\n 6.10 Tangible Net Worth……………………………………………….18
\n 6.11 Profitability……………………………………………………18
\n 6.12 Further Assurances……………………………………………….18<\/p>\n7. NEGATIVE COVENANTS……………………………………………………..18
\n 7.1 Dispositions…………………………………………………….18
\n 7.2 Changes in Business, Ownership, Management or Business Locations………19
\n 7.3 Mergers or Acquisitions…………………………………………..19
\n 7.4 Indebtedness…………………………………………………….19
\n 7.5 Encumbrances…………………………………………………….19
\n 7.6 Distributions……………………………………………………19
\n 7.7 Investments……………………………………………………..19
\n 7.8 Transactions with Affiliates………………………………………19
\n 7.9 Intellectual Property Agreements…………………………………..19
\n 7.10 Subordinated Debt………………………………………………..19
\n 7.11 Inventory……………………………………………………….20
\n 7.12 Compliance………………………………………………………20<\/p>\n
8. EVENTS OF DEFAULT………………………………………………………20
\n 8.1 Payment Default………………………………………………….20
\n 8.2 Covenant Default…………………………………………………20
\n 8.3 Material Adverse Change…………………………………………..21
\n 8.4 Attachment………………………………………………………21
\n 8.5 Insolvency………………………………………………………21
\n 8.6 Other Agreements…………………………………………………21
\n 8.7 Subordinated Debt………………………………………………..21
\n 8.8 Judgments……………………………………………………….21
\n 8.9 Misrepresentations……………………………………………….21<\/p>\n
9. BANK’S RIGHT’S AND REMEDIES……………………………………………..22
\n 9.1 Rights and Remedies………………………………………………22
\n 9.2 Power of Attorney………………………………………………..23
\n 9.3 Accounts Collection………………………………………………23
\n 9.4 Bank Expenses……………………………………………………23
\n 9.5 Bank’s Liability for Collateral……………………………………24
\n 9.6 Remedies Cumulative………………………………………………24
\n 9.7 Demand; Protest………………………………………………….24<\/p>\n
10. NOTICES……………………………………………………………….24<\/p>\n
11. CHOICE OF LAW AND VENUE…………………………………………………25<\/p>\n
12. GENERAL PROVISIONS……………………………………………………..25
\n 12.1 Successors and Assigns……………………………………………25
\n 12.2 Indemnification………………………………………………….25
\n 12.3 Time of Essence………………………………………………….25
\n 12.4 Severability of Provisions………………………………………..26
\n 12.5 Amendments in Writing, Integration…………………………………26
\n 12.6 Counterparts…………………………………………………….26
\n 12.7 Survival………………………………………………………..26<\/p>\n
<\/c><\/s><\/caption>\n<\/table>\n
ii
\n 4<\/p>\n
This LOAN AND SECURITY AGREEMENT is entered into as of July 16,1997, by
\nand between VENTURE BANKING GROUP, a division of Cupertino National Bank
\n(“Bank”) and SAGENT TECHNOLOGY, INC. (“Borrower”).<\/p>\n
RECITALS<\/p>\n
Borrower wishes to obtain credit from time to time from Bank, and Bank
\ndesires to extend credit to Borrower. This Agreement sets forth the terms on
\nwhich Bank will advance credit to Borrower, and Borrower will repay the amounts
\nowing to Bank.<\/p>\n
AGREEMENT<\/p>\n
The parties agree as follows:<\/p>\n
1. DEFINITIONS AND CONSTRUCTION<\/p>\n
1.1 Definitions.<\/p>\n
As used in this Agreement, the following terms shall
\nhave the following definitions:<\/p>\n
“Accounts” means all presently existing and hereafter
\narising accounts, contract rights, and all other forms of obligations owing to
\nBorrower arising out of the sale or lease of goods (including, without
\nlimitation, the licensing of software and other technology) or the rendering of
\nservices by Borrower, whether or not earned by performance, and any and all
\ncredit insurance, guaranties, and other security therefor, as well as all
\nmerchandise returned to or reclaimed by Borrower and Borrower’s Books relating
\nto any of the foregoing.<\/p>\n
“Advance” or “Advances” means a loan advance under the
\nCommitted Revolving Line.<\/p>\n
“Affiliate” means, with respect to any Person, any
\nPerson that owns or controls directly or indirectly such Person, any Person that
\ncontrols or is controlled by or is under common control with such Person, and
\neach of such Person’s senior executive officers, directors, partners and, for
\nany Person that is a limited liability company, such Persons, managers and
\nmembers.<\/p>\n
“Bank Expenses” means all: reasonable costs or expenses
\n(including reasonable attorneys’ fees and expenses) incurred in connection with
\nthe preparation, negotiation, administration, and enforcement of the Loan
\nDocuments; and Bank’s reasonable attorneys’ fees and expenses incurred in
\namending, enforcing or defending the Loan Documents (including fees and expenses
\nof appeal or review, or those incurred in any Insolvency Proceeding), whether or
\nnot suit is brought.<\/p>\n
“Borrower’s Books” means all of Borrower’s books and
\nrecords including without limitation: ledgers; records concerning Borrower’s
\nassets or liabilities, the Collateral, business operations or financial
\ncondition; and all computer programs, or tape files, and the equipment,
\ncontaining such information.<\/p>\n
“Borrowing Base” means an amount equal to (i) eighty
\npercent (80%) of Eligible Accounts plus (ii) fifty percent (50%) of Eligible
\nForeign Accounts, as determined by Bank with reference to the most recent
\nBorrowing Base Certificate delivered by Borrower.<\/p>\n
1
\n 5<\/p>\n
“Business Day” means any day that is not a Saturday,
\nSunday, or other day on which banks in the State of California are authorized or
\nrequired to close.<\/p>\n
“Closing Date” means the date of this Agreement.<\/p>\n
“Code” means the California Uniform Commercial Code.<\/p>\n
“Collateral” means the property described on Exhibit A
\nattached hereto.<\/p>\n
“Committed Revolving Line” means a credit extension of
\nup to Two Million Dollars ($2,000,000).<\/p>\n
“Committed Equipment Line means a credit extension of up
\nto One Million Dollars ($1,000,000).<\/p>\n
“Contingent Obligation” means, as applied to any Person,
\nany direct or indirect liability, contingent or otherwise, of that Person with
\nrespect to (i) any indebtedness, lease, dividend, letter of credit or other
\nobligation of another, including, without limitation, any such obligation
\ndirectly or indirectly guaranteed, endorsed, co-made or discounted or sold with
\nrecourse by that Person, or in respect of which that Person is otherwise
\ndirectly or indirectly liable; (H) any obligations with respect to undrawn
\nletters of credit issued for the account of that Person; and (W) all obligations
\narising under any interest rate, currency or commodity swap agreement, interest
\nrate cap agreement, interest rate collar agreement, or other agreement or
\narrangement designated to protect a Person against fluctuation in interest
\nrates, currency exchange rates or commodity prices; provided, however, that the
\nterm “Contingent Obligation” shall not include endorsements for collection or
\ndeposit in the ordinary course of business. The amount of any Contingent
\nObligation shall be deemed to be an amount equal to the stated or determined
\namount of the primary obligation in respect of which such Contingent Obligation
\nis made or, if not stated or determinable, the maximum reasonably anticipated
\nliability in respect thereof as determined by such Person in good faith;
\nprovided, however, that such amount shall not in any event exceed the maximum
\namount of the obligations under the guarantee or other support arrangement.<\/p>\n
“Copyrights” means any and all copyright rights,
\ncopyright applications, copyright registrations and like protections in each
\nwork or authorship and derivative work thereof, whether published or unpublished
\nand whether or not the same also constitutes a trade secret, now or hereafter
\nexisting, created, acquired or held.<\/p>\n
“Credit Extension” means each Advance, Equipment
\nAdvance, Letter of Credit, Term Loan, Exchange Contract or any other extension
\nof credit by Bank for the benefit of Borrower hereunder.<\/p>\n
“Current Assets” means, as of any applicable date, all
\namounts that should, in accordance with GAAP, be included as current assets on
\nthe consolidated balance sheet of Borrower and its Subsidiaries as at such date.<\/p>\n
“Current Liabilities” means, as of any applicable date,
\nall amounts that should, in accordance with GAAP, be included as current
\nliabilities on the consolidated balance sheet of Borrower and its Subsidiaries,
\nas at such date, plus, to the extent not already included therein, all
\noutstanding Credit Extensions made under this Agreement, including all
\nIndebtedness that is payable upon demand or within one year from the date of
\ndetermination thereof unless such Indebtedness is renewable or extendable at the
\noption of Borrower or any Subsidiary to a date more than one year from the date
\nof determination, but excluding Subordinated Debt.<\/p>\n
2
\n 6<\/p>\n
“Eligible Accounts” means those Accounts that arise in
\nthe ordinary course of Borrower’s business that comply with all of Borrower’s
\nrepresentations and warranties to Bank set forth in Section 5.4; provided that
\nstandards of eligibility may be fixed and revised from time to time by Bank in
\nBank’s reasonable judgment and upon notification thereof to Borrower in
\naccordance with the provisions hereof. Unless otherwise agreed to by Bank in
\nwriting, Eligible Accounts shall not include -the following:<\/p>\n
(a) Accounts that the account debtor has failed to pay
\nwithin ninety (90) days of invoice date;<\/p>\n
(b) Accounts with respect to an account debtor, fifty
\npercent (50%) of whose Accounts the account debtor has failed to pay within
\nninety (90) days of invoice date;<\/p>\n
(c) Accounts with respect to an account debtor,
\nincluding Affiliates, whose total obligations to Borrower exceed forty percent
\n(40%) of all Accounts, except with respect to Fortune 500 Companies, as to which
\nthe percentage shall be sixty-five percent (65%) to the extent such obligations
\nexceed the aforementioned percentage, except as approved in writing by Bank;<\/p>\n
(d) Accounts with respect to which the account debtor
\ndoes not have its principal place of business in the United States;<\/p>\n
(e) Accounts with respect to which the account debtor is
\na federal, state or local governmental entity or any department, agency, or
\ninstrumentality thereof;<\/p>\n
(f) Accounts with respect to which Borrower is liable to
\nthe account debtor, but only to the extent of any amounts owing to the account
\ndebtor (sometimes referred to as “contra” accounts, e.g. accounts payable,
\ncustomer deposits, credit accounts, etc.);<\/p>\n
(g) Accounts generated by demonstration or promotional
\nequipment, or with respect to which goods are placed on consignment, guaranteed
\nsale, sale or return, sale on approval, bill and hold, or other terms by reason
\nof which the payment by the account debtor may be conditional;<\/p>\n
(h) Accounts with respect to which the account debtor is
\nan Affiliate, officer, employee, or agent of Borrower;<\/p>\n
(i) Accounts with respect to which the account debtor
\ndisputes liability or makes any claim with respect thereto as to which Bank
\nbelieves, in its sole discretion, that there may be a basis for dispute (but
\nonly to the extent of the amount subject to such dispute or claim), or is
\nsubject to any Insolvency Proceeding, or becomes insolvent, or goes out of
\nbusiness;<\/p>\n
(j) Accounts owing from distributors that have not been
\npre-approved in writing by Bank; and<\/p>\n
(k) Accounts with respect to progress billings;<\/p>\n
(l) Accounts the collection of which Bank reasonably
\ndetermines to be doubtful. “Eligible Foreign Accounts” means Accounts with
\nrespect to which the account debtor does not have its principal place of
\nbusiness in the United States and that are: (1) covered by credit insurance in
\nform and amount, and by an insurer satisfactory to Bank less the amount of any
\ndeductible(s) which may be or become owing thereon; or (2) supported by one or
\nmore letters of credit either advised or negotiated through Bank or in favor of
\nBank as beneficiary, in an amount and of a <\/p>\n
3
\n 7<\/p>\n
tenor, and issued by a financial institution, acceptable to Bank; or (3) that
\nBank approves on a case-by-case basis.<\/p>\n
“Equipment” means all present and future machinery,
\nequipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and
\nattachments in which Borrower has any interest.<\/p>\n
“Equipment Advance” has the meaning set forth in Section
\n2.1.3.<\/p>\n
“Equipment Availability Date” has the meaning set forth
\nin Section 2.1.3.<\/p>\n
“ERISA” means the Employment Retirement Income Security
\nAct of 1974, as amended, and the regulations thereunder.<\/p>\n
“Fortune 500 Companies” mean any account debtor of
\nBorrower listed among the 500 largest United States companies in the most recent
\nsuch listing published by Fortune Magazine.<\/p>\n
“GAAP” means generally accepted accounting principles as
\nin effect in the United States from time to time.<\/p>\n
“Indebtedness” means (a) all indebtedness for borrowed
\nmoney or the deferred purchase price of property or services, including without
\nlimitation reimbursement and other obligations with respect to surety bonds and
\nletters of credit, (b) all obligations evidenced by notes, bonds, debentures or
\nsimilar instruments, (c) all capital lease obligations and (d) all Contingent
\nObligations.<\/p>\n
“Insolvency Proceeding” means any proceeding commenced
\nby or against any person or entity under any provision of the United States
\nBankruptcy Code, as amended, or under any other bankruptcy or insolvency law,
\nincluding assignments for the benefit of creditors, formal or informal
\nmoratoria, compositions, extension generally with its creditors, or proceedings
\nseeking reorganization, arrangement, or other relief.<\/p>\n
“Intellectual Property Collateral” means<\/p>\n
(a) Copyrights, Trademarks, Patents, and Mask Works;<\/p>\n
(b) Any and all trade secrets, and any and all
\nintellectual property rights in computer software and computer software products
\nnow or hereafter existing, created, acquired or held;<\/p>\n
(c) Any and all design rights which may be available to
\nBorrower now or hereafter existing, created, acquired or held;<\/p>\n
(d) Any and all claims for damages by way of past,
\npresent and future infringement of any of the rights included above, with the
\nright, but not the obligation, to sue for and collect such damages for said use
\nor infringement of the intellectual property rights identified above;<\/p>\n
(e) All licenses or other rights to use any of the
\nCopyrights, Patents, Trademarks, or Mask Works, and all license fees and
\nroyalties arising from such use to the extent permitted by such license or
\nrights;<\/p>\n
(f) All amendments, renewals and extensions of any of
\nthe Copyrights, Trademarks, Patents or Mask Works; and<\/p>\n
4
\n 8<\/p>\n
(g) All proceeds and products of the foregoing,
\nincluding without limitation all payments under-insurance or any indemnity or
\nwarranty payable in respect of any of the foregoing.<\/p>\n
“Inventory” means all present and future inventory in
\nwhich Borrower has any interest, including merchandise, raw materials, parts,
\nsupplies, packing and shipping materials, work in process and finished products
\nintended for sale or lease or to be furnished under a contract of service, of
\nevery kind and description now or at any time hereafter owned by or in the
\ncustody or possession, actual or constructive, of Borrower, including such
\ninventory as is temporarily out of its custody or possession or in transit and
\nincluding any returns upon any accounts or other proceeds, including insurance
\nproceeds, resulting from the sale or disposition of any of the foregoing and any
\ndocuments of title representing any of the above.<\/p>\n
“Investment” means any beneficial ownership of
\n(including stock, partnership interest or other securities) any Person, or any
\nloan, advance or capital contribution to any Person.<\/p>\n
“IRC” means the Internal Revenue Code of 1986, as
\namended, and the regulations thereunder.<\/p>\n
“Letter of Credit” means a letter of credit or similar
\nundertaking issued by Bank pursuant to Section 2.1-2, and any letters of credit
\npreviously issued by Bank for the account of Borrower and existing on the
\nClosing Date, including Letter of Credit #10356.<\/p>\n
“Letter of Credit Reserve” has the meaning set forth in
\nSection 2.1.2.<\/p>\n
“Lien” means any mortgage, lien, deed of trust, charge,
\npledge, security interest or other encumbrance.<\/p>\n
“Loan Documents” means, collectively, this Agreement,
\nany note or notes executed by Borrower, and any other present or future
\nagreement entered into between Borrower and.\/or for the benefit of Bank in
\nconnection with this Agreement, all as amended, extended or restated from time
\nto time.<\/p>\n
“Mask Works” means all mask works or similar rights
\navailable for the protection of semiconductor chips, now owned or hereafter
\nacquired.<\/p>\n
“Material Adverse Effect” means a material adverse
\neffect on (i) the business operations or condition (financial or otherwise) of
\nBorrower and its Subsidiaries taken as a whole or (ii) the ability of Borrower
\nto repay the Obligations or otherwise perform its obligations under the Loan
\nDocuments.<\/p>\n
“Maturity Date” means July 15, 2001.<\/p>\n
“Negotiable Collateral” means all of Borrower’s present
\nand future letters of credit of which it is a beneficiary, notes, drafts,
\ninstruments, securities, documents of title, and chattel paper.<\/p>\n
“Obligations” means all debt, principal, interest, Bank
\nExpenses and other amounts owed to Bank by Borrower pursuant to this Agreement
\nor any other agreement, whether absolute or contingent, due or to become due,
\nnow existing or hereafter arising, including any interest that accrues after the
\ncommencement of an Insolvency Proceeding and including any debt, liability, or
\nobligation owing from Borrower to others that Bank may have obtained by
\nassignment or otherwise.<\/p>\n
5
\n 9<\/p>\n
“Patents” means all patents, patent applications and
\nlike protections, including without limitation improvements, divisions,
\ncontinuations, renewals, reissues, extensions and continuations-in-part of the
\nsame.<\/p>\n
“Payment Date” means the fifteenth (15th) calendar day
\nof each month, commencing on the first such date after the Closing Date and
\nending on the Maturity Date.<\/p>\n
“Permitted Indebtedness” means:<\/p>\n
(a) Indebtedness of Borrower in favor of Bank arising
\nunder this Agreement or any other Loan Document;<\/p>\n
(b) Indebtedness existing on the Closing Date and
\ndisclosed in the Schedule;<\/p>\n
(c) Subordinated Debt;<\/p>\n
(d) Indebtedness to trade creditors incurred in the
\nordinary course of business; and<\/p>\n
(e) Indebtedness secured by Permitted Liens.<\/p>\n
“Permitted Investment” means:<\/p>\n
(a) Investments existing on the Closing Date disclosed
\nin the Schedule; and<\/p>\n
(b) (i) marketable direct obligations issued or
\nunconditionally guaranteed by the United States of America or any agency or any
\nState thereof maturing within one (1) year from the date of acquisition thereof,
\n(ii) commercial paper maturing no more than one (1) year from the date of
\ncreation thereof and currently having the highest rating obtainable from either
\nStandard & Poor’s Corporation or Moody’s Investors Service, Inc., and (iii)
\ncertificates of deposit maturing no more than one (1) year from the date of
\ninvestment therein issued by Bank.<\/p>\n
“Permitted Liens” means the following:<\/p>\n
(a) Any Liens existing on the Closing Date and disclosed
\nin the Schedule or arising under this Agreement or the other Loan Documents;<\/p>\n
(b) Liens for taxes, fees, assessments or other
\ngovernmental charges or levies,. either not delinquent or being contested in
\ngood faith by appropriate proceedings and as to which adequate reserves are
\nmaintained on Borrower’s Books in accordance with GAAP, provided the same have
\nno priority over any of Bank’s security interests;<\/p>\n
(c) Liens (i) upon or in any Equipment acquired or held
\nby Borrower or any of its Subsidiaries to secure the purchase price of such
\nEquipment or indebtedness incurred solely for the purpose of financing the
\nacquisition of such Equipment, or (ii) existing on such equipment at the time of
\nits acquisition, provided that the Lien is confined solely to the property so
\nacquired and improvements thereon, and the proceeds of such equipment;<\/p>\n
(d) Leases or subleases and licenses or sublicenses
\ngranted to others in the ordinary course of Borrower’s business not interfering
\nin any material respect with the business of Borrower and its Subsidiaries taken
\nas a whole, and any interest or title of a lessor, licensor or under <\/p>\n
6
\n 10<\/p>\n
any lease or license, provided that such leases, subleases, licenses and
\nsublicenses do not prohibit the grant of the security interest granted
\nhereunder; and<\/p>\n
(e) Liens incurred in connection with the extension,
\nrenewal or refinancing of the indebtedness secured by Liens of the type
\ndescribed in clauses (a) through (c) above, provided that any extension, renewal
\nor replacement Lien shall be limited to the property encumbered by the existing
\nLien and the principal amount of the indebtedness being extended, renewed or
\nrefinanced does not increase.<\/p>\n
“Person” means any individual, sole proprietorship,
\npartnership, limited liability company, joint venture, trust, unincorporated
\norganization, association, corporation, institution, public benefit corporation,
\nfirm, joint stock company, estate, entity or governmental agency.<\/p>\n
“Prime Rate” means the variable rate of interest, per
\nannum, most recently published in the Western edition of The Wall Street
\nJournal, as the “prime rate,” whether or not such rate is the lowest rate
\navailable from Bank.<\/p>\n
“Quick Assets” means, as of any applicable date, the
\nconsolidated cash, cash equivalents, accounts receivable and investments with
\nmaturities of fewer than ninety (90) days of Borrower determined in accordance
\nwith GAAP.<\/p>\n
“Responsible Officer” means each of the Chief Executive
\nOfficer, the President, the Chief Financial Officer and the Controller of
\nBorrower.<\/p>\n
“Revolving Maturity Date” means the date immediately
\npreceding the first anniversary of the Closing Date.<\/p>\n
“Schedule” means the schedule of exceptions attached
\nhereto, if any.<\/p>\n
“Subordinated Debt” means any debt incurred by Borrower
\nthat is subordinated to the debt owing by Borrower to Bank on terms acceptable
\nto Bank (and identified as being such by Borrower and Bank).<\/p>\n
“Subsidiary” means with respect to any Person, any
\ncorporation, partnership, company association, joint venture, or any other
\nbusiness entity, if any, of which more than fifty percent (50%) of the voting
\nstock or other equity interests is owned or controlled, directly or indirectly,
\nby such Person or one or more Affiliates of such Person.<\/p>\n
“Tangible Net Worth” means, as of any applicable date,
\nthe consolidated total assets of Borrower and its Subsidiaries minus without
\nduplication, (i) the sum of any amounts attributable to (a) goodwill, (b)
\nintangible items such as unamortized debt discount and expense, patents, trade
\nand service marks and names, copyrights and research and development expenses
\nexcept prepaid expenses, and (c) all reserves not already deducted from assets,
\nand (ii) Total Liabilities.<\/p>\n
“Total Liabilities” means, as of any applicable date,
\nall obligations that should, in accordance with GAAP, be classified as
\nliabilities on the consolidated balance sheet of Borrower, including in any
\nevent all Indebtedness, but specifically excluding Subordinated Debt.<\/p>\n
“Trademarks” means any trademark and servicemark rights,
\nwhether registered or not, applications to register and registrations of the
\nsame and like protections, and the entire goodwill of the business of Borrower
\nconnected with and symbolized by such trademarks.<\/p>\n
7
\n 11<\/p>\n
1.2 Accounting and Other Terms.<\/p>\n
All accounting terms not specifically defined herein
\nshall be construed in accordance with GAAP and all calculations and
\ndeterminations made hereunder shall be made in accordance with GAAP. When used
\nherein, the term “financial statements” shall include the notes and schedules
\nthereto. The terms “including” \/ “includes” shall always be read as meaning
\n“including (or includes) without limitation,” when used herein or in any other
\nLoan Document.<\/p>\n
2. LOAN AND TERMS OF PAYMENT<\/p>\n
2.1 Credit Extensions.<\/p>\n
Borrower promises to pay when due to the order of Bank,
\nin lawful money of the United States of America, the aggregate unpaid principal
\namount of all Credit Extensions made by Bank to Borrower hereunder. Borrower
\nshall also pay interest on the unpaid principal amount of such Credit Extensions
\nat rates in accordance with the terms hereof.<\/p>\n
2.1.1 Revolving Advances<\/p>\n
(a) Subject to and upon the terms and conditions of this
\nAgreement, Bank agrees to make Advances to Borrower in an aggregate outstanding
\namount not to exceed (i) the Committed Revolving Line or the Borrowing Base,
\nwhichever is less, minus (ii) the face amount of all outstanding Letters -of
\nCredit (including drawn but unreimbursed Letters of Credit). Subject to the
\nterms and conditions of this Agreement, amounts borrowed pursuant to this
\nSection may be repaid and reborrowed at any time prior to the Revolving Maturity
\nDate.<\/p>\n
(b) Whenever Borrower desires an Advance, Borrower will
\nnotify Bank by facsimile transmission or telephone no later than 3:00 p.m.
\nPacific time, on the Business Day that the Advance is to be made. Each such
\nnotification shall be promptly confirmed by a Payment\/Advance Form in
\nsubstantially the form of Exhibit B hereto. Bank is authorized to make Advances
\nunder this Agreement, based upon instructions received from a Responsible
\nOfficer or a designee of a Responsible Officer or without instructions if in
\nBank’s discretion such Advances are necessary to meet Obligations which have
\nbecome due and remain unpaid. Bank shall be entitled to rely on any telephonic
\nnotice given by a person who Bank reasonably believes to be a Responsible
\nOfficer or a designee thereof, and Borrower shall indemnify and hold Bank
\nharmless for any damages or loss suffered by Bank as a result of such reliance.
\nBank will credit the amount of Advances made under this Section 2.1 to
\nBorrower’s deposit account. Borrower shall deliver to Bank a promissory note in
\nsubstantially the form of Exhibit C-1.<\/p>\n
(c) The Committed Revolving Line shall terminate on the
\nRevolving Maturity Date, at which time all Advances under this Section 2.1.1
\nshall be immediately due and payable.<\/p>\n
2.1.2 Letters of Credit.<\/p>\n
(a) Subject to the terms and conditions of this
\nAgreement, Bank agrees to issue or cause to be issued Letters of Credit for the
\naccount of Borrower in an aggregate outstanding face amount not to exceed (i)
\nthe lesser of the Committed Revolving Line or the Borrowing Base, whichever is
\nless, minus (ii) the then outstanding principal balance of the Advances,
\nprovided that the face amount of outstanding Letters of Credit (including drawn
\nbut unreimbursed Letters of Credit and any Letter of Credit Reserve) shall not
\nin any case exceed Two Hundred Thousand Dollars ($200,000). Each Letter of
\nCredit shall have an expiration date no later than one hundred eighty (180) days
\nafter the Revolving Maturity Date provided that Borrower’s reimbursement
\nobligation shall be secured by cash on terms acceptable to Bank at any time
\nafter the Revolving<\/p>\n
8
\n 12<\/p>\n
Maturity Date. All Letters of Credit shall be, in form and substance, acceptable
\nto Bank in its sole discretion and shall be subject to the terms and conditions
\nof Bank’s form of standard Application and Letter of Credit Agreement.<\/p>\n
(b) The obligation of Borrower to immediately reimburse
\nBank for drawings made under Letters of Credit shall be absolute, unconditional
\nand irrevocable, and shall be performed strictly in accordance with the terms of
\nthis Agreement and such Letters of Credit, under all circumstances whatsoever.
\nBorrower shall indemnify, defend, protect and hold Bank harmless against any
\nloss, cost, expense or liability, including, without limitation, reasonable
\nattorneys’ fees, arising out of or in connection with all obligations, demands,
\nclaims, and liabilities claimed or asserted by any other party in connection
\nwith any Letters of Credit.<\/p>\n
(c) Borrower may request that Bank issue a Letter of
\nCredit payable in a currency other than United States Dollars. If a demand for
\npayment is made under any such Letter of Credit, Bank shall treat such demand as
\nan Advance to Borrower of the equivalent of the amount thereof (plus cable
\ncharges) in United States currency at the then prevailing rate of exchange in
\nSan Francisco, California, for sales of that other currency for cable transfer
\nto the country of which it is the currency.<\/p>\n
(d) Upon the issuance of any Letter of Credit payable in
\na currency other than United States Dollars, Bank shall create a reserve under
\nthe Committed Revolving Line for Letters of Credit against fluctuations in
\ncurrency exchange rates, in an amount equal to ten percent (10%) of the face
\namount of such Letter of Credit. The amount of such reserve may be amended by
\nBank from time to time to account for fluctuations in the exchange rate. The
\navailability of hinds under the Committed Revolving Line shall be reduced by the
\namount of such reserve for so long as such Letter of Credit remains outstanding.<\/p>\n
2.1.3 Equipment Advances.<\/p>\n
(a) Subject to and upon the terms and conditions of this
\nAgreement, at any time from the date hereof through July 16, 1998 (the
\n“Equipment Availability End Date”), Bank agrees to make advances (each an
\n“Equipment Advance” and, collectively, the “Equipment Advances”) to Borrower in
\nan aggregate outstanding amount not to exceed the Committed Equipment Line. To
\nevidence the Equipment Advance or Equipment Advances, Borrower shall deliver to
\nBank, at the time of each Equipment Advance request, an invoice for the
\nequipment to be purchased. The Equipment Advances shall be used only to purchase
\nor refinance Equipment purchased on or after ninety (90) days prior to the date
\nhereof and shall not exceed one hundred percent (100%) of the invoice amount of
\nsuch equipment approved from time to time by Bank, excluding taxes, shipping,
\nwarranty charges, freight discounts and installation expense. Equipment
\nAdvances, once repaid, may not be reborrowed.<\/p>\n
(b) Interest shall accrue from the date of each
\nEquipment Advance at the rate specified in Section 23(a), and shall be payable
\nmonthly for each month through the month in which the Equipment Availability End
\nDate falls. Any Equipment Advances that are outstanding on October 15, 1997
\nshall be payable in thirty-six (36) equal monthly installments of principal,
\nplus accrued interest, beginning on November 15, 1997, and continuing through
\nOctober 15, 2000. Any Equipment Advances drawn after October 15, 1997 that are
\noutstanding on January 15, 1998 shall be payable in thirty-six (36) equal
\nmonthly installments of principal, plus accrued interest, beginning on February
\n15, 1998 and continuing through January 15, 2001. Any Equipment Advances drawn
\nafter January 15, 1998 that are outstanding on April 15, 1998 shall be payable
\nin thirty-six (36) equal monthly installments of principal, plus accrued
\ninterest, beginning on May 15, 1998 and continuing through April 15, 2001. Any
\nEquipment Advances drawn after April 15, 1998 that are outstanding on the
\nEquipment Availability End Date will be payable in thirty-six (36) equal monthly
\ninstallments of principal, plus accrued interest, beginning on August 15, 1998
\nand continuing through the Maturity<\/p>\n
9
\n 13<\/p>\n
Date, at which time all amounts due under this Section 2.1.3 and any other
\namounts due under this Agreement shall be immediately due and payable.<\/p>\n
(c) When Borrower desires to obtain an Equipment
\nAdvance, Borrower shall notify Bank (which notice shall be irrevocable) by
\nfacsimile transmission to be received no later than 3:00 p.m. Pacific time one
\n(1) Business Day before the day on which the Equipment Advance is to be made.
\nSuch notice shall be substantially in the form of Exhibit B. The notice shall be
\nsigned by a Responsible Officer or its designee and include a copy of the
\ninvoice for the Equipment to be financed. Borrower shall deliver to Bank a
\npromissory note in substantially the form of Exhibit C-2.<\/p>\n
2.2 Overadvances.<\/p>\n
If, at any time or for any reason, the amount of
\nObligations owed by Borrower to Bank pursuant to Section 2.1.1 and 2.1.2 of this
\nAgreement is greater than the lesser of (i) the Committed Revolving Line or (ii)
\nthe Borrowing Base, Borrower shall immediately pay to Bank, in cash, the amount
\nof such excess.<\/p>\n
2.3 Interest Rates, Payments, and Calculations.<\/p>\n
(a) Interest Rate. Except as set forth in Section 23(b),
\nany Advances and\/or Equipment Advances shall bear interest on the average daily
\nbalance thereof, at -a per annum rate equal to the Prime Rate.<\/p>\n
(b) Default Rate. AR Obligations shall bear interest,
\nfrom and after the occurrence of an Event of Default, at a rate equal to five
\n(5) percentage points above the interest rate applicable immediately prior to
\nthe occurrence of the Event of Default.<\/p>\n
(c) Payments. Interest hereunder shall be due and
\npayable on each Payment Date. Borrower hereby authorizes Bank to debit any
\naccounts with – Bank, including, without limitation, Account Number 3103056 for
\npayments of principal and interest due on the Obligations and any other amounts
\nowing by Borrower to Bank. Bank win notify Borrower of all debits which Bank has
\nmade against Borrower’s accounts. Any such debits against Borrower’s accounts in
\nno way shall be deemed a set-off. Any interest not paid when due shall be
\ncompounded by becoming a part of the Obligations, and such interest shall
\nthereafter accrue interest at the rate then applicable hereunder.<\/p>\n
(d) Computation. In the event the Prime Rate is changed
\nfrom time to time hereafter, the applicable rate of interest hereunder shall be
\nincreased or decreased effective as of 12:01 a.m. on the day the Prime Rate is
\nchanged, by an amount equal to such change in the Prime Rate. All interest
\nchargeable under the Loan Documents shall be computed on the basis of a three
\nhundred sixty (360) day year for the actual number of days elapsed.<\/p>\n
2.4 Crediting Payments.<\/p>\n
Prior to the occurrence of an Event of Default, Bank
\nshall credit a wire transfer of funds, check or other item of payment to such
\ndeposit account or Obligation as Borrower specifies. After the occurrence of an
\nEvent of Default, the receipt by Bank of any wire transfer of funds, check, or
\nother item of payment, whether directed to Borrower’s deposit account with Bank
\nor to the Obligations or otherwise, shall be immediately applied to
\nconditionally reduce Obligations, but shall not be considered a payment in
\nrespect of the Obligations unless such payment is of immediately available
\nfederal funds or unless. and until such check or other item of payment is
\nhonored when presented for payment. Notwithstanding anything to the contrary
\ncontained herein, any wire transfer or payment received by Bank after 12:00 noon
\nPacific time shall be deemed to have been received by <\/p>\n
10
\n 14<\/p>\n
Bank as of the opening of business on the immediately following Business Day.
\nWhenever any payment to Bank under the Loan Documents would otherwise be due
\n(except by reason of acceleration) on a date that is not a Business Day, such
\npayment shall instead be due on the next Business Day, and additional fees or
\ninterest, as the case may be, shall accrue and be payable for the period of such
\nextension.<\/p>\n
2.5 Fees.<\/p>\n
Borrower shall pay to Bank the following:<\/p>\n
(a) Facility Fee. A Facility Fee equal to Six Thousand
\nDollars ($6,000), which fee shall be due on the Closing Date and shall be fully
\nearned and non-refundable;<\/p>\n
(b) Financial Examination and Appraisal Fees. Bank’s
\ncustomary fees and out-of-pocket expenses for Bank’s audits of Borrower’s
\nAccounts, and for each appraisal of Collateral and financial analysis and
\nexamination of Borrower performed from time to time by Bank or its agents;<\/p>\n
(c) Bank Expenses. Upon demand from Bank, including,
\nwithout limitation, upon the date hereof, all Bank Expenses incurred through the
\ndate hereof, including reasonable attorneys’ fees and expenses (not to exceed
\n$3,500 without Borrower’s prior approval) and, after the date hereof, all Bank
\nExpenses, including reasonable attorneys’ fees and expenses, as and when they
\nbecome due.<\/p>\n
2.6 Additional Costs.<\/p>\n
In case any law, regulation, treaty or official
\ndirective or the interpretation or application thereof by any court or any
\ngovernmental authority charged with the administration thereof or the compliance
\nwith any guideline or request of any central bank or other governmental
\nauthority (whether or not having the force of law):<\/p>\n
(a) subjects Bank to any tax with respect to payments of
\nprincipal or interest or any other amounts payable hereunder by Borrower or
\notherwise with respect to the transactions contemplated hereby (except for taxes
\non the overall net income of Bank imposed by the United States of America or any
\npolitical subdivision thereof);<\/p>\n
(b) imposes, modifies or deems applicable any deposit
\ninsurance, reserve, special deposit or similar requirement against assets held
\nby, or deposits in or for the account of, or loans by, Bank; or<\/p>\n
(c) imposes upon Bank any other condition with respect
\nto its performance under this Agreement,<\/p>\n
and the result of any of the foregoing is to increase the cost to Bank, reduce
\nthe income receivable by Bank or impose any expense u on Bank with respect to
\nany loans, Bank shall notify Borrower thereof. Borrower agrees to pay to Bank
\nthe amount of such increase in cost, reduction in income or additional expense
\nas and when such cost, reduction or expense is incurred or determined, upon
\npresentation by Bank of a statement of the amount and setting forth Bank’s
\ncalculation thereof, all in reasonable detail, which statement shall be deemed
\ntrue and correct absent manifest error.<\/p>\n
11
\n 15<\/p>\n
2.7 Term.<\/p>\n
Except as otherwise set forth herein, this Agreement
\nshall become effective on the Closing Date and, subject to Section 12.7, shall
\ncontinue in full force and effect for a term ending on. the Maturity Date.
\nNotwithstanding the foregoing, Bank shall have the right to terminate its
\nobligation to make Credit Extensions under this Agreement immediately and
\nwithout notice upon the occurrence and during the continuance of an Event of
\nDefault. Notwithstanding termination of this Agreement, Bank’s lien on the
\nCollateral shall remain in effect for so long as any Obligations are
\noutstanding.<\/p>\n
3. CONDITIONS OF LOANS<\/p>\n
3.1 Conditions Precedent to Initial Credit Extension.<\/p>\n
The obligation of Bank to make the initial Credit
\nExtension is subject to the condition precedent that Bank shall have received,
\nin form and substance satisfactory to Bank, the following:<\/p>\n
(a) this Agreement;<\/p>\n
(b) a certificate of the Secretary of Borrower with
\nrespect to articles, bylaws,. incumbency and resolutions authorizing the
\nexecution and delivery of this Agreement;<\/p>\n
(c) a warrant to purchase stock;<\/p>\n
(d) financing statements (Forms UCC-1);<\/p>\n
(e) insurance certificate;<\/p>\n
(f) payment of the fees and Bank Expenses then due
\nspecified in Section .2.5 hereof;<\/p>\n
(g) an audit of Borrower’s Accounts, the results of
\nwhich shall be satisfactory to Bank; and<\/p>\n
(h) such other documents, and completion of such other
\nmatters, as Bank may reasonably deem necessary or appropriate.<\/p>\n
3.2 Conditions Precedent to all Credit Extensions.<\/p>\n
The obligation of Bank to make each Credit Extension,
\nincluding the initial Credit Extension, is further subject to the following
\nconditions:<\/p>\n
(a) timely receipt by Bank of the Payment\/Advance Form
\nas provided in Section 2.1; and<\/p>\n
(b) the representations and warranties contained in
\nSection 5 shall be true and correct in all material respects on and as of the
\ndate of such Payment\/Advance Form and on the effective date of each Credit
\nExtension as though made at and as of each such date, and no Event of Default
\nshall have occurred and be continuing, or would result from such Credit
\nExtension. The making of each Credit Extension shall be deemed to be a
\nrepresentation and warranty by Borrower on the date of such Credit Extension as
\nto the accuracy of the facts referred to in this Section 3.2(b).<\/p>\n
12
\n 16<\/p>\n
4. CREATION OF SECURITY INTEREST<\/p>\n
4.1 Grant of Security Interest.<\/p>\n
Borrower grants and pledges to Bank a continuing
\nsecurity interest in all presently existing and hereafter acquired or arising
\nCollateral in order to secure prompt payment of any and all Obligations and in
\norder to secure prompt performance by Borrower of each of its covenants and
\nduties under the Loan Documents. Except as set forth in the Schedule, such
\nsecurity interest constitutes a valid, first priority security interest in the
\npresently existing Collateral, and will constitute a valid, first priority
\nsecurity interest in Collateral acquired after the date hereof. Borrower
\nacknowledges that Bank may place a “hold” on any Deposit Account pledged as
\nCollateral to secure the Obligations. Notwithstanding termination of this
\nAgreement, Bank’s Lien on the Collateral shall remain in effect for so long as
\nany Obligations are outstanding.<\/p>\n
4.2 Delivery of Additional Documentation Required.<\/p>\n
Borrower shall from time to time execute and deliver to
\nBank, at the request of Bank, all Negotiable Collateral, all financing
\nstatements and other documents that Bank may reasonably request, in form
\nsatisfactory to Bank, to perfect and continue perfected Bank’s security
\ninterests in the Collateral and in order to fully consummate all of the
\ntransactions contemplated under the Loan Documents.<\/p>\n
4.3 Right to Inspect.<\/p>\n
Bank (through any of its officers, employees, or agents)
\nshall have the right, upon reasonable prior notice, from time to time during
\nBorrower’s usual business hours, to inspect Borrower’s Books and to make copies
\nthereof and to check, test, and appraise the Collateral in order to verify
\nBorrower’s financial condition or the amount, condition of, or any other matter
\nrelating to, the Collateral.<\/p>\n
5. REPRESENTATIONS AND WARRANTIES<\/p>\n
Borrower represents and warrants as follows:<\/p>\n
5.1 Due Organization and Qualification.<\/p>\n
Borrower and each Subsidiary is a corporation duly
\nexisting and in good standing under the laws of its state of incorporation and
\nqualified and licensed to do business in, and is in good standing in, any state
\nin which the conduct of its business or its ownership of property requires that
\nit be so qualified.<\/p>\n
5.2 Due Authorization; No Conflict.<\/p>\n
The execution, delivery, and performance of the Loan
\nDocuments are within Borrower’s powers, have been duly authorized, and are not
\nin conflict with nor constitute a breach of any provision contained in
\nBorrower’s Articles of Incorporation or Bylaws, nor will they constitute an
\nevent of default under any material agreement to which Borrower is a party or by
\nwhich Borrower is bound. Borrower is not in default under any agreement to which
\nit is a party or by which it is bound, which default could have a Material
\nAdverse Effect.<\/p>\n
5.3 No Prior Encumbrances.<\/p>\n
Borrower has good and indefeasible title to the
\nCollateral, free and clear of Liens, except for Permitted Liens.<\/p>\n
13
\n 17<\/p>\n
5.4 Bona Fide Eligible Accounts.<\/p>\n
The Eligible Accounts are bona fide existing
\nobligations. The service or property giving rise to such Eligible Accounts has
\nbeen performed or delivered to the account debtor or to the account debtor’s
\nagent for immediate shipment to and unconditional acceptance by the . account
\ndebtor. Borrower has not received notice of actual or imminent Insolvency
\nProceeding of any account debtor whose accounts are included in any Borrowing
\nBase Certificate as an Eligible Account.<\/p>\n
5.5 Merchantable Inventory.<\/p>\n
All Inventory is in all material respects of good and
\nmarketable quality, free from all material defects.<\/p>\n
5.6 Intellectual Property.<\/p>\n
Borrower is the sole owner of the Intellectual Property
\nCollateral, except for non-exclusive licenses granted by Borrower to its
\ncustomers in the ordinary course of business. Each of the Patents is valid and
\nenforceable, and no part of the Intellectual Property Collateral has been judged
\ninvalid or unenforceable, in whole or in part, and no claim has been made that
\nany part of the Intellectual Property Collateral violates the rights of any
\nthird party.<\/p>\n
5.7 Name; Location of Chief Executive Office.<\/p>\n
Except as disclosed in the Schedule, Borrower has not
\ndone business and will not, without at least thirty (30) days prior written
\nnotice to Bank, do business under any name other than that specified on the
\nsignature page hereof. The chief executive office of Borrower is located at the
\naddress indicated in Section 10 hereof.<\/p>\n
5.8 Litigation.<\/p>\n
Except as set forth in the Schedule, there are no
\nactions or proceedings pending or, to Borrower’s knowledge, threatened by or
\nagainst Borrower or any Subsidiary before any court or administrative agency in
\nwhich an adverse decision could have a Material Adverse Effect or a material
\nadverse effect on Borrower’s interest or Bank’s security interest in the
\nCollateral.<\/p>\n
5.9 No Material Adverse Change in Financial Statements.<\/p>\n
All consolidated financial statements related to
\nBorrower and any Subsidiary that have been delivered by Borrower to Bank fairly
\npresent in all material respects Borrower’s consolidated financial condition as
\nof the date thereof and Borrower’s consolidated results of operations for the
\nperiod then ended. There has not been a material adverse change in the
\nconsolidated financial condition of Borrower since the date of the most recent
\nof such financial statements submitted to Bank on or about the Closing Date.<\/p>\n
5.10 Solvency.<\/p>\n
The fair saleable value of Borrower’s assets (including
\ngoodwill minus disposition costs) exceeds the fair value of its liabilities; the
\nBorrower is not left with unreasonably small capital after the transactions
\ncontemplated by this Agreement; and Borrower is able to pay its debts (including
\ntrade debts) as they mature.<\/p>\n
14
\n 18<\/p>\n
5.11 Regulatory Compliance.<\/p>\n
Borrower and each Subsidiary has met the minimum funding
\nrequirements of ERISA with respect to any employee benefit plans subject to
\nERISA. No event has occurred resulting from Borrower’s failure to comply with
\nERISA that is reasonably likely to result in Borrower’s incurring any liability
\nthat could have a Material Adverse Effect. Borrower is not an “investment
\ncompany” or a company “controlled” by an “investment company” within the meaning
\nof the Investment Company Act of 1940. Borrower is not engaged principally, or
\nas one of its important activities, in the business of extending credit for the
\npurpose of purchasing or carrying margin stock (within the meaning of
\nRegulations G, T and U of the Board of Governors of the Federal Reserve System).
\nBorrower has complied with all the provisions of the Federal Fair Labor
\nStandards Act. Borrower has not violated any statutes, laws, ordinances or rules
\napplicable to it, violation of which could have a Material Adverse Effect.<\/p>\n
5.12 Environmental Condition.<\/p>\n
None of Borrower’s or any Subsidiary’s properties or
\nassets has ever been used by Borrower or any Subsidiary or, to the best of
\nBorrower’s knowledge, by previous owners or operators, in the disposal of, or to
\nproduce, store, handle, treat, release, or transport, any hazardous waste or
\nhazardous substance other than in accordance with applicable law; to the best of
\nBorrower’s knowledge, none of Borrower’s properties or assets has ever been
\ndesignated or identified in any manner pursuant to any environmental protection
\nstatute as a hazardous waste or hazardous substance disposal site, or a
\ncandidate for closure pursuant to any environmental protection statute; no lien
\narising under any environmental protection statute has attached to any revenues
\nor to any real or personal property owned by Borrower or any Subsidiary; and
\nneither Borrower nor any Subsidiary has received a summons, citation, notice, or
\ndirective from the Environmental Protection Agency or any other federal, state
\nor other governmental agency concerning any action or omission by Borrower or
\nany Subsidiary resulting in the release or other disposition of hazardous waste
\nor hazardous substances into the environment.<\/p>\n
5.13 Taxes.<\/p>\n
Borrower and each Subsidiary has filed or caused to be
\nfiled all tax returns required to be filed on a timely basis, and has paid, or
\nhas made adequate provision for the payment of, all taxes reflected therein.<\/p>\n
5.14 Subsidiaries.<\/p>\n
Borrower does not own any stock, partnership interest or
\nother equity securities of any Person, except for Permitted Investments.<\/p>\n
5.15 Government Consents.<\/p>\n
Borrower and each Subsidiary has obtained all consents,
\napprovals and authorizations of, made all declarations or filings with, and
\ngiven all notices to, all governmental authorities that are necessary for the
\ncontinued operation of Borrower’s business as currently conducted.<\/p>\n
5.16 Full Disclosure<\/p>\n
No representation, warranty or other statement made by
\nBorrower in any certificate or written statement furnished to Bank contains any
\nuntrue statement of a material fact or omits to state a material fact necessary
\nin order to make the statements contained in such certificates or statements not
\nmisleading.<\/p>\n
15
\n 19<\/p>\n
6. AFFIRMATIVE COVENANTS<\/p>\n
Borrower covenants and agrees that, until payment in
\nfull of all outstanding Obligations, and for so long as Bank may have any
\ncommitment to make a Credit Extension hereunder, Borrower shall do all of the
\nfollowing:<\/p>\n
6.1 Good Standing.<\/p>\n
Borrower shall maintain its and each of its
\nSubsidiaries’ corporate existence and good standing in its jurisdiction of
\nincorporation and maintain qualification in each jurisdiction in which the
\nfailure to so qualify could have a Material Adverse Effect. Borrower shall
\nmaintain, and shall cause each of its Subsidiaries to maintain, to the extent
\nconsistent with prudent management of Borrower’s business, in force all
\nlicenses, approvals and agreements, the loss of which could have a Material
\nAdverse Effect.<\/p>\n
6.2 Government Compliance.<\/p>\n
Borrower shall meet, and shall cause each Subsidiary to
\nmeet, the minimum funding requirements of ERISA with respect to any employee
\nbenefit plans subject to ERISA. Borrower shall comply, and shall cause each
\nSubsidiary to comply, with all statutes, laws, ordinances and government rules
\nand regulations to which it is subject, noncompliance with which could have a
\nMaterial Adverse Effect or a material adverse effect on the Collateral or the
\npriority of Bank’s Lien on the Collateral.<\/p>\n
6.3 Financial Statements, Reports, Certificates.<\/p>\n
Borrower shall deliver to Bank: (a) as soon as
\navailable, but in any event within thirty (30) days after the end of each month,
\na company prepared consolidated balance sheet and income statement covering
\nBorrower’s consolidated operations during such period, in a form and certified
\nby an Officer of Borrower reasonably acceptable to Bank; (b) as soon as
\navailable, but in any event within one hundred twenty (120) days after the end
\nof Borrower’s fiscal year, audited consolidated financial statements of Borrower
\nprepared in accordance with GAAP, consistently applied, together with an
\nunqualified opinion on such financial statements of an independent certified
\npublic accounting firm reasonably acceptable to Bank; (c) if applicable, within
\nfive (5) days of filing, copies of all statements, reports and notices sent or
\nmade available generally by Borrower to its security holders or to any holders
\nof Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K filed with the
\nSecurities and Exchange Commission; (d) promptly upon receipt of notice thereof,
\na report of any legal actions pending or threatened against Borrower or any
\nSubsidiary that could result in damages or costs to Borrower or any Subsidiary
\nof One Hundred Thousand Dollars ($100,000) or more; and (e) such budgets, sales
\nprojections, operating plans or other financial information as Bank may
\nreasonably request from time to time.<\/p>\n
Within thirty (30) days after the last day of each
\nmonth, Borrower shall deliver to Bank a Borrowing Base Certificate signed by a
\nResponsible Officer in substantially the form of Exhibit D hereto, together with
\naged listings of accounts receivable and accounts payable.<\/p>\n
Within thirty (30) days after the last day of each
\nmonth, Borrower shall deliver to Bank with the monthly financial statements a
\nCompliance Certificate signed by a Responsible Officer in substantially the form
\nof Exhibit E hereto.<\/p>\n
Bank shall have a right from time to time hereafter to
\naudit Borrower’s Accounts at Borrower’s expense, provided that such audits will
\nbe conducted no more often than every six (6) months unless an Event of Default
\nhas occurred and is continuing.<\/p>\n
16
\n 20<\/p>\n
6.4 Inventory; Returns.<\/p>\n
Borrower shall keep all Inventory in good and marketable
\ncondition, free from all material defects. Returns and allowances, if any, as
\nbetween Borrower and its account debtors shall be on the same basis and in
\naccordance with the usual customary practices of Borrower, as they exist at the
\ntime of the execution and delivery of this Agreement. Borrower shall promptly
\nnotify Bank of all returns and recoveries and of all disputes and claims, where
\nthe return, recovery, dispute or claim involves more than Fifty Thousand Dollars
\n($50,000).<\/p>\n
6.5 Taxes.<\/p>\n
Borrower shall make, and shall cause each Subsidiary to
\nmake, due and timely payment or deposit of all material federal, state, and
\nlocal taxes, assessments, or contributions required of it by law, and will
\nexecute and deliver to Bank, on demand, appropriate certificates attesting to
\nthe payment or deposit thereof; and Borrower will make, and will cause each
\nSubsidiary to make, timely payment or deposit of all material tax payments and
\nwithholding taxes required of it by applicable laws, including, but not limited
\nto, those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
\nstate, and federal income taxes, and will, upon request, furnish Bank with proof
\nsatisfactory to Bank indicating that Borrower or a Subsidiary has made such
\npayments or deposits; provided that Borrower or a. Subsidiary need not make any
\npayment if the amount or validity of such payment is (i)contested in good faith
\nby appropriate proceedings, (ii) is reserved against (to the extent required by
\nGAAP) by Borrower and (iii) no lien other than a Permitted Lien results.<\/p>\n
6.6 Insurance.<\/p>\n
(a) Borrower, at its expense, shall keep the Collateral
\ninsured against loss or damage by fire, theft, explosion, sprinklers, and all
\nother hazards and risks, and in such amounts, as ordinarily insured against by
\nother owners in similar businesses conducted in the locations where Borrower’s
\nbusiness is conducted on the date hereof. Borrower shall also maintain insurance
\nrelating to Borrower’s ownership and use of the Collateral in amounts and of a
\ntype that are customary to businesses similar to Borrower’s.<\/p>\n
(b) All such policies of insurance shall be in such
\nform, with such companies, and in such amounts as are reasonably satisfactory to
\nBank. All such policies of property insurance shall contain a lender’s loss
\npayable endorsement, in a form satisfactory to Bank, showing Bank as an
\nadditional loss payee thereof and all liability insurance policies shall show
\nthe Bank as an additional insured, and shall specify that the insurer must give
\nat least twenty (20) days notice to Bank before canceling its policy for any
\nreason. At Bank’s request, Borrower shall deliver to Bank certified copies of
\nsuch policies of insurance and evidence of the payments of all premiums
\ntherefor. All proceeds payable under any such policy shall, at the option of
\nBank, be payable to Bank to be applied on account of the Obligations.<\/p>\n
6.7 Principal Depository<\/p>\n
Borrower shall maintain its principal depository and
\noperating accounts with Bank.<\/p>\n
6.8 Quick Ratio, Cash Coverage Ratio or Cash Flow Coverage
\n Ratio.<\/p>\n
Borrower shall maintain, as of the last day of each
\ncalendar month, at least one of the following:<\/p>\n
(a) a ratio of Quick Assets to Current Liabilities,
\nexcluding deferred revenues, of at least 1.75 to 1.0;<\/p>\n
17
\n 21<\/p>\n
(b) a ratio of unrestricted cash and cash-equivalents,
\nplus the lesser of the Committed Revolving Line or the Borrowing Base, minus the
\nface amount of all outstanding Letters of Credit (including drawn but
\nunreimbursed Letters of Credit), minus any outstanding Advances under the
\nRevolving Facility, to the aggregate outstanding Equipment Advances of at least
\n1.75 to 1.0; or <\/p>\n
(c) a ratio of net profits after taxes plus depreciation
\nand amortization plus non-cash interest charges, to the current portion of long
\nterm debt and capitalized leases of at least 1.25:1.0.<\/p>\n
6.9 Debt-Net Worth Ratio.<\/p>\n
Borrower shall maintain, as of the last day of each
\ncalendar month, a ratio of Total Liabilities less Subordinated Debt to Tangible
\nNet Worth plus Subordinated Debt of not more than 1.75 to 1.0. Notwithstanding
\nthe foregoing, Borrower’s obligation to comply. with this Section 6.9 shall be
\nwaived for the months ending July 31, 1997 and August 31, 1997 upon Bank’s
\nreceipt of verbal confirmation from Borrower’s existing lead investor stating
\nthat an equity event in which Borrower shall receive at least $3,000,000 from
\nthe issuance of its equity securities will close by September 30, 1997 and that
\nsuch investor intends to participate in such equity event.<\/p>\n
6.10 Tangible Net Worth.<\/p>\n
Beginning September 30, 1997, Borrower shall maintain,
\nas of the last day of each calendar month, a Tangible Net Worth of not less than
\nTwo Million Eight Hundred Thousand Dollars ($2,800,000).<\/p>\n
6.11 Profitability.<\/p>\n
Borrower may incur losses not to exceed: (i) Two Million
\ndollars ($2,000,000) for the fiscal quarter ending June 30, 1997; (ii) One
\nMillion Five Hundred Thousand Dollars ($1,500,000) for the fiscal quarter ending
\nSeptember 30, 1997; and (iii) Nine Hundred Fifty Thousand Dollars ($950,000) for
\nthe fiscal quarter ending December 31, 1997. Borrower and Bank agree to
\nestablish maximum quarterly loss covenants for fiscal year 1998 by March 15,
\n1998. Such covenants will be established to the mutual satisfaction of both
\nparties.<\/p>\n
6.12 Further Assurances.<\/p>\n
At any time and from time to time Borrower shall execute
\nand deliver such further instruments and take such further action as may
\nreasonably be requested by Bank to effect the purposes of this Agreement.<\/p>\n
7. NEGATIVE COVENANTS<\/p>\n
Borrower covenants and agrees that, so long as any Credit
\nExtension hereunder shall be available and until payment in full of the
\noutstanding Obligations or for so long as Bank may have any commitment to make
\nany Advances, Borrower will not do any of the following:<\/p>\n
7.1 Dispositions.<\/p>\n
Convey, sell, lease, transfer or otherwise dispose of
\n(collectively, a “Transfer”), or permit any of its Subsidiaries to Transfer, all
\nor any part of its business or property, other than Transfers (i) of inventory
\nin the ordinary course of business, (ii) of non-exclusive licenses and similar
\narrangements for the use of the property of Borrower or its Subsidiaries in the
\nordinary course of business, or (iii) of worn-out or obsolete Equipment.<\/p>\n
18
\n 22<\/p>\n
7.2 Changes in Business, Ownership, Management or Business
\n Locations.<\/p>\n
Engage in any business, or permit any of its
\nSubsidiaries to engage in any business, other than the businesses currently
\nengaged in by Borrower and any business substantially similar or related thereto
\n(or incidental thereto), or suffer a material change in Borrower’s ownership or
\nmanagement. Borrower will not, without at least thirty (30) days prior written
\nnotification to Bank, relocate its chief executive office or add any new offices
\nor business locations.<\/p>\n
7.3 Mergers or Acquisitions.<\/p>\n
Merge or consolidate, or permit any of its Subsidiaries
\nto merge or consolidate, with or into any other business organization, or
\nacquire, or permit any of its Subsidiaries to acquire, all or substantially all
\nof the capital stock or property of another Person.<\/p>\n
7.4 Indebtedness.<\/p>\n
Create, incur, assume or be or remain liable with
\nrespect to any Indebtedness, or permit any Subsidiary so to do, other than
\nPermitted Indebtedness.<\/p>\n
7.5 Encumbrances.<\/p>\n
Create, incur, assume or suffer to exist any Lien with
\nrespect to any of its property, or assign or otherwise convey any right to
\nreceive income, including the sale of any Accounts, or permit any of its
\nSubsidiaries so to do, except for Permitted Liens.<\/p>\n
7.6 Distributions.<\/p>\n
Pay any dividends or make any other distribution or
\npayment on account of or in redemption, retirement or purchase of any capital
\nstock.<\/p>\n
7.7 Investments.<\/p>\n
Directly or indirectly acquire or own, or make any
\nInvestment in or to any Person, or permit any of its Subsidiaries so to do,
\nother than Permitted Investments.<\/p>\n
7.8 Transactions with Affiliates.<\/p>\n
Directly or indirectly enter into or permit to exist any
\nmaterial transaction with any Affiliate of Borrower except for transactions that
\nare in the ordinary course of Borrower’s business, upon fair and reasonable
\nterms that are no less favorable to Borrower than would be obtained in an arm’s
\nlength transaction with a non-affiliated Person.<\/p>\n
7.9 Intellectual Property Agreements.<\/p>\n
Borrower shall not permit the inclusion in any material
\ncontract to which it becomes a party of any provisions that could or might in
\nany way prevent the creation of a security interest in Borrower’s rights and
\ninterests in any property included within the definition of the Intellectual
\nProperty Collateral acquired under such contracts.<\/p>\n
19
\n 23<\/p>\n
7.10 Subordinated Debt. <\/p>\n
Make any-payment in respect of any Subordinated Debt, or
\npermit any of its Subsidiaries to make any such payment, except in compliance
\nwith the terms of such Subordinated Debt, or amend any provision contained in
\nany documentation relating to the Subordinated Debt without Bank’s prior written
\nconsent.<\/p>\n
7.11 Inventory.<\/p>\n
Store the Inventory with a bailee, warehouseman, or
\nsimilar party unless Bank has received a pledge of any warehouse receipt
\ncovering such Inventory. Except for Inventory sold in the ordinary course of
\nbusiness and except for such other locations as Bank may approve in writing,
\nBorrower shall keep the Inventory only at the location set forth in Section 10
\nhereof and such other locations of which Borrower gives Bank prior written
\nnotice and as to which Borrower signs and files a financing statement where
\nneeded to perfect Bank’s security interest.<\/p>\n
7.12 Compliance.<\/p>\n
Become an “investment company” or a company controlled
\nby an “investment company,” within the meaning of the Investment Company Act of
\n1940, or become principally engaged in, or undertake as one of its important
\nactivities, the business of extending credit for the purpose of purchasing or
\ncarrying margin stock, or use the proceeds of any Advance for such purpose; fail
\nto meet the minimum funding requirements of ERISA, permit a Reportable Event or
\nProhibited Transaction, as defined in ERISA, to occur; fail to comply with the
\nFederal Fair Labor Standards Act or violate any other law or regulation, which
\nviolation could have a Material Adverse Effect or a material adverse effect on
\nthe Collateral or the priority of Bank’s Lien on the Collateral, or pen-nit any
\nof its Subsidiaries to do any of the foregoing.<\/p>\n
8. EVENTS OF DEFAULT<\/p>\n
Any one or more of the following events shall constitute an
\nEvent of Default by Borrower under this Agreement:<\/p>\n
8.1 Payment Default.<\/p>\n
If Borrower fails to pay, when due, any of the
\nObligations;<\/p>\n
8.2 Covenant Default.<\/p>\n
(a) If Borrower fails to perform any obligation under
\nSections 6.3, 6.6, 6.7, 6.8, 6.9, 6.10 or 6.11 or violates any of the covenants
\ncontained in Article 7 of this Agreement, or<\/p>\n
(b) If Borrower fails or neglects to perform, keep, or
\nobserve any other material term, provision, condition, covenant, or agreement
\ncontained in this Agreement, in any of the Loan Documents, or in any other
\npresent or future agreement between Borrower and Bank and as to any default
\nunder such other term, provision, condition, covenant or agreement that can be
\ncured, has failed to cure such default within ten (10) days after the occurrence
\nthereof; provided, however, that if the default cannot by its nature b6 cured
\nwithin the ten (10) day period or cannot after diligent attempts by Borrower be
\ncured within such ten (10) day period, and such default is likely to be cured
\nwithin a reasonable time, then Borrower shall have an additional reasonable
\nperiod (which shall not in any case exceed thirty (30) days) to attempt to cure
\nsuch default, and within such reasonable time period the failure to have cured
\nsuch default shall not be deemed an Event of Default (provided that no Credit
\nExtensions will be required to be made during such cure period);<\/p>\n
20
\n 24<\/p>\n
8.3 Material Adverse Change.<\/p>\n
If there (i) occurs a material adverse change in the
\nbusiness, operations, or condition (financial or otherwise) of Borrower or (ii)
\nis a material impairment of the prospect of repayment of any portion of the
\nObligations or (iii) is a material impairment of the value or priority of Bank’s
\nsecurity interests in the Collateral;<\/p>\n
8.4 Attachment.<\/p>\n
If any material portion of Borrower’s assets is
\nattached, seized, subjected to a writ or distress warrant, or is levied upon, or
\ncomes into the possession of any trustee, receiver or person Acting in a similar
\ncapacity and such attachment, seizure, writ or distress warrant or levy has not
\nbeen removed, discharged or rescinded within ten (10) days, or if Borrower is
\nenjoined, restrained, or in any way prevented by court order from continuing to
\nconduct all or any material part of its business affairs, or if a judgment or
\nother claim becomes a lien or encumbrance upon any material portion of
\nBorrower’s assets, or if a notice of lien, levy, or assessment is filed of
\nrecord with respect to any of Borrower’s assets by the United States Government,
\nor any department, agency, or instrumentality thereof, or by any state, county,
\nmunicipal, or governmental agency, and the same is not paid within ten (10) days
\nafter Borrower receives notice thereof, provided that none of the foregoing
\nshall constitute an Event of Default where such action or event is stayed or an
\nadequate bond has been posted pending A good faith contest by Borrower (provided
\nthat no Credit Extensions will be required to be made during such cure period);<\/p>\n
8.5 Insolvency.<\/p>\n
If Borrower becomes insolvent, or if an Insolvency
\nProceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced
\nagainst Borrower and is not dismissed or stayed within thirty (30) days
\n(provided that no Credit Extensions will be made prior to the dismissal of such
\nInsolvency Proceeding);<\/p>\n
8.6 Other Agreements.<\/p>\n
If there is a default in any agreement to which Borrower
\nis a party with a third party or parties resulting in a right by such third
\nparty or parties, whether or not exercised, to accelerate the maturity of any
\nIndebtedness in an amount in excess of One Hundred Thousand Dollars ($100,000)
\nor that could have a Material Adverse Effect,<\/p>\n
8.7 Subordinated Debt.<\/p>\n
If Borrower makes any payment on account of Subordinated
\nDebt, except to the extent such payment is allowed under any subordination
\nagreement entered into with Bank;<\/p>\n
8.8 Judgments.<\/p>\n
If a judgment or judgments for the payment of money IN
\nan amount, individually or in the aggregate, of at least Fifty Thousand Dollars
\n($50,000) shall be rendered against Borrower and shall remain unsatisfied and
\nunstayed for a period of ten (10) days (provided that no Credit Extensions will
\nbe made prior to the satisfaction or stay of such judgment); or<\/p>\n
21
\n 25<\/p>\n
8.9 Misrepresentations.<\/p>\n
If any material misrepresentation or material
\nmisstatement exists now or hereafter in any warranty or representation set forth
\nherein or in any certificate or writing delivered to Bank by Borrower or any
\nPerson acting on Borrower’s behalf pursuant to this Agreement or to induce Bank
\nto enter into this Agreement or any other Loan Document.<\/p>\n
9. BANK’S RIGHT’S AND REMEDIES<\/p>\n
9.1 Rights and Remedies.<\/p>\n
Upon the occurrence and during the continuance of an
\nEvent of Default, Bank may, at its election, without notice of its election and
\nwithout demand, do any one or more of the following, all of which are authorized
\nby Borrower:<\/p>\n
(a) Declare all Obligations, whether evidenced by this
\nAgreement, by any of the other Loan Documents, or otherwise, immediately due and
\npayable (provided that upon the occurrence of an Event of Default described in
\nSection 8.5 all Obligations shall become immediately due and payable without any
\naction by Bank);<\/p>\n
(b) Cease advancing money or extending credit to or for
\nthe benefit of Borrower under this Agreement or under any other agreement
\nbetween Borrower and Bank;<\/p>\n
(c) Demand that Borrower (i) deposit cash with Bank in
\nan amount equal to the amount of any Letters of Credit remaining undrawn, as
\ncollateral security for the repayment of any future drawings under such Letters
\nof Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii)
\npay in advance all Letters of Credit fees scheduled to be paid or payable over
\nthe remaining term of the Letters of Credit;<\/p>\n
(d) Settle or adjust disputes and claims directly with
\naccount debtors for amounts, upon terms and in whatever order that Bank
\nreasonably considers advisable;<\/p>\n
(e) Without notice to or demand upon Borrower, make such
\npayments and. do such acts as Bank considers necessary or reasonable to protect
\nits security interest in the Collateral. Borrower agrees to assemble the
\nCollateral if Bank so requires, and to make @he Collateral available to Bank as
\nBank may designate. Borrower authorizes Bank to enter the premises where the
\nCollateral is located, to. take and maintain possession of the Collateral, or
\nany part of it, and to pay, purchase, contest, or compromise any encumbrance,
\ncharge, or lien which in Bank’s determination appears to be prior or superior to
\nits security interest and to pay all expenses incurred in connection therewith.
\nWith respect to any of Borrower’s premises, Borrower hereby grants Bank a
\nlicense to enter such premises and to occupy the same, without charge, in order
\nto exercise any of Bank’s rights or remedies, provided herein, at law, in
\nequity, or otherwise;<\/p>\n
(f) Without notice to Borrower set off and apply to the
\nObligations any and all (i) balances and deposits of Borrower held by Bank, or
\n(ii) indebtedness at any time owing to or for the credit or the account of
\nBorrower held by Bank;<\/p>\n
(g) Ship, reclaim, recover, store, finish, maintain,
\nrepair, prepare for sale, advertise for sale, and sell (in the manner provided
\nfor herein) the Collateral. Bank is hereby granted a non-exclusive, royalty-free
\nlicense or other right, solely pursuant to the provisions of this Section 9.1,
\nto use, without charge, Borrower’s labels, patents, copyrights, mask works,
\nrights of use of any name, trade secrets, trade names, trademarks, service
\nmarks, and advertising matter, or any property of a similar nature, as it
\npertains to the Collateral, in completing production of, advertising for sale,
\nand <\/p>\n
22
\n 26<\/p>\n
selling any Collateral and, in connection with Bank’s exercise of its rights
\nunder this Section 9.1, Borrower’s rights under all licenses and all franchise
\nagreements shall inure to Bank’s benefit;<\/p>\n
(h) Sell the Collateral at either a public or private
\nsale, or both, by way of one or more contracts or transactions, for cash or on
\nterms, in such manner and at such places (including Borrower’s premises) as Bank
\ndetermines is commercially reasonable, and apply the proceeds thereof to the
\nObligations in whatever manner or order Bank deems appropriate;<\/p>\n
(i) Bank may credit bid and purchase at any public sale,
\nor at any private sale as permitted by law; and<\/p>\n
(j) Any deficiency that exists after disposition of the
\nCollateral as provided above will be paid immediately by Borrower.<\/p>\n
(k) Bank shall have a non-exclusive, royalty-free
\nlicense to use the Intellectual Property Collateral to the extent reasonably
\nnecessary to permit Bank to exercise its rights and remedies upon the occurrence
\nof an Event of Default.<\/p>\n
9.2 Power of Attorney.<\/p>\n
Effective only upon the occurrence and during the
\ncontinuance of an Event of Default, Borrower hereby irrevocably appoints Bank
\n(and any of Bank’s designated officers, or employees) as Borrower’s true and
\nlawful attorney to: (a) send requests for verification of Accounts or notify
\naccount debtors of Bank’s security interest in the Accounts; (b) endorse
\nBorrower’s name on any checks or other forms of payment or security that may
\ncome into Bank’s possession; (c) sign Borrower’s name on any invoice or bill of
\nlading relating to any Account, drafts against account debtors, schedules and
\nassignments of Accounts, verifications of Accounts, and notices to account
\ndebtors; (d) make, settle, and adjust all claims under and decisions with
\nrespect to Borrower’s policies of insurance; (e) settle and adjust disputes and
\nclaims respecting the accounts directly with account debtors, for amounts and
\nupon terms which Bank determines to be reasonable; (f) to file, in its sole
\ndiscretion, one or more financing or continuation statements and amendments
\nthereto, relative to any of the Collateral without the signature of Borrower
\nwhere permitted by law; and (g) to transfer the Intellectual Property Collateral
\ninto the name of Bank or a third party to the extent permitted under the
\nCalifornia Uniform Commercial Code, provided Bank may exercise such power of
\nattorney to sign the name of Borrower on any of the documents described in
\nSection 4.2 regardless of whether an Event of Default has occurred. The
\nappointment of Bank as Borrower’s attorney in fact, and each and every one of
\nBank’s rights and powers, being coupled with an interest, is irrevocable until
\nall of the Obligations have been fully repaid and performed and Bank’s
\nobligation to provide advances hereunder is terminated.<\/p>\n
9.3 Accounts Collection.<\/p>\n
Upon the occurrence and during the continuance of an
\nEvent of Default, Bank may notify any Person owing funds to Borrower of Bank’s
\nsecurity interest in such funds and verify the amount of such Account. Borrower
\nshall collect all amounts owing to Borrower for Bank, receive in trust all
\npayments as Bank’s trustee, and, if requested or required by Bank, immediately
\ndeliver such payments to Bank in their original form as received from the
\naccount debtor, with proper endorsements for deposit.<\/p>\n
9.4 Bank Expenses.<\/p>\n
If Borrower fails to pay any amounts or furnish any
\nrequired proof of payment due to third persons or entities, as required under
\nthe terms of this Agreement, then Bank may do any or-all of the following: (a)
\nmake payment of the same or any part thereof; (b) set up such reserves <\/p>\n
23
\n 27<\/p>\n
under the Committed Revolving Line as Bank deems necessary to protect Bank from
\nthe exposure created by such failure; or (c) obtain and maintain insurance
\npolicies of the type discussed in. Section 6.6 of this Agreement, and take any
\naction with respect to such policies as Bank deems prudent. Any amounts so paid
\nor deposited by Bank shall constitute Bank Expenses, shall be immediately due
\nand payable, and shall bear interest at the then applicable rate herein above
\nprovided, and shall be secured by the Collateral. Any payments made by Bank
\nshall not constitute an agreement by Bank to make similar payments in the future
\nor a waiver by Bank of any Event of Default under this Agreement.<\/p>\n
9.5 Bank’s Liability for Collateral.<\/p>\n
So long as Bank complies with reasonable banking
\npractices, Bank shall not in any way or manner be liable or responsible for: (a)
\nthe safekeeping of the Collateral; (b) any loss or damage thereto occurring or
\narising in any manner or fashion from any cause; (c) any diminution in the value
\nthereof; or (d) any act or default of any carrier, warehouseman, bailee,
\nforwarding agency, or other person whomsoever. All risk of loss, damage or
\ndestruction of the Collateral shall be borne by Borrower.<\/p>\n
9.6 Remedies Cumulative.<\/p>\n
Bank’s rights and remedies under this Agreement, the
\nLoan Documents, and all; other agreements shall be cumulative. Bank shall have
\nall other rights and remedies not expressly set forth herein as provided under
\nthe Code, by law, or in equity. No exercise by Bank of one right or remedy shall
\nbe deemed an election, and no waiver by Bank of any Event of Default on
\nBorrower’s part shall be deemed a continuing waiver. No delay by Bank shall
\nconstitute a waiver, election, or acquiescence by it. No waiver by Bank shall be
\neffective unless made in a written document signed on behalf of Bank and then
\nshall be effective only in the specific instance and for the specific purpose
\nfor which it was given.<\/p>\n
9.7 Demand; Protest.<\/p>\n
Borrower waives demand, protest, notice of protest,
\nnotice of default or dishonor, notice of payment and nonpayment, notice of any
\ndefault, nonpayment at maturity, release, compromise, settlement, extension, or
\nrenewal of accounts, documents, instruments, chattel paper and guarantees at.
\nany time held by Bank on which Borrower may in any way be liable.<\/p>\n
10. NOTICES<\/p>\n
Unless otherwise provided in this Agreement, all notices
\nor demands by any party relating to this Agreement or any other agreement
\nentered into in connection herewith shall be in writing and (except for
\nfinancial statements and other informational documents which may be sent by
\nfirst-class mail, postage prepaid) shall be personally delivered or sent by a
\nrecognized overnight delivery service, by certified mail, postage prepaid,
\nreturn receipt requested, or by telefacsimile to Borrower or to Bank, as the
\ncase may be, at its addresses set forth below:<\/p>\n
\n
\n If to Borrower: Sagent Technology, Inc.
\n 2225 E. Bayshore Road, Suite 100
\n Palo Alto, CA 94303
\n Attn: Ken Gardner
\n FAX: (415) 833-6820
\n<\/c><\/s><\/table>\n 24
\n 28<\/p>\n
\n
\n If to Bank: Venture Banking Group
\n Three Palo Alto Square, Suite 150
\n Palo Alto, CA 94306
\n Attn: Jennifer Schellenberg
\n FAX: (415) 843-6969
\n<\/c><\/s><\/table>\n The parties hereto may change the address at which they are to receive
\nnotices hereunder, by notice in writing in the foregoing manner given to the
\nother.<\/p>\n
11. CHOICE OF LAW AND VENUE<\/p>\n
The Loan Documents shall be governed by, and construed in
\naccordance with, the internal laws of the State of California, without regard to
\nprinciples of conflicts of law. Each of Borrower and Bank hereby submits to the
\nexclusive jurisdiction of the state and Federal courts located in the County of
\nSanta Clara, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR
\nRESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
\nARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
\nTHEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
\nOTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
\nFOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT F IT TO ENTER INTO THIS
\nAGREEMENT. EACH P REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH
\nITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
\nRIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.<\/p>\n
12. GENERAL PROVISIONS<\/p>\n
12.1 Successors and Assigns.<\/p>\n
This Agreement shall bind and inure to the benefit 6f
\nthe respective successors and permitted assigns of each. of the parties;
\nprovided however that neither this Agreement nor any rights hereunder may be
\nassigned by Borrower without Bank’s prior written consent, which consent may be
\ngranted or withheld in Bank’s sole discretion. Bank shall have the right without
\nthe consent of or notice to Borrower to sell, transfer, negotiate, or grant
\nparticipation in all or any part of, or any interest in, Bank’s obligations,
\nrights and benefits hereunder.<\/p>\n
12.2 Indemnification.<\/p>\n
Borrower shall indemnify, defend, protect and hold
\nharmless Bank and its officers, employees, and agents against: (a) all
\nobligations, demands, claims, and liabilities claimed or asserted by any other
\nparty in connection with the transactions contemplated by the Loan Documents;
\nand (b) all losses or Bank Expenses in any way suffered, incurred, or paid by
\nBank as a result of or in any way arising out of, following, or consequential to
\ntransactions between Bank and Borrower whether under the Loan Documents, or
\notherwise (including without limitation reasonable attorneys fees and expenses),
\nexcept for losses caused by Bank’s gross negligence or willful misconduct.<\/p>\n
12.3 Time of Essence.<\/p>\n
Time is of the essence for the performance of all
\nobligations set forth in this Agreement.<\/p>\n
25
\n 29<\/p>\n
12.4 Severability of Provisions.<\/p>\n
Each provision of this Agreement shall be severable from
\nevery other provision of this Agreement for the purpose of determining the legal
\nenforceability of any specific provision.<\/p>\n
12.5 Amendments in Writing, Integration.<\/p>\n
This Agreement cannot be amended or terminated except by
\na writing signed by Borrower and Bank. All prior agreements, understandings,
\nrepresentations, warranties, and negotiations between the parties hereto with
\nrespect to the subject matter of this Agreement, if any, are merged into this
\nAgreement and the Loan Documents.<\/p>\n
12.6 Counterparts.<\/p>\n
This Agreement may be executed in any number of
\ncounterparts and by different parties on separate counterparts, each of which,
\nwhen executed and delivered, shall be deemed to be an original, and all of
\nwhich, when taken together, shall constitute but one and the same Agreement.<\/p>\n
12.7 Survival.<\/p>\n
All covenants, representations and warranties made in
\nthis Agreement shall continue in full force and effect so long as any
\nObligations remain outstanding. The obligations of Borrower to indemnify Bank
\nwith respect to the expenses, damages, losses, costs and liabilities described
\nin Section 12.2 shall survive until all applicable statute of limitations
\nperiods with respect to actions that may be brought against Bank have run.<\/p>\n
IN WITNESS WHEREOF, -the parties hereto have caused this Agreement to be
\nexecuted as of the date first above written.<\/p>\n
SAGENT TECHNOLOGY, INC.<\/p>\n
By: \/s\/ KENNETH C. GARDNER
\n ———————————-<\/p>\n
Title: President & CEO
\n ——————————–<\/p>\n
VENTURE BANKING GROUP, a division of
\n Cupertino National Bank<\/p>\n
By: \/s\/ JENNIFER SCHELLENBERG
\n ———————————<\/p>\n
Title: Account Officer
\n ——————————<\/p>\n
26
\n 30<\/p>\n
EXHIBIT A<\/p>\n
The Collateral shall consist of all right, title and interest of
\nBorrower in and to the following:<\/p>\n
(a) All goods and equipment now owned or hereafter acquired, including,
\nwithout limitation, all machinery, fixtures, vehicles (including motor vehicles
\nand trailers), and any interest in any of the foregoing, and all attachments,
\naccessories, accessions, replacements, substitutions, additions, and
\nimprovements to any of the foregoing, wherever located;<\/p>\n
(b) All inventory, now owned or hereafter acquired, including, without
\nlimitation, all merchandise, raw materials, parts, supplies, packing and
\nshipping materials, work in process and finished products including such
\ninventory as is temporarily out of Borrower’s custody or possession or in
\ntransit and including any returns upon any accounts or other proceeds, including
\ninsurance proceeds, resulting from the sale or disposition of any of the
\nforegoing and any documents of title representing any of the above;<\/p>\n
(c) All contract rights and general intangibles now owned or hereafter
\nacquired, including, without limitation, goodwill, trademarks, servicemarks,
\ntrade styles, trade names, patents, patent applications, leases, license
\nagreements, franchise agreements, blueprints, drawings, purchase orders,
\ncustomer lists, route lists, infringements, claims, computer programs, computer
\ndiscs, computer tapes, literature, reports, catalogs, design rights, income tax
\nrefunds, payments of insurance and rights to payment of any kind;<\/p>\n
(d) All now existing and hereafter arising accounts, contract rights,
\nroyalties, license rights and all other forms of obligations owing to Borrower
\narising out of the sale or lease of goods, the licensing of technology or the
\nrendering of services by Borrower, whether or not earned by performance, and any
\nand all credit insurance, guaranties, and other security therefor, as well as an
\nmerchandise returned to or reclaimed by Borrower;<\/p>\n
(e) All documents, cash, deposit accounts, securities, securities
\nentitlements, securities accounts, investment property, letters of credit,
\ncertificates of deposit, instruments and chattel paper now owned or hereafter
\nacquired and Borrower’s Books relating to the foregoing;<\/p>\n
(f) All copyright rights, copyright applications, copyright
\nregistrations and like protections in each work of authorship and derivative
\nwork thereof, whether published or unpublished, now owned or hereafter acquired;
\nall trade secret rights, including all rights to unpatented inventions,
\nknow-how, operating manuals, license rights and agreements and confidential
\ninformation, now owned or hereafter acquired; all mask work or similar rights
\navailable for the protection of . semiconductor chips, now owned, or hereafter
\nacquired; all claims for damages by way of any past, present and future
\ninfringement of any of the foregoing; and<\/p>\n
(g) All Borrower’s Books relating to the foregoing and any and all
\nclaims, rights and interests in any of the above and all substitutions for,
\nadditions and accessions to and proceeds thereof.<\/p>\n
27
\n 31<\/p>\n
EXHIBIT B<\/p>\n
LOAN PAYMENT\/ADVANCE TELEPHONE REQUEST FORM<\/p>\n
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.<\/p>\n
TO: CENTRAL CLIENT SERVICE DIVISION DATE:
\n ——————————-
\nFAX#: TIME:
\n —————- ——————————-<\/p>\n
FROM: Sagent Technology, Inc.
\n ————————————————————————
\n CLIENT NAME (BORROWER)<\/p>\n
REQUESTED BY:
\n —————————————————————-
\n AUTHORIZED SIGNER’S NAME<\/p>\n
AUTHORIZED SIGNATURE:
\n ——————————————————-
\n PHONE NUMBER:
\n —————————————————————
\n FROM ACCOUNT # TO ACCOUNT #
\n —————– ———————————-
\n REQUESTED TRANSACTION REQUEST DOLLAR AMOUNT<\/p>\n
PRINCIPAL INCREASE (ADVANCE) $
\n —————————
\n PRINCIPAL PAYMENT (ONLY) $
\n —————————
\n INTEREST PAYMENT (ONLY) $
\n —————————
\n PRINCIPAL AND INTEREST (PAYMENT) $
\n —————————
\n OTHER INSTRUCTIONS:
\n ———————————————————<\/p>\n
——————————————————————————–<\/p>\n
All representations and warranties of Borrower stated in the Loan and
\n Security Agreement are true, correct .and complete in all material respects
\n as of the date of the telephone request for and Advance confirmed by this
\n Borrowing Certificate; provided, -however, that those representations and
\n warranties expressly referring to another date shall be true, correct and
\n complete in all material respects as of such date.<\/p>\n
BANK USE ONLY<\/p>\n
TELEPHONE REQUEST<\/p>\n
The following person is authorized to request the loan payment transger\/loan
\nadvance on the advance designated account and is known to me.<\/p>\n
————————————— ———————————
\n Authorized Requester Phone#<\/p>\n
————————————— ———————————
\n Received By (Bank) Phone #<\/p>\n
———————————–
\n Authoreized Signature (Bank)<\/p>\n
28
\n 32<\/p>\n
EXHIBIT C-1
\n REVOLVING PROMISSORY NOTE<\/p>\n
$2,000,000 Palo Alto, California
\n Date: July 16, 1997<\/p>\n
SAGENT TECHNOLOGY, INC. (“Borrower”), for value received, hereby
\npromises to pay to the order of VENTURE BANKING GROUP, a division of Cupertino
\nNational Bank (“Bank”), in lawful money of the United States of America,
\npursuant to that certain Loan and Security Agreement dated as of July 16, 1997,
\nby and between Borrower and Bank (the “Loan Agreement”), (i) the principal
\namount of $2,000,000 or, if lesser, (ii) the principal amount of all Advances
\noutstanding as of the maturity date hereof.<\/p>\n
This Note is one of the Notes referred to in the Loan Agreement. All
\nterms defined in the Loan Agreement shall have the same definitions when used
\nherein, unless otherwise defined herein.<\/p>\n
Borrower further promises to pay interest on each Advance hereunder in
\nlike funds on the principal amount hereof from time to time outstanding from the
\ndate hereof until paid in full, at a rate or rates per annum and payable on the
\ndates determined pursuant to the Loan Agreement.<\/p>\n
Payment on this Note shall be applied in the manner set forth in the
\nLoan Agreement. The Loan Agreement contains provisions for acceleration of the
\nmaturity of Advances hereunder upon the occurrence of certain stated events and
\nalso provides for optional and mandatory prepayments of principal hereof prior
\nto any stated maturity upon the terms and conditions therein specified.<\/p>\n
All Advances made by Bank to Borrower pursuant to the Loan Agreement
\nshall be recorded by Bank on the books and records of Bank. The failure of Bank
\nto record any Advance or any prepayment or payment made on account of the
\nprincipal balance hereof shall not limit or otherwise affect the obligation of
\nBorrower under this Note and under the Loan Agreement to pay the principal,
\ninterest and other amounts due and payable under the Advances.<\/p>\n
Any principal or interest payments on this Note not paid when due,
\nwhether at stated maturity, by acceleration or otherwise, shall bear interest at
\nthe Default Rate.<\/p>\n
Upon the occurrence of a default hereunder or an Event of Default under
\nthe Loan Agreement, all unpaid principal, accrued interest and other amounts
\nowing hereunder shall, at the option of Bank, be immediately collectible by or
\non behalf of Bank pursuant to the Loan Agreement and applicable law.<\/p>\n
Borrower waives presentment and demand for payment, notice of dishonor,
\nprotest and notice of protest of this Note, and shall pay all costs of
\ncollection when incurred, including reasonable attorneys’ fees, costs and
\nexpenses. The right to plead any and-all statutes of limitations as a defense to
\nany demand hereunder is hereby waived to the full extent permitted by law.<\/p>\n
The amount of this Note is secured by the Collateral identified and
\ndescribed as security therefor in the Loan Agreement.<\/p>\n
This Note shall be governed by, and construed and enforced in accordance
\nwith, the laws of the State of California, excluding conflict of laws principles
\nthat would cause the application of the laws of any other jurisdiction.<\/p>\n
The provisions of this Note shall inure to the benefit of and be binding
\nupon any successor to Borrower and shall extend to any holder hereof.<\/p>\n
SAGENT TECHNOLOGY, INC.<\/p>\n
By:
\n ————————————-
\n Printed Name:
\n —————————
\n Title:
\n ———————————-<\/p>\n
29
\n 33<\/p>\n
EXHIBIT C-2
\n EQUIPMENT PROMISSORY NOTE<\/p>\n
$1,000,000 Palo Alto, California
\n Date: July 16, 1997<\/p>\n
SAGENT TECHNOLOGY, INC. (“Borrower”), for value received, hereby
\npromises to pay to the order of VENTURE BANKING GROUP, a division of Cupertino
\nNational Bank (“Bank”), in lawful money of the United States of America,
\npursuant to that certain Loan and Security Agreement dated as of July 16, 1997,
\nby and between Borrower and Bank (the “Loan Agreement’), (i) the principal
\namount of $1,000,000 or, if lesser, 00 the principal amount of all Equipment
\nAdvances (the “Advances”) outstanding as of the maturity date hereof.<\/p>\n
This Note is one of the Notes referred to in the Loan Agreement. All
\nterms defined in the Loan Agreement shall have the same definitions when used
\nherein, unless otherwise defined herein.<\/p>\n
Borrower further promises to pay interest on each Advance hereunder in
\nlike funds on the principal amount hereof from time to time outstanding from the
\ndate hereof until paid in full, at a rate or rates per annum. and payable on the
\ndates determined pursuant to the Loan Agreement.<\/p>\n
Payment on this Note shall be applied in the manner set forth in the
\nLoan Agreement. The Loan Agreement contains provisions for acceleration of the
\nmaturity of Advances hereunder upon the occurrence of certain stated events and
\nalso provides for optional and mandatory prepayments of principal hereof prior
\nto any stated maturity upon the terms and conditions therein specified.<\/p>\n
All Advances made by Bank to Borrower pursuant to the Loan Agreement
\nshall be, recorded by Bank on the books and records of Bank. The failure of Bank
\nto record any Advance or any prepayment or payment made on account of the
\nprincipal balance hereof shall not limit or otherwise affect the obligation of
\nBorrower under this Note and under the Loan Agreement to pay the principal,
\ninterest and other amounts due and payable under the Advances.<\/p>\n
Any principal or interest payments on this Note not paid when due,
\nwhether at stated maturity, by acceleration or otherwise, shall bear interest at
\nthe Default Rate.<\/p>\n
Upon the occurrence of a default hereunder or an Event of Default under
\nthe Loan Agreement, all unpaid principal, accrued interest and other amounts
\nowing hereunder shall, at the option of Bank, be immediately collectible by or
\non behalf of Bank pursuant to the Loan Agreement and applicable law.<\/p>\n
Borrower waives presentment and demand for payment, notice of dishonor,
\nprotest and notice of protest of this Note, and shall pay all costs of
\ncollection when incurred, including reasonable attorneys’ fees, costs and
\nexpenses. The right to plead any and all statutes of limitations as a defense to
\nany demand hereunder is hereby waived to the full extent permitted by law.<\/p>\n
The amount of this Note is secured by the Collateral identified and
\ndescribed as security therefor in the Loan Agreement.<\/p>\n
This Note shall be governed by, and construed and enforced in accordance
\nwith, the laws of the State of California, excluding conflict of laws principles
\nthat would cause the application of the laws of any other jurisdiction.<\/p>\n
The provisions of this Note shall inure to the benefit of and be binding
\nupon any successor to Borrower and shall extend to any holder hereof.<\/p>\n
SAGENT TECHNOLOGY, INC.<\/p>\n
By:
\n ————————————-
\n Printed Name:
\n —————————
\n Title:
\n ———————————-<\/p>\n
30
\n 34<\/p>\n
EXHIBIT D<\/p>\n
BORROWING BASE CERTIFICATE<\/p>\n
Borrower: Sagent Technology, Inc. Lender: Venture Banking Group<\/p>\n
Commitment Amount: $2,000,000
\n——————————————————————————–<\/p>\n
\nACCOUNTS RECEIVABLE
\n
\n 1. Accounts Receivable Book Value as of __ $_________
\n 2. Additions (please explain on reverse) $_________
\n 3. TOTAL ACCOUNTS RECEIVABLE $_________<\/p>\nACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
\n 4. Amounts over 90 days due $_________
\n 5. Balance of 50% over 90 day accounts $_________
\n 6. Concentration Limits $_________
\n 7. Foreign Accounts $_________
\n 8. Governmental Accounts $_________
\n 9. Contra Accounts $_________
\n 10. Promotion or Demo Accounts $_________
\n 11. Intercompany\/Employee Accounts $_________
\n 12. Other (please explain on reverse) $_________
\n 13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $_________
\n 14. Eligible Accounts (#3 minus #13) $_________
\n 15. LOAN VALUE OF ACCOUNTS (80% of #14) $_________<\/p>\n
FOREIGN ACCOUNTS
\n 16. Eligible Foreign Accounts Value as of $_________
\n 17. LOAN VALUE OF FOREIGN ACCOUNTS (50% of #16) $_________<\/p>\n
BALANCES
\n 18. Maximum Loan Amount $_________
\n 19. Total Funds Available [Lesser of #18 or (#15 plus #17)] $_________
\n 20. Present balance owing on Line of Credit $_________
\n 21. Outstanding under Sublimits ( ) $_________
\n 22. RESERVE POSITION (#19 minus #20 and #21) $_________
\n<\/c><\/c><\/s><\/table>\n
The undersigned represents and warrants- that the foregoing is true, complete
\nand correct, and that the information reflected in this Borrowing Base
\nCertificate complies with the representations and warranties set forth in the
\nLoan and Security Agreement between the undersigned and Venture Banking Group.<\/p>\n
COMMENTS: BANK USE ONLY<\/p>\n
SAGENT TECHNOLOGY, INC. Rec’d By:__________________
\n Auth. Signer
\nBy:
\n ——————————- Date:______________________
\n Authorized Signer Verified:__________________
\n Auth. Signer
\n Date:______________________<\/p>\n
31
\n 35<\/p>\n
EXHIBIT E
\n COMPLIANCE CERTIFICATE<\/p>\n
TO: VENTURE BANKING GROUP<\/p>\n
FROM: SAGENT TECHNOLOGY, INC.<\/p>\n
The undersigned authorized officer of Sagent Technology, Inc. hereby
\ncertifies that in accordance with the terms and conditions of the Loan
\nand-Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower
\nis in complete compliance for the period ending __________ with all required
\ncovenants except as noted below and (ii) all representations and warranties of
\nBorrower stated in the Agreement are true and correct in all material respects
\nas of the date hereof. Attached herewith are the required documents supporting
\nthe above certification. The Officer further certifies that these are prepared
\nin accordance with Generally Accepted Accounting Principles (GAAP) and are
\nconsistently applied from one period to the next except as explained in an
\naccompanying letter or footnotes. The Officer expressly acknowledges that no
\nborrowings may be requested by Borrower at any time or date of determination
\nthat Borrower is not in compliance with any of the terms of the Agreement, and
\nthat such compliance is determined not just at the date this certificate is
\ndelivered.<\/p>\n
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES\/NO UNDER “COMPLIES” COLUMN.<\/p>\n
\n\n REPORTING COVENANT REQUIRED COMPLIES
\n —————— ——– ——–
\n <\/p>\n Monthly financial statements Monthly within 30 days Yes No
\n Annual (CPA Audited) FYE within 120 days Yes No
\n 10-Q, 10-K and 8-K Within 5 days after filing with Yes No
\n SEC
\n A\/R & A\/P Agings Monthly within 30 days Yes No
\n A\/R Audit Initial and Semi-Annual Yes No
\n<\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n
\n\n FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
\n —————— ——– —— ——–<\/p>\n
\n Maintain on a Monthly Basis: Yes No
\n Minimum Quick, Cash __________(1) ____:1.0 Yes No
\n Coverage or Cash Flow
\n Minimum Tangible Net Worth $2,800,000(2) $________ Yes No
\n Maximum Debt\/Tangible Net 1.75:10(3) ____:1.0 Yes No
\n Worth
\n Profitability: Quarterly __________(4) $________ Yes No<\/p>\n COMMENTS REGARDING EXCEPTIONS: See Attached.
\n<\/c><\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n
————<\/p>\n
1 Quick Ratio of > 1.75:1.0; or Cash Coverage Ratio of > 1.75:1.0; OR Cash
\n Flow Coverage Ratio of > 1.25:1.0.<\/p>\n
2 Beginning September 30, 1997.<\/p>\n
3 Waived for July, 1997 and August, 1997 upon confirmation of equity event
\n of > $3,000,000 and lead investor’s participation.<\/p>\n
4 Permitted losses not to exceed: $2,000,000 for quarter ending June 30,
\n 1997; $i@00,000 for quarter ending September 30, 1997; and $950,000 for
\n quarter ending December 31, 1997. Borrower and Bank to establish
\n quarterly loss covenants for 1998 by March 15, 1998<\/p>\n
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY<\/p>\n
Received by:
\n ——————
\nSincerely, AUTHORIZED SIGNER<\/p>\n
Date:
\n——————————— ————————-
\nSIGNATURE
\n Verified:
\n ———————
\n AUTHORIZED SIGNER
\n——————————–
\nTITLE
\n Date:
\n——————————– ————————-
\nDATE Compliance Status: Yes No<\/p>\n
32
\n 36<\/p>\n
EQUIPMENT PROMISSORY NOTE<\/p>\n
$1,000,000 Palo Alto, California
\n Date: July 16, 1997<\/p>\n
SAGENT TECHNOLOGY, INC. (“Borrower”), for value received, hereby
\npromises to pay to the order of VENTURE BANKING GROUP, a division of Cupertino
\nNational Bank (“Bank”), in lawful money of the United States of America,
\npursuant to that certain Loan and Security Agreement dated as of July 16, 1997,
\nby and between Borrower and Bank (the “Loan Agreement”), (i) the principal
\namount of $1,00,000 or, if lesser, (ii) the principal amount of all Equipment
\nAdvances (the “Advances”) outstanding as of the maturity date hereof.<\/p>\n
This Note is one of the Notes referred to in the Loan Agreement. All
\nterms defined in the Loan Agreement shall have the same definitions when used
\nherein, unless otherwise defined herein.<\/p>\n
Borrower further promises to pay interest on each Advance hereunder in
\nlike funds on the principal amount hereof from time to time outstanding from the
\ndate hereof until paid in full, at a rate or rates per annum and payable on the
\ndates determined pursuant to the Loan Agreement.<\/p>\n
Payment on this Note shall be applied in the manner set forth in the
\nLoan Agreement. The Loan Agreement contains provisions for acceleration of the
\nmaturity of Advances hereunder upon the occurrence of certain stated events and
\nalso provides for optional and mandatory prepayments of principal hereof prior
\nto any stated maturity upon the terms and conditions therein specified.<\/p>\n
All Advances made by Bank to Borrower pursuant to the Loan Agreement
\nshall be recorded by Bank on the books and records of Bank. The failure of Bank
\nto record any Advance or any prepayment or payment made on account of the
\nprincipal balance hereof shall not limit or otherwise affect the obligation of
\nBorrower under this Note and under the Loan Agreement to pay the principal,
\ninterest and other amounts due and payable under the Advances.<\/p>\n
Any principal or interest payments on this Note not paid when due,
\nwhether at stated maturity, by acceleration or otherwise, shall bear interest at
\nthe Default Rate.<\/p>\n
Upon the occurrence of a default hereunder or an Event of Default under
\nthe Loan Agreement, all unpaid principal, accrued interest and other amounts
\nowing hereunder shall, at the option of Bank, be immediately collectible by or
\non behalf of Bank pursuant to the Loan Agreement and applicable law.<\/p>\n
Borrower-waives presentment and demand for payment, notice of dishonor,
\nprotest and notice of protest of this Note, and shall pay all costs of
\ncollection when incurred, including reasonable attorneys’ fees, costs and
\nexpenses. The right to plead any and all statutes of limitations as a defense to
\nany demand hereunder is hereby waived to the full extent permitted by law.<\/p>\n
The amount of this Note is secured by the Collateral identified and
\ndescribed as security therefor in the Loan Agreement.<\/p>\n
This Note shall be governed by, and construed and enforced in accordance
\nwith, the laws of the State of California, excluding conflict of laws principles
\nthat would cause the application of the laws of any other jurisdiction.<\/p>\n
The provisions of this Note shall inure to the benefit of and be binding
\nupon any successor to Borrower and shall extend to any holder hereof.<\/p>\n
SAGENT TECHNOLOGY, INC.<\/p>\n
By:
\n ————————————-
\n Printed Name:
\n —————————
\n Title:
\n ———————————-<\/p>\n
37<\/p>\n
REVOLVING PROMISSORY NOTE<\/p>\n
$2,000,000 Palo Alto, California
\n Date: July 16, 1997<\/p>\n
SAGENT TECHNOLOGY, INC. (“Borrower”), for value received, hereby
\npromises to pay to the order of VENTURE BANKING GROUP, a division of Cupertino
\nNational Bank (“Bank”), in lawful money of the United States of America,
\npursuant to that certain Loan and Security Agreement dated as of July 16, 1997,
\nby and between Borrower and Bank (the “Loan Agreement”), (i) the principal
\namount of $2,000,000 or, if lesser, (ii) the principal amount of all Advances
\noutstanding as of the maturity date hereof.<\/p>\n
This Note is one of the Notes referred to in the Loan Agreement. AR
\nterms defined in the Loan Agreement shall have the same definitions when used
\nherein, unless otherwise defined herein.<\/p>\n
Borrower further promises to pay interest on each Advance hereunder in
\nlike funds on the principal amount hereof from time to time outstanding from the
\ndate hereof until paid in full, at a rate or rates per annum and payable on the
\ndates determined pursuant to the Loan Agreement.<\/p>\n
Payment on this Note shall be applied in the manner set forth in the
\nLoan Agreement. The Loan Agreement contains provisions for acceleration of the
\nmaturity of Advances hereunder upon the occurrence of certain stated events and
\nalso provides for optional and mandatory prepayments of principal hereof prior
\nto any stated maturity upon the terms and conditions therein specified.<\/p>\n
All Advances made by Bank to Borrower pursuant to the Loan Agreement
\nshall be recorded by Bank on the books and records of Bank. The failure of Bank
\nto record any Advance or any prepayment or payment made on account of the
\nprincipal balance hereof shall not limit or otherwise affect the obligation of
\nBorrower under this Note and under the Loan Agreement to pay the principal,
\ninterest and other amounts due and payable under the Advances.<\/p>\n
Any principal or interest payments on this Note not paid when due,
\nwhether at stated maturity, by acceleration or otherwise, shall bear interest at
\nthe Default Rate.<\/p>\n
Upon the occurrence of a default hereunder or an Event of Default under
\nthe Loan Agreement, all unpaid principal, accrued interest and other amounts
\nowing hereunder shall, at the option of Bank, be immediately collectible by or
\non behalf of Bank pursuant to the Loan Agreement and applicable law.<\/p>\n
Borrower waives presentment and demand for payment, notice of dishonor,
\nprotest and notice of protest of this Note, and shall pay all costs of
\ncollection when incurred, including reasonable attorneys’ fees, costs and
\nexpenses. The right to plead any and all statutes of limitations as a defense to
\nany demand hereunder is hereby waived to the full extent permitted by law.<\/p>\n
The amount of this Note is secured by the Collateral identified and
\ndescribed as security therefor in the Loan Agreement.<\/p>\n
This Note shall be governed by, and construed and enforced in accordance
\nwith, the laws of the State of California, excluding conflict of laws principles
\nthat would cause the application of the laws of any other jurisdiction.<\/p>\n
The provisions of this Note shall inure to the benefit of and be binding
\nupon any successor to Borrower and shall extend to any holder hereof.<\/p>\n
SAGENT TECHNOLOGY, INC.<\/p>\n
By: \/s\/ KENNETH C. GARDNER
\n ——————————————
\n Printed Name: Kenneth C. Gardner
\n ——————————–
\n Title: President and Chief Executive Officer
\n —————————————<\/p>\n
38<\/p>\n
AMENDMENT
\n TO
\n LOAN AND SECURITY AGREEMENT<\/p>\n
This Amendment to Loan and Security Agreement (“this Amendment”) is
\nentered into as of July 31, 1997, by and between VENTURE BANKING GROUP, a
\ndivision of Cupertino National Bank (“Bank”) and SAGENT TECHNOLOGY, INC.
\n(“Borrower”).<\/p>\n
RECITALS<\/p>\n
Borrower and Bank are parties to that certain Loan and Security
\nAgreement dated as of July 16, 1997, (the “Agreement”). Borrower has requested
\ncertain modification (s) to the Agreement. Bank has agreed to amend the
\nAgreement, all in accordance with the terms of this Amendment. This Amendment
\nsets forth the modified terms on which Bank will continue to advance credit to
\nBorrower, and Borrower will repay the amounts owing to Bank.<\/p>\n
NOW, THEREFORE, the parties agree as follows:<\/p>\n
1. The following sentence in Section 3.1(g) of the Agreement is hereby
\namended to read follows:<\/p>\n
(g) an audit of Borrower’s Accounts shall be completed no later
\nthan August 18, 1997, the results of which shall be satisfactory to Bank; and<\/p>\n
2. The effectiveness of this Amendment is subject to the following
\ncondition’s precedent:<\/p>\n
(a) Bank shall have received, in form and substance satisfactory
\nto Bank this Amendment;<\/p>\n
(b) Bank shall have received, in form and substance satisfactory
\nto Bank, such other documents, and completion of such other matters, as Bank may
\nreasonably deem necessary or appropriate.<\/p>\n
3. Unless otherwise defined, all capitalized terms In this Amendment
\nshall be as defined in the Agreement. Except as amended, the Agreement remains
\nin full force and effect.<\/p>\n
4. Borrower represents and warrants that the Representations and
\nWarranties contained in the Agreement are true and correct as of the date of
\nthis Amendment, and that no Event of Default has occurred and is continuing.<\/p>\n
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
\nthe first date above written.<\/p>\n
SAGENT TECHNOLOGY, INC.<\/p>\n
By: \/s\/ KATHLEEN OVALLE
\n ————————————-
\n Title: Corporation Controller
\n ———————————-<\/p>\n
VENTURE BANKING GROUP, a division of
\n Cupertino National Bank<\/p>\n
By: \/s\/ JENNIFER SCHELLENBERG
\n ————————————-
\n Title: Account Officer
\n ———————————-<\/p>\n
1<\/p>\n
39<\/p>\n
SCHEDULE OF PERMITTED LIENS<\/p>\n
\n\nUCC FILING NUMBER DATE OF FILING EXPIRATION DATE SECURED PARTY
\n—————– ————– ————— ————-
\n <\/p>\n9524960130 9\/5\/95 9\/5\/2000 Lighthouse Capital
\n Partners, L.P.<\/p>\n
9524960135 9\/5\/95 9\/5\/2000 Lighthouse Capital
\n Partners, L.P.<\/p>\n
9524960068 1\/5\/95 1\/5\/2001 Lighthouse Capital
\n Partners, L.P.<\/p>\n
9524960592 3\/28\/96 3\/28\/2001 Lighthouse Capital
\n Partners, L.P.<\/p>\n
9524960508 5\/17\/96 5\/17\/2001 Lighthouse Capital
\n Partners, L.P.<\/p>\n
9524960854 7\/2\/96 7\/2\/2001 Lighthouse Capital
\n Partners, L.P.<\/p>\n
9524960069 10\/22\/96 10\/22\/2001 Lighthouse Capital
\n Partners, L.P.<\/p>\n
9524960203 12\/26\/96 12\/26\/2001 Lighthouse Capital
\n Partners, L.P.<\/p>\n
9524960189 2\/13\/96 2\/13\/2002 Lighthouse Capital
\n Partners, L.P.<\/p>\n
9524960436 4\/18\/96 4\/18\/2002 Lighthouse Capital
\n Partners, L.P.<\/p>\n
9524960400 5\/22\/96 5\/2\/2002 Lighthouse Capital
\n Partners, L.P.<\/p>\n
<\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n
40<\/p>\n
DISBURSEMENT REQUEST AND AUTHORIZATION<\/p>\n
Borrower: Sagent Technology, Inc. Bank: Venture Banking Group<\/p>\n
LOAN TYPE. This is a Variable Rate, Revolving Line of Credit of a principal
\namount up to $2,000,000 and an Equipment Line of up to $1,000,000.<\/p>\n
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for business.<\/p>\n
SPECIFIC PURPOSE. The specific purpose of this loan is: Short-term working
\ncapital and acquisition of equipment.<\/p>\n
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
\ndisbursed until all of Bank’s conditions for making the loan have been
\nsatisfied. Please disburse the loan proceeds as follows:<\/p>\n
\n\n Revolving Line Equipment Line
\n ————– ————–
\n
\n Amount paid to Borrower directly: $____ $____
\n Undisbursed Funds $____ $____<\/p>\n Principal $____ $____
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
\nfollowing charges:<\/p>\n
\n
\n $____
\n Prepaid Finance Charges Paid in Cash:
\n $6,000 Loan Fee
\n TBD Accounts Receivables Audit<\/p>\n Other Charges Paid in Cash: $____
\n $TBD UCC Search Fees
\n $TBD UCC Filing Fees
\n $TBD Patent Filing Fees
\n $TBD Trademark Filing Fees
\n $TBD Copyright Filing Fees
\n $3500 Outside Counsel Fees and Expenses
\n (Estimate)<\/p>\n
Total Charges Paid in Cash $____
\n<\/c><\/s><\/table>\n
AUTOMATIC PAYMENTS. Borrower hereby authorizes Bank automatically to deduct from
\nBorrower’s account numbered __________ the amount of any loan payment. If the
\nfunds in the account are insufficient to cover any payment, Bank shall not be
\nobligated to advance funds to cover the payment.<\/p>\n
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
\nWARRANTS TO BANK THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
\nTHAT THERE HAS BEEN NO ADVERSE CHANGE IN BORROWER’S FINANCIAL CONDITION AS
\nDISCLOSED IN BORROWER’S MOST RECENT FINANCIAL STATEMENT TO BANK. THIS
\nAUTHORIZATION IS DATED AS OF JULY 16,1997.<\/p>\n
BORROWER:<\/p>\n
SAGENT TECHNOLOGY, INC.<\/p>\n
\/s\/ KENNETH C. GARDNER
\n—————————–
\nAuthorized Officer<\/p>\n
41<\/p>\n
AGREEMENT TO PROVIDE INSURANCE<\/p>\n
Grantor: Sagent Technology, Inc. Bank: Venture Banking Group<\/p>\n
INSURANCE REQUIREMENTS. Sagent Technology, Inc. (“Grantor”) understands
\nthat insurance coverage is required in connection with the extending of a loan
\nor the providing of other financial accommodations to Grantor by Bank. These
\nrequirements are set forth in the Loan Documents. The following minimum
\ninsurance coverages must be provided on the following described collateral (the
\n“Collateral”):<\/p>\n
\n
\n Collateral: All Inventory, Equipment and Fixtures
\n Type: All risks, including fire, theft and liability.
\n Amount: Full insurable value.
\n Basis: Replacement value.
\n Endorsements: Loss payable clause to Bank with stipulation that coverage
\n will not be canceled or diminished without a minimum of
\n twenty (20) days’ prior written notice to Bank
\n<\/c><\/s><\/table>\n INSURANCE COMPANY. Grantor may obtain insurance from any insurance
\ncompany Grantor may choose that is reasonably acceptable to Bank. Grantor
\nunderstands that credit may not be denied solely because insurance was not
\npurchased through Bank.<\/p>\n
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Bank, on or
\nbefore closing, evidence of the required insurance as provided above, with an
\neffective date of July 16, 1997, or earlier. Grantor acknowledges and agrees
\nthat if Grantor fails to provide any required insurance or fails to continue
\nsuch insurance in force, Bank may do so at Grantor’s expense as provided in the
\nLoan and Security Agreement. The cost of such insurance, at the option of Bank,
\nshall be payable on demand or shall be added to the indebtedness as provided in
\nthe security document. GRANTOR ACKNOWLEDGES THAT IF BANK SO PURCHASES ANY SUCH
\nINSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE
\nTO THE COLLATERAL, UP TO THE BALANCE OF THE LOAN; HOWEVER, GRANTOR’S EQUITY IN
\nTHE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE
\nANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE
\nREQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.<\/p>\n
AUTHORIZATION. For purposes of insurance coverage on the Collateral,
\nGrantor authorizes Bank to provide to any person (including any insurance agent
\nor company) all information Bank deems appropriate, whether regarding the
\nCollateral, the loan or other financial accommodations, or both.<\/p>\n
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO
\nPROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT LS DATED JULY 16,1997.<\/p>\n
GRANTOR:<\/p>\n
SAGENT TECHNOLOGY, INC.<\/p>\n
\/s\/ KENNETH C. GARDNER
\n—————————-
\nAuthorized Officer<\/p>\n
FOR BANK USE ONLY
\n INSUREANCE VERIFICATION<\/p>\n
DATE:___________________________________ PHONE:_____________________________
\nAGENT’S NAME:___________________________________________________________________
\nINSUREANCE COMPANY:_____________________________________________________________
\nPOLICY NUMBER:__________________________________________________________________
\nEFFECTIVE DATES:________________________________________________________________
\nCOMMENTS:_______________________________________________________________________<\/p>\n
42<\/p>\n
EQUIPMENT PROMISSORY NOTE<\/p>\n
$1,000,0 00 Palo Alto, California
\n Date: July 16, 1997<\/p>\n
SAGENT TECHNOLOGY, INC. (“Borrower”), for value received, hereby
\npromises to pay to the order of VENTURE BANKING GROUP, a division of Cupertino
\nNational Bank (“Bank”), in lawful money of the United States of America,
\npursuant to that certain Loan and Security Agreement dated as of July 16, 1997,
\nby and between Borrower and Bank (the “Loan Agreement”), (i) the principal
\namount of $1,00,000 or, if lesser, (ii) the principal amount of all Equipment
\nAdvances (the “Advances”) outstanding as of the maturity date hereof.<\/p>\n
This Note is one of the Notes referred to in the Loan Agreement. All
\nterms defined in the Loan Agreement shall have the same definitions when used
\nherein, unless otherwise defined herein.<\/p>\n
Borrower further promises to pay interest on each Advance hereunder in
\nlike funds on the principal amount hereof from time to time outstanding from the
\ndate hereof until paid in full, at a rate or rates per annum and payable on the
\ndates determined pursuant to the Loan Agreement.<\/p>\n
Payment on this Note shall be applied in the manner set forth in the
\nLoan Agreement. The Loan Agreement contains provisions for acceleration of the
\nmaturity of Advances hereunder upon the occurrence of certain stated events and
\nalso provides for optional and mandatory prepayments of principal hereof prior
\nto any stated maturity upon the terms and conditions therein specified.<\/p>\n
All Advances made by Bank to Borrower pursuant to the Loan Agreement
\nshall be recorded by Bank on the books and records of Bank. The failure of Bank
\nto record any Advance or any prepayment or payment made on account of the
\nprincipal balance hereof shall not limit or otherwise affect the obligation of
\nBorrower under this Note and under the Loan Agreement to pay the principal,
\ninterest and other amounts due and payable under the Advances.<\/p>\n
Any principal or interest payments on this Note not paid when due,
\nwhether at stated maturity, by acceleration or otherwise, shall bear interest at
\nthe Default Rate.<\/p>\n
Upon the occurrence of a default hereunder or an Event of Default under
\nthe Loan Agreement, all unpaid principal, accrued interest and other amounts
\nowing hereunder shall, at the option of Bank, be immediately collectible by or
\non behalf of Bank pursuant to the Loan Agreement and applicable law.<\/p>\n
Borrower-waives presentment and demand for payment, notice of dishonor,
\nprotest and notice of protest of this Note, and shall pay all costs of
\ncollection when incurred, including reasonable attorneys’ fees, costs and
\nexpenses. The right to plead any and all statutes of limitations as a defense to
\nany demand hereunder is hereby waived to the full extent permitted by law.<\/p>\n
The amount of this Note is secured by the Collateral identified and
\ndescribed as security therefor in the Loan Agreement.<\/p>\n
This Note shall be governed by, and construed and enforced in accordance
\nwith, the laws of the State of California, excluding conflict of laws principles
\nthat would cause the application of the laws of any other jurisdiction.<\/p>\n
The provisions of this Note shall inure to the benefit of and be binding
\nupon any successor to Borrower and shall extend to any holder hereof.<\/p>\n
SAGENT TECHNOLOGY, INC.<\/p>\n
By: \/s\/ KENNETH C. GARDNER
\n ————————————
\n Printed Name: Kenneth C. Gardner
\n Title: President and Chief Executive
\n Officer<\/p>\n
43<\/p>\n
REVOLVING PROMISSORY NOTE<\/p>\n
$2,000,000 Palo Alto, California
\n Date: July 16,1997<\/p>\n
SAGENT TECHNOLOGY, INC. (“Borrower”), for value received, hereby
\npromises to pay to the order of VENTURE BANKING GROUP, A division of Cupertino
\nNational Bank (“Bank”), in lawful money of the United States of America,
\npursuant to that certain Loan and Security Agreement dated as of July 16, 1097,
\nby and between Borrower and Bank (the “Loan Agreement”), (i) the principal
\namount of $2,000,000 or, if lesser, (ii) the principal amount of all Advances
\noutstanding as of the maturity date hereof.<\/p>\n
This Note is one of the Notes referred to in the Loan Agreement. All
\nterms defined in the Loan Agreement shall have the same definitions when used
\nherein, unless otherwise defined herein.<\/p>\n
Borrower further promises to pay interest on each Advance hereunder in
\nlike funds on the principal amount hereof from time to time outstanding from the
\ndate hereof until paid in full, at a rate or rates per annum and payable on the
\ndates determined pursuant to the Loan Agreement.<\/p>\n
Payment on this Note shall be applied in the manner set forth in the
\nLoan Agreement. The Loan Agreement contains provisions for acceleration of the
\nmaturity of Advances hereunder upon the occurrence of certain stated events and
\nalso provides for optional and mandatory prepayments of principal hereof prior
\nto any stated maturity upon the terms and conditions therein specified.<\/p>\n
All Advances made by Bank to Borrower pursuant to the Loan Agreement
\nshall be recorded by Bank on the books and records of Bank. The failure of Bank
\nto record any Advance or any prepayment or payment made on account of the
\nprincipal balance hereof shall not limit or otherwise affect the obligation of
\nBorrower under this Note and under the Loan Agreement to pay the principal,
\ninterest and other amounts due and payable under the Advances.<\/p>\n
Any principal or interest payments on this Note not paid when due,
\nwhether at stated maturity, by acceleration or otherwise, shall bear interest at
\nthe Default Rate.<\/p>\n
Upon the occurrence of a default hereunder or an Event of Default under
\nthe Loan Agreement, all unpaid principal, accrued interest and other amounts
\nowing hereunder shall, at the option of Bank, be. immediately collectible by or
\non behalf of Bank pursuant to the Loan Agreement and applicable law.<\/p>\n
Borrower waives presentment and demand for payment, notice of dishonor,
\nprotest and notice of protest of this Note, and shall pay all costs of
\ncollection when incurred, including reasonable attorneys’ fees, costs and
\nexpenses. The right to plead any and all statutes of limitations as a defense to
\nany demand hereunder is hereby waived to the full extent permitted by law.<\/p>\n
The amount of this Note is secured by the Collateral identified and
\ndescribed as security therefor in the Loan Agreement.<\/p>\n
This Note shall be governed by, and construed and enforced in accordance
\nwith, the laws of the State of California, excluding conflict of laws principles
\nthat would cause the application of the laws of any other jurisdiction.<\/p>\n
The provisions of this Note shall inure to the benefit of and be binding
\nupon any success or to Borrower and shall extend to any holder hereof.<\/p>\n
SAGENT TECHNOLOGY, INC.<\/p>\n
By: \/s\/ KENNETH C. GARDNER
\n ————————————-
\n Printed Name: Kenneth C. Gardner
\n Title: President and Chief Executive
\n Officer<\/p>\n
44<\/p>\n
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
\nTHE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
\nOTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
\nOR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
\nCORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.<\/p>\n
WARRANT TO PURCHASE STOCK<\/p>\n
\n
\nCorporation: SAGENT TECHNOLOGY, INC., a California corporation
\nNumber of Shares: See below
\nClass of Stock: See below
\nInitial Exercise Price: See below
\nIssue Date: July 16, 1997
\nExpiration Date: The later of (i) July 16, 2007 or (ii) five
\n (5) years after the closing of the Company’s
\n initial public offering of its Common Stock
\n effected pursuant to a Registration Statement on
\n Form S-1 (or its successor) filed under the
\n Securities Act of 1933, as amended (the “Act”).
\n<\/c><\/s><\/table>\n THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
\nother good and valuable consideration, VENTURE BANKING GROUP, a division of
\nCupertino National Bank (“Holder”) is entitled to purchase the number of fully
\npaid and nonassessable shares of the class of securities (the “Shares”) of the
\ncorporation (the “Company”) at the initial exercise price per Share (the
\n“Warrant Price”) all as set forth herein and as adjusted pursuant to Article 2
\nof this Warrant, subject to the provisions and upon the terms and conditions set
\nforth of this Warrant. The Warrant Price shall be equal to the price per share
\nat which the Company after the date hereof first sells its equity securities in
\nan offering in which the gross proceeds are at least Three Million Dollars
\n($3,000,000), and the Shares shall be the type of securities sold in such
\noffering; provided that if such offering does not take place on or before
\nSeptember 30, 1997, the Warrant Price shall be $2.50, and the Shares shall be
\nthe Company’s Series C Preferred Stock. The number of Shares shall be equal to
\nthe quotient derived by dividing Thirty Thousand Dollars ($30,000) by the
\nWarrant Price.<\/p>\n
ARTICLE 1. EXERCISE.<\/p>\n
1.1 Method of Exercise. Holder may exercise this Warrant by
\ndelivering a duly executed Notice of Exercise in substantially the form attached
\nas Appendix 1 to the principal office of the Company. Unless Holder is
\nexercising the conversion right set forth in Section 1.2, Holder shall also
\ndeliver to the Company a check for the aggregate Warrant Price for the Shares
\nbeing purchased.<\/p>\n
1.2 Conversion Right. In lieu of exercising this Warrant as
\nspecified in Section 1.1, Holder may from time to time convert this Warrant, in
\nwhole or in part, into a number of Shares determined by dividing (a) the
\naggregate fair market value of the Shares or other securities otherwise issuable
\nupon exercise of this Warrant minus the aggregate Warrant Price of such Shares
\nby (b) the fair market value of one Share. The fair market value of the Shares
\nshall be determined pursuant Section 1.4.<\/p>\n
1
\n 45<\/p>\n
1.3 Omitted.<\/p>\n
1.4 Fair Market Value. If the Shares are traded in a public
\nmarket, the fair market value of the Shares shall be the dosing price of the
\nShares (or the closing price of the Company’s stock into which the Shares are
\nconvertible) reported for the business day immediately before Holder delivers
\nits Notice of Exercise to the Company. If the Shares are not traded in a public
\nmarket, the Board of Directors of the Company shall determine fair market value
\nin its reasonable good faith judgment. The foregoing notwithstanding, if Holder
\nadvises the Board of Directors in writing that Holder disagrees with such
\ndetermination, then the Company and Holder shall promptly agree upon a reputable
\ninvestment banking firm to undertake such valuation. If the valuation of such
\ninvestment banking firm is greater than that determined by the Board of
\nDirectors, then all fees and expenses of such investment banking firm shall be
\npaid by the Company. An all other circumstances, such fees and expenses shall be
\npaid by Holder.<\/p>\n
1.5 Delivery of Certificate and New Warrant. Promptly after
\nHolder exercises or converts this Warrant, the Company shall deliver to Holder
\ncertificates for the Shares acquired and, if this Warrant has not been fully
\nexercised or converted and has not expired, a new Warrant representing the
\nShares not so acquired.<\/p>\n
1.6 Replacement of Warrants. On receipt of evidence reasonably
\nsatisfactory to the Company of the loss, theft, destruction or mutilation of
\nthis Warrant and, in the case of loss, theft or destruction, on delivery of an
\nindemnity agreement reasonably satisfactory in form and amount to the Company
\nor, in the case of mutilation, or surrender and cancellation of this Warrant,
\nthe Company at Holder’s expense shall execute and deliver, in lieu of this
\nWarrant, a new warrant of like tenor.<\/p>\n
1.7 Repurchase on Sale, Merger, or Consolidation of the Company.<\/p>\n
1.7.1. “Acquisition”. For the purpose of this Warrant,
\n“Acquisition” means any sale, license, or other disposition of all or
\nsubstantially all of the assets of the Company, or any reorganization,
\nconsolidation, or merger of the Company where the holders of the Company’s
\nsecurities before the transaction beneficially own less than 50% of the
\noutstanding voting securities of the surviving entity after the transaction.<\/p>\n
1.7.2. Assumption of Warrant. Upon the dosing of any
\nAcquisition the successor entity shall assume the obligations of this Warrant,
\nand this Warrant shall be exercisable for the same securities, cash, and
\nproperty as would be payable for the Shares issuable upon exercise of the
\nunexercised portion of this Warrant as if such Shares were outstanding on the
\nrecord date for the Acquisition and subsequent closing. The Warrant Price shall
\nbe adjusted accordingly.<\/p>\n
1.7.3. Purchase Right. Notwithstanding the foregoing, at
\nthe election of Holder, the Company shall purchase the unexercised portion of
\nthis Warrant for cash upon the closing of any Acquisition for an amount equal to
\n(a) the fair market value of any. consideration that would have been received by
\nHolder in consideration of the Shares had Holder exercised the unexercised
\nportion of this Warrant immediately before the record date for determining the
\nshareholders entitled to participate in the proceeds of the Acquisition, less
\n(b) the aggregate Warrant Price of the Shares, but in no event less than zero.<\/p>\n
2
\n 46<\/p>\n
ARTICLE 2. ADJUSTMENTS TO THE SHARES.<\/p>\n
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays
\na dividend on its common stock (or the Shares if the Shares are securities other
\nthan common stock) payable in common stock, or other securities, subdivides the
\noutstanding common stock into a greater amount of common stock, or, if the
\nShares are securities other than common stock, subdivides the Shares in a
\ntransaction that increases the amount of common stock into which the Shares are
\nconvertible, then upon exercise of this Warrant, for each Share acquired,
\nHolder shall receive, without cost to Holder, the total number and kind of
\nsecurities to which Holder would have been entitled had Holder owned the Shares
\nof record as of the date the dividend or subdivision occurred.<\/p>\n
2.2 Reclassification, Exchange or Substitution. Upon any
\nreclassification, exchange, substitution, or other event that results in a
\nchange of the number and\/or class of the securities issuable upon exercise or
\nconversion of this Warrant, Holder shall be entitled to receive, upon exercise
\nor conversion of this Warrant, the number and kind of securities and property
\nthat Holder would have received for the Shares if this Warrant had been
\nexercised immediately before such reclassification, exchange, substitution, or
\nother event. Such an event shall include any automatic conversion of the
\noutstanding or issuable securities of the Company of the same class or series as
\nthe Shares to common stock pursuant to the terms of the Company’s Articles of
\nIncorporation upon the dosing of a registered public offering of the Company’s
\ncommon stock. The Company or its successor shall promptly issue to Holder a new
\nWarrant for such new securities or other property. The new Warrant shall provide
\nfor adjustments which shall be as nearly equivalent as may be practicable to the
\nadjustments provided for in this Article 2 including, without limitation,
\nadjustments to the Warrant Price and to the number of securities or property
\nissuable upon exercise of the new Warrant. The provisions of this Section 2.2
\nshall similarly apply to successive reclassifications, exchanges, substitutions,
\nor other events.<\/p>\n
2.3 Adjustments for Combinations, Etc. If the outstanding Shares
\nare combined or consolidated, by reclassification or otherwise, into a lesser
\nnumber of shares, the Warrant Price shall be proportionately increased.<\/p>\n
2.4 Adjustments; for Diluting Issuances. The Warrant Price and
\nthe number of Shares issuable upon exercise of this Warrant or, if the Shares
\nare Preferred Stock, the number of shares of common stock issuable upon
\nconversion of the Shares, shall be subject to adjustment, from time to time in
\nthe manner set forth on Exhibit A in the event of Diluting Issuances (as defined
\non Exhibit A).<\/p>\n
2.5 No Impairment. The Company shall not, by amendment of its
\nArticles of Incorporation or through a reorganization, transfer of assets,
\nconsolidation, merger, dissolution, issue, or sale of securities or any other
\nvoluntary action, avoid or seek to avoid the observance or performance of any of
\nthe terms to be observed or performed under this Warrant by the Company, but
\nshall at all times in good faith assist in carrying out of all the provisions of
\nthis Article 2 and in taking all such action as may be necessary or appropriate
\nto protect Holder’s rights under this Article against impairment. If the Company
\ntakes any action affecting the Shares or its common stock other than as
\ndescribed above that adversely affects Holder’s rights under this Warrant, the
\nWarrant Price shall be adjusted downward and the number of Shares issuable upon
\nexercise of this Warrant shall be adjusted upward in such a manner that the
\naggregate Warrant Price of this Warrant is unchanged.<\/p>\n
3
\n 47<\/p>\n
2.6 Fractional Shares. No fractional Shares shall be issuable
\nupon exercise or conversion of the Warrant and the number of Shares to be issued
\nshall be rounded down to the nearest whole Share. If a fractional share interest
\narises upon any exercise or conversion of the Warrant, the Company shall
\neliminate such fractional share interest by paying Holder amount computed by
\nmultiplying the fractional interest by the fair market value of a full Share.<\/p>\n
2.7 Certificate as to Adjustments. Upon each adjustment of the
\nWarrant Price, the Company at its expense shall promptly compute such
\nadjustment, and furnish Holder with a certificate of its Chief Financial Officer
\nsetting forth such adjustment and the facts upon which such adjustment is based.
\nThe Company shall, upon written request, furnish Holder a certificate setting
\nforth the Warrant Price in effect upon the date thereof and the series of
\nadjustments leading to such Warrant Price.<\/p>\n
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.<\/p>\n
3.1 Representations and Warranties. The Company hereby represents
\nand warrants to the Holder as follows:<\/p>\n
All Shares which may be issued upon the exercise of the
\npurchase right represented by this Warrant, and all securities, if any, issuable
\nupon conversion of the Shares, shall, upon issuance, be duly authorized, validly
\nissued, fully paid and nonassessable, and free of any hens and encumbrances
\nexcept for restrictions on transfer provided for herein or under applicable
\nfederal and state securities laws.<\/p>\n
3.2 Notice of Certain Events. If the Company proposes at any time
\n(a) to declare any dividend or distribution upon its common stock, whether in
\ncash, property, stock, or other securities and whether or not a regular cash
\ndividend; (b) to offer for subscription pro rata to the holders of any class or
\nseries of its stock any additional shares of stock of any class or series or
\nother rights; (c) to effect any reclassification or recapitalization of common
\nstock; (d) to merge or consolidate with or into any other corporation, or sell,
\nlease, license, or convey all or substantially all of its assets, or to
\nliquidate, dissolve or wind up; or (e) offer holders of registration rights the
\nopportunity to participate in an underwritten public offering of the company’s
\nsecurities for cash, then, in connection with each such event, the Company shall
\ngive Holder (1) at least 20 days prior written notice of the date on which a
\nrecord will be taken for such dividend, distribution, or subscription rights
\n(and specifying the date on which the holders of common stock will be entitled
\nthereto) or for determining rights to vote, if any, in respect of the matters
\nreferred to in (c) and (d) above; (2) in the case of the matters referred to in
\n(c) and (d) above at least 20 days prior written notice of the date when the
\nsame will take place (and specifying the date on which the holders of common
\nstock will be entitled to exchange their common stock for securities or other
\nproperty deliverable upon the occurrence of such event); and (3) in the case of
\nthe matter referred to in (e) above, the same notice as is given to the holders
\nof such registration rights.<\/p>\n
3.3 Information Rights. So long as the Holder holds this Warrant
\nand\/or any of the Shares, the Company shall deliver to the Holder (a) promptly
\nafter mailing, copies of all notices or other written communications to the
\nshareholders of the Company, (b) within ninety (90) days after the end of each
\nfiscal year of the Company, the annual audited financial statements of the
\nCompany certified by independent public accountants of <\/p>\n
4
\n 48<\/p>\n
recognized standing and (c) within forty-five (45) days after the end of each of
\nthe first three quarters of each fiscal year, the Company’s quarterly, unaudited
\nfinancial statements.<\/p>\n
3.4 Registration Under Securities Act of 1933, as amended. The
\nCompany agrees that the Shares or, if the Shares are convertible into common
\nstock of the Company, such common stock, shall be subject to the registration
\nrights set forth on Exhibit B, if attached.<\/p>\n
ARTICLE 4. MISCELLANEOUS.<\/p>\n
4.1 Term; Notice of Expiration. This Warrant is exercisable, in
\nwhole or in part, at any time and from time to time on or before the Expiration
\nDate set forth above. The Company shall give Holder written notice of Holder’s
\nright to exercise this Warrant in the form attached as Appendix 2 not more than
\n90 days and not less than 30 days before the Expiration Date. If the notice is
\nnot so given, the Expiration Date shall automatically be extended until 30 days
\nafter the date the Company delivers the notice to Holder.<\/p>\n
42 Legends. This Warrant and the Shares (and the securities
\nissuable, directly or indirectly, upon conversion of the Shares, if any) shall
\nbe imprinted with a legend in substantially the following form:<\/p>\n
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
\n AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
\n WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO
\n RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO. THE
\n CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.<\/p>\n
4.3 Compliance with Securities Laws on Transfer. This Warrant and
\nthe Shares issuable upon exercise this Warrant (and the securities issuable,
\ndirectly or indirectly, upon conversion of the Shares, if any) may not be
\ntransferred or assigned in whole or in part without compliance with applicable
\nfederal and state securities laws by the transferor and the transferee
\n(including, without limitation, the delivery of investment representation
\nletters and legal opinions reasonably satisfactory to the Company, as reasonably
\nrequested by the Company). The Company shall not require Holder to provide an
\nopinion of counsel if the transfer is to an affiliate of Holder or if there is
\nno material question as to the availability of current information as referenced
\nin Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e)
\nin reasonable detail, the selling broker represents that it has complied with
\nRule 144(f), and the Company is provided with a copy of Holder’s notice of
\nproposed sale.<\/p>\n
4.4 Transfer Procedure. Subject to the provisions of Section 4.2,
\nHolder may transfer all or part of this Warrant or the Shares issuable upon
\nexercise of this Warrant (or the securities issuable, directly or indirectly,
\nupon conversion of the Shares, if any) by giving the Company notice of the
\nportion of the Warrant being transferred setting forth the name, address and
\ntaxpayer identification number of the transferee and surrendering this Warrant
\nto the Company for reissuance to the transferee(s) (and Holder if applicable).
\nUnless the Company is filing financial information with the SEC pursuant to the
\nSecurities Exchange <\/p>\n
5
\n 49<\/p>\n
Act of 1934, the Company shall have the right to refuse to transfer any portion
\nof this Warrant to any person who directly competes with the Company.<\/p>\n
4.5 Notices. All notices and other communications from the
\nCompany to the Holder, or vice versa, shall be deemed delivered and effective
\nwhen given personally or mailed by first-class registered or certified mail,
\npostage prepaid, at such address as may have been furnished to the Company or
\nthe Holder, as the case may be, in writing by the Company or such holder from
\ntime to time.<\/p>\n
4.6 Waiver. This Warrant and any term hereof may be changed,
\nwaived, discharged or terminated only by an instrument in writing signed by the
\nparty against which enforcement of such change, waiver, discharge or termination
\nis sought.<\/p>\n
4.7 Attorneys Fees. In the event of any dispute between the
\nparties concerning the terms and provisions of this Warrant, the party
\nprevailing in such dispute shall be entitled to collect from the other party all
\ncosts incurred in such dispute, including reasonable attorneys’ fees.<\/p>\n
4.8 Governing Law. This Warrant shall be governed by and
\nconstrued in accordance with the laws of the State of California, without giving
\neffect to its principles regarding conflicts of law.<\/p>\n
“COMPANY”<\/p>\n
SAGENT TECHNOLOGY, INC.<\/p>\n
By \/s\/ Kenneth C. Gardner
\n ————————————————
\n Name Kenneth C. Gardner
\n ———————————————-
\n (Print)<\/p>\n
Title: Chairman of the Board, President, or
\n Vice President<\/p>\n
By \/s\/ Kathleen Ovalle
\n ————————————————
\n Name Kathleen Ovalle
\n ———————————————-
\n (Print)<\/p>\n
Title: Chief Financial Officer, Secretary
\n Assistant Treasurer, or Assistant Secretary<\/p>\n
6
\n 50<\/p>\n
APPENDIX 1<\/p>\n
NOTICE OF EXERCISE<\/p>\n
1. The undersigned hereby elects to purchase ___ shares of the Series __
\nPreferred Stock of _________ pursuant to the terms of the attached Warrant, and
\ntenders herewith payment of the purchase price of such shares in full.<\/p>\n
1. The undersigned hereby elects to convert the attached Warrant into
\nShares in the manner specified in the Warrant. This conversion is exercised with
\nrespect to ______ of the Shares covered by the Warrant.<\/p>\n
[Strike paragraph that does not apply.]<\/p>\n
2. Please issue a certificate or certificates, representing said shares
\nin the name of the undersigned or in such other name as is specified below:<\/p>\n
————————–
\n (Name)<\/p>\n
————————–<\/p>\n
————————–
\n (Address)<\/p>\n
3. The undersigned represents it is acquiring the shares solely for its
\nown account and not as a nominee for any other party and not with a view toward
\nthe resale or distribution thereof except in compliance with applicable
\nsecurities laws.<\/p>\n
—————————————-
\n (Signature)<\/p>\n
————————–
\n (Date<\/p>\n
7
\n 51<\/p>\n
APPENDIX 2<\/p>\n
Notice that Warrant Is About to Expire<\/p>\n
VENTURE BANKING GROUP
\nThree Palo Alto Square, Suite 150
\nPalo Alto, CA 94306
\nAttn: Chief Financial Officer<\/p>\n
Dear:_______________<\/p>\n
This is to advise you that the Warrant issued to you described below
\nwill expire on ___________, 19__.<\/p>\n
Issuer:<\/p>\n
Issue Date: July 16, 1997<\/p>\n
Class of Security Issuable: See Warrant<\/p>\n
Exercise Price per Share: See Warrant<\/p>\n
Number of Shares Issuable: See Warrant<\/p>\n
Procedure for Exercise:<\/p>\n
Please contact [name of contact person at (phone number)] with any
\nquestions you may have concerning exercise of the Warrant. This is your only
\nnotice of pending expiration.<\/p>\n
—————————————-
\n (Name of Issuer)<\/p>\n
By
\n ————————————–
\n Its
\n ————————————-<\/p>\n
8
\n 52<\/p>\n
EXHIBIT A<\/p>\n
Anti-Dilution Provisions<\/p>\n
In the event of the issuance (a “Diluting Issuance”) by
\nthe Company, after the Issue Date of the Warrant, of securities at a price per
\nshare less than the Warrant Price, then the number of shares of common stock
\nissuable upon conversion of the Shares shall be adjusted in accordance with
\nthose provisions (the “Provisions”) of the Company’s Articles of Incorporation
\nwhich apply to Diluting Issuances.<\/p>\n
The Company agrees that the Provisions, as in effect on
\nthe Issue Date, shall be deemed to remain in full force and effect during the
\nterm of the Warrant notwithstanding any subsequent amendment, waiver or
\ntermination thereof by the Company’s shareholders.<\/p>\n
Under no circumstances shall the aggregate Warrant Price
\npayable by the Holder upon exercise of the Warrant increase as a result of any
\nadjustment arising from a Diluting Issuance.<\/p>\n
9
\n 53<\/p>\n
EXHIBIT B<\/p>\n
Registration Rights<\/p>\n
The Shares (if common stock), or the common stock issuable
\nupon conversion of the Shares, shall be deemed “registrable securities” or
\notherwise entitled to “piggy back” registration rights in accordance with the
\nterms of the following agreement (the “Agreement”) between the Company and its
\ninvestor(s): FOURTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT dated as
\nof June 16, 1997, by and among the Company and the investors party thereto.<\/p>\n
The Company agrees that no amendments will be made to the
\nAgreement which would have an adverse impact on Holder’s registration rights
\nthereunder without the consent of Holder. By acceptance of the Warrant to which
\nthis Exhibit B is attached, Holder shall be deemed to be a party to the
\nAgreement.<\/p>\n
10
\n 54<\/p>\n
AGREEMENT TO PROVIDE INSURANCE<\/p>\n
GRANTOR: Sagent Technology, Inc. BANK: Venture Banking Group<\/p>\n
INSURANCE REQUIREMENTS. Sagent Technology, Inc. (“Grantor”) understands
\nthat insurance coverage is required in connection with the extending of a loan
\nor the providing of other financial accommodations to Grantor by Bank. These
\nrequirements are set forth in the Loan Documents. The following minimum
\ninsurance coverages must be provided on the following described collateral (the
\n“Collateral”):<\/p>\n
\n
\n Collateral: All Inventory, Equipment and Fixtures.
\n Type: All risks, including fire, theft and
\n liability.
\n Amount: Full insurable value.
\n Basis: Replacement value.
\n Endorsements: Loss payable clause to Bank with stipulation
\n that coverage will not be canceled or
\n diminished without a minimum of twenty (20)
\n days’ prior written notice to Bank.
\n<\/c><\/s><\/table>\n INSURANCE COMPANY. Grantor may obtain insurance from any insurance
\ncompany Grantor may choose that is reasonably acceptable to Bank., Grantor
\nunderstands that credit may not be denied solely because insurance was not
\npurchased through Bank.<\/p>\n
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Bank, on or
\nbefore closing, evidence of the required insurance as provided above, with an
\neffective date of July 16, 1997, or earlier. Grantor acknowledges and agrees
\nthat if Grantor fails to provide any required insurance or fails to continue
\nsuch insurance in force, Bank may do so at Grantor’s expense as provided in the
\nLoan and Security Agreement. The cost of such insurance, at the option of Bank,
\nshall be payable on demand or shall be added to the indebtedness as provided in
\nthe security document.<\/p>\n
GRANTOR ACKNOWLEDGES THAT. IF BANK SO PURCHASES ANY SUCH INSURANCE, THE
\nINSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE TO THE
\nCOLLATERAL, UP TO THE BALANCE OF THE LOAN; HOWEVER, GRANTOR’S EQUITY IN THE
\nCOLLATERAL MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE ANY
\nPUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE
\nREQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.<\/p>\n
AUTHORIZATION. For purposes of insurance coverage on the Collateral,
\nGrantor authorizes Bank to provide to any person (including any insurance agent
\nor company) all information Bank deems appropriate, whether regarding the
\nCollateral, the loan or other financial accommodations, or both.<\/p>\n
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO
\nPROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED JULY
\n16,1997.<\/p>\n
GRANTOR:<\/p>\n
Sagent Technology, Inc.<\/p>\n
\/s\/ Kenneth C. Gardner
\n——————————
\nAuthorized Officer<\/p>\n
FOR BANK USE ONLY
\n INSUREANCE VERIFICATION<\/p>\n
DATE:___________________________________ PHONE:_____________________________
\nAGENT’S NAME:___________________________________________________________________
\nINSUREANCE COMPANY:_____________________________________________________________
\nPOLICY NUMBER:__________________________________________________________________
\nEFFECTIVE DATES:________________________________________________________________
\nCOMMENTS:_______________________________________________________________________<\/p>\n
55<\/p>\n
DISBURSEMENT REQUEST AND AUTHORIZATION<\/p>\n
Borrower: Sagent Technology, Inc. Bank: Venture Banking Group<\/p>\n
LOAN TYPE. This is a Variable Rate, Revolving Line of Credit of a principal
\namount up to $2,000,000 and an Equipment Line of up to $1,000,000.<\/p>\n
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for business.<\/p>\n
SPECIFIC PURPOSE. The specific purpose of this loan is: Short-term working
\ncapital and acquisition of equipment.<\/p>\n
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
\ndisbursed until all of Bank’s conditions for making the loan have been
\nsatisfied. Please disburse the loan proceeds as follows:<\/p>\n
\n\n Revolving Line Equipment Line
\n ————– ————–
\n
\n Amount paid to $____ $____
\n Borrower directly:
\n Undisbursed Funds
\n $____ $____<\/p>\n Principal $____ $____
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
\nfollowing charges:<\/p>\n
\n
\n $____
\n Prepaid Finance Charges Paid in Cash:
\n $6,000 Loan Fee
\n $TBD Accounts Receivables Audit<\/p>\n Other Charges Paid in Cash: $____
\n $TBD UCC Search Fees
\n $TBD UCC Filing Fees
\n $TBD Patent Filing Fees
\n $TBD Trademark Filing Fees
\n $TBD Copyright Filing Fees
\n $3,500 Outside Counsel Fees and Expenses
\n (Estimate)<\/p>\n
Total Charges Paid in Cash $____
\n<\/c><\/s><\/table>\n
AUTOMATIC PAYMENTS. Borrower hereby authorizes Bank automatically to deduct from
\nBorrower’s account numbered 3103056 the amount of any loan payment. If the funds
\nin the account are insufficient to cover any payment, Bank shall not be
\nobligated to advance funds to cover the payment.<\/p>\n
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
\nWARRANTS TO BANK THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
\nTHAT THERE HAS BEEN NO ADVERSE CHANGE IN BORROWER’S FINANCIAL CONDITION AS
\nDISCLOSED IN BORROWER’S MOST RECENT FINANCIAL STATEMENT TO BANK. THIS
\nAUTHORIZATION IS DATED AS OF JULY 16,1997.<\/p>\n
BORROWER:<\/p>\n
SAGENT TECHNOLOGY, INC<\/p>\n
\/s\/ KENNETH C. GARDNER
\n—————————-
\nAuthorized Officer<\/p>\n
56<\/p>\n
FIRST AMENDMENT TO
\n LOAN AND SECURITY AGREEMENT<\/p>\n
This First Amendment to Loan and Security Agreement, dated as of
\nSeptember 21, 1998, (the “Amendment”), is entered into by and between SAGENT
\nTECHNOLOGY, INC. (“Borrower”) and VENTURE BANKING GROUP, A DIVISION OF CUPERTINO
\nNATIONAL BANK (“Bank”). Capitalized terms used herein without definition shall
\nhave the same meanings as is given to them in the Agreement (defined below).<\/p>\n
RECITALS<\/p>\n
A. The Borrower and the Bank have entered into that certain Amended and
\nRestated Loan and Security Agreement dated as of July 14, 1998, (as amended or
\nmodified from time to time, the “Agreement”) pursuant to which the Bank has
\nagreed to extend and make available to the Borrower certain advances of money.<\/p>\n
B. The Borrower has requested certain modification(s) to the Agreement
\nand desires that the Bank amend the Agreement upon the terms and conditions more
\nfully set forth herein.<\/p>\n
C. Subject to the representations and warranties of the Borrower herein
\nand upon the terms and conditions set forth in this Amendment, the Bank is
\nwilling to amend the Agreement.<\/p>\n
AGREEMENT<\/p>\n
NOW, THEREFORE, in consideration of the foregoing Recitals and intending
\nto be legally bound, the parties hereto agree as follows:<\/p>\n
SECTION 1. THE BORROWER’S REPRESENTATIONS AND WARRANTIES. The Borrower
\nrepresents and warrants that:<\/p>\n
(a) the execution, delivery, and performance of the Loan
\nDocuments are within Borrower’s powers, have been duly authorized, and are not
\nin conflict with nor constitute a breach of any provision contained in
\nBorrower’s Amended and Restated Articles of Incorporation or Bylaws, nor will
\nthey constitute an event of default under any material agreement to which
\nBorrower is a party or by which Borrower is bound. Borrower is not in default
\nunder any agreement to which it is a party or by which it is bound, which
\ndefault could have a Material Adverse Effect; and<\/p>\n
(b) immediately before and immediately after giving effect to
\nthis Amendment, no event shall have occurred and be continuing which constitutes
\nan Event of Default that has not been disclosed to Bank.<\/p>\n
SECTION 2. AMENDMENTS TO THE LOAN AND SECURITY AGREEMENT.<\/p>\n
2.1 Section 1, entitled Definitions and Construction, is hereby
\namended by deleting “Committed Equipment Line” and replacing it with the
\nfollowing:<\/p>\n
“Committed Equipment Line” means Two Million Eight Hundred
\nThousand Dollars ($2,800,000).<\/p>\n
2.2 Section 2.1.3, entitled Equipment Advances is hereby amended
\nby deleting the first two sentences of (b) and replacing them with the
\nfollowing:<\/p>\n
“It is understood by Bank and Borrower that, as of September 21,
\n1998, Equipment Advances of One Million Five Hundred Ninety Nine Thousand Nine
\nHundred Ninety Eight Dollars have been made under the Committed Equipment Line.
\nOf such amount, Equipment Advances of (i) Four <\/p>\n
1
\n 57<\/p>\n
Hundred Eighty Four Thousand Twenty Five Dollars and 05\/100 ($484,025.05) and
\n(ii) Four Hundred Three Thousand Three Hundred Sixty Five Dollars and 10\/100
\n($403,365.10) were previously termed out on April 15, 1998 and August 5, 1998,
\nrespectively and are being paid to Bank by Borrower in thirty-six (36) equal
\nmonthly installments of principal plus accrued interest (at the rate specified
\nin Section 2.3(a)). <\/p>\n
2.3 Section 6.10 entitled Tangible Net Worth, is hereby deleted
\nand amended to read in its entirety as follows:<\/p>\n
6.10 Tangible Net Worth. Borrower shall maintain, as of the last
\nday of each calendar month, a Tangible Net Worth of not less than Three Million
\nFive Hundred Thousand Dollars ($3,500,000). <\/p>\n
2.4 Section 6.11, entitled Profitability, is hereby deleted and
\namended to read in its entirety as follows:<\/p>\n
6.11 Profitability. Borrower may incur losses not to exceed: (i)
\nTwo Million Five Hundred Thousand Dollars ($2,500,000) for the fiscal quarter
\nending September 30, 1998; (ii) One Million Three Hundred Thousand Dollars
\n($1,300,000) for the fiscal quarter ending December 31, 1998; (iii) Five Hundred
\nThousand Dollars ($500,000) for the fiscal quarter ending March 31, 1999; and
\n(iv) profitable on a Net Profit After Tax Basis for the fiscal quarter ending
\nJune 30, 1999 and for each fiscal quarter ending thereafter.<\/p>\n
2.5 Exhibit E to Agreement is replaced by Exhibit E hereto.<\/p>\n
2.6 Compliance Certificate is replaced by Exhibit F hereto.<\/p>\n
SECTION 3. LIMITATION. The amendments and waivers set forth in this
\nAmendment shall be limited precisely as written and shall not be deemed (a) to
\nbe a modification of any other term or condition of the Agreement or of any
\nother instrument or agreement referred to therein or to prejudice any right or
\nremedy which the Bank may now have or may have in the future under or in
\nconnection with the Agreement or any instrument or agreement referred to
\ntherein; or (b) to be a consent to any future amendment or waiver to any
\ninstrument or agreement the execution and delivery of which is consented to
\nhereby, or to any waiver of any of the provisions thereof. Except as expressly
\namended hereby, the Agreement shall continue in full force and effect.<\/p>\n
SECTION 4. EFFECTIVENESS. This Amendment shall become effective upon:<\/p>\n
(1) The execution and delivery of a copy hereof by Borrower to
\nthe Bank;<\/p>\n
(2) The execution and delivery of a certificate of the Secretary
\nof Borrower with respect to incumbency and resolutions authorizing the execution
\nand delivery of this Amendment;<\/p>\n
(3) The execution and delivery of a revised Term Loan Note;<\/p>\n
(4) The payment of the amendment fee in the amount of Two
\nThousand Four Hundred Dollars ($2,400) by Borrower to the Bank;<\/p>\n
(5) The execution and delivery of a Warrant;<\/p>\n
(6) Bank shall have received, in form and substance satisfactory
\nto Bank, such other documents, and completion of such other matters, as Bank may
\nreasonably deem necessary or appropriate.<\/p>\n
SECTION 5. RELEASE AND WAIVER. BORROWER HEREBY REPRESENTS AND WARRANTS
\nTO THE BANK THAT IT HAS NO KNOWLEDGE OF ANY FACTS THAT WOULD<\/p>\n
2
\n 58<\/p>\n
SUPPORT A CLAIM, COUNTERCLAIM, DEFENSE OR RIGHT OF SET-OFF, AND HEREBY RELEASES
\nBANK FROM ALL LIABILITY ARISING UNDER OR WITH RESPECT TO AND WAIVES ANY AND ALL
\nCLAIMS, COUNTERCLAIMS, DEFENSES AND RIGHTS OF SET-OFF, AT LAW OR IN EQUITY, THAT
\nBORROWER MAY HAVE AGAINST BANK EXISTING AS OF THE DATE OF THIS AMENDMENT ARISING
\nUNDER OR RELATED TO THIS AMENDMENT, THE AGREEMENT OR ANY OF THE OTHER LOAN
\nDOCUMENTS OR TO THE LOANS CONTEMPLATED HEREBY OR THEREBY OR TO ANY ACT OR
\nOMISSION TO ACT BY THE BANK WITH RESPECT HERETO OR THERETO.<\/p>\n
SECTION 6. COUNTERPARTS. This Amendment may be signed in any number of
\ncounterparts, and by different parties hereto in separate counterparts, with the
\nsame effect as if the signatures to each such counterpart were upon a single
\ninstrument. All counterparts shall be deemed an original of this Amendment.<\/p>\n
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
\nexecuted as of the date first written above.<\/p>\n
BORROWER SAGENT TECHNOLOGY, INC.<\/p>\n
By: \/s\/ Virginia Walker
\n —————————————–
\n Title: Executive V.P., CFO
\n ————————————–<\/p>\n
BANK VENTURE BANKING GROUP, a division of
\n Cupertino National Bank<\/p>\n
By: \/s\/ J. Schellenberg
\n —————————————–<\/p>\n
Title: AVP
\n ————————————–<\/p>\n
3
\n 59<\/p>\n
EXHIBIT E<\/p>\n
Term Loan Note<\/p>\n
$2,800,000 Palo Alto, California
\n September 21, 1998<\/p>\n
SAGENT TECHNOLOGY, INC. (“Borrower”), for value received, hereby
\npromises to pay to the order of Venture Banking Group, a division of Cupertino
\nNational Bank (“Bank”), in lawful money of the United States of America,
\npursuant to that certain Amended and Restated Loan and Security Agreement dated
\nas of July 14, 1998, as amended or modified from time to time, by and between
\nBorrower and Bank (the “Loan Agreement”), (i) the principal amount of $2,800,000
\nor, if lesser, (ii) the principal amount of all Equipment Advances outstanding
\nas of the maturity date hereof.<\/p>\n
This Note replaces and supersedes the Note dated May 7, 1998. This Note
\nis referred to in the First Amendment to the Loan Agreement. All terms defined
\nin the Loan Agreement shall have the same definitions when used herein, unless
\notherwise defined herein.<\/p>\n
Borrower further promises to pay interest on each Advance hereunder in
\nlike funds on the principal amount hereof from time to time outstanding from the
\ndate hereof until paid in full, at a rate or rates per annum and payable on the
\ndates determined pursuant to the Loan Agreement.<\/p>\n
Payment on this Note shall be applied in the manner set forth in the
\nLoan Agreement. The Loan Agreement contains provisions for acceleration of the
\nmaturity of Advances hereunder upon the occurrence of certain stated events and
\nalso provides for optional and mandatory prepayments of principal hereof prior
\nto and stated maturity upon the terms and conditions therein specified.<\/p>\n
All Advances made by Bank to Borrower pursuant to the Loan Agreement
\nshall be recorded by Bank on the books and records of Bank. The failure of Bank
\nto record any Advance or any prepayment or payment made on account of the
\nprincipal balance hereof shall not limit or otherwise affect the obligation of
\nBorrower under this Note and under the Loan Agreement to pay the principal,
\ninterest and other amounts due and payable under the Advances.<\/p>\n
Any principal or interest payments on this Note not paid when due,
\nwhether at stated maturity, by acceleration or otherwise, shall bear interest at
\nthe Default Rate.<\/p>\n
Upon the occurrence of a default hereunder or any Event of Default under
\nthe Loan Agreement, all unpaid principal, accrued interest and other amounts
\nowing hereunder shall, at the option of Bank, be immediately collectible by or
\non behalf of Bank pursuant to the Loan Agreement and applicable law.<\/p>\n
Borrower waives presentment and demand for payment, notice of dishonor,
\nprotest and notice of protest of this Note, and shall pay all costs of
\ncollection when incurred, including reasonable attorneys’ fees, costs and
\nexpenses. The right to plead any and all statutes of limitations as a defense to
\nany demand hereunder is hereby waived to the full extent permitted by law.<\/p>\n
The amount of this Note is secured by the Collateral identified and
\ndescribed as security therefor in the Loan Agreement.<\/p>\n
This Note shall be governed by, and construed and enforced in accordance
\nwith, the laws of the State of California, excluding conflict of laws principles
\nthat would cause the application of the laws of any other jurisdiction.<\/p>\n
The provisions of this Note shall inure to the benefit of and be binding
\nupon any successor to Borrower and shall extend to any holder hereof.<\/p>\n
SAGENT TECHNOLOGY, INC.<\/p>\n
By: \/s\/ Virginia Walker
\n —————————————<\/p>\n
Printed Name: VIRGINIA WALKER
\n —————————–<\/p>\n
Title: EXECUTIVE V.P. C.F.O.
\n ————————————<\/p>\n
60<\/p>\n
EXHIBIT F
\n COMPLIANCE CERTIFICATE<\/p>\n
TO: Venture Banking Group<\/p>\n
FROM: Sagent Technology, Inc.<\/p>\n
The undersigned authorized officer of Sagent Technology, Inc. hereby
\ncertifies that in accordance with the terms and conditions of the Amended and
\nRestated Loan and Security Agreement between Borrower and Bank (the
\n“Agreement”), (i) Borrower is in complete compliance for the period ending
\n____________________ with all required covenants except as noted below and (ii)
\nall representations and warranties of Borrower stated in the Agreement are true
\nand correct in all material respects as of the date hereof. Attached herewith
\nare the required documents supporting the above certification. The Officer
\nfurther certifies that these are prepared in accordance with Generally Accepted
\nAccounting Principles (GAAP) and are consistently applied from one period to the
\nnext except as explained in an accompanying letter or footnotes.<\/p>\n
Please indicate compliance status by circling Yes\/No under “Complies”
\ncolumn.<\/p>\n
\n\nREPORTING COVENANT REQUIRED COMPLIES
\n—————— ——– ——–
\n
\nMonthly financial statements Monthly within 15 days Yes No
\nAnnual CPA Audited FYE within 90 days Yes No
\n10-Q, 10-K and 8-K Within 5 days after filing with SEC Yes No
\nA\/R & A\/P Agings; Borrowing Base Cert. Monthly within 15 days* Yes No
\nA\/R Audit Semi-Annual Yes No
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n*Only due prior to initial Rev. Line Advance or while there is line usage or
\nLetter of Credit issued.<\/p>\n
\n\nFINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
\n—————— ——– —— ——–
\n
\nMaintain on a Monthly Basis:
\n Minimum Quick Ratio, Cash Coverage or Cash
\n Flow (1) :1.0 Yes No
\n ———- ——— <\/p>\nMinimum Tangible Net Worth $3,500,000 $ Yes No
\n ———- ———
\nMaximum Debt\/Tangible Net Worth 1.75:1.0 :1.0 Yes No
\n ———- ——— <\/p>\n
Profitability: Quarterly $ (2) $ Yes No
\n ———- ———
\n<\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n
(1) Quick Ratio of > 1.75:1.0; or Cash Coverage Ratio of > 1.75:1.0; or Cash
\n Flow Coverage Ratio of > 1.25:1.0.<\/p>\n
(2) Permitted losses not to exceed: $2,500,000 for quarter ending September
\n 30, 1998; $1,300,000 for quarter ending December 31, 1998; $500,000 for
\n quarter ending March 31, 1999; and Profitable on a Net Profit After Tax
\n basis for quarter ending June 30, 1999 and quarterly thereafter.<\/p>\n
Comments Regarding
\nExceptions: See Attached. BANK USE ONLY<\/p>\n
Received by:
\n ———————–
\nSincerely, AUTHORIZED SIGNER<\/p>\n
Date:
\n——————————– —————————–
\nSIGNATURE<\/p>\n
Verified:
\n ————————-
\n AUTHORIZED SIGNER
\n——————————–
\nTITLE<\/p>\n
Date:
\n——————————– ——————————
\nDATE Compliance Status: Yes No<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7683,8746],"corporate_contracts_industries":[9415,9513],"corporate_contracts_types":[9560,9567],"class_list":["post-41131","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-greater-bay-bancorp","corporate_contracts_companies-sagent-technology-inc","corporate_contracts_industries-financial__banks","corporate_contracts_industries-technology__software","corporate_contracts_types-finance","corporate_contracts_types-finance__loan"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/41131","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=41131"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=41131"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=41131"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=41131"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}