UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 23, 2015
Marin Software Incorporated
(Exact name of registrant as specified in its charter)
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Delaware |
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001-35838 |
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20-4647180 |
(State or other jurisdiction
of incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
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123 Mission Street, 25th Floor
San Francisco, California 94105 |
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94105 |
(Address of principal executive offices) |
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(Zip Code) |
(415) 399-2580
(Registrants telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement.
On July 23, 2015, Marin Software Incorporated (the Company) entered into the Second Amended and Restated Loan
and Security Agreement, dated as of July 23, 2015, by and among Silicon Valley Bank (Bank) and the Company and certain of the Companys subsidiaries as borrowers (the Amended Credit
Agreement), which amends and restates in its entirety that certain Amended and Restated Loan and Security Agreement, dated as of December 9, 2011, by and among Bank and the Company and of the Companys subsidiaries as
borrowers, as amended (the Original Credit Agreement). The Amended Credit Agreement provides for a revolving credit facility (the Revolving Credit Facility) of up to the lesser of $20 million or
80% of the Companys eligible accounts receivable, increased from the lesser of $15 million or 80% of the Companys eligible accounts receivable provided for under the Original Credit Agreement. The Revolving Credit Facility will provide
funds for working capital and to fund its general business requirements.
No amounts were outstanding under the Revolving Credit Facility
as of March 31, 2015. Amounts repaid under the Revolving Credit Facility may be reborrowed. The Revolving Credit Facility matures on July 31, 2017 and is payable in full upon maturity.
Loans under the Revolving Credit Facility will accrue interest at a rate per annum equal to either (a) the prime rate as
published in the Wall Street Journal or announced by Bank or (b) the London interbank offered rate then in effect (adjusted for any reserve requirements required by law), plus a margin of 2.75%.
The Amended Credit Agreement contains customary representations and warranties and affirmative and negative covenants including covenants
related to the delivery of financial and other information, the maintenance of financial covenants, as well as limitations on dispositions, change in business or management, mergers or consolidations, dividends and other corporate activities.
The Amended Credit Agreement contains customary events of default, including non-payment of principal or interest when due, inaccuracy of
representations and warranties, violation of covenants, defaults under other specified agreements, certain undischarged judgments and insolvency or inability to pay debts. Upon the occurrence and during the continuance of an event of default, Bank
may declare the loans and all other obligations under the Amended Credit Agreement immediately due and payable, will have no further obligation to make advances under the Revolving Credit Facility and will have the immediate right to exercise its
rights with respect to any collateral.
The Revolving Credit Facility is secured by substantially all of the Companys personal
property and that of its subsidiaries that are borrowers, excluding shares of controlled foreign corporations, intellectual property and certain other property specified in the Amended Credit Agreement.
No warrants, other forms of equity or royalties on future product sales are due to Bank in connection with the Amended Credit Agreement.
The foregoing is a summary of the Credit Agreement and does not purport to be complete. The foregoing is qualified in its entirety by
reference to the Credit Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth above under Item 1.01 is hereby incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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Number |
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Description |
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99.1 |
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Second Amended and Restated Loan and Security Agreement, dated as of July 23, 2015, by and among Silicon Valley Bank, Marin Software Incorporated, Marin Software Limited, a company registered under the laws of England and Wales, and
Marin Software Limited, a company incorporated in Ireland. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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Marin Software Incorporated |
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Date: July 24, 2015 |
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By: |
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/s/ Stephen E. Kim |
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Stephen E. Kim |
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EVP, General Counsel and Corporate Secretary |
EXHIBIT INDEX
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Number |
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Description |
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99.1 |
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Second Amended and Restated Loan and Security Agreement, dated as of July 23, 2015, by and among Silicon Valley Bank, Marin Software Incorporated, Marin Software Limited, a company registered under the laws of England and Wales, and
Marin Software Limited, a company incorporated in Ireland. |
Exhibit 99.1
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this Agreement) dated as of July 23, 2015, by and among
SILICON VALLEY BANK (Bank), MARIN SOFTWARE INCORPORATED, a Delaware corporation (Marin), MARIN SOFTWARE LIMITED, a company registered under the laws of England and Wales (Marin UK), and MARIN
SOFTWARE LIMITED, a company incorporated in Ireland (Marin Ireland; and together with Marin and Marin Ltd, individually and collectively, the Borrower) provides the terms on which Bank shall lend to Borrower and
Borrower shall repay Bank.
RECITALS
A. Bank, Marin, and Marin UK have entered into that certain Amended and Restated Loan and Security Agreement dated as of December 9, 2011
(as the same may from time to time be further amended, modified, supplemented or restated, the Prior Loan Agreement). Marin Ireland was added to the Loan Agreement as a Borrower pursuant to that certain Additional Borrower Joinder
Supplement, dated June 13, 2013, by and among Bank, Marin and Marin Ireland. Pursuant to the Prior Loan Agreement, Bank made certain loans and other credit accommodations available to Borrower, including a secured (i) revolving loan in the
maximum principal amount of Fifteen Million Dollars ($15,000,000), (ii) equipment loan in an aggregate principal amount of up to Two Million Dollars ($2,000,000), and (iii) supplemental equipment loan in an aggregate principal amount of up
to Three Million Dollars ($3,000,000).
B. Borrower has requested, and Bank has agreed to amend and restate the Prior Loan Agreement in
its entirety.
AGREEMENT
The parties hereby agree that the Prior Loan Agreement is hereby amended, restated, and replaced in its entirety as follows:
1. ACCOUNTING AND OTHER TERMS
Except as otherwise expressly provided in this Agreement, (i) accounting terms not defined in this Agreement shall be construed following
GAAP and (ii) calculations and determinations must be made following GAAP. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All other terms contained in this Agreement, unless
otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.
2. LOAN AND TERMS OF
PAYMENT
2.1 Promise to Pay. Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all
Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with this Agreement.
2.2 Revolving Advances.
(a) Availability. Subject to the terms and conditions of this Agreement and to deduction of Reserves, Bank shall make Advances not
exceeding the Availability Amount. Each LIBOR Advance, if any, must be in an aggregate principal amount of not less than One Million Dollars ($1,000,000) or a whole multiple of One Million Dollars ($1,000,000) in excess thereof. Amounts borrowed
under the Revolving Line may be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable terms and conditions precedent herein.
(b) Termination; Repayment. The Revolving Line terminates on the Revolving Line Maturity Date, when the principal amount of all
Advances, the unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately due and payable.
2.3 Prior Equipment Loan.
(a) Prior Equipment Advances. Borrower hereby acknowledges that, as part of the Prior Loan Agreement, Bank made advances (each, a
Prior Equipment Advance and collectively, the Prior Equipment Advances) available to Borrower in an aggregate original principal amount of Two Million Dollars ($2,000,000) a portion of which remains outstanding
as of the Effective Date (the Prior Equipment Loan). Bank and Borrower hereby agree that there is no further availability under the Prior Equipment Loan. The Obligations owing with respect to the Prior Equipment Loan have not been
extinguished or discharged hereby and the execution of this Agreement is not intended to and shall not cause or result in a novation with respect to the Prior Equipment Loan. The aggregate outstanding principal amount of the Prior Equipment Loan as
of May 4, 2015 is Seventy-Five Thousand Three Hundred Sixty Four Dollars and Fifty-Six Cents ($75,364.56), which Obligations shall be subject to and governed by the terms of this Agreement.
(b) Principal and Interest Payments. Borrower hereby agrees to continue to make equal monthly payments of principal and interest on the
Prior Equipment Loan of Twenty-Five Thousand Three Hundred Twenty-Eight Dollars and Eight Cents ($25,328.08) commencing on the first (1st) calendar day of the first (1st) month after the Effective Date and continuing thereafter on the
first (1st) calendar day of each successive month. All unpaid principal and accrued and unpaid interest on the Prior Equipment Loan is due and payable in full on the Prior Equipment Maturity Date. The Prior Equipment Loan shall continue to
accrue interest at a fixed per annum rate of five and one half of one percent (5.50%).
(c) Prepayment Upon an Event of Loss.
Borrower shall bear the risk of any loss, theft, destruction, or damage of or to the Financed Equipment. If, during the term of this Agreement, any item of Financed Equipment becomes obsolete or is lost, stolen, destroyed, damaged beyond repair,
rendered permanently unfit for use, or seized by a governmental authority for any reason for a period ending beyond the Equipment Maturity Date with respect to such Financed Equipment (an Event of Loss), then, within ten
(10) days following such Event of Loss, Borrower shall (i) pay to Bank on account of the Obligations all accrued interest to the date of the prepayment, plus all outstanding principal owing with respect to the Financed Equipment subject to
the Event of Loss; or (ii) if no Event of Default has occurred and is
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continuing, at Borrowers option, repair or replace any Financed Equipment subject to an Event of Loss provided the repaired or replaced Financed Equipment is of equal or like value to the
Financed Equipment subject to an Event of Loss and provided further that Bank has a first priority perfected security interest in such repaired or replaced Financed Equipment. Any partial prepayment of a Prior Equipment Advance paid by Borrower on
account of an Event of Loss shall be applied to prepay amounts owing for such Prior Equipment Advance in inverse order of maturity.
(d)
Mandatory Prepayment Upon an Acceleration. If the Prior Equipment Advances are accelerated following the occurrence of an Event of Default or otherwise, Borrower shall immediately pay to Bank an amount equal to the sum of: (i) all
outstanding principal plus accrued interest, plus (ii) all other sums, if any, that shall have become due and payable, including interest at the Default Rate with respect to any past due amounts.
(e) Permitted Prepayment of Prior Equipment Advances. Borrower shall have the option to prepay all, but not less than all, of the Prior
Equipment Advances advanced by Bank under this Agreement, provided Borrower (i) provides written notice to Bank of its election to prepay the Prior Equipment Advances at least ten (10) days prior to such prepayment, and (ii) pays, on
the date of such prepayment (A) all outstanding principal plus accrued interest, plus (B) all other sums, if any, that shall have become due and payable, including interest at the Default Rate with respect to any past due amounts. Borrower
may condition such prepayment on the funding of another financing and provide that its prepayment election shall terminate if such funding does not occur by a specific date.
2.4 Prior Supplemental Equipment Loan.
(a) Prior Supplemental Equipment Advances. Borrower hereby acknowledges that, as part of the Prior Loan Agreement, Bank made advances
(each, a Prior Equipment Advance and collectively, the Prior Supplemental Equipment Advances) available to Borrower in an aggregate original principal amount of Three Million Dollars ($3,000,000) a portion of which
remains outstanding as of the Effective Date (the Prior Supplemental Equipment Loan). Bank and Borrower hereby agree that there is no further availability under the Prior Supplemental Equipment Loan. The Obligations owing with
respect to the Prior Supplemental Equipment Loan have not been extinguished or discharged hereby and the execution of this Agreement is not intended to and shall not cause or result in a novation with respect to the Prior Supplemental Equipment
Loan. The aggregate outstanding principal amount of the Prior Supplemental Equipment Loan as of May 4, 2015 is Nine Hundred Thirty-Five Thousand Seven Hundred Fifty-Six Dollars and Thirty-Four Cents ($935,756.34), which Obligations shall be
subject to and governed by the terms of this Agreement.
(b) Principal and Interest Payments. Borrower hereby agrees to continue to
make equal monthly payments of principal and interest on the Prior Supplemental Equipment Loan of Ninety-Four Thousand Eight Hundred Eighty-Two Dollars and Eighteen Cents ($94,882.18) commencing on the first (1st) calendar day of the first
(1st) month after the Effective Date and continuing thereafter on the first (1st) calendar day of each successive month. All unpaid principal and accrued and unpaid interest on the Prior Supplemental Equipment Loan is due and payable in
full on the Prior Supplemental Equipment Maturity Date. The Prior Supplemental Equipment Loan shall continue to accrue interest at a fixed per annum rate of three percent (3.00%).
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(c) Prepayment Upon an Event of Loss. Borrower shall bear the risk of any loss, theft,
destruction, or damage of or to the Financed Equipment. If, during the term of this Agreement, any Event of Loss occurs with respect to Financed Equipment financed by a Prior Supplemental Equipment Advance, then, within ten (10) days following
such Event of Loss, Borrower shall (i) pay to Bank on account of the Obligations all accrued interest to the date of the prepayment, plus all outstanding principal owing with respect to the Financed Equipment subject to the Event of Loss, plus
the Prior Supplemental Equipment Loan Final Payment or (ii) if no Event of Default has occurred and is continuing, at Borrowers option, repair or replace any Financed Equipment subject to an Event of Loss provided the repaired or replaced
Financed Equipment is of equal or like value to the Financed Equipment subject to an Event of Loss and provided further that Bank has a first priority perfected security interest in such repaired or replaced Financed Equipment. Any partial
prepayment of a Prior Supplemental Equipment Advance paid by Borrower on account of an Event of Loss shall be applied to prepay amounts owing for such Prior Supplemental Equipment Advance in inverse order of maturity.
(d) Mandatory Prepayment Upon an Acceleration. If the Prior Supplemental Equipment Advances are accelerated following the occurrence of
an Event of Default or otherwise, Borrower shall immediately pay to Bank an amount equal to the sum of: (i) all outstanding principal plus accrued interest, plus (ii) the Prior Supplemental Equipment Loan Final Payment, plus (iii) all
other sums, if any, that shall have become due and payable, including interest at the Default Rate with respect to any past due amounts.
(e) Permitted Prepayment of Prior Supplemental Equipment Advances. Borrower shall have the option to prepay all, but not less than all,
of the Prior Supplemental Equipment Advances advanced by Bank under this Agreement, provided Borrower (i) provides written notice to Bank of its election to prepay the Prior Supplemental Equipment Advances at least thirty (30) days prior
to such prepayment, and (ii) pays, on the date of such prepayment (A) all outstanding principal plus accrued interest with respect to the Prior Supplemental Equipment Advances only, plus (B) the Prior Supplemental Equipment Loan Final
Payment, plus (C) all other sums, if any, that shall have become due and payable, including interest at the Default Rate with respect to any past due amounts. Borrower may condition such prepayment on the funding of another financing and
provide that its prepayment election shall terminate if such funding does not occur by a specific date.
2.5 Overadvances. If, at
any time, the outstanding principal amount of any Advances exceeds the lesser of either the Revolving Line or the Borrowing Base, Borrower shall immediately pay to Bank in cash the amount of such excess (such excess, the
Overadvance). Without limiting Borrowers obligation to repay Bank any Overadvance, Borrower agrees to pay Bank interest on the outstanding amount of any Overadvance, on demand, at the Default Rate.
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2.6 Payment of Interest on the Credit Extensions.
(a) Interest; Payment. Each Advance shall bear interest on the outstanding principal amount thereof from the date when made, continued
or converted until paid in full at a rate per annum equal to (i) for Prime Rate Advances, the Prime Rate, and (ii) for LIBOR Advances, the LIBOR Rate plus the applicable LIBOR Rate Margin. On and after the expiration of any Interest
Period applicable to any LIBOR Advance outstanding on the date of occurrence of an Event of Default or acceleration of the Obligations, the amount of such LIBOR Advance shall, during the continuance of such Event of Default or after acceleration,
bear interest at a rate per annum equal to the Prime Rate plus five percent (5.00%). Pursuant to the terms hereof, interest on each Advance shall be paid in arrears on each Interest Payment Date. Interest shall also be paid on the date of any
prepayment of any Advance pursuant to this Agreement for the portion of any Advance so prepaid and upon payment (including prepayment) in full thereof. All accrued but unpaid interest on the Advances shall be due and payable on the Revolving Line
Maturity Date.
(b) Prime Rate Advances. Each change in the interest rate of the Prime Rate Advances based on changes in the Prime
Rate shall be effective on the effective date of such change and to the extent of such change.
(c) LIBOR Advances. The interest
rate applicable to each LIBOR Advance shall be determined in accordance with Section 3.5(a) hereunder. Subject to Sections 3.6 and 3.7, such rate shall apply during the entire Interest Period applicable to such LIBOR Advance, and interest
calculated thereon shall be payable on the Interest Payment Date applicable to such LIBOR Advance.
(d) Computation of Interest.
Any interest hereunder will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days. In computing interest on any Credit Extension, the date of the making of such Credit Extension shall be
included and the date of payment shall be excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is made, such day shall be included in computing interest on such Credit Extension.
(e) Default Rate. Except as otherwise provided in Section 2.6(a), upon the occurrence and during the continuance of an Event of
Default, Obligations shall bear interest at a rate per annum which is five percentage points (5.0%) above the rate that would otherwise be applicable thereto (the Default Rate). Payment or acceptance of the increased interest
provided in this Section 2.6(e) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank.
2.7 Fees. Borrower shall pay to Bank:
(a) Commitment Fee. A fully earned, non refundable commitment fee of Twenty-five Thousand Dollars ($25,000), on the Effective Date;
(b) Prior Supplemental Equipment Loan Final Payment. A Prior Supplemental Equipment Loan Final Payment due on the Prior
Supplemental Equipment Maturity Date, or at the time of a prepayment pursuant to the terms of Sections 2.4(c), 2.4(d), and 2.4(e);
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(c) Unused Revolving Line Facility Fee. Payable monthly in arrears on May 31, 2015,
on the last day of each month occurring thereafter prior to the Revolving Line Maturity Date, and on the Revolving Line Maturity Date, a fee (the Unused Revolving Line Facility Fee) in an amount equal to one hundred twenty-five
thousandths of one percent (0.125%) per annum of the average unused portion of the Revolving Line, as determined by Bank. The unused portion of the Revolving Line, for purposes of this calculation, shall be calculated on a calendar year basis and
shall equal the difference between (i) the Revolving Line, and (ii) the average for the period of the daily closing balance of the Revolving Line outstanding;
(d) Bank Expenses. All Bank Expenses (including reasonable attorneys fees and expenses for documentation and negotiation of this
Agreement) incurred through and after the Effective Date, when due (or, if no stated due date, upon demand by Bank); and
(e) Fees
Fully Earned. Unless otherwise provided in this Agreement or in a separate writing by Bank, Borrower shall not be entitled to any credit, rebate, or repayment of any fees earned by Bank pursuant to this Agreement notwithstanding any termination
of this Agreement or the suspension or termination of Banks obligation to make loans and advances hereunder. Bank may deduct amounts owing by Borrower under the clauses of this Section 2.7 pursuant to the terms of Section 2.8(c).
Bank shall provide Borrower written notice of deductions made from the Designated Deposit Account pursuant to the terms of the clauses of this Section 2.7.
2.8 Payments; Application of Payments; Debit of Accounts.
(a) All payments to be made by Borrower under any Loan Document shall be made in immediately available funds in Dollars, without setoff or
counterclaim, before 12:00 p.m. Pacific time on the date when due. Payments of principal and/or interest received after 12:00 p.m. Pacific time are considered received at the opening of business on the next Business Day. When a payment is
due on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid.
(b) Bank has the exclusive right to determine the order and manner in which all payments with respect to the Obligations may be applied.
Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or apply any payments required to be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application
is not specified elsewhere in this Agreement.
(c) Bank may debit any of Borrowers deposit accounts, including the Designated
Deposit Account, for principal and interest payments or any other amounts Borrower owes Bank when due. These debits shall not constitute a set-off.
2.9 Withholding. Payments received by Bank from Borrower under this Agreement will be made free and clear of and without deduction for
any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority (including any interest, additions to tax or penalties applicable thereto).
Specifically, however, if at any time any Governmental Authority, applicable law, regulation or international agreement requires Borrower to make any withholding or deduction from any such payment or other sum payable hereunder to Bank, Borrower
hereby covenants and
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agrees that the amount due from Borrower with respect to such payment or other sum payable hereunder will be increased to the extent necessary to ensure that, after the making of such required
withholding or deduction, Bank receives a net sum equal to the sum which it would have received had no withholding or deduction been required, and Borrower shall pay the full amount withheld or deducted to the relevant Governmental Authority.
Borrower will, upon request, furnish Bank with proof reasonably satisfactory to Bank indicating that Borrower has made such withholding payment; provided, however, that Borrower need not make any withholding payment if the amount or validity of such
withholding payment is contested in good faith by appropriate and timely proceedings and as to which payment in full is bonded or reserved against by Borrower. The agreements and obligations of Borrower contained in this Section 2.9 shall
survive the termination of this Agreement.
3. CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Credit Extension. Banks obligation to make the initial Credit Extension is subject to the
condition precedent that Bank shall have received, in form and substance satisfactory to Bank, such documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate, including, without limitation:
(a) duly executed original signatures to the Loan Documents;
(b) the Operating Documents and long-form good standing certificates of Borrower and its Subsidiaries certified by the Secretary of State (or
equivalent agency) of Borrowers and such Subsidiaries jurisdiction of organization or formation and each jurisdiction in which Borrower and each Subsidiary is qualified to conduct business, each as of a date no earlier than thirty
(30) days prior to the Effective Date;
(c) duly executed original signatures to the completed Borrowing Resolutions for Borrower;
(d) certified copies, dated as of a recent date, of financing statement searches, as Bank may request, accompanied by written evidence
(including any UCC termination statements) that the Liens indicated in any such financing statements constitute Permitted Liens;
(e) the
Perfection Certificates of Borrower, together with the duly executed original signatures thereto;
(f) a bailees waiver in favor of
Bank for each location where Borrower maintains property with a third party, by each such third party, together with the duly executed original signatures thereto;
(g) evidence satisfactory to Bank that the insurance policies and endorsements required by Section 6.7 hereof are in full force and
effect, together with appropriate evidence showing lender loss payable and/or additional insured clauses or endorsements in favor of Bank; and
(h) payment of the fees and Bank Expenses then due as specified in Section 2.7 hereof.
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3.2 Conditions Precedent to all Credit Extensions. Banks obligations to make each
Credit Extension, including the initial Credit Extension, is subject to the following conditions precedent:
(a) timely receipt of
an executed Transaction Report;
(b) the representations and warranties in this Agreement shall be true, accurate, and complete in all
material respects on the date of the Transaction Report and on the Funding Date of each Credit Extension, taking into account updates thereof subsequent to the Effective Date to the extent permitted by notice to the Bank by one or more specific
provisions of this Agreement; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that
those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of Default shall have occurred and be continuing or result from the Credit
Extension. Each Credit Extension is Borrowers representation and warranty on that date that the representations and warranties in this Agreement remain true, accurate, and complete in all material respects; provided, however, that such
materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a
specific date shall be true, accurate and complete in all material respects as of such date; and
(c) in Banks sole good faith
business discretion, there has not been any material impairment in the general affairs, management, results of operation, financial condition or the prospect of repayment of the Obligations, or any material adverse deviation by Borrower from the
most recent business plan of Borrower presented to and accepted by Bank. If any event, condition, circumstance or other factor (collectively, Circumstances) exists or does not exist whose existence or non-existence serves as
justification under this Section (c)3.2(c) for Banks refusal to make a requested Credit Extension, the existence or non-existence of such Circumstance shall not constitute an Event of Default under Section 8 unless it independently
constitutes an Event of Default pursuant to another provision of this Agreement.
3.3 Covenant to Deliver.
Borrower agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a condition precedent to any Credit
Extension. Borrower expressly agrees that a Credit Extension made prior to the receipt by Bank of any such item shall not constitute a waiver by Bank of Borrowers obligation to deliver such item, and the making of any Credit Extension in the
absence of a required item shall be in Banks sole good faith business discretion.
3.4 Procedures for Borrowing.
(a) Subject to the prior satisfaction of all other applicable conditions to the making of an Advance set forth in this Agreement, an Advance
shall be made upon Borrowers irrevocable written notice delivered to Bank by electronic mail in the form of a Notice of Borrowing executed by an Authorized Signer or without instructions if any Advances is necessary to meet Obligations which
have become due. Such Notice of Borrowing must be
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received by Bank prior to 12:00 p.m. Pacific time, (i) at least three (3) Business Days prior to the requested Funding Date, in the case of any LIBOR Advance, and (ii) on the
requested Funding Date, in the case of a Prime Rate Advance, specifying: (1) the amount of the Advance; (2) the requested Funding Date; (3) whether the Advance is to be comprised of LIBOR Advances or Prime Rate Advances; and
(4) the duration of the Interest Period applicable to any such LIBOR Advances included in such notice; provided that if the Notice of Borrowing shall fail to specify the duration of the Interest Period for any Advance comprised of LIBOR
Advances, such Interest Period shall be one (1) month. In addition to such Notice of Borrowing, Borrower must promptly deliver to Bank by electronic mail a completed Transaction Report executed by an Authorized Signer together with such other
reports and information, including without limitation, sales journals, cash receipts journals, accounts receivable aging reports, as Bank may request in its sole good faith business discretion.
(b) On the Funding Date, Bank shall credit proceeds of an Advance to the Designated Deposit Account and, subsequently, shall transfer such
proceeds by wire transfer to such other account as Borrower may instruct in the Notice of Borrowing. No Advances shall be deemed made to Borrower, and no interest shall accrue on any such Advance, until the related funds have been deposited in the
applicable Designated Deposit Account.
3.5 Conversion and Continuation Elections.
(a) So long as (i) no Event of Default exists; (ii) Borrower shall not have sent any notice of termination of this Agreement; and
(iii) Borrower shall have complied with such customary procedures as Bank has established from time to time for Borrowers requests for LIBOR Advances, Borrower may, upon irrevocable written notice to Bank:
(1) elect to convert on any Business Day, Prime Rate Advances into LIBOR Advances;
(2) elect to continue on any Interest Payment Date any LIBOR Advances maturing on such Interest Payment Date; or
(3) elect to convert on any Interest Payment Date any LIBOR Advances maturing on such Interest Payment Date into Prime Rate
Advances.
(b) Borrower shall deliver a Notice of Conversion/Continuation by electronic mail to be received by Bank prior to
12:00 p.m. Pacific time (i) at least three (3) Business Days in advance of the Conversion Date or Continuation Date, if any Advances are to be converted into or continued as LIBOR Advances; and (ii) on the Conversion Date, if any
Advances are to be converted into Prime Rate Advances, in each case specifying the:
(1) proposed Conversion Date or
Continuation Date;
(2) aggregate amount of the Advances to be converted or continued;
(3) nature of the proposed conversion or continuation; and
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(4) if the resulting Advance is to be a LIBOR Advance, the duration of the
requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to any LIBOR Advances, Borrower shall have timely
failed to select a new Interest Period to be applicable to such LIBOR Advances or request to convert a LIBOR Advance into a Prime Rate Advance, Borrower shall be deemed to have elected to convert such LIBOR Advances into Prime Rate Advances.
(d) Any LIBOR Advances shall, at Banks option, convert into Prime Rate Advances in the event that (i) an Event of Default exists,
or (ii) the aggregate principal amount of the Prime Rate Advances which have been previously converted to LIBOR Advances, or the aggregate principal amount of existing LIBOR Advances continued, as the case may be, at the beginning of an
Interest Period shall at any time during such Interest Period exceeds the lesser of the Revolving Line or the Borrowing Base. Borrower agrees to pay Bank, upon demand by Bank (or Bank may, at its option, debit the Designated Deposit Account or any
other account Borrower maintains with Bank) any amounts required to compensate Bank for any loss (including loss of anticipated profits), cost, or expense incurred by Bank, as a result of the conversion of LIBOR Advances to Prime Rate Advances
pursuant to this Section 3.5(d).
(e) Notwithstanding anything to the contrary contained herein, Bank shall not be required to
purchase Dollar deposits in the London interbank market or other applicable LIBOR market to fund any LIBOR Advances, but the provisions hereof shall be deemed to apply as if Bank had purchased such deposits to fund the LIBOR Advances.
3.6 Special Provisions Governing LIBOR Advances. Notwithstanding any other provision of this Agreement to the contrary, the following
provisions shall govern with respect to LIBOR Advances as to the matters covered:
(a) Determination of Applicable Interest
Rate. As soon as practicable on each Interest Rate Determination Date, Bank shall determine (which determination shall, absent manifest error in calculation, be final, conclusive and binding upon all parties) the interest rate that shall apply
to the LIBOR Advances for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Borrower.
(b) Inability to Determine Applicable Interest Rate. In the event that Bank shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any LIBOR Advance, that by reason of circumstances affecting the London interbank market adequate and fair means do not exist for
ascertaining the interest rate applicable to such LIBOR Advance on the basis provided for in the definition of LIBOR, Bank shall on such date give notice (by facsimile or by telephone confirmed in writing) to Borrower of such determination,
whereupon (i) no Advances may be made as, or converted to, LIBOR Advances until such time as Bank notifies Borrower that the circumstances giving rise to such notice no longer exist, and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by Borrower with respect to LIBOR Advances in respect of which such determination was made shall be deemed to be rescinded by Borrower.
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(c) Compensation for Breakage or Non-Commencement of Interest Periods. If (i) for any
reason, other than a default by Bank or any failure of Bank to fund LIBOR Advances due to impracticability or illegality under Sections 3.7(c) and 3.7(d) of this Agreement, a borrowing or a conversion to or continuation of any LIBOR Advance
does not occur on a date specified in a Notice of Borrowing or a Notice of Conversion/Continuation, as the case may be, or (ii) any complete or partial principal payment or reduction of a LIBOR Advance, or any conversion of any LIBOR Advance,
occurs on a date prior to the last day of an Interest Period applicable to that LIBOR Advance, including due to voluntary or mandatory prepayment or acceleration, then, in each case, Borrower shall compensate Bank, upon written request by Bank, for
all losses and expenses incurred by Bank in an amount equal to the excess, if any, of:
(A) the amount of interest that
would have accrued on the amount (1) not borrowed, converted or continued as provided in clause (i) above, or (2) paid, reduced or converted as provided in clause (ii) above, for the period from (y) the date of such failure
to borrow, convert or continue as provided in clause (i) above, or the date of such payment, reduction or conversion as provided in clause (ii) above, as the case may be, to (z) in the case of a failure to borrow, convert or continue
as provided in clause (i) above, the last day of the Interest Period that would have commenced on the date of such borrowing, conversion or continuing but for such failure, and in the case of a payment, reduction or conversion prior to the last
day of an Interest Period applicable to a LIBOR Advance as provided in clause (ii) above, the last day of such Interest Period, in each case at the applicable rate of interest or other return for such LIBOR Advance(s) provided for herein
(excluding, however, the LIBOR Rate Margin included therein, if any), over
(B) the interest which would have accrued to
Bank on the applicable amount provided in clause (A) above through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to the definition of LIBOR Rate on the date of such failure to borrow, convert or continue as
provided in clause (i) above, or the date of such payment, reduction or conversion as provided in clause (ii) above, as the case may be, for a period equal to the remaining period of such applicable Interest Period provided in
clause (A) above.
Banks request shall set forth the manner and method of computing such compensation and such determination as to such
compensation shall be conclusive absent manifest error.
(d) Assumptions Concerning Funding of LIBOR Advances. Calculation of all
amounts payable to Bank under this Section 3.6 and under Section 3.7 shall be made as though Bank had actually funded each relevant LIBOR Advance through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant
to the definition of LIBOR Rate in an amount equal to the amount of such LIBOR Advance and having a maturity comparable to the relevant Interest Period; provided, however, that Bank may fund each of its LIBOR Advances in any manner it sees fit and
the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this Section 3.6 and under Section 3.7.
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(e) LIBOR Advances After Default. After the occurrence and during the continuance of an
Event of Default, (i) Borrower may not elect to have an Advance be made or continued as, or converted to, a LIBOR Advance after the expiration of any Interest Period then in effect for such Advance and (ii) subject to the provisions of
Section 3.6(c), any Notice of Conversion/Continuation given by Borrower with respect to a requested conversion/continuation that has not yet occurred shall, at Banks option, be deemed to be rescinded by Borrower and be deemed a request to
convert or continue Advances referred to therein as Prime Rate Advances.
3.7 Additional Requirements/Provisions Regarding LIBOR
Advances.
(a) Borrower shall pay Bank, upon demand by Bank, from time to time such amounts as Bank may reasonably determine to be
necessary to compensate it for any costs incurred by Bank that Bank determines are attributable to its making or maintaining of any amount receivable by Bank hereunder in respect of any LIBOR Advances relating thereto (such increases in costs and
reductions in amounts receivable being herein called Additional Costs), in each case resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to Bank under this Agreement in respect of any LIBOR Advances (other than changes
which affect taxes measured by or imposed on the overall net income of Bank by the jurisdiction in which Bank has its principal office);
(ii) imposes or modifies any reserve, special deposit or similar requirements relating to any extensions of credit or other assets of, or any
deposits with, or other liabilities of Bank (including any LIBOR Advances or any deposits referred to in the definition of LIBOR); or
(iii) imposes any other condition affecting this Agreement (or any of such extensions of credit or liabilities).
Bank will notify Borrower of any event occurring after the Effective Date which will entitle Bank to compensation pursuant to this
Section 3.7(a) as promptly as practicable after it obtains knowledge thereof and determines to request such compensation. Bank will furnish Borrower with a statement setting forth the basis and amount of each request by Bank for compensation
under this Section 3.7(a). Determinations and allocations by Bank for purposes of this Section 3.7(a) of the effect of any Regulatory Change on its costs of maintaining its obligations to make LIBOR Advances, of making or maintaining LIBOR
Advances, or on amounts receivable by it in respect of LIBOR Advances, and of the additional amounts required to compensate Bank in respect of any Additional Costs, shall be conclusive absent manifest error.
(b) If Bank shall determine that the adoption or implementation of any applicable law, rule, regulation, or treaty regarding capital adequacy,
or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or
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compliance by Bank (or its applicable lending office) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank, or
comparable agency, has or would have the effect of reducing the rate of return on capital of Bank or any person or entity controlling Bank (a Parent) as a consequence of its obligations hereunder to a level below that which Bank
(or its Parent) could have achieved but for such adoption, change, or compliance (taking into consideration policies with respect to capital adequacy) by an amount deemed by Bank to be material, then from time to time, within five (5) Business
Days after demand by Bank, Borrower shall pay to Bank such additional amount or amounts as will compensate Bank for such reduction. A statement of Bank claiming compensation under this Section 3.7(b) and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive absent manifest error.
Notwithstanding anything to the contrary in this
Section 3.7, Borrower shall not be required to compensate Bank pursuant to this Section 3.7(b) for any amounts incurred more than six (6) months prior to the date that Bank notifies Borrower of Banks intention to claim
compensation therefor; provided that if the circumstances giving rise to such claim have a retroactive effect, then such six-month period shall be extended to include the period of such retroactive effect. The obligations of the Borrower
arising pursuant to this Section 3.7(b) shall survive the Revolving Line Maturity Date, the termination of this Agreement and the repayment of all Obligations.
(c) If, at any time, Bank, in its sole and absolute discretion, determines that (i) the amount of LIBOR Advances for periods equal to the
corresponding Interest Periods are not available to Bank in the offshore currency interbank markets, or (ii) LIBOR does not accurately reflect the cost to Bank of lending the LIBOR Advances, then Bank shall promptly give notice thereof to
Borrower. Upon the giving of such notice, Banks obligation to make the LIBOR Advances shall terminate; provided, however, LIBOR Advances shall not terminate if Bank and Borrower agree in writing to a different interest rate applicable to LIBOR
Advances.
(d) If it shall become unlawful for Bank to continue to fund or maintain any LIBOR Advances, or to perform its obligations
hereunder, upon demand by Bank, Borrower shall prepay the LIBOR Advances in full with accrued interest thereon and all other amounts payable by Borrower hereunder (including, without limitation, any amount payable in connection with such prepayment
pursuant to Section 3.6(c)(ii)). Notwithstanding the foregoing, to the extent a determination by Bank as described above relates to a LIBOR Advance then being requested by Borrower pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Borrower shall have the option, subject to the provisions of Section 3.6(c)(ii), to (i) rescind such Notice of Borrowing or Notice of Conversion/Continuation by giving notice (by facsimile or by telephone confirmed
in writing) to Bank of such rescission on the date on which Bank gives notice of its determination as described above, or (ii) modify such Notice of Borrowing or Notice of Conversion/Continuation to obtain a Prime Rate Advance or to have
outstanding Advances converted into or continued as Prime Rate Advances by giving notice (by facsimile or by telephone confirmed in writing) to Bank of such modification on the date on which Bank gives notice of its determination as described above.
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4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations, a
continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.
Borrower acknowledges that it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank. Regardless of
the terms of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations hereunder and that it is the intent of Borrower and Bank to have all such Obligations secured by the first
priority perfected security interest in the Collateral granted herein (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Banks Lien in this Agreement).
If this Agreement is terminated, Banks Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity
obligations) are repaid in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at such time as Banks obligation to make Credit Extensions has terminated, Bank shall, at the sole cost
and expense of Borrower, release its Liens in the Collateral and all rights therein shall revert to Borrower. In the event (x) all Obligations (other than inchoate indemnity obligations), except for Bank Services, are satisfied in full, and
(y) this Agreement is terminated, Bank shall terminate the security interest granted herein upon Borrower providing cash collateral acceptable to Bank in its good faith business judgment for Bank Services, if any. Bank shall use reasonable
commercial efforts to inform Borrower within a commercially reasonable period of time what constitutes acceptable cash collateral with respect to each Bank Services Agreement in force and effect when Borrower delivers its written termination notice.
In the event such Bank Services consist of outstanding Letters of Credit, Borrower shall provide to Bank cash collateral in an amount equal to (x) if such Letters of Credit are denominated in Dollars, then at least one hundred five percent
(105.0%); and (y) if such Letters of Credit are denominated in a Foreign Currency, then at least one hundred ten percent (110.0%), of the Dollar Equivalent of the face amount of all such Letters of Credit plus all interest, fees, and costs due
or to become due in connection therewith (as estimated by Bank in its business judgment), to secure all of the Obligations relating to such Letters of Credit.
4.2 Priority of Security Interest. Borrower represents, warrants, and covenants that the security interest granted herein is and shall
at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Banks Lien under this
Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the general details thereof and grant to Bank in such writing a security interest therein and in the proceeds
thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank.
4.3
Authorization to File Financing Statements. Borrower hereby authorizes Bank to file financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Banks interest or rights hereunder, including a
notice that any disposition of the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Bank under the Code.
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4.4 Reaffirmation of UK Debenture. Marin UK hereby covenants and agrees with Bank that
(a) the UK Debenture, is and shall continue in full force and effect for the benefit of Bank with respect to the Secured Obligations (as such term is defined in the UK Debenture); (b) the Secured Obligations shall include, without
limitation, the Obligations of Borrower as increased, amended, and restated by this Agreement and the other Loan Documents; (c) there are no offsets, claims or defenses of Marin UK with respect to the UK Debenture or with respect to the Secured
Obligations; and (d) the UK Debenture is hereby ratified and confirmed in all respects and shall continue in full force and effect, shall be valid and enforceable and shall not be impaired or otherwise affected by the execution of this
Agreement or any other document or instrument delivered in connection herewith. All terms and provisions of the UK Debenture shall remain unchanged and in full force and effect and Marin UK hereby reaffirms its obligations under the UK Debenture.
4.5 Reaffirmation of Ireland Debenture. Marin Ireland hereby covenants and agrees with Bank that (a) the Ireland
Debenture, is and shall continue in full force and effect for the benefit of Bank with respect to the Secured Obligations (as such term is defined in the Ireland Debenture); (b) the Secured Obligations shall include, without limitation, the
Obligations of Borrower as increased, amended, and restated by this Agreement and the other Loan Documents; (c) there are no offsets, claims or defenses of Marin Ireland with respect to the Ireland Debenture or with respect to the Secured
Obligations; and (d) the Ireland Debenture is hereby ratified and confirmed in all respects and shall continue in full force and effect, shall be valid and enforceable and shall not be impaired or otherwise affected by the execution of this
Agreement or any other document or instrument delivered in connection herewith. All terms and provisions of the Ireland Debenture shall remain unchanged and in full force and effect and Marin Ireland hereby reaffirms its obligations under the
Ireland Debenture.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 Due Organization, Authorization; Power and Authority. Borrower is duly existing and in good standing as a Registered Organization
in its jurisdiction of formation and is qualified and licensed to do business and is in good standing in any jurisdiction in which the conduct of its business or its ownership of property requires that it be qualified except where the failure to do
so could not reasonably be expected to have a material adverse effect on Borrowers business. In connection with this Agreement, Borrower has delivered to Bank completed certificates each signed by Borrower, entitled Perfection
Certificate. Borrower represents and warrants to Bank that (a) Borrowers exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the type and is
organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth Borrowers organizational identification number or accurately states that Borrower has none; (d) the
Perfection Certificate accurately sets forth Borrowers place of business, or, if more than one, its chief executive office as well as Borrowers mailing address (if different than its chief executive office); (e) Borrower (and each
of its predecessors) has not, in
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the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or any organizational number assigned by its jurisdiction; and (f) all other
information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete (it being understood and agreed that Borrower may from time to time update certain information in the Perfection
Certificate after the Effective Date to the extent permitted by one or more specific provisions in this Agreement). If Borrower is not now a Registered Organization but later becomes one, Borrower shall promptly notify Bank of such occurrence and
provide Bank with Borrowers organizational identification number.
The execution, delivery and performance by Borrower of the Loan
Documents to which it is a party have been duly authorized, and do not (i) conflict with any of Borrowers organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of
Law, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets may be
bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and
effect) or (v) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or acceleration of, any material agreement by which Borrower is bound. Borrower is not in default under any agreement to
which it is a party or by which it is bound in which the default could reasonably be expected to have a material adverse effect on Borrowers business.
5.2 Collateral. Borrower has good title to, rights in, and the power to transfer each item of the Collateral upon which it purports to
grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no Collateral Accounts at or with any bank or financial institution other than Bank or Banks Affiliates except for the Collateral Accounts
described in the Perfection Certificate delivered to Bank in connection herewith and which Borrower has taken such actions as are necessary to give Bank a perfected security interest therein, pursuant to the term of Section 6.8(b). The Accounts
are bona fide, existing obligations of the Account Debtors.
The Collateral is not in the possession of any third party bailee (such as a
warehouse) except as otherwise provided in the Perfection Certificate. None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as permitted pursuant to Section 7.2.
All Inventory is in all material respects of good and marketable quality, free from material defects.
Borrower is the sole owner of the Intellectual Property which it owns or purports to own except for (a) non-exclusive licenses granted to
its customers in the ordinary course of business, (b) over-the-counter software that is commercially available to the public, and (c) non-material Intellectual Property licensed to Borrower and material Intellectual Property licensed to
Borrower. Each Patent which it owns or purports to own and which is material to Borrowers business is valid and enforceable, and no part of the Intellectual Property which Borrower owns or purports to own and which is material to
Borrowers business has been judged invalid or
16
unenforceable, in whole or in part. To the best of Borrowers knowledge, no claim has been made that any part of the Intellectual Property violates the rights of any third party except to
the extent such claim would not reasonably be expected to have a material adverse effect on Borrowers business.
Except as noted on
the Perfection Certificate, Borrower is not a party to, nor is it bound by, any Restricted License.
5.3 Accounts Receivable;
Inventory.
(a) For each Account with respect to which Advances are requested, on the date each Advance is requested and made, such
Account shall be an Eligible Account.
(b) All statements made and all unpaid balances appearing in all invoices, instruments and other
documents evidencing the Eligible Accounts are and shall be true and correct and all such invoices, instruments and other documents, and all of Borrowers Books are genuine and in all respects what they purport to be. All sales and other
transactions underlying or giving rise to each Eligible Account shall comply in all material respects with all applicable laws and governmental rules and regulations. Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any
Account Debtor whose accounts are Eligible Accounts in any Transaction Report. To the best of Borrowers knowledge, all signatures and endorsements on all documents, instruments, and agreements relating to all Eligible Accounts are genuine, and
all such documents, instruments and agreements are legally enforceable in accordance with their terms.
5.4 Litigation. There are
no actions or proceedings pending or, to the knowledge of any Responsible Officer, threatened in writing by or against Borrower or any of its Subsidiaries involving more than, individually or in the aggregate, Two Hundred Fifty Thousand Dollars
($250,000), except as disclosed on the Perfection Certificate delivered to the Bank on the Effective Date.
5.5 Financial Statements;
Financial Condition. All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Bank fairly present in all material respects Borrowers consolidated financial condition and Borrowers consolidated
results of operations. There has not been any material deterioration in Borrowers consolidated financial condition since the date of the most recent financial statements submitted to Bank.
5.6 Solvency. The fair salable value of Borrowers consolidated assets (including goodwill minus disposition costs) exceeds the
fair value of Borrowers liabilities; Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature.
5.7 Regulatory Compliance. Borrower is not an investment company or a company controlled by an investment
company under the Investment Company Act of 1940, as amended. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors).
Borrower (a) has complied in all material respects with all Requirements of Law, and (b) has not violated any Requirements of Law the violation of which could reasonably be expected to have a
17
material adverse effect on its business. None of Borrowers or any of its Subsidiaries properties or assets has been used by Borrower or any Subsidiary or, to the best of
Borrowers knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations
of, made all declarations or filings with, and given all notices to, all Government Authorities that are necessary to continue their respective businesses as currently conducted.
5.8 Subsidiaries; Investments. Borrower does not own any stock, partnership, or other ownership interest or other equity securities
except for Permitted Investments.
5.9 Tax Returns and Payments; Pension Contributions. Borrower has timely filed all required tax
returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except (a) to the extent such taxes are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor, or (b) if such taxes, assessments, deposits
and contributions do not, individually or in the aggregate, exceed Twenty-Five Thousand Dollars ($25,000).
To the extent Borrower defers
payment of any contested taxes, Borrower shall (i) notify Bank in writing of the commencement of, and any material development in, the proceedings, and (ii) post bonds or take any other steps required to prevent the governmental authority
levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a Permitted Lien. Borrower is unaware of any claims or adjustments proposed for any of Borrowers prior tax years which could result in
additional taxes becoming due and payable by Borrower. Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from
participation in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower, including any
liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.
5.10 Use of Proceeds.
Borrower shall use the proceeds of the Credit Extensions solely as working capital and to fund its general business requirements and not for personal, family, household or agricultural purposes.
5.11 Full Disclosure. No written representation, warranty or other statement of Borrower in any certificate or written statement given
to Bank, as of the date such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Bank, contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed
as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).
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5.12 Definition of Knowledge. For purposes of the Loan Documents, whenever a
representation or warranty is made to Borrowers knowledge or awareness, to the best of Borrowers knowledge, or with a similar qualification, knowledge or awareness means the actual knowledge, after reasonable investigation,
of any Responsible Officer.
6. AFFIRMATIVE COVENANTS
Borrower shall do all of the following:
6.1 Government Compliance.
(a) Maintain its and all its Subsidiaries legal existence and good standing in their respective jurisdictions of formation and maintain
qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on Borrowers business or operations. Borrower shall comply, and have each Subsidiary comply, in all material
respects, with all laws, ordinances and regulations to which it is subject.
(b) Use commercially reasonably efforts to obtain all of the
Governmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents to which it is a party and the grant of a security interest to Bank in all of its property. Borrower shall promptly provide copies of any
such obtained Governmental Approvals to Bank.
6.2 Financial Statements, Reports, Certificates. Provide Bank with the following:
(a) a Transaction Report (and any schedules related thereto), in the event that Borrowers Net Cash is less than Thirty-Five Million
Dollars (the Net Cash Threshold) and provided no Event of Default has occurred and is continuing, no later than thirty (30) days after the end of each month;
(b) in the event that Borrowers Net Cash is (i) greater than the Net Cash Threshold and there are outstanding Obligations, within
five (5) days of filing its Form 10-Q with the SEC, but no later than fifty (50) days after the end of each fiscal quarter, and (ii) less than the Net Cash Threshold and there are outstanding Obligations, no later than thirty
(30) days after the end of each month, (A) accounts receivable agings, aged by invoice date, for the applicable period, (B) accounts payable agings for the applicable period, aged by invoice date, and outstanding or held check
registers, if any, (C) reconciliations of accounts receivable agings for the applicable period (aged by invoice date), transaction reports and general ledger, and (D) Borrowers Deferred Revenue report in form satisfactory to Bank in
its sole discretion, but reasonable discretion; provided, however, notwithstanding the foregoing requirements of this Section 6.2(b), in the event Borrowers Net Cash is (i) greater than the Net Cash Threshold and there are no
outstanding Obligations, and (ii) less than the Net Cash Threshold and there are no outstanding Obligations, Borrower will not be required to provide the reports in clauses (A) through (D) of this Section and no Advances shall be made
under this Agreement until such time as Borrower shall provide to Bank the reports in clauses (A) through (D) not less than thirty (30) days prior to the request for an Advance;
(c) as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated and
consolidating balance sheet and income statement covering Borrowers consolidated and consolidating operations for such month certified by a Responsible Officer and in a form acceptable to Bank (the Monthly Financial
Statements);
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(d) within thirty (30) days after the last day of each month and together with the Monthly
Financial Statements, a duly completed Compliance Certificate signed by a Responsible Officer, certifying that as of the end of such month, Borrower was in full compliance with all of the terms and conditions of this Agreement, and setting forth
calculations showing compliance with the financial covenants set forth in this Agreement and such other information as Bank may reasonably request, including, without limitation, a statement that at the end of such month there were no held checks;
(e) as soon as available, within five (5) days of filing its Form 10-Q with the SEC, and in any event within fifty (50) days
after the end of each fiscal quarter of Borrower, company prepared consolidated balance sheet and income statement covering Borrowers and each of its Subsidiarys operations for such quarter certified by a Responsible Officer and in a
form acceptable to Bank (the Quarterly Financial Statements);
(f) within the earlier of (i) seven (7) days
after approval by Borrowers Board of Directors or (ii) ninety (90) days after the end of each fiscal year of Borrower, (A) annual operating budgets (including income statements, balance sheets and cash flow statements, by month)
for the upcoming fiscal year of Borrower, and (B) annual financial projections for the following fiscal year (on a quarterly basis) as approved by Borrowers board of directors, together with any related business forecasts used in the
preparation of such annual financial projections;
(g) As soon as available, within five (5) days of filing its Form 10-K with the
SEC, but no later than ninety (90) days after the last day of Borrowers fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements
from an independent certified public accounting firm acceptable to Bank in its reasonable discretion;
(h) within five (5) days of
filing, copies of all periodic and other reports, proxy statements and other materials filed by Borrower with the SEC, any Governmental Authority succeeding to any or all of the functions of the SEC or with any national securities exchange, or
distributed to its shareholders, as the case may be. Documents required to be delivered pursuant to the terms hereof (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link thereto, on Borrowers website on the Internet at Borrowers website address;
(i) within five (5) days of delivery, copies of all statements, reports and notices made available to Borrowers security holders or
to any holders of Subordinated Debt;
(j) prompt report of any legal actions pending or, to the knowledge of any Responsible Officer,
threatened in writing against Borrower or any of its Subsidiaries in which an adverse decision could reasonably be expected to result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, Five Hundred
Thousand Dollars ($500,000) or more; and
20
(k) other financial information reasonably requested by Bank.
6.3 Accounts Receivable.
(a) Schedules and Documents Relating to Accounts. Borrower shall deliver to Bank transaction reports and schedules of collections, as
provided in Section 6.2, on Banks standard forms; provided, however, that Borrowers failure to execute and deliver the same shall not affect or limit Banks Lien and other rights in all of Borrowers Accounts, nor shall
Banks failure to advance or lend against a specific Account affect or limit Banks Lien and other rights therein. If requested by Bank, Borrower shall furnish Bank with copies (or, at Banks request, originals) of all contracts,
orders, invoices, and other similar documents, and all shipping instructions, delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or disposition of which gave rise to such Accounts. In addition, Borrower shall
deliver to Bank, on its request, the originals of all instruments, chattel paper, security agreements, guarantees and other documents and property evidencing or securing any Accounts, in the same form as received, with all necessary indorsements,
and copies of all credit memos.
(b) Disputes. Borrower shall promptly notify Bank of all disputes or claims relating to Accounts
which in the aggregate exceeds One Hundred Thousand Dollars ($100,000) in any calendar month. Borrower may forgive (completely or partially), compromise, or settle any Account for less than payment in full, or agree to do any of the foregoing so
long as (i) Borrower does so in good faith, in a commercially reasonable manner, in the ordinary course of business, in arms-length transactions, and reports the same to Bank in the regular reports provided to Bank; (ii) no Event of
Default has occurred and is continuing; and (iii) after taking into account all such discounts, settlements and forgiveness, the total outstanding Advances will not exceed the lesser of the Revolving Line or the Borrowing Base.
(c) Collection of Accounts. Borrower shall have the right to collect all Accounts, unless and until an Event of Default has occurred
and is continuing. Bank shall require that Borrower direct Account Debtors to deliver or transmit all proceeds of Accounts from Account Debtors which have their principal place of business in the United States into a lockbox account, or via
electronic deposit capture into a blocked account as specified by Bank (either such account, the Cash Collateral Account). Whether or not an Event of Default has occurred and is continuing, Borrower shall immediately
deliver all payments on and proceeds of Accounts to the Cash Collateral Account (i) to be applied to immediately reduce the Obligations when Borrower is not Streamline Eligible, or (ii) to be transferred on a daily basis to Borrowers
operating account with Bank when Borrower is Streamline Eligible.
(d) Returns. Provided no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory to Borrower, Borrower shall promptly (i) determine the reason for such return, (ii) issue a credit memorandum to the Account Debtor in the appropriate amount, and (iii) provide a
copy of such credit memorandum to Bank, upon request from Bank. In the event any attempted return occurs after the occurrence and during the continuance of any Event of Default, Borrower shall hold the returned Inventory in trust for Bank, and
immediately notify Bank of the return of the Inventory.
21
(e) Verification. Bank may, from time to time, verify directly with the respective Account
Debtors the validity, amount and other matters relating to the Accounts, either in the name of Borrower or Bank or such other name as Bank may choose, and notify any Account Debtor of Banks security interest in such Account.
(f) No Liability. Bank shall not be responsible or liable for any shortage or discrepancy in, damage to, or loss or destruction of, any
goods, the sale or other disposition of which gives rise to an Account, or for any error, act, omission, or delay of any kind occurring in the settlement, failure to settle, collection or failure to collect any Account, or for settling any Account
in good faith for less than the full amount thereof, nor shall Bank be deemed to be responsible for any of Borrowers obligations under any contract or agreement giving rise to an Account. Nothing herein shall, however, relieve Bank from
liability for its own gross negligence or willful misconduct.
6.4 Remittance of Proceeds. Except as otherwise provided in
Section 6.3(c), deliver, in kind, all proceeds arising from the disposition of any Collateral to Bank in the original form in which received by Borrower not later than the following Business Day after receipt by Borrower, to be applied to the
Obligations (a) prior to an Event of Default, pursuant to the terms of Section 2.8 hereof, and (b) after the occurrence and during the continuance of an Event of Default, pursuant to the terms of Section 9.4 hereof; provided
that, if no Event of Default has occurred and is continuing, Borrower shall not be obligated to remit to Bank the proceeds of the sale of worn out or obsolete Equipment disposed of by Borrower in good faith in an arms length transaction for an
aggregate purchase price of $200,000 or less (for all such transactions in any fiscal year). Borrower agrees that it will not commingle proceeds of Collateral with any of Borrowers other funds or property, but will hold such proceeds separate
and apart from such other funds and property and in an express trust for Bank. Nothing in this Section limits the restrictions on disposition of Collateral set forth elsewhere in this Agreement.
6.5 Taxes; Pensions. Timely file, and require each of its Subsidiaries to timely file, all required tax returns and reports and timely
pay, and require each of its Subsidiaries to timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower and each of its Subsidiaries, except for (a) deferred payment of any taxes contested
pursuant to the terms of Section 5.9 hereof and (b) other than taxes which in the aggregate do not at any time exceed Ten Thousand Dollars ($10,000), and shall deliver to Bank, on demand, appropriate certificates attesting to such
payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.
6.6 Access to Collateral; Books and Records. At reasonable times, on five (5) Business Days notice (provided no notice is
required if an Event of Default has occurred and is continuing), Bank, or its agents, shall have the right to inspect the Collateral and the right to audit and copy Borrowers Books. The foregoing inspections and audits shall be conducted at
Borrowers expense and no more often than once every six (6) months (or more frequently as Bank shall determine conditions warrant, in its sole discretion) unless an Event of Default has occurred and is continuing in which case such
inspections and audits shall occur as often as Bank
22
shall determine is necessary. The charge therefor shall be $850 per person per day (or such higher amount as shall represent Banks then-current standard charge for the same), plus
reasonable out-of-pocket expenses. In the event Borrower and Bank schedule an audit more than ten (10) days in advance, and Borrower cancels or seeks to reschedule the audit with less than ten (10) days written notice to Bank, then
(without limiting any of Banks rights or remedies) Borrower shall pay Bank a fee of $1,000 plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of the cancellation or rescheduling.
6.7 Insurance.
(a) Keep
its business and the Collateral insured for risks and in amounts standard for companies in Borrowers industry and location and as Bank may reasonably request. Insurance policies shall be in a form, with financially sound and reputable
insurance companies that are not Affiliates of Borrower, and in amounts that are reasonably satisfactory to Bank. All property policies shall have a lenders loss payable endorsement showing Bank as lender loss payee. All liability policies
shall show, or have endorsements showing, Bank as an additional insured. Bank shall be named as lender loss payee and/or additional insured with respect to any such insurance providing coverage in respect of any Collateral.
(b) Ensure that proceeds payable under any property policy are, at Banks option, payable to Bank on account of the Obligations.
(c) At Banks request, Borrower shall deliver certified copies of insurance policies and evidence of all premium payments. Each provider
of any such insurance required under this Section 6.7 shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to Bank, that it will give Bank thirty (30) days prior written notice before
any such policy or policies shall be materially altered or canceled. If Borrower fails to obtain insurance as required under this Section 6.7 or to pay any amount or furnish any required proof of payment to third persons and Bank, Bank may make
all or part of such payment or obtain such insurance policies required in this Section 6.7, and take any action under the policies Bank deems prudent.
6.8 Operating Accounts.
(a) Maintain its primary domestic operating and other domestic deposit accounts and securities accounts, including all excess cash, with Bank
and Banks Affiliates. Borrower shall consider maintaining its foreign primary banking relationship with Bank and Banks Affiliates.
(b) Provide Bank five (5) days prior written notice before establishing any Collateral Account at or with any bank or financial
institution in the United States other than Bank or Banks Affiliates. For each Collateral Account that Borrower at any time maintains in the United States, Borrower shall cause the applicable bank or financial institution (other than Bank) at
or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Banks Lien in such Collateral Account in accordance with the terms
hereunder which Control Agreement may not be terminated without the prior written consent of Bank. The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes, and other employee wage and
benefit payments to or for the benefit of Borrowers employees and identified to Bank by Borrower as such.
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6.9 Financial Covenants.
Maintain at all times, as of the last day of each month, unless otherwise noted, on a consolidating basis with respect to Borrower and its
Subsidiaries:
(a) Minimum Quarterly Revenue. Commencing with the quarter ending June 30, 2015, and as of the last day of each
quarter thereafter, for the trailing three (3) month period then ended, minimum Quarterly Revenue of at least (i) Twenty-Five Million Dollars ($25,000,000) at all times that Borrowers unrestricted cash on balance sheet is at least
Thirty-Five Million Dollars ($35,000,000) or (ii) the following amounts at the following times at all times that Borrowers unrestricted cash on balance sheet is less than Thirty-Five Million Dollars ($35,000,000):
|
|
|
|
|
Quarter Ending |
|
Minimum Quarterly Revenue |
|
June 30, 2015 |
|
$ |
25,000,000 |
|
September 30, 2015 |
|
$ |
25,000,000 |
|
December 31, 2015 |
|
$ |
27,000,000 |
|
March 31, 2016 |
|
$ |
27,000,000 |
|
June 30, 2016 |
|
$ |
28,000,000 |
|
September 30, 2016 |
|
$ |
29,000,000 |
|
December 31, 2016 |
|
$ |
31,000,000 |
|
Commencing with the quarter ending March 31, 2017, Borrowers minimum Quarterly Revenue is
subject to change based on Borrowers annual financial projections approved by Borrowers Board of Directors for the December 31, 2017 fiscal year and delivered to Bank pursuant to Section 6.2(f), which shall be equal to or
greater than seventy-five percent (75%) of Borrowers projected performance for each such quarter, as determined by Bank in its sole discretion (the 2017 MRR Covenant). Borrowers failure to reach an agreement with
Bank on the 2017 MRR Covenant and to execute and deliver to Bank an amendment to this Agreement on or by April 15, 2017 shall constitute an immediate Event of Default under this Agreement.
(b) Adjusted Quick Ratio. Maintain at all times, to be tested as of the last day of each month on a consolidating basis with respect to
Borrower and its Subsidiaries an Adjusted Quick Ratio of at least 1.50 to 1.00 at all times that Borrowers unrestricted cash on balance sheet is less than Thirty-Five Million Dollars ($35,000,000).
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6.10 Protection of Intellectual Property Rights.
(a)(i) Protect, defend and maintain the validity and enforceability of its Intellectual Property material to Borrowers business
(other than intellectual property which Borrower licenses from one or more third parties); (ii) promptly advise Bank in writing of material infringements or any other event that could reasonably be expected to materially and adversely affect
the value of its Intellectual Property material to Borrowers business; and (iii) not allow any Intellectual Property material to Borrowers business to be abandoned, forfeited or dedicated to the public without Banks written
consent.
(b) Provide written notice to Bank within thirty (30) days of entering or becoming bound by any Restricted License (other
than over-the-counter software that is commercially available to the public). Borrower shall take such steps as Bank reasonably requests to attempt to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for
(i) any Restricted License to be deemed Collateral and for Bank to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such Restricted License, whether now existing or
entered into in the future, and (ii) Bank to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Banks rights and remedies under this Agreement and the other Loan Documents.
6.11 Litigation Cooperation. From the date hereof and continuing through the termination of this Agreement, make available to
Bank, without expense to Bank, Borrower and its officers, employees and agents and Borrowers books and records, to the extent that Bank may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by
or against Bank with respect to any Collateral or relating to Borrower.
6.12 Formation or Acquisition of Subsidiaries.
Notwithstanding and without limiting the negative covenants contained in Sections 7.3 and 7.7 hereof, at the time that Borrower forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Effective Date,
Borrower shall (a) cause such new Subsidiary to provide to Bank a joinder to this Agreement to cause such Subsidiary to become a co-borrower hereunder, together with such appropriate financing statements and/or Control Agreements, all in form
and substance satisfactory to Bank (including being sufficient to grant Bank a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to Bank appropriate certificates and
powers and financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary, in form and substance satisfactory to Bank, and (c) provide to Bank all other documentation in form and substance satisfactory
to Bank, including one or more opinions of counsel satisfactory to Bank, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above. Any document, agreement, or instrument
executed or issued pursuant to this Section 6.12 shall be a Loan Document.
6.13 Further Assurances. Execute any further
instruments and take further action as Bank reasonably requests to perfect or continue Banks Lien in the Collateral or to effect the purposes of this Agreement. Deliver to Bank, within five (5) days after the same are sent or received,
copies of all correspondence, reports, documents and other filings with any
25
Governmental Authority regarding compliance with or maintenance of Governmental Approvals or Requirements of Law or that could reasonably be expected to have a material effect on any of the
Governmental Approvals or otherwise on the operations of Borrower or any of its Subsidiaries.
7. NEGATIVE COVENANTS
Borrower shall not do any of the following without Banks prior written consent:
7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, Transfer), or permit
any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn-out or obsolete Equipment that is, in the reasonable judgment of
Borrower, no longer economically practicable to maintain or useful in the ordinary course of business of Borrower; (c) consisting of Permitted Liens and Permitted Investments; (d) consisting of the sale or issuance of any stock of Borrower
permitted under Section 7.2 of this Agreement; (e) consisting of Borrowers use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents ;and (f) of
non-exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course of business.
7.2 Changes in
Business, Management, Ownership, or Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably
related thereto; (b) liquidate or dissolve; or (c) (i) have a change in the Key Person such that the Key Person ceases to hold such office with Borrower and a replacement satisfactory to Borrowers Board of Directors are not made
within ninety (90) days after the Key Persons departure from Borrower; or (ii) enter into any transaction or series of related transactions in which the stockholders of Borrower who were not stockholders immediately prior to the
first such transaction own more than 40% of the voting stock of Borrower immediately after giving effect to such transaction or related series of such transactions (other than by the sale of Borrowers equity securities in a public offering or
to venture capital or private equity investors so long as Borrower identifies to Bank the venture capital or private equity investors at least seven (7) Business Days prior to the closing of the transaction and provides to Bank a description of
the material terms of the transaction).
Borrower shall not, without at least ten (10) days prior written notice to Bank:
(1) add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than Two Hundred Fifty Thousand Dollars ($250,000) in Borrowers assets or property) in Borrowers assets
or property) or deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Seven Hundred Fifty Thousand Dollars ($750,000) to a bailee at a location other than to a bailee and at a location already disclosed in the
Perfection Certificate, (2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of
organization. If Borrower intends to deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Seven Hundred Fifty Thousand Dollars ($750,000) to a bailee, and Bank and such bailee are not already parties to a
bailee agreement governing both the Collateral and the location to which Borrower intends to deliver the Collateral, then Borrower will first receive the written consent of Bank, and such bailee shall execute and deliver a bailee agreement in form
and substance satisfactory to Bank. Notwithstanding the foregoing, bailee agreements shall not be required with collocation facilities.
26
7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to
merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person (including, without limitation, by the formation of any Subsidiary). A
Subsidiary may merge or consolidate into another Subsidiary or into Borrower.
7.4 Indebtedness. Create, incur, assume, or be
liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.
7.5 Encumbrance. Create, incur,
allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to
the first priority security interest granted herein, or enter into any agreement, document, instrument or other arrangement (except with or in favor of Bank) with any Person which directly or indirectly prohibits or has the effect of prohibiting
Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrowers or any Subsidiarys Intellectual Property, except (i) customary restrictions on assignment in
any license agreement where Borrower is the licensee (and not the licensor) and (ii) as is otherwise permitted in Section 7.1 hereof and the definition of Permitted Liens herein.
7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.8(b) hereof.
7.7 Distributions; Investments. (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any
capital stock provided that (i) Borrower may convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, (ii) Borrower may pay dividends solely in
common stock; and (iii) Borrower may repurchase the stock of former employees or consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving
effect to such repurchase, provided that the aggregate amount of all such repurchases does not exceed Two Hundred Fifty Thousand Dollars ($250,000) per fiscal year; or (b) directly or indirectly make any Investment (including, without
limitation, by the formation of any Subsidiary) other than Permitted Investments, or permit any of its Subsidiaries to do so.
7.8
Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower, except for transactions that are in the ordinary course of Borrowers business, upon fair and
reasonable terms that are no less favorable to Borrower than would be obtained in an arms length transaction with a non-affiliated Person.
7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt, except under the terms of the subordination,
intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof, provide for earlier or greater
principal, interest, or other payments thereon, or adversely affect the subordination thereof to Obligations owed to Bank.
27
7.10 Compliance. Become an investment company or a company controlled by an
investment company, under the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of
the Federal Reserve System), or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply
with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrowers business, or permit any of its Subsidiaries to do so; withdraw or
permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could
reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.
8. EVENTS OF DEFAULT
Any one of the following shall constitute an event of default (an Event of Default) under this Agreement:
8.1 Payment Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension when due, or
(b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the Revolving Line Maturity Date, the Prior Equipment
Maturity Date, and the Prior Supplemental Equipment Maturity Date). During the cure period, the failure to make or pay any payment specified under clause (b) hereunder is not an Event of Default (but no Credit Extension will be made during the
cure period);
8.2 Covenant Default.
(a) Borrower fails or neglects to perform any obligation in Sections 2.5, 6.2, 6.5, 6.7, 6.8, 6.9, 6.10(b), or violates any covenant in
Section 7; or
(b) Borrower fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or
agreement contained in this Agreement or any Loan Documents, and as to any default (other than those specified in this Section 8) under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the
default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten
(10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such
reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions shall be made during such cure period). Cure periods provided under this section shall not apply, among other things, to
financial covenants or any other covenants set forth in clause (a) above;
28
8.3 Investor Abandonment; Priority of Security Interest.
If Bank determines in its good faith judgment that it is the clear intention of Borrowers current and future investors to not continue
to fund Borrower in the amounts and timeframe to the extent necessary to enable Borrower to satisfy the Obligations as they become due and payable, or there is a material impairment in the perfection or priority of the Banks security interest
in the Collateral; provided, however, any Transfer permitted under Section 7.1 shall not constitute an Event of Default under this Section 8.3;
8.4 Attachment; Levy; Restraint on Business.
(a)(i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity under the control
of Borrower (including a Subsidiary), or (ii) a notice of lien or levy is filed against any of Borrowers assets by any Governmental Authority, and the same under subclauses (i) and (ii) hereof are not, within ten (10) days
after the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during any ten (10) day cure period; or
(b)(i) any material portion of Borrowers assets is attached, seized, levied on, or comes into possession of a trustee or receiver,
or (ii) any court order enjoins, restrains, or prevents Borrower from conducting all or any material part of its business;
8.5
Insolvency. (a) Borrower is unable to pay its debts (including trade debts) as they become due; (b) Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower and is not dismissed or stayed
within thirty (30) days (but no Credit Extensions shall be made while any of the conditions described in clause (a) exist and/or until any Insolvency Proceeding is dismissed);
8.6 Other Agreements. There is, under any agreement to which Borrower or any Guarantor is a party with a third party or parties,
(a) any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount individually or in the aggregate in excess of Two Hundred Fifty Thousand Dollars
($250,000); or (b) any breach or default by Borrower or Guarantor, the result of which could have a material adverse effect on Borrowers business;
8.7 Judgments; Penalties. One or more fines, penalties or final judgments, orders or decrees for the payment of money in an amount,
individually or in the aggregate, of at least Two Hundred Fifty Thousand Dollars ($250,000) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower by
any Governmental Authority, and the same are not, within ten (10) days after the entry, assessment or issuance thereof, discharged, satisfied, or paid, or after execution thereof, stayed or bonded pending appeal, or such judgments are not
discharged prior to the expiration of any such stay (provided that no Credit Extensions will be made prior to the satisfaction, payment, discharge, stay, or bonding of such fine, penalty, judgment, order or decree);
29
8.8 Misrepresentations. Borrower or any Person acting for Borrower makes any
representation, warranty, or other statement now or later in this Agreement, any Loan Document or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such representation, warranty, or other statement
is incorrect in any material respect when made;
8.9 Subordinated Debt. Any document, instrument, or agreement evidencing any
Subordinated Debt shall for any reason be revoked or invalidated or otherwise cease to be in full force and effect, any Person shall be in breach thereof or contest in any manner the validity or enforceability thereof or deny that it has any further
liability or obligation thereunder, or the Obligations shall for any reason be subordinated or shall not have the priority contemplated by this Agreement;
8.10 Governmental Approvals. Any Governmental Approval shall have been (a) revoked, rescinded, suspended, modified in an adverse
manner or not renewed in the ordinary course for a full term or (b) subject to any decision by a Governmental Authority that designates a hearing with respect to any applications for renewal of any of such Governmental Approval or that could
result in the Governmental Authority taking any of the actions described in clause (a) above, and such decision or such revocation, rescission, suspension, modification or non-renewal (i) cause, or could reasonably be expected to cause, a
material adverse change, or (ii) adversely affects the legal qualifications of Borrower or any of its Subsidiaries to hold such Governmental Approval in any applicable jurisdiction and such revocation, rescission, suspension, modification or
non-renewal could reasonably be expected to affect the status of or legal qualifications of Borrower or any of its Subsidiaries to hold any Governmental Approval in any other jurisdiction;
8.11 Cross-Default with UK Debenture. A default shall occur under the UK Debenture and such default is not cured within any applicable
grace period provided therein.
8.12 Cross-Default with Ireland Debenture. A default shall occur under the Ireland Debenture and
such default is not cured within any applicable grace period provided therein.
9. BANKS RIGHTS AND REMEDIES
9.1 Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, without notice or demand, do
any or all of the following:
(a) declare all Obligations immediately due and payable (but if an Event of Default described in
Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);
(b) stop advancing money or
extending credit for Borrowers benefit under this Agreement or under any other agreement between Borrower and Bank;
(c) for any
Letters of Credit, demand that Borrower (i) deposit cash with Bank in an amount equal to at least 105% of the Dollar Equivalent (or 110% if the Dollar Equivalent is denominated in Foreign Currency) of the aggregate face amount of all Letters of
Credit remaining undrawn (plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment)), to secure all of the
30
Obligations relating to such Letters of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such
amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining term of any Letters of Credit;
(d) terminate any FX Contracts;
(e) verify the amount of, demand payment of and performance under, and collect any Accounts and General Intangibles, settle or adjust disputes
and claims directly with Account Debtors for amounts on terms and in any order that Bank considers advisable, and notify any Person owing Borrower money of Banks security interest in such funds;
(f) make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the
Collateral. Borrower shall assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase,
contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Banks
rights or remedies;
(g) apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by
Bank owing to or for the credit or the account of Borrower;
(h) ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrowers labels, Patents, Copyrights, mask works, rights of use of any name, trade secrets,
trade names, Trademarks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Banks exercise of its rights under
this Section, Borrowers rights under all licenses and all franchise agreements inure to Banks benefit;
(i) place a
hold on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any
Collateral;
(j) demand and receive possession of Borrowers Books; and
(k) exercise all rights and remedies available to Bank under the Loan Documents or at law or equity, including all remedies provided under the
Code (including disposal of the Collateral pursuant to the terms thereof).
9.2 Power of Attorney. Borrower hereby irrevocably
appoints Bank as its lawful attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrowers name on any checks or other forms of payment or security; (b) sign
Borrowers name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Bank determines
reasonable; (d) make, settle, and
31
adjust all claims under Borrowers insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any
judgment based thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to
sign Borrowers name on any documents necessary to perfect or continue the perfection of Banks security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full
and Bank is under no further obligation to make Credit Extensions hereunder. Banks foregoing appointment as Borrowers attorney in fact, and all of Banks rights and powers, coupled with an interest, are irrevocable until all
Obligations have been fully repaid and performed and Banks obligation to provide Credit Extensions terminates.
9.3 Protective
Payments. If Borrower fails to obtain the insurance called for by Section 6.7 or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document or which
may be required to preserve the Collateral, Bank may obtain such insurance or make such payment, and all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the then highest rate applicable to the
Obligations, and secured by the Collateral. Bank will make reasonable efforts to provide Borrower with notice of Bank obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an
agreement to make similar payments in the future or Banks waiver of any Event of Default.
9.4 Application of Payments and
Proceeds. If an Event of Default has occurred and is continuing, Bank shall have the right to apply in any order any funds in its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of
Accounts or other disposition of the Collateral, or otherwise, to the Obligations. Bank shall pay any surplus to Borrower by credit to the Designated Deposit Account or to other Persons legally entitled thereto; Borrower shall remain liable to Bank
for any deficiency. If Bank, directly or indirectly, enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations by
the principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Bank of cash therefor.
9.5 Banks Liability for Collateral. So long as Bank complies with reasonable banking practices regarding the safekeeping of the
Collateral in the possession or under the control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the
Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral.
9.6 No Waiver; Remedies Cumulative. Banks failure, at any time or times, to require strict performance by Borrower of any
provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by the
party granting the waiver and then is only effective for the specific instance and purpose for which it is given. Banks rights and remedies under this Agreement and the other Loan Documents are cumulative. Bank has all rights and remedies
provided under the
32
Code, by law, or in equity. Banks exercise of one right or remedy is not an election and shall not preclude Bank from exercising any other remedy under this Agreement or other remedy
available at law or in equity, and Banks waiver of any Event of Default is not a continuing waiver. Banks delay in exercising any remedy is not a waiver, election, or acquiescence.
9.7 Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default,
nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable.
9.8 Borrower Liability. Either Borrower may, acting singly, request Advances hereunder. Each Borrower hereby appoints the other as
agent for the other for all purposes hereunder, including with respect to requesting Advances hereunder. Each Borrower hereunder shall be jointly and severally obligated to repay all Advances made hereunder, regardless of which Borrower actually
receives said Advance, as if each Borrower hereunder directly received all Advances. Each Borrower waives (a) any suretyship defenses available to it under the Code or any other applicable law, including, without limitation, the benefit of
California Civil Code Section 2815 permitting revocation as to future transactions and the benefit of California Civil Code Sections 1432, 2809, 2810, 2819, 2839, 2845, 2847, 2848, 2849, 2850, and 2899 and 3433, and (b) any right to
require Bank to: (i) proceed against any Borrower or any other person; (ii) proceed against or exhaust any security; or (iii) pursue any other remedy. Bank may exercise or not exercise any right or remedy it has against any Borrower
or any security it holds (including the right to foreclose by judicial or non-judicial sale) without affecting any Borrowers liability. Notwithstanding any other provision of this Agreement or other related document, each Borrower irrevocably
waives all rights that it may have at law or in equity (including, without limitation, any law subrogating Borrower to the rights of Bank under this Agreement) to seek contribution, indemnification or any other form of reimbursement from any other
Borrower, or any other Person now or hereafter primarily or secondarily liable for any of the Obligations, for any payment made by Borrower with respect to the Obligations in connection with this Agreement or otherwise and all rights that it might
have to benefit from, or to participate in, any security for the Obligations as a result of any payment made by Borrower with respect to the Obligations in connection with this Agreement or otherwise. Any agreement providing for indemnification,
reimbursement or any other arrangement prohibited under this Section shall be null and void. If any payment is made to a Borrower in contravention of this Section, such Borrower shall hold such payment in trust for Bank and such payment shall be
promptly delivered to Bank for application to the Obligations, whether matured or unmatured.
10. NOTICES
All notices, consents, requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be
in writing and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt
requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or
(d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email
33
address indicated below. Bank or Borrower may change its mailing or electronic mail address or facsimile number by giving the other party written notice thereof in accordance with the terms of
this Section 10.
|
|
|
If to Borrower: |
|
Marin Software Incorporated 123 Mission Street,
25th Floor San Francisco, California 94105
Attn: General Counsel
Fax: (415) 358-6994 |
|
|
If to Bank: |
|
Silicon Valley Bank 555 Mission Street
9th Floor San Francisco, California 94105
Attn: Charles Thor
Fax: (415) 615-0076
Email: cthor@svb.com |
11. CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE
Except as otherwise expressly provided in any of the Loan Documents, California law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Bank from
bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Bank. Borrower expressly submits and consents in
advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the
granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons,
complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, or subsequently provided by Borrower in accordance with, Section 10 of this Agreement and that service so made shall be
deemed completed upon the earlier to occur of Borrowers actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH
PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
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WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT
TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between them arising at any time shall be decided by a reference to a
private judge, mutually selected by the parties (or, if they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with California Code of Civil Procedure § 638 (or pursuant to
comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby submit to the jurisdiction of such court. The
reference proceedings shall be conducted pursuant to and in accordance with the provisions of California Code of Civil Procedure Sections 638 through 645.1, inclusive. The private judge shall have the power, among others, to grant provisional
relief, including without limitation, entering temporary restraining orders, issuing preliminary and permanent injunctions and appointing receivers. All such proceedings shall be closed to the public and confidential and all records relating thereto
shall be permanently sealed. If during the course of any dispute, a party desires to seek provisional relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then such party may apply to the Santa
Clara County, California Superior Court for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before a court under the rules of evidence applicable to judicial proceedings. The parties shall be
entitled to discovery which shall be conducted in the same manner as it would be before a court under the rules of discovery applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all discovery rules and orders
applicable to judicial proceedings in the same manner as a trial court judge. The parties agree that the selected or appointed private judge shall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shall
report a statement of decision thereon pursuant to California Code of Civil Procedure Section 644(a). Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies, foreclose against collateral, or
obtain provisional remedies. The private judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph.
This Section 11 shall survive the termination of this Agreement.
12. GENERAL PROVISIONS
12.1 Termination Prior to Revolving Line Maturity Date; Survival. All covenants, representations and warranties made in this Agreement
continue in full force until this Agreement has terminated pursuant to its terms and all Obligations have been satisfied. So long as Borrower has satisfied the Obligations (other than inchoate indemnity obligations, any other obligations which, by
their terms, are to survive the termination of this Agreement, and any Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement), this Agreement may be terminated prior to the
Revolving Line Maturity Date by Borrower, effective three (3) Business Days after written notice of termination is given to Bank. Those obligations that are expressly specified in this Agreement as surviving this Agreements termination
shall continue to survive notwithstanding this Agreements termination.
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12.2 Successors and Assigns. This Agreement binds and is for the benefit of the successors
and permitted assigns of each party. Borrower may not assign this Agreement or any rights or obligations under it without Banks prior written consent (which may be granted or withheld in Banks discretion). Bank has the right, without the
consent of or notice to Borrower, to sell, transfer, assign, negotiate, or grant participation in all or any part of, or any interest in, Banks obligations, rights, and benefits under this Agreement and the other Loan Documents.
12.3 Indemnification. Borrower agrees to indemnify, defend and hold Bank and its directors, officers, employees, agents, attorneys, or
any other Person affiliated with or representing Bank (each, an Indemnified Person) harmless against: (i) all obligations, demands, claims, and liabilities (collectively, Claims) claimed or asserted by any
other party in connection with the transactions contemplated by the Loan Documents; and (ii) all losses or expenses (including Bank Expenses) in any way suffered, incurred, or paid by such Indemnified Person as a result of, following from,
consequential to, or arising from transactions between Bank and Borrower (including reasonable attorneys fees and expenses), except for Claims and/or losses directly caused by such Indemnified Persons gross negligence or willful
misconduct.
This Section 12.3 shall survive until all statutes of limitation with respect to the Claims, losses, and expenses for
which indemnity is given shall have run.
12.4 Time of Essence. Time is of the essence for the performance of all Obligations in
this Agreement.
12.5 Severability of Provisions. Each provision of this Agreement is severable from every other provision in
determining the enforceability of any provision.
12.6 Correction of Loan Documents. Bank may correct patent errors and fill in any
blanks in the Loan Documents consistent with the agreement of the parties.
12.7 Amendments in Writing; Waiver; Integration. No
purported amendment or modification of any Loan Document, or waiver, discharge or termination of any obligation under any Loan Document, shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writing signed by
the party against which enforcement or admission is sought. Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate as, or
evidence, an amendment, supplement or waiver or have any other effect on any Loan Document. Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall not apply to any subsequent or other circumstance,
whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver. The Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All
prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of the Loan Documents merge into the Loan Documents.
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12.8 Counterparts. This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement.
12.9 Confidentiality. In handling any confidential information, including but not limited to any confidential information obtained
pursuant to any audit, Bank shall exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made: (a) to Banks Subsidiaries or Affiliates (such Subsidiaries and
Affiliates, together with Bank, collectively, Bank Entities); (b) to prospective transferees or purchasers of any interest in the Credit Extensions (provided, however, Bank shall use its best efforts to obtain any prospective
transferees or purchasers agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or other order; (d) to Banks regulators or as otherwise required in connection with Banks
examination or audit; (e) as Bank considers appropriate in exercising remedies under the Loan Documents; and (f) to third-party service providers of Bank so long as such service providers have executed a confidentiality agreement with Bank
with terms no less restrictive than those contained herein. Confidential information does not include information that is either: (i) in the public domain or in Banks possession when disclosed to Bank, or becomes part of the public domain
(other than as a result of its disclosure by Bank in violation of this Agreement) after disclosure to Bank; or (ii) disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information.
Bank Entities may use anonymous forms of confidential information for aggregate datasets, for analyses or reporting, and for any other
uses not expressly prohibited in writing by Borrower. The provisions of the immediately preceding sentence shall survive termination of this Agreement.
12.10 Attorneys Fees, Costs and Expenses. In any action or proceeding between Borrower and Bank arising out of or relating to the
Loan Documents, the prevailing party shall be entitled to recover its reasonable attorneys fees and other costs and expenses incurred, in addition to any other relief to which it may be entitled.
12.11 Electronic Execution of Documents. The words execution, signed, signature and words of like
import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a
paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.
12.12 Captions. The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.
12.13 Construction of Agreement. The parties mutually acknowledge that they and their attorneys have participated in the
preparation and negotiation of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty to exist.
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12.14 Relationship. The relationship of the parties to this Agreement is determined solely
by the provisions of this Agreement. The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arms-length contract.
12.15 Third Parties. Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights or
remedies under or by reason of this Agreement on any persons other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any person not an express party to
this Agreement; or (c) give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement.
12.16 Transitional Arrangements.
On the Effective Date, this Agreement shall amend, restate and supersede the Prior Loan Agreement in its entirety, except as provided in this
Section. On the Effective Date, the rights and obligations of the parties evidenced by the Prior Loan Agreement shall be evidenced by this Agreement and the other Loan Documents and the grant of security interest in the Collateral by the Borrower
under the Prior Loan Agreement and the other Loan Documents (as defined in the Prior Loan Agreement) shall continue under this Agreement and the other Loan Documents, and shall not in any event be terminated, extinguished or annulled but
shall hereafter be governed by this Agreement and the other Loans Documents. All references to the Prior Loan Agreement in any Loan Document or other document or instrument delivered in connection therewith shall be deemed to refer to this Agreement
and the provisions hereof. Without limiting the generality of the foregoing and to the extent necessary, the Bank reserves all of its rights under the Prior Loan Agreement.
13. DEFINITIONS
13.1 Definitions. As used in the Loan Documents, the word shall is mandatory, the word may is permissive, the
word or is not exclusive, the words includes and including are not limiting, the singular includes the plural, and numbers denoting amounts that are set off in brackets are negative. As used in this Agreement, the
following capitalized terms have the following meanings:
Account is any account as defined in the Code
with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other sums owing to Borrower.
Account Debtor is any account debtor as defined in the Code with such additions to such term as may hereafter
be made.
Adjusted Quick Ratio means, as of the date of determination, a ratio of Quick Assets to Current Liabilities.
Advance or Advances means a revolving credit loan (or revolving credit loans) under the Revolving
Line.
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Affiliate is, with respect to any Person, each other Person that owns or
controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Persons senior executive officers, directors, partners and, for any Person that is a limited
liability company, that Persons managers and members.
Agreement is defined in the preamble hereof.
Authorized Signer is any individual listed in Borrowers Borrowing Resolution who is authorized to execute the Loan
Documents, including any Notice of Borrowing or Advance request, on behalf of Borrower.
Availability Amount is
(a) the lesser of (i) the Revolving Line or (ii) the amount available under the Borrowing Base minus (b) the outstanding principal balance of any Advances.
Bank is defined in the preamble hereof.
Bank Entities is defined in Section 12.9.
Bank Expenses are all audit fees and expenses, costs, and expenses (including reasonable attorneys fees and expenses)
for preparing, amending, negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings) or otherwise incurred with respect to Borrower.
Bank Services are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to
Borrower or any of its Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, cash management services (including, without limitation, merchant services, direct deposit of payroll, business credit cards,
and check cashing services), interest rate swap arrangements, and foreign exchange services as any such products or services may be identified in Banks various agreements related thereto (each, a Bank Services Agreement).
Borrower is defined in the preamble hereof.
Borrowers Books are all Borrowers books and records including ledgers, federal and state tax returns, records
regarding Borrowers assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.
Borrowing Base is (a) 80% of Eligible Accounts, plus (b) eighty percent (80%) of Eligible Accounts
with respect to UK Accounts and Ireland Accounts, plus (c) eighty percent (80%) of Eligible Unbilled Accounts, in each case, as determined in good faith by Bank from Borrowers most recent Transaction Report; provided, however,
that Bank may decrease the foregoing percentage in its good faith business judgment based on events, conditions, contingencies, or risks which, as determined by Bank, may adversely affect Collateral.
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Borrowing Resolutions are, with respect to any Person, those resolutions
substantially in the form attached hereto as Exhibit E.
Business Day is any day that is not a Saturday,
Sunday or other day on which banking institutions in the State of California are authorized or required by law or other governmental action to close, except that if any determination of a Business Day shall relate to a LIBOR Advance, the
term Business Day shall also mean a day on which dealings are carried on in the London interbank market, and if any determination of a Business Day shall relate to an FX Contract, the term Business Day shall mean
a day on which dealings are carried on in the country of settlement of the Foreign Currency.
Cash Equivalents means
(a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing
no more than one (1) year after its creation and having the highest rating from either Standard & Poors Ratings Group or Moodys Investors Service, Inc.; and (c) Banks certificates of deposit issued maturing no
more than one (1) year after issue;.
Claims is defined in Section 12.3.
Code is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of
California; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article
or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Banks Lien on any Collateral is governed by
the Uniform Commercial Code in effect in a jurisdiction other than the State of California, the term Code shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.
Collateral is any and all properties, rights and assets of Borrower described on Exhibit A.
Collateral Account is any Deposit Account, Securities Account, or Commodity Account.
Commodity Account is any commodity account as defined in the Code with such additions to such term as may
hereafter be made.
Compliance Certificate is that certain certificate in the form attached hereto as
Exhibit B.
Contingent Obligation is, for any Person, any direct or indirect liability, contingent or not,
of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation, in each case, directly or indirectly guaranteed, endorsed, co made, discounted or sold with recourse by that
Person, or for which that Person is directly or indirectly
40
liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity swap agreement, interest
rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but Contingent Obligation does not include endorsements in
the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for
it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement.
Continuation Date means any date on which Borrower continues a LIBOR Advance into another Interest Period.
Control Agreement is any control agreement entered into among the depository institution at which Borrower maintains a
Deposit Account or the securities intermediary or commodity intermediary at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Bank pursuant to which Bank obtains control (within the meaning of the Code) over such
Deposit Account, Securities Account, or Commodity Account.
Conversion Date means any date on which Borrower converts a
Prime Rate Advance to a LIBOR Advance or a LIBOR Advance to a Prime Rate Advance.
Copyrights are any and all copyright
rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.
Credit Extension is any Advance, Prior Equipment Advance, Prior Supplemental Equipment Advance, any Overadvance, Letter of
Credit, FX Contract, amount utilized for Cash Management Services, or any other extension of credit by Bank for Borrowers benefit.
Currency is coined money and such other banknotes or other paper money as are authorized by law and circulate as a medium
of exchange.
Current Liabilities are all obligations and liabilities of Borrower to Bank, plus, without duplication,
the aggregate amount of Borrowers Total Liabilities that mature within one (1) year (excluding all Deferred Revenue).
Default Rate is defined in Section 2.6(e).
Deferred Revenue is all amounts received or invoiced in advance of performance under contracts and not yet recognized as
revenue.
Deposit Account is any deposit account as defined in the Code with such additions to such term as
may hereafter be made.
Designated Deposit Account is the multicurrency account denominated in Dollars, account number
317 (last three digits only), maintained by Borrower with Bank.
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Dollars, dollars or use of the sign $
means only lawful money of the United States and not any other currency, regardless of whether that currency uses the $ sign to denote its currency or may be readily converted into lawful money of the United States.
Dollar Equivalent is, at any time, (a) with respect to any amount denominated in Dollars, such amount, and
(b) with respect to any amount denominated in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Bank at such time on the basis of the then-prevailing rate of exchange in San Francisco, California, for sales of the
Foreign Currency for transfer to the country issuing such Foreign Currency.
Domestic Subsidiary means a Subsidiary
organized under the laws of the United States or any state or territory thereof or the District of Columbia.
Effective
Date is defined in the preamble hereof.
Eligible Accounts means Accounts which arise in the ordinary course
of Borrowers business that meet all Borrowers representations and warranties in Section 5.3. Bank reserves the right at any time after the Effective Date to adjust any of the criteria set forth below and to establish new criteria in
its good faith business judgment. Unless Bank otherwise agrees in writing, Eligible Accounts shall not include:
(a) Accounts for which
the Account Debtor is Borrowers Affiliate, officer, employee, or agent;
(b) Accounts that the Account Debtor has not paid within
ninety (90) days (or one hundred twenty (120) days for UK Accounts and Ireland Accounts) of invoice date regardless of invoice payment period terms;
(c) Accounts with credit balances over ninety (90) days from invoice date;
(d) Accounts owing from an Account Debtor, in which fifty percent (50%) or more of the Accounts have not been paid within ninety
(90) days (or one hundred twenty (120) days for UK Accounts and Ireland Accounts) of invoice date;
(e) Accounts owing from an
Account Debtor which does not have its principal place of business in the United States unless such Accounts are otherwise Eligible Foreign Accounts;
(f) Accounts billed and/or payable outside of the United States, including, without limitation UK Accounts and Ireland Accounts, unless Bank
has a first priority, perfected security interest or other enforceable Lien in such Accounts under all applicable laws, including foreign laws;
(g) Accounts owing from an Account Debtor to the extent that Borrower is indebted or obligated in any manner to the Account Debtor (as
creditor, lessor, supplier or otherwisesometimes called contra accounts, accounts payable, customer deposits or credit accounts);
(h) Accounts owing from an Account Debtor which is a United States government entity or any department, agency, or instrumentality thereof
unless Borrower has assigned its payment rights to Bank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940, as amended;
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(i) Accounts for demonstration or promotional equipment, or in which goods are consigned, or sold
on a sale guaranteed, sale or return, sale on approval, or other terms if Account Debtors payment may be conditional;
(j) Accounts owing from an Account Debtor where goods or services have not yet been rendered to the Account Debtor (sometimes called memo
billings or pre-billings);
(k) Accounts subject to contractual arrangements between Borrower and an Account Debtor where payments shall
be scheduled or due according to completion or fulfillment requirements where the Account Debtor has a right of offset for damages suffered as a result of Borrowers failure to perform in accordance with the contract (sometimes called contracts
accounts receivable, progress billings, milestone billings, or fulfillment contracts);
(l) Accounts owing from an Account Debtor the
amount of which may be subject to withholding based on the Account Debtors satisfaction of Borrowers complete performance (but only to the extent of the amount withheld; sometimes called retainage billings);
(m) Accounts subject to trust provisions, subrogation rights of a bonding company, or a statutory trust;
(n) Accounts owing from an Account Debtor that has been invoiced for goods that have not been shipped to the Account Debtor unless Bank,
Borrower, and the Account Debtor have entered into an agreement acceptable to Bank wherein the Account Debtor acknowledges that (i) it has title to and has ownership of the goods wherever located, (ii) a bona fide sale of the goods has
occurred, and (iii) it owes payment for such goods in accordance with invoices from Borrower (sometimes called bill and hold accounts);
(o) Accounts for which the Account Debtor has not been invoiced, unless such Accounts are otherwise Eligible Unbilled Accounts;
(p) Accounts that represent non-trade receivables or that are derived by means other than in the ordinary course of Borrowers business;
(q) Accounts for which Borrower has permitted Account Debtors payment to extend beyond 90 days;
(r) Accounts arising from chargebacks, debit memos or other payment deductions taken by an Account Debtor;
(s) Accounts arising from product returns and/or exchanges (sometimes called warranty or RMA accounts);
(t) Accounts in which the Account Debtor disputes liability or makes any claim (but only up to the disputed or claimed amount), or if the
Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of business;
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(u) Accounts owing from an Account Debtor with respect to which Borrower has received Deferred
Revenue (but only to the extent of such Deferred Revenue);
(v) Accounts owing from an Account Debtor, whose total obligations to Borrower
exceed thirty percent (30%) of all Accounts, for the amounts that exceed that percentage, unless Bank approves in writing; and
(w)
Accounts for which Bank in its good faith business judgment determines collection to be doubtful, including, without limitation, accounts represented by refreshed or recycled invoices.
Eligible Equipment is the following to the extent it complies with all of Borrowers representations and warranties to
Bank, is acceptable to Bank in all respects, (i) is located at 123 Mission Street, 25th Floor, San Francisco, California 94105 or in such other locations in the United States which Bank has received prior written notice of such location and, at
Banks request, a bailee agreement executed by the bailee of such location in form and substance satisfactory to Bank, and (ii) is subject to a first priority Lien in favor of Bank: (a) new and used general purpose equipment, computer
equipment, manufacturing equipment, office equipment, test and laboratory equipment, telephone systems, furnishings, subject to the limitations set forth herein, and (b) Other Equipment.
Eligible Foreign Accounts are Accounts for which the Account Debtor does not have its principal place of business in the
United States and which (a) otherwise satisfy the definition of Eligible Accounts, (b) billed from the United States, and (c) at no time will total Advances made against such Accounts exceed Three Million Dollars ($3,000,000).
Eligible Unbilled Accounts are Accounts for which the Account Debtor has not been invoiced and which (a) otherwise
satisfy the definition of Eligible Accounts, (b) have been fully earned and are verifiable by Bank, (c) will be invoiced to the Account Debtor within ten (10) Business Days after the last day of each month, (d) will be collected
under standard commercial terms acceptable to Bank, and (e) at no time will total Advances made against such Accounts exceed Twenty Million Dollars ($20,000,000).
Equipment is all equipment as defined in the Code with such additions to such term as may hereafter be made,
and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.
ERISA is the Employee Retirement Income Security Act of 1974, and its regulations.
Event of Default is defined in Section 8.
Exchange Act is the Securities Exchange Act of 1934, as amended.
Financed Equipment is all present and future Eligible Equipment in which Borrower has any interest which is financed by an
Equipment Advance, a Prior Equipment Advance, or a Supplemental Equipment Advance.
Foreign Currency means lawful money
of a country other than the United States.
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Foreign Subsidiary means any Subsidiary which is not a Domestic Subsidiary.
Funding Date is any date on which a Credit Extension is made to or for the account of Borrower which shall be a
Business Day.
FX Contract is any foreign exchange contract by and between Borrower and Bank under which Borrower
commits to purchase from or sell to Bank a specific amount of Foreign Currency on a specified date.
GAAP is generally
accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or
in such other statements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.
General Intangibles is all general intangibles as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation, all Intellectual Property, claims, income and other tax refunds, security and other deposits, payment intangibles, contract rights, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of
insurance and rights to payment of any kind.
Governmental Approval is any consent, authorization, approval, order,
license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.
Governmental Authority is any nation or government, any state or other political subdivision thereof, any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any
self-regulatory organization.
Indebtedness is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, and (d) Contingent
Obligations.
Indemnified Person is defined in Section 12.3.
Insolvency Proceeding is any proceeding by or against any Person under the United States Bankruptcy Code, or any other
bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.
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Intellectual Property means, with respect to any Person, means all of such
Persons right, title, and interest in and to the following:
(a) its Copyrights, Trademarks and Patents;
(b) any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how, operating
manuals;
(c) any and all source code;
(d) any and all design rights which may be available to such Person;
(e) any and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above; and
(f) all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.
Interest Payment Date means, with respect to any LIBOR Advance, the last day of each Interest Period applicable to such
LIBOR Advance, but in no event longer than ninety (90) days after the Funding Date of such LIBOR Advance, and, with respect to Prime Rate Advances, the last day of each month (or, if that day of the month does not fall on a Business Day, then
on the first Business Day following such date), and each date a Prime Rate Advance is converted into a LIBOR Advance to the extent of the amount converted to a LIBOR Advance.
Interest Period means, as to any LIBOR Advance, the period commencing on the date of such LIBOR Advance, or on the
conversion/continuation date on which the LIBOR Advance is converted into or continued as a LIBOR Advance, and ending on the date that is one, two, or three months thereafter, in each case as Borrower may elect in the applicable Notice of Borrowing
or Notice of Conversion/Continuation; provided, however, that (a) no Interest Period with respect to any LIBOR Advance shall end later than the Revolving Line Maturity Date, (b) the last day of an Interest Period shall be determined in
accordance with the practices of the LIBOR interbank market as from time to time in effect, (c) if any Interest Period would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the following Business Day
unless, in the case of a LIBOR Advance, the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day, (d) any Interest Period
pertaining to a LIBOR Advance that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of
the calendar month at the end of such Interest Period, and (e) interest shall accrue from and include the first Business Day of an Interest Period but exclude the last Business Day of such Interest Period.
Interest Rate Determination Date means each date for calculating the LIBOR for purposes of determining the interest rate in
respect of an Interest Period. The Interest Rate Determination Date shall be the second Business Day prior to the first day of the related Interest Period for a LIBOR Advance.
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Inventory is all inventory as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrowers custody or possession or in transit and including any returned goods and any documents of title representing any of the above.
Investment is any beneficial ownership interest in any Person (including stock, partnership interest or other securities),
and any loan, advance or capital contribution to any Person.
Ireland Accounts means Accounts that are billed and
collected by Marin Ireland in Ireland and which (a) otherwise satisfy the definition of Eligible Accounts and (b) contain selling terms and conditions acceptable to Bank in its sole but reasonable discretion.
Ireland Debenture means that certain Mortgage Debenture, dated June 10, 2013, by and between Marin Ireland and Bank,
as amended, restated, or otherwise modified.
Key Person means Borrowers Chief Executive Officer, who is, as of
the Effective Date, David Yovanno.
Letter of Credit is a standby or commercial letter of credit issued by Bank upon
request of Borrower based upon an application, guarantee, indemnity, or similar agreement.
LIBOR means, for any
Interest Rate Determination Date with respect to an Interest Period for any Advance to be made, continued as or converted into a LIBOR Advance, the rate of interest per annum determined by Bank to be the per annum rate of interest at which deposits
in Dollars are offered to Bank in the London interbank market (rounded upward, if necessary, to the nearest 0.0001%) in which Bank customarily participates at 11:00 a.m. (local time in such interbank market) two (2) Business Days prior to the
first day of such Interest Period for a period approximately equal to such Interest Period and in an amount approximately equal to the amount of such Advance.
LIBOR Advance means an Advance that bears interest based at the LIBOR Rate.
LIBOR Rate means, for each Interest Period in respect of LIBOR Advances comprising part of the same Advances, an interest
rate per annum (rounded upward, if necessary, to the nearest 0.0001%) equal to LIBOR for such Interest Period divided by one (1) minus the Reserve Requirement for such Interest Period.
LIBOR Rate Margin is two hundred seventy-five (275) basis points.
Lien is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether
voluntarily incurred or arising by operation of law or otherwise against any property.
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Loan Documents are, collectively, this Agreement, the UK Debenture, the
Ireland Debenture, the Perfection Certificate, the Stock Pledge Agreements, any Bank Services Agreement, any subordination agreement, any note, or notes or guaranties executed by Borrower or any guarantor, and any other present or future agreement
by Borrower and/or any guarantor with or for the benefit of Bank in connection with this Agreement or Bank Services, all as amended, restated, or otherwise modified.
Monthly Financial Statements is defined in Section 6.2(c).
Net Cash is the sum of all of Borrowers unrestricted cash, less outstanding Obligations under the Revolving Line.
Net Income means, as calculated on a consolidated basis for Borrower and its Subsidiaries for any period as at any
date of determination, the net profit (or loss), after provision for taxes, of Borrower and its Subsidiaries for such period taken as a single accounting period.
Notice of Borrowing means a notice given by Borrower to Bank in accordance with Section 3.4, substantially in the form
of Exhibit D, with appropriate insertions.
Notice of Conversion/Continuation means a notice given by
Borrower to Bank in accordance with Section 3.5, substantially in the form of Exhibit E, with appropriate insertions.
Obligations are Borrowers obligations to pay when due any debts, principal, interest, fees, Bank Expenses, and other
amounts Borrower owes Bank now or later, whether under this Agreement, the other Loan Documents, or otherwise, including, without limitation, all obligations relating to letters of credit (including reimbursement obligations for drawn and undrawn
letters of credit), cash management services, and foreign exchange contracts, if any, and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform
Borrowers duties under the Loan Documents.
Operating Documents are, for any Person, such Persons formation
documents, as certified by the Secretary of State (or equivalent agency) of such Persons jurisdiction of organization on a date that is no earlier than thirty (30) days prior to the Effective Date, and, (a) if such Person is a
corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar
agreement), each of the foregoing with all current amendments or modifications thereto.
Other Equipment is leasehold
improvements, intangible property such as computer software and software licenses, equipment specifically designed or manufactured for Borrower, other intangible property, limited use property and other similar property and soft costs approved by
Bank, including taxes, shipping, warranty charges, freight discounts and installation expenses.
Overadvance is defined
in Section 2.3.
Parent is defined in Section 3.7(b).
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Patents means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.
Perfection Certificate is defined in Section 5.1.
Permitted Indebtedness is:
(a) Borrowers Indebtedness to Bank under this Agreement and the other Loan Documents;
(b) Indebtedness existing on the Effective Date and shown on the Perfection Certificate;
(c) Subordinated Debt;
(d)
unsecured Indebtedness to trade creditors incurred in the ordinary course of business;
(e) Indebtedness incurred as a result of endorsing
negotiable instruments received in the ordinary course of business;
(f) Indebtedness secured by Liens permitted under clauses
(a) and (c) of the definition of Permitted Liens hereunder;
(g) guarantees of real property lease obligations of
Subsidiaries in the ordinary course of business; and
(h) extensions, refinancings, modifications, amendments and restatements of any
items of Permitted Indebtedness (a) through (g) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.
Permitted Investments are:
(a) Investments (including, without limitation, Subsidiaries) existing on the Effective Date and shown on the Perfection Certificate;
(b) Investments consisting of Cash Equivalents;
(c) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary
course of Borrower;
(d) Investments consisting of deposit accounts in which Bank has a perfected security interest;
(e) Investments accepted in connection with Transfers permitted by Section 7.1;
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(f) Investments consisting of the creation of a Subsidiary for the purpose of consummating a
merger transaction permitted by Section 7.3 of this Agreement, which is otherwise a Permitted Investment;
(g) Investments by Marin
in Subsidiaries (other than Marin UK and Marin Ireland) not to exceed Seven Million Five Hundred Thousand Dollars ($7,500,000) in the aggregate for any fiscal year;
(h) Investments consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary
course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by Borrowers Board of
Directors;
(i) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or
suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business; and
(j) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not
Affiliates, in the ordinary course of business; provided that this paragraph (i) shall not apply to Investments of Borrower in any Subsidiary.
Permitted Liens are:
(a) Liens existing on the Effective Date and shown on the Perfection Certificate or arising under this Agreement and the other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or levies, either (i) not due and payable or (ii) being
contested in good faith and for which Borrower maintains adequate reserves on its Books, provided that no notice of any such Lien has been filed or recorded under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations
adopted thereunder;
(c) purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of
the Equipment securing no more than Five Hundred Thousand Dollars ($500,000) in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the
Equipment;
(d) Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary course
of business so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed Seventy-Five Thousand Dollars ($75,000) and which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;
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(e) Liens to secure payment of workers compensation, employment insurance, old-age
pensions, social security and other like obligations incurred in the ordinary course of business (other than Liens imposed by ERISA);
(f)
Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and
the principal amount of the indebtedness may not increase;
(g) leases or subleases of real property granted in the ordinary course of
Borrowers business (or, if referring to another Person, in the ordinary course of such Persons business), and leases, subleases, non-exclusive licenses or sublicenses of personal property (other than Intellectual Property) granted in the
ordinary course of Borrowers business (or, if referring to another Person, in the ordinary course of such Persons business), if the leases, subleases, licenses and sublicenses do not prohibit granting Bank a security interest
therein;
(h) non-exclusive licenses of Intellectual Property granted to third parties in the ordinary course of business;
(i) Liens arising from attachments or judgments, orders, or decrees in circumstances not constituting an Event of Default under
Sections 8.4 and 8.7; and
(j) Liens in favor of other financial institutions arising in connection with Borrowers deposit
and/or securities accounts held at such institutions, provided that Bank has a perfected security interest in the amounts held in such deposit and/or securities accounts.
Person is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust,
unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.
Prime Rate is the rate of interest per annum from time to time published in the money rates section of The Wall Street
Journal or any successor publication thereto as the prime rate then in effect; provided that if such rate of interest, as set forth from time to time in the money rates section of The Wall Street Journal, becomes unavailable
for any reason as determined by Bank, the Prime Rate shall mean the rate of interest per annum announced by Bank as its prime rate in effect at its principal office in the State of California (such Bank announced Prime Rate not being
intended to be the lowest rate of interest charged by Bank in connection with extensions of credit to debtors).
Prime Rate
Advance means an Advance that bears interest based at the Prime Rate.
Prior Equipment Maturity Date is, for
each Prior Equipment Advance, the thirty-ninth (39th) payment date for such Prior Equipment Advance, but no later than September 1, 2015.
Prior Supplemental Equipment Maturity Date is, for each Prior Supplemental Equipment Advance, the thirty-ninth
(39th) payment date for such Prior Supplemental Equipment Advance, but no later than March 1, 2016.
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Prior Supplemental Equipment Loan Final Payment is a fully earned,
non-refundable payment (in addition to and not a substitution for the regular monthly payments of principal and accrued interest) due on the earlier of (a) the final payment date for the Prior Supplemental Equipment Advances or (b) the
date set forth in Section 2.7(b), equal to One Hundred Fifty Thousand Dollars ($150,000).
Quarterly Revenue
means, for any period as at any date of determination, the sum of the aggregate value of all (a) billed Accounts of Borrower for such period taken as a single accounting period under GAAP, plus (b) quarterly services performed by the
Borrower on all service contracts for billed Accounts, as reported by Borrower in its Quarterly Financial Statements delivered to the Bank pursuant to Section 6.2(e), minus (c) one-time credits applied to any of Borrowers Accounts.
Quick Assets is, on any date, Borrowers and its Subsidiaries consolidated, unrestricted cash and Cash
Equivalents, net billed accounts receivable (including earned but unbilled accounts that are expected to be billed within ten (10) days of month-end) and short and long-term investments determined according to GAAP.
Registered Organization is any registered organization as defined in the Code with such additions to such term
as may hereafter be made.
Regulatory Change means, with respect to Bank, any change on or after the date of this
Agreement in United States federal, state, or foreign laws or regulations, including Regulation D, or the adoption or making on or after such date of any interpretations, directives, or requests applying to a class of lenders including Bank, of or
under any United States federal or state, or any foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof.
Requirement of Law is as to any Person, the organizational or governing documents of such Person, and any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is
subject.
Reserve Requirement means, for any Interest Period, the average maximum rate at which reserves (including any
marginal, supplemental, or emergency reserves) are required to be maintained during such Interest Period under Regulation D against Eurocurrency liabilities (as such term is used in Regulation D) by member banks of the Federal Reserve
System. Without limiting the effect of the foregoing, the Reserve Requirement shall reflect any other reserves required to be maintained by Bank by reason of any Regulatory Change against (a) any category of liabilities which includes deposits
by reference to which the LIBOR Rate is to be determined as provided in the definition of LIBOR or (b) any category of extensions of credit or other assets which include Advances.
Reserves means, as of any date of determination, such amounts as Bank may from time to time establish and revise in its
good faith business judgment, reducing the amount of Advances and other financial accommodations which would otherwise be available to Borrower (a) to reflect events, conditions, contingencies or risks which, as determined by Bank in its good
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faith business judgment, do or may adversely affect (i) the Collateral or any other property which is security for the Obligations or its value (including without limitation any increase in
delinquencies of Accounts), (ii) the assets, business or prospects of Borrower or any Guarantor, or (iii) the security interests and other rights of Bank in the Collateral (including the enforceability, perfection and priority thereof); or
(b) to reflect Banks reasonable belief that any collateral report or financial information furnished by or on behalf of Borrower or any Guarantor to Bank is or may have been incomplete, inaccurate or misleading in any material respect; or
(c) in respect of any state of facts which Bank determines constitutes an Event of Default or may, with notice or passage of time or both, constitute an Event of Default.
Responsible Officer is any of the Chief Executive Officer, President, Chief Financial Officer, Controller, Principal
Financial Officer, and Principal Accounting Officer of Borrower.
Restricted License is any material license or other
material agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrowers interest in such license or agreement or any other property, or
(b) for which a default under or termination of could interfere with the Banks right to sell any Collateral.
Revolving Line is an Advance or Advances in an amount equal to Twenty Million Dollars ($20,000,000), provided, however,
that Advances supported by Accounts which (a) are either (i) UK Accounts or (ii) Ireland Accounts shall not exceed Seven Million Five Hundred Thousand Dollars ($7,500,000) in the aggregate at any time outstanding and (b) are
Eligible Foreign Accounts shall not exceed Three Million Dollars ($3,000,000) in the aggregate at any time outstanding.
Revolving Line Maturity Date is July 31, 2017.
SEC shall mean the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority.
Securities Account is any securities account as defined in the Code with such additions to such term as
may hereafter be made.
Stock Pledge Agreements are collectively those certain Stock Pledge Agreements, dated
December 9, 2011, from Marin for the benefit of Bank and that certain Stock Pledge Agreement, dated June 10, 2013, from Marin for the benefit of Bank.
Streamline Eligible shall mean at all times that Borrowers Net Cash for the immediately preceding fiscal quarter is
greater than Zero Dollars ($0.00), as determined by Bank, in its reasonable discretion (the Streamline Threshold); provided, however, Borrower shall not be Streamline Eligible during the continuance of an Event of Default. At any
time that Borrowers Net Cash is equal to or less than the Streamline Threshold, Borrower will not be Streamline Eligible until the first (1st) day of the first (1st) month following Banks confirmation that
(a) Borrowers Net Cash is greater than the Streamline Threshold as of such date and (b) Borrowers Net Cash is greater than the Streamline Threshold at all times during the immediately preceding three (3) monthly reporting
periods. Borrower shall give Bank prior written notice of Borrowers intention to become Streamline Eligible. Bank will test whether Borrower is Streamline Eligible on the first (1st) day of each month.
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Subordinated Debt is indebtedness incurred by Borrower subordinated to all of
Borrowers now or hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Bank entered into between Bank and the other creditor), on terms acceptable to Bank.
Subsidiary is, as to any Person, a corporation, partnership, limited liability company or other entity of which shares
of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless the context otherwise
requires, each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.
Total Liabilities is
on any day, obligations that should, under GAAP, be classified as liabilities on Borrowers and its Subsidiaries consolidated balance sheets, including all Indebtedness and all Subordinated Debt, but excluding all Deferred Revenue.
Trademarks means any trademark and servicemark rights, whether registered or not, applications to register and
registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.
Transaction Report is that certain report of transactions and schedule of collections in the form attached hereto as
Exhibit C.
Transfer is defined in Section 7.1.
Unused Revolving Line Facility Fee is defined in Section 2.7(c).
UK Accounts means Accounts that are billed and collected by the Borrower in the United Kingdom and which (a) otherwise
satisfy the definition of Eligible Accounts and (b) contain selling terms and conditions acceptable to Bank in its sole but reasonable discretion.
UK Debenture means that certain Mortgage Debenture by and between Marin UK and Bank dated as of the January 10, 2011,
as amended, restated, or otherwise modified.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
Effective Date.
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BANK
SILICON VALLEY BANK |
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By: |
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/s/ Charles Thor |
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Name: Charles Thor |
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Title: Vice President |
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BORROWER
MARIN SOFTWARE INCORPORATED |
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By: |
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/s/ David A. Yovanno |
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Name: David A. Yovanno |
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Title: Chief Executive Officer |
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MARIN SOFTWARE LIMITED |
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By: |
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/s/ David A. Yovanno |
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Name: David A. Yovanno |
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Title: Director |
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MARIN SOFTWARE LIMITED |
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By: |
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/s/ David A. Yovanno |
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Name: David A. Yovanno |
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Title: Director |
EXHIBIT A
The Collateral consists of all of Borrowers right, title and interest in and to the following personal property:
All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license
agreements, franchise agreements, General Intangibles (except as provided below), commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures,
letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and
All Borrowers Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all
substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.
Notwithstanding the foregoing, the Collateral does not include any of the following, whether now owned or hereafter acquired (a) more
than sixty five percent (65%) of the presently existing and hereafter arising issued and outstanding shares of capital stock owned by Borrower of any controlled foreign corporation (as defined in the Internal Revenue code of 1986,
as amended) which shares entitle the holder thereof to vote for directors or any other matter, (b) any copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work,
whether published or unpublished, any patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks, service marks and, to the
extent permitted under applicable law, any applications therefor, whether registered or not, and the goodwill of the business of Borrower connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented
inventions, and any claims for damage by way of any past, present, or future infringement of any of the foregoing; provided, however, the Collateral shall include all Accounts, license and royalty fees and other revenues, proceeds, or income arising
out of or relating to any of the foregoing, or (c) any interest of Borrower as a lessee or sublessee under a real property lease or as a licensee under an inbound license of intellectual property if Borrower is prohibited by the terms of such
lease or license from granting a security interest in such lease or license or under which such an assignment or lien would cause a default to occur under such lease or license (other than to the extent that any such term would be rendered
ineffective pursuant to Section 9-407 or 9-408 of the Code or any other applicable law or principles of equity); provided, however, that upon termination of such prohibition, such interest shall immediately become Collateral without any action
by Borrower or Bank.
Borrower has agreed not to encumber any of its copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work, whether published or unpublished, any patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues, extensions, and
continuations-in-part of the same, trademarks, service marks and, to the extent permitted under
A-1
applicable law, any applications therefor, whether registered or not, and the goodwill of the business of Borrower connected with and symbolized thereby, know-how, operating manuals, trade secret
rights, rights to unpatented inventions, and any claims for damage by way of any past, present, or future infringement of any of the foregoing, without Banks prior written consent.
A-2
EXHIBIT B
COMPLIANCE CERTIFICATE
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TO: |
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SILICON VALLEY BANK |
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Date:
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FROM: |
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MARIN SOFTWARE INCORPORATED MARIN SOFTWARE
LIMITED MARIN SOFTWARE LIMITED |
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The undersigned authorized officers of MARIN SOFTWARE INCORPORATED, MARIN SOFTWARE LIMITED, AND MARIN SOFTWARE
LIMITED (collectively, the Borrower) certifies that under the terms and conditions of the Second Amended and Restated Loan and Security Agreement between Borrower and Bank (the Agreement), (1) Borrower is
in complete compliance for the period ending with all
required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that
such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against Borrower
or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank. Attached are the required documents supporting the certification. The undersigned certifies that
these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the
meanings given them in the Agreement.
Please indicate compliance status by circling Yes/No under Complies column.
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Reporting Covenant |
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Required |
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Complies |
Monthly financial statements with Compliance Certificate |
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Monthly within 30 days |
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Yes No |
Quarterly financial statements with Compliance Certificate |
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Quarterly within 50 days or 5 days of 10-Q |
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Yes No |
Annual financial statement (CPA Audited) + CC (Form 10-K) |
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FYE within 90 days or within 5 days of 10-K |
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Yes No |
A/R, A/P Agings, and Deferred Revenue Reports |
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Quarterly within 50 days or 5 days of 10-Q if Net Cash is >35,000,000 and there are outstanding Obligations; Monthly within 30 days if Net Cash is <35,000,000 and there are outstanding Obligations; No reports required if no
outstanding Obligations and cash is ether >35,000,000 or less than <35,000,000 |
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Yes No |
Transaction Reports |
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Monthly within 30 days if Net Cash is <35,000,000 |
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Yes No |
Board Projections |
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Earlier of 7 days after Board approval or FYE within 60 days |
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Yes No |
B-1
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Required |
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Actual |
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Complies |
Maintain on a Quarterly Basis: |
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On a calendar quarterly basis at all times Borrowers unrestricted cash on Balance sheet is at least $35,000,000, minimum
Quarterly Revenue for the trailing three (3) month period then ended of at least |
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$ |
25,000,000 |
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Yes No |
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On a calendar quarterly basis at all times Borrowers unrestricted cash on Balance sheet is less than $35,000,000, minimum
Quarterly Revenue for the trailing three (3) month period then ended of at least the following amounts: |
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June 30, 2015 |
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$ |
25,000,000 |
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$ |
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Yes No |
September 30, 2015 |
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$ |
25,000,000 |
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$ |
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Yes No |
December 31, 2015 |
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$ |
27,000,000 |
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$ |
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Yes No |
March 31, 2016 |
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$ |
27,000,000 |
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$ |
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Yes No |
June 30, 2016 |
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$ |
28,000,000 |
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$ |
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Yes No |
September 30, 2016 |
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$ |
29,000,000 |
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$ |
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Yes No |
December 31, 2016 |
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$ |
31,000,000 |
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$ |
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Yes No |
Maintain on a Monthly Basis: |
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At all times Borrowers unrestricted cash on Balance sheet is less than $35,000,000, an Adjusted Quick Ratio of at least: |
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1.50 to 1.00 |
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: |
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Yes No |
The following financial covenant analysis and information set forth in Schedule 1 attached hereto are true and
accurate as of the date of this Certificate.
The following are the exceptions with respect to the certification above and these
exceptions also are intended to update the Perfection Certificate: (If no exceptions exist, state No exceptions to note.)
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MARIN SOFTWARE INCORPORATED
By:
Name: Title:
MARIN SOFTWARE LIMITED
By:
Name: Title:
MARIN SOFTWARE LIMITED
By:
Name: Title: |
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BANK USE ONLY
Received by:
AUTHORIZED
SIGNER Date:
Verified:
AUTHORIZED SIGNER
Date:
Compliance
Status: Yes No |
B-2
Schedule 1 to Compliance Certificate
Financial Covenants of Borrower
In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.
Dated:
I |
Minimum Quarterly Revenue (Section 6.9(a)) |
Required: Commencing with the quarter ending
June 30, 2015, and as of the last day of each quarter thereafter, for the trailing three (3) month period then ended, minimum Quarterly Revenue of at least (i) Twenty-Five Million Dollars ($25,000,000) at all times that
Borrowers unrestricted cash on balance sheet is at least Thirty-Five Million Dollars ($35,000,000) or (ii) the following amounts at the following times at all times that Borrowers unrestricted cash on balance sheet is less than
Thirty-Five Million Dollars ($35,000,000):
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Quarter Ending |
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Minimum Quarterly Revenue |
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June 30, 2015 |
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$ |
25,000,000 |
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September 30, 2015 |
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$ |
25,000,000 |
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December 31, 2015 |
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$ |
27,000,000 |
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March 31, 2016 |
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$ |
27,000,000 |
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June 30, 2016 |
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$ |
28,000,000 |
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September 30, 2016 |
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$ |
29,000,000 |
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December 31, 2016 |
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$ |
31,000,000 |
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Actual:
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A. |
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Aggregate value of all Billed Accounts of Borrower for such period taken as a single accounting period under GAAP |
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$ |
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B. |
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Aggregate value of all quarterly services performed by the on all service contracts for billed Accounts |
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$ |
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C. |
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Aggregate value of all one-time credits applied to any of Borrowers Accounts |
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$ |
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D. |
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Quarterly Revenue (sum of line A, plus line B, minus line C) |
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$ |
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Is line D equal to or greater than the required amount?
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No, not in compliance |
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Yes, in compliance |
II |
Adjusted Quick Ratio (Section 6.9(b)) |
Required: An Adjusted Quick Ratio of at least 1.50 to 1.00
at all times that Borrowers unrestricted cash on balance sheet is less than Thirty-Five Million Dollars ($35,000,000)
B-3
Actual:
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A. |
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Aggregate value of Borrowers unrestricted cash and cash equivalents |
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$ |
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B. |
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Aggregate value of net billed accounts receivable (including earned but unbilled accounts receivable that is expected to be billed
within ten (10) days of month end) |
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$ |
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C. |
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Aggregate value of short and long term investments determined according to GAAP |
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$ |
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D. |
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Quick Assets (Line A plus Line B plus Line C) |
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$ |
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E. |
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Aggregate value of Obligations under the Revolving Line and Prior Growth Capital Loan |
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$ |
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F. |
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Aggregate value obligations that should, under GAAP, be classified as liabilities on Borrowers and its Subsidiaries
consolidated balance sheets, including all Indebtedness and all Subordinated Debt, but excluding all Deferred Revenue, and not otherwise reflected in line E above that matures within one (1) year |
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$ |
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G. |
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Current Liabilities (the sum of lines E and F) |
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$ |
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H. |
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Adjusted Quick Ratio (line D divided by line G) |
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_______ |
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Is line H equal to or greater than 1.50:1:00?
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No, not in compliance |
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Yes, in compliance |
B-4
EXHIBIT C
Transaction Report
C-1
EXHIBIT D
FORM OF NOTICE OF BORROWING
MARIN SOFTWARE INCORPORATED
MARIN SOFTWARE LIMITED
MARIN SOFTWARE LIMITED
Date:
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Attention: CFD Operations |
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Email: CFDOperations@svb.com |
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[also include email address of SVB account officer for Borrower] |
RE: |
Second Amended and Restated Loan and Security Agreement dated as of May , 2015 (as amended, modified, supplemented or restated from time to time, the Loan Agreement), by
and among MARIN SOFTWARE INCORPORATED, a Delaware corporation (Marin), MARIN SOFTWARE LIMITED, a company registered under the laws of England and Wales (Marin Ltd), and MARIN SOFTWARE LIMITED, a company
incorporated in Ireland (Marin Ireland; and together with Marin and Marin Ltd, individually and collectively, the Borrower), and Silicon Valley Bank (the Bank) |
Ladies and Gentlemen:
The undersigned refers
to the Loan Agreement, the terms defined therein and used herein as so defined, and hereby gives you notice irrevocably, pursuant to Section 3.4(a) of the Loan Agreement, of the borrowing of an Advance.
1. The Funding Date, which shall be a Business Day, of the requested borrowing is
.
2. The currency of the requested borrowing is U.S. Dollars.
3. The aggregate amount of the requested Advance is $
.
4. The requested Advance shall consist of
$ of Prime Rate Advances and $
of LIBOR Advances.
5. The duration of the Interest Period for the LIBOR Advances included in the requested Advance shall be
months.
The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed
Advance before and after giving effect thereto, and to the application of the proceeds therefrom, as applicable:
D-1
(a) all representations and warranties of Borrower contained in the Loan
Agreement are true, accurate and complete in all material respects as of the date hereof; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date;
(b) no Event of Default has occurred and is continuing, or would result from such proposed Advance; and
(c) the requested Advance will not cause the aggregate principal amount of the outstanding Advances to exceed, as of the
designated Funding Date, the Availability Amount.
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BORROWER
MARIN SOFTWARE INCORPORATED |
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By: |
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Name: |
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Title: |
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MARIN SOFTWARE LIMITED |
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By: |
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Name: |
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Title: |
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MARIN SOFTWARE LIMITED |
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By: |
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Name: |
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Title: |
For internal Bank use only
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LIBOR Pricing Date |
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LIBOR |
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LIBOR Variance |
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Maturity Date |
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% |
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D-2
EXHIBIT E
FORM OF NOTICE OF CONVERSION/CONTINUATION
MARIN SOFTWARE INCORPORATED
MARIN SOFTWARE LIMITED
MARIN SOFTWARE LIMITED
Date:
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Attention: CFD Operations |
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Email: CFDOperations@svb.com |
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[also include email address of SVB account officer for Borrower] |
RE: |
Second Amended and Restated Loan and Security Agreement dated as of May , 2015 (as amended, modified, supplemented or restated from time to time, the Loan Agreement), by
and among MARIN SOFTWARE INCORPORATED, a Delaware corporation (Marin), MARIN SOFTWARE LIMITED, a company registered under the laws of England and Wales (Marin Ltd), and MARIN SOFTWARE LIMITED, a company
incorporated in Ireland (Marin Ireland; and together with Marin and Marin Ltd, individually and collectively, the Borrower), and Silicon Valley Bank (the Bank) |
Ladies and Gentlemen:
The undersigned refers
to the Loan Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 3.5 of the Loan Agreement, of the [conversion] [continuation] of the Advances specified herein,
that:
1. The date of the [conversion] [continuation] is
,
20 .
2. The aggregate amount of the proposed Advances to be [converted] is
$
or [continued] is $ .
3. The Advances are to be [converted into] [continued as] [LIBOR] [Prime Rate] Advances.
4. The duration of the Interest Period for the LIBOR Advances included in the [conversion] [continuation] shall be
months.
The undersigned, on
behalf of Borrower, hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed [conversion] [continuation], before and after giving effect thereto and to the application of the proceeds
therefrom:
E-1
(a) all representations and warranties of Borrower stated in the Loan Agreement are true,
accurate and complete in all material respects as of the date hereof; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date;
(b) no Event of Default has occurred and is continuing, or would result from such proposed [conversion] [continuation]; and
(c) the requested [conversion] [continuation] will not cause the aggregate principal amount of the outstanding Advances to exceed, as of
the designated Funding Date, the lesser of (A) the Revolving Line or (B) the Borrowing Base and minus the aggregate outstanding principal amount of any Advances.
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BORROWER
MARIN SOFTWARE INCORPORATED |
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By: |
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Name: |
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Title: |
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MARIN SOFTWARE LIMITED |
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By: |
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Name: |
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Title: |
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MARIN SOFTWARE LIMITED |
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By: |
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Name: |
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Title: |
For internal Bank use only
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LIBOR Pricing Date |
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LIBOR |
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LIBOR Variance |
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Maturity Date |
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% |
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E-2
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