFICATE" is that certain certificate in the form
attached hereto as Exhibit C.
"BORROWING RESOLUTIONS" are, with respect to any Person, those resolutions
adopted by such Person's Board of Directors and delivered by such Person to Bank
approving the Loan Documents to which such Person is a party and the
transactions contemplated thereby, together with a certificate executed by its
secretary on behalf of such Person certifying that (a) such Person has the
authority to execute, deliver, and perform its obligations under each of the
Loan Documents to which it is a party, (b) that attached as Exhibit A to such
certificate is a true, correct, and complete copy of the resolutions then in
full force and effect authorizing and ratifying the execution, delivery, and
performance by such Person of the Loan Documents to which it is a party, and (c)
the name(s) of the Person(s) authorized to execute the Loan Documents on behalf
of such Person, together with a sample of the true signature(s) of such
Person(s).
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on which
Bank is closed.
"CASH EQUIVALENTS" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (I) year from the date of
acquisition; (b) commercial paper maturing no more than one (I) year after its
creation and having the highest rating from either Standard & Poor's Ratings
Group or Xxxxx'x Investors Service, Inc., and (c) Bank's certificates of deposit
issued maturing no more than one (1) year after issue.
"CASH MANAGEMENT SERVICES" is defined in Section 2.1.4.
"CASH MANAGEMENT SERVICES SUBLIMIT" is defined in Section 2.1.4.
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"CLAIMS" are defined in Section 12.2.
"CODE" is the Uniform Commercial Code, as the same may, from time to time,
be enacted and in effect in the Commonwealth of Massachusetts; provided, that,
to the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the Code, the definition of such term contained in Article or Division 9
shall govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, or priority of, or
remedies with respect to, Bank's Lien on any Collateral is governed by the
Uniform Commercial Code in effect in a jurisdiction other than the Commonwealth
of Massachusetts, the term "CODE" shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes on the
provisions thereof relating to such attachment, perfection, priority, or
remedies and for purposes of definitions relating to such provisions.
"COLLATERAL" is any and all properties, rights and assets of Borrower
described on Exhibit A.
"COLLATERAL ACCOUNT" is any Deposit Account, Securities Account, or
Commodity Account.
"COMMODITY ACCOUNT" is any "commodity account" as defined in the Code with
such additions to such term as may hereafter be made.
"COMMUNICATION" is defined in Section 10.
"COMPLIANCE CERTIFICATE" is that certain certificate in the form attached
hereto as Exhibit D.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (a) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (b) any obligations for undrawn letters of credit for the account of
that Person; and (c) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under any guarantee or other support arrangement.
"CONTROL AGREEMENT" is any control agreement entered into among the
depository institution at which Borrower maintains a Deposit Account or the
securities intermediary or commodity intermediary at which Borrower maintains a
Securities Account or a Commodity account, Borrower, and Bank pursuant to which
Bank obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.
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"CREDIT EXTENSION" is any Advance, Letter of Credit, FX Forward Contract,
amount utilized for Cash Management Services, or any other extension of credit
by Bank for Borrower's benefit.
"DEFAULT" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"DEFAULT RATE" is defined in Section 2.3(b).
"DEPOSIT ACCOUNT" is any "deposit account" as defined in the Code with such
additions to such term as may hereafter be made.
"DESIGNATED DEPOSIT ACCOUNT" is Borrower's deposit account, account number
______, maintained with Bank.
"DOLLARS," "DOLLARS" and "$" each mean lawful money of the United States.
"EARLY TERMINATION FEE" is defined in Section 2.4.
"EFFECTIVE DATE" is defined in the preamble of this Agreement.
"ELIGIBLE ACCOUNTS" are Accounts which arise in the ordinary course of
Borrower's business that meet all Borrower's representations and warranties in
Section 5.3. Bank reserves the right, at any time and from time to time upon
notice to Borrower and after the Effective Date, to adjust any of the criteria
set forth below and to establish new criteria in its good faith business
judgment. Unless Bank agrees otherwise in writing, Eligible Accounts shall not
include:
(a) Accounts for which the Account Debtor has not been invoiced;
(b) Accounts that the Account Debtor has not paid within ninety (90)
days of invoice date;
(c) Accounts owing from an Account Debtor, fifty percent (50%) or more
of whose Accounts have not been paid within ninety (90) days of invoice date;
(d) Credit balances over ninety (90) days from invoice date;
(e) Accounts owing from an Account Debtor, including Affiliates, whose
total obligations to Borrower exceed twenty-five percent (25%) of all Accounts,
for the amounts that exceed that percentage, unless Bank approves in writing;
(f) Accounts owing from an Account Debtor which does not have its
principal place of business in the United States, provided, that Bank may, in
its sole and absolute discretion, on a case by case basis, deem such foreign
Accounts to be eligible, so long as such foreign Accounts do not exceed
twenty-five percent (25%) of all Accounts;
(g) Accounts owing from an Account Debtor which is a federal, state or
local government entity or any department, agency, or instrumentality thereof,
except for Accounts of
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the United States if Borrower has assigned its payment rights to Bank and the
assignment has been acknowledged under the Federal Assignment of Claims Act of
1940, as amended, provided Bank may, in its sole and absolute discretion, on a
case by case basis, deem governmental accounts, with respect to which Borrower
has not assigned its payment rights to Bank and the assignment has been
acknowledged under the Federal Assignment of Claims Act of 1940, to be eligible,
so long as such Accounts do not exceed fifteen percent (15%) of all Accounts;
(h) Accounts owing from an Account Debtor to the extent that Borrower
is indebted or obligated in any manner to the Account Debtor (as creditor,
lessor, supplier or otherwise - sometimes called "contra" accounts, accounts
payable, customer deposits or credit accounts), with the exception of customary
credits, adjustments and/or discounts given to an Account Debtor by Borrower in
the ordinary course of its business;
(i) Accounts for demonstration or promotional equipment, or in which
goods are consigned, or sold on a "sale guaranteed", "sale or return", "sale on
approval", "xxxx and hold", or other terms if Account Debtor's payment may be
conditional;
(j) Accounts for which the Account Debtor is Borrower's Affiliate,
officer, employee, or agent;
(k) Accounts in which the Account Debtor disputes liability or makes
any claim (but only up to the disputed or claimed amount), or if the Account
Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out
of business;
(l) Accounts owing from an Account Debtor with respect to which
Borrower has received deferred revenue (but only to the extent of such deferred
revenue), unless Bank agrees otherwise in its sole and absolute discretion on a
case by case basis;
(m) Accounts for which Bank in its good faith business judgment
determines collection to be doubtful; and
(n) other Accounts Bank deems ineligible in the exercise of its good
faith business judgment.
"ELIGIBLE INVENTORY" means, at any time, the aggregate of Borrower's
Inventory that (a) consists of finished goods, in good, new, and salable
condition, which is not perishable, returned, consigned, obsolete, not salable,
damaged, or defective, and is not comprised of custom inventory, works in
progress, packaging or shipping materials, or supplies; (b) meets all applicable
governmental standards; (c) has been manufactured in compliance with the Fair
Labor Standards Act; (d) is not subject to any Liens (except for Permitted
Liens), except the first priority Liens granted or in favor of Bank under this
Agreement or any of the other Loan Documents; (e) is located at Borrower's
principal place of business (or any location permitted under Section 7.2); and
(f) is otherwise acceptable to Bank in its good faith business judgment.
"EQUIPMENT" is all "equipment" as defined in the Code and includes without
limitation all machinery, fixtures, goods, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing.
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"ERISA" is the Employee Retirement Income Security Act of 1974, and its
regulations.
"EVENT OF DEFAULT" is defined in Section 8.
"FOREIGN CURRENCY" means lawful money of a country other than the United
States.
"FUNDING DATE" is any date on which a Credit Extension is made to or on
account of Borrower which shall be a Business Day.
"FX BUSINESS DAY" is any day when (a) Bank's Foreign Exchange Department is
conducting its normal business and (b) the Foreign Currency being purchased or
sold by Borrower is available to Bank from the entity from which Bank shall buy
or sell such Foreign Currency.
"FX FORWARD CONTRACT" is defined in Section 2.1.3.
"FX RESERVE" is defined in Section 2.1.3.
"GAAP" is generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other Person as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"GENERAL INTANGIBLES" is all "general intangibles" as defined in the Code
in effect on the date hereof and includes without limitation, all copyright
rights, copyright applications, copyright registrations and like protections in
each work of authorship and derivative work, whether published or unpublished,
any patents, trademarks, service marks and, to the extent permitted under
applicable law, any applications therefor, whether registered or not, any trade
secret rights, including any rights to unpatented inventions, payment
intangibles, royalties, contract rights, goodwill, franchise agreements,
purchase orders, customer lists, route lists, telephone numbers, domain names,
claims, income and other tax refunds, security and other deposits, options to
purchase or sell real or personal property, rights in all litigation presently
or hereafter pending (whether in contract, tort or otherwise), insurance
policies (including without limitation key man, property damage, and business
interruption insurance), payments of insurance and rights to payment of any
kind.
"GROWTH CAPITAL LOAN ARRANGEMENT" is that certain loan arrangement by and
among, Borrower, Bank and Gold Hill Venture Lending 03, L.P., evidenced by,
among other documents, a Term Loan and Security Agreement dated as of June 14,
2005.
"GUARANTOR" is any present or future guarantor of the Obligations,
including, without limitation, Netezza Security Corporation.
"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,
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(b) obligations evidenced by notes, bonds, debentures or similar instruments,
(c) capital lease obligations, and (d) Contingent Obligations.
"INSOLVENCY PROCEEDING" is any proceeding by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INVENTORY" is all "inventory" as defined in the Code in effect on the date
hereof and includes without limitation all merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products,
including without limitation such inventory as is temporarily out of Borrower's
custody or possession or in transit and including any returned goods and any
documents of title representing any of the above.
"INVESTMENT" is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to any Person.
"KEY PERSON" is the Chief Executive Officer of Borrower.
"LETTER OF CREDIT" means a standby letter of credit issued by Bank or
another institution based upon an application, guarantee, indemnity or similar
agreement on the part of Bank as set forth in Section 2.1.2.
"LETTER OF CREDIT APPLICATION" is defined in Section 2.1.2(a).
"LETTER OF CREDIT RESERVE" has the meaning set forth in Section 2.1.2(d).
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, the Perfection
Certificate, any note, or notes or guaranties executed by Borrower or any
Guarantor, and any other present or future agreement between Borrower any
Guarantor and/or for the benefit of Bank in connection with this Agreement, all
as amended, restated, or otherwise modified.
"LOCKBOX" is defined in Section 6.10.
"MATERIAL ADVERSE CHANGE" is (a) a material impairment in the perfection or
priority of Bank's Lien in the Collateral or in the value of such Collateral;
(b) a material adverse change in the business, operations, or condition
(financial or otherwise) of Borrower; (c) a material impairment of the prospect
of repayment of any portion of the Obligations; or (d) Bank determines, based
upon information available to it and in its reasonable judgment, that there is a
substantial likelihood that Borrower shall fail to comply with one or more of
the financial covenants in Section 6 during the next succeeding financial
reporting period.
"MINIMUM REVENUE" shall be determined in accordance with GAAP.
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"OBLIGATIONS" are Borrower's obligation to pay when due any debts,
principal, interest, Bank Expenses and other amounts Borrower owes Bank now or
later, under this Agreement or the Loan Documents including, without limitation,
all obligations relating to letters of credit (including reimbursement
obligations for drawn and undrawn letters of credit), cash management services,
and foreign exchange contracts, if any, and including interest accruing after
Insolvency Proceedings begin and the performance of Borrower's duties under the
Loan Documents.
"OPERATING DOCUMENTS" are, for any Person, such Person's formation
documents, as certified with the Secretary of State of such Person's state of
formation on a date that is no earlier than 30 days prior to the Effective Date,
and, its bylaws in current form, each of the foregoing with all current
amendments or modifications thereto.
"OVERADVANCE" is defined in Section 2.2.
"PAYMENT/ADVANCE FORM" is that certain form attached hereto as Exhibit B.
"PAYMENT DATE" is defined in Section 2.1.8(b).
"PERFECTION CERTIFICATE" is defined in Section 5.1.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's Indebtedness to Bank under this Agreement and the other
Loan Documents;
(b) Indebtedness existing on the Effective Date and shown on the
Perfection Certificate;
(c) Subordinated Debt;
(d) unsecured Indebtedness to trade creditors incurred in the ordinary
course of business;
(e) Indebtedness secured by Permitted Liens;
(f) reimbursement obligations up to One Hundred Fifty Thousand Dollars
($150,000.00) in connection with letters of credit;
(g) Indebtedness of (i) Borrower or Netezza Security Corporation to
any Guarantor or Borrower, or (ii) a Subsidiary to Borrower with the prior
written consent of Bank.
(h) Guarantees by Borrower of obligations of Borrower's Subsidiaries
in an amount not to exceed One Million Dollars ($1,000,000.00) in the aggregate;
(i) without limitation of clause (g) above, Indebtedness of Borrower
to any Subsidiary, and Indebtedness of any Subsidiary to Borrower (so long as
such Indebtedness is not otherwise prohibited hereby) or to any other
Subsidiary, however, such Indebtedness may not
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exceed Three Million Dollars ($3,000,000.00) (inclusive of amounts in (h) above
and inclusive of amounts provided in Section (c) of the definition of Permitted
Investments); and
(j) extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (e) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Perfection Certificate and existing on
the Effective Date;
(b) Cash Equivalents;
(c) without limitation of clause (d) below, Investments by Borrower in
its Subsidiaries and Investments by Netezza Security Corporation in any other
Subsidiary of Borrower, in an amount not to exceed Three Million Dollars
($3,000,000.00) in the aggregate, per fiscal year (inclusive of amounts provided
in Section (i) of Permitted Indebtedness) and Investments by Subsidiaries in
Borrower or to any other Subsidiary of Borrower;
(d) Investments by Borrower in Netezza Security Corporation, and by
Netezza Security Corporation in Borrower; and
(e) Investments consisting of (i) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the
purchase of equity securities of Borrower or its Subsidiaries pursuant to
employee stock purchase plans or agreements approved by Borrower's Board of
Directors.
"PERMITTED LIENS" are:
(a) Liens existing on the Effective Date and shown on the Perfection
Certificate or arising under this Agreement and the other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Bank's Liens;
(c) purchase money Liens (i) on Equipment acquired or held by Borrower
incurred for financing the acquisition of the Equipment securing no more than
One Hundred Thousand Dollars ($100,000.00) in the aggregate amount outstanding,
or (ii) existing on Equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the Equipment;
(d) Leases or subleases and non-exclusive licenses or sublicenses
granted in the ordinary course of Borrower's business, if the leases, subleases,
licenses and sublicenses do not prohibit granting Bank a security interest;
-31-
(e) Mechanic's Liens arising in the ordinary course of business and
which are not delinquent for more than thirty (30) days or are being contested
in good faith by appropriate proceedings;
(f) Liens in favor of other financial institutions arising in
connection with Borrower's deposit and/or securities accounts held at such
institutions, provided that Bank has a perfected security interest in the
amounts held in such deposit and/or securities accounts;
(g) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default;
(h) Security deposits with Borrower's or Borrower's Subsidiary's
landlord;
(i) Deposits or pledges to secure the performance of bids, tenders,
contracts, public or statutory obligations, surety, stay, appeal, indemnity,
performance or other similar bonds or similar obligations arising in the
ordinary course of business; (j) Cash deposits or similar security up to One
Hundred Fifty Thousand Dollars ($150,000.00) in the aggregate securing
Borrower's reimbursement obligations in connection with letters of credit;
(k) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (j), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it is
not Bank's lowest rate.
"REGISTERED ORGANIZATION" is any "registered organization" as defined in
the Code with such additions to such term as may hereafter be made
"RESPONSIBLE OFFICER" is any of the Chief Executive Officer, President,
Chief Financial Officer and Controller of Borrower.
"REVOLVING LINE" is an Advance or Advances in an aggregate amount of up to
Fifteen Million Dollars ($15,000,000.00) outstanding at any time.
"REVOLVING LINE MATURITY DATE" is January 30, 2008.
"SECURITIES ACCOUNT" is any "securities account" as defined in the Code
with such additions to such term as may hereafter be made.
-32-
"SUBORDINATED DEBT" is indebtedness incurred by Borrower subordinated to
all of Borrower's now or hereafter indebtedness to Bank (pursuant to a
subordination, intercreditor, or other similar agreement in form and substance
satisfactory to Bank entered into between Bank and the other creditor), on terms
acceptable to Bank.
"SUBSIDIARY" means, with respect to any Person, any Person of which more
than 50% of the voting stock or other equity interests (in the case of Persons
other than corporations) is owned or controlled, directly or indirectly, by such
Person or one or more Affiliates of such Person.
"TRANSFER" is defined in Section 7.1.
"UNUSED REVOLVING LINE FACILITY FEE" is defined in Section 2.5(c).
[Signature page follows.]
-33-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts as of the Effective Date.
BORROWER:
NETEZZA CORPORATION
By /s/ XX Xxxxxxxx Xx.
----------------------------------
Name: XX Xxxxxxxx Xx.
Title: Sr. VP & CFO
BANK:
SILICON VALLEY BANK
By /s/ Xxxx Xxxxxxxxx
----------------------------------
Name: Xxxx Xxxxxxxxx
Title: SVP
[Signature page to Loan and Security Agreement]
EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest in and to
the following personal property:
All goods, Accounts (including health-care receivables), Equipment,
Inventory, contract rights or rights to payment of money, leases, license
agreements, franchise agreements, General Intangibles (except as provided
below), commercial tort claims, documents, instruments (including any promissory
notes), chattel paper (whether tangible or electronic), cash, deposit accounts,
fixtures, letters of credit rights (whether or not the letter of credit is
evidenced by a writing), securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and
all Borrower's Books relating to the foregoing, and any and all claims,
rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.
Notwithstanding the foregoing, the Collateral does not include any of the
following, whether now owned or hereafter acquired: any copyright rights,
copyright applications, copyright registrations and like protections in each
work of authorship and derivative work, whether published or unpublished, any
patents, patent applications and like protections, including improvements,
divisions, continuations, renewals, reissues, extensions, and
continuations-inpart of the same, trademarks, service marks and, to the extent
permitted under applicable law, any applications therefor, whether registered or
not, and the goodwill of the business of Borrower connected with and symbolized
thereby, know-how, operating manuals, trade secret rights, rights to unpatented
inventions, and any claims for damage by way of any past, present, or future
infringement of any of the foregoing; provided, however, the Collateral shall
include all Accounts, license and royalty fees and other revenues, proceeds, or
income arising out of or relating to any of the foregoing.
Pursuant to the terms of a certain negative pledge arrangement with Bank,
Borrower has agreed not to encumber any of its copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
patent applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-inpart of the
same, trademarks, service marks and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, and the goodwill of
the business of Borrower connected with and symbolized thereby, know-how,
operating manuals, trade secret rights, rights to unpatented inventions, and any
claims for damage by way of any past, present, or future infringement of any of
the foregoing, without Bank's prior written consent.
1
EXHIBIT B
LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS NOON E.S.T.*
Fax To: Date: _____________
LOAN PAYMENT:
Netezza Corporation
From Account # _________________________ To Account # ________________________
(Deposit Account #) (Loan Account #)
Principal $ ____________________________ and/or Interest $____________________
AUTHORIZED SIGNATURE: Phone Number:
------------------ --------------------
Print Name/Title:
----------------------
LOAN ADVANCE:
Complete Outgoing Wire Request section below if all or a portion of the funds
from this loan advance are for an outgoing wire.
From Account # _________________________ To Account # _____________________
(Loan Account #) (Deposit Account #)
Amount of Advance $_____________________
All Borrower's representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
request for an advance; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date:
AUTHORIZED SIGNATURE: Phone Number:
------------------ --------------------
Print Name/Title:
----------------------
OUTGOING WIRE REQUEST:
COMPLETE ONLY IF ALL OR A PORTION OF FUNDS FROM THE LOAN ADVANCE ABOVE IS TO BE
WIRED.
Deadline for same day processing is noon, E.S.T.
Beneficiary Name: ______________________ Amount of Wire: $____________________
Beneficiary Bank: ______________________ Account Number: _____________________
City and State: ________________________
Beneficiary Bank Transit (ABA)#: Beneficiary Bank Code (Swift, Sort,
_______ Chip, etc.): ________________________
(FOR INTERNATIONAL WIRE ONLY)
Intermediary Bank: ______________________ Transit (ABA) #: ____________________
For Further Credit to: _________________________________________________________
Special Instruction: ___________________________________________________________
By signing below, l (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).
Authorized Signature: 2nd Signature (if required):
------------------- --------
Print Name/Title: Print Name/Title:
----------------------- -------------------
Telephone #: Telephone #:
--------------------------- ------------------------
----------
* Unless otherwise provided for an Advance bearing interest at LIBOR.
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EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: Netezza Corporation
Lender: Silicon Valley Bank
Commitment Amount: $15,000,000.00
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 days $__________
7. Concentration Limits $__________
8. Foreign Accounts $__________
9. Governmental Accounts $__________
10. Contra Accounts $__________
11. Promotion or Demo Accounts $__________
12. Intercompany/Employee Accounts $__________
13. Disputed Accounts $__________
14. Deferred Revenue $__________
15. Other (please explain on reverse) $__________
16. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $__________
17. Eligible Accounts (#3 minus # 16) $__________
18. ELIGIBLE AMOUNT OF ACCOUNTS (80% of #17) $__________
INVENTORY
19. Eligible Inventory Value as of _______________ $__________
20. Lesser of (a) ELIGIBLE AMOUNT OF INVENTORY (25% of #19) and
(b) $4,000,000.00 $__________
NETEZZA CORPORATION LIMITED ACCOUNTS
21. Accounts permitted by definition of "Borrowing Base" (up to
10% of the outstanding principal amount of Advances)
BALANCES
22. Maximum Loan Amount $__________
23. Total Funds Available [Lesser of #22 or (#18 plus #20 plus
#21)] $__________
24. Present balance owing on Line of Credit $__________
25. Outstanding under Sublimits $__________
26. RESERVE POSITION (#23 minus #24 and #25) $__________
The undersigned represents and warrants for and on behalf of Borrower that this
is true, complete and correct, and that the information in this Borrowing Base
Certificate complies with the representations and warranties in the Loan and
Security Agreement between the undersigned and Silicon Valley Bank.
1
COMMENTS: BANK USE ONLY
Received by:
By: ---------------------------
---------------------------------- AUTHORIZED SIGNER
Authorized Signer
Date: Date:
-------------------------------- -----------------------------------
Verified:
------------------------------
AUTHORIZED SIGNER
Date:
-----------------------------------
Compliance Status: Yes No
2
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK Date: __________________
FROM: NETEZZA CORPORATION
The undersigned authorized officer of ________________________ ("Borrower")
certifies in such capacity that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (1) Borrower is
in complete compliance for the period ending ______________ with all required
covenants except as noted below, (2) there are no Events of Default, (3) all
representations and warranties in the Agreement are true and correct in all
material respects on this date except as noted below; provided, however, that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, (4) Borrower, and each of its
Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise
permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no
Liens have been levied or claims: made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Bank. Attached are the
required documents supporting the certification. The undersigned certifies that
these are prepared in accordance with GAAP consistently applied from one period
to the next except as explained in an accompanying letter or footnotes. The
undersigned acknowledges that no borrowings may be requested at any time or date
of determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered. Capitalized terms used but not otherwise defined
herein shall have the meanings given them in the Agreement.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Monthly financial statements with Monthly within 30 days Yes No
Compliance Certificate
Annual financial statement (CPA Audited) FYE within 180 days Yes No
10-Q, 10-K and 8-K Within 5 days after filing with SEC Yes No
Borrowing Base Certificate, A/R & A/P Monthly within 30 days Yes No
Agings and deferred revenue report
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ ----------- ----------- --------
Maintain on a Quarterly Basis:
Minimum Revenue $__________* $__________ Yes No
* As set forth in Section 6.7(a) of the Loan and Security Agreement
1
The following financial covenant analysis and information set forth in
Schedule 1 attached hereto are true and accurate as of the date of this
Certificate.
The following are the exceptions with respect to the certification above:
(If no exceptions exist, state "No exceptions to note.")
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Netezza Corporation BANK USE ONLY
By: Received by:
--------------------------------- ---------------------------
Name: AUTHORIZED SIGNER
------------------------------- Date:
Title: ----------------------------------
------------------------------ Verified:
------------------------------
AUTHORIZED SIGNER
Date:
----------------------------------
Compliance Status: Yes No
2
SCHEDULE 1 TO COMPLIANCE CERTIFICATE
FINANCIAL COVENANTS OF BORROWER
Dated: ____________________
In the event of a conflict between this Schedule and the Loan Agreement, the
terms of the Loan Agreement shall control.
I. MINIMUM REVENUE (Section 6.7(a))
Borrower shall maintain at all times, to be tested as of the last day of each of
Borrower's fiscal quarters, unless otherwise noted, on a consolidated basis with
respect to Borrower and its Subsidiaries:
(i) Nineteen Million Eighty Thousand Dollars ($19,080,000.00) as of
and for the quarter ending January 31, 2007, (ii) Seventeen Million Six
Hundred Thousand Dollars ($17,600,000.00) as of and for the quarter ending
April 30, 2007, (iii) Nineteen Million Four Hundred Thousand Dollars
($19,400,000.00) as of and for the quarter ending July 31, 2007, (iv)
Twenty Two Million Four Hundred Thousand Dollars ($22,400,000.00) as of and
for the quarter ending October 31, 2007, (v) Twenty Four Million Eight
Hundred Thousand Dollars ($24,800,000.00) as of and for the quarter ending
January 31, 2008, and (vi) Seventeen Million Dollars ($17,000,000.00) as of
and for the quarter ending April 30, 2008 and as of and for each quarter
ending thereafter.
Required: $__________
Actual: $__________
_______________ No, not in compliance _________________ Yes, in compliance
3
