Loan Agreement - Portal Software Inc. and Imperial Bank
LOAN AGREEMENT
This Loan Agreement is entered into as of April 15, 1999 (this "Loan
Agreement") between Portal Software, Inc., a California corporation (herein
called "Borrower"), and Imperial Bank (herein called "Bank").
1. Definitions. As used in this Loan Agreement and unless otherwise
defined herein, all initially capitalized terms shall have the meanings set
forth on Exhibit A attached hereto and incorporated herein by this reference.
2. Commitment.
A. Revolving Commitment. Subject to all the terms and conditions of
this Loan Agreement and prior to the termination of its commitment as
hereinafter provided, Bank hereby agrees to make loans (each a "Revolving Loan")
to Borrower, from time to time and in such amounts as Borrower shall request
pursuant to this Section 2.A., up to an aggregate principal amount outstanding
under the Revolving Loan Account not to exceed the lesser of: (a) eighty percent
(80.0%) of Eligible Accounts (as the same may be adjusted from time to time as
provided for under Section 9.B. hereof, the "Borrowing Base") or (b)
$5,000,000.00 (the "Revolving Commitment"). If at any time or for any reason,
the outstanding principal amount of the Revolving Loan Account is greater than
the lesser of: (x) the Borrowing Base or (y) the Revolving Commitment, Borrower
shall immediately pay to Bank, in cash, the amount of such excess. Any
commitment of Bank, pursuant to the terms of this Loan Agreement, to make
Revolving Loans shall expire on the Revolving Maturity Date, subject to Bank's
right to renew said commitment in its sole and absolute discretion at Borrower's
request. Any such renewal of the Revolving Commitment shall not be binding upon
Bank unless it is in writing and signed by an officer of Bank. The outstanding
principal balance of the Revolving Loan Account may be prepaid in whole or in
part at any time without penalty. Provided that no Event of Default has occurred
and is continuing, all or any portion of the Revolving Loans advanced by Bank
which are repaid by Borrower shall be available for reborrowing in accordance
with the terms hereof. Borrower promises to pay to Bank the entire outstanding
unpaid principal balance (and all accrued unpaid interest thereon) of the
Revolving Loan Account on or before April 13, 2000 ("Revolving Maturity Date").
(1) Revolving Loans. The amount of each Revolving Loan made by Bank
to Borrower hereunder shall be debited to the loan ledger account of Borrower
maintained by Bank for the Revolving Commitment (herein called the "Revolving
Loan Account") and Bank shall credit the Revolving Loan Account with all loan
repayments in respect thereof made by Borrower. When Borrower desires to obtain
a Revolving Loan, Borrower shall notify Bank (which notice shall be signed by an
officer of Borrower and shall be irrevocable) in accordance with Section 3
hereof, to be received no later than 3:00 p.m. Pacific time one (1) Banking Day
before the day on which the Revolving Loan is to be made. Revolving Loans may
only be used for working capital purposes.
(a) Lighthouse Capital Advance. Subject to the availability of
the Revolving Commitment and in reliance on the representations and warranties
of Borrower set forth herein, in order to repay all existing loans and related
indebtedness ("Lighthouse Loans") owed by Borrower to Lighthouse Capital
Partners L.P. ("Lighthouse Capital"), Bank hereby agrees to make one Revolving
Loan to Borrower in an aggregate principal amount not to exceed $3,000,000.00
(the "Lighthouse Capital Advance"); provided, however, that the amount of the
Lighthouse Capital Advance shall be deemed to constitute a Revolving Loan for
the purpose of calculating the availability under the Revolving Commitment.
(b) Limitations on Advance of any Revolving Loan.
Notwithstanding any of the foregoing provisions contained in this Section 2.A.
prior to any advance of a Revolving Loan, except for
1.
<PAGE>
the initial advance of a Revolving Loan to repay the Lighthouse Capital Loans,
Bank shall have received satisfactory evidence of Lighthouse Capital's release
of all existing liens against the Collateral (including the termination of any
financing statements filed by Lighthouse Capital) to ensure Bank's first
priority lien in the Collateral.
(2) Interest Payments on Revolving Loans. Borrower further promises
to pay to Bank from the date of the advance of the initial Revolving Loan
(including the Lighthouse Capital Advance) through the Revolving Maturity Date,
on or before the tenth (10th) day of each month, interest on the average daily
unpaid balance of the Revolving Loan Account during the immediately preceding
month at a rate of interest equal to one-half of one percent (0.50%) per annum
in excess of the rate of interest which Bank has announced as its prime lending
rate (the "Prime Rate"), which shall vary concurrently with any change in the
Prime Rate. Interest shall be computed at the above rate on the basis of the
actual number of days during which the principal balance of the Revolving Loan
Account is outstanding divided by 360, which shall for interest computation
purposes be considered one (1) year.
(3) Limitation on Advance of any Revolving Loan. Notwithstanding
any of the provisions contained in Section 2.A.(1) hereof, prior to any advance
of a Revolving Loan (excluding the Lighthouse Capital Advance), a representative
of Bank shall have conducted an audit of Borrower's books and records relating
to the Collateral and made extracts therefrom, and arranged for verification of
the Accounts, directly with the account debtors or otherwise, all with results
satisfactory to Bank, the cost of such audit of which shall be at Borrower's
sole expense. Based on Bank's review of such audit, and prior to the advance of
a Revolving Loan in accordance with the terms of this Section 2.A.(3) hereof,
Bank may adjust the Borrowing Base percentage, in its sole and reasonable
discretion, as provided for under Section 9.B. hereof.
3. Loan Requests. Requests for Revolving Loans hereunder shall be in
writing duly executed by Borrower in a form satisfactory to Bank and shall
contain a certification setting forth the matters referred to in Section 2,
which shall disclose that Borrower is entitled to the amount and type of Loan
being requested. Bank is hereby authorized to charge Borrower's deposit account
with Bank for all sums due Bank under this Loan Agreement.
4. Delivery of Payments. Payment to Bank of all amounts due hereunder
shall be made at its Santa Clara Valley Regional office, or at such other place
as may be designated in writing by Bank from time to time. If any payment date
fall on a day that is not a day that Bank is open for the transaction of
business ("Banking Day"), the payment due date shall be extended to the next
Banking Day.
5. Late Charge. If any interest payment, principal payment or principal
balance payment required hereunder is not received by Bank on or before ten (10)
days from the date in which such payment becomes due, Borrower shall pay to
Bank, a late charge equal to the lesser of (a) five percent (5.0%) of the amount
of such unpaid payment, in addition to said unpaid payment or (b) the maximum
amount permitted to be charged by applicable law, until remitted to Bank;
provided; however, nothing contained in this Section 5, shall be construed as
any obligation on the part of Bank to accept payment of any past due payment or
less than the total unpaid principal balance of the Revolving Loan Account
following the Revolving Maturity Date. All payments shall be applied first to
any late charges due hereunder, next to accrued interest then payable and the
remainder, if any, to reduce any unpaid principal due under the Revolving Loan
Account.
6. Default Interest. From and after the Revolving Maturity Date, or such
earlier date as all sums owing under the Revolving Loan Account becomes due and
payable by acceleration or otherwise, or upon the occurrence of an Event of
Default, at the option of Bank all sums owing under the Revolving Loan Account
shall bear interest until paid in full at a rate equal to the lesser of (a) five
percent (5.0%) per annum in excess of the then applicable interest rate provided
for in Section 2.A.(2) hereof or (b) the maximum amount permitted to be
2.
<PAGE>
charged by applicable law, until all obligations hereunder are repaid in full or
the Event of Default is waived or cured to the satisfaction of Bank, as
applicable.
7. Representations and Warranties. Borrower represents and warrants to
Bank: (a) That Borrower is a corporation, duly organized and existing in the
State of its incorporation and the execution, delivery and performance of each
of the Loan Documents are within Borrower's corporate powers, have been duly
authorized and are not in conflict with law or the terms of any charter, by-law
or other incorporation papers, or of any indenture, agreement or undertaking to
which Borrower is a party or by which Borrower is bound or affected; (b)
Borrower is, and at the time the Collateral becomes subject to Bank's security
interest will be, the true and lawful owner of and has, and at the time the
Collateral becomes subject to Bank's security interest will have, good and clear
title to the Collateral, subject only to Bank's rights therein and to Permitted
Liens; (c) Each Account is, and at the time the Account comes into existence
will be, a true and correct statement of a bona fide indebtedness incurred by
the debtor named therein in the amount of the Account for either merchandise
sold or delivered (or being held subject to Borrower's delivery instructions)
to, or services rendered, performed and accepted by, the account debtor; (d)
That there are no defenses, counterclaims, or setoffs which may be asserted
against the Accounts from time to time represented by Borrower to be Eligible
Accounts, except as permitted in the definition thereof; (e) Any and all
financial information, including information relating to the Collateral,
submitted by Borrower to Bank, whether previously or in the future, is and will
be true and correct; (f) There is no litigation or other proceeding pending or
threatened against or affecting Borrower, and Borrower is not in default with
respect to any order, writ, injunction, decree or demand of any court or other
governmental or regulatory authority; (g) (i) The consolidated balance sheets of
Borrower dated as of January 31, 1999, and the related consolidated profit and
loss statements for the fiscal year then ended, copies of which have heretofore
been delivered to Bank by Borrower, and all other statements and data submitted
in writing by Borrower to Bank in connection with Borrower's request for credit
are true and correct, and said balance sheet and profit and loss statement
accurately present the financial condition of Borrower as of the date thereof
and the results of the operations of Borrower for the period covered thereby,
and have been prepared in accordance with GAAP, (ii) since such date, there have
been no material adverse changes in the financial condition of Borrower, and
(iii) Borrower has no knowledge of any liabilities, contingent or otherwise,
which are not reflected in said balance sheet, and Borrower has not entered into
any special commitments or substantial contracts which are not reflected in said
balance sheet, other than in the ordinary and normal course of its business,
which may have a Material Adverse Effect upon its financial condition,
operations or business as now conducted; (h) Borrower has no liability for any
delinquent local, state or federal taxes, except for taxes being contested in
good faith or reserved against in accordance with GAAP, and, if Borrower has
contracted with any government agency, it has no liability for renegotiation of
profits; and (i) Borrower, as of the date hereof, possesses all necessary
Trademarks, trade names, Copyrights, Patents, patent rights and licenses to
conduct its business as now operated, without any known conflict with valid
Trademarks, trade names, Copyrights, Patents, patent rights and license rights
of others; and (j) Borrower and its Subsidiaries have reviewed the areas within
their operations and business which could be adversely affected by, and have
developed or are developing a program to address on a timely basis, the Year
2000 Problem and have made related appropriate inquiry of material suppliers and
vendors, and based on such review and program, the Year 2000 Problem will not
have a Material Adverse Effect upon its financial condition, operations or
business as now conducted.
8. Negative Covenants. Borrower agrees that so long as any loans,
obligations or liabilities remain outstanding or unpaid to Bank or the
commitment of Bank hereunder is in effect, neither Borrower, nor any of its
subsidiaries ("Subsidiaries") will, without the prior written consent of Bank:
A. Make any substantial change in the character of its business as now
conducted;
B. Create, incur, assume or permit to exist any Indebtedness other
than loans from Bank except obligations now existing as shown in the financial
statements referenced in Section 7.(g)(i), excluding
3.
<PAGE>
those being refinanced by Bank, and except for Subordinated Debt and Permitted
Indebtedness; or sell or transfer, either with or without recourse, any accounts
or notes receivable or any monies due or to become due;
C. Create, incur, assume or permit to exist any mortgage, pledge,
encumbrance, lien or charge of any kind (including the charge upon property at
any time purchased or acquired under conditional sale or other title retention
agreement) upon any asset now owned or hereafter acquired by it, other than
Permitted Liens and liens in favor of Bank;
D. Sell, dispose of or grant a security interest in any of the
Collateral other than to Bank (other than the disposing of such Collateral in
the ordinary and normal course of its business or other assets which are
obsolete or otherwise considered surplus), or execute any financing statements
covering the Collateral in favor of any secured party or Person other than Bank
or in respect of Permitted Liens;
E. (1) Make any loans or advances to any Person or other entity other
than in the ordinary and normal course of its business, except for employee
loans in accordance with Borrower's and its Subsidiaries' usual and customary
practices; or (2) make any investment in the securities of any Person or other
entity other than the United States Government, except for investments in the
capital stock of its Subsidiaries; or (3) guarantee or otherwise become liable
upon the obligation of any Person or other entity, except (a) guaranties made in
accordance with Borrower's and its Subsidiaries' usual and customary practices,
(b) the guaranty obligations identified as Permitted Indebtedness, (c) by
endorsement of negotiable instruments for deposit or collection in the ordinary
and normal course of its business and (4) Permitted Indebtedness;
F. (1) Purchase or otherwise acquire all or substantially all of the
assets or business of any Person or other entity; or (2) liquidate, dissolve,
merge or consolidate, or commence any proceedings therefore; or (3) except in
the ordinary and normal course of its business, sell (including, without
limitation, the selling of any property or other asset accompanied by the
leasing back of the same) any assets including any fixed assets, any property,
or other assets necessary for the continuance of its business;
G. (1) Declare or pay any dividend or make any other distribution on
any of its capital stock now outstanding or hereafter issued; or (2) purchase,
redeem or retire any of such stock other than in dividends or distributions
payable in Borrower's or any such Subsidiary's capital stock, except for the
repurchase of Borrower's capital stock from officers, directors, employees or
consultants of Borrower upon termination of their employment with or rendering
of service to Borrower; and
H. Sell, transfer, assign, mortgage, pledge, license, lease, grant a
security interest in, or otherwise encumber any of its Intellectual Property,
other than licenses or leases of its Intellectually Property granted in the
ordinary and normal course of its business.
9. Affirmative Covenants. Borrower affirmatively covenants that so long as
any loans, obligations or liabilities remain outstanding or unpaid to Bank or
the commitment of Bank hereunder is in effect, it will:
A. Furnish Bank from time to time such financial statements and
information as Bank may reasonably request and inform Bank immediately upon the
occurrence of a material adverse change therein;
B. Notwithstanding the provisions contained in Section 2.A.(3) hereof,
permit representatives of Bank to conduct an audit of Borrower's books and
records relating to the Collateral and make extracts therefrom, with results
satisfactory to Bank, provided that Bank shall use its best efforts to not
interfere with the conduct of Borrower's business, and to the extent possible to
arrange for verification of the Accounts directly with the account debtors
obligated thereon or otherwise, all under reasonable procedures acceptable to
Bank and at Borrower's sole expense; provided further that, prior to an Event of
Default, Borrower shall not be responsible for the expense of more than two (2)
such audits in any fiscal year, the cost of each audit of which
4.
<PAGE>
shall not exceed $2,000.00. Borrower hereby acknowledges and agrees that upon
completion of any such audit, including any such audit conducted in accordance
with the provisions of Section 2.A.(3) hereof, Bank shall have the right to
adjust the Borrowing Base percentage, in its sole and reasonable discretion,
based on its review of the results of such Collateral audit;
C. Promptly notify Bank of any attachment or other legal process
levied against any of the Collateral and any information received by Borrower
relative to the Collateral, including the Accounts, the account debtors or other
Persons obligated in connection therewith, which may in any way materially and
adversely affect the value of the Collateral or the rights and remedies of Bank
in respect thereto;
D. Reimburse Bank upon demand for any and all legal costs, including
reasonable attorneys' fees, and other expenses incurred following the occurrence
of an Event of Default, in collecting any sums payable by Borrower under the
Revolving Loan Account or any other obligation secured hereby, enforcing any
term or provision of this Loan Agreement or otherwise or in the checking,
handling and collection of the Collateral and the preparation and enforcement of
any agreement relating thereto;
E. Notify Bank of each location and of each office of Borrower at
which records of Borrower relating to the Accounts are kept;
F. Provide, maintain and deliver to Bank policies insuring the
Collateral against loss or damage by such risks and in such amounts, forms and
companies as Bank may require (to the extent customarily maintained by
businesses similar to Borrower and similarly located) and with loss payable to
Bank, and, in the event Bank takes possession of the Collateral, the insurance
policy or policies and any unearned or returned premium thereon shall at the
option of Bank become the sole property of Bank, such policies and the proceeds
of any other insurance covering or in any way relating to the Collateral,
whether now in existence or hereafter obtained, being hereby assigned to Bank;
G. In the event the unpaid balance of the Revolving Loan Account shall
exceed the maximum amount of outstanding loans to which Borrower is entitled
under Section 2 hereof, as applicable, Borrower shall immediately pay to Bank
for credit to the Revolving Loan Account the amount of such excess;
H. Maintain and preserve all rights, franchises and other authority
adequate and necessary for the conduct of its business and maintain and preserve
its existence in the state of its incorporation and any other state(s) in which
Borrower conducts its business, except with respect to such other state(s),
where the failure to do so would not have a Material Adverse Effect;
I. Maintain public liability, property damage and workers compensation
insurance and insurance on all its insurable property against fire and other
hazards with responsible insurance carriers to the extent usually maintained by
similar businesses. Borrower shall provide evidence of property insurance in
amounts and types acceptable to Bank, and certificates naming Bank as a loss
payee;
J. Pay and discharge, before the same becomes delinquent and penalties
accrue thereon, all taxes, assessments and governmental charges upon or against
it or any of its properties, and any of its other liabilities (except for
Permitted Indebtedness and trade debt) at any time existing, except to the
extent and so long as: (1) the same are being contested in good faith and by
appropriate proceedings in such manner as not to cause any Material Adverse
Effect or the loss of any right of redemption from any sale thereunder; and (2)
it shall have set aside on its books reserves (segregated to the extent required
by GAAP);
K. Maintain a standard and modern system of accounting in accordance
with GAAP on a basis consistently maintained; upon reasonable notice, permit
Bank's representatives to have access to, and to
5.
<PAGE>
examine its properties, books and records at all reasonable times; provided that
Bank shall use its best efforts to not interfere with the conduct of Borrower's
business;
L. Maintain its properties, equipment and facilities in good order and
repair;
M. Maintain a minimum deposit balance of at least $500,000.00 in a
checking or money market account with Bank;
N. Prior to allowing any of Borrower's raw materials, work in process,
finished goods inventory and property, plant and equipment to be transported to
or be held at any contract manufacturer, warehouse or other location (other than
with bona fide distributors and retail accounts and carriers), Borrower shall
provide notice to Bank and Borrower shall have complied with such filing and
notice requirements as shall, in Bank's reasonable opinion, assure Borrower's
and Bank's priority in such property over creditors of such contract
manufacturer, warehouseman or operator of such other location, including,
without limitation, making filings under California Commercial Code (S)2326,
providing notice under California Commercial Code (S)9114 and making filings and
publications as required under California Civil Code (S)3440.1 and (S)3440.5 All
such filings, notices and publications shall be in form and substance reasonably
satisfactory to Bank; and
O. Borrower shall perform all acts reasonably necessary to ensure that
Borrower and any business in which Borrower holds a substantial interest become
Year 2000 Compliant in a timely manner. Such acts shall include, without
limitation, performing a comprehensive review and assessment of all of
Borrower's systems and adopting a detailed plan, with an itemized budget, for
the remediation, monitoring and testing of such systems. Borrower shall also
take reasonably necessary steps to ensure that it will not be materially
adversely affected as a result of any customer, supplier and vendor's failure to
become Year 2000 Compliant. If requested by Bank, Borrower shall within ten (10)
business days deliver a statement to Bank summarizing the Year 2000 exposure,
program or progress of Borrower or other evidence of Borrower's compliance with
the terms of this Section 9.O. certified by an officer of Borrower.
10. Financial Covenants and Information. All financial covenants and
financial information referenced herein shall be interpreted and prepared in
accordance with GAAP as used in the United States of America applied on a basis
consistent with previous years. Compliance with the financial covenants shall be
calculated and monitored on a monthly basis, except as shall be expressly stated
to the contrary. Borrower affirmatively covenants that so long as any loans,
obligations or liabilities remain outstanding or unpaid to Bank or any
commitment is outstanding hereunder, it will, on a consolidated basis:
A. At all times maintain a minimum Adjusted Quick Ratio of not less
than (1) 0.75:1.00 through July 31, 1999, (2) 1.00:1.00 through October 31, 1999
and (3) 1.25:1.00 thereafter. As used herein "Adjusted Quick Ratio" means the
sum of all unrestricted cash and cash equivalents plus Accounts divided by
current liabilities minus deferred revenue derived from maintenance service
contracts;
B. (1) Measured on a quarterly basis on the last day of each fiscal
quarter, have maximum quarterly losses (excluding Amortization of Deferred Stock
Compensation) not in excess of (a) $5,200,000.00 for the fiscal quarter ending
January 31, 1999, (b) $4,500,000.00 for the fiscal quarters ending April 30,
1999 and July 31, 1999, (c) $3,000,000.00 for the fiscal quarter ending October
31, 1999, and (d) $1,000,000 for the fiscal quarter ending January 31, 2000; and
(2) Beginning February 1, 2000, at all times maintain after-tax profitability.
As used herein, "Amortization of Deferred Stock Compensation" means any non-cash
charges related to "cheap stock" issues addressed and levied by the Securities
and Exchange Commission;
C. Measured on the last day of the fiscal year ending January 31,
2000, have a maximum annual loss not in excess of $12,000,000.00;
6.
<PAGE>
D. As soon as it is available, but not later than thirty (30) days
after and as of the end of each month, deliver to Bank an internally-prepared
financial statement consisting of a balance sheet and profit and loss statement,
in form satisfactory to Bank, and a Compliance Certificate in the form of
Exhibit B attached hereto and incorporated herein by this reference, certified
by an officer of Borrower;
E. As soon as it is available, but not later than ninety (90) days
after the end of Borrower's fiscal year, beginning with the fiscal year ending
January 31, 1999, deliver to Bank unqualified copies of Borrower's consolidated
financial statements together with changes in financial position audited by an
independent certified public accountant selected by Borrower but reasonably
acceptable to Bank;
F. So long as any amounts remain outstanding and unpaid under the
Revolving Loan Account, as soon as it is available, but not later than twenty
(20) days after and as of the end of each month, deliver to Bank, in such form
and detail as Bank may reasonably require, statements showing aging of the
Accounts and Borrower's accounts payable by invoice date, together with a
Borrowing Base Certificate in the form of Exhibit C attached hereto and
incorporated herein by this reference, certified by an officer of Borrower.
Notwithstanding the foregoing, if Borrower has not provided to Bank the
statements described immediately above for the most recent month then ended, as
a condition to any request for a Revolving Loan, Borrower shall have delivered
to Bank said statements as well as a Borrowing Base Certificate covering the
most recent month then ended at least twenty (20) days prior to the date of
Borrower's request for an advance for said Revolving Loan;
G. Upon the reasonable request of Bank, deliver to Bank current
budgets, sales projections, operating plans and other financial exhibits and
information in form and substance reasonably satisfactory to Bank; and
H. Upon any officer becoming aware, deliver immediately to Bank
written notice of any pending or threatened litigation claiming, or reasonably
likely to result in, damages against Borrower in an amount in excess of
$50,000.00.
11. Fees.
A. Loan Fee. Borrower has paid, and Bank hereby acknowledges receipt
of a loan fee in the amount of Twenty-Five Thousand Dollars ($25,000.00), with
respect to the Revolving Commitment.
B. Commitment Fee. Borrower shall pay to Bank a commitment fee equal
to one-quarter of one percent (0.25%) per annum of the average unused amount of
the Revolving Commitment, which fee shall be due quarterly, beginning with the
fiscal quarter ending April 30, 1999, and payable in arrears to Bank.
12. Default and Remedies. The occurrence of any one or more of the
following shall constitute an "Event of Default": (a) Default be made in the
payment of any obligation by Borrower under any Loan Document; (b) Except for
any failure to pay as described in clause (a) above, breach be made in any
warranty, statement, promise, term or condition, contained herein or in any
other Loan Document and the same shall not have been cured to the satisfaction
of Bank within fifteen (15) days after Borrower shall have become aware thereof,
whether by written notice from Bank, or otherwise, (except that no cure period
shall exist for breaches in respect of Borrower's obligations under Section 8,
Subsections 9.A., 9.B., 9.C., 9.F., 9.G., 9.H., 9.I. and 9.O., Subsections
10.A., 10.B., 10.C., 10.D., 10.E. and 10.F. of this Loan Agreement, and Sections
1 and 2 of the General Security Agreement); (c) Any statement, warranty or
representation made by Borrower proves false in any material respect at the time
made or deemed made; (d) Borrower defaults in the repayment of any principal of
or the payment of any interest on any indebtedness for borrowed money exceeding
in the aggregate principal amount $100,000.00 or breaches or violates any term
or provision of any promissory note, loan agreement, mortgage, indenture or
other evidence of such indebtedness pursuant to which amounts outstanding in the
aggregate exceed $100,000.00 if the effect of such breach is to permit the
acceleration of such indebtedness,
7.
<PAGE>
whether or not waived by the note holder or obligee, and such failure shall not
have been cured to Bank's satisfaction within fifteen (15) calendar days after
Borrower shall become aware thereof, whether by written notice from Bank or
otherwise, or there has in fact been an acceleration of such indebtedness; (e)
Borrower becomes insolvent or makes an assignment for the benefit of creditors;
(f) Any proceeding be commenced by Borrower under any bankruptcy,
reorganization, arrangement, readjustment of debt or moratorium law or statute
or, any such a proceeding is commenced against Borrower and is not dismissed or
stayed within thirty (30) days (provided that no Revolving Loans will be made
prior to the dismissal of such proceeding); (g) Any money judgment, writ of
attachment, garnishment, execution or other legal process be entered against
Borrower or issued against any material property of Borrower which is not fully
covered by insurance (subject to reasonable deductibles) and remains unvacated,
unbonded, unstayed or unpaid or undischarged for more than fifteen (15) days
(whether or not consecutive) or in any event later than five (5) days prior to
the date of any proposed sale thereunder, or if any assessment for taxes against
Borrower other than against any of its real property, is made by the Federal or
State government or any department thereof; or (h) Any change in Borrower's
financial condition, prospects or operations which has a Material Adverse
Effect. Upon the occurrence and during the continuance of an Event of Default,
Bank may, at its option and without demand first made and without notice to
Borrower, do any one or more of the following: (i) Terminate its obligation to
make loans to Borrower as provided in Section 2 hereof; (ii) Declare all sums
secured hereby immediately due and payable; (iii) Immediately take possession of
the Collateral wherever it may be found, using all legally permissible means to
do so, or require Borrower to assemble the Collateral and make it available to
Bank at a place designated by Bank which is reasonably convenient to Borrower
and Bank, and Borrower waives all claims for damages due to or arising from or
connected with any such taking; (iv) Proceed in the foreclosure of Bank's
security interest and sale of the Collateral in any manner permitted by law, or
provided for herein; (v) Sell, lease or otherwise dispose of the Collateral at
public or private sale, with or without having the Collateral at the place of
sale, and upon terms and in such manner as Bank may determine, and Bank may
purchase same at any such sale; (vi) Retain the Collateral in full satisfaction
of the obligations secured thereby to the extent permitted under the Uniform
Commercial Code; or (vii) Exercise any remedies of a secured party under the
Uniform Commercial Code. Prior to any such disposition, Bank may, at its option,
cause any of the Collateral to be repaired or reconditioned in such manner and
to such extent as Bank may deem advisable, and any sums expended therefor by
Bank shall be repaid by Borrower and secured hereby. Bank shall have the right
to enforce one or more remedies hereunder successively or concurrently, and any
such action shall not stop or prevent Bank from pursuing any further remedy
that it may have hereunder or by law. If a sufficient sum is not realized from
any such disposition of the Collateral to pay all obligations secured by this
Loan Agreement, Borrower hereby promises and agrees to pay Bank any deficiency.
13. Records Retention. Borrower authorizes Bank to destroy all invoices,
delivery receipts, reports and other types of documents and records submitted to
Bank in connection with the transactions contemplated herein at any time
subsequent to four (4) months from the time such items are delivered to Bank.
14. Attorneys' Fees. Borrower agrees to reimburse Bank up to $5,000.00 for
its reasonable attorneys' fees and expenses incurred in connection with the
negotiation, preparation, execution and delivery of the Loan Documents.
15. Governing Law; Judicial Reference.
A. Governing Law. This Agreement shall be deemed to have been made in
the State of California and the validity, construction, interpretation, and
enforcement hereof, and the rights of the parties hereto, shall be determined
under, governed by, and construed in accordance with the internal laws of the
State of California, without regard to principles of conflicts of law.
8.
<PAGE>
B. Judicial Reference.
(1) Other than (a) nonjudicial foreclosure and all matters in
connection therewith regarding security interests in real or personal property;
or (b) the appointment of a receiver, or the exercise of other provisional
remedies (any and all of which may be initiated pursuant to applicable law),
each controversy, dispute or claim between the parties arising out of or
relating to this Loan Agreement or the other Loan Documents, which controversy,
dispute or claim is not settled in writing within thirty (30) days after the
"Claim Date" (defined as the date on which a party subject to this Loan
Agreement gives written notice to all other parties that a controversy, dispute
or claim exists), will be settled by a reference proceeding in California in
accordance with the provisions of Section 638 et seq. of the California Code of
Civil Procedure, or their successor section ("CCP"), which shall constitute the
exclusive remedy for the settlement of any controversy, dispute or claim
concerning this Loan Agreement, including whether such controversy, dispute or
claim is subject to the reference proceeding and except as set forth above, the
parties waive their rights to initiate any legal proceedings against each other
in any court or jurisdiction other than the Superior Court in the County where
the real property, if any, is located or Santa Clara County, if none (the
"Court"). The referee shall be a retired Judge of the Court selected by mutual
agreement of the parties, and if they cannot so agree within forty-five (45)
days after the Claim Date, the referee shall be promptly selected by the
Presiding Judge of the Court (or his/her representative). The referee shall be
appointed to sit as a temporary judge, with all of the powers for a temporary
judge, as authorized by law, and upon selection should take and subscribe to the
oath of office as provided for in Rule 244 of the California Rules of Court (or
any subsequently enacted Rule). Each party shall have one peremptory challenge
pursuant to CCP (S) 170.6. The referee shall (x) be requested to set the matter
for hearing within sixty (60) days after the date of selection of the referee
and (y) try any and all issues of law or fact and report a statement of decision
upon them, if possible, within ninety (90) days of the Claim Date. Any decision
rendered by the referee will be final, binding and conclusive and judgement
shall be entered pursuant to CCP (S) 644 in any court in the State of California
having jurisdiction. Any party may apply for a reference proceeding at any time
after thirty (30) days following notice to any other party of the nature of the
controversy, dispute or claim, by filing a petition for a hearing and/or trial.
All discovery permitted by this Loan Agreement shall be completed no later than
fifteen (15) days before the first hearing date established by the referee. The
referee may extend such period in the event of a party's refusal to provide
requested discovery for any reason whatsoever, including, without limitation,
legal objections raised to such discovery or unavailability of a witness due to
absence or illness. No party shall be entitled to "priority" in conducting
discovery. Depositions may be taken by either party upon seven (7) days written
notice, and request for production or inspection of documents shall be responded
to within ten (10) days after service. All disputes relating to discovery which
cannot be resolved by the parties shall be submitted to the referee whose
decision shall be final and binding upon the parties. Pending appointment of the
referee as provided herein, the Superior Court is empowered to issue temporary
and/or provisional remedies, as appropriate.
(2) Except as expressly set forth in this Loan Agreement, the
referee shall determine the manner in which the reference proceeding is
conducted including the time and place of all hearings, the order of
presentation of evidence, and all other questions that arise with respect to the
course of the reference proceeding. All proceedings and hearings conducted
before the referee, except for trial, shall be conducted without a court
reporter except that when any party so requests, a court reporter will be used
at any hearing conducted before the referee. The party making such a request
shall have the obligation to arrange for and pay for the court reporter. The
costs of the court reporter at the trial shall be borne equally by the parties.
(3) The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the State
of California will be applicable to the reference proceeding. The referee shall
be empowered to enter equitable as well as legal relief, to provide all
temporary and/or provisional remedies and to enter equitable orders that will be
binding upon the parties. The referee shall issue a single judgment at the close
of the reference proceeding that shall dispose of all of the claims of the
parties that are the subject of the reference. The parties hereto expressly
reserve the right to contest or appeal from the final judgment or any appealable
order or
9.
<PAGE>
appealable judgment entered by the referee. The parties hereto expressly reserve
the right to findings of fact, conclusions of laws, a written statement of
decision, and the right to move for a new trial or a different judgment, which
new trial, if granted, is also to be a reference proceeding under this
provision.
(4) In the event that the enabling legislation which provides for
appointment of a referee is repealed (and no successor statute is enacted), any
dispute between the parties that would otherwise be determined by the reference
procedure herein described will be resolved and determined by arbitration. The
arbitration will be conducted by a retired judge of the Court, in accordance
with the California Arbitration Act, (S) 1280 through (S) 1294.2 of the CCP as
amended from time to time. The limitations with respect to discovery as set
forth hereinabove shall apply to any such arbitration proceeding.
16. Confidentiality. Bank shall not disclose to any Person any information
with respect to Borrower or any of its Subsidiaries which is furnished pursuant
to this Loan Agreement, except that Bank may disclose any such information (a)
to its own directors, officers, employees, auditors, counsel and other
professional advisors and to its affiliates if Bank in its sole discretion
determines that any such party should have access to such information; (b) if
such information is generally available to the public; (c) if required or
appropriate in any report, statement or testimony submitted to any governmental
authority having or claiming to have jurisdiction over Bank; (d) if required or
appropriate in response to any summons or subpoena or in connection with any
litigation, to the extent permitted or deemed advisable by counsel; (e) to
comply with any requirement or law applicable to Bank; (f) to the extent
necessary in connection with the exercise of any right or remedy under any Loan
Document; (g) to any participant or assignee of Bank or any prospective
participant or assignee, provided that such participant or assignee or
prospective participant or assignee agrees in writing to be bound by this
Section 16 prior to disclosure; or (h) otherwise with the prior consent of
Borrower; provided, however, that any disclosure made in violation of this Loan
Agreement shall not affect the obligations of Borrower or any of its
Subsidiaries under this Loan Agreement or the other Loan Documents.
17. Miscellaneous Provisions.
A. Nothing herein shall in any way limit the effect of the conditions
set forth in any other security or other agreement executed by Borrower, but
each and every condition hereof shall be in addition thereto.
B. No failure or delay on the part of Bank, in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof.
C. All rights and remedies existing under this Loan Agreement or any
other Loan Document are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
D. All headings and captions in this Loan Agreement and any related
documents are for convenience only and shall not have any substantive effect.
10.
<PAGE>
E. This Loan Agreement may be executed in any number of counterparts,
each of which when so delivered shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. Each such
agreement shall become effective upon the execution of a counterpart hereof or
thereof by each of the parties hereto and telephonic notification that such
executed counterparts has been received by Borrower and Bank.
Bank: Borrower:
Imperial Bank Portal Software, Inc.,
a California corporation
By: /s/ Sunita R. Patel By: /s/ Jack L. Acosta
------------------------- ---------------------------
Sunita R. Patel Jack L. Acosta
Assistant Vice President Chief Financial Officer and
Vice President-Finance
LIST OF EXHIBITS AND SCHEDULES
------------------------------
Exhibit A: Definitions
Schedule 1 to Exhibit A: List of Specific Permitted Indebtedness
Schedule 2 to Exhibit A: List of Specific Permitted Liens
Exhibit B: Compliance Certificate
Exhibit C: Borrowing Base Certificate
11.
<PAGE>
Exhibit A
DEFINITIONS
"Accounts" means any right to payment for goods sold or leased, or to be
sold or to be leased, or for services rendered or to be rendered no matter how
evidenced, including accounts receivable, contract rights, chattel paper,
instruments, purchase orders, notes, drafts, acceptances, general intangibles
and other forms of obligations and receivables.
"Approved Account" means the Account of any account debtor approved by Bank
in its sole and reasonable discretion.
"Capital Lease" means, as to any Person, any lease of any Property by such
Person as lessee that is, or should be in accordance with Financing Accounting
Standards Board Statement No. 13, classified and accounted for as a "capital
lease" on the balance sheet of such Person prepared in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with GAAP,
would appear on a balance sheet of such lessee in respect of such Capital Lease
or otherwise be disclosed in a note to such balance sheet.
"Collateral" means any and all personal property of Borrower which is
assigned or hereafter is assigned to Bank as security or in which Bank now has
or hereafter acquires a security interest hereunder (including, without
limitation, the Accounts), or pursuant to the terms of the General Security
Agreement, the IP Security Agreement or otherwise.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), co-made or discounted or sold with recourse by that Person,
or in respect of which that Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation for which that Person is in
effect liable through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, capital stock purchases, capital contributions or
otherwise), or to maintain the solvency of the obligor of such obligation, or to
make payment for any products, materials or supplies or for any transportation,
services or lease regardless of the non-delivery or non-furnishing thereof, in
any such case if the purpose or intent of such agreement is to provide assurance
that such obligation will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof. The amount of
any Contingent Obligation of any Person shall be deemed to be an amount equal to
the maximum amount of such Person's liability with respect to the stated or
determinable amount of the primary obligation for which such Contingent
Obligation is incurred or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder).
"Eligible Accounts" means such of Borrower's Accounts as Bank in its sole
reasonable discretion shall determine are eligible from time to time; provided,
however, that in no event shall Eligible Accounts include the following:
(1) all Accounts under which payment is not received within ninety
(90) days from the applicable invoice date; provided, however, Approved
Accounts will be excluded under which payment is not received within one
hundred twenty (120) days from the applicable invoice date;
EXHIBIT A
Page 1 of 6
<PAGE>
(2) all Accounts against which the account debtor or any other
Person obligated to make payment thereon asserts any defense, offset,
counterclaim or other right to avoid or reduce the liability represented by
the Accounts;
(3) any Accounts if the account debtor or any other Person liable
in connection therewith is insolvent, subject to bankruptcy or receivership
proceedings or has made an assignment for the benefit of creditors or whose
credit standing is unacceptable to Bank and Bank has so notified Borrower;
(4) Accounts with respect to which the account debtor is an
officer, director, shareholder, employee or Subsidiary of Borrower;
(5) Accounts due from an account debtor if more than fifty percent
(50%) of the aggregate amount of Accounts of such account debtor have at
that time remained unpaid for more than ninety (90) days from the
applicable invoice date;
(6) Accounts (other than Approved Accounts) with respect to account
debtors located outside of the United States of America unless either (a)
such Accounts are insured or covered by a letter of credit in a manner and
form acceptable to the Bank or (b) Bank shall have otherwise permitted in
writing in its sole and absolute direction;
(7) salesperson's accounts for promotional purposes;
(8) the amount by which the aggregate of all Accounts of an account
debtor exceeds twenty-five percent (25%) of the total accounts receivable
balance;
(9) Accounts where the account debtor is a seller to borrower, to
the extent that a potential offset exists; and
(10) Accounts where the account debtor is a federal governmental
entity, federal agency or instrumentality thereof.
"Event of Default" has the meaning set forth in Section 12.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other Person as may be approved by the significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"General Security Agreement" means that certain General Security Agreement
dated of even date herewith, made by Borrower in favor of Bank.
"IP Security Agreement" means a Collateral Assignment, Patent Mortgage and
Security Agreement dated of even date herewith, made by Borrower in favor of
Bank.
"Indebtedness" means, as to any Person, without duplication, (a) all
indebtedness of such Person for borrowed money, including, without limitation,
all of such indebtedness outstanding under this Loan Agreement and any of the
other Loan Documents, (b) all Capital Lease Obligations of such Person, (c) to
the extent of the outstanding indebtedness thereunder, any obligation of such
Person representing an extension of credit to such Person, whether or not for
borrowed money, (d) any obligation of such Person for the deferred purchase
price of
EXHIBIT A
Page 2 of 6
<PAGE>
Property or services (other than (i) trade or other accounts payable and current
operating liabilities in the ordinary course of business in accordance with
customary industry terms and (ii) deferred franchise fees and royalties), (e)
all Contingent Obligations, (f) any obligation of such Person of the nature
described in clauses (a), (b), (c), (d) or (e) above, that is secured by a Lien
on assets of such Person and which is non-recourse to the credit of such Person,
but only to the extent of the fair market value of the assets so subject to the
Lien, (g) obligations of such Person arising under acceptance facilities or
under facilities for the discount of accounts receivable of such Person, (h) any
obligation of such Person to reimburse the issuer of any letter of credit issued
for the account of such Person upon which a draw has been made, and (i) any
lease having the effect of indebtedness for borrowed money, whether or not the
same shall be treated as such on the balance sheet of Borrower under GAAP.
"Intellectual Property" means
(1) Any and all copyright rights, copyright applications, copyright
registrations and like protection in each work or authorship and derivative
work thereof, whether published or unpublished and whether or not the same
also constitutes a trade secret, now or hereafter existing, created,
acquired or held (collectively, the "Copyrights");
(2) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
(3) Any and all design rights which may be available to Borrower
now or hereafter existing, created, acquired or held;
(4) Any patents, patent applications and like protections,
including, without limitation, improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same,
including, without limitation, the patents and patent applications
(collectively, the "Patents");
(5) Any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected
with and symbolized by such trademarks (collectively, the "Trademarks");
(6) Any and all claims for damages by way of past, present and
future infringements of any of the rights included above, with the right,
but not the obligation, to sue for and collect such damages for said use or
infringement of the intellectual property rights identified above;
(7) Any licenses or other rights to use any of the Copyrights,
Patents or Trademarks and all license fees and royalties arising from such
use to the extent permitted by such license or rights;
(8) Any amendments, extensions, renewals and extensions of any of
the Copyrights, Patents or Trademarks; and
(9) Any proceeds and products of the foregoing, including, without
limitation, all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.
"Lien" means any mortgage, pledge, security interest, lien or other charge
or encumbrance, including the lien or retained security title of a conditional
vendor, upon or with respect to any property or assets.
"Loan Documents" means this Loan Agreement, the General Security Agreement,
the IP Security Agreement and that certain Agreement to Provide Insurance (Real
or Personal Property) dated of even date herewith, each as executed by Borrower
in favor of Bank, together with all other documents entered into or
EXHIBIT A
Page 3 of 6
<PAGE>
delivered pursuant to any of the foregoing, in each case as originally executed
or as the same may from time to time be modified, amended, supplemented or
restated.
"Material Adverse Effect" means any set of circumstances or events which
(a) has or could reasonably be expected to have any material adverse effect upon
the validity or enforceability of any material provision of any Loan Document,
(b) is or could reasonably be expected to be material and adverse to the
condition (financial or otherwise) or business operations of Borrower, (c)
materially impairs or could reasonably be expected to materially impair the
ability of Borrower, to perform its material obligations under this Loan
Agreement and the other Loan Documents, (d) materially impairs or could
reasonably be expected to materially impair the value or priority of Bank's
security interest in any Collateral or (e) materially impairs or could
reasonably be expected to materially impair the ability of Bank to enforce any
of its legal remedies pursuant to the Loan Documents.
"Permitted Indebtedness" means the following:
(1) Indebtedness of Borrower or Indebtedness and Contingent
Obligations of its Subsidiaries in favor of Bank arising under this Loan
Agreement and the other Loan Documents;
(2) the existing Indebtedness and Contingent Obligations disclosed
on Schedule 1 attached hereto and incorporated herein by this reference;
provided that the principal amount thereof is not increased and the terms
thereof are not modified to impose more burdensome terms upon Borrower or
any of its Subsidiaries;
(3) the Subordinated Debt;
(4) extensions, renewals or refinancings of Indebtedness permitted
under this Loan Agreement, other than clause (3) immediately above;
(5) accrued dividends on the preferred stock of Borrower;
(6) interest rate and currency hedging agreements;
(7) guaranties of any Subsidiary's suppliers in connection with the
purchase of supplies in the ordinary course of business;
(8) guaranties of lease obligations incurred in the ordinary course
of business and to the extent otherwise permitted hereunder;
(9) Contingent Obligations constituting Permitted Liens; and
(10) the indebtedness referred to in clause (3)(a) of the definition
of Permitted Liens.
"Permitted Liens" means the following:
(1) liens and security interests existing as of this date and
disclosed in Schedule 2 attached hereto and incorporated herein by this
reference;
(2) liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith
by appropriate proceedings;
EXHIBIT A
Page 4 of 6
<PAGE>
(3) liens and security interests (a) upon or in any equipment
acquired or held by Borrower to secure the purchase price of such equipment
or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment and in an amount not greater than the
purchase price thereof or (b) existing on such equipment at the time of its
acquisition, provided that the lien and security interest is confined
solely to the property so acquired and improvements thereon, and the
proceeds of such equipment;
(4) liens consisting of leases or subleases and licenses and
sublicenses granted to others in the ordinary course of Borrower's business
not interfering in any material respect with the business of Borrower and
any interest or title of a lessor or licensor under any lease or license,
as applicable;
(5) liens securing claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like persons or entities
imposed without action of such parties, provided that the payment thereof
is not yet required;
(6) liens incurred or deposits made in the ordinary course of
Borrower's business in connection with worker's compensation, unemployment
insurance, social security and other like laws;
(7) liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default;
(8) zoning restrictions, easements, reservations, rights-of-way,
restrictions, minor defects or irregularities in title and other similar
charges or encumbrances affecting real property not interfering in any
material respect with the ordinary conduct of Borrower's business;
(9) liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(10) liens that are not prior to Bank's security interest which
constitute rights of set-off of a customary nature;
(11) any interest or title of a lessor in equipment subject to any
Capitalized Lease otherwise permitted hereunder; and
(12) any liens arising from the filing of any financing statements
relating to true leases otherwise permitted hereunder and statutory
landlord's liens.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, firm, joint stock
company, estate, entity or governmental agency.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.
"Subordinated Debt" means indebtedness of Borrower, the repayment of
principal of which is fully subordinated in time and right of payment to the
Loans, and has been approved in Bank's sole and absolute discretion and in
writing.
EXHIBIT A
Page 5 of 6
<PAGE>
"Year 2000 Compliant" means, in regard to Borrower or any Person, that all
software, hardware, firmware, equipment, goods or systems utilized by or
material to the business operations or financial condition of Borrower or such
Person, will properly perform date sensitive functions before, during and after
the year 2000.
"Year 2000 Problem" means the risk that any computer applications used by
Borrower and its Subsidiaries may be unable to recognize and properly perform
date-sensitive functions involving certain dates prior to and any date on or
after December 31, 1999.
EXHIBIT A
Page 6 of 6
<PAGE>
Schedule 1 to Exhibit A
SPECIFIC PERMITTED INDEBTEDNESS
1. All Capital Lease Obligations of Borrower to Comdisco.
SCHEDULE 1 TO EXHIBIT A
<PAGE>
Schedule 2 to Exhibit A
SPECIFIC PERMITTED LIENS
None.
SCHEDULE 2 TO EXHIBIT A
<PAGE>
Exhibit C
BORROWING BASE CERTIFICATE
(To be provided and attached by Bank)
EXHIBIT C
<PAGE>
GENERAL SECURITY AGREEMENT
This General Security Agreement is executed on April ___, 1999 (this
"Security Agreement"), by Portal Software, Inc., a California corporation
(hereinafter called "Grantor"). In consideration of financial accommodations
given, to be given or continued, Grantor hereby grants to Imperial Bank
(hereinafter called "Bank") a security interest in (a) all property (i)
delivered to Bank by Grantor, (ii) which shall be in Bank's possession or
control in any matter or for any purpose, (iii) described below or (iv) now
owned or hereafter acquired by Grantor of the type or class described below
and/or in any exhibit or supplementary schedule hereto, or in any financing
statement filed by Bank and executed by or on behalf of Grantor; and (b) the
proceeds, increase and products of such property, all accessions thereto, and
all property which Grantor may receive on account of such collateral
(collectively referred to as "Collateral") to secure payment and performance of
all of Grantor's present or future debts or obligations to Bank, whether
absolute or contingent (hereafter referred to as "Debt"). See Exhibit A
attached hereto and incorporated herein by this reference for a description of
the Collateral. The Collateral which is not in Bank's possession will, except
as may otherwise be permitted by the Loan Agreement, be located at the locations
set forth on Exhibit B attached hereto and incorporated herein by this
reference. Unless otherwise defined herein, initially capitalized terms used
herein shall have the meanings given them (A) in the California Uniform
Commercial Code, (B) as defined in that certain Loan Agreement dated as of the
date hereof entered into by and among Grantor and Bank (as the same may be
modified, amended, supplemented, restated or superceded from time to time, the
"Loan Agreement") or (C) as defined in Exhibit A attached hereto.
Grantor hereby represents, warrants and agrees:
1. Grantor will immediately pay (a) any Debt when due, (b) Bank's costs of
collecting the Debt, of protecting, insuring or realizing on Collateral, and any
expenditure of Bank pursuant hereto, including attorneys' fees and expenses,
with interest at the rate of twenty-four percent (24%) per year, or the rate
applicable to the Debt, whichever is less, from the date of expenditure, and (c)
any deficiency after realization of Collateral.
2. Grantor will use the proceeds of any loan that becomes Debt hereunder
for the purpose indicated on the application therefor, and will promptly
contract to purchase and pay the purchase price of any property which becomes
Collateral hereunder from the proceeds of any loan made for that purpose.
3. As to all Collateral in Grantor's possession or the possession of its
contract manufacturers (unless specifically otherwise agreed to by Bank in
writing), Grantor will:
(a) Have or has possession of the Collateral at the location disclosed
to Bank and will not remove the Collateral from said location, except for sales
in the ordinary course of Borrower's business or as may otherwise be permitted
by the Loan Agreement.
(b) Keep the Collateral separate and identifiable.
(c) Maintain the Collateral in good order and saleable condition,
repair and otherwise deal with the Collateral in all such ways as are considered
good practice by owners of like property, use it lawfully and only as permitted
by insurance policies, and permit Bank upon reasonable notice to inspect the
Collateral at any reasonable time in accordance with the terms of the Loan
Agreement.
(d) Not sell, contract to sell, lease, encumber or transfer the
Collateral (other than the disposition of such inventory Collateral in the
ordinary course of Borrower's business and other assets which are obsolete or
otherwise considered surplus), except as may otherwise be permitted under the
Loan Agreement, until
1.
<PAGE>
the Debt has been paid or performed in full, even though Bank has a security
interest in the proceeds of such Collateral.
4. As to Collateral which is inventory and accounts, Grantor:
(a) May, until notice from Bank after the occurrence and during the
continuance of an Event of Default, sell, lease or otherwise dispose of
inventory Collateral in the ordinary course of business only, or as may
otherwise be permitted under the Loan Agreement, and collect the cash proceeds
thereof.
(b) Will, upon notice from Bank after the occurrence and during the
continuance of an Event of Default, deposit all cash proceeds as received in a
demand deposit account with Bank, containing only such proceeds and deliver
statements identifying units of inventory disposed of, accounts which gave rise
to proceeds, and all acquisitions and returns of inventory as required by Bank.
(c) Will receive in trust after the occurrence and during the
continuance of an Event of Default, schedule on forms satisfactory to Bank and,
upon notice from Bank, deliver to Bank all non-cash proceeds other than
inventory received in trade.
(d) So long as there does not exist an Event of Default, may obtain
release of Bank's interest in individual units of inventory upon request
therefore, payment to Bank of the release price of such units shown on any
Collateral schedule supplementary hereto, and compliance herewith as to proceeds
thereof.
5. As to Collateral which are Accounts, Chattel Paper, General Intangibles
and Proceeds described in Section 4(c) above, Grantor warrants, represents and
agrees:
(a) To the best of Grantor's knowledge, all such Collateral is
genuine, enforceable in accordance with its terms and conditions precedent
(except as disclosed to and accepted by Bank in writing), and, if applicable, is
supported by consecutively numbered invoices to, or rights against, the account
debtors thereon. Grantor will supply Bank with duplicate invoices or other
evidence of Grantor's rights on Bank's request.
(b) To the best of Grantor's knowledge, all persons appearing to be
obligated on such Collateral have authority and capacity to contract.
(c) To the best of Grantor's knowledge, all Chattel Paper is in
compliance with applicable law as to form, content and manner of preparation and
execution and has been properly registered, recorded, and/or filed to protect
Grantor's interest thereunder.
(d) If an account debtor shall also be indebted to Grantor on another
obligation, any payment made by such account debtor not specifically designated
to be applied on any particular obligation shall be considered to be a payment
on the account in which Bank has a security interest. Should any remittance
include a payment not on an account, it shall be delivered to Bank and, if no
Event of Default has occurred, Bank shall pay Grantor the amount of such
payment.
(e) Grantor agrees that following the occurrence and during the
continuance of an Event of Default and receipt of notice thereof from Bank,
Grantor shall not compromise, settle or adjust any Account or renew or extend
the time of payment thereof without Bank's prior written consent.
(f) Until Bank exercises its rights to collect the Accounts pursuant
to Section 11 hereof, Grantor will collect with diligence all Grantor's
Accounts. Any collection of Accounts by Grantor, whether in the form of cash,
checks, notes, or other instruments for the payment of money (properly endorsed
or assigned where required to enable Bank to collect same), shall be in trust
for Bank. If an Event of Default has occurred and is
2.
<PAGE>
continuing, Grantor shall keep all such collections separate and apart from all
other funds and property so as to be capable of identification as the property
of Bank and deliver said collections daily to Bank in the identical form
received. The proceeds of such collections when received by Bank may be applied
by Bank directly to the payment of the applicable Loan Account or to any other
obligation secured hereby. Any credit given by Bank upon receipt of said
proceeds shall be conditional credit subject to collection. Returned items at
Bank's option may be charged to Grantor's deposit account with Bank. All
collections of the Accounts shall be set forth on an itemized schedule, showing
the name of the account debtor, the amount of each payment and such other
information as Bank may request.
(g) Until Bank exercises its rights to collect the Accounts pursuant
to Section 11 hereof, Grantor may continue its present policies with respect to
returned merchandise and adjustments. However, Grantor shall immediately notify
Bank of all cases involving repossessions, and material loss or damage of or to
merchandise represented by the Accounts.
6. Grantor has good and marketable title to all of the Collateral, subject
only to Bank's rights therein, and no other person has or claims any interest in
any of the Collateral, except for Permitted Liens. Grantor will defend any
proceeding which may affect title to or Bank's security interest in any of the
Collateral, and will indemnify and hold Bank free and harmless from all costs
and expenses of Bank's defense.
7. Grantor will pay when due all existing or future charges, liens or
encumbrances on and all taxes and assessments (except for taxes not yet due and
payable or which are contested in good faith and for which Grantor has set aside
adequate reserves) now or hereafter imposed on or affecting the Collateral and,
if the Collateral is in Grantor's possession, the realty on which the Collateral
is located.
8. Grantor will insure the Collateral with Bank as loss payee in form and
amounts with companies, and against risks and liability satisfactory to Bank (to
the extent customarily maintained by businesses similar to Borrower's and
similarly located), and hereby assigns such policies to Bank, agrees to deliver
them to Bank at Bank's request, and authorizes Bank to make any claim
thereunder, to cancel the insurance upon Grantor's default, and to receive
payment of and endorse any instrument in payment of any loss or return premium.
If Grantor should fail to deliver the required insurance policy or policies to
Bank, Bank may, at Grantor's cost and expense, without any duty to do so, get
and pay for insurance naming as the insured, at Bank's option, either both
Grantor and Bank, or only Bank, and the cost thereof shall be secured by this
Security Agreement, and shall be repayable as provided in Section 1 above.
9. Grantor will give Bank any information it reasonably requires in
accordance with the terms of the Loan Documents. All information at any time
supplied to Bank by Grantor (including, but not limited to, the value and
condition of Collateral, financial statements, financing statements, and
statements made in documentary Collateral) will, at the date supplied, be
correct and complete in all material respects, and Grantor will notify Bank of
any material adverse change in such information. Grantor will promptly notify
Bank of any change of Grantor's residence, chief executive office or mailing
address.
10. At any time and from time to time, upon the written request of Bank,
and at the sole expense of Grantor, Grantor shall promptly and duly execute and
deliver any and all such further instruments and documents and take such further
action as Bank may reasonably deem necessary to obtain the full benefits of this
Security Agreement and of the rights and powers herein granted, including,
without limitation, (a) using its best efforts to secure all consents and
approvals necessary or appropriate for the grant of a security interest to Bank
in any Contract or License held by Grantor or in which Grantor has any rights
not heretofore assigned, (b) filing any financing or continuation statements
under the UCC with respect to the security interests granted hereby, (c) filing
or cooperating with Bank in filing any forms or other documents required to be
filed with the United States Patent and Trademark Office, United States
Copyright Office, or any filings in any foreign jurisdiction or under any
international treaty, required to secure or protect Bank's interest in the
Collateral, (d) transferring Collateral to
3.
<PAGE>
Bank's possession (if a security interest in such Collateral can be perfected by
possession), (e) placing the interest of Bank as lienholder on the certificate
of title (or other evidence of ownership) of any vehicle owned by Grantor or in
or with respect to which Grantor holds a beneficial interest and (f) using its
reasonable efforts to obtain waivers of liens from landlords and mortgagees.
Grantor also hereby authorizes Bank to file any such financing or continuation
statement without the signature of Grantor. If any amount payable under or in
connection with any of the Collateral is or shall become evidenced by any
Instrument, such Instrument, other than checks and notes received in the
ordinary course of business, shall be duly endorsed in a manner satisfactory to
Bank and delivered to Bank promptly upon Grantor's receipt thereof.
11. Upon the occurrence and during the continuation of an Event of Default
Bank may, without prior notice to Grantor, collect the Collateral and may give
notice of assignment of Accounts to any and all account debtors and Grantor for
the purpose of realizing the Collateral does hereby make, constitute and appoint
Bank its irrevocable, true and lawful attorney-in-fact with power to do any act
which Grantor is obligated hereby to do, to exercise such rights as Grantor may
exercise, to use such equipment as Grantor might use, to enter Grantor's
premises to give notice of Bank's security interest, and to collect Collateral
and proceeds and to execute and file in Grantor's name any financing statements
and amendments thereto required to perfect Bank's security interest hereunder,
all to protect and preserve the Collateral and Bank's rights hereunder. Without
limiting the generality of the foregoing, after and during the continuance of an
Event of Default, Bank may:
(a) Endorse the name of Grantor, collect and receive delivery or
payment of Instruments and Documents constituting Collateral.
(b) Demand, sue for, give acquittances for, make extension agreements
with respect to or affecting Collateral, exchange it for other Collateral,
release persons liable thereon or take security for the payment thereof, and
compromise, prosecute or defend any action, claim, proceeding or other disputes
in connection therewith.
(c) Use or operate Collateral for the purpose of preserving Collateral
or its value and for preserving or liquidating Collateral.
12. Discharge of Grantor except for full payment, or any extension,
forbearance, change of rate of interest, or acceptance, release or substitution
of Collateral or any impairment or suspension of Bank's rights against Grantor,
or any transfer of Grantor's interest to another shall not affect the liability
of Grantor hereunder. Until the Debt shall have been paid or performed in full,
Bank's rights hereunder shall continue even if the Debt is deemed unenforceable.
Grantor hereby waives: (a) any right to require Bank to proceed against Grantor
before any other, or to pursue any other remedy; (b) presentment, protest and
notice of protest, demand and notice of nonpayment, demand or performance,
notice of sale, and advertisement of sale; (c) any right to the benefit of or to
direct the application of any Collateral until the Debt shall have been paid or
performed in full; and (d) any right of subrogation to Bank until the Debt shall
have been paid or performed in full.
13. After and during the continuance of an Event of Default, at Bank's
option, without demand or notice, all or any part of the Debt shall immediately
become due and payable. Bank shall have all rights given by law, and may sell,
in one or more sales, Collateral in any county where Bank has an office. Bank
may purchase at such sale. Sales for cash or on credit to a wholesaler, retailer
or user of the Collateral, or at public or private auction, are all to be
considered commercially reasonable. Bank may require Grantor to assemble the
Collateral and make it available to Bank at the entrance to the location where
the Collateral is stored, or at a place designated by Bank.
14. Bank's acceptance of partial or delinquent payments or the failure of
Bank to exercise any right or remedy shall not waive any obligation of Grantor
or right of Bank to modify this Security Agreement, or waive any other similar
default.
4.
<PAGE>
15. Upon the transfer of all or any part of the Debt, Bank may transfer
all or any part of the Collateral. Bank may deliver all or any part of the
Collateral to any Grantor at any time. Any such transfer or delivery shall
discharge Bank from all liability and responsibility with respect to such
Collateral transferred or delivered. This Security Agreement benefits Bank's
successors and assigns and binds Grantor's heirs, legatees, personal
representatives, successors and assigns. Time is of the essence. This Security
Agreement, the other Loan Documents and the exhibit(s) attached hereto contain
the entire security agreement between Bank and Grantor. Grantor will execute any
additional agreements, assignments or documents reasonably required by Bank to
carry this Security Agreement into effect.
16. If one or more Grantors sign this Security Agreement, their liability
hereunder shall be joint and several. Any Grantor who is married hereby agrees
that recourse may be had against his or her separate property for the Debt.
17. This Security Agreement shall be governed by and construed in
accordance with the laws of the State of California, to the jurisdiction of
whose courts Grantor hereby agrees to submit. Grantor agrees that service of
process may be accomplished by any means authorized by California law. All words
used herein in the singular shall be considered to have been used in the plural
where the context and construction so require.
18. Grantor hereby acknowledges receiving a copy of this Security
Agreement and waives all rights to receive from Bank a copy of any financing
statement or financing change statement filed, or any verification statement
received, at any time in respect of this Security Agreement.
Grantor
Portal Software, Inc.,
a California corporation
By: /s/ Jack L. Acosta
----------------------------------------------------
Jack L. Acosta
Chief Financial Officer and Vice President - Finance
5.
<PAGE>
Exhibit A
DESCRIPTION OF COLLATERAL
A. Collateral. This Exhibit A covers all right, title and interest of
----------
Grantor in, to and under all of the following, wherever located and whether now
owned or hereafter owned or acquired (collectively, the "Collateral"):
(a) All Accounts of Grantor;
(b) All Chattel Paper of Grantor;
(c) All Contracts of Grantor;
(d) All Deposit Accounts of Grantor;
(e) All Documents of Grantor;
(f) All Equipment of Grantor;
(g) All Fixtures of Grantor;
(h) All General Intangibles of Grantor;
(i) All Instruments of Grantor;
(j) All Inventory of Grantor;
(k) All Investment Property of Grantor;
(l) All Licenses of Grantor;
(m) All property of Grantor held by Bank or any other party for whom
Bank is acting as agent hereunder, including, without limitation, all property
of every description now or hereafter in the possession or custody of or in
transit to Bank or such other party for any purpose, including, without
limitation, safekeeping, collection or pledge, for the account of Grantor, or as
to which Grantor may have any right or power;
(n) All other goods and personal property of Grantor whether tangible
or intangible and whether now or hereafter owned or existing, leased, consigned
by or to, or acquired by, Grantor and wherever located;
(o) To the extent not otherwise included, all Proceeds of each of the
foregoing and all accessions to, substitutions and replacements for, and rents,
profits and products of each of the foregoing; and
(p) All Proceeds of the Intellectual Property of Grantor.
B. Defined Terms. Unless otherwise defined herein, the following terms
-------------
shall have the following meanings (such meanings being equally applicable to
both the singular and plural forms of the terms defined):
EXHIBIT A
Page 1 of 5
<PAGE>
"Accounts" means any "account," as such term is defined in Section 9106 of
the UCC, now owned or hereafter acquired by Grantor or in which Grantor now
holds or hereafter acquires any interest and, in any event, shall include,
without limitation, all accounts receivable, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to Grantor (including, without limitation, under any trade
name, style or division thereof) whether arising out of goods sold or services
rendered by Grantor or from any other transaction, whether or not the same
involves the sale of goods or services by Grantor (including, without
limitation, any such obligation which may be characterized as an account or
contract right under the UCC) and all of Grantor's rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it for goods or
services, and all of Grantor's rights to any goods represented by any of the
foregoing (including, without limitation, unpaid seller's rights of rescission,
replevin, reclamation and stoppage in transit and rights to returned, reclaimed
or repossessed goods), and all monies due or to become due to Grantor under all
purchase orders and contracts for the sale of goods or the performance of
services or both by Grantor (whether or not yet earned by performance on the
part of Grantor or in connection with any other transaction), now in existence
or hereafter occurring, including, without limitation, the right to receive the
proceeds of said purchase orders and contracts, and all collateral security and
guarantees of any kind given by any Person with respect to any of the foregoing.
"Chattel Paper" means any "chattel paper," as such term is defined in
Section 9105(1)(b) of the UCC, now owned or hereafter acquired by Grantor or in
which Grantor now holds or hereafter acquires an interest.
"Contracts" means all contracts, undertakings, franchise agreements or
other agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which Grantor may now or hereafter have any right,
title or interest, including, without limitation, any and all right, title and
interest of Grantor under any customer agreements, supply agreements,
distribution agreements, rebate agreements, processing agreements, warehousing
agreements or royalty agreements and shall include, without limitation, with
respect to an Account, any agreement relating to the terms of payment or the
terms of performance thereof.
"Copyright License" means all of the following now owned or hereafter
acquired by Grantor: any agreement granting any right in and to any Copyright
or Copyright registration (whether Grantor is the licensee or the licensor
thereunder), now owned or hereafter acquired by Grantor, including, without
limitation, licenses pursuant to which Grantor has obtained the exclusive right
to use a copyright owned by a third party.
"Copyrights" means all of the following now owned or hereafter acquired by
Grantor or in which Grantor now holds or hereafter acquires any interest: (a)
all copyrights, whether registered or unregistered, held pursuant to the laws of
the United States, any state thereof or of any other country or political
subdivision thereof; (b) registrations, applications and recordings in the
United States Copyright Office or in any similar office or agency of the United
States, any state thereof or any other country or political subdivision thereof;
(c) any continuations, renewals or extensions thereof; (d) any registrations to
be issued in any pending applications; (e) prior versions of works covered by a
copyright and all works based upon, derived from, or incorporating such works;
(f) income, royalties, damages, claims, and payments now and hereafter due and
payable with respect to copyrights including, without limitation, damages and
payments for past, present, or future infringement; (g) rights to sue for past,
present and future infringements of copyright; and (h) any other rights
corresponding to any of the foregoing rights throughout the world.
"Deposit Account" means any "deposit account" as such term is defined in
Section 9105(e) of the UCC, and shall include, without limitation, any demand,
time, savings passbook or like account, now or hereafter maintained by or for
the benefit of Grantor, or in which Grantor now holds or hereafter acquires any
interest, with a bank, savings and loan association, credit union or like
organization (including Bank) and all funds and amounts therein, whether or not
restricted or designated for a particular purpose.
EXHIBIT A
Page 2 of 5
<PAGE>
"Documents" means any "documents," as such term is defined in Section
9105(1)(f) of the UCC, now owned or hereafter acquired by Grantor or in which
Grantor now holds or hereafter acquires an interest.
"Equipment" means any "equipment," as such term is defined in Section
9109(2) of the UCC, now or hereafter owned or acquired by Grantor or in which
Grantor now holds or hereafter acquires an interest, and, in any event, shall
include, without limitation, all machinery, equipment, furnishings, vehicles,
computers and other electronic data-processing and any other office equipment of
any nature whatsoever, any and all additions, substitutions and replacements of
any of the foregoing, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto.
"Fixtures" means "fixtures," as such term is defined in Section 9313(1)(a)
of the UCC, now or hereafter owned or acquired by Grantor or in which Grantor
now holds or hereafter acquires any interest and, in any event, shall include,
without limitation, regardless of where located, all of the fixtures, systems,
machinery, apparatus, equipment and fittings of every kind and nature whatsoever
and all appurtenances and additions thereto and substitutions or replacements
thereof, now or hereafter attached or affixed to or constituting a part of, or
located in or upon, real property wherever located, including, without
limitation, all heating, electrical, mechanical, lighting, lifting, plumbing,
ventilating, air-conditioning and air cooling, refrigerating, food preparation,
incinerating and power, loading and unloading, communication, sprinkler and
other fire prevention and extinguishing, fixtures, systems, machinery, apparatus
and equipment, any signs, escalators, elevators, boilers or switchboards, and
all engines, motors, dynamos, machinery, pipes, pumps, tanks, conduits and ducts
constituting a part of any of the foregoing, together with all right, title, and
interest of Grantor in and to all extensions, improvements, betterments,
renewals, substitutes, and replacements of, and all additions and appurtenances
to any of the foregoing property, and all conversions of the security
constituted thereby, immediately upon any acquisition or release thereof or any
such conversion, as the case may be.
"General Intangibles" means any "general intangibles," as such term is
defined in Section 9106 of the UCC, now owned or hereafter acquired by Grantor
or in which Grantor now holds or hereafter acquires an interest, and, in any
event, shall include, without limitation, all right, title and interest which
Grantor may now or hereafter have in or under any Contract, interests in
partnerships, joint ventures and other business associations, Licenses, permits,
goodwill, claims in or under insurance policies, including unearned premiums,
uncertificated securities, deposit accounts (including as defined in Section
9105(e) of the UCC), rights to receive tax refunds and other payments and rights
of indemnification; provided, however, that General Intangibles shall not
include Intellectual Property.
"Instruments" means any "instrument," as such term is defined in Section
9105(1)(i) of the UCC now owned or hereafter acquired by Grantor or in which
Grantor now holds or hereafter acquires any interest, including, without
limitation, all notes, certificated securities, and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"Intellectual Property" means all intellectual property of any kind or
nature, including, without limitation, all Copyrights, Copyright Licenses,
Trademarks, Trademark Licenses, Patents, Patent Licenses, trade secrets,
customer lists, proprietary or confidential information, inventions (whether or
not patented or patentable), technical information, procedures, designs,
knowledge, know-how, software, data bases, data, skill, expertise, recipes,
experience, processes, models, drawings, materials and records.
"Inventory" means any "inventory," as such term is defined in Section
9109(4) of the UCC, wherever located, now or hereafter owned or acquired by
Grantor or in which Grantor now holds or hereafter acquires any interest and, in
any event, shall include, without limitation, all inventory, merchandise, goods
and other personal property which are held by or on behalf of Grantor for sale
or lease or are furnished or are to be furnished under a
EXHIBIT A
Page 3 of 5
<PAGE>
contract of service or which constitute raw materials, work in process or
materials used or consumed or to be used or consumed in Grantor's business, or
the processing, packaging, promotion, delivery or shipping of the same, and all
finished goods, whether or not such inventory is listed on any schedules,
assignments or reports furnished to Bank from time to time and whether or not
the same is in transit or in the constructive, actual or exclusive occupancy or
possession of Grantor or is held by Grantor or by others for Grantor's account,
including, without limitation, all goods covered by purchase orders and
contracts with suppliers and all goods billed and held by suppliers and all
inventory which may be located on premises of Grantor or of any carriers,
forwarding agents, truckers, warehousemen, vendors, selling agents or other
Persons.
"Investment Property" means any "investment property" as such term is
defined in Section 9115(1)(f) of the UCC, now owned or hereafter acquired by
Grantor or in which Grantor now holds or hereafter acquires an interest,
including, without limitation, a security, whether certificated or
uncertificated, a security entitlement, a securities account, a commodity
contract or a commodity account.
"License" means any license of rights or interests now held or hereafter
acquired by Grantor or in which Grantor now holds or hereafter acquires an
interest, and any renewals or extensions thereof; provided, however, Licenses
shall not include any Intellectual Property licenses.
"Patent License" means any written agreement granting any right with
respect to any invention on which a Patent is in existence, now owned or
hereafter acquired by Grantor or in which Grantor now holds or hereafter
acquires an interest.
"Patents" means all of the following now owned or hereafter acquired by
Grantor or in which Grantor now holds or hereafter acquires any interest: (a)
all letters patent of the United States or any other country, all registrations
and recordings thereof, and all applications for letters patent of the United
States or any other country or political subdivision thereof, including, without
limitation, registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country or political subdivision thereof;
(b) all reissues, continuations, continuations-in-part or extensions thereof;
(c) all petty patents, divisionals, and patents of addition; and (d) all patents
to issue in any such applications.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, firm, joint stock company, estate,
entity or governmental agency.
"Proceeds" means "proceeds," as such term is defined in Section 9306(1) of
the UCC, and, in any event, shall include, without limitation, (a) any and all
Accounts, Chattel Paper, Instruments, cash or other forms of money or currency,
income, royalties or other proceeds, payable to Grantor from time to time in
respect of the Collateral or Grantor's Intellectual Property; (b) any and all
proceeds of any insurance, indemnity, warranty or guaranty payable to Grantor
from time to time with respect to any of the Collateral or Grantor's
Intellectual Property; (c) any and all payments (in any form whatsoever) made or
due and payable to Grantor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral or Grantor's Intellectual Property by any governmental body,
authority, bureau or agency (or any person acting under color of governmental
authority); (d) any claim of Grantor against third parties (i) for past, present
or future infringement of any Patent or Patent License, (ii) for past, present
or future infringement of any Copyright or Copyright License, or (iii) for past,
present or future infringement, dilution or misappropriation of any Trademark or
Trademark License or for injury to the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License; (e)
all certificates, dividends, cash, Instruments and other property received or
distributed in respect of or in exchange for any Investment Property; and (f)
any
EXHIBIT A
Page 4 of 5
<PAGE>
and all other amounts from time to time paid or payable under or in connection
with any of the Collateral, Grantor's Intellectual Property or any Contract.
"Trademark License" means any written agreement granting any right in and
to any Trademark or Trademark registration (whether Grantor is the licensee or
the licensor thereunder) now owned or hereafter acquired by Grantor or in which
Grantor now holds or hereafter acquires an interest.
"Trademarks" means any of the following now owned or hereafter acquired by
Grantor or in which Grantor now holds or hereafter acquires an interest: (a)
any and all trademarks, trade names, corporate names, company names, business
names, trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear, designs
and general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and any applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof or any other
country or any political subdivision thereof (the "Marks"); (b) any reissues,
extensions or renewals thereof; (c) the goodwill of the business symbolized by
or associated with Marks; (d) income, royalties, damages and payments now and
hereafter due and/or payable with respect to Marks, including, without
limitation, damages, claims and recoveries for past, present or future
infringement, misappropriation, or dilution; and (e) rights to sue for past,
present and future infringements of Marks.
"UCC" means the Uniform Commercial Code as the same may, from time to time,
be in effect in the State of California; provided, however, in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Bank's security interest in any Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than the
State of California, the term "UCC" shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such attachment, perfection or priority and for purposes of definitions
related to such provisions.
EXHIBIT A
Page 5 of 5
<PAGE>
Exhibit B
LOCATION OF COLLATERAL NOT IN BANK'S POSSESSION
1. 20863 Stevens Creek Boulevard, Suite 200, Cupertino, California 95014.
2. 181 Post Road West, Suite 47, Westport, Connecticut.
3. 5001 Spring Valley Road, Office #85, 86 and 87, Dallas, Texas 75244.
4. 1333 Burr Ridge Parkway, Suite 175, Burr Ridge, Illinois 60521.
5. 25 Burlington Mall Road, Suites 324, 325 and 356, Burlington,
Massachusetts.
6. 90 Park Avenue, Suite 1600, New York, New York 10016.
7. 7916 Jones Branch Drive, Suite 600, McLean, Virginia 22102.
EXHIBIT B