Exhibit 10.26
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[LOGO OF GREYROCK CAPITAL APPEARS HERE]
LOAN AND SECURITY AGREEMENT
BORROWER: PRIME RESPONSE, INC.
ADDRESS: 000 XXXXXXXXX XXXX XXXXX
XXXXXXXXX, XXXXXXXXXXXXX 00000
DATE: OCTOBER 28, 1999
This Loan and Security Agreement is entered into on the above date between
GREYROCK CAPITAL, a Division of Banc of America Commercial Finance Corporation
("GC"), whose address is 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000 and the borrower named above ("Borrower"), whose chief
executive office is located at the above address ("Borrower's Address"). Banc
of America Commercial Finance Corporation is hereinafter referred to as "GC".
The Schedule to this Agreement (the "Schedule") being signed concurrently is an
integral part of this Agreement. (Definitions of certain terms used in this
Agreement are set forth in Section 8 below.)
1. LOANS.
1.1 LOANS. GC will make loans to Borrower (the "Loans") up to the amounts
(the "Credit Limit") shown on the Schedule, provided no Default or Event of
Default has occurred and is continuing. If at any time or for any reason the
total of all outstanding Loans and all other Obligations exceeds the Credit
Limit, Borrower shall pay the amount of the excess to GC, without notice or
demand*.
*WITHIN ONE BUSINESS DAY
1.2 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth to
the contrary in this Agreement or in another written agreement signed by GC and
Borrower. Interest shall be payable monthly, on the last day of the month.
Unpaid interest* may, in GC's discretion, be charged to Borrower's loan account,
and the same shall thereafter bear interest at the same rate as the other Loans.
*UNPAID INTEREST
1.3 FEES. Borrower shall pay GC the fee(s) shown on the Schedule, which
are in addition to all interest and other sums payable to GC and are not
refundable.
2. SECURITY INTEREST.
2.1 SECURITY INTEREST. To secure the payment and performance of all of the
Obligations when due, Borrower hereby grants to GC a security interest in all of
Borrower's interest in the following, whether now owned or hereafter acquired,
and wherever located (collectively, the "Collateral"): All Inventory,
Equipment, Receivables, Investment Property and General Intangibles, including,
without limitation, all of Borrower's Deposit Accounts, all money, all
collateral in which GC is granted a security interest pursuant to any other
present or future agreement, all property now or at any time in the future in
GC's possession, and all proceeds (including proceeds of any insurance policies,
proceeds of letters of credit, proceeds of proceeds and claims against third
parties), all products of the foregoing, and all books and records related to
any of the foregoing. Borrower's payment and performance of all of the
Obligations when due shall be secured also by the Additional Collateral.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
In order to induce GC to enter into this Agreement and to make Loans,
Borrower represents and warrants to GC as follows, and Borrower covenants that
the following representations will continue to be true,* and that
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Borrower will at all times comply with all of the following covenants:
*(EXCEPT AS EXPRESSLY PROVIDED BELOW FOR CHANGES PURSUANT TO WRITTEN NOTICE
BY BORROWER TO GC)
3.1 EXISTENCE AND AUTHORITY. Borrower is and will continue to be, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Borrower is and will continue to be
qualified and licensed to do business in all jurisdictions in which any failure
to do so would have a material adverse effect on Borrower. The execution,
delivery and performance by Borrower of this Agreement, and all other documents
contemplated hereby (i) have been duly and validly authorized, (ii) are
enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights generally), (iii) do not violate Borrower's articles or certificate of
incorporation or bylaws or any law or any material agreement or instrument which
is binding upon Borrower or its property, and (iv) do not constitute grounds for
acceleration of any material indebtedness or obligation under any material
agreement or instrument which is binding upon Borrower or its property.
3.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give GC 30 days prior written notice before changing its name or
doing business under any other name. Borrower has complied, and will in the
future comply, with all laws relating to the conduct of business under a
fictitious business name.
3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in the
heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth on the Schedule*. Borrower will give GC at least 30 days' prior
written notice before opening any additional place of business, changing its
chief executive office, or moving any of the Collateral** other than Borrower's
Address or one of the locations set forth on the Schedule.
*(EXCEPT FOR SALES OFFICES AT WHICH NOT MORE THAN $50,000 OF COLLATERAL IS
LOCATED)
**TO ANY NEW LOCATION NOT PREVIOUSLY REPORTED TO GC
3.4 TITLE TO COLLATERAL; PERMITTED LIENS. Borrower is now, and will at all
times in the future be, the sole owner of all the Collateral, except for items
of Equipment which are leased by Borrower. The Collateral now is and will
remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for Permitted Liens. GC now has, and
will continue to have, a first-priority perfected and enforceable security
interest in all of the Collateral, subject only to the Permitted Liens, and
Borrower will at all times defend GC and the Collateral against all claims of
others. So long as any Loan is outstanding which is a term loan, none of the
Collateral now is or will be affixed to any real property in such a manner, or
with such intent, as to become a fixture. Borrower is not and will not become a
lessee under any real property lease pursuant to which the lessor may obtain any
rights in any of the Collateral* and no such lease now prohibits, restrains,
impairs or will prohibit, restrain or impair Borrower's right to remove any
Collateral from the leased premises. Whenever any Collateral is located upon
premises in which any third party has an interest (whether as owner, mortgagee,
beneficiary under a deed of trust, lien or otherwise), Borrower shall, whenever
requested by GC, use its best efforts to cause such third party to execute and
deliver to GC, in form acceptable to GC, such waivers and subordinations as GC
shall specify, so as to ensure that GC's rights in the Collateral are, and will
continue to be, superior to the rights of any such third party. Borrower will
keep in full force and effect, and will comply with all the** terms of, any
lease of real property where any of the Collateral now or in the future may be
located***.
*(UNLESS BORROWER PROVIDES GC WITH A LANDLORD WAIVER WITH RESPECT THERETO IN
FORM AND SUBSTANCE SATISFACTORY TO GC, IF SO REQUESTED BY GC, OR UNLESS THE SAME
IS A SALES OFFICE AT WHICH NOT MORE THAN $50,000 OF COLLATERAL IS LOCATED)
**MATERIAL
***EXCEPT FOR LEASES OF SALES OFFICES AT WHICH NOT MORE THAN $50,000 OF
COLLATERAL IS LOCATED
3.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the *Collateral in
good working condition, ordinary wear and tear excepted, and Borrower will not
use the Collateral for any unlawful purpose. Borrower will immediately advise GC
in writing of any material loss or damage to the Collateral. Borrower will
maintain the validity of, and otherwise maintain, preserve and protect, its
patents, trademarks, copyrights and other intellectual property in accordance
with prudent business practices.
*EQUIPMENT AND OTHER TANGIBLE
3.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting
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system in accordance with generally accepted accounting principles.
3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial statements
now or in the future delivered to GC have been, and will be, prepared in
conformity with generally accepted accounting principles and now and in the
future will completely and fairly reflect the financial condition of Borrower,
at the times and for the periods therein stated. Between the last date covered
by any such statement provided to GC and the date hereof, there has been no
material adverse change in the financial condition or business of Borrower.
Borrower is now and will continue to be solvent.
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely
filed, and will timely file, all tax returns and reports required by applicable
law, and Borrower has timely paid, and will timely pay, all applicable taxes,
assessments, deposits and contributions now or in the future owed by Borrower*.
Borrower may, however, defer payment of any contested taxes, provided that
Borrower (i) in good faith contests Borrower's obligation to pay the taxes by
appropriate proceedings promptly and diligently instituted and conducted, (ii)
notifies GC in writing of the commencement of, and any material development in,
the proceedings, and (iii) posts bonds or takes any other steps required to keep
the contested taxes from becoming a lien upon any of the Collateral. 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, and shall continue to pay all amounts necessary to
fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not and will not withdraw
from participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could result
in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or any other governmental agency. Borrower shall, at all
times, maintain a separate payroll account which shall be used exclusively for
payment of payroll and payroll taxes and other items related directly to
payroll.
*(EXCEPT WHERE FAILURE TO DO SO WOULD NOT HAVE A MATERIAL ADVERSE EFFECT ON
BORROWER AND WOULD NOT RESULT IN A LIEN ON ANY OF THE COLLATERAL, BUT ONLY SO
LONG AS THE BORROWER MAINTAINS ADEQUATE RESERVES WITH RESPECT TO SUCH
LIABILITIES IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
CONSISTENTLY APPLIED)
3.9 COMPLIANCE WITH LAW. Borrower has complied, and will comply, in all
material respects, with all provisions of all applicable laws and regulations,
including, but not limited to, those relating to Borrower's ownership of real or
personal property, the conduct and licensing of Borrower's business, and all
environmental matters.
3.10 LITIGATION. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of Borrower's
knowledge) threatened by or against or affecting Borrower in any court or before
any governmental agency (or any basis therefor known to Borrower) which *
result, either separately or in the aggregate, in any material adverse change in
the financial condition or business of Borrower, or in any material impairment
in the ability of Borrower to carry on its business in substantially the same
manner as it is now being conducted. Borrower will promptly inform GC in
writing of any claim, proceeding, litigation or investigation in the future
threatened or instituted by or against Borrower**.
*IS REASONABLY LIKELY TO
**WHICH, IF DETERMINED ADVERSELY TO THE BORROWER, WOULD BE REASONABLY LIKELY
TO RESULT IN (I) A JUDGMENT, LOSS OR PAYMENT OF $50,000 OR MORE, OR $100,000 OR
MORE IN THE AGGREGATE, OR (II) A MATERIAL ADVERSE CHANGE IN THE BUSINESS OR
CONDITION OF BORROWER, OR A MATERIAL IMPAIRMENT IN THE ABILITY OF BORROWER TO
CARRY ON ITS BUSINESS IN SUBSTANTIALLY THE SAME MANNER AS IT IS NOW BEING
CONDUCTED
3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes.
3.12 YEAR 2000 COMPLIANCE. The Borrower has (i) initiated a review and
assessment of all areas within its and each of its subsidiaries' business and
operations (including those affected by suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Borrower or any of its subsidiaries (or its suppliers
and vendors) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (ii) developed a plan and timeline for addressing the Year 2000 Problem
on a timely basis, and (iii) to date, implemented that plan in accordance with
that timetable. The Borrower reasonably believes that all computer applications
(including those of its suppliers and vendors) that are material to its or any
of its subsidiaries' business and operations will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "Year 2000 compliant"), except to the extent that a failure
to do so could not reasonably be expected to have material adverse effect. The
Borrower will promptly notify GC in the event the
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Borrower discovers or determines that any computer application (including those
of its suppliers and vendors) that is material to its or any of its
subsidiaries' business and operations will not be Year 2000 compliant on a
timely basis, except to the extent that such failure could not reasonably be
expected to have a material adverse effect.
4. RECEIVABLES AND INVESTMENT PROPERTY.
4.1 REPRESENTATIONS RELATING TO RECEIVABLES. Borrower and each Related
Company represents and warrants to GC that each Receivable with respect to which
Loans are requested by Borrower shall, on the date each Loan is requested and
made, represent an undisputed, bona fide, existing, unconditional obligation of
the Account Debtor created by the sale, delivery, and acceptance of goods* or
the rendition of services, in the ordinary course of Borrower's business or any
Related Company's business**.
*, THE LICENSING OF SOFTWARE,
**(EXCEPT AS DISCLOSED TO AND APPROVED BY GC)
4.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE. Borrower
and Related Companies each represents and warrants to GC as follows: All
statements made and all unpaid balances appearing in all invoices, instruments
and other documents evidencing the Receivables are and shall be true and correct
and all such invoices, instruments and other documents and all of Borrower's (or
any Related Company's, as the case may be) books and records are and shall be
genuine and in all respects what they purport to be, and all signatories and
endorsers* have the capacity to contract. All sales and other transactions
underlying or giving rise to each Receivable shall comply with all applicable
laws and governmental rules and regulations. All signatures and indorsements on
all documents, instruments, and agreements relating to all Receivables* are and
shall be genuine, and all such documents, instruments and agreements are and
shall be legally enforceable in accordance with their terms.
*(TO THE BEST OF BORROWER'S KNOWLEDGE, FOR PARTIES OTHER THAN BORROWER)
4.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES AND INVESTMENT
PROPERTY. Borrower shall deliver to GC transaction reports and loan requests,
schedules and assignments of all Receivables, and schedules of collections, all
on GC's standard forms*; provided, however, that Borrower's failure to execute
and deliver the same shall not affect or limit GC's security interest and other
rights in all of Borrower's and any Related Company's Receivables, nor shall
GC's failure to advance or lend against a specific Receivable affect or limit
GC's security interest and other rights therein. Together with each such
schedule and assignment, or later if requested by GC, Borrower shall furnish GC
with copies (or, at GC's request, originals) of all contracts, orders, invoices,
and other similar documents, and all original shipping instructions, delivery
receipts, bills of lading, and other evidence of delivery, for any goods the
sale or disposition of which gave rise to such Receivables, and Borrower
warrants the genuineness of all of the foregoing. Borrower shall also furnish to
GC an aged accounts receivable trial balance in such form and at such intervals
as GC shall request. In addition, Borrower shall deliver to GC the originals of
all instruments, chattel paper, security agreements, guarantees and other
documents and property evidencing or securing any Receivables, immediately upon
receipt thereof and in the same form as received, with all necessary
indorsements, and, upon the request of GC, Borrower shall deliver to GC all
letters of credit and also all certificated securities with respect to any
Investment Property, with all necessary indorsements, and obtain such account
control agreements with securities intermediaries and take such other action
with respect to any Investment Property, as GC shall request, in form and
substance satisfactory to GC. Upon request of GC Borrower additionally shall
obtain consents from any letter of credit issuers with respect to the assignment
to GC of any letter of credit proceeds.
*, AS GC SHALL REASONABLY REQUEST
4.4 COLLECTION OF RECEIVABLES AND INVESTMENT PROPERTY INCOME. Borrower and
Related Companies each shall have the right to collect all Receivables and
retain all Investment Property payments and distributions, unless and until a
Default or an Event of Default has occurred*. Borrower shall hold all payments
on, and proceeds of, and distributions with respect to, Receivables and
Investment Property in trust for GC, and Borrower shall deliver all such
payments, proceeds and distributions to GC, within one business day after
receipt of the same, in their original form, duly endorsed, to be applied to the
Obligations in such order as GC shall determine. Except to the extent otherwise
provided in the Schedule or as otherwise agreed with GC, each Related Company
shall hold all payments on, and proceeds of, and distributions with respect to,
each Related Company's Receivables in trust for GC, and each Related Company
shall deliver all such payments, proceeds and distributions to GC, within one
Business Day after receipt of the same, in their original form, duly endorsed,
to be applied to the Obligations in such order as GC shall determine.
4.5 Upon the request of GC, any such distributions and payments with
respect to any Investment Property held in any securities account shall be held
and retained in such securities account as part of the Collateral.
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*AND IS CONTINUING
**, SUBJECT TO SECTION 7.5
4.6 DISPUTES. Borrower and Related Companies each shall notify GC promptly
of all disputes* or claims relating to Receivables on the regular reports to GC.
Borrower shall not forgive, or settle any Receivable for less than payment in
full, or agree to do any of the foregoing (nor shall any Related Company agree
to do any of the foregoing), except that each of the Related Companies and
Borrower may do so, provided that: (i) Borrower or any Related Company, as the
case may be, does so in good faith, in a commercially reasonable manner, in the
ordinary course of business, and in arm's-length transactions, which are
reported to GC on the regular reports provided to GC; (ii) no Default or Event
of Default has occurred and is continuing; and (iii) taking into account all
such settlements and forgiveness, the total outstanding Loans and other
Obligations will not exceed the Credit Limit.
*IN EXCESS OF $50,000
4.7 RETURNS. Provided no Event of Default has occurred and is continuing,
if any Account Debtor returns any Inventory to Borrower (or a Related Company)
in the ordinary course of its business, Borrower (or a Related Company) shall
promptly determine the reason for such return and promptly issue a credit
memorandum to the Account Debtor in the appropriate amount (sending a copy to
GC). In the event any attempted return occurs after the occurrence of any Event
of Default, Borrower (or a Related Company) shall (i) not accept any return
without GC's prior written consent, (ii) hold the returned Inventory in trust
for GC, (iii) segregate all returned Inventory from all of Borrower's (or a
Related Company's) other property, (iv) conspicuously label the returned
Inventory as GC's property, and (v) immediately notify GC of the return of any
Inventory, specifying the reason for such return, the location and condition of
the returned Inventory, and on GC's request deliver such returned Inventory to
GC.
4.8 VERIFICATION. GC may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Receivables, by means of mail, telephone or otherwise, either in the name of
Borrower or a Related Company or GC or such other name as GC may choose, and GC
or its designee may, at any time, notify Account Debtors that it has a security
interest in the Receivables.
4.9 NO LIABILITY. GC shall not under any circumstances be responsible or
liable for any shortage or discrepancy in, damage to, or loss or destruction of,
any goods, the sale or other disposition of which gives rise to a Receivable, or
for any error, act, omission, or delay of any kind occurring in the settlement,
failure to settle, collection or failure to collect any Receivable, or for
settling any Receivable in good faith for less than the full amount thereof, nor
shall GC be deemed to be responsible for any of Borrower's obligations under any
contract or agreement giving rise to a Receivable. Nothing herein shall,
however, relieve GC from liability for its own gross negligence or willful
misconduct.
5. ADDITIONAL DUTIES OF THE BORROWER.
5.1 INSURANCE. Borrower shall, at all times, insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to GC, in such form and amounts as GC may
reasonably require, and Borrower shall provide evidence of such insurance to GC,
so that GC is satisfied that such insurance is, at all times, in full force and
effect. All such insurance policies shall name GC as an additional loss payee,
and shall contain a lenders loss payee endorsement in form reasonably acceptable
to GC. Upon receipt of the proceeds of any such insurance, GC shall apply such
proceeds in reduction of the Obligations as GC shall determine in its sole
discretion, except that, provided no Default or Event of Default has occurred
and is continuing, GC shall release to Borrower* insurance proceeds with respect
to Equipment totaling less than $100,000, which shall be utilized by Borrower
for the replacement of the Equipment with respect to which the insurance
proceeds were paid**. GC may require reasonable assurance that the insurance
proceeds so released will be so used. If Borrower fails to provide or pay for
any insurance, GC may, but is not obligated to, obtain the same at Borrower's
expense. Borrower shall promptly deliver to GC copies of all**** reports made
to insurance companies.
*(I)
**AND (II) INSURANCE PROCEEDS WITH RESPECT TO INVENTORY TOTALING LESS THAN
$100,000, WHICH SHALL BE UTILIZED BY BORROWER FOR THE REPLACEMENT OF THE
INVENTORY WITH RESPECT TO WHICH THE INSURANCE PROCEEDS WERE PAID.
*** MATERIAL
5.2 REPORTS. Borrower, at its expense, shall provide GC with the written
reports set forth in the Schedule, and such other written reports with respect
to Borrower and the Related Companies (including budgets, sales projections,
operating plans and other financial documentation), as GC shall from time to
time reasonably specify.
5.3 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on
one business day's notice, GC, or its agents, shall have the right to inspect
the Collateral,
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and the right to audit and copy Borrower's and any Related Company's books and
records. GC shall take reasonable steps to keep confidential all information
obtained in any such inspection or audit, but GC shall have the right to
disclose any such information to its auditors, regulatory agencies, and
attorneys, and pursuant to any subpoena or other legal process. The foregoing
inspections and audits shall be at Borrower's expense and the charge therefor
shall be $600 per person per day (or such higher amount as shall represent GC's
then current standard charge for the same), plus reasonable out-of-pockets
expenses. Borrower shall not be charged more than $3,000 per audit (plus
reasonable out-of-pockets expenses), nor shall audits be done more frequently
than four times per calendar year, provided that * the foregoing limits shall
not apply after the occurrence of a Default or Event of Default, nor shall they
restrict GC's right to conduct audits at its own expense (whether or not a
Default or Event of Default has occurred). Borrower will not enter into any
agreement with any accounting firm, service bureau or third party to store
Borrower's books or records at any location other than Borrower's Address,
without first obtaining GC's written consent, which may be conditioned upon such
accounting firm, service bureau or other third party agreeing to give GC the
same rights with respect to access to books and records and related rights as GC
has under this Agreement.
* GC SHALL NOT CHARGE FOR MORE THAN ONE SUCH AUDIT PER YEAR; AND PROVIDED
FURTHER THAT
5.4 REMITTANCE OF PROCEEDS. All proceeds arising from the sale or other
disposition of any Collateral shall be delivered, in kind, by Borrower or any
Related Company to GC* in the original form in which received by Borrower or
such Related Company not later than the following business day after receipt by
Borrower**, to be applied to the Obligations in such order as GC shall
determine***; provided that, if no Default or Event of Default has occurred and
is continuing, and if no term loan is outstanding hereunder, then Borrower shall
not be obligated to remit to GC the proceeds of the sale of Equipment which is
sold in the ordinary course of business, in a good-faith arm's-length
transaction****. Except for the proceeds of the sale of Equipment as set forth
above and except as provided in the Schedule as to Related Company, Borrower and
each Related Company shall not commingle proceeds of Collateral with any of
Borrower's or a Related Company's other funds or property, and shall hold such
proceeds separate and apart from such other funds and property and in an express
trust for GC. Nothing in this Section limits the restrictions on disposition of
Collateral set forth elsewhere in this Agreement.
*(OR, AT GC'S REQUEST, INTO A LOCKBOX ACCOUNT, OR OTHER BLOCKED ACCOUNT,
ESTABLISHED PURSUANT TO AN AGREEMENT ACCEPTABLE TO GC, AND WITH A BANK SELECTED
BY BORROWER WHICH IS ACCEPTABLE TO GC)
**(EXCEPT WIRE TRANSFER REMITTANCES RECEIVED BY BORROWER OR A RELATED
COMPANY SHALL BE TRANSMITTED TO GC IN TOTAL THE DAY FOLLOWING POSTING TO
BORROWER'S BANK ACCOUNT)
***(SUBJECT TO SECTION 7.5)
****NOR SHALL BORROWER OR ANY RELATED COMPANY BE OBLIGATED TO REMIT TO GC ANY
SUCH PROCEEDS UNLESS THE AGGREGATE AMOUNT THEREOF RECEIVED AND HELD BY THE
BORROWER OR SUCH RELATED COMPANY EQUALS OR EXCEEDS $25,000
5.5 NEGATIVE COVENANTS. Except as may be permitted in the Schedule, neither
Borrower nor any Related Company shall, without GC's prior written consent, do
any of the following: (i) merge or consolidate with another corporation or
entity; (ii) acquire any assets, except in the ordinary course of business;
(iii) sell or transfer any Collateral, except that, provided no Default or Event
of Default has occurred and is continuing, each of Borrower and the Related
Companies may (A) sell finished Inventory in the ordinary course of Borrower's
or such Related Company's business, (B) sell Equipment in the ordinary course of
business, in good-faith arm's-length transactions, and (C) license or sublicense
on a non-exclusive basis intellectual property in the ordinary course of
Borrower's or such Related Company's business; (IV) store any Inventory or other
Collateral with any warehouseman or other third party*; (V) sell any Inventory
on a sale-or-return, guaranteed sale, consignment, or other contingent basis;
(VI) make any loans of any money or other assets**; (VII) incur any debts,
outside the ordinary course of business, which would have a material, adverse
effect on Borrower or a Related Company or on the prospect of repayment of the
Obligations; (VIII) guarantee or otherwise become liable with respect to the
obligations of another party or entity***; (IX) pay or declare any dividends on
Borrower's or a Related Company's stock (except for dividends payable solely in
stock of Borrower or a Related Company) other than to Parent Company; (X)
redeem, retire, purchase or otherwise acquire, directly or indirectly, any of
Borrower's or a Related Company's stock****; (XI) make any change in Borrower's
or a Related Company's capital structure which would have a material adverse
effect on Borrower or a Related Company or on the prospect of repayment of the
Obligations; (XII) dissolve or elect to dissolve; or (XIII) agree to do any of
the foregoing.
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*, UNLESS SUCH WAREHOUSEMAN OR OTHER THIRD PARTY ENTERS INTO A BAILEE
AGREEMENT WITH GC ON TERMS SATISFACTORY TO GC IN ITS SOLE DISCRETION
**, EXCEPT (A) ADVANCES TO SUBSIDIARIES OF THE BORROWER OR A RELATED COMPANY
AND CUSTOMERS OR SUPPLIERS, IN EACH CASE, IF CREATED, ACQUIRED OR MADE IN THE
ORDINARY COURSE OF BUSINESS, (B) TRAVEL ADVANCES IN THE ORDINARY COURSE OF
BUSINESS, (C) EMPLOYEE RELOCATION LOANS IN THE ORDINARY COURSE OF BUSINESS, (D)
INTERCOMPANY ADVANCES, (E) OTHER EMPLOYEE LOANS AND ADVANCES IN THE ORDINARY
COURSE OF BUSINESS, (F) LOANS TO EMPLOYEES, OFFICERS AND DIRECTORS FOR THE
PURPOSE OF PURCHASING EQUITY SECURITIES OF THE PARENT COMPANY, (G) OTHER LOANS
TO OFFICERS AND EMPLOYEES APPROVED BY THE BOARD OF DIRECTORS OF THE BORROWER OR
THE APPLICABLE RELATED COMPANY AND (H) OTHER LOANS OR EXTENSIONS OF CREDIT NOT
OTHERWISE PERMITTED HEREUNDER, PROVIDED THAT THE AGGREGATE AMOUNT OF ALL OF THE
FOREGOING ITEMS SET FORTH IN (A), (B), (E), (F), (G) AND (H) SHALL NOT EXCEED
$1,000,000 AT ANY ONE TIME OUTSTANDING EXCEPT THAT ANY LOANS MADE PRIOR TO THE
DATE HEREOF PURSUANT TO ITEM (A) SHALL NOT BE INCLUDED IN SAID $1,000,000 LIMIT,
AND PROVIDED, FURTHER, THAT NO DEFAULT OR EVENT OF DEFAULT SHALL EXIST EITHER
IMMEDIATELY PRIOR TO OR AFTER GIVING EFFECT TO THE MAKING OF ANY OF THE
FOREGOING ADVANCES, LOANS OR OTHER EXTENSIONS OF CREDIT IN CLAUSES (A) THROUGH
(H)
***EXCEPT THAT PARENT COMPANY MAY ISSUE GUARANTEES OF ITS SUBSIDIARIES'
OBLIGATIONS IN THE ORDINARY COURSE OF BUSINESS
****(EXCEPT THAT THE PARENT COMPANY MAY REPURCHASE OR REDEEM SHARES OF ITS
CAPITAL STOCK (A) PURSUANT TO EMPLOYEE OPTION PLANS FOR AN AGGREGATE PURCHASE
PRICE NOT TO EXCEED $250,000 PLUS PAYMENTS MADE FROM THE PROCEEDS OF THE
EXERCISE OF STOCK OPTIONS PER FISCAL YEAR, ON A NON-CUMULATIVE BASIS AND (B) IF
A CAPITAL CONTRIBUTION TO THE PARENT COMPANY HAS BEEN MADE PRIOR TO ANY SUCH
PURCHASE OR REDEMPTION IN AN AGGREGATE AMOUNT AT LEAST EQUAL TO THE AMOUNT OF
THE PURCHASE OR REDEMPTION)
5.6 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against GC with respect to any Collateral or in any manner
relating to Borrower or any Related Company, Borrower or any Related Company, as
the case may be, shall, without expense to GC, make available Borrower and its
officers, employees and agents, and Borrower's or any Related Company's, as the
case may be, books and records, without charge, to the extent that GC may deem
them reasonably necessary in order to prosecute or defend any such suit or
proceeding.
5.7 NOTIFICATION OF CHANGES. Borrower and the Related Companies each will
promptly notify GC in writing of any change in its*, the opening of any
new bank account or other deposit account, the opening of any new securities
account, and any material adverse change in the business or financial affairs of
Borrower.
*EXECUTIVE OFFICERS
5.8 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by GC,
to execute all documents and take all actions, as GC may deem reasonably
necessary or useful in order to perfect and maintain GC's perfected security
interest in the Collateral, and in order to fully consummate the transactions
contemplated by this Agreement.
5.9 INDEMNITY. Borrower hereby agrees to indemnify GC and hold GC harmless
from and against any and all claims, debts, liabilities, demands, obligations,
actions, causes of action, penalties, costs and expenses (including attorneys'
fees), of every nature, character and description, which GC may sustain or incur
based upon or arising out of any of the Obligations, any actual or alleged
failure to collect and pay over any withholding or other tax relating to
Borrower or its employees, any relationship or agreement between GC and
Borrower, any actual or alleged failure of GC to comply with any writ of
attachment or other legal process relating to Borrower or any of its property,
or any other matter, cause or thing whatsoever occurred, done, omitted or
suffered to be done by GC relating to Borrower or the Obligations (except any
such amounts sustained or incurred as the result of the gross negligence or
willful misconduct of GC or any of its directors, officers, employees, agents,
attorneys, or any other person affiliated with or representing GC).
Notwithstanding any provision in this Agreement to the contrary, the indemnity
agreement set forth in this Section shall survive any termination of this
Agreement and shall for all purposes continue in full force and effect.
6. TERM.
6.1 MATURITY DATE. This Agreement shall continue in effect until the
maturity date set forth on the Schedule (the "Maturity Date"); provided that the
Maturity Date shall automatically be extended, and this Agreement shall
automatically and continuously renew, for successive additional terms of one
year each, unless one party gives written notice to the other, not less than
sixty days prior to the next Maturity Date, that such party elects to terminate
this Agreement effective on the next Maturity Date.
6.2 EARLY TERMINATION. This Agreement may be terminated prior to the
Maturity Date as follows: (i) by Borrower, effective three business days after
written notice of termination is given to GC; or (ii) by GC at any time after
the occurrence of an Event of Default, without notice, effective immediately. If
this Agreement is terminated by Borrower or by GC under this Section 6.2,
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Borrower shall pay to GC a termination fee (the "Termination Fee") in the amount
shown on the Schedule. The Termination Fee shall be due and payable on the
effective date of termination and thereafter shall bear interest at a rate equal
to the highest rate applicable to any of the Obligations.
6.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier effective
date of termination, Borrower shall pay and perform in full all Obligations,
whether evidenced by installment notes or otherwise, and whether or not all or
any part of such Obligations are otherwise then due and payable. Without
limiting the generality of the foregoing, if on the Maturity Date, or on any
earlier effective date of termination, there are any outstanding letters of
credit issued based upon an application, guarantee, indemnity or similar
agreement on the part of GC, then on such date Borrower shall provide to GC cash
collateral in an amount equal to 110% of the face amount of all such letters of
credit plus all interest, fees and costs due or (in GC's estimation) likely to
become due in connection therewith, to secure all of the Obligations relating to
said letters of credit, pursuant to GC's then standard form cash pledge
agreement. Notwithstanding any termination of this Agreement, all of GC's
security interests in all of the Collateral and all of the terms and provisions
of this Agreement shall continue in full force and effect until all Obligations
have been paid and performed in full; provided that GC may, in its sole
discretion, refuse to make any further Loans after termination. No termination
shall in any way affect or impair any right or remedy of GC, nor shall any such
termination relieve Borrower of any Obligation to GC, until all of the
Obligations have been paid and performed in full. Upon payment and performance
in full of all the Obligations and termination of this Agreement, GC shall
promptly deliver to Borrower termination statements, requests for reconveyances
and such other documents as may be reasonably required to terminate GC's
security interests.
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Default" under this Agreement, and Borrower shall give
GC immediate written notice thereof: (A) Any warranty, representation,
statement, report or certificate made or delivered to GC by Borrower or any
Guarantor or any of Borrower's or any Guarantor's officers, employees or agents,
now or in the future, shall be untrue or misleading in a material respect*; or
(B) Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation**; or (C) the total Loans and other Obligations
outstanding at any time shall exceed the Credit Limit***; or (D) Borrower shall
fail to perform any non-monetary Obligation which by its nature cannot be cured;
or (e) Borrower shall fail to perform any other non-monetary Obligation, which
failure is not cured within **** business days after the date performance is
due; or (f) any levy, assessment, attachment, seizure, lien or encumbrance
(other than a Permitted Lien) is made on all or any part of the Collateral which
is not cured within ***** days after the occurrence of the same; or (g) any
default or event of default occurs under any obligation secured by a Permitted
Lien, which is not cured within any applicable cure period or waived in writing
by the holder of the Permitted Lien+; or (h) Borrower or any Guarantor breaches
any material contract or obligation, which has or may reasonably be expected to
have a material adverse effect on Borrower's or such Guarantor's business or
financial condition; or (i) dissolution, termination of existence, insolvency or
business failure of Borrower or any Guarantor; or appointment of a receiver,
trustee or custodian, for all or any part of the property of, assignment for the
benefit of creditors by, or the commencement of any proceeding by Borrower or
any Guarantor under any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect; or (j) the commencement of any
proceeding against Borrower or any Guarantor under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect,
which is not cured by the dismissal thereof within 45 days after the date
commenced; or (k) revocation or termination of, or limitation or denial of
liability upon, any guaranty of the Obligations or any attempt to do any of the
foregoing; or (l) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset pledged by any other Person to secure any or all of the
Obligations, or any attempt to do any of the foregoing, or commencement of
proceedings by or against any such Person under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect; or (m) Borrower or
any Guarantor makes any payment on account of any indebtedness or obligation
which has been subordinated to the Obligations other than as permitted in the
applicable subordination agreement, or if any Person who has subordinated such
indebtedness or obligations terminates or in any way limits or terminates its
subordination agreement; or (n) there shall be a change in the record or
beneficial ownership of an aggregate of more than 20% of the outstanding shares
of stock of Parent Company, in one or more transactions, compared to the
ownership of outstanding shares of stock of Parent Company in effect on the date
hereof, ++ without the prior written consent of GC; or (o) Borrower or any
Guarantor shall generally not pay its debts as they become due, or Borrower or
any Guarantor shall conceal, remove or transfer any part of its property, with
intent to hinder, delay or defraud its creditors, or make or suffer any
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transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or (p) there shall be a material adverse
change in Borrower's or any Guarantor's business or financial condition; or (q)
there shall be a change in the record or beneficial ownership of Borrower or
Borrower Affiliate such that Parent Company ceases to hold 100% of the common
stock and all other capital stock of Borrower and Borrower Affiliate, without
the prior written consent of GC; or (r) any defined "Event of Default" shall
exist under any Related Company Guaranty or Security Agreement, or the security
provided by the Borrower Affiliate shall become enforceable. GC may cease making
any Loans hereunder during any of the above cure periods, and thereafter if an
Event of Default has occurred.
*WHEN MADE
**AND IN THE CASE OF ANY AMOUNT OTHER THAN PRINCIPAL, SUCH DEFAULT SHALL
CONTINUE FOR THREE BUSINESS DAYS
***AND ARE NOT PROMPTLY REPAID TO THE EXTENT OF SUCH EXCESS WITHIN ONE
BUSINESS DAY
****20
*****30
+, PROVIDED THAT IF THE AMOUNT INVOLVED IS LESS THAN $50,000 THEN THE SAME
SHALL NOT BE AN EVENT OF DEFAULT UNLESS AND UNTIL THE HOLDER OF THE PERMITTED
LIEN COMMENCES ANY ACTION TO ENFORCE ITS LIEN AGAINST ANY COLLATERAL;
++, OTHER THAN IN CONNECTION WITH AN INITIAL PUBLIC OFFERING OF PARENT
COMPANY'S SECURITIES OR ANY PUBLIC OFFERING THEREAFTER,
7.2 REMEDIES. Upon the occurrence and during the continuance of any Event of
Default,* GC, at its option, and without notice or demand of any kind (all of
which are hereby expressly waived by Borrower), may do any one or more of the
following**: (A) Cease making Loans or otherwise extending credit to Borrower
under this Agreement or any other document or agreement; (B) Accelerate and
declare all or any part of the Obligations to be immediately due, payable, and
performable, notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any Obligation; (C) Take possession of any
or all of the Collateral wherever it may be found, and for that purpose Borrower
hereby authorizes GC without judicial process to enter onto any of Borrower's
premises without interference to search for, take possession of, keep, store, or
remove any of the Collateral, and remain on the premises or cause a custodian to
remain on the premises in exclusive control thereof, without charge for so long
as XX xxxxx it reasonably necessary in order to complete the enforcement of its
rights under this Agreement or any other agreement; provided, however, that
should GC seek to take possession of any of the Collateral by Court process,
Borrower hereby irrevocably waives: (i) any bond and any surety or security
relating thereto required by any statute, court rule or otherwise as an incident
to such possession; (ii) any demand for possession prior to the commencement of
any suit or action to recover possession thereof; and (iii) any requirement that
GC retain possession of, and not dispose of, any such Collateral until after
trial or final judgment; (D) Require Borrower to assemble any or all of the
Collateral and make it available to GC at places designated by GC which are
reasonably convenient to GC and Borrower, and to remove the Collateral to such
locations as GC may deem advisable; (e) Complete the processing, manufacturing
or repair of any Collateral prior to a disposition thereof and, for such purpose
and for the purpose of removal, GC shall have the right to use Borrower's
premises, vehicles, hoists, lifts, cranes, equipment and all other property
without charge; (f) Sell, lease or otherwise dispose of any of the Collateral,
in its condition at the time GC obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private sales,
in lots or in bulk, for cash, exchange or other property, or on credit, and to
adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. GC shall have the right to conduct
such disposition on Borrower's premises without charge, for such time or times
as XX xxxxx reasonable, or on GC's premises, or elsewhere and the Collateral
need not be located at the place of disposition. GC may directly or through any
affiliated company purchase or lease any Collateral at any such public
disposition, and if permissible under applicable law, at any private
disposition. Any sale or other disposition of Collateral shall not relieve
Borrower of any liability Borrower may have if any Collateral is defective as to
title or physical condition or otherwise at the time of sale; (g) Demand payment
of, and collect any Receivables and General Intangibles comprising Collateral
and, in connection therewith, Borrower irrevocably authorizes GC to endorse or
sign Borrower's name on all collections, receipts, instruments and other
documents, to take possession of and open mail addressed to Borrower and remove
therefrom payments made with respect to any item of the Collateral or proceeds
thereof, and, in GC's sole discretion, to grant extensions of time to pay,
compromise claims and settle Receivables, General Intangibles and the like for
less than face value; (h) Collect, receive, dispose of and realize upon any
Investment Property, including withdrawal of any and all funds from any
securities accounts; and (i) Demand and receive possession of any of Borrower's
federal and state income tax returns and the books and records utilized in the
preparation thereof or
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referring thereto. All reasonable attorneys' fees, expenses, costs, liabilities
and obligations incurred by GC with respect to the foregoing shall be added to
and become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations.
*AND AT ANY TIME THEREAFTER, WHILE SUCH EVENT OF DEFAULT IS CONTINUING
**(EXCEPT THAT, PRIOR TO OR CONCURRENTLY WITH THE TAKING OF THE FIRST OF ANY
OF THE FOLLOWING ACTIONS, GC SHALL GIVE BORROWER ONE GENERAL WRITTEN NOTICE
STATING THAT GC IS "PROCEEDING TO EXERCISE ITS RIGHTS AND REMEDIES" OR WORDS TO
THAT EFFECT)
7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and GC
agree that a sale or other disposition (collectively, "sale") of any Collateral
which complies with the following standards will conclusively be deemed to be
commercially reasonable: (i) Notice of the sale is given to Borrower at least
seven days prior to the sale, and, in the case of a public sale, notice of the
sale is published at least seven days before the sale in a newspaper of general
circulation in the county where the sale is to be conducted; (ii) Notice of the
sale describes the collateral in general, non-specific terms; (iii) The sale is
conducted at a place designated by GC, with or without the Collateral being
present; (iv) The sale commences at any time between 8:00 a.m. and 6:00 p.m.;
(v) Payment of the purchase price in cash or by cashier's check or wire transfer
is required; (vi) With respect to any sale of any of the Collateral, GC may (but
is not obligated to) direct any prospective purchaser to ascertain directly from
Borrower any and all information concerning the same. GC shall be free to
employ other methods of noticing and selling the Collateral, in its discretion,
if they are commercially reasonable. Without limiting the generality of the
foregoing, Borrower recognizes that GC may be unable to make a public sale of
any or all of the Investment Property, by reason of prohibitions contained in
applicable securities laws or otherwise, and expressly agrees that a private
sale to a restricted group of purchasers for investment and not with a view to
any distribution thereof shall * be considered a commercially **sale ***.
*NOT
**UNREASONABLE
***FOR SUCH REASON
7.4 POWER OF ATTORNEY. Upon the occurrence and during the continuance of
any Event of Default, without limiting GC's other rights and remedies, Borrower
grants to GC an irrevocable power of attorney coupled with an interest,
authorizing and permitting GC (acting through any of its employees, attorneys or
agents) at any time*, at its option, but without obligation, with or without
notice to Borrower, and at Borrower's expense, to do any or all of the
following, in Borrower's name or otherwise, but GC agrees to exercise the
following powers in a commercially reasonable manner: (A) Execute on behalf of
Borrower any documents that GC may, in its sole discretion, deem advisable in
order to perfect and maintain GC's security interest in the Collateral, or in
order to exercise a right of Borrower or GC, or in order to fully consummate all
the transactions contemplated under this Agreement, and all other present and
future agreements; (B) Execute on behalf of Borrower any document exercising,
transferring or assigning any option to purchase, sell or otherwise dispose of
or to lease (as lessor or lessee) any real or personal property which is part of
GC's Collateral or in which GC has an interest; (C) Execute on behalf of
Borrower, any invoices relating to any Receivable, any draft against any Account
Debtor and any notice to any Account Debtor, any proof of claim in bankruptcy,
any Notice of Lien, claim of mechanic's, materialman's or other lien, or
assignment or satisfaction of mechanic's, materialman's or other lien; (D) Take
control in any manner of any cash or non-cash items of payment or proceeds of
Collateral; endorse the name of Borrower upon any instruments, or documents,
evidence of payment or Collateral that may come into GC's possession; (e)
Endorse all checks and other forms of remittances received by GC; (f) Pay,
contest or settle any lien, charge, encumbrance, security interest and adverse
claim in or to any of the Collateral, or any judgment based thereon, or
otherwise take any action to terminate or discharge the same; (g) Grant
extensions of time to pay, compromise claims and settle Receivables and General
Intangibles for less than face value and execute all releases and other
documents in connection therewith; (h) Pay any sums required on account of
Borrower's taxes or to secure the release of any liens therefor, or both; (i)
Settle and adjust, and give releases of, any insurance claim that relates to any
of the Collateral and obtain payment therefor; (j) Instruct any third party
having custody or control of any books or records belonging to, or relating to,
Borrower to give GC the same rights of access and other rights with respect
thereto as GC has under this Agreement; (k) Execute and deliver to any
securities intermediary or other Person any entitlement order, account control
agreement or other notice, document or instrument with respect to any Investment
Property; and (l) Take any action or pay any sum required of Borrower pursuant
to this Agreement and any other present or future agreements. Any and all
reasonable sums paid and any and all reasonable costs, expenses, liabilities,
obligations and reasonable attorneys' fees incurred by GC with respect to the
foregoing shall be added to and become part of the Obligations, shall be payable
on demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations. In no event shall GC's rights under the
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foregoing power of attorney or any of GC's other rights under this Agreement be
deemed to indicate that GC is in control of the business, management or
properties of Borrower.
*DURING THE CONTINUANCE OF SUCH EVENT OF DEFAULT
7.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any
sale or other disposition of the Collateral shall be applied by GC first to the
reasonable costs, expenses, liabilities, obligations and attorneys' fees
incurred by GC 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, in such order as GC shall determine in its sole discretion. Any
surplus shall be paid to Borrower or other persons legally entitled thereto;
Borrower shall remain liable to GC for any deficiency. If, GC, in its sole
discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale of Collateral, GC shall have
the option, exercisable at any time, in its sole discretion, of either reducing
the Obligations by the principal amount of purchase price or deferring the
reduction of the Obligations until the actual receipt by GC of the cash
therefor.
7.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth
in this Agreement, GC shall have all the other rights and remedies accorded a
secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between GC and Borrower, and all of such rights and remedies
are cumulative and none is exclusive. Exercise or partial exercise by GC of one
or more of its rights or remedies shall not be deemed an election, nor bar GC
from subsequent exercise or partial exercise of any other rights or remedies.
The failure or delay of GC to exercise any rights or remedies shall not operate
as a waiver thereof, but all rights and remedies shall continue in full force
and effect until all of the Obligations have been fully paid and performed.
8. DEFINITIONS. AS USED IN THIS AGREEMENT, THE FOLLOWING TERMS HAVE THE
FOLLOWING MEANINGS:
"Account Debtor" means the obligor on a Receivable.
--------------
"Additional Collateral" means all property and interests in property and
---------------------
proceeds thereof described as collateral in the Related Company Security
Agreements.
"Affiliate" means, with respect to any Person, a relative, partner,
---------
shareholder, director, member, officer, or employee of such Person, or any
parent or subsidiary of such Person, or any Person controlling, controlled by or
under common control with such Person.
"Agreement" and "this Agreement" means this Loan and Security Agreement and
--------- --------------
all modifications and amendments thereto, extensions thereof, and replacements
therefor.
"Borrower Affiliate" means Prime Response, Ltd., a corporation organized under
------------------
the laws of England.
"Business Day" means a day on which GC is open for business.
------------
"Code" means the Uniform Commercial Code as adopted and in effect in the State
----
of California from time to time.
"Collateral" has the meaning set forth in Section 2.1 above.
----------
"Default" means any event which with notice or passage of time or both, would
-------
constitute an Event of Default.
"Deposit Account" has the meaning set forth in Section 9105 of the Code.
---------------
"Eligible Receivables" means unconditional Receivables arising in the ordinary
--------------------
course of Borrower's or a Related Company's business from the completed sale of
goods or rendition of services*, which GC, in its sole judgment, shall deem
eligible for borrowing, based on such considerations as GC may from time to time
deem appropriate.
*OR THE LICENSING OF SOFTWARE
"Equipment" means all of Borrower's present and hereafter acquired
---------
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
"Event of Default" means any of the events set forth in Section 7.1 of this
----------------
Agreement.
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lists, security and other deposits, rights in all litigation presently or
hereafter pending for any cause or claim (whether in contract, tort or
otherwise), and all judgments now or hereafter arising therefrom, all claims of
Borrower against GC, rights to purchase or sell real or personal property,
rights as a licensor or licensee of any kind, royalties, telephone numbers,
proprietary information, purchase orders, and all insurance policies and claims
(including life insurance, key man insurance, credit insurance, liability
insurance, property insurance and other insurance), tax refunds and claims,
computer programs, discs, tapes and tape files, claims under guaranties,
security interests or other security held by or granted to Borrower, all rights
to indemnification and all other intangible property of every kind and nature
(other than Receivables).
"Guarantor" means any Person who has guaranteed any of the Obligations.
---------
"Inventory" means all of Borrower's now owned and hereafter acquired goods,
---------
merchandise or other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease (including all raw materials,
work in process, finished goods and goods in transit), and all materials and
supplies of every kind, nature and description which are or might be used or
consumed in Borrower's business or used in connection with the manufacture,
packing, shipping, advertising, selling or finishing of such goods, merchandise
or other personal property, and all warehouse receipts, documents of title and
other documents representing any of the foregoing.
"Investment Property" means any and all investment property of Borrower,
-------------------
including all securities, whether certificated or uncertificated, security
entitlements, securities accounts, commodity contracts and commodity accounts,
and all financial assets held in any securities account or otherwise, wherever
located, and whether now existing or hereafter acquired or arising.
"Obligations" means all present and future Loans, advances, debts,
-----------
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to GC, whether evidenced by this Agreement or any note or
other instrument or document, whether arising from an extension of credit,
opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, including, without limitation, all interest,
charges, expenses, fees, attorney's fees, expert witness fees, audit fees,
letter of credit fees, loan fees, termination fees, minimum interest charges and
any other sums chargeable to Borrower under this Agreement or under any other
present or future instrument or agreement between Borrower and GC.
"Parent Company" means Prime Response Group, Inc., a corporation organized
--------------
under the laws of __________________.
"Permitted Liens" means the following: (i) purchase money security interests
-----------------
in specific items of Equipment; (ii) leases of specific items of Equipment;
(iii) liens for taxes*; (iv) additional security interests and
liens which are subordinate to the security interest in favor of GC and are
consented to in writing by GC (which consent shall not be unreasonably
withheld); (v) security interests being terminated substantially concurrently
with this Agreement; (vi) liens of materialmen, mechanics, warehousemen,
carriers, or other similar liens arising in the ordinary course of business and
securing obligations which are not delinquent**; (vii) liens incurred in
connection with the extension, renewal or refinancing of the indebtedness
secured by liens of the type described above in clauses (i) or (ii) above,
provided that any extension, renewal or replacement lien is limited to the
property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; (viii)
Liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods***. GC will have the
right to require, as a condition to its consent under subparagraph (iv) above,
that the holder of the additional security interest or lien sign an
intercreditor agreement on GC's then standard form, acknowledge that the
security interest is subordinate to the security interest in favor of GC, and
agree not to take any action to enforce its subordinate security interest so
long as any Obligations remain outstanding, and that Borrower agree that any
uncured default in any obligation secured by the subordinate security interest
shall also constitute an Event of Default under this Agreement.
*, OR GOVERNMENTAL FEES, ASSESSMENTS OR OTHER GOVERNMENTAL CHARGES OR
LEVIES, EITHER NOT DELINQUENT OR BEING CONTESTED IN GOOD FAITH BY APPROPRIATE
PROCEEDINGS, PROVIDED THE SAME HAVE NO PRIORITY OVER ANY OF GC'S SECURITY
INTERESTS AND THE BORROWER OR RELATED COMPANY MAINTAINS ADEQUATE RESERVES
THEREFOR IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES,
CONSISTENTLY APPLIED.
**MORE THAN 45 DAYS, OR ARE BEING CONTESTED IN GOOD FAITH (PROVIDED SUCH
LIEN IS NOT FORECLOSED)
***;(IX) ANY JUDGMENT, ATTACHMENT OR SIMILAR LIEN, UNLESS THE JUDGMENT IT
SECURES IS NOT FULLY COVERED BY INSURANCE AND HAS NOT BEEN DISCHARGED OR
EXECUTION THEREOF EFFECTIVELY STAYED AND BONDED AGAINST PENDING APPEAL WITHIN 45
DAYS OF THE ENTRY THEREOF PROVIDED THAT, IF THE JUDGMENT IS NOT FULLY COVERED BY
INSURANCE OR EXECUTION THEREOF HAS NOT BEEN SO STAYED AND BONDED, GC SHALL NOT
BE REQUIRED TO MAKE ANY LOANS OR OTHERWISE EXTEND CREDIT TO OR FOR THE BENEFIT
OF
-12-
BORROWER; (X) LICENSES OR SUBLICENSES GRANTED TO OTHERS NOT INTERFERING IN ANY
MATERIAL RESPECT WITH THE BUSINESS OF BORROWER OR RELATED COMPANY; AND (XI)
LIENS WHICH CONSTITUTE RIGHTS OF SET-OFF OF A CUSTOMARY NATURE OR BANKER'S LIENS
ON AMOUNTS ON DEPOSIT, WHETHER ARISING BY CONTRACT OR BY OPERATION OF LAW, IN
CONNECTION WITH ARRANGEMENTS ENTERED INTO WITH DEPOSITORY INSTITUTIONS IN THE
ORDINARY COURSE OF BUSINESS
"Person" means any individual, sole proprietorship, partnership, joint
------
venture trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"Receivables" means all of Borrower's or a Related Company's now owned and
-----------
hereafter acquired accounts (whether or not earned by performance), letters of
credit, contract rights, chattel paper, instruments, documents and all other
forms of obligations at any time owing to Borrower or a Related Company, all
guaranties and other security therefor, all merchandise returned to or
repossessed by Borrower or a Related Company, and all rights of stoppage in
transit and all other rights or remedies of an unpaid vendor, lienor or secured
party.
"Related Company" means Parent Company or Borrower Affiliate.
---------------
"Related Company Guaranty" means a guaranty of a Related Company, in form
------------------------
and substance satisfactory to GC, pursuant to which such Related Company
guarantees the Obligations.
"Related Company Obligations" means all obligations of a Related Company
---------------------------
under a Related Company Guaranty.
"Related Company Security Agreement" means (i) as to Parent Company, a
----------------------------------
security agreement between Borrower Affiliate and GC, and (ii) as to Borrower
Affiliate, a Debenture of Parent Company in favor of GC, each in form and
substance satisfactory to GC, pursuant to which such Related Company pledges to
GC, and grants to GC a security interest in, such Related Company's accounts
receivable and other property and interests in property described therein as
security for the Obligations.
Other Terms. All accounting terms used in this Agreement, unless otherwise
-----------
indicated, shall have the meanings given to such terms in accordance with
generally accepted accounting principles, consistently applied. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meanings
provided by the Code, to the extent such terms are defined therein.
9. GENERAL PROVISIONS.
Each reference to Borrower in Sections 9.5 through 9.17 below shall be
deemed to include a reference to each Related Company.
9.1 INTEREST COMPUTATION. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by GC (including
proceeds of Receivables and payment of the Obligations in full) shall be deemed
applied by GC on account of the Obligations THREE Business Days after receipt by
GC of immediately available funds. GC shall not, however, be required to credit
Borrower's account for the amount of any item of payment which is unsatisfactory
to GC in its discretion, and GC may charge Borrower's Loan account for the
amount of any item of payment which is returned to GC unpaid.
9.2 APPLICATION OF PAYMENTS. *payments with respect to the Obligations
may be applied, and in GC's sole discretion reversed and reapplied, to the
Obligations, in such order and manner as GC shall determine in its sole
discretion.
*SUBJECT TO SECTION 7.5, ALL
9.3 CHARGES TO ACCOUNT. GC may, in its discretion, require that Borrower
pay monetary Obligations in cash to GC, or charge them to Borrower's Loan
account, in which event they will bear interest at the same rate applicable to
the Loans.
9.4 MONTHLY ACCOUNTINGS. GC shall provide Borrower monthly with an account
of advances, charges, expenses and payments made pursuant to this Agreement.
Such account shall be deemed correct, accurate and binding on Borrower and an
account stated (except for reverses and reapplications of payments made and
corrections of errors discovered by GC), unless Borrower notifies GC in writing
to the contrary within *days after each account is rendered, describing
the nature of any alleged errors or admissions.
*90
9.5 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service, or by facsimile, or by regular first-class mail, or certified mail
return receipt requested, addressed to GC or Borrower at the addresses shown in
the heading to this Agreement, or at any other address designated in writing by
one party to the other party. All notices shall be deemed to have been given
upon delivery in the case of notices personally delivered, or at the expiration
of one business day following delivery to the private delivery service, or one
day after the date sent by facsimile, or two business days
-13-
following the deposit thereof in the United States mail, with postage prepaid*.
* (OR FIVE DAYS FOLLOWING THE DEPOSIT THEREOF IN THE U.K. MAIL, WITH POSTAGE
PREPAID)
9.6 SEVERABILITY. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
9.7 INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and GC and supersede all
prior and contemporaneous negotiations and oral representations and agreements,
all of which are merged and integrated in this Agreement. There are no oral
-----------------
understandings, representations or agreements between the parties which are not
-------------------------------------------------------------------------------
set forth in this Agreement or in other written agreements signed by the parties
--------------------------------------------------------------------------------
in connection herewith.
----------------------
9.8 WAIVERS. The failure of GC at any time or times to require Borrower to
strictly comply with any of the provisions of this Agreement or any other
present or future agreement between Borrower and GC shall not waive or diminish
any right of GC later to demand and receive strict compliance therewith. Any
waiver of any default shall not waive or affect any other default, whether prior
or subsequent, and whether or not similar. None of the provisions of this
Agreement or any other agreement now or in the future executed by Borrower and
delivered to GC shall be deemed to have been waived by any act or knowledge of
GC or its agents or employees, but only by a specific written waiver signed by
an authorized officer of GC and delivered to Borrower. Borrower waives demand,
protest, notice of protest and notice of default or dishonor, notice of payment
and nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, instrument, account, General Intangible, document or guaranty
at any time held by GC on which Borrower is or may in any way be liable, and
notice of any action taken by GC, unless expressly required by this Agreement.
9.9 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by Borrower and a duly
authorized officer of GC.
9.10 TIME OF ESSENCE. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement.
9.11 ATTORNEYS' FEES AND COSTS. Borrower shall reimburse GC for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by GC, pursuant to, or in
connection with, or relating to this Agreement (whether or not a lawsuit is
filed), including, but not limited to, any reasonable attorneys' fees and costs
GC incurs in order to do the following: prepare and negotiate this Agreement and
the documents relating to this Agreement; obtain legal advice in connection with
this Agreement or Borrower; enforce, or seek to enforce, any of its rights;
prosecute actions against, or defend actions by, Account Debtors; commence,
intervene in, or defend any action or proceeding; initiate any complaint to be
relieved of the automatic stay in bankruptcy; file or prosecute any probate
claim, bankruptcy claim, third-party claim, or other claim; examine, audit,
copy, and inspect any of the Collateral or any of Borrower's books and records;
protect, obtain possession of, lease, dispose of, or otherwise enforce GC's
security interest in, the Collateral; and otherwise represent GC in any
litigation relating to Borrower. If either GC or Borrower files any lawsuit
against the other predicated on a breach of this Agreement, the prevailing party
in such action shall be entitled to recover its reasonable costs and attorneys'
fees, including (but not limited to) reasonable attorneys' fees and costs
incurred in the enforcement of, execution upon or defense of any order, decree,
award or judgment. All attorneys' fees and costs to which GC may be entitled
pursuant to this Paragraph shall immediately become part of Borrower's
Obligations, shall be due on demand, and shall bear interest at a rate equal to
the highest interest rate applicable to any of the Obligations.
9.12 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and GC; provided, however,
that Borrower may not assign or transfer any of its rights under this Agreement
without the prior written consent of GC, and any prohibited assignment shall be
void. No consent by GC to any assignment shall release Borrower from its
liability for the Obligations.
9.13 JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.
9.14 LIMITATION OF ACTIONS. Any claim or cause of action by Borrower
against GC, its directors, officers, employees, agents, accountants or
attorneys, based upon, arising from, or relating to this Agreement, or any other
present or future document or agreement, 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 GC, its
directors, officers, employees, agents, accountants or attorneys, shall be
barred unless asserted
-14-
by Borrower by the commencement of an action or proceeding in a court of
competent jurisdiction by the filing of a complaint within one year after* the
first act, occurrence or omission upon which such claim or cause of action, or
any part thereof, is based, and the service of a summons and complaint on an
officer of GC, or on any other person authorized to accept service on behalf of
GC, within thirty (30) days thereafter. Borrower agrees that such one-year
period is a reasonable and sufficient time for Borrower to investigate and act
upon any such claim or cause of action. The one-year period provided herein
shall not be waived, tolled, or extended except by the written consent of GC in
its sole discretion. This provision shall survive any termination of this
Agreement or any other present or future agreement.
*BORROWER LEARNS OF, OR IN THE EXERCISE OF REASONABLE DILIGENCE SHOULD HAVE
LEARNED OF,
9.15 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used in
this Agreement for convenience. Borrower and GC acknowledge that the headings
may not describe completely the subject matter of the applicable paragraph, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. The term "including,"
whenever used in this Agreement, shall mean "including (but not limited to)."
This Agreement has been fully reviewed and negotiated between the parties and no
uncertainty or ambiguity in any term or provision of this Agreement shall be
construed strictly against GC or Borrower under any rule of construction or
otherwise.
9.16 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and
transactions hereunder and all rights and obligations of GC and Borrower shall
be governed by the laws of the State of California. As a material part of the
consideration to GC to enter into this Agreement, Borrower (i) agrees that all
actions and proceedings relating directly or indirectly to this Agreement shall,
at GC's option, be litigated in courts located within California*, and that the
exclusive venue for ** shall be Los Angeles County; (ii) consents to the
jurisdiction and venue of any such court and consents to service of process in
any such action or proceeding by personal delivery or any other method permitted
by law; and (iii) waives any and all rights Borrower may have to object to the
jurisdiction of any such court, or to transfer or change the venue of any such
action or proceeding.
* OR THE UNITED KINGDOM
** ANY ACTION OR PROCEEDING IN CALIFORNIA
9.17 Mutual Waiver of Jury Trial. BORROWER AND GC EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN GC AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF GC OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH GC OR BORROWER, IN ALL OF
THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
(remainder of page intentionally left blank)
-15-
BORROWER:
PRIME RESPONSE, INC.
By: /s/ Xxxxx Xxxx
--------------------------------------
President or Vice President
By: /s/ Xxxxx Xxxx
--------------------------------------
Secretary or Ass't Secretary
GC:
GREYROCK CAPITAL,
A DIVISION OF BANC OF AMERICA COMMERCIAL FINANCE
CORPORATION
By: /s/ Xxxx Xxxxxx
--------------------------------------
TITLE: Senior Vice President
-----------------------------------
RELATED COMPANY CONSENTS
------------------------
Each of Prime Response Group, Inc., a
corporation organized under the laws of
Delaware, and Prime Response, Ltd., a
corporation organized under the laws of
England, hereby approves of, agrees to and
consents to all of the terms and provisions
of the foregoing as they relate to it, and
agrees to be bound thereby.
RELATED COMPANIES:
PRIME RESPONSE GROUP, INC.
BY: /s/ Xxxxx Xxxx
--------------------------------------
TITLE: Vice President
-----------------------------------
PRIME RESPONSE, LTD.
BY: /s/ Xxxxx Xxxx
--------------------------------------
TITLE: Vice President
-----------------------------------
-16-
[GREYROCK LOGO APPEARS HERE]
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: PRIME RESPONSE, INC.
Address: 000 XXXXXXXXX XXXX XXXXX
XXXXXXXXX, XXXXXXXXXXXXX 00000
Date: OCTOBER 28, 1999
This Schedule is an integral part of the Loan and Security Agreement between
GREYROCK CAPITAL, A DIVISION OF BANC OF AMERICA COMMERCIAL FINANCE CORPORATION
("GC") and the borrower named above ("Borrower") of even date.
===============================================================================
1. CREDIT LIMIT
(Section 1.1):
An amount not to exceed the lesser of (1) or (2) below:
(1) $5,000,000 at any one time outstanding; or
(2) an amount equal to the sum of the following (without
duplication): (A) the amount equal to 85% of the amount
of Borrower's Eligible Receivables (as defined in
Section 8 above), plus (B) the unpaid principal balance
----
of the Term Loan in the original principal amount of
$2,000,000 being made concurrently herewith by GC to
Borrower (the "Term Loan") and evidenced by the Secured
Promissory Note (the "Term Note") of even date herewith
made by Borrower to the order of GC.
===============================================================================
2. INTEREST
INTEREST RATE (Section 1.2):
The interest rate in effect throughout each calendar
month during the term of this Agreement shall be the
highest "Prime Rate" in effect during such month, plus
2% per annum; provided that the interest rate in effect
in each month shall not be less than 7% per annum, and
provided further that the interest charged for each
month shall be a minimum of $12,000, regardless of the
amount of the Obligations outstanding. Interest shall be
calculated on the basis of a 360-day year for the actual
number of days elapsed. As used herein, "Prime Rate"
shall mean the actual prime rate or the substitute
therefor of Bank of
America, N.A. ("BofA") whether or not that rate is the
lowest interest rate charged by BofA. If the Prime Rate,
as so defined, is unavailable on any date of
determination, "Prime Rate" shall mean the highest of
the prime rates published in the Wall Street Journal, on
such date of determination, as the base rate on
corporate loans at large United States money center
commercial banks, as determined in good faith by GC,
which determination shall be conclusive absent manifest
error.
================================================================================
3. FEES (Section 1.3/Section 6.2):
LOAN FEE: $50,000, payable on the Closing Date.
TERMINATION FEE: None.
NSF CHECK CHARGE: $15.00 per item.
WIRE TRANSFERS: $15.00 per transfer.
===============================================================================
4. MATURITY DATE November 30, 2000, subject to automatic renewal
Section 6.1 (Section 6.1): as provided in above, and early termination as
provided in Section 6.2 above.
===============================================================================
5. REPORTING Borrower shall provide GC with the following:
(Section 5.2):
1. Annual financial statements, as soon as available,
and in any event within 90 days following the end of
Parent Company's fiscal year, certified by
independent certified public accountants acceptable
to GC.
2. Quarterly unaudited financial statements, as soon as
available, and in any event within 30 days after the
end of each fiscal quarter of Parent Company.
3. Copies of the regular, periodic or special reports
that Parent Company or any subsidiary may make to,
or file with, any governmental authority or entity
in the U.S. or U.K. within 5 days after the earlier
of the date they are filed or required to be filed.
4. Monthly unaudited financial statements as soon as
available and, in any event, no later than 30 days
after the end of each month.
5. Monthly Receivable agings, aged by invoice date,
within 10 days after the end of each month.
6. Monthly accounts payable agings, aged by invoice
date, and outstanding or held check registers within
10 days after the end of each month.
7. Such other information as GC shall from time to time
reasonably request with respect to Receivables of
Borrower and the Related Companies and such other
information reasonably requested by GC relating
thereto.
==============================================================================
-2-
6. BORROWER INFORMATION:
PRIOR NAMES OF BORROWER
(Section 3.2): ---------------------------------------------
PRIOR TRADE NAMES OF BORROWER
(Section 3.2): ---------------------------------------------
EXISTING TRADE NAMES OF
BORROWER
(Section 3.2): ---------------------------------------------
OTHER LOCATIONS AND ADDRESSES
(Section 3.3): 0000 00xx Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000
---------------------------------------------
MATERIAL ADVERSE LITIGATION
(Section 3.10): See attached
---------------------------------------------
===============================================================================
7. ADDITIONAL 1. RELATED COMPANY RECEIVABLES. (A) In order
PROVISIONS: to be Eligible Receivables, the Borrower
Affiliate's Receivables (the "U.K.
Receivables") shall be billed from and payable
to offices in England (even though bills may
be sent to, and payments may be remitted from,
other countries). Currencies in other than
U.S. Dollars or English pounds sterling in
which U.K. Receivables are denominated shall
be acceptable to GC in its sole discretion.
For purposes hereof, all determinations based
on any Receivables denominated in a currency
other than U.S. Dollars shall be made using
the equivalent amount in U.S. Dollars at the
spot rate of exchange of Bank of America, N.A.
(B) Daily reporting of transactions and daily
schedules and assignments of Receivables and
schedules of collections, called for by
Section 4.3 of the Loan Agreement, will not be
required with respect to any Related Company's
Receivables. Instead, Borrower will provide GC
with a monthly Borrowing Base Certificate, in
such form as GC shall from time to time
specify, within 10 days after the end of each
month, with respect to any Related Company's
Receivables. In the event, as of the end of
any month, the total of all Loans and all
other Obligations secured by all Eligible
Receivables (determined after including all
Related Company Receivables) exceeds the
Credit Limit set forth above, Borrower shall
immediately pay the amount of the excess to
GC. (C) Delivery of the proceeds of any
Related Company's Receivables and other
Additional Collateral within one business day
after receipt, as called for by Sections 4.4
and 5.4 of the Loan Agreement, will not be
required. (D) The foregoing provisions of this
Section 7 shall immediately terminate if any
Default or Event of Default occurs and is
continuing. Upon any such termination,
Borrower shall, then and thereafter, provide
GC with the daily reporting of transactions
and daily schedules and assignments of the
Related Company's Receivables and schedules of
collections, as called for by Section 4.3 of
the Loan Agreement, and Borrower shall deliver
all proceeds of the Related Company's
Receivables and other Additional Collateral to
GC, within one business day after receipt,
-3-
as called for by Sections 4.4 and 5.4 of the
Loan Agreement.
2. CERTAIN CONDITIONS PRECEDENT. The
availability of all Loans shall be subject to
the conditions precedent that GC shall have
received, in form and substance satisfactory
to GC and its counsel:
(i) the Parent Company's Security Agreement,
duly executed by the Parent Company; and
(ii) the Parent Company's Guaranty, duly
executed by the Parent Company.
The availability of Loans secured by any U.K.
Receivables shall be subject to the conditions
precedent that GC shall have received, in form
and substance satisfactory to GC and its
counsel:
(i) a certificate of the Secretary or other
appropriate officer of Borrower Affiliate
certifying (A) copies of the articles of
incorporation and bylaws (or other
applicable organizational documents), of
the Borrower Affiliate and the
resolutions and other actions taken or
adopted by the Borrower Affiliate
authorizing the execution, delivery and
performance of the Borrower Affiliate
Security Agreement and Guaranty to which
it is a party (the "U.K. Documents"), and
(B) the incumbency, authority and
signatures of each officer of Borrower
Affiliate authorized to execute and
deliver the U.K. Documents, and act with
respect thereto; and
(ii) a favorable legal opinion of U.K. counsel
to the Borrower Affiliate as to such
matters as GC may reasonably request.
The availability of Loans to be secured by any
Related Company Receivables shall be subject
to the condition precedent that GC shall have
received, in form and substance satisfactory
to GC and its counsel, evidence that all
filings, registrations and recordings have
been made in the appropriate governmental
offices, and all other action has been taken,
which shall be necessary to create, in favor
of GC, a perfected first priority pledge of
and security interest in the Additional
Collateral.
3. CORPORATE STRUCTURE. Borrower represents
and warrants that its corporate structure is
as follows: Parent Company owns (directly or
indirectly) 100% of the outstanding stock of
Borrower and Borrower Affiliate. The Parent
Company has no other subsidiaries, other than
as set forth above.
4. FOREIGN LAW PROVISIONS. (A) Each of
Borrower and the Related Companies (each an
"Obligor") shall pay all amounts of principal,
interest, fees and other amounts due under
this Agreement and any and all related
instruments and agreements (collectively, the
"Loan Documents") free and clear of, and
without reduction for or on account of, any
present and future taxes, levies, imposts,
duties, fees, assessments, charges,
-4-
deductions or withholdings and all liabilities
with respect thereto excluding, in the case of
GC, income and franchise taxes imposed on it
by the jurisdiction under the laws of which GC
is organized or in which its principal
executive offices may be located or any
political subdivision or taxing authority
thereof or therein, and by the jurisdiction of
GC's lending office and any political
subdivision or taxing authority thereof or
therein (all such nonexcluded taxes, levies,
imposts, duties, fees, assessments, charges,
deductions, with-holdings and liabilities
being hereinafter referred to as "Taxes"). If
any Taxes shall be required by law to be
deducted or withheld from any payment, Obligor
shall increase the amount paid so that GC
receives when due (and is entitled to retain),
after deduction or with-holding for or on
account of such Taxes (including deductions or
withholdings applicable to additional sums
payable under this Section), the full amount
of the payment pro-vided for in the Loan
Documents. (B) If an Obligor makes any payment
hereunder in respect of which it is required
by law to make any deduction or withholding,
it shall pay the full amount to be deducted or
withheld to the relevant taxation or other
authority within the time allowed for such
payment under applicable law and promptly
thereafter shall furnish to GC an original or
certified copy of a receipt evidencing payment
thereof, together with such other information
and documents as GC may reasonably request. If
no Taxes are payable in respect of any payment
hereunder or in connection herewith, the
Obligor shall, upon request of GC, furnish to
GC a certificate from each appropriate taxing
authority, or an opinion of counsel acceptable
to GC, in either case stating that such
payment is exempt from or not subject to
Taxes. (C) If GC is required by law to make
any payment on account of Taxes, or any
liability in respect of any Tax is imposed,
levied or assessed against GC, the Obligor
shall indemnify GC for and against such
payment or liability, together with any
incremental taxes, interest or penalties, and
all costs and expenses, payable or incurred in
connection therewith, including Taxes imposed
on amounts payable under this Section 8,
whether or not such payment or liability was
correctly or legally asserted. A certificate
of GC as to the amount of any such payment
shall, in the absence of manifest error, be
conclusive and binding for all purposes. (D)
The Obligor agrees to indemnify GC against and
hold it harmless from any and all present and
future stamp, transfer, documentary and other
such taxes, levies, fees, assessments and
other charges made by any jurisdiction by
reason of the execution, delivery, performance
and enforcement of the Loan Documents. (E)
Payment in U.S. Dollars of all amounts due
under the Loan Documents is of the essence,
and U.S. Dollars shall be the currency of
account in all events. The payment obligations
of an Obligor under the Loan Documents shall
not be discharged by an amount paid in another
currency or in another place, whether pursuant
to a judgment or otherwise, to
-5-
the extent that the amount so paid on
conversion to U.S. Dollars and transfer to GC
under normal banking procedures (after premium
and costs of exchange) does not yield the
amount of U.S. Dollars due under the Loan
Documents. If, for the purposes of obtaining
judgment in any court, it is necessary to
convert a sum due hereunder or any other Loan
Document in U.S. Dollars into another currency
(the "Other Currency"), the rate of exchange
used shall be that at which in accordance with
normal banking procedures GC could purchase
U.S. Dollars with the Other Currency on the
Business Day preceding that on which final
judgment is given. The obligation of any
Obligor in respect of any such sum due from it
to GC under the Loan Documents shall,
notwithstanding any judgment in such Other
Currency, be discharged only to the extent
that on the Business Day following receipt by
GC of any sum adjudged to be so due in the
Other Currency, GC may in accordance with
normal banking procedures purchase U.S.
Dollars with the Other Currency; if the U.S.
Dollars so purchased are less than the sum
originally due to GC in U.S. Dollars, each
Obligor agrees, as a separate and independent
obligation and notwithstanding any such
judgment, to indemnify GC against such loss,
and if the U.S. Dollars so purchased exceed
the sum originally due to GC in U.S. Dollars,
GC agrees to remit to Borrower such excess.
5. CLOSING AS TO BORROWER AFFILIATE. Not
later than 30 days from the date hereof, all
documentary conditions precedent set forth in
Section 7(2) above as to Borrower Affiliate
must be satisfied. It shall be an Event of
Default if such conditions are not satisfied
by such date.
(remainder of page intentionally left blank)
-6-
BORROWER: GC:
PRIME RESPONSE, INC. GREYROCK CAPITAL,
A DIVISION OF BANC OF AMERICA COMMERCIAL
FINANCE CORPORATION
By: /s/ Xxxxx Xxxx By: /s/ Xxxx Xxxxxx
-------------------------- ---------------------------------
President or Vice President Title: Senior Vice President
------------------------------
By: /s/ Xxxxx Xxxx
--------------------------
Secretary or Ass't Secretary
RELATED COMPANY CONSENTS
------------------------
Each of Prime Response Group, Inc.,
a corporation organized under the laws of
Delaware, and Prime Response, Ltd., a
corporation organized under the laws of
England, hereby approves of, agrees to and
consents to all of the terms and provisions
of the foregoing as they relate to it, and
agrees to be bound thereby.
RELATED COMPANIES:
PRIME RESPONSE GROUP, INC.
BY: /s/ Xxxxx Xxxx
--------------------------------
TITLE: Vice President
-----------------------------
PRIME RESPONSE, LTD.
BY: /s/ Xxxxx Xxxx
--------------------------------
TITLE: Vice President
-----------------------------
-7-
