Loan and Security Agreement - Silicon Valley Bank and Roving Software Inc.
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated as of February
27, 2003, between SILICON VALLEY BANK, a California chartered bank, with its
principal place of business at 3003 Tasman Drive, Santa Clara, California 95054
and with a loan production office located at One Newton Executive Park, Suite
200, 2221 Washington Street, Newton, Massachusetts 02462, doing business under
the name "Silicon Valley East" ("Bank") and ROVING SOFTWARE INCORPORATED, a
Delaware corporation ("Borrower"), provides the terms on which Bank shall lend
to Borrower and Borrower shall repay Bank. The parties agree as follows:
1. ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed following
GAAP. Calculations and determinations must be made following GAAP. The term
"financial statements" includes the notes and schedules. The terms "including"
and "includes" always mean "including (or includes) without limitation," in this
or any Loan Document. Capitalized terms in this Agreement shall have the
meanings set forth in Section 13.
2. LOAN AND TERMS OF PAYMENT
2.1 PROMISE TO PAY. Borrower hereby unconditionally promises to pay
Bank the unpaid principal amount of all Credit Extensions and interest on the
unpaid principal amount of the Credit Extensions as and when due in accordance
with this Agreement
2.1.1 EQUIPMENT ADVANCES.
(a) Availability. From (i) the Closing Date through June 30,
2003 (the "Equipment Availability End Date No. 1"), Bank shall make advances
("Equipment Advance" and, collectively, "Equipment Advances") not exceeding the
Equipment Line, and from (ii) July 1, 2003 through December 31, 2003 (the
"Equipment Availability End Date No. 2"), bank shall make Equipment Advances
upon Borrower' request, not to exceed the amount of the Equipment Line (in the
aggregate, including the original principal amount of all Equipment Advances
made hereunder). The Equipment Advances may only be used to finance Eligible
Equipment purchased on or after 90 days before the date of each Equipment
Advance and no Equipment Advances may exceed 100 % of the equipment invoice
excluding taxes, shipping, warranty charges, freight discounts and installation
expense relating to such Equipment, unless such costs constitute Other
Equipment. After repayment, Equipment Advances may not be reborrowed.
(b) Interest Rate. Interest accrues from the date of each
Equipment Advance at the rate in Section 2.2(a) and is payable monthly.
(c) Repayment. Equipment Advances outstanding on each
Equipment Availability End Date are payable in (a) thirty (30) consecutive equal
monthly installments of principal, plus, (b) monthly payments of accrued
interest, beginning on the Payment Date of each month following the Equipment
Availability End Date.
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(d) To obtain an Equipment Advance, Borrower must notify
Bank (the notice is irrevocable) by facsimile no later than 3:00 p.m. Eastern
time one (1) Business Day before the day on which the Equipment Advance is to be
made. The notice in the form of EXHIBIT B (Payment/Advance Form) must be signed
by a Responsible Officer or designee and include a copy of the invoice for the
Equipment being financed.
2.1.2 UNDISBURSED CREDIT EXTENSIONS. The Bank's obligation to
lend the undisbursed portion of the Obligations shall terminate if, in Bank's
sole discretion, there has been a material adverse change in the general
affairs, management, results of operation, condition (financial or otherwise) or
the prospect of repayment of the Obligations, or there has been any material
adverse deviation by Borrower from the most recent business plan of Borrower
presented to and accepted by Bank prior to the execution of this Agreement.
2.2 INTEREST RATE; PAYMENTS.
(a) Interest Rate. The principal amounts outstanding under the
Equipment Line shall accrue interest at a per annum rate equal to the aggregate
of the Bank's Prime Rate, and two percent (2.0%). After an Event Default,
Obligations shall bear interest at five percent (5.0%) above the rate effective
immediately before the Event of Default. The applicable interest rate hereunder
shall increase or decrease when the Prime Rate changes. Interest is computed on
the basis of a 360 day year for the actual number of days elapsed.
(b) Payments. Interest is payable on the Payment Date of each
month. Payments received after 12:00 noon Eastern time are considered received
at the opening of business on the next Business Day. When a payment is due on a
day that is not a Business Day, the payment is due the next Business Day and
additional fees or interest, as applicable, shall continue to accrue. The
Borrower may pay without penalty all or a portion of the Equipment Line owed
earlier than it is due.
(c) Debit of Accounts. Bank may debit any of Borrower's deposit
accounts including Account Number ____________ for principal and interest
payments or any amounts Borrower owes Bank. Bank shall promptly notify Borrower
when it debits Borrower's accounts. These debits are not a set-off.
2.3 FEES. Borrower shall pay to Bank:
(a) Equipment Line Facility Fee. A fully earned, non-refundable
facility fee of One Thousand Seven Hundred Fifty Dollars ($1,750.00) due on the
Closing Date; and
(b) Bank Expenses. All Bank Expenses (including reasonable
attorneys' fees and expenses incurred through and after the Closing Date) when
due.
3. CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION. The Bank's
obligation to make the initial Credit Extension is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, the following:
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(a) this Agreement;
(b) a certificate of the Secretary of Borrower with respect to
articles, bylaws, incumbency and resolutions authorizing the execution and
delivery of this Agreement;
(c) Perfection Certificate (s) by Borrower;
(d) Loan Modification Agreement;
(e) Bailee/Warehouse Waiver;
(f) financing statements (Forms UCC-1);
(g) insurance certificate;
(h) payment of the fees and Bank Expenses then due specified in
Section 2.4 hereof;
(i) Certificate of Foreign Qualification (if applicable);
(j) Certificate of Good Standing/Legal Existence; and
(k) such other documents, and completion of such other matters,
as Bank may reasonably deem necessary or appropriate.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Bank's obligations
to make each Credit Extension, including the initial Credit Extension, is
subject to the following:
(a) timely receipt of any Payment/Advance Form; and
(b) the representations and warranties in Section 5 shall be
materially true on the date of the Payment/Advance Form and on the effective
date of each Credit Extension and no Event of Default shall have occurred and be
continuing, or result from the Credit Extension. Each Credit Extension is
Borrower's representation and warranty on that date that the representations and
warranties in Section 5 remain true.
4. CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants Bank, to secure
the payment and performance in full of all of the Obligations and the
performance of each of Borrower's duties under the Loan Documents, a continuing
security interest in, and pledges and assigns to the Bank, the Collateral,
wherever located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof. Borrower warrants and represents that the
security interest granted herein shall be a first priority security interest in
the Collateral. Bank may place a "hold" on any deposit account pledged as
Collateral.
Except as noted on the Perfection Certificate, Borrower is not a party to, nor
is bound by, any license or other agreement with respect to which the Borrower
is the licensee that prohibits or otherwise restricts Borrower from granting a
security interest in Borrower's interest in such
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license or agreement or any other property. Without prior consent from Bank,
Borrower shall not enter into, or become bound by, any such license or agreement
which is reasonably likely to have a material impact on Borrower's business or
financial condition. Borrower shall take such steps as Bank requests to obtain
the consent of, or waiver by, any person whose consent or waiver is necessary
for all such licenses or contract rights to be deemed "Collateral" and for Bank
to have a security interest in it that might otherwise be restricted or
prohibited by law or by the terms of any such license or agreement, whether now
existing or entered into in the future.
If the Agreement is terminated, Bank's lien and security interest in the
Collateral shall continue until Borrower fully satisfies its Obligations. If
Borrower shall at any time, acquire a commercial tort claim, Borrower shall
promptly notify Bank in a writing signed by Borrower of the brief details
thereof and grant to Bank in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance satisfactory to Bank.
4.2 AUTHORIZATION TO FILE FINANCING STATEMENTS. Borrower hereby
authorizes Bank to file financing statements, without notice to Borrower, with
all appropriate jurisdictions in order to perfect or protect Bank's interest or
rights hereunder, including a notice that any disposition of the Collateral, by
either the Borrower or any other Person, shall be deemed to violate the rights
of the Bank under the Code.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION. Borrower and each Subsidiary
is duly existing and in good standing in its state of formation and qualified
and licensed to do business in, and in good standing in, any state in which the
conduct of its business or its ownership of property requires that it be
qualified except where the failure to do so could not reasonably be expected to
cause a Material Adverse Change. In connection with this Agreement, the Borrower
delivered to the Bank a certificate signed by the Borrower and entitled
"Perfection Certificate". The Borrower represents and warrants to the Bank that:
(a) the Borrower's exact legal name is that indicated on the Perfection
Certificate and on the signature page hereof; and (b) the Borrower is an
organization of the type, and is organized in the jurisdiction, set forth in the
Perfection Certificate; and (c) the Perfection Certificate accurately sets forth
the Borrower's organizational identification number or accurately states that
the Borrower has none; and (d) the Perfection Certificate accurately sets forth
the Borrower's place of business, or, if more than one, its chief executive
office as well as the Borrower's mailing address if different, and (e) all other
information set forth on the Perfection Certificate pertaining to the Borrower
is accurate and complete. If the Borrower does not now have an organizational
identification number, but later obtains one, Borrower shall forthwith notify
the Bank of such organizational identification number.
The execution, delivery and performance of the Loan Documents have
been duly authorized, and do not conflict with Borrower's organizational
documents, nor constitute an event of default under any material agreement by
which Borrower is bound. Borrower is not in
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default under any agreement to which or by which it is bound in which the
default could reasonably be expected to cause a Material Adverse Change.
5.2 COLLATERAL. Borrower has good title to the Collateral, free of
Liens except Permitted Liens. Borrower has no deposit account, other than the
deposit accounts with Bank and deposit accounts described in the Perfection
Certificate delivered to the Bank in connection herewith. The Accounts are bona
fide, existing obligations, and the service or property has been performed or
delivered to the account debtor or its agent for immediate shipment to and
unconditional acceptance by the account debtor. Except as set forth in the
Perfection Certificate, the Collateral is not in the possession of any third
party bailee (such as a warehouse). Except as hereafter disclosed to the Bank in
writing by Borrower, none of the components of the Collateral shall be
maintained at locations other than as provided in the Perfection Certificate. In
the event that Borrower, after the date hereof, intends to store or otherwise
deliver any portion of the Collateral to a bailee, then Borrower will first
receive the written consent of Bank and such bailee must acknowledge in writing
that the bailee is holding such Collateral for the benefit of Bank. All
Inventory is in all material respects of good and marketable quality, free from
material defects. Borrower is the sole owner of the Intellectual Property,
except for non-exclusive licenses granted to its customers in the ordinary
course of business. Each Patent is valid and enforceable and no part of the
Intellectual Property has been judged invalid or unenforceable, in whole or in
part, and no claim has been made that any part of the Intellectual Property
violates the rights of any third party except to the extent such claim could not
reasonably be expected to cause a Material Adverse Change.
5.3 LITIGATION. Except as shown in the Perfection Certificate, there
are no actions or proceedings pending or, to the knowledge of Borrower's
Responsible Officers or legal counsel, threatened by or against Borrower or any
Subsidiary in which an adverse decision could reasonably be expected to cause a
Material Adverse Change.
5.4 NO MATERIAL DEVIATION IN FINANCIAL STATEMENTS. All consolidated
financial statements for Borrower and any Subsidiary delivered to Bank fairly
present in all material respects Borrower's consolidated financial condition and
Borrower's consolidated results of operations. There has not been any material
deterioration in Borrower's consolidated financial condition since the date of
the most recent financial statements submitted to Bank.
5.5 SOLVENCY. The fair salable value of Borrower's assets (including
goodwill minus disposition costs) exceeds the fair value of its liabilities; the
Borrower is not left with unreasonably small capital after the transactions in
this Agreement; and Borrower is able to pay its debts (including trade debts) as
they mature.
5.6 REGULATORY COMPLIANCE. Borrower is not an "investment company" or
a company "controlled" by an "investment company" under the Investment Company
Act. Borrower is not engaged as one of its important activities in extending
credit for margin stock (under Regulations T and U of the Federal Reserve Board
of Governors). Borrower has complied in all material respects with the Federal
Fair Labor Standards Act. Borrower has not violated any laws, ordinances or
rules, the violation of which could reasonably be expected to cause a Material
Adverse Change. None of Borrower's or any Subsidiary's properties or assets has
been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge,
by
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previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally. Borrower and each Subsidiary has
timely filed all required tax returns and paid, or made adequate provision to
pay, all material taxes, except those being contested in good faith with
adequate reserves under GAAP. Borrower and each Subsidiary has obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all government authorities that are necessary to
continue its business as currently conducted except where the failure to make
such declarations, notices or filings would not reasonably be expected to cause
a Material Adverse Change.
5.7 SUBSIDIARIES. Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments.
5.8 FULL DISCLOSURE. No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank
taken together with all such written certificates and written statements given
to Bank contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not viewed as facts and that actual results during the period or
periods covered by such projections and forecasts may differ from the projected
or forecasted results).
6. AFFIRMATIVE COVENANTS
Borrower shall do all of the following:
6.1 GOVERNMENT COMPLIANCE. Borrower shall maintain its and all
Subsidiaries' legal existence and good standing in its jurisdiction of formation
and maintain qualification in each jurisdiction in which the failure to so
qualify would reasonably be expected to have a material adverse effect on
Borrower's business or operations. Borrower shall comply, and have each
Subsidiary comply, with all laws, ordinances and regulations to which it is
subject, noncompliance with which could have a material adverse effect on
Borrower's business or operations or would reasonably be expected to cause a
Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower shall deliver to Bank: (i) as soon as available, but
no later than twenty-five (25) days after the last day of each month, a company
prepared consolidated balance sheet and income statement covering Borrower's
consolidated operations during the period certified by a Responsible Officer and
in a form acceptable to Bank; (ii) as soon as available, but no later than one
hundred and fifty (150) days after the last day of Borrower's fiscal year
(except for Borrower's fiscal years ending December 31, 2001 and December 31,
2002, which audited consolidated financial statements shall be due July 31,
2003), audited consolidated financial statements prepared under GAAP,
consistently applied, together with an unqualified opinion on the financial
statements from an independent certified public accounting firm reasonably
acceptable to Bank; (iii) in the event that the Borrower's stock becomes
publicly held, within five (5) days of filing, copies of all statements, reports
and notices made available to Borrower's security holders or to any holders of
Subordinated Debt and all
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reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange
Commission; (iv) a prompt report of any legal actions pending or threatened
against Borrower or any Subsidiary that could result in damages or costs to
Borrower or any Subsidiary of One Hundred Thousand Dollars ($100,000.00) or
more; (v) as soon as available, but not later than forty-five (45) days after
the last of Borrower's fiscal year, Board approved Operating Plan (expressed on
a monthly and quarterly basis); (vi) prompt notice of any material change in the
composition of the Intellectual Property, or the registration of any copyright,
including any subsequent ownership right of Borrower in or to any Copyright,
Patent or Trademark not shown in any intellectual property security agreement
between Borrower and Bank or knowledge of an event that materially adversely
affects the value of the Intellectual Property; and (vii) other financial
information reasonably requested by Bank.
(b) Borrower shall deliver to Bank with the monthly and annual
financial statements a Compliance Certificate signed by a Responsible Officer in
the form of EXHIBIT C.
6.3 INVENTORY; RETURNS. Borrower shall keep all Inventory in good and
marketable condition, free from material defects. Returns and allowances between
Borrower and its account debtors shall follow Borrower's customary practices as
they exist at the Closing Date. Borrower must promptly notify Bank of all
returns, recoveries, disputes and claims that involve more than Fifty Thousand
Dollars ($50,000.00).
6.4 TAXES. Borrower shall make, and cause each Subsidiary to make,
timely payment of all material federal, state, and local taxes or assessments
(other than taxes and assessments which Borrower is contesting in good faith,
with adequate reserves maintained in accordance with GAAP) and will deliver to
Bank, on demand, appropriate certificates attesting to such payments.
6.5 INSURANCE. Borrower shall keep its business and the Collateral
insured for risks and in amounts, and as Bank may reasonably request. Insurance
policies shall be in a form, with companies, and in amounts that are
satisfactory to Bank. All property policies shall have a lender's loss payable
endorsement showing Bank as an additional loss payee and all liability policies
shall show the Bank as an additional insured and all policies shall provide that
the insurer must give Bank at least twenty (20) days notice before canceling its
policy. At Bank's request, Borrower shall deliver certified copies of policies
and evidence of all premium payments. Proceeds payable under any policy shall,
at Bank's option, be payable to Bank on account of the Obligations.
Notwithstanding the foregoing, so long as no Event of Default has occurred and
is continuing, Borrower shall have the option of applying the proceeds of any
casualty policy up to $25,000.00, in the aggregate, toward the replacement or
repair of destroyed or damaged property; provided that (i) any such replaced or
repaired property (a) shall be of equal or like value as the replaced or
repaired Collateral and (b) shall be deemed Collateral in which Bank has been
granted a first priority security interest and (ii) after the occurrence and
during the continuation of an Event of Default all proceeds payable under such
casualty policy shall, at the option of the Bank, be payable to Bank on account
of the Obligations. If Borrower fails to obtain insurance as required under
Section 6.5 or to pay any amount or furnish any required proof of payment to
third persons and the Bank, Bank may make all or part of such
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payment or obtain such insurance policies required in Section 6.5, and take any
action under the policies Bank deems prudent
6.6 ACCOUNTS.
(a) In order to permit the Bank to monitor the Borrower's
financial performance and condition, Borrower, and all Borrower's Subsidiaries,
shall maintain all of Borrower's, and such Subsidiaries, primary depository,
operating, and securities accounts with Bank.
(b) Borrower shall identify to Bank, in writing, any bank or
securities account opened by Borrower with any institution other than Bank. In
addition, for each such account that the Borrower at any time opens or
maintains, Borrower shall, at the Bank's request and option, pursuant to an
agreement in form and substance acceptable to the Bank, cause the depository
bank or securities intermediary to agree that such account is the collateral of
the Bank pursuant to the terms hereunder. The provisions of the previous
sentence shall not apply to deposit accounts exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit
of the Borrower's employees.
6.7 FINANCIAL COVENANTS.
Borrower shall maintain at all times, to be tested as of the last day
of each month, unless otherwise noted:
(a) QUICK RATIO. A ratio of Quick Assets to Current Liabilities
minus Deferred Revenues of at least 1.75 to 1.0.
(b) TANGIBLE NET WORTH. Borrower shall maintain, to be tested as
of the last day of each calendar quarter, a Tangible Net Worth of not less than
One Million Dollars ($1,000,000.00).
6.8 FURTHER ASSURANCES. Borrower shall execute any further instruments
and take further action as Bank reasonably requests to perfect or continue
Bank's security interest in the Collateral or to effect the purposes of this
Agreement.
7. NEGATIVE COVENANTS
Borrower shall not do any of the following without the Bank's prior
written consent which shall not be unreasonably withheld.
7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise dispose
of (collectively a "Transfer"), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, except for Transfers (i) of
Inventory in the ordinary course of business; (ii) of non-exclusive licenses and
similar arrangements for the use of the property of Borrower or its Subsidiaries
in the ordinary course of business; or (iii) of worn-out or obsolete Equipment
7.2 CHANGES IN BUSINESS OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.
Engage in or permit any of its Subsidiaries to engage in any business other than
the businesses
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currently engaged in by Borrower or reasonably related thereto, or have a
material change in its ownership (other than by the sale of Borrower's equity
securities in a public offering or to venture capital investors so long as
Borrower identifies to Bank the venture capital investors prior to the closing
of the investment), or management. Borrower shall not, without at least thirty
(30) days prior written notice to Bank: (i) relocate its chief executive office,
or add any new offices or business locations, including warehouses (unless such
new offices or business locations contain less than Five Thousand Dollars
($5,000.00) in Borrower's assets or property), or (ii) change its jurisdiction
of organization, or (iii) change its organizational structure or type, or (iv)
change its legal name, or (v) change any organizational number (if any) assigned
by its jurisdiction of organization.
7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any of
its Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.
7.4 INDEBTEDNESS. Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.
7.5 ENCUMBRANCE. Create, incur, or allow any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interest granted herein. Notwithstanding the foregoing, however, the Collateral
may also be subject to Permitted Liens.
7.6 DISTRIBUTIONS; INVESTMENTS. (i) Directly or indirectly acquire or
own any Person, or make any Investment in any Person, other than Permitted
Investments, or permit any of its Subsidiaries to do so; or (ii) pay any
dividends or make any distribution or payment or redeem, retire or purchase any
capital stock, except for repurchases of stock from former employees or
directors of Borrower under the terms of applicable repurchase agreements in an
aggregate amount not to exceed One Hundred Fifty Thousand Dollars ($150,000.00)
in the aggregate in any fiscal year, provided that no Event of Default has
occurred, is continuing or would exist after giving effect to the repurchases.
7.7 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower, except
for transactions that are in the ordinary course of Borrower's business, upon
fair and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm's length transaction with a non-affiliated Person or in
connection with any investment by any one or more Affiliates that are venture
capital investors so long as Borrower identifies such Affiliate venture capital
investors to the Bank prior to the closing of the investment
7.8 SUBORDINATED DEBT. Make or permit any payment on any Subordinated
Debt, except under the terms of the Subordinated Debt, or amend any provision in
any document relating to the Subordinated Debt, without Bank's prior written
consent.
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7.9 COMPLIANCE. Become an "investment company" or a company controlled
by an "investment company", under the Investment Company Act of 1940 or
undertake as one of its important activities extending credit to purchase or
carry margin stock, or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material
adverse effect on Borrower's business or operations or would reasonably be
expected to cause a Material Adverse Change, or permit any of its Subsidiaries
to do so.
8. EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1 PAYMENT DEFAULT. Borrower fails to pay any of the Obligations
within three (3) days after their due date. During the additional period the
failure to cure the default is not an Event of Default (but Bank shall not be
obligated to make Credit Extensions during the cure period);
8.2 COVENANT DEFAULT. Borrower fails or neglects to perform any
obligation in Section 6 or violates any covenant in Section 7 or fails or
neglects to perform, keep, or observe any other material term, provision,
condition, covenant or agreement contained in this Agreement, any Loan
Documents, or in any present or future agreement between Borrower and Bank and
as to any default under such other material term, provision, condition, covenant
or agreement that can be cured, has failed to cure the default within ten (10)
days after the occurrence thereof; provided, however, that if the default cannot
by its nature be cured within the ten (10) day period or cannot after diligent
attempts by Borrower be cured within such ten (10) day period, and such default
is likely to be cured within a reasonable time, then Borrower shall have an
additional period (which shall not in any case exceed thirty (30) days) to
attempt to cure such default, and within such reasonable time period the failure
to cure the default shall not be deemed an Event of Default (but Bank shall not
be obligated to make Credit Extensions during such cure period). Grace periods
provided under this section shall not apply, among other things, to financial
covenants or any other covenants that are required to be satisfied, completed or
tested by a date certain.
8.3 MATERIAL ADVERSE CHANGE. A Material Adverse Change occurs;
8.4 ATTACHMENT. (i) Any material portion of Borrower's assets is
attached, seized, levied on, or comes into possession of a trustee or receiver
and the attachment, seizure or levy is not removed in ten (10) days; (ii) the
service of process upon the Borrower seeking to attach, by trustee or similar
process, any funds of the Borrower on deposit with the Bank; (iii) Borrower is
enjoined, restrained, or prevented by court order from conducting a material
part of its business; (iv) a judgment or other claim becomes a Lien on a
material portion of Borrower's assets; or (v) a notice of lien, levy, or
assessment is filed against any of Borrower's assets by any government agency
and not paid within ten (10) days after Borrower receives notice. These are not
Events of Default if stayed or if a bond is posted pending contest by Borrower
(but Bank shall not be obligated to make Credit Extensions during the cure
period);
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8.5 INSOLVENCY. (i) Borrower becomes insolvent; (ii) Borrower begins
an Insolvency Proceeding; or (iii) an Insolvency Proceeding is begun against
Borrower and not dismissed or stayed within thirty (30) days (but Bank shall not
be obligated to make Credit Extensions before any Insolvency Proceeding is
dismissed);
8.6 OTHER AGREEMENTS. If there is a default in any agreement to which
Borrower is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of One Hundred Thousand Dollars
($100,000) or that could result in a Material Adverse Change;
8.7 JUDGMENTS. If a judgment or judgments for the payment of money in
an amount, individually or in the aggregate, of at least Two Hundred Thousand
Dollars ($200,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of ten (10) days (provided that Bank shall
not be obligated to make Credit Extensions prior to the satisfaction or stay of
such judgment);
8.8 MISREPRESENTATIONS. If Borrower or any Person acting for Borrower
makes any material misrepresentation or material misstatement now or later in
any warranty or representation in this Agreement or in any writing delivered to
Bank or to induce Bank to enter this Agreement or any Loan Document.
9. BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES. When an Event of Default occurs and continues
Bank may, without notice or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if
an Event of Default described in Section 8.5 occurs all Obligations are
immediately due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's
benefit under this Agreement or under any other agreement between Borrower and
Bank;
(c) Settle or adjust disputes and claims directly with account
debtors for amounts, on terms and in any order that Bank considers advisable and
notify any Person owing Borrower money of Bank's security interest in such funds
and verify the amount of such account. Borrower shall collect all payments in
trust for Bank and, if requested by Bank, immediately deliver the payments to
Bank in the form received from the account debtor, with proper endorsements for
deposit;
(d) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrower shall
assemble the Collateral if Bank requests and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank's rights
or remedies;
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(e) Apply to the Obligations any (i) balances and deposits of
Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or
the account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby
granted a non-exclusive, royalty-free license or other right to use, without
charge, Borrower's labels, patents, copyrights, mask works, rights of use of any
name, trade secrets, trade names, trademarks, service marks, and advertising
matter, or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section, Borrower's
rights under all licenses and all franchise agreements inure to Bank's benefit;
and
(g) Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY. Borrower hereby irrevocably appoints Bank as
its lawful attorney-in-fact, to be effective only upon the occurrence and during
the continuance of an Event of Default to: (i) endorse Borrower's name on any
checks or other forms of payment or security; (ii) sign Borrower's name on any
invoice or bill of lading for any Account or drafts against account debtors;
(iii) settle and adjust disputes and claims about the Accounts directly with
account debtors, for amounts and on terms Bank determines reasonable; (iv) make,
settle, and adjust all claims under Borrower's insurance policies; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign
Borrower's name on any documents necessary to perfect or continue the perfection
of any security interest regardless of whether an Event of Default has occurred
until all Obligations have been satisfied in full and Bank is under no further
obligation to make Credit Extensions hereunder. Bank's foregoing appointment as
Borrower's attorney in fact, and all of Bank's rights and powers, coupled with
an interest, are irrevocable until all Obligations have been fully repaid and
performed and Bank's obligation to provide Credit Extensions terminates.
9.3 ACCOUNTS NOTIFICATION/COLLECTION. In the event that an Event of
Default occurs and is continuing, Bank may notify any Person owing Borrower
money of Bank's security interest in the funds and verify and/or collect the
amount of the Account. After the occurrence and during the continuance of an
Event of Default, any amounts received by Borrower shall be held in trust by
Borrower for Bank, and, if requested by Bank, Borrower shall immediately deliver
such receipts to Bank in the form received from the account debtor, with proper
endorsements for deposit.
9.4 BANK EXPENSES. Any amounts paid by Bank as provided herein are
Bank Expenses and are immediately due and payable, and shall bear interest at
the then applicable rate and be secured by the Collateral. No payments by Bank
shall be deemed an agreement to make similar payments in the future or Bank's
waiver of any Event of Default.
9.5 BANK'S LIABILITY FOR COLLATERAL. So long as the Bank complies with
reasonable banking practices regarding the safekeeping of Collateral and Section
9-207 of the Code, to the extent applicable, the Bank shall not be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
to the Collateral; (c) any diminution in the value of the
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Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other person. Borrower bears all risk of loss, damage or destruction of the
Collateral.
9.6 REMEDIES CUMULATIVE. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements are cumulative. Bank has
all rights and remedies provided under the Code, by law, or in equity. Bank's
exercise of one right or remedy is not an election, and Bank's waiver of any
Event of Default is not a continuing waiver. Bank's delay is not a waiver,
election, or acquiescence. No waiver hereunder shall be effective unless signed
by Bank and then is only effective for the specific instance and purpose for
which it was given.
9.7 DEMAND WAIVER. Borrower waives demand, notice of default or
dishonor, notice of payment and nonpayment notice of any default,t nonpayment at
maturity, release, compromise, settlement extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees held by Bank on which
Borrower is liable.
10. NOTICES
All notices or demands by any party to this Agreement or any other related
agreement must be in writing and be personally delivered or sent by an overnight
delivery service, by certified mail, postage prepaid, return receipt requested,
or by telefacsimile at the addresses listed below. Either Bank or Borrower may
change its notice address by giving the other written notice.
If to Borrower: Roving Software Incorporated
1601 Trapelo Road, Suite 246
Waltham, Massachusetts 02451
Attn: Ms. Gail F. Goodman
FAX: (781) 444-6155
If to Bank: Silicon Valley Bank
One Newton Executive Park, Suite 200
2221 Washington Street
Newton, Massachusetts 02462
Attn: Ms. Pamela Aldsworth
Fax: (617) 969-4395
with a copy to: Riemer & Braunstein LLP
Three Center Plaza
Boston, Massachusetts 02108
Attn: David A. Ephraim, Esquire
FAX: (617) 880-3456
11. CHOICE OF LAW. VENUE AND JURY TRIAL WAIVER
Massachusetts law governs the Loan Documents without regard to principles
of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Massachusetts; provided, however, that if for
any reason Bank cannot avail itself of
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such courts in the Commonwealth of Massachusetts, Borrower accepts jurisdiction
of the courts and venue in Santa Clara County, California. NOTWITHSTANDING THE
FOREGOING, THE BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION
WHICH THE BANK DEEMS NECESSARY OR APPROPRIATE EN ORDER TO REALIZE ON THE
COLLATERAL OR TO OTHERWISE ENFORCE THE BANK'S RIGHTS AGAINST THE BORROWER OR ITS
PROPERTY.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12. GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS. This Agreement binds and is for the
benefit of the successors and permitted assigns of each party. Borrower may not
assign this Agreement or any rights or Obligations under it without Bank's prior
written consent which may be granted or withheld in Bank's discretion. Bank has
the right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights and benefits under this Agreement, the Loan Documents
or any related agreement.
12.2 INDEMNIFICATION. Borrower hereby indemnifies, defends and holds
the Bank and its officers, employees and agents against: (a) all obligations,
demands, claims, and liabilities asserted by any other party in connection with
the transactions contemplated by the Loan Documents; and (b) all losses or Bank
Expenses incurred, or paid by Bank from, following, or consequential to
transactions between Bank and Borrower (including reasonable attorneys' fees and
expenses), except for losses caused by Bank's gross negligence or willful
misconduct.
12.3 RIGHT OF SET-OFF. Borrower and any guarantor hereby grant to
Bank, a lien, security interest and right of setoff as security for all
Obligations to Bank, whether now existing or hereafter arising upon and against
all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the
control of the Bank (including a Bank subsidiary) or in transit to any of them.
At any time after the occurrence and during the continuance of an Event of
Default, without demand or notice, Bank may set off the same or any part thereof
and apply the same to any liability or obligation of Borrower and any guarantor
even though unmatured and regardless of the adequacy of any other collateral
securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE
OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
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12.4 TIME OF ESSENCE. Time is of the essence for the performance of
all Obligations in this Agreement.
12.5 SEVERABILITY OF PROVISION. Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.
12.6 AMENDMENTS IN WRITING; INTEGRATION. All amendments to this
Agreement must be in writing signed by both Bank and Borrower. This Agreement
and the Loan Documents represent the entire agreement about this subject matter,
and supersede prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
into this Agreement and the Loan Documents.
12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, constitute
one Agreement.
12.8 SURVIVAL. All covenants, representations and warranties made in
this Agreement continue in full force while any Obligations remain outstanding.
The obligation of Borrower in Section 12.2 to indemnify Bank shall survive until
the statute of limitations with respect to such claim or cause of action shall
have run.
12.9 CONFIDENTIALITY. In handling any confidential information, Bank
shall exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (i) to Bank's
subsidiaries or affiliates in connection with their business with Borrower; (ii)
to prospective transferees or purchasers of any interest in the Credit
Extensions (provided, however, Bank shall use commercially reasonable efforts in
obtaining such prospective transferee's or purchaser's agreement to the terms of
this provision); (iii) as required by law, regulation, subpoena, or other order,
(iv) as required in connection with Bank's examination or audit; and (v) as Bank
considers appropriate in exercising remedies under this Agreement. Confidential
information does not include information that either: (a) is in the public
domain or in Bank's possession when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank; or (b) is disclosed to Bank by a third
party, if Bank does not know that the third party is prohibited from disclosing
the information.
13. DEFINITIONS
13.1 DEFINITIONS. In this Agreement:
"ACCOUNTS" are all existing and later arising accounts, contract
rights, and other obligations owed Borrower in connection with its sale or lease
of goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing, as such definition may be amended from time to time according to the
Code.
"AFFILIATE" is a Person that owns or controls directly or indirectly
the Person, any Person that controls or is controlled by or is under common
control with the Person, and each of
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that Person's senior executive officers, directors, partners and, for any Person
that is a limited liability company, that Person's managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs
or expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"BORROWER'S BOOKS" are all Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs or
any equipment containing the information.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which the Bank is closed.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the Uniform Commercial Code as adopted in Massachusetts, as
amended and as may be amended and in effect from time to time.
"COLLATERAL" is any and all properties, rights and assets of the
Borrower granted by the Borrower to Bank or arising under the Code, now, or in
the future, in which the Borrower obtains an interest, or the power to transfer
rights, including, without limitation, the property described on EXHIBIT A.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"COPYRIGHTS" are all copyright rights, applications or registrations
and like protections in each work or authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.
"CREDIT EXTENSION" is each Equipment Advance or any other extension of
credit by Bank for Borrower's benefit
"CURRENT ASSETS" are amounts that under GAAP should be included on
that date as current assets on Borrower's consolidated balance sheet.
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"CURRENT LIABILITIES" are the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year, which shall include, without
limitation, all obligations and liabilities of Borrower to Bank.
"DEFERRED REVENUE" is all amounts received in advance of performance
under contracts and not yet recognized as revenue.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"EQUIPMENT ADVANCE" is defined in Section 2.1.1.
"EQUIPMENT AVAILABILITY END DATE" shall mean each of Equipment
Availability End Date No. 1 and Equipment Availability End Date No. 2.
"EQUIPMENT AVAILABILITY END DATE NO. 1" is defined in Section
2.1.l(a).
"EQUIPMENT AVAILABILITY END DATE NO. 2" is defined in Section
2.1.1(a).
"EQUIPMENT LINE" is an Equipment Advance or Equipment Advances of up
to Three Hundred Fifty Thousand Dollars ($350,000.00).
"ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.
"EXISTING LOAN" is that certain Loan and Security Agreement dated
December 23, 1999 by and between the Bank and the Borrower, as the same has been
previously amended and may be amended and in effect from time to time.
"FUNDING DATE" is any date on which an Equipment Advance is made to or
on account of Borrower.
"GAAP" is generally accepted accounting principles.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" is any proceeding by or against any Person
under the United States Bankruptcy Code, or any other bankruptcy or insolvency
law, including assignments for the benefit of creditors, compositions,
extensions generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
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"INTELLECTUAL PROPERTY" is
(a) Copyrights, Trademarks, Patents, and Mask Works
including amendments, renewals, extensions and all licenses or other rights to
use and all license fees and royalties from the use;
(b) Any trade secrets and any Intellectual Property rights
in computer software and computer software products now or later existing,
created, acquired or held;
(c) All design rights which may be available to Borrower now
or later created, acquired or held;
(d) Any claims for damages (past, present or future) for
infringement of any of the rights above, with the right, but not the obligation,
to sue and collect damages for use or infringement of the intellectual property
rights above.
All proceeds and products of the foregoing, including all insurance, indemnity
or warranty payments.
"INVENTORY" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN AMOUNT" in respect of each Equipment Advance is the original
principal amount of such Equipment Advance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes
or guaranties executed by Borrower, and any other present or future agreement
between Borrower and/or for the benefit of Bank in connection with this
Agreement, all as amended, extended or restated.
"MATERIAL ADVERSE CHANGE" is: (i) A material impairment in the
perfection or priority of Bank's security interest in the Collateral or in the
value of such Collateral (other than normal depreciation) that is not covered by
adequate insurance; (ii) a material adverse change in the business, operations,
or condition (financial or otherwise) of the Borrower; or (iii) a material
impairment of the prospect of repayment of any portion of the Obligations; or
(iv) Bank
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determines, based upon information available to it and in its reasonable
judgment, that there is a reasonable likelihood that Borrower shall fail to
comply with one or more of the financial covenants in Section 6 during the next
succeeding financial reporting period.
"MASK WORKS" are all mask works or similar rights available for the
protection of semiconductor chips, now owned or later acquired.
"OBLIGATIONS" arc debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later under this Agreement, or the Existing
Loan, including letters of credit, cash management services, and foreign
exchange contracts, if any, and including interest accruing after Insolvency
Proceedings begin and debts, liabilities, or obligations of Borrower assigned to
Bank.
"OTHER EQUIPMENT" is leasehold improvements, intangible property such
as computer software and software licenses, equipment specifically designed or
manufactured for Borrower, other intangible property, limited use property and
other similar property and soft costs approved by the Bank, including sales tax,
freight and installation expenses. Unless otherwise agreed to by Bank, not more
than twenty-five percent (25%) of the proceeds of the Equipment Line shall be
used to finance Other Equipment
"PAYMENT DATE" is defined in the first calendar day of each month.
"PATENTS" are patents, patent applications and like protections,
including improvements, divisions, continuations, renewals, reissues, extensions
and continuations-in-part of the same.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Bank under this Agreement,
the Loan Documents, or the Existing Loan;
(b) Indebtedness existing on the Closing Date and shown on
the Perfection Certificate;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary
course of business; and
(e) Indebtedness secured by Permitted Liens; and
(f) Extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (e) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.
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"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Perfection Certificate and
existing on the Closing Date; and
(b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States or its agency or any state
maturing within 1 year from its acquisition, (ii) commercial paper maturing no
more than 1 year after its creation and having the highest rating from either
Standard & Poor's Corporation or Moody's Investors Service, Inc., (iii) Bank's
certificates of deposit issued maturing no more than 1 year after issue, (iv)
any other investments administered through the Bank.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the
Perfection Certificate or arising under this Agreement, other Loan Documents, or
the Existing Loan;
(b) Liens for taxes, fees, assessments or other government
charges or levies, either not delinquent or being contested in good faith and
for which Borrower maintains adequate reserves on its Books, if they have no
priority over any of Bank's security interests;
(c) Leases or subleases and non-exclusive licenses or
sublicenses granted in the ordinary course of Borrower's business, if the
leases, subleases, licenses and sublicenses permit granting Bank a security
interest;
(d) Purchase money Liens in an amount not to exceed Fifty
Thousand Dollars ($50,000.00) in the aggregate, during any fiscal year: (i) on
Equipment acquired or held by Borrower incurred for financing the acquisition of
the Equipment, or (ii) existing on equipment when acquired, if the Lien is
confined to the property and improvements and the proceeds of the equipment; and
(e) Liens incurred in the extension, renewal or refinancing
of the indebtedness secured by Liens described in (a) through (d), but any
extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness may
not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if
it is not Bank's lowest rate, except that at no time under this Agreement shall
the Prime Rate be less than four and one-quarter percent (4.25%). Except as
otherwise provided elsewhere herein, any Credit Extension made hereunder based
on the Bank's Prime Rate shall increase or decrease with the changes in the
Bank's Prime Rate.
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"QUICK ASSETS" is, on any date, the Borrower's consolidated,
unrestricted cash, cash equivalents, net billed accounts receivable and
investments with maturities of fewer than 12 months determined according to
GAAP.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer,
President, Chief Financial Officer and Controller of Borrower.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's debt to Bank (pursuant to a subordination agreement entered into
between the Bank, the Borrower and the subordinated creditor), on terms
acceptable to Bank.
"SUBSIDIARY" is any Person, corporation, partnership, limited
liability company, joint venture, or any other business entity of which more
than 50% of the voting stock or other equity interests is owned or controlled,
directly or indirectly, by the Person or one or more Affiliates of the Person.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus (i) any amounts attributable to (a)
goodwill, (b) intangible items including unamortized debt discount and expense,
patents, trade and service marks and names, copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities.
"TOTAL LIABILITIES" is on any day, obligations that should, under
GAAP, be classified as liabilities on Borrower's consolidated balance sheet,
including all Indebtedness, and current portion of Subordinated Debt permitted
by Bank to be paid by Borrower, but excluding all other Subordinated Debt.
"TRADEMARKS" are trademark and service mark rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Assignor connected with the trademarks.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts as of the date first above written.
BORROWER:
ROVING SOFTWARE INCORPORATED
By: /s/ Gail F. Goodman
---------------------------------
Name: Gail F. Goodman
Title: CEO
<PAGE>
BANK:
SILICON VALLEY BANK, d/b/a
SILICON VALLEY EAST
By: /s/ Michael J. Tromack
---------------------------------
Name: Michael J. Tromack
Title Vice President
SILICON VALLEY BANK
By: /s/ Michelle Giannini
---------------------------------
Name: Michelle Giannini
Title: AVP
(Signed in Santa Clara County,
California)
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EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest in
and to the following:
All goods, equipment, inventory, contract rights or rights to payment of
money, leases, license agreements, franchise agreements, general intangibles
(including payment intangibles), accounts (including health-care receivables),
documents, instruments (including any promissory notes), chattel paper (whether
tangible or electronic), cash, deposit accounts, fixtures, letters of credit
rights (whether or not the letter of credit is evidenced by a writing),
commercial tort claims, securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and
Any copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work, whether
published or unpublished, now owned or later acquired; any patents, trademarks,
service marks and applications therefor; trade styles, trade names, any trade
secret rights, including any rights to unpatented inventions, know-how,
operating manuals, license rights and agreements and confidential information,
now owned or hereafter acquired; or any claims for damages by way of any past,
present and future infringement of any of the foregoing; and
All Borrower's books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.
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EXHIBIT B
LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 E.S.T.
Fax To: (617)969-5965 Date: ________________
LOAN PAYMENT:
Sample documents Client Name (Borrower)
From Account # ______________________ To Account # ___________________________
(Deposit Account #) (Loan Account #)
Principal $____________________________ and/or Interest $_______________________
All Borrower's representation and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
telephone transfer request for an advance, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date:
Authorized Signature: Phone Number
--------------- ---------------------------
LOAN ADVANCE:
COMPLETE OUTGOING WIRE REQUEST SECTION BELOW IF ALL OR A PORTION OF THE FUNDS
FROM THIS LOAN ADVANCE ARE FOR AN OUTGOING WIRE.
From Account # ______________________ To Account # ___________________________
(Loan Account #) (Deposit Account #)
Amount of Advance $__________________
All Borrower's representation and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
telephone transfer request for an advance, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date:
Authorized Signature: Phone Number:
--------------- --------------------------
OUTGOING WIRE REQUEST
COMPLETE ONLY IF ALL OR A PORTION OF FUNDS FROM THE LOAN ADVANCE ABOVE ARE TO BE
WIRED.
Deadline for same day processing is 3:00 pm, E.S.T.
Beneficiary Name: ___________________ Amount of Wire: $_______________________
Beneficiary Bank: ___________________ Account Number: ________________________
City and Sate: ______________________
Beneficiary Bank Beneficiary Bank Code
Transit (ABA) #: ____________________ (Swift, Sort, Chip, etc.):
(FOR INTERNATIONAL WIRE ONLY)
Intermediary Bank: __________________ Transit (ABA) #: _______________________
For Further Credit to: _________________________________________________________
Special Instruction: ___________________________________________________________
By signing below, I (we) acknowledge and agree that my (our) funds transfer
requests shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).
Authorized 2nd Signature
Signature: (If Required):
-------------------------- -------------------------
<PAGE>
Print Name/Title: ___________________ Print Name/Title: ______________________
Telephone # _________________________ Telephone # ____________________________
<PAGE>
FIRST LOAN MODIFICATION AGREEMENT
This First Loan Modification Agreement (this "Loan Modification Agreement')
is entered into as of August 4, 2003, by and between SILICON VALLEY BANK, a
California-chartered bank, with its principal place of business at 3003 Tasman
Drive, Santa Clara, California 95054 and with a loan production office located
at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton,
Massachusetts 02462, doing business under the name "Silicon Valley East"
("Bank") and ROVING SOFTWARE, INCORPORATED, a Delaware corporation with its
chief executive office located at 1601 Trapelo Road, Suite 246, Waltham,
Massachusetts 02451 ("Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of February 27, 2003,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of February 27, 2003, between Borrower and Bank (as amended, the "Loan
Agreement"). The Loan Agreement established an equipment line of credit in favor
of Borrower in the maximum principal amount of Three Hundred Fifty Thousand
Dollars ($350,000.00) (the "Committed Equipment Line"). Capitalized terms used
but not otherwise defined herein shall have the same meaning as in the Loan
Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement (together with any other
collateral security granted to Bank, the "Security Documents").
Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the "Existing
Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modifications to Loan Agreement.
1. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 13.1 thereof:
"EQUIPMENT LINE" is an Equipment Advance or Equipment
Advances of up to Three Hundred Fifty Thousand Dollars
($350,000.00).
and inserting in lieu thereof the following:
"Equipment Line" is an Equipment Advance or Equipment
Advances of up to Four Hundred Fifty Thousand Dollars
($450,000.00).
4. FEES. The Borrower shall also reimburse Bank for all legal fees and expenses
incurred in connection with this amendment to the Existing Loan Documents.
5. RATIFICATION OF NEGATIVE PLEDGE AGREEMENT. Borrower hereby ratifies, confirms
and reaffirms, all and singular, the terms and conditions of a certain Negative
Pledge
<PAGE>
Agreement dated as of December 23, 1999 between Borrower and Bank, and
acknowledges, confirms and agrees that said Negative Pledge Agreement, shall
remain in full force and effect.
6. RATIFICATION OF PERFECTION CERTIFICATE. Borrower hereby ratifies, confirms
and reaffirms, all and singular, the terms and disclosures contained in a
certain Perfection Certificate dated as of February 27, 2003, between Borrower
and Bank, and acknowledges, confirms and agrees the disclosures and information
above Borrower provided to Bank in the Perfection Certificate has not changed,
as of the date hereof.
7. AUTHORIZATION TO FILE. Borrower hereby authorizes Bank to file financing
statements without notice to Borrower, with all appropriate jurisdictions, as
Bank deems appropriate, in order to further perfect or protect Bank's interest
in the Collateral, including a notice that any disposition of the Collateral, by
either the Borrower or any other Person, shall be deemed to violate the rights
of the Bank under the Code.
8. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
9. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.
10. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses, claims, or counterclaims against Bank, whether
known or unknown, at law or in equity, all of them are hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.
11. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank's agreement to modifications to the existing Obligations pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Obligations. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Obligations. It is the intention of Bank
and Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this Loan Modification Agreement.
12. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank (provided, however,
in no event shall this Loan Modification Agreement become effective until signed
by an officer of Bank in California).
[The remainder of this page is intentionally left blank]
<PAGE>
This Loan Modification Agreement is executed as a sealed instrument under
the laws of the Commonwealth of Massachusetts as of the date first written
above.
BORROWER: BANK:
ROVING SOFTWARE INCORPORATED SILICON VALLEY BANK, doing business
as SILICON VALLEY EAST
By: /s/ Gail Goodman By:
--------------------------------- ------------------------------------
Name: Gail Goodman Name:
Title: CEO ----------------------------------
Title:
---------------------------------
SILICON VALLEY BANK
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
(signed in Santa Clara County,
California)
<PAGE>
SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement (this "Loan Modification
Agreement") is entered into as of February 10, 2004, by and between SILICON
VALLEY BANK, a California-chartered bank, with its principal place of business
at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production
office located at One Newton Executive Park, Suite 200, 2221 Washington Street,
Newton, Massachusetts 02462, doing business under the name "Silicon Valley East"
("Bank") and ROVING SOFTWARE INCORPORATED, a Delaware corporation with its chief
executive office located at 1601 Trapelo Road, Suite 246, Waltham, Massachusetts
02451 ("Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of February 27, 2003,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of February 27, 2003, as amended by a certain First Loan Modification
Agreement dated August 4, 2003 (as amended, the "Loan Agreement"). Capitalized
terms used but not otherwise defined herein shall have the same meaning as in
the Loan Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement (together with any other
collateral security granted to Bank, the "Security Documents").
Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the "Existing
Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modifications to Loan Agreement.
1. Section 2.1.1 of the Loan Agreement shall be retitled as "2003
Equipment Advances".
2. All references to "Equipment Line" in the Loan Agreement shall
mean and refer to the "2003 Equipment Line".
3. The Loan Agreement shall be amended by adding the following new
Section appearing after Section 2.1.1 thereof:
"2.1.2 2004 Equipment Advances.
(a) Availability. Subject to the terms and conditions of this
Agreement, Bank agrees to lend to Borrower, from time to time as
further described herein, Equipment Advances in an aggregate
amount not to exceed the 2004 Equipment Line. The proceeds of the
2004 Equipment Line shall be advanced in four separate tranches
(each, a "Tranche"), as follows: (i) from February 1, 2004
through April 30, 2004, Bank shall make Equipment Advances not
exceeding $200,000, (ii) from May 1, 2004 through July 31, 2004,
Bank shall make Equipment Advances not
<PAGE>
exceeding $150,000, (iii) from August 1,2004 through October 3 1,
2004, Bank shall make Equipment Advances not exceeding $150,000;
and (iv) from November 1, 2004 through December 31, 2004, bank
shall make Equipment Advances not exceeding $100,000. The
aggregate of all Equipment Advances made under this Section 2.1.2
shall not exceed the 2004 Equipment Line. The Equipment Advances
may only be used to finance Eligible Equipment purchased on or
after 90 days before the date of each Equipment Advance and no
Equipment Advances may exceed 100% of the equipment invoice
excluding taxes, shipping, warranty charges, freight discounts
and installation expense relating to such Equipment, unless such
costs constitute Other Equipment. After repayment, Equipment
Advances may not be reborrowed.
(b) Interest Rate; Interest Payment. Interest accrues from the
date of each Equipment Advance at the rate in Section 2.2(a) and
is payable monthly on the first day of each month.
(c) Principal Repayment. In addition to the monthly payment of
interest, the principal amount of the Equipment Advances made
under the 2004 Equipment Line outstanding on the last day of such
Tranche is payable in thirty-three (33) consecutive equal monthly
installments of principal based upon the amount of Equipment
Advances outstanding during any particular Tranche on the last
day of such Tranche divided by thirty-three (33). Such payments
shall begin on the first day of each month following the end of
such Tranche and shall continue on the first day of each month
thereafter.
(d) Advance Requests. To obtain an Equipment Advance, Borrower
must notify Bank (the notice is irrevocable) by facsimile no
later than 3:00 p.m. Eastern time one (1) Business Day before the
day on which the Equipment Advance is to be made. The notice in
the form of Exhibit B (Payment/Advance Form) must be signed by a
Responsible Officer or designee and include a copy of the invoice
for the Equipment being financed."
4. The Loan Agreement shall be amended by deleting the following
appearing as Section 2.2(a) thereof:
"(a) Interest Rate. The principal amounts outstanding under the
Equipment Line shall accrue interest at a per annum rate equal to
the aggregate of the Bank's Prime Rate, and two percent (2.0%).
After an Event of Default, Obligations shall bear interest at
five percent (5.0%) above the rate effective immediately before
the Event of Default. The applicable interest rate hereunder
shall increase or decrease when the Prime Rate changes. Interest
is computed on the basis of a 360 day year for the actual number
of days elapsed."
<PAGE>
and inserting in lieu thereof the following:
"(a) Interest Rate.
(i) The principal amounts outstanding under the 2003
Equipment Line shall accrue interest at a per annum rate
equal to the aggregate of the Prime Rate, plus two percent
(2.0%).
(ii) The principal amounts outstanding under the 2004
Equipment Line shall accrue interest at a per annum rate
equal to the aggregate of the Prime Rate, plus two percent
(2.0%); provided, however, such rate shall reduce to a per
annum rate equal to the aggregate of the Prime Rate, plus
one and one-half percent (1.50%) after the occurrence of the
Profitability Event, to be effective ten (10) Business Days
after Borrower has provided to Bank satisfactory evidence of
same for such period. In addition to the foregoing, if at
any time Borrower is unable to provide Bank with
satisfactory evidence that the Profitability Event has
occurred for a period of three (3) consecutive months, the
rate shall increase to a per annum rate equal to the
aggregate of the Prime Rate, plus two percent (2.0%).
(iii) After an Event of Default, Obligations shall bear
interest at five percent (5.0%) above the rate effective
immediately before the Event of Default. The applicable
interest rate hereunder shall increase or decrease when the
Prime Rate changes. Interest is computed on the basis of a
360 day year for the actual number of days elapsed."
5. The Loan Agreement shall be amended by deleting the following
appearing as Section 6.7 thereof:
"6.7 FINANCIAL COVENANTS.
Borrower shall maintain at all times, to be tested as of the last
day of each month, unless otherwise noted:
(a) QUICK RATIO. A ratio of Quick Assets to Current
Liabilities minus Deferred Revenues of at least 1.75 to 1.0.
(b) TANGIBLE NET WORTH. Borrower shall maintain, to be
tested as of the last day of each calendar quarter, a Tangible
Net Worth of not less than One Million Dollars ($1,000,000.00)."
and inserting in lieu thereof the following:
<PAGE>
"6.7 FINANCIAL COVENANTS.
Borrower shall maintain at all times, to be tested as of the last
day of each month:
(a) ADJUSTED QUICK RATIO. A ratio of Quick Assets to Current
Liabilities minus Deferred Revenues of at least:
(i) 1.25 to 1.0 from January 1, 2004 through March 31,
2004;
(ii) 1.15 to 1.0 from April 1, 2004 through April 30, 2004;
(iii) 1.10 to 1.0 from May 1, 2004 through May 31, 2004;
(iv) 1.15 to 1.0 from June 1, 2004 through September 30,
2004; and
(v) 1.25 to 1.0 from October 1, 2004 and thereafter.
(b) TANGIBLE NET WORTH. Borrower shall maintain a Tangible Net
Worth of not less than the sum of (I) plus (II) below:
(I) (i) $700,000 from January 1, 2004 through March 31, 2004;
(ii) $600,000 from April 1, 2004 through June 30, 2004;
(iii) $500,000 from July 1, 2004 through November 30, 2004;
and
(iv) $700,000 from December 1, 2004 and thereafter; plus
(II) the aggregate of (x) 25% of all consideration received after
January 1, 2004 from proceeds from the issuance of any equity
securities of Borrower and/or subordinated debt incurred by
Borrower; plus (y) beginning with the month ending January 31,
2005, 75% of Borrower's monthly net profit in accordance with
GAAP."
6. "The Loan Agreement shall be amended by adding the following new
subsection appearing after subsection 6.7 (b) thereof:
"(c) PROFITABILITY. From and after the occurrence of the
Profitability Event, Borrower shall have minimum monthly net
profit (in accordance with GAAP) of at least $1.00."
7. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 13.1 thereof:
""CURRENT LIABILITIES" are the aggregate amount of
Borrower's Total Liabilities which mature within one (1)
year, which shall include, without limitation, all
obligations and liabilities of Borrower to Bank."
and inserting in lieu thereof the following:
<PAGE>
""CURRENT LIABILITIES" are the aggregate amount of
Borrower's Total Liabilities which mature within one (1)
year, plus, without duplication, all obligations and
liabilities of Borrower to Bank."
8. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 13.1 thereof:
""EQUIPMENT ADVANCE" is defined in Section 2.1.1."
and inserting in lieu thereof the following:
""EQUIPMENT ADVANCE" or "EQUIPMENT ADVANCES" shall mean any
advance made hereunder pursuant to Section 2.1.1 or Section
2.1.2 hereof."
9. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 13.1 thereof:
""OTHER EQUIPMENT" is leasehold improvements, intangible
property such as computer software and software licenses,
equipment specifically designed or manufactured for
Borrower, other intangible property, limited use property
and other similar property and soft costs approved by the
Bank, including sales tax, freight and installation
expenses. Unless otherwise agreed to by Bank, not more than
twenty-five percent (25%) of the proceeds of the Equipment
Line shall be used to finance Other Equipment."
and inserting in lieu thereof the following:
""OTHER EQUIPMENT" is intangible property such as computer
software and software licenses, equipment specifically
designed or manufactured for Borrower, other intangible
property, limited use property and other similar property
and soft costs approved by the Bank, including sales tax,
freight and installation expenses. Unless otherwise agreed
to by Bank, not more than twenty-five percent (25%) of the
proceeds of the 2003 Equipment Line or twenty-five percent
(25%) of the proceeds of the 2004 Equipment Line shall be
used to finance Other Equipment."
10. The Loan Agreement shall be amended by adding the following
definitions to appear in Section 13.1 thereof:
""2004 EQUIPMENT LINE" is an Equipment Advance or Equipment
Advances of up to Six Hundred Thousand Dollars
($600,000.00).
"ELIGIBLE EQUIPMENT" is (a) general purpose computer
equipment, office equipment, test and laboratory equipment,
furnishings, and, subject to the limitations set forth
herein, (b) Other Equipment that
<PAGE>
complies with all of Borrower's representations and
warranties to Bank and which is acceptable to Bank in all
respects. All Equipment financed with the proceeds of the
Equipment Advances shall be new, provided that Bank, in its
sole discretion may finance used equipment.
"PROFITABILITY EVENT" is the achievement by Borrower of
three (3) consecutive months with a net profit (in
accordance with GAAP) of at least $1.00.
"TRANCHE" is defined in Section 2.1.2."
B. Waiver. Bank hereby waives Borrower's existing defaults under the Loan
Agreement by virtue of Borrower's failure to comply with the Quick
Ratio covenant set forth is Section 6.7(a) thereof as of the months
ended October 31, 2003, November 30, 2003 and December 31, 2003.
Bank's waiver of Borrower's compliance of said affirmative covenant
shall apply only to the foregoing specific periods.
4. FEES. Borrower shall pay to Bank a modification fee of $4,500.00, which fee
shall be due on the date hereof and shall be deemed fully earned as of the date
hereof. Borrower shall also reimburse Bank for all legal fees and expenses
incurred in connection with this amendment to the Existing Loan Documents.
5. RATIFICATION OF PERFECTION CERTIFICATE. Borrower hereby ratifies, confirms
and reaffirms, all and singular, the terms and disclosures contained in a
certain Perfection Certificate dated as of February 27, 2003, between Borrower
and Bank, and acknowledges, confirms and agrees the disclosures and information
above Borrower provided to Bank in the Perfection Certificate has not changed,
as of the date hereof.
6. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
7. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.
8. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses, claims, or counterclaims against Bank, whether
known or unknown, at law or in equity, all of them are hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.
9. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain
<PAGE>
unchanged and in full force and effect. Bank's agreement to modifications to the
existing Obligations pursuant to this Loan Modification Agreement in no way
shall obligate Bank to make any future modifications to the Obligations. Nothing
in this Loan Modification Agreement shall constitute a satisfaction of the
Obligations. It is the intention of Bank and Borrower to retain as liable
parties all makers of Existing Loan Documents, unless the party is expressly
released by Bank in writing. No maker will be released by virtue of this Loan
Modification Agreement.
10. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank (provided, however,
in no event shall this Loan Modification Agreement become effective until signed
by an officer of Bank in California).
This Loan Modification Agreement is executed as a sealed instrument under
the laws of the Commonwealth of Massachusetts as of the date first written
above.
BORROWER: BANK:
ROVING SOFTWARE INCORPORATED SILICON VALLEY BANK, doing business
as SILICON VALLEY EAST
By: /s/ Gail Goodman By: /s/ Pamela Aldsworth
--------------------------------- ------------------------------------
Name: Gail Goodman Name: Pamela Aldsworth
------------------------------- ----------------------------------
Title: CEO Title: SCO
------------------------------ ---------------------------------
SILICON VALLEY BANK
By: /s/ Maggie Garcia
------------------------------------
Name: Maggie Garcia
----------------------------------
Title: AVP
---------------------------------
(signed in Santa Clara County,
California)
<PAGE>
SILICON VALLEY BANK
INVOICE FOR LOAN CHARGES
BORROWER: ROVING SOFTWARE INCORPORATED
LOAN OFFICER: MR. MICHAEL FELL
DATE: February 10, 2004
2004 Equipment Line Fee $4,500.00
---------
TOTAL FEES DUE $4,500.00
=========
Please indicate the method of payment:
[ ] A check for the total amount is attached.
[X] Debit DDA 3300147118 for the total amount.
[ ] Loan proceeds
ROVING SOFTWARE INCORPORATED
By: /s/ Gail Goodman
---------------------------------
Gail Goodman
/s/ Pamela Aldsworth
-------------------------------------
Silicon Valley Bank (Date) 2-19-04
Account Officer's Signature
<PAGE>
THIRD LOAN MODIFICATION AGREEMENT
This Third Loan Modification Agreement (this "Loan Modification Agreement")
is entered into as of August 12, 2004, by and between SILICON VALLEY BANK, a
California-chartered bank, with its principal place of business at 3003 Tasman
Drive, Santa Clara, California 95054 and with a loan production office located
at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton,
Massachusetts 02462, doing business under the name "Silicon Valley East"
("Bank") and ROVING SOFTWARE INCORPORATED, a Delaware corporation with its chief
executive office located at 1601 Trapelo Road, Suite 246, Waltham, Massachusetts
02451 ("Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of February 27, 2003,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of February 27, 2003, as amended by a certain First Loan Modification
Agreement dated August 4, 2003, and as further amended by a certain Second Loan
Modification Agreement dated February 10, 2004 (as amended, the "Loan
Agreement"). Capitalized terms used but not otherwise defined herein shall have
the same meaning as in the Loan Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement (together with any other
collateral security granted to Bank, the "Security Documents").
3. Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the "Existing
Loan Documents".
4. DESCRIPTION OF CHANGE IN TERMS.
1. The Loan Agreement shall be amended by deleting the following
text appearing in Section 2.1.2 thereof:
"(a) Availability. Subject to the terms and conditions of
this Agreement, Bank agrees to lend to Borrower, from time
to time as further described herein, Equipment Advances in
an aggregate amount not to exceed the 2004 Equipment Line.
The proceeds of the 2004 Equipment Line shall be advanced in
four separate tranches (each, a "Tranche"), as follows: (i)
from February 1, 2004 through April 30, 2004, Bank shall
make Equipment Advances not exceeding $200,000, (ii) from
May 1, 2004 through July 31, 2004, Bank shall make Equipment
Advances not exceeding $150,000, (iii) from August 1, 2004
through October 31, 2004, Bank shall make Equipment Advances
not exceeding $150,000; and (iv) from November 1, 2004
through December 31, 2004, Bank shall make Equipment
Advances not exceeding $100,000."
<PAGE>
and inserting in lieu thereof the following:
"(a) Availability. Subject to the terms and conditions of
this Agreement, Bank agrees to lend to Borrower, from time
to time as further described herein, Equipment Advances in
an aggregate amount not to exceed the 2004 Equipment Line.
The proceeds of the 2004 Equipment Line shall be advanced in
three separate tranches (each, a "Tranche"), as follows: (i)
from February 1, 2004 through April 30, 2004, Bank shall
make Equipment Advances not exceeding $200,000, (ii) from
May 1, 2004 through July 31, 2004, Bank shall make Equipment
Advances not exceeding the 2004 Equipment Line less the
aggregate principal amount of outstanding Equipment Advances
under the 2004 Equipment Line, and (iii) from August 1, 2004
through October 31, 2004, Bank shall make Equipment Advances
not exceeding $102,342.35."
2. The Loan Agreement shall be amended by adding the following new
Section appearing after Section 2.1.2 thereof:
"2.1.3 2004 Equipment Line No. 2.
(a) Availability. From August 12, 2004 through January 15,
2005, subject to the terms and conditions of this Agreement,
Bank agrees to lend to Borrower, from time to time as
further described herein, Equipment Advances in an aggregate
amount not to exceed the 2004 Equipment Line No. 2. The
Equipment Advances may only be used to finance Eligible
Equipment purchased on or after 90 days before the date of
each Equipment Advance and no Equipment Advances may exceed
100% of the equipment invoice excluding taxes, shipping,
warranty charges, freight discounts and installation expense
relating to such Equipment, unless such costs constitute
Other Equipment. After repayment, Equipment Advances may not
be reborrowed.
(b) Interest Rate; Interest Payment. Interest accrues from
the date of each Equipment Advance at the rate in Section
2.2(a) and is payable monthly on the first day of each
month.
(c) Principal Repayment. In addition to the monthly payment
of interest, the principal amount of each Equipment Advances
made under the 2004 Equipment Line No. 2 is payable in
thirty-six (36) consecutive equal monthly installments of
principal beginning on the first day of the month following
such Equipment Advance and shall continue on the first day
of each month thereafter.
(d) Advance Requests. To obtain an Equipment Advance,
Borrower must notify Bank (the notice is irrevocable) by
facsimile
<PAGE>
no later than 3:00 p.m. Eastern time one (1) Business Day
before the day on which the Equipment Advance is to be made.
The notice in the form of Exhibit B (Payment/Advance Form)
must be signed by a Responsible Officer or designee and
include a copy of the invoice for the Equipment being
financed."
3. The Loan Agreement shall be amended by deleting the following
text appearing in Section 2.2(a) thereof:
"(ii) The principal amounts outstanding under the 2004
Equipment Line shall accrue interest at a per annum rate
equal to the aggregate of the Prime Rate, plus two percent
(2.0%); provided, however, such rate shall reduce to a per
annum rate equal to the aggregate of the Prime Rate, plus
one and one-half percent (1.50%) after the occurrence of the
Profitability Event, to be effective ten (10) Business Days
after Borrower has provided to Bank satisfactory evidence of
same for such period. In addition to the foregoing, if at
any time Borrower is unable to provide Bank with
satisfactory evidence that the Profitability Event has
occurred for a period of three (3) consecutive months, the
rate shall increase to a per annum rate equal to the
aggregate of the Prime Rate, plus two percent (2.0%)."
and inserting in lieu thereof the following:
"(ii) The principal amounts outstanding under the 2004
Equipment Line and the 2004 Equipment Line No. 2 shall
accrue interest at a per annum rate equal to the aggregate
of the Prime Rate, plus two percent (2.0%); provided,
however, such rate shall reduce to a per annum rate equal to
the aggregate of the Prime Rate, plus one and one-half
percent (1.50%) after the occurrence of the Profitability
Event, to be effective ten (10) Business Days after Borrower
has provided to Bank satisfactory evidence of same for such
period. In addition to the foregoing, if at any time
Borrower is unable to provide Bank with satisfactory
evidence that the Profitability Event has occurred for a
period of three (3) consecutive months, the rate shall
increase to a per annum rate equal to the aggregate of the
Prime Rate, plus two percent (2.0%)."
4. The Loan Agreement shall be amended by deleting the following
appearing as Section 6.7 thereof:
"6.7 Financial Covenants. Borrower shall maintain at all
times, to be tested as of the last day of each month:
(a) Adjusted Quick Ratio. A ratio of Quick Assets to Current
Liabilities minus Deferred Revenues of at least:
<PAGE>
(i) 1.25 to 1.0 from January 1, 2004 through March 31,
2004;
(ii) 1.15 to 1.0 from April 1, 2004 through April 30, 2004;
(iii) 1.10 to 1.0 from May 1, 2004 through May 31, 2004;
(iv) 1.15 to 1.0 from June 1, 2004 through September 30,
2004; and
(v) 1.25 to 1.0 from October 1, 2004 and thereafter.
(b) TANGIBLE NET WORTH. Borrower shall maintain a Tangible
Net Worth of not less than the sum of (I) plus (II) below:
(I) (i) $700,000 from January 1, 2004 through
March 31, 2004;
(ii) $600,000 from April 1, 2004 through June 30, 2004;
(iii) $500,000 from July 1, 2004 through November 30,
2004; and
(iv) $700,000 from December 1, 2004 and thereafter;
plus
(II) the aggregate of (x) 25% of all consideration received
after January 1, 2004 from proceeds from the issuance of any
equity securities of Borrower and/or subordinated debt
incurred by Borrower; plus (y) beginning with the month
ending January 31, 2005, 75% of Borrower's monthly net
profit in accordance with GAAP.
(c) PROFITABILITY. From and after the occurrence of the
Profitability Event, Borrower shall have minimum monthly net
profit (in accordance with GAAP) of at least $1.00."
and inserting in lieu thereof the following:
"6.7 FINANCIAL COVENANTS. Borrower shall maintain at all
times, to be tested as of the last day of each month:
(a) ADJUSTED QUICK RATIO. A ratio of Quick Assets to Current
Liabilities minus Deferred Revenues of at least 0.80 to 1.0.
(b) DEBT SERVICE RATIO. In the event that the amount of
Borrower's unrestricted cash maintained at Bank is less than
$1,200,000.00, a ratio of (i) net income plus interest,
depreciation, amortization, unfunded capital expenditures,
and cash taxes paid, calculated based on the three (3) month
period ending as of the date tested, to (ii) principal and
interest expense with respect to the Obligations, calculated
based on the three (3) month period ending as of the date
tested, of greater than 1.25 to 1.0."
<PAGE>
5. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 13.1 thereof:
""EQUIPMENT ADVANCE" or "EQUIPMENT ADVANCES" shall mean any
advance made hereunder pursuant to Section 2.1.1 or Section
2.1.2 hereof."
and inserting in lieu thereof the following:
""EQUIPMENT ADVANCE" or "EQUIPMENT ADVANCES" shall mean any
advance made hereunder pursuant to Section 2.1.1, Section
2.1.2, or Section 2.1.3 hereof."
6. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 13.1 thereof:
""OTHER EQUIPMENT" is intangible property such as computer
software and software licenses, equipment specifically
designed or manufactured for Borrower, other intangible
property, limited use property and other similar property
and soft costs approved by the Bank, including sales tax,
freight and installation expenses. Unless otherwise agreed
to by Bank, not more than twenty-five percent (25%) of the
proceeds of the 2003 Equipment Line or twenty-five percent
(25%) of the proceeds of the 2004 Equipment Line shall be
used to finance Other Equipment."
and inserting in lieu thereof the following:
""OTHER EQUIPMENT" is intangible property such as computer
software and software licenses, equipment specifically
designed or manufactured for Borrower, other intangible
property, limited use property and other similar property
and soft costs approved by the Bank, including sales tax,
freight and installation expenses. Unless otherwise agreed
to by Bank, not more than twenty-five percent (25%) of the
proceeds of the 2003 Equipment Line, twenty-five percent
(25%) of the proceeds of the 2004 Equipment Line, or
twenty-five percent (25%) of the proceeds of the 2004
Equipment Line No. 2 shall be used to finance Other
Equipment."
7. The Loan Agreement shall be amended by adding the following
definitions to appear in Section 13.1 thereof:
""2004 EQUIPMENT LINE NO. 2" is an Equipment Advance or
Equipment Advances of up to One Hundred Seventy Five
Thousand Dollars ($175,000.00)."
<PAGE>
8. The Compliance Certificate appearing as Exhibit C to the Loan
Agreement is hereby replaced with the Compliance Certificate
attached as Exhibit A hereto.
5. FEES. Borrower shall pay to Bank a modification fee of $1,500.00, which fee
shall be due on the date hereof and shall be deemed fully earned as of the date
hereof. Borrower shall also reimburse Bank for all legal fees and expenses
incurred in connection with this amendment to the Existing Loan Documents.
6. RATIFICATION OF PERFECTION CERTIFICATE. Borrower hereby ratifies, confirms
and reaffirms, all and singular, the terms and disclosures contained in a
certain Perfection Certificate dated as of February 27, 2003, between Borrower
and Bank, and acknowledges, confirms and agrees the disclosures and information
above Borrower provided to Bank in the Perfection Certificate has not changed,
as of the date hereof.
7. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
8. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.
9. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses, claims, or counterclaims against Bank, whether
known or unknown, at law or in equity, all of them are hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.
10. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank's agreement to modifications to the existing Obligations pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Obligations. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Obligations. It is the intention of Bank
and Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this Loan Modification Agreement.
11. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank (provided, however,
in no event shall this Loan Modification Agreement become effective until signed
by an officer of Bank in California).
[The remainder of this page is intentionally left blank]
<PAGE>
This Loan Modification Agreement is executed as a sealed instrument under
the laws of the Commonwealth of Massachusetts as of the date first written
above.
BORROWER: BANK:
ROVING SOFTWARE INCORPORATED SILICON VALLEY BANK, doing business
as SILICON VALLEY EAST
By: /s/ Gail Goodman By:
--------------------------------- ------------------------------------
Name: Gail Goodman Name:
-------------------------------- ----------------------------------
Title: CEO Title:
------------------------------- ---------------------------------
SILICON VALLEY BANK
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
(signed in Santa Clara County,
California)
<PAGE>
CORPORATE RESOLUTIONS FOR
AMENDING LOAN ARRANGEMENT
Gail Goodman, being the Secretary of ROVING SOFTWARE INCORPORATED, a Delaware
corporation duly organized, validly existing, and in good standing under the
laws of the state of Delaware, CERTIFIES that the following resolutions were
adopted
CHECK [xx] at a duly called and conducted meeting of the Directors of said
ONE corporation held on July 29, 2004 at which a quorum was present and
voting throughout,
[ ] by the unanimous consent of the Directors of said corporation, the
originals of which consents having been placed with the records of
meetings of Directors of said corporation,
and are in conformity with the Certificate of Incorporation and By-Laws of said
corporation (each as amended to date) and that each of the following resolutions
presently is in full force and effect without change:
AMENDMENT OF LOAN ARRANGEMENT
RESOLVED, That this corporation amend its loan arrangement(s) with Silicon
Valley Bank (hereinafter, with any successor, the "Bank") in such
manner as has been or is hereafter discussed and negotiated by and
between the Bank on the one hand and any of the following, acting on
behalf of this corporation, on the other:
Insert title, only, if
Persons to act on behalf of CEO
corporation have titles.
Otherwise, insert names. _______________________
In connection with the foregoing, each of said officers and/or persons, acting
as described above, is authorized to execute, seal, acknowledge, and deliver in
the name of and on behalf of this corporation such instruments, documents, and
papers which relate thereto as may be appropriate, each in such form and upon
such terms as the officer(s) and/or person(s) so authorized determines, such
execution and delivery to be conclusive of such officer'(s) and/or person'(s)
authority so to act in the name of and on behalf of this corporation.
DELEGATION OF AUTHORITY
RESOLVED, That any one of the officers and/or persons authorized by the
foregoing Resolution, acting singly, may by written instrument
furnished the Bank delegate to any other officer or person the same
authority which is vested singly and individually by said Resolution
in the person(s) or officer(s) so delegating authority which written
delegation shall be in such form as may be requested by the Bank and
may be subject to such restrictions and limitations as may be
indicated thereon.
<PAGE>
CONTINUATION OF AUTHORITY
RESOLVED, That all resolutions and delegations relative to the authority of any
officer or person to act on behalf of this corporation shall remain in
full force and effect until the Bank's receipt of written notice of
the revocation or modification of such authority from the person
signing below as the Secretary of this corporation or from that person
whom the Bank reasonably believes to be authorized to act in this
regard on behalf of this corporation.
RATIFICATION OF PRIOR TRANSACTIONS
RESOLVED, That all action heretofore taken on behalf of this corporation and all
instruments, documents, and papers heretofore executed in the name of
and on behalf of this corporation concerning this corporation's
relationship with the Bank be, and they hereby are, approved, adopted,
and ratified. This corporation is authorized to indemnify, defend, and
hold the Bank harmless to the extent provided in the loan arrangements
with the Bank.
REVOCATION OF INCONSISTENT RESOLUTIONS
RESOLVED, That any and all resolutions of this corporation which may be in
conflict with any of the foregoing resolutions be, and they hereby
are, revoked.
RESOLVED, That the resolutions of this corporation's Directors concerning this
corporation's relationship with and borrowing from the Bank, pursuant
to which, among other things, this corporation may be granting the
Bank a security interest or other collateral in and to, and/or
mortgaging, all or any portion of the assets of this corporation, be,
and said resolutions are hereby approved, adopted, and incorporated
herein by reference.
PERSONS PRESENTLY AUTHORIZED TO ACT
I further CERTIFY that the following persons presently are authorized under the
preceding Resolutions to act:
Name Title
---- -----
Gail Goodman CEO
Eric Groves SVP Sales and Business Development
IN WITNESS WHEREOF, I have set my hand and the seal of this
corporation on this 12th of August, 2004.
(Corporate Seal) /s/ Gail Goodman
----------------------------------------
Secretary
<PAGE>
Print Name: Gail Goodman
----------------------------
If the foregoing Resolutions confer authority upon the Secretary, this
Certificate should be confirmed by another officer of the corporation
CONFIRMED: /s/ Eric Groves
-----------------------------
Print Name: Eric Groves
Title: SVP Sales and Business
Development
<PAGE>
FOURTH LOAN MODIFICATION AGREEMENT
This Fourth Loan Modification Agreement (this "Loan Modification
Agreement") is entered into as of March 11, 2005, by and between SILICON VALLEY
BANK, a California-chartered bank, with its principal place of business at 3003
Tasman Drive, Santa Clara, California 95054 and with a loan production office
located at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton,
Massachusetts 02462 ("Bank") and ROVING SOFTWARE INCORPORATED, a Delaware
corporation with its chief executive office located at 1601 Trapelo Road, Suite
246, Waltham, Massachusetts 02451 ("Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of February 27, 2003,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of February 27, 2003, as amended by a certain First Loan Modification
Agreement dated August 4, 2003, as further amended by a certain Second Loan
Modification Agreement dated February 10, 2004, and as further amended by a
Third Loan Modification Agreement dated August 12, 2004 (as amended, the "Loan
Agreement"). Capitalized terms used but not otherwise defined herein shall have
the same meaning as in the Loan Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement (together with any other
collateral security granted to Bank, the "Security Documents").
Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the "Existing
Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
1. The Loan Agreement shall be amended by renumbering the section
entitled "Undisbursed Credit Extensions" as Section 2.4.
2. The Loan Agreement shall be amended by adding the following new
Section appearing after Section 2.1.3 thereof:
"2.1.4 2005 Equipment Advances.
(a) Availability. From March 11, 2005 through July 31,
2005, subject to the terms and conditions of this
Agreement, Bank agrees to lend to Borrower, from time to
time as further described herein, Equipment Advances in an
aggregate amount not to exceed the 2005 Equipment Line. The
Equipment Advances may only be used to finance Eligible
Equipment purchased on or after 90 days before the date of
each Equipment Advance and no Equipment Advances may exceed
100% of the equipment invoice excluding taxes, shipping,
warranty charges, freight discounts and installation
expense relating to such Equipment, unless such costs
constitute
<PAGE>
Other Equipment. After repayment, Equipment Advances may not
be reborrowed.
(b) Interest Rate; Interest Payment. Interest accrues from
the date of each Equipment Advance at the rate in Section
2.2(a) and is payable monthly on the first Business Day of
each month.
(c) Principal Repayment. In addition to the monthly payment
of interest, the principal amount of each Equipment Advance
made under the 2005 Equipment Line is payable in thirty-six
(36) consecutive equal monthly installments of principal
beginning on the first Business Day of the month following
such Equipment Advance and shall continue on the first
Business Day of each month thereafter.
(d) Advance Requests. To obtain an Equipment Advance,
Borrower must notify Bank (the notice is irrevocable) by
facsimile no later than 3:00 p.m. Eastern time one (1)
Business Day before the day on which the Equipment Advance
is to be made. The notice in the form of Exhibit B
(Payment/Advance Form) must be signed by a Responsible
Officer or designee and include a copy of the invoice for
the Equipment being financed."
3. The Loan Agreement shall be amended by deleting the following
text appearing in Section 2.2(a) thereof:
"(ii) The principal amounts outstanding under the 2004
Equipment Line and the 2004 Equipment Line No. 2 shall
accrue interest at a per annum rate equal to the aggregate
of the Prime Rate, plus two percent (2.0%); provided,
however, such rate shall reduce to a per annum rate equal to
the aggregate of the Prime Rate, plus one and one-half
percent (1.50%) after the occurrence of the Profitability
Event, to be effective ten (10) Business Days after Borrower
has provided to Bank satisfactory evidence of same for such
period. In addition to the foregoing, if at any time
Borrower is unable to provide Bank with satisfactory
evidence that the Profitability Event has occurred for a
period of three (3) consecutive months, the rate shall
increase to a per annum rate equal to the aggregate of the
Prime Rate, plus two percent (2.0%)."
and inserting in lieu thereof the following:
"(ii) The principal amounts outstanding under the 2004
Equipment Line, the 2004 Equipment Line No. 2 and the 2005
Equipment Line shall accrue interest at a per annum rate
equal to the aggregate of the Prime Rate, plus two percent
(2.0%); provided, however, such rate shall reduce to a per
annum rate equal to the aggregate of
<PAGE>
the Prime Rate, plus one and one-half percent (1.50%) after
the occurrence of the Profitability Event, to be effective
ten (10) Business Days after Borrower has provided to Bank
satisfactory evidence of same for such period. In addition
to the foregoing, if at any time Borrower is unable to
provide Bank with satisfactory evidence that the
Profitability Event has occurred for a period of three (3)
consecutive months, the rate shall increase to a per annum
rate equal to the aggregate of the Prime Rate, plus two
percent (2.0%)."
4. The Loan Agreement shall be amended by deleting the following
appearing as Section 6.7(b) thereof:
"(b) DEBT SERVICE RATIO. In the event that the amount of
Borrower's unrestricted cash maintained at Bank is less than
$1,200,000.00, a ratio of (i) net income plus interest,
depreciation, amortization, unfunded capital expenditures,
and cash taxes paid, calculated based on the three (3) month
period ending as of the date tested, to (ii) principal and
interest expense with respect to the Obligations, calculated
based on the three (3) month period ending as of the date
tested, of greater than 1.25 to 1.0."
and inserting in lieu thereof the following:
"(b) DEBT SERVICE RATIO. In the event that the amount of
Borrower's unrestricted cash maintained at Bank is less than
$1,200,000.00, a ratio of (i) net income plus interest,
depreciation, and amortization, minus unfunded capital
expenditures, and minus cash taxes paid, calculated based on
the three (3) month period ending as of the date tested, to
(ii) principal and interest expense with respect to the
Obligations, calculated based on the three (3) month period
ending as of the date tested, of greater than 1.25 to 1.0."
5. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 13.1 thereof:
""EQUIPMENT ADVANCE" or "EQUIPMENT ADVANCES" shall mean any
advance made hereunder pursuant to Section 2.1.1, Section
2.1.2, or Section 2.1.3 hereof."
and inserting in lieu thereof the following:
""EQUIPMENT ADVANCE" or "EQUIPMENT ADVANCES" shall mean any
advance made hereunder pursuant to Section 2.1.1, Section
2.1.2, Section 2.1.3, or Section 2.1.4 hereof."
<PAGE>
6. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 13.1 thereof:
""OTHER EQUIPMENT" is intangible property such as computer
software and software licenses, equipment specifically
designed or manufactured for Borrower, other intangible
property, limited use property and other similar property
and soft costs approved by the Bank, including sales tax,
freight and installation expenses. Unless otherwise agreed
to by Bank, not more than twenty-five percent (25%) of the
proceeds of the 2003 Equipment Line, twenty-five percent
(25%) of the proceeds of the 2004 Equipment Line, or
twenty-five percent (25%) of the proceeds of the 2004
Equipment Line No. 2 shall be used to finance Other
Equipment."
and inserting in lieu thereof the following:
""OTHER EQUIPMENT" is intangible property such as computer
software and software licenses, equipment specifically
designed or manufactured for Borrower, other intangible
property, limited use property and other similar property
and soft costs approved by the Bank, including sales tax,
freight and installation expenses. Unless otherwise agreed
to by Bank, not more than twenty-five percent (25%) of the
proceeds of the 2003 Equipment Line, twenty-five percent
(25%) of the proceeds of the 2004 Equipment Line,
twenty-five percent (25%) of the proceeds of the 2004
Equipment Line No. 2, or twenty-five percent (25%) of the
proceeds of the 2005 Equipment Line shall be used to finance
Other Equipment."
7. The Loan Agreement shall be amended by adding the following
definition to appear alphabetically in Section 13.1 thereof:
""2005 EQUIPMENT LINE" is an Equipment Advance or Equipment
Advances of up to Three Hundred Fifty Thousand Dollars
($350,000.00)."
4. FEES. Borrower shall pay to Bank a modification fee of One Thousand Seven
Hundred Fifty Dollars ($1,750.00), which fee shall be due on the date hereof and
shall be deemed fully earned as of the date hereof. Borrower shall also
reimburse Bank for all legal fees and expenses incurred in connection with this
amendment to the Existing Loan Documents.
5. RATIFICATION OF PERFECTION CERTIFICATE. Borrower hereby ratifies, confirms
and reaffirms, all and singular, the terms and disclosures contained in a
certain Perfection Certificate dated as of February 27, 2003, between Borrower
and Bank, and acknowledges, confirms and agrees the disclosures and information
above Borrower provided to Bank in the Perfection Certificate has not changed,
as of the date hereof.
6. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
<PAGE>
7. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.
8. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses, claims, or counterclaims against Bank, whether
known or unknown, at law or in equity, all of them are hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.
9. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank's agreement to modifications to the existing Obligations pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Obligations. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Obligations. It is the intention of Bank
and Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this Loan Modification Agreement.
10. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank.
[The remainder of this page is intentionally left blank]
<PAGE>
This Loan Modification Agreement is executed as a sealed instrument under
the laws of the Commonwealth of Massachusetts as of the date first written
above.
BORROWER: BANK:
ROVING SOFTWARE INCORPORATED SILICON VALLEY BANK
By: /s/ Marcus Green By: /s/ Laura M. Scott
--------------------------------- ------------------------------------
Name: Marcus Green Name: Laura M. Scott
Title: Controller Title: Senior Vice President
<PAGE>
FIFTH LOAN MODIFICATION AGREEMENT
This Fifth Loan Modification Agreement (this "Loan Modification Agreement")
is entered into as of September 19, 2005, by and between SILICON VALLEY BANK, a
California-chartered bank, with its principal place of business at 3003 Tasman
Drive, Santa Clara, California 95054 and with a loan production office located
at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton,
Massachusetts 02462 ("Bank") and ROVING SOFTWARE INCORPORATED, a Delaware
corporation with its chief executive office located at 1601 Trapelo Road, Suite
246, Waltham, Massachusetts 02451 ("Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of February 27, 2003,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of February 27, 2003, as amended by a certain First Loan Modification
Agreement dated August 4, 2003, as further amended by a certain Second Loan
Modification Agreement dated February 10, 2004, as further amended by a Third
Loan Modification Agreement dated August 12, 2004, and as further amended by a
Fourth Loan Modification Agreement dated March 11, 2005 (as amended, the "Loan
Agreement"). Capitalized terms used but not otherwise defined herein shall have
the same meaning as in the Loan Agreement
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement (together with any other
collateral security granted to Bank, the "Security Documents").
Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the "Existing
Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
1. The Loan Agreement shall be amended by adding the following new
Section appearing after Section 2.1.4 thereof:
"2.1.5 2005 Equipment Line No. 2.
(a) Availability. Subject to the terms and conditions of
this Agreement, Bank agrees to lend to Borrower, from time
to time as further described herein, Equipment Advances in
an aggregate amount not to exceed the 2005 Equipment Line
No. 2. The proceeds of the 2005 Equipment Line No. 2 shall
be advanced in two separate tranches (each, a "2005
Tranche"), as follows: (i) from September 20, 2005 through
October 31, 2005, Bank shall make Equipment Advances not
exceeding $300,000, and (ii) from November 1, 2005 through
January 31, 2006, Bank shall make Equipment Advances not
exceeding $300,000. The Equipment Advances may only be used
to finance Eligible Equipment purchased on or after 90 days
before the date of each Equipment Advance and no Equipment
Advances may exceed 100% of the
<PAGE>
equipment invoice excluding taxes, shipping, warranty
charges, freight discounts and installation expense relating
to such Equipment, unless such costs constitute Other
Equipment. After repayment, Equipment Advances may not be
reborrowed.
(b) Interest Rate;Interest Payment. Interest accrues from
the date of each Equipment Advance at the rate in Section
2.2(a) and is payable monthly on the first Business Day of
each month.
(c) Principal Repayment. In addition to the monthly payment
of interest, the principal amount of each Equipment Advance
made under the 2005 Equipment Line No. 2 is payable in
thirty-six (36) consecutive equal monthly installments of
principal beginning on the first Business Day of the month
following such Equipment Advance and shall continue on the
first Business Day of each month thereafter.
(d) Advance Requests. To obtain an Equipment Advance,
Borrower must notify Bank (the notice is irrevocable) by
facsimile no later than 3:00 p.m. Eastern time one (1)
Business Day before the day on which the Equipment Advance
is to be made. The notice in the form of Exhibit B
(Payment/Advance Form) must be signed by a Responsible
Officer or designee and include a copy of the invoice for
the Equipment being financed."
2. The Loan Agreement shall be amended by deleting the following
text appearing in Section 2.2(a) thereof:
"(ii) The principal amounts outstanding under the 2004
Equipment Line, the 2004 Equipment Line No. 2 and the 2005
Equipment Line shall accrue interest at a per annum rate
equal to the aggregate of the Prime Rate, plus two percent
(2.0%); provided, however, such rate shall reduce to a per
annum rate equal to the aggregate of the Prime Rate, plus
one and one-half percent (1.50%) after the occurrence of the
Profitability Event, to be effective ten (10) Business Days
after Borrower has provided to Bank satisfactory evidence of
same for such period. In addition to the foregoing, if at
any time Borrower is unable to provide Bank with
satisfactory evidence that the Profitability Event has
occurred for a period of three (3) consecutive months, the
rate shall increase to a per annum rate equal to the
aggregate of the Prime Rate, plus two percent (2.0%)."
and inserting in lieu thereof the following:
"(ii) The principal amounts outstanding under the 2004
Equipment Line, the 2004 Equipment Line No. 2, the 2005
Equipment Line
<PAGE>
and the 2005 Equipment Line No. 2 shall accrue interest at a
per annum rate equal to the aggregate of the Prime Rate,
plus two percent (2.0%); provided, however, such rate shall
reduce to a per annum rate equal to the aggregate of the
Prime Rate, plus one and one-half percent (1.50%) after the
occurrence of the Profitability Event, to be effective ten
(10) Business Days after Borrower has provided to Bank
satisfactory evidence of same for such period. In addition
to the foregoing, if at any time Borrower is unable to
provide Bank with satisfactory evidence that the
Profitability Event has occurred for a period of three (3)
consecutive months, the rate shall increase to a per annum
rate equal to the aggregate of the Prime Rate, plus two
percent (2.0%)."
3. The Loan Agreement shall be amended by deleting the following
appearing as Section 6.7 thereof:
"6.7 FINANCIAL COVENANTS. Borrower shall maintain at all
times, to be tested as of the last day of each month:
(a) ADJUSTED QUICK RATIO. A ratio of Quick Assets to Current
Liabilities minus Deferred Revenues of at least 0.80 to 1.0.
(b) DEBT SERVICE RATIO. In the event that the amount of
Borrower's unrestricted cash maintained at Bank is less than
$1,200,000.00, a ratio of (i) net income plus interest,
depreciation, and amortization, minus unfunded capital
expenditures, and minus cash taxes paid, calculated based on
the three (3) month period ending as of the date tested, to
(ii) principal and interest expense with respect to the
Obligations, calculated based on the three (3) month period
ending as of the date tested, of greater than 1.25 to 1.0."
and inserting in lieu thereof the following:
"6.7 FINANCIAL COVENANTS. Borrower shall maintain at all
times, to be tested as of the last day of each month (unless
otherwise noted):
(a) NET REVENUE. Consolidated net revenue of at least (i)
$3,000,000 for the fiscal quarter ending September 30, 2005,
(ii) $3,500,000 for the fiscal quarter ending December 31,
2005, (iii) $4,000,000 for the fiscal quarter ending March
31, 2006, (iv) $4,750,000 for the fiscal quarter ending June
30, 2006, (v) $5,250,000 for the fiscal quarter ending
September 30, 2006, (vi) $6,000,000 for the fiscal quarter
ending December 31, 2006, and (vii) the greater of (A)
$6,250,000, and (B) eighty percent (80.0%) of Borrower's
Board-approved operating plan, for the
<PAGE>
fiscal quarter ending March 31, 2007 and as of the last day
of each fiscal quarter thereafter.
(b) DEBT SERVICE RATIO. In the event that the amount of
Borrower's unrestricted cash maintained at Bank is less than
$1,300,000.00, a ratio of (i) net income plus interest,
depreciation, and amortization, minus unfunded capital
expenditures, and minus cash taxes paid, calculated based on
the three (3) month period ending as of the date tested, to
(ii) principal and interest expense with respect to the
Obligations, calculated based on the three (3) month period
ending as of the date tested, of greater than 1.25 to 1.0."
4. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 13.1 thereof:
""EQUIPMENT ADVANCE" or "EQUIPMENT ADVANCES" shall mean any
advance made hereunder pursuant to Section 2.1.1, Section
2.1.2, Section 2.1.3, or Section 2.1.4 hereof."
and inserting in lieu thereof the following:
""EQUIPMENT ADVANCE" or "EQUIPMENT ADVANCES" shall mean any
advance made hereunder pursuant to Section 2.1.1, Section
2.1.2, Section 2.1.3, Section 2.1.4, or Section 2.1.5
hereof."
5. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 13.1 thereof:
""OTHER EQUIPMENT" is intangible property such as computer
software and software licenses, equipment specifically
designed or manufactured for Borrower, other intangible
property, limited use property and other similar property
and soft costs approved by the Bank, including sales tax,
freight and installation expenses. Unless otherwise agreed
to by Bank, not more than twenty-five percent (25%) of the
proceeds of the 2003 Equipment Line, twenty-five percent
(25%) of the proceeds of the 2004 Equipment Line,
twenty-five percent (25%) of the proceeds of the 2004
Equipment Line No. 2, or twenty-five percent (25%) of the
proceeds of the 2005 Equipment Line shall be used to finance
Other Equipment."
and inserting in lieu thereof the following:
""OTHER EQUIPMENT" is intangible property such as computer
software and software licenses, equipment specifically
designed or manufactured for Borrower, other intangible
property, limited use property and other similar property
and soft costs approved by the Bank, including sales tax,
freight and installation expenses. Unless
<PAGE>
otherwise agreed to by Bank, not more than twenty-five
percent (25%) of the proceeds of the 2003 Equipment Line,
twenty-five percent (25%) of the proceeds of the 2004
Equipment Line, twenty-five percent (25%) of the proceeds of
the 2004 Equipment Line No. 2, twenty-five percent (25%) of
the proceeds of the 2005 Equipment Line, or twenty-five
percent (25%) of the proceeds of the 2005 Equipment Line No.
2 shall be used to finance Other Equipment."
6. The Loan Agreement shall be amended by adding the following
definitions to appear alphabetically in Section 13.1 thereof:
""2005 EQUIPMENT LINE NO. 2" is an Equipment Advance or
Equipment Advances of up to Six Hundred Thousand Dollars
($600,000.00)."
"2005 TRANCHE" is defined in Section 2.1.5(a)."
4. FEES. Borrower shall pay to Bank a modification fee of Four Thousand Five
Hundred Dollars ($4,500.00), which fee shall be due on the date hereof and shall
be deemed fully earned as of the date hereof. Borrower shall also reimburse Bank
for all legal fees and expenses incurred in connection with this amendment to
the Existing Loan Documents.
5. RATIFICATION OF PERFECTION CERTIFICATE. Borrower hereby ratifies, confirms
and reaffirms, all and singular, the terms and disclosures contained in a
certain Perfection Certificate dated as of February 27, 2003, between Borrower
and Bank, and acknowledges, confirms and agrees the disclosures and information
above Borrower provided to Bank in the Perfection Certificate has not changed,
as of the date hereof.
6. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
7. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.
8. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses, claims, or counterclaims against Bank, whether
known or unknown, at law or in equity, all of them are hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.
9. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank's agreement to modifications to the existing
<PAGE>
Obligations pursuant to this Loan Modification Agreement in no way shall
obligate Bank to make any future modifications to the Obligations. Nothing in
this Loan Modification Agreement shall constitute a satisfaction of the
Obligations. It is the intention of Bank and Borrower to retain as liable
parties all makers of Existing Loan Documents, unless the party is expressly
released by Bank in writing. No maker will be released by virtue of this Loan
Modification Agreement.
10. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank.
[The remainder of this page is intentionally left blank]
<PAGE>
This Loan Modification Agreement is executed as a sealed instrument under
the laws of the Commonwealth of Massachusetts as of the date first written
above.
BORROWER: BANK:
ROVING SOFTWARE INCORPORATED SILICON VALLEY BANK
By: /s/ Marcus Green By: /s/ Michael J. Fell
--------------------------------- ------------------------------------
Name: Marcus Green Name: Michael J. Fell
Title: Controller Title: Relationship Manager
<PAGE>
EXHIBIT C
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: ROVING SOFTWARE INCORPORATED
The undersigned authorized officer of SOFTWARE INCORPORATED hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending ___________________ with all
required covenants except as noted below and (ii) all representations and
warranties of Borrower stated in the Agreement are true and correct in all
material respects as of the date hereof. Attached herewith are the required
documents supporting the certification. The Officer further certifies that these
are prepared in accordance with Generally Accepted Accounting Principles (GAAP)
and are consistently applied from one period to the next except as explained in
an accompanying letter or footnotes. The Officer expressly acknowledges that no
borrowings may be requested by the Borrower at any time or date of determination
that Borrower is not in compliance with any of the terms of the Agreement, and
that such compliance is determined not just at the date this certificate is
delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ ---------------------- ---------
Monthly financial statements with CC Monthly within 25 days Yes No
Annual (CPA Audited) FYE within 150 days Yes No
Board Approved Operating Plan FYE within 45 days Yes No
The following Intellectual Property was registered after the Closing Date (if
blank, read "None")
________________________________________________________________________________
________________________________________________________________________________
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- -------- ---------
To be maintained at all times:
Net Revenue (tested quarterly) _______* _________ Yes No
Debt Service Ratio (tested monthly) 1.25:10 _____:1.0 Yes No
* As set forth in Section 6.7(a) of the Loan and Security Agreement
** only in effect if Borrower's unrestricted cash falls below $1,300,000.
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY
Sincerely, RECEIVED BY: _____________
DATE: ____________________
REVIEWED BY: _____________
Date: COMPLIANCE STATUS: YES/NO
---------------------------- -------------
SIGNATURE
----------------------------
TITLE
<PAGE>
SIXTH LOAN MODIFICATION AGREEMENT
This Sixth Loan Modification Agreement (this "Loan Modification
Agreement") is entered into as of March 20, 2007, by and between SILICON VALLEY
BANK, a California-chartered bank, with its principal place of business at 3003
Tasman Drive, Santa Clara, California 95054 and with a loan production office
located at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton,
Massachusetts 02462 ("Bank") and CONSTANT CONTACT, INC., f/k/a ROVING SOFTWARE
INCORPORATED, a Delaware corporation with its chief executive office located at
1601 Trapelo Road, Suite 246, Waltham, Massachusetts 02451 ("Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of February 27, 2003,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of February 27, 2003, as amended by a certain First Loan Modification
Agreement dated August 4, 2003, as further amended by a certain Second Loan
Modification Agreement dated February 10, 2004, as further amended by a Third
Loan Modification Agreement dated August 12, 2004, as amended by a Fourth Loan
Modification Agreement dated March 11, 2005, and as further amended by a Fifth
Loan Modification Agreement dated September 19, 2005 (as amended, the "Loan
Agreement"). Capitalized terms used but not otherwise defined herein shall have
the same meaning as in the Loan Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement (together with any other
collateral security granted to Bank, the "Security Documents").
Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the "Existing
Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
1. The Loan Agreement shall be amended by adding the following
new Section appearing after Section 2.1.5 thereof:
"2.1.6 2007 EQUIPMENT LINE.
(a) Availability. Subject to the terms and conditions of
this Agreement, during the Draw Period, Bank agrees to lend to
Borrower, from time to time as further described herein,
advances (each, an "2007 Equipment Advance" and, collectively,
"2007 Equipment Advances") in an aggregate amount not to
exceed the 2007 Equipment Line. 2007 Equipment Advances may
only be used to finance Eligible Equipment purchased on or
after 90 days (determined based upon the applicable invoice
date of such Eligible Equipment) before the date of each 2007
Equipment Advance and no 2007 Equipment Advances may exceed
100% of the total invoice for Eligible Equipment, excluding
taxes, shipping, warranty charges, freight discounts and
installation expense relating to such Eligible Equipment.
Notwithstanding the foregoing, the initial 2007 Equipment
Advance under this Section 2.1.6 (the "Initial 2007 Equipment
Advance") may be used to reimburse Borrower for Eligible
Equipment purchased on or after July 1, 2006. Unless otherwise
agreed to by Bank, not more than 30% of the proceeds of the
2007 Equipment Line shall be used to finance Other Equipment.
Borrower may only request a total of six (6) 2007 Equipment
Advances (including the Initial Equipment Advance) hereunder.
After repayment, no 2007 Equipment Advance may be reborrowed.
<PAGE>
(b) Interest Rate; Interest Payment. Interest accrues
from the date of each 2007 Equipment Advance at the rate in
Section 2.2(a)(ii) and is payable monthly on the first
Business Day of each month.
(c) Principal Repayment. In addition to the monthly
payments of interest, as set forth in Section 2.2(a)(ii)
below, the principal amount of each 2007 Equipment Advance is
payable in thirty-six (36) consecutive equal monthly
installments (with the exception of the Initial 2007 Equipment
Advance which is payable in thirty (30) consecutive equal
monthly installments) of principal beginning on the first
Business Day of the month following such 2007 Equipment
Advance and shall continue on the first Business Day of each
month thereafter.
(d) Advance Requests. To obtain a 2007 Equipment
Advance, Borrower must notify Bank (the notice is irrevocable)
by facsimile no later than 3:00 p.m. Eastern time one (1)
Business Day before the day on which the 2007 Equipment
Advance is to be made. The notice in the form of EXHIBIT B
(Payment/Advance Form) must be signed by a Responsible Officer
or designee and include a copy of the invoice for the Eligible
Equipment being financed."
2. The Loan Agreement shall be amended by deleting the following
text appearing in Section 2.2(a) thereof:
" (ii) The principal amounts outstanding under the
2004 Equipment Line, the 2004 Equipment Line No. 2, the
2005 Equipment Line and the 2005 Equipment Line No. 2
shall accrue interest at a per annum rate equal to the
aggregate of the Prime Rate, plus two percent (2.0%);
provided, however, such rate shall reduce to a per annum
rate equal to the aggregate of the Prime Rate, plus one
and one-half percent (1.50%) after the occurrence of the
Profitability Event, to be effective ten (10) Business
Days after Borrower has provided to Bank satisfactory
evidence of same for such period. In addition to the
foregoing, if at any time Borrower is unable to provide
Bank with satisfactory evidence that the Profitability
Event has occurred for a period of three (3) consecutive
months, the rate shall increase to a per annum rate
equal to the aggregate of the Prime Rate, plus two
percent (2.0%)."
and inserting in lieu thereof the following:
" (ii) The principal amounts outstanding under the
2004 Equipment Line, the 2004 Equipment Line No. 2, the
2005 Equipment Line, the 2005 Equipment Line No. 2, and
the 2007 Equipment Line shall accrue interest at a per
annum rate equal to the aggregate of the Prime Rate,
plus two percent (2.0%); provided, however, such rate
shall reduce to a per annum rate equal to the aggregate
of the Prime Rate, plus one and one-half percent (1.50%)
after the occurrence of the Profitability Event, to be
effective ten (10) Business Days after Borrower has
provided to Bank satisfactory evidence of same for such
period. In addition to the foregoing, if at any time
Borrower is unable to provide Bank with satisfactory
evidence that the Profitability Event has occurred for a
<PAGE>
period of three (3) consecutive months, the rate shall
increase to a per annum rate equal to the aggregate of
the Prime Rate, plus two percent (2.0%)."
3. The Loan Agreement shall be amended by deleting the following
text appearing as the second paragraph of Section 4.1 thereof:
" Except as noted on the Perfection Certificate, Borrower is
not a party to, nor is bound by, any license or other
agreement with respect to which the Borrower is the licensee
that prohibits or otherwise restricts Borrower from granting a
security interest in Borrower's interest in such license or
agreement or any other property. Without prior consent from
Bank, Borrower shall not enter into, or become bound by, any
such license or agreement which is reasonably likely to have a
material impact on Borrower's business or financial condition.
Borrower shall take such steps as Bank requests to obtain the
consent of, or waiver by, any person whose consent or waiver
is necessary for all such licenses or contract rights to be
deemed "Collateral" and for Bank to have a security interest
in it that might otherwise be restricted or prohibited by law
or by the terms of any such license or agreement, whether now
existing or entered into in the future."
and inserting in lieu thereof:
"Except as noted on the Perfection Certificate, Borrower is
not a party to, nor is bound by, any material license or other
agreement with respect to which Borrower is the licensee that
prohibits or otherwise restricts Borrower from granting a
security interest in Borrower's interest in such license or
agreement or any other property (other than over- the-counter
software that is commercially available to the public).
Borrower shall provide written notice to Bank within ten (10)
days of entering or becoming bound by any such license or
agreement which is reasonably likely to have a material impact
on Borrower's business or financial condition (other than
over-the-counter software that is commercially available to
the public). Borrower shall take such steps as Bank requests
to obtain the consent of, or waiver by, any person whose
consent or waiver is necessary for all such licenses or
contract rights to be deemed "Collateral" and for Bank to have
a security interest in it that might otherwise be restricted
or prohibited by law or by the terms of any such license or
agreement (such consent or authorization may include a
licensor's agreement to a contingent assignment of the license
to Bank if Bank determines that is necessary in its good faith
judgment), whether now existing or entered into in the
future."
4. The Loan Agreement shall be amended by deleting the following
provision appear as Section 5.3 thereof:
"5.3 LITIGATION. Except as shown in the Perfection
Certificate, there are no actions or proceedings pending or,
to the knowledge of Borrower's Responsible Officers or legal
counsel, threatened by or against Borrower or any Subsidiary
in which an adverse decision could reasonably be expected to
cause a Material Adverse Change."
<PAGE>
and inserting in lieu thereof the following:
"5.3 LITIGATION. Except as shown on the Perfection
Certificate, there are no actions or proceedings pending or,
to the knowledge of the Responsible Officers, threatened in
writing against Borrower or any of its Subsidiaries that would
reasonably be expected to result in costs or damages to
Borrower or its Subsidiaries in excess of Two Hundred Fifty
Thousand Dollars ($250,000)."
5. The Loan Agreement shall be amended by deleting the following
appearing as Section 6.2 thereof:
"6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower shall deliver to Bank: (i) as soon as
available, but no later than twenty-five (25) days after the
last day of each month, a company prepared consolidated
balance sheet and income statement covering Borrower's
consolidated operations during the period certified by a
Responsible Officer and in a form acceptable to Bank; (ii) as
soon as available, but no later than one hundred and fifty
(150) days after the last day of Borrower's fiscal year
(except for Borrower's fiscal years ending December 31, 2001
and December 31, 2002, which audited consolidated financial
statements shall be due July 31, 2003), audited consolidated
financial statements prepared under GAAP, consistently
applied, together with an unqualified opinion on the financial
statements from an independent certified public accounting
firm reasonably acceptable to Bank; (iii) in the event that
the Borrower's stock becomes publicly held, within five (5)
days of filing, copies of all statements, reports and notices
made available to Borrower's security holders or to any
holders of Subordinated Debt and all reports on Form 10-K, 10-
Q and 8-K filed with the Securities and Exchange Commission;
(iv) a prompt report of any legal actions pending or
threatened in writing against Borrower or any Subsidiary that
would reasonably be expected to result in damages or costs to
Borrower or any Subsidiary of One Hundred Thousand Dollars
($100,000.00) or more; (v) as soon as available, but not later
than forty-five (45) days after the last of Borrower's fiscal
year, Board approved Operating Plan (expressed on a monthly
and quarterly basis); (vi) prompt notice of any material
change in the composition of the Intellectual Property, or the
registration of any copyright, including any subsequent
ownership right of Borrower in or to any Copyright, Patent or
Trademark not shown in any intellectual property security
agreement between Borrower and Bank or knowledge of an event
that materially adversely affects the value of the
Intellectual Property; and (vii) other financial information
reasonably requested by Bank.
(b) Borrower shall deliver to Bank with the monthly and
annual financial statements a Compliance Certificate signed by
a Responsible Officer in the form of Exhibit C."
and inserting in lieu thereof the following:
"6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower shall deliver to Bank: (i) as soon as
available, but no later than thirty (30) days after the last
day of each month, a company prepared consolidated balance
sheet and income statement covering Borrower's consolidated
operations during the period certified by a Responsible
Officer and in a form acceptable to Bank; (ii) as soon as
available, but no later than one hundred eighty (180) days
after the last day of Borrower's fiscal year, audited
consolidated financial statements prepared under GAAP,
consistently applied, together with an unqualified opinion on
the financial statements
<PAGE>
from an independent certified public accounting firm
reasonably acceptable to Bank; (iii) in the event that the
Borrower's stock becomes publicly held, within five (5) days
of filing, copies of all statements, reports and notices made
available to Borrower's security holders or to any holders of
Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K
filed with the Securities and Exchange Commission; (iv) a
prompt report of any legal actions pending or threatened
against Borrower or any Subsidiary that could result in
damages or costs to Borrower or any Subsidiary of Two Hundred
Fifty Thousand Dollars ($250,000.00) or more; (v) as soon as
available, but not later than ten (10) days after the last of
Borrower's fiscal year, Board approved Operating Plan
(expressed on a monthly and quarterly basis); (vi) prompt
notice of any material change in the composition of the
Intellectual Property, or the registration of any copyright,
including any subsequent ownership right of Borrower in or to
any Copyright, Patent or Trademark not shown in any
intellectual property security agreement between Borrower and
Bank or knowledge of an event that materially adversely
affects the value of the Intellectual Property; and (vii)
other financial information reasonably requested by Bank.
(b) Borrower shall deliver to Bank with the monthly
financial statements a Compliance Certificate signed by a
Responsible Officer in the form of Exhibit C."
6. The Loan Agreement shall be amended by deleting the following
appearing as Section 6.7 thereof:
"6.7 FINANCIAL COVENANTS. Borrower shall maintain at all
times, to be tested as of the last day of each month
(unless otherwise noted):
(a) NET REVENUE. Consolidated net revenue of at least
(i) $[**] for the fiscal quarter ending September 30,
2005, (ii) $[**] for the fiscal quarter ending December
31, 2005, (iii) $[**] for the fiscal quarter ending
March 31, 2006, (iv) $[**] for the fiscal quarter ending
June 30, 2006, (v) $[**] for the fiscal quarter ending
September 30, 2006, (vi) $[**] for the fiscal quarter
ending December 31, 2006, and (vii) the greater of (A)
$[**], and (B) [**] percent ([**]%) of Borrower's
Board-approved operating plan, for the fiscal quarter
ending March 31, 2007 and as of the last day of each
fiscal quarter thereafter.
(b) DEBT SERVICE RATIO. In the event that the amount of
Borrower's unrestricted cash maintained at Bank is less
than $1,300,000.00, a ratio of (i) net income plus
interest, depreciation, and amortization, minus unfunded
capital expenditures, and minus cash taxes paid,
calculated based on the three (3) month period ending as
of the date tested, to (ii) principal and interest
expense with respect to the Obligations, calculated
based on the three (3) month period ending as of the
date tested, of greater than 1.25 to 1.0."
and inserting in lieu thereof the following:
"6.7 FINANCIAL COVENANTS. Borrower shall maintain at all
times, to be tested as of the last day of each month
(unless otherwise noted):
(a) MINIMUM REVENUE. Minimum Net Revenue as set forth on
Exhibit D.
(b) TOTAL FUNDED DEBT RATIO. Borrower shall maintain at
all times, a ratio of Total Funded Debt to Liquid Assets
of not more than 0.85 to 1.0."
<PAGE>
7. The Loan Agreement shall be amended by deleting the following
text appearing in Section 7.2 thereof:
"or management."
and inserting in lieu thereof the following:
" or if the Key Person ceases to hold such office with
Borrower and a replacement reasonably satisfactory to
Bank is not made within one hundred twenty (120) days
thereafter"
8. The Loan Agreement shall be amended by deleting the following
definitions appearing in Section 13.1 thereof:
""EQUIPMENT ADVANCE" or "EQUIPMENT ADVANCES" shall mean
any advance made hereunder pursuant to Section 2.1.1,
Section 2.1.2, Section 2.1.3, Section 2.1.4, or Section
2.1.5 hereof."
""OTHER EQUIPMENT" is intangible property such as
computer software and software licenses, equipment
specifically designed or manufactured for Borrower,
other intangible property, limited use property and
other similar property and soft costs approved by the
Bank, including sales tax, freight and installation
expenses. Unless otherwise agreed to by Bank, not more
than twenty-five percent (25%) of the proceeds of the
2003 Equipment Line, twenty-five percent (25%) of the
proceeds of the 2004 Equipment Line, twenty-five percent
(25%) of the proceeds of the 2004 Equipment Line No. 2,
twenty-five percent (25%) of the proceeds of the 2005
Equipment Line, or twenty-five percent (25%) of the
proceeds of the 2005 Equipment Line No. 2 shall be used
to finance Other Equipment."
and inserting in lieu thereof the following:
""EQUIPMENT ADVANCE" or "EQUIPMENT ADVANCES" shall mean
any advance made hereunder pursuant to Section 2.1.1,
Section 2.1.2, Section 2.1.3, Section 2.1.4, Section
2.1.5, or Section 2.1.6 hereof."
""OTHER EQUIPMENT" is intangible property such as
computer software and software licenses, equipment
specifically designed or manufactured for Borrower,
other intangible property, limited use property and
other similar property and soft costs approved by the
Bank, including sales tax, freight and installation
expenses. Unless otherwise agreed to by Bank, not more
than twenty-five percent (25%) of the proceeds of the
2003 Equipment Line, twenty-five percent (25%) of the
proceeds of the 2004 Equipment Line, twenty-five percent
(25%) of the proceeds of the 2004 Equipment Line No. 2,
twenty-five percent (25%) of the proceeds of the 2005
Equipment Line, twenty-five percent (25%) of the
proceeds of the 2005 Equipment Line No. 2, or thirty
percent (30%) of the proceeds of the 2007 Equipment Line
shall be used to finance Other Equipment."
9. The Loan Agreement shall be amended by adding the following
definitions to appear alphabetically in Section 13.1 thereof:
<PAGE>
""2007 CLOSING DATE" is March 20, 2007."
""2007 EQUIPMENT ADVANCE" or "2007 EQUIPMENT ADVANCES"
is defined in Section 2.1.6(a)."
""2007 EQUIPMENT LINE" is a 2007 Equipment Advance or
2007 Equipment Advances of up to Five Million Dollars
($5,000,000.00)."
""DRAW PERIOD" is the period of time from the 2007
Closing Date through the earliest to occur of (a)
December 31, 2007, or (b) an Event of Default."
""INITIAL 2007 EQUIPMENT ADVANCE" is defined in Section
2.1.6(a)."
""KEY PERSON" is Borrower's Chief Executive Officer,
who, as of the 2007 Closing Date, is Gail Goodman."
""LIQUID ASSETS" shall mean all unrestricted and
unencumbered cash, and marketable securities maintained
at Bank or SVB Securities in Borrower's name and not
pledged to any other Person."
""NET REVENUE" means net revenue consistent with
Borrower's current practice as reported by Borrower to
Bank and consistent with the manner of preparation of
the budgeted revenue that Borrower provided to Bank
prior to March 20, 2007."
""TOTAL FUNDED DEBT" is the aggregate amount of all
outstanding principal, interest, fees and other
liabilities or costs arising out of any indebtedness of
Borrower for borrowed money."
10. The Compliance Certificate appearing as EXHIBIT C to the Loan
Agreement is hereby replaced with the Compliance Certificate
attached as EXHIBIT A hereto.
11. EXHIBIT B attached hereto shall hereby be attached to the Loan
Agreement as EXHIBIT D thereto.
4. FEES. Borrower shall pay to Bank a modification fee of Twenty-Five Thousand
Dollars ($25,000.00), which fee shall be due on the date hereof and shall be
deemed fully earned as of the date hereof. Borrower shall also reimburse Bank
for all reasonable legal fees and expenses incurred in connection with this
amendment to the Existing Loan Documents.
5. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
6. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.
7. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses, claims, or counterclaims against Bank, whether
known or unknown, at law or in equity, all of them are hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.
<PAGE>
8. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank's agreement to modifications to the existing Obligations pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Obligations. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Obligations. It is the intention of Bank
and Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this Loan Modification Agreement.
9. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank.
[The remainder of this page is intentionally left blank]
<PAGE>
This Loan Modification Agreement is executed as a sealed instrument under
the laws of the Commonwealth of Massachusetts as of the date first written
above.
BORROWER: BANK:
CONSTANT CONTACT, INC. SILICON VALLEY BANK
By: /s/ Steven R. Wasserman By: /s/ Naomi B. Herman
--------------------------- ---------------------------
Name: Steven R. Wasserman Name: Naomi B. Herman
------------------------- -------------------------
Title: VP & CFO & Treasurer Title: Vice President
------------------------ ------------------------
<PAGE>
EXHIBIT A
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: CONSTANT CONTACT, INC.
The undersigned authorized officer of CONSTANT CONTACT, INC. hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending ________________ with all required
covenants except as noted below and (ii) all representations and warranties of
Borrower stated in the Agreement are true and correct in all material respects
as of the date hereof. Attached herewith are the required documents supporting
the certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The Officer expressly acknowledges that no
borrowings may be requested by the Borrower at any time or date of determination
that Borrower is not in compliance with any of the terms of the Agreement, and
that such compliance is determined not just at the date this certificate is
delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES"
COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Monthly financial statements with CC Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 180 days Yes No
Board Approved Operating Plan FYE within 10 days Yes No
The following Intellectual Property was registered after the Closing
Date (if blank, read "None")
____________________________________________________________________
____________________________________________________________________
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
To be maintained at all
times, tested monthly:
Minimum Revenue $_____________* _____:1.0 Yes No
Total Funded Debt Ratio < or = 0.85:1.0 _____:1.0 Yes No
* As set forth in Section 6.7(a) of the Agreement.
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY
Sincerely, RECEIVED BY:___________________
_______________________ Date:__________ DATE:____________________
SIGNATURE REVIEWED BY:___________________
_______________________ COMPLIANCE STATUS: YES / NO
TITLE
<PAGE>
EXHIBIT B
MINIMUM REVENUE
Borrower shall maintain at all times, to be tested as of the last day of each
month, Net Revenue equal to or greater than: (i) [**] Dollars ($[**]) as of the
month ending January 31, 2007, (ii) [**] Dollars ($[**]) as of the month ending
February 28, 2007, (iii) [**] Dollars ($[**]) as of the month ending March 31,
2007, (iv) [**] Dollars ($[**]) as of the month ending April 30, 2007, (v) [**]
Dollars ($[**]) as of the month ending May 31, 2007, (vi) [**] Dollars ($[**])
as of the month ending June 30, 2007, (vii) [**] Dollars ($[**]) as of the month
ending July 31, 2007, (viii) [**] Dollars ($[**]) as of the month ending August
31, 2007, (ix) [**] Dollars ($[**]) as of the month ending September 30, 2007,
(x) [**] Dollars ($[**]) as of the month ending October 31, 2007, (xi) [**]
Dollars ($[**]) as of the month ending November 30, 2007, (xii) [**] Dollars
($[**]) as of the month ending December 31, 2007, and as of the last day of each
month thereafter.
<PAGE>
[Silicon Valley Bank Letterhead]
June 13, 2007
Mr. Steven Wasserman
Chief Financial Officer
Constant Contact, Inc.
1601 Trapelo Road
Waltham, MA 02451
Dear Steve:
This letter is written in connection with that certain Loan and Security
Agreement between Silicon Valley Bank ("Bank") and Constant Contact, Inc.
("Borrower") dated February 27, 2003 and related loan documents (as amended from
time to time, collectively, the "Loan Agreement").
DESCRIPTION OF CHANGE IN TERMS.
Modification to Loan Agreement
Section 6.2(a)(ii) of the Loan Agreement is hereby amended by deleting
the following text appearing therein:
as soon as available, but no later than one hundred eighty (180) days
after the last day of Borrower's fiscal year, audited consolidated
financial statements prepared under GAAP, consistently applied,
together with an unqualified opinion on the financial statements from
an independent certified public accounting firm reasonably acceptable
to Bank;
And substituting the following text therefore:
as soon as available, but no later than two hundred seventy (270) days
after the last day of Borrower's fiscal year, audited consolidated
financial statements prepared under GAAP, consistently applied,
together with an unqualified opinion on the financial statements from
an independent certified public accounting firm reasonably acceptable
to Bank;
By signing below and returning a copy of this letter to Bank, Borrower
acknowledges that the Loan Agreement is hereby modified in accordance with the
provisions set forth above. Borrower further understands and agrees that in
modifying the Loan Agreement, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Loan Agreement. Except as
expressly modified pursuant to this letter, the terms of the Loan Agreement
remain unchanged and in full force and effect. Bank's agreement to modify the
Loan Agreement in accordance with the provisions set forth in this letter in no
way shall obligate Bank to make any future waivers or modifications to the Loan
Agreement. Nothing in this letter shall constitute a satisfaction of the
Borrower's indebtedness to Bank. It is the intention of Bank and Borrower to
retain as liable parties all makers and endorsers of the Loan Agreement, unless
the party is expressly released by in writing. No maker or endorser will be
released by virtue of this letter.
<PAGE>
The terms of this paragraph apply not only to this letter, but also to all
subsequent loan modification agreements.
The provisions of this letter shall not be deemed effective until such time as
Borrower shall have returned a countersigned copy to Bank.
Very truly yours,
/s/ Naomi B. Herman
-------------------------
Naomi B. Herman
Vice President
Silicon Valley Bank
By executing below, the undersigned acknowledges and confirms the effectiveness
of this letter.
Constant Contact, Inc.
By: /s/ Steven R. Wasserman
---------------------------------
Title: Steven R. Wasserman VP & CFO
------------------------------
Dated: 6/14/07
------------------------------