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Exhibit 10.1
 
 

 
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”) dated
as of January 3, 2007, and effective as of December 29, 2006 (the "Effective
Date") between SILICON VALLEY BANK, a California corporation and with a loan
production office located at 100 Matsonford Road, Building 5, Suite 555, Radnor,
Pennsylvania 19087 (“Bank”), and VOXWARE, INC., a Delaware corporation
(“Borrower”), provides the terms on which Bank shall lend to Borrower and
Borrower shall repay Bank. This Agreement amends and restates in its entirety a
certain Loan and Security Agreement dated as of May 24, 2006, between Borrower
and Bank. The parties agree as follows:
 
1         ACCOUNTING AND OTHER TERMS
 
Accounting terms not defined in this Agreement shall be construed following
GAAP. Calculations and determinations must be made following GAAP. 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.
 
2.1.1  Revolving Advances.
 
(a)    Availability. Subject to the terms and conditions of this Agreement and
to the deduction of Reserves, Bank will make Advances to Borrower up to the
Availability Amount. 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.
 
2.1.2  Letters of Credit Sublimit.
 
(a)    As part of the Revolving Line and subject to the deduction of Reserves,
Bank shall issue or have issued Letters of Credit for Borrower’s account. The
face amount of outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit and any Letter of Credit Reserve) may not exceed One Million
Dollars ($1,000,000.00), inclusive of Credit Extensions relating to Sections
2.1.3 and 2.1.4. Such aggregate amounts utilized hereunder shall at all times
reduce the amount otherwise available for Advances under the Revolving Line. If,
on the Revolving Maturity Date, there are any outstanding Letters of Credit,
then on such date Borrower shall provide to Bank cash collateral in an amount
equal to 105% 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 good faith business judgment), to secure all of the
Obligations relating to said Letters of Credit. All Letters of Credit shall be
in form and substance acceptable to Bank in its sole discretion and shall be
subject to the terms and conditions of Bank’s standard Application and Letter of
Credit Agreement (the “Letter of Credit Application”). Borrower agrees to
execute any further documentation in connection with the Letters of Credit as
Bank may reasonably request. Borrower further agrees to be bound by the
regulations and interpretations of the issuer of any Letters of Credit
guarantied by Bank and opened for Borrower’s account or by Bank’s
interpretations of any Letter of Credit issued by Bank for Borrower’s account,
and Borrower understands and agrees that Bank shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrower’s instructions or those contained in the Letters of Credit or any
modifications, amendments, or supplements thereto.
 
(b)    The obligation of Borrower to immediately reimburse Bank for drawings
made under Letters of Credit shall be absolute, unconditional, and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement,
such Letters of Credit, and the Letter of Credit Application.
 

 

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(c)    Borrower may request that Bank issue a Letter of Credit payable in a
Foreign Currency. If a demand for payment is made under any such Letter of
Credit, Bank shall treat such demand as an Advance to Borrower of the equivalent
of the amount thereof (plus fees and charges in connection therewith such as
wire, cable, SWIFT or similar charges) in Dollars at 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.
 
(d)    To guard against fluctuations in currency exchange rates, upon the
issuance of any Letter of Credit payable in a Foreign Currency, Bank shall
create a reserve (the “Letter of Credit Reserve”) under the Revolving Line in an
amount equal to ten percent (10%) of the face amount of such Letter of Credit.
The amount of the Letter of Credit Reserve may be adjusted by Bank from time to
time to account for fluctuations in the exchange rate. The availability of funds
under the Revolving Line shall be reduced by the amount of such Letter of Credit
Reserve for as long as such Letter of Credit remains outstanding.
 
2.1.3  Foreign Exchange Sublimit. As part of the Revolving Line and subject to
the deduction of Reserves, Borrower may enter into foreign exchange contracts
with Bank under which Borrower commits to purchase from or sell to Bank a
specific amount of Foreign Currency (each, a “FX Forward Contract”) on a
specified date (the “Settlement Date”). FX Forward Contracts shall have a
Settlement Date of at least one (1) FX Business Day after the contract date and
shall be subject to a reserve of ten percent (10%) of each outstanding FX
Forward Contract in a maximum aggregate amount equal to One Million Dollars
($1,000,000.00) (the “FX Reserve”), inclusive of Credit Extensions relating to
Sections 2.1.2 and 2.1.4. The aggregate amount of FX Forward Contracts at any
one time may not exceed ten (10) times the amount of the FX Reserve.
 
2.1.4  Cash Management Services Sublimit. Borrower may use up to One Million
Dollars ($1,000,000.00) (the “Cash Management Services Sublimit”), inclusive of
Credit Extensions relating to Sections 2.1.2 and 2.1.3 of the Revolving Line for
Bank’s cash management services which may include merchant services, direct
deposit of payroll, business credit card, and check cashing services identified
in Bank’s various cash management services agreements (collectively, the “Cash
Management Services”). Any amounts Bank pays on behalf of Borrower or any
amounts that are not paid by Borrower for any Cash Management Services will be
treated as Advances under the Revolving Line and will accrue interest at the
interest rate applicable to Advances.
 
2.1.5  Term Loan.
 
(a)    Availability. Bank shall make one (1) term loan available to Borrower in
an amount up to the Term Loan on or before March 31, 2007, subject to the
satisfaction of the terms and conditions of this Agreement.
 
(b)    Interest Payments. Commencing on the first Payment Date of the month
following the month in which the Funding Date occurs (or commencing on the
Funding Date if the Funding Date is the first calendar day of the month),
Borrower shall make monthly payments of interest at the rate set forth in
Section 2.3(a)(ii).
 
(c)    Repayment. Commencing on April 1, 2007, and continuing on the Payment
Date of each month thereafter, Borrower shall repay the Term Loan in (i)
thirty-six (36) equal installments of principal, plus (ii) monthly payments of
accrued interest (the “Term Loan Payment”). Borrower’s final Term Loan Payment,
due on the Term Loan Maturity Date, shall include all outstanding principal and
accrued and unpaid interest under the Term Loan.
 
2.2     Overadvances. If at any time or for any reason the total of all
outstanding Advances and all other monetary Obligations exceeds the Availability
Amount (an “Overadvance”), Borrower shall immediately pay the amount of the
excess to Bank, without notice or demand. Without limiting Borrower’s obligation
to repay to Bank the amount of 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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2.3     Payment of Interest on the Credit Extensions. 
 
(a)    Interest Rate.
 
(i)    Advances. Subject to Section 2.3(b), the principal amount outstanding
under the Revolving Line shall accrue interest at a floating per annum rate
equal to the one and three-quarters of one percentage points (1.75%) above the
Prime Rate (which shall be reduced to one-half of one percentage point (.50%)
above the Prime Rate, beginning on the first Payment Date following the
occurrence of the Profitability Event), which interest shall be payable monthly
in accordance with Section 2.3(f) below.
 
(ii)    Term Loan. Subject to Section 2.3(b), the principal amount outstanding
under the Term Loan shall accrue interest at a floating per annum rate equal to
two and one-quarter of one percentage points (2.25%) above the Prime Rate, which
interest shall be payable monthly in accordance with Section 2.3(f) below. 
 
(b)    Default Rate. Immediately 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 above the rate effective immediately before the
Event of Default (the “Default Rate”). Payment or acceptance of the increased
interest rate provided in this Section 2.3(b) 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.
 
(c)    Adjustment to Interest Rate. Changes to the interest rate of any Credit
Extension based on changes to the Prime Rate shall be effective on the effective
date of any change to the Prime Rate and to the extent of any such change.
 
(d)    360-Day Year. Interest shall be computed on the basis of a 360-day year
for the actual number of days elapsed.
 
(e)    Debit of Accounts. Bank may debit any of Borrower’s 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.
 
(f)    Payments; Interest Computation; Float Charge. Interest is payable monthly
on the last calendar day of each month. In computing interest on the
Obligations, all Payments received after 12:00 noon Eastern time on any day
shall be deemed received on the next Business Day. When a payment is due on a
day that is not a Business Day, the payment is due the next Business Day and
additional fees or interest, as applicable, shall continue to accrue. In
addition, Bank shall be entitled to charge Borrower a “float” charge in an
amount equal to three (3) Business Days interest, at the interest rate
applicable to the Advances, on all Payments received by Bank. The float charge
for each month shall be payable on the last day of the month. Bank shall not,
however, be required to credit Borrower's account for the amount of any item of
payment which is unsatisfactory to Bank in its good faith business judgment, and
Bank may charge Borrower's Designated Deposit Account for the amount of any item
of payment which is returned to Bank unpaid.
 
2.4      Fees. Borrower shall pay to Bank:
 
(a)    Revolving Line Commitment Fee. A fully earned, non-refundable commitment
fee of Seven Thousand Five Hundred Dollars ($7,500.00) is due on the Effective
Date.
 
(b)    Unused Revolving Line Facility Fee. A fee (the “Unused Revolving Line
Facility Fee”), payable monthly, in arrears, on the last day of each month, in
an amount equal to one-quarter of one percent (0.25%) per annum of the average
unused portion of the Revolving Line, as determined by Bank. Borrower shall not
be entitled to any credit, rebate or repayment of any Unused Revolving Line
Facility Fee previously earned by Bank pursuant to this Section notwithstanding
any termination of the within Agreement or the suspension or termination of
Bank’s obligation to make loans and advances hereunder; and
 
(c)    Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees
and expenses, plus expenses, for documentation and negotiation of this
Agreement) incurred through and after the Effective Date, when due.
 

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                3         CONDITIONS OF LOANS
 
3.1     Conditions Precedent to Initial Credit Extension. Bank’s obligation to
make the initial Credit Extension is subject to the condition precedent that
Bank shall have received, in form and substance satisfactory to Bank, 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 to which it is a
party;
 
(b)    Duly executed original signatures to the Control Agreement[s];
 
(c)    Borrower shall have delivered its Operating Documents and a good standing
certificate of Borrower certified by the Secretary of State of the State of
Delaware as of a date no earlier than thirty (30) days prior to the Effective
Date;
 
(d)    Duly executed original signatures to the completed Borrowing Resolutions
for Borrower;
 
(e)    Bank shall have received certified copies, dated as of a recent date, of
financing statement searches, as Bank shall request, accompanied by written
evidence (including any UCC termination statements) that the Liens indicated in
any such financing statements either constitute Permitted Liens or have been or,
in connection with the initial Credit Extension, will be terminated or released;
 
(f)    Borrower shall have delivered a legal opinion of Borrower’s counsel dated
as of the Effective Date together with the duly executed original signatures
thereto;
 
(g)    Duly executed original signatures to the guaranty and security agreement
(together with the completed Borrowing Resolution) for Guarantor;
 
(h)    Borrower shall have delivered evidence satisfactory to Bank that the
insurance policies required by Section 6.5 hereof are in full force and effect,
together with appropriate evidence showing loss payable and/or additional
insured clauses or endorsements in favor of Bank; and
 
(i)    Borrower shall have paid the fees and Bank Expenses then due as specified
in Section 2.4 hereof.
 
3.2     Conditions Precedent to all Credit Extensions. Bank’s obligations to
make each Credit Extension, including the initial Credit Extension, is subject
to the following:
 
(a)    timely receipt of an executed Transaction Report;
 
(b)    the representations and warranties in Section 5 shall be true in all
material respects on the date of the Transaction Report and on the Funding Date
of each Credit Extension; 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 Default or Event of Default shall have occurred and be continuing or
result from the Credit Extension. Each Credit Extension is Borrower’s
representation and warranty on that date that the representations and warranties
in Section 5 remain true 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 Bank’s sole 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 there has not been any material
adverse deviation by Borrower from the most recent business plan of Borrower
presented to and accepted by Bank.
 
 

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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 to any Credit Extension. Borrower expressly
agrees that the extension of a Credit Extension prior to the receipt by Bank of
any such item shall not constitute a waiver by Bank of Borrower’s obligation to
deliver such item, and any such extension in the absence of a required item
shall be in Bank’s sole discretion.
 
3.4      Procedures for Borrowing. Subject to the prior satisfaction of all
other applicable conditions to the making of an Advance set forth in this
Agreement, to obtain an Advance (other than Advances under Sections 2.1.2 or
2.1.4), Borrower shall notify Bank (which notice shall be irrevocable) by
electronic mail, facsimile, or telephone by 12:00 noon Eastern time on the
Funding Date of the Advance. Together with any such electronic or facsimile
notification, Borrower must promptly deliver to Bank by electronic mail or
facsimile a completed Transaction Report executed by a Responsible Officer or
his or her designee. Bank may rely on any telephone notice given by a person
whom Bank believes is a Responsible Officer or designee. Bank shall credit
Advances to the Designated Deposit Account. Bank may make Advances under this
Agreement based on instructions from a Responsible Officer or his or her
designee or without instructions if the Advances are necessary to meet
Obligations which have become due.
 
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 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 may
have superior priority to Bank’s 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.
 
If this Agreement is terminated, Bank’s 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 and at such time
as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at
Borrower’s sole cost and expense, release its Liens in the Collateral and all
rights therein shall revert to Borrower.
 
4.2      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 Bank’s 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.
 
5         REPRESENTATIONS AND WARRANTIES
 
Borrower represents and warrants as follows:
 
5.1     Due Organization and Authorization. Borrower and each of its
Subsidiaries are duly existing and in good standing, as Registered Organizations
in their respective jurisdictions of formation and are qualified and licensed to
do business and are in good standing in any jurisdiction in which the conduct of
their business or their ownership of property requires that they be qualified
except where the failure to do so could not reasonably be expected to have a
material adverse effect on Borrower’s business. In connection with this
Agreement, Borrower delivered to Bank a completed certificate signed by Borrower
dated as of May 24, 2006 (the “Perfection Certificate”). Borrower represents and
warrants to Bank that (a) Borrower’s 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
Borrower’s organizational identification number or accurately states that
Borrower has none; (d) the Perfection Certificate accurately sets forth
Borrower’s place of business, or, if more than one, its chief executive office
as well as Borrower’s mailing address (if different than its chief executive
office); (e) Borrower (and each of its predecessors) has not, in 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. If Borrower is
 

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not now a Registered Organization but later becomes one, Borrower shall promptly
notify Bank of such occurrence and provide Bank with Borrower’s organizational
identification number.
 
The execution, delivery and performance of the Loan Documents have been duly
authorized, and do not conflict with Borrower’s organizational documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in 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 Borrower’s business.
 
5.2     Collateral. Borrower has good title to, has 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 deposit accounts other than the deposit accounts with Bank, the deposit
accounts, if any, described in the Perfection Certificate delivered to Bank in
connection herewith. 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. In the event that Borrower, after the
date hereof, intends to store or otherwise deliver any portion of the Collateral
to a bailee, then Borrower will first receive the written consent of Bank and
such bailee must execute and deliver a bailee agreement in form and substance
satisfactory to Bank in its sole discretion.
 
All Inventory is in all material respects of good and marketable quality, free
from material defects.
 
 Borrower is the sole owner of its intellectual property, except for
non-exclusive licenses granted to its customers in the ordinary course of
business. Each patent is valid and enforceable, and no part of the intellectual
property has been judged invalid or unenforceable, in whole or in part, and to
the best of Borrower’s 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 could not reasonably be expected to have a material adverse
effect on Borrower’s business. Except as noted on the Perfection Certificate,
Borrower is not a party to, nor is bound by, any material license or other
agreement with respect to which Borrower is the licensee that prohibits or
otherwise restricts Borrower from granting a security interest in Borrower’s
interest in such license or agreement or any other property. Borrower shall
provide written notice to Bank within ten (10) days of entering or becoming
bound by any such license or agreement which is reasonably likely to have a
material impact on Borrower’s business or financial condition (other than
over-the-counter software that is commercially available to the public).
Borrower shall take such steps as Bank requests to obtain the consent of, or
waiver by, any person whose consent or waiver is necessary for all such licenses
or contract rights to be deemed “Collateral” and for Bank to have a security
interest in it that might otherwise be restricted or prohibited by law or by the
terms of any such license or agreement (such consent or authorization may
include a licensor’s agreement to a contingent assignment of the license to Bank
if Bank determines that is necessary in its good faith judgment), whether now
existing or entered into in the future. 
 
5.3      Accounts Receivable.
 
(a)    For each Account with respect to which Advances are requested, on the
date each  Advance is requested and made, such Account shall meet the Minimum
Eligibility Requirements set forth in Section  13 below.
 
(b)    All statements made and all unpaid balances appearing in all invoices,
instruments and other documents evidencing the Accounts are and shall be true
and correct and all such invoices, instruments and other documents, and all of
Borrower’s Books are genuine and in all respects what they purport to be. All
sales and other transactions underlying or giving rise to each 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 an Eligible Account in any
Borrowing Base Certificate. To the best of Borrower’s knowledge, all signatures
and endorsements on all documents, instruments, and agreements relating to all
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 the Responsible  Officers, threatened in writing by or against
Borrower or any of its Subsidiaries involving more than Fifty  Thousand Dollars
($50,000.00).
 

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5.5     No Material Deviation in Financial Statements. All consolidated
financial statements for Borrower and any of its Subsidiaries delivered to Bank
fairly present in all material respects Borrower’s consolidated financial
condition and Borrower’s consolidated results of operations. There has not been
any material deterioration in Borrower’s consolidated financial condition since
the date of the most recent financial statements submitted to Bank.
 
5.6     Solvency. The fair salable value of Borrower’s assets (including
goodwill minus disposition costs) exceeds the fair value of its 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. Borrower is not engaged as one of its important activities in extending
credit for margin stock (under Regulations T and U of the Federal Reserve Board
of Governors). Borrower has complied in all material respects with the Federal
Fair Labor Standards Act. Borrower has not violated any laws, ordinances or
rules, the violation of which could reasonably be expected to have a material
adverse effect on its business. None of Borrower’s or any of its Subsidiaries’
properties or assets has been used by Borrower or any Subsidiary or, to the best
of Borrower’s 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 its business as
currently conducted.
 
5.8     Subsidiaries; Investments. Borrower does not own any stock, partnership
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 and its Subsidiaries,
if any, have timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower. Borrower may defer
payment of any contested taxes, provided that Borrower (a) in good faith
contests its obligation to pay the taxes by appropriate proceedings promptly and
diligently instituted and conducted, (b) notifies Bank in writing of the
commencement of, and any material development in, the proceedings, (c) posts
bonds or takes 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 Borrower's 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 representations, warranties, or other statements were 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).
 
6         AFFIRMATIVE COVENANTS
 
Borrower shall do all of the following:
 
6.1     Government Compliance. 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 Borrower’s
business or operations. Borrower shall comply, and have each Subsidiary comply,
with all laws, ordinances and regulations to which it is subject, the
noncompliance with which could have a material adverse effect on Borrower’s
business.
 

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6.2     Financial Statements, Reports, Certificates.
 
(a)    Borrower shall provide Bank with the following:
 
(i)     weekly, and upon each request for a Credit Extension, a Transaction
Report;
 
(ii)            within fifteen (15) days after the end of each month, (A)
monthly accounts receivable agings, aged by invoice date, and (b) monthly
accounts payable agings, aged by invoice date, and outstanding or held check
registers, if any;
 
(iii)           as soon as available, and in any event within thirty (30) days
after the end of each month, monthly unaudited financial statements;
 
(iv)          within thirty (30) days after the end of each month a monthly
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 shall reasonably request, including, without limitation, a
statement that at the end of such month there were no held checks;
 
(v)          within thirty (30) days prior to 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 Borrower’s board of directors, together with
any related business forecasts used in the preparation of such annual financial
projections; and
 
(vi)         as soon as available, and in any event within one hundred twenty
(120) days following the end of Borrower's fiscal year, annual financial
statements certified by, and with an unqualified opinion of, independent
certified public accountants acceptable to Bank.
 
(vii)        within five (5) days after filing, all reports on Form 10-K, 10-Q
and 8-K filed with the Securities and Exchange Commission or a link thereto on
Borrower’s or another website on the Internet.
 
Notwithstanding the foregoing, during any period in which Borrower maintains
unrestricted and unencumbered cash at Bank, plus the Availability Amount, in an
amount greater than $2,500,000, or when there are no Credit Extensions
outstanding or requested under the Revolving Line, Borrower shall only be
required to provide the Bank with reports pursuant to clause (a)(i) above on a
monthly basis.
 
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 Bank’s standard forms; provided, however, that Borrower’s failure to
execute and deliver the same shall not affect or limit Bank’s Lien and other
rights in all of Borrower’s Accounts, nor shall Bank’s failure to advance or
lend against a specific Account affect or limit Bank’s Lien and other rights
therein. If requested by Bank, Borrower shall furnish Bank with copies (or, at
Bank’s 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. 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
arm’s-length transactions, and reports the same to Bank in the regular reports
provided to Bank; (ii) no Default or 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 Availability
Amount.
 
(c)    Collection of Accounts. Borrower shall have the right to collect all
Accounts, unless and until a Default or an Event of Default has occurred and is
continuing. Whether or not an Event of Default has occurred and is continuing,
Borrower shall hold all Payments on, and proceeds of, Accounts in trust for
Bank, and Borrower shall immediately deliver all such payments and proceeds to
Bank in their original form, duly endorsed, to be applied to the Obligations
pursuant to the terms of Section 9.4 hereof. Accounts shall be deposited by
Borrower into a lockbox account, or such other “blocked account” as Bank may
specify, pursuant to a blocked account agreement in such form as Bank may
specify in its good faith business judgment.

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(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.
 
(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.
 
(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 Borrower’s 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 pursuant to the terms of Section 9.4 hereof; provided that, if no
Default or 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 arm’s length transaction
for an aggregate purchase price of $25,000 or less (for all such transactions in
any fiscal year). Borrower agrees that it will not commingle proceeds of
Collateral with any of Borrower’s 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. Make, and cause each of its Subsidiaries to make,
timely payment of all foreign, federal, state, and local taxes or assessments
(other than taxes and assessments which Borrower is contesting pursuant to the
terms of Section 5.9 hereof) 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 one (1)
Business Day’s 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 Borrower’s Books. The
foregoing inspections and audits shall be at Borrower’s expense, and the charge
therefor shall be $750 per person per day (or such higher amount as shall
represent Bank’s 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 reschedules the
audit with less than ten (10) days written notice to Bank, then (without
limiting any of Bank’s 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. Keep its business and the Collateral insured for risks and in
amounts standard for companies in Borrower’s industry and location and as Bank
may reasonably request. Insurance policies shall be in a form, with companies,
and in amounts that are satisfactory to Bank. All property policies shall have a
lender’s loss payable endorsement showing Bank as lender loss payee and waive
subrogation against Bank, and all liability policies shall show, or have
endorsements showing, Bank as an additional insured. All policies (or the loss
payable and additional insured endorsements) shall provide that the insurer must
give Bank at least thirty (30) days notice before canceling, amending, or
declining to renew its policy. At Bank’s request, Borrower shall deliver
certified copies of policies and evidence of all premium payments. Proceeds
payable under any policy shall, at Bank’s
 

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option, be payable to Bank on account of the Obligations. Notwithstanding the
foregoing, (a) so long as no Event of Default has occurred and is continuing,
Borrower shall have the option of applying the proceeds of any casualty policy
up to $50,000, in the aggregate, toward the replacement or repair of destroyed
or damaged property; provided that any such replaced or repaired property (i)
shall be of equal or like value as the replaced or repaired Collateral and
(ii) shall be deemed Collateral in which Bank has been granted a first priority
security interest, and (b) after the occurrence and during the continuance of an
Event of Default, all proceeds payable under such casualty policy shall, at the
option of Bank, be payable to Bank on account of the Obligations. 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 and its Subsidiaries’ depository, operating, and securities
accounts with Bank and Bank’s affiliates, with the exception of accounts
maintained with: (i) PNC Bank and Barclays Bank, provided that the maximum
aggregate balance of such accounts does not exceed Seventy-Five Thousand Dollars
($75,000.00) at any time, and (ii) Royal Bank of Scotland, provided that the
maximum balance of such account does not exceed the lesser of: (a) Five Hundred
Thousand Dollars ($500,000.00), or (b) ten percent (10%) of the dollar value of
the Borrower's unrestricted consolidated cash (the "RBS Maximum Amount")
(collectively, the "Permitted Accounts"). In addition, the Borrower shall,
within seven (7) business days following any event in which the balance of the
Royal Bank of Scotland exceeds the RBS Maximum Amount, transfer such excess cash
to an account of Borrower maintained with Bank and/or Bank's affiliates. Any
Guarantor shall maintain all depository, operating and securities accounts with
Bank, or SVB Securities.
 
(b)    With the exception of the Permitted Accounts, provide Bank five (5) days
prior written notice before establishing any Collateral Account at or with any
bank or financial institution other than Bank or its Affiliates. In addition,
with the exception of the Permitted Accounts for each Collateral Account that
Borrower or Guarantor at any time maintains, 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 Bank’s
Lien in such Collateral Account in accordance with the terms hereunder. The
provisions of the previous sentence shall not apply to deposit accounts
exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of Borrower’s employees and identified to Bank by
Borrower as such.
 
6.9     Financial Covenants.
 
Borrower shall maintain, as of the last day of each month, unless otherwise
noted:
 
(a)    Minimum Cash Balance. As of the Effective Date, and at all times
thereafter, Borrower shall maintain: (i) Two Million Five Hundred Thousand
Dollars ($2,500,000.00) in unrestricted and unencumbered cash in accounts with
the Bank or a Bank subsidiary, plus (ii) the aggregate of the Availability
Amount, plus, prior to the occurrence of an Event of Default, Five Hundred
Thousand Dollars ($500,000.00), which shall be tested as of the last day of each
month.
 
(b)    Minimum Quarterly Net Loss/Net Income. Borrower’s quarterly: (i) net
losses shall not exceed: (A) Six Hundred Thousand Dollars ($600,000.00) for the
quarter ending March 31, 2007; (B) One Million Dollars ($1,000,000.00) for the
quarter ending June 30, 2007; and (C) Five Hundred Thousand Dollars
($500,000.00) for the quarter ending September 30, 2007, and (ii) net income
shall be at least One Dollar ($1.00) for the Borrower’s quarter ending December
31, 2007 and as of the last day of each quarter thereafter.
 
6.10   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 Borrower's 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.
 
6.11   Lock Box Agreement. Within thirty (30) days after a request from Borrower
for an Advance and at all times thereafter, Borrower shall direct each account
debtor (and each depository institution where proceeds of
 
accounts receivable are on deposit) to make payments with respect to all
receivables to one or more lockbox accounts established with the Bank
(“Lockbox”) or to wire transfer payments to a cash collateral account that Bank
controls, as and when directed by the Bank from time to time, at its option and
at the sole and exclusive discretion of the Bank 
 

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6.12   Protection and Registration of Intellectual Property Rights. Borrower
shall: (a) protect, defend and maintain the validity and enforceability of its
intellectual property; (b) promptly advise Bank in writing of material
infringements of its intellectual property; and (c) not allow any intellectual
property material to Borrower’s business to be abandoned, forfeited or dedicated
to the public without Bank’s written consent. If Borrower decides to register
any copyrights or mask works in the United States Copyright Office, Borrower
shall: (x) provide Bank with at least fifteen (15) days prior written notice of
its intent to register such copyrights or mask works together with a copy of the
application it intends to file with the United States Copyright Office
(excluding exhibits thereto); (y) execute an intellectual property security
agreement or such other documents as Bank may reasonably request to maintain the
perfection and priority of Bank’s security interest in the copyrights or mask
works intended to be registered with the United States Copyright Office; and (z)
record such intellectual property security agreement with the United States
Copyright Office contemporaneously with filing the copyright or mask work
application(s) with the United States Copyright Office. Borrower shall promptly
provide to Bank a copy of the application(s) filed with the United States
Copyright Office together with evidence of the recording of the intellectual
property security agreement necessary for Bank to maintain the perfection and
priority of its security interest in such copyrights or mask works. Borrower
shall provide written notice to Bank of any application filed by Borrower in the
United States Patent and Trademark Office for a patent or to register a
trademark or service mark within 30 days after any such filing.
 
6.13   Further Assurances. Borrower shall execute any further instruments and
take further action as Bank reasonably requests to perfect or continue Bank’s
Lien in the Collateral or to effect the purposes of this Agreement.
 
6.12   Ratification of Intellectual Property Security Agreement. Borrower hereby
ratifies, confirms and reaffirms, all and singular, the terms and conditions of
the IP Agreement, and acknowledges, confirms and agrees that “Loan Agreement” as
defined therein includes this Agreement. The IP Agreement contains an accurate
and complete listing of all Intellectual Property Collateral as defined in said
IP Agreement, shall remain in full force and effect, and secures the
Obligations.
 
7        NEGATIVE COVENANTS
 
Borrower shall not do any of the following without Bank’s prior written consent:
 
7.1     Dispositions. Convey, sell, lease, transfer 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; (c)
in connection with Permitted Liens and Permitted Investments; and (d) of
non-exclusive licenses and similar arrangements for the use of the property of
Borrower or its Subsidiary in the ordinary course of business. Borrower shall
not enter into an agreement with any Person other than Bank which restricts the
subsequent granting of a security interest in the Intellectual Property.
 
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 material change in management or (ii) enter into any transaction
or series of related transactions in which the stockholders of Borrower
immediately prior to the first such transaction own less than 50% 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 Borrower’s equity
securities in a public offering or to venture capital investors so long as
Borrower identifies to Bank the venture capital investors prior to the closing
of the transaction). Borrower shall not, without at least thirty (30) 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 Ten
Thousand Dollars ($10,000) in Borrower’s assets or property), (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.
 

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7.3     Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.
 
7.4     Indebtedness. Create, incur, assume, or be liable for any Indebtedness,
or permit any Subsidiary to do so, other than Permitted Indebtedness.
 
7.5     Encumbrance. Create, incur, or allow any Lien on any of its property, or
assign or convey any right to receive income, including the sale of any
Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interest granted herein, 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 Borrower’s or any Subsidiary’s
intellectual property, except as is otherwise permitted in Section 7.1 hereof
and the definition of “Permitted Lien” herein. The Collateral may also be
subject to Permitted Liens.
 
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) Directly or indirectly make any
Investment other than Permitted Investments, or permit any of its Subsidiaries
to do so; or (b) pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock.
 
7.8     Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower, except
for: (i) those transactions contemplated by the guarantee of the Guarantor, and
(ii) transactions that are in the ordinary course of Borrower’s business, upon
fair and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm’s length transaction with a non-affiliated Person.
 
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 or adversely affect the subordination thereof to Obligations
owed to Bank.
 
7.10   Compliance. Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock (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 Borrower’s 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 make any payment of principal or
interest on any Credit Extension on its due date, or pay any other Obligations
within three (3) Business Days after such Obligations are due and payable.
During the cure period, the failure to cure the payment default is not an Event
of Default (but no Credit Extension will be made during the cure period);
 

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8.2     Covenant Default.
 
(a)    Borrower fails or neglects to perform any obligation in Sections 6.2,
6.3, 6.4, 6.6, 6.8, 6.9, 6.11, 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, 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). Grace periods provided under this section shall not
apply, among other things, to financial covenants or any other covenants set
forth in subsection (a) above;
 
8.3     Material Adverse Change. A Material Adverse Change occurs;
 
8.4     Attachment. (a) Any material portion of Borrower’s assets is attached,
seized, levied on, or comes into possession of a trustee or receiver and the
attachment, seizure or levy is not removed in ten (10) days; (b) the service of
process seeking to attach, by trustee or similar process, any funds of Borrower,
or of any entity under control of Borrower (including a Subsidiary) on deposit
with the Bank or Bank's Affiliate; (c) Borrower is enjoined, restrained, or
prevented by court order from conducting a material part of its business; (d) a
judgment or other claim in excess of One Hundred Thousand Dollars ($100,000.00)
becomes a Lien on any of Borrower’s assets; or (e) a notice of lien, levy, or
assessment is filed against any of Borrower’s assets by any government agency
and not paid within ten (10) days after Borrower receives notice. These are not
Events of Default if stayed or if a bond is posted pending contest by Borrower
(but no Credit Extensions shall be made during the cure period);
 
8.5     Insolvency (a) Borrower is unable to pay its debts (including trade
debts) as they become due or otherwise becomes insolvent; (b) Borrower begins an
Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower
and not dismissed or stayed within forty-five (45) days (but no Credit
Extensions shall be made while of any of the conditions described in clause (a)
exist and/or until any Insolvency Proceeding is dismissed);
 
8.6     Other Agreements. There is a default in any agreement to which Borrower
or any Guarantor is a party with a third party or parties resulting in a right
by such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of One Hundred Thousand
Dollars ($100,000) or that could have a material adverse effect on Borrower’s or
any Guarantor’s business;
 
8.7     Judgments. A judgment or judgments for the payment of money in an
amount, individually or in the aggregate, of at least Two Hundred Thousand
Dollars ($200,000) (not covered by independent third-party insurance) shall be
rendered against Borrower and shall remain unsatisfied and unstayed for a period
of ten (10) days after the entry thereof (provided that no Credit Extensions
will be made prior to the satisfaction or stay of such judgment);
 
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. A default or breach occurs under any agreement
between Borrower and any creditor of Borrower that signed a subordination,
intercreditor, or other similar agreement with Bank, or any creditor that has
signed such an agreement with Bank breaches any terms of such agreement; or
 
8.10   Guaranty. (a) Any guaranty of any Obligations terminates or ceases for
any reason to be in full force and effect; (b) any Guarantor does not perform
any obligation or covenant under any guaranty of the Obligations; (c) any
circumstance described in Sections 8.3, 8.4, 8.5, 8.7, or 8.8 occurs with
respect to any Guarantor; (d) the liquidation, winding up, or termination of
existence of any Guarantor; or (e) a material adverse change in the general
affairs, management, results of operation, condition (financial or otherwise) or
the prospect of repayment of the Obligations occurs with respect to any
Guarantor.
 

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8.11   Cross-Default. An Event of Default occurs and remains continuing under
the Existing Loan and Security Agreement.
 
9        BANK’S RIGHTS AND REMEDIES
 
9.1     Rights and Remedies. While an Event of Default occurs and continues Bank
may, without notice or demand, do any or all of the following:
 
(a)    declare all Obligations immediately due and payable (but if an Event of
Default described in Section 8.5 occurs all Obligations are immediately due and
payable without any action by Bank);
 
(b)    stop advancing money or extending credit for Borrower’s benefit under
this Agreement or under any other agreement between Borrower and Bank;
 
(c)    demand that Borrower (i) deposits cash with Bank in an amount equal to
the aggregate amount of any Letters of Credit remaining undrawn, 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)    settle or adjust disputes and claims directly with Account Debtors for
amounts on terms and in any order that Bank considers advisable, notify any
Person owing Borrower money of Bank’s security interest in such funds, and
verify the amount of such account;
 
(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 Bank’s 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,
Borrower’s labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank’s exercise of its rights under this Section, Borrower’s
rights under all licenses and all franchise agreements inure to Bank’s benefit;
 
(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 Borrower’s 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).
 

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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 Borrower’s name on any
checks or other forms of payment or security; (b) sign Borrower’s 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 adjust all claims under Borrower’s 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 Borrower’s name on any documents
necessary to perfect or continue the perfection of Bank’s 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. Bank’s foregoing appointment as Borrower’s
attorney in fact, and all of Bank’s rights and powers, coupled with an interest,
are irrevocable until all Obligations have been fully repaid and performed and
Bank’s obligation to provide Credit Extensions terminates.
 
9.3     Protective Payments. If Borrower fails to obtain the insurance called
for by Section 6.5 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, 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 applicable rate, 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 Bank’s waiver of any Event of Default.
 
9.4     Application of Payments and Proceeds. If an Event of Default has
occurred and is continuing, Bank may apply 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 in such order as Bank shall determine in its sole discretion.
Any surplus shall be paid to Borrower or other Persons legally entitled thereto;
Borrower shall remain liable to Bank for any deficiency. If Bank, in its good
faith business judgment, 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     Bank’s 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. Bank’s 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 Bank and then is only
effective for the specific instance and purpose for which it is given. Bank’s
rights and remedies under this Agreement and the other Loan Documents are
cumulative. Bank has all rights and remedies provided under the Code, by law, or
in equity. Bank’s exercise of one right or remedy is not an election, and Bank’s
waiver of any Event of Default is not a continuing waiver. Bank’s delay 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.
 
10       NOTICES
 
All notices, consents, requests, approvals, demands, or other communication
(collectively, “Communication”), other than Advance requests made pursuant to
Section 3.4, by any party to this Agreement or any other Loan Document must be
in writing and be delivered or sent by facsimile at the addresses or facsimile
numbers listed below. Bank or Borrower may change its notice address by giving
the other party written notice thereof. Each such Communication shall be deemed
to have been validly served, given, or delivered: (a) upon the
 

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earlier of actual receipt and three (3) Business Days after deposit in the U.S.
mail, registered or certified mail, return receipt requested, with proper
postage prepaid; (b) upon transmission, when sent by facsimile transmission
(with such facsimile promptly confirmed by delivery of a copy by personal
delivery or United States mail as otherwise provided in this Section 10); (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 or
facsimile number indicated below. Advance requests made pursuant to Section 3.4
must be in writing and may be in the form of electronic mail, delivered to Bank
by Borrower at the e-mail address of Bank provided below and shall be deemed to
have been validly served, given, or delivered when sent (with such electronic
mail promptly confirmed by delivery of a copy by personal delivery or United
States mail as otherwise provided in this Section 10). Bank or Borrower may
change its address, facsimile number, or electronic mail address by giving the
other party written notice thereof in accordance with the terms of this
Section 10.
 
If to Borrower:
Voxware, Inc.
 
168 Franklin Corner Road
 
Lawrenceville, New Jersey 08648
 
Attn: Chief Executive Officer
 
Fax: 609 514 4103
 
Email:  pcommons@voxware.com
   
If to Bank:
Silicon Valley Bank
 
100 Matsonford Road, Building 5, Suite 555
 
Radnor, Pennsylvania 19087
 
Attn: Mr. Bill Howell
 
Fax: (610) 971-2063
 
Email: BHowell@svbank.com
 
 
with a copy to:
Riemer & Braunstein LLP
 
Three Center Plaza
 
Boston, Massachusetts 02108
 
Attn: David A. Ephraim, Esquire
 
Fax: (617) 880-3456
 
Email: DEphraim@riemerlaw.com

 
11       CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER AND JUDICIAL REFERENCE
 
Massachusetts law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Massachusetts; provided, however, that 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
Section 10 of this Agreement and that service so made shall be deemed completed
upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days
after deposit in the U.S. mails, proper postage prepaid. NOTWITHSTANDING
ANYTHING TO THE CONTRARY SET FORTH HEREINABOVE, BANK SHALL SPECIFICALLY HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTION WHICH BANK DEEMS NECESSARY OR APPROPRIATE IN
ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE BANK’S RIGHTS AGAINST
BORROWER OR ITS PROPERTY.
 

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TO THE 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.
 
12      GENERAL PROVISIONS
 
12.1    Successors and Assigns. This Agreement binds and is for the benefit of
the successors and permitted assigns of each party. Borrower may not assign this
Agreement or any rights or obligations under it without Bank’s prior written
consent (which may be granted or withheld in Bank’s discretion). Bank has the
right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank’s obligations, rights, and benefits under this Agreement and the other Loan
Documents.
 
12.2   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 harmless against: (a) all obligations,
demands, claims, and liabilities (collectively, “Claims”) asserted by any other
party in connection with the transactions contemplated by the Loan Documents;
and (b) all losses or Bank Expenses incurred, or paid by Bank from, following,
or arising from transactions between Bank and Borrower (including reasonable
attorneys’ fees and expenses), except for Claims and/or losses directly caused
by Bank’s gross negligence or willful misconduct.
 
12.3   Limitation of Actions. Any claim or cause of action by Borrower against
Bank, its directors, officers, employees, agents, accountants, attorneys, or any
other Person affiliated with or representing Bank based upon, arising from, or
relating to this Loan Agreement or any other Loan Document, or any other
transaction contemplated hereby or thereby or relating hereto or thereto, or any
other matter, cause or thing whatsoever, occurred, done, omitted or suffered to
be done by Bank, its directors, officers, employees, agents, accountants or
attorneys, shall be barred unless asserted by Borrower by the commencement of an
action or proceeding in a court of competent jurisdiction by (a) the filing of a
complaint within one year from the earlier of (i) the date any of Borrower’s
officer or directors had knowledge of the first act, the occurrence or omission
upon which such claim or cause of action, or any part thereof, is based, or (ii)
the date this Agreement is terminated, and (b) the service of a summons and
complaint on an officer of Bank, or on any other person authorized to accept
service on behalf of Bank, within thirty (30) days thereafter. Borrower agrees
that such one-year period is a reasonable and sufficient time for Borrower to
investigate and act upon any such claim or cause of action. The one-year period
provided herein shall not be waived, tolled, or extended except by the written
consent of Bank in its sole discretion. This provision shall survive any
termination of this Loan Agreement or any other Loan Document.
 
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   Amendments in Writing; Integration. All amendments to this Agreement must
be in writing signed by both Bank and Borrower. This Agreement and the Loan
Documents represent the entire agreement about this subject matter and supersede
prior negotiations or agreements. All prior agreements, understandings,
representations, warranties, and negotiations between the parties about the
subject matter of this Agreement and the Loan Documents merge into this
Agreement and the Loan Documents.
 
12.7   Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, constitute
one Agreement.
 
12.8   Survival. All covenants, representations and warranties made in this
Agreement continue in full force until this Agreement has terminated pursuant to
its terms and all Obligations (other than inchoate indemnity obligations and any
other obligations which, by their terms, are to survive the termination of this
Agreement) have been satisfied. The obligation of Borrower in Section 12.2 to
indemnify Bank shall survive until the statute of limitations with respect to
such claim or cause of action shall have run.
 

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12.9   Confidentiality. In handling any confidential information, Bank shall
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Bank’s
Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any
interest in the Credit Extensions (provided, however, Bank shall use
commercially reasonable efforts to obtain such prospective transferee’s or
purchaser’s agreement to the terms of this provision); (c) as required by law,
regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise
required in connection with Bank’s examination or audit; and (e) as Bank
considers appropriate in exercising remedies under this Agreement. Confidential
information does not include information that either: (i) is in the public
domain or in Bank’s possession when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank; or (ii) is disclosed to Bank by a third
party, if Bank does not know that the third party is prohibited from disclosing
the information.
 
12.10   Right of Set Off. Borrower hereby grants to Bank, a lien, security
interest and right of set off as security for all Obligations to Bank, whether
now existing or hereafter arising upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of Bank
(including a Bank subsidiary) or in transit to any of them. At any time after
the occurrence and during the continuance of an Event of Default, without demand
or notice, Bank may set off the same or any part thereof and apply the same to
any liability or obligation of Borrower even though unmatured and regardless of
the adequacy of any other collateral securing the Obligations. ANY AND ALL
RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
 
13      DEFINITIONS
 
13.1   Definitions. As used in this Agreement, the following 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.
 
“Advance” or “Advances” means an advance (or advances) under the Revolving Line.
 
"Adjusted Quick Ratio" means a ratio of Quick Assets to Quick Liabilities.
 
“Affiliate” of any Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person’s senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person’s managers and members.
 
“Agreement” is defined in the preamble hereof.
 
“Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the
Borrowing Base minus (b) the amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) plus an amount equal to the
Letter of Credit Reserves, minus (c) the FX Reserve, and minus (d) the
outstanding principal balance of any Advances (including any amounts used for
Cash Management Services).
 
“Bank” is defined in the preamble hereof.
 
“Bank Expenses” are all audit fees and expenses, costs, and expenses (including
reasonable attorneys’ fees and expenses) for preparing, 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.
 
"Board" means Borrower's Board of Directors.
 
 

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“Borrower” is defined in the preamble hereof.

“Borrower’s Books” are all Borrower’s books and records including ledgers,
federal and state tax returns, records regarding Borrower’s 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 seventy-five percent (75.0%) of Eligible Accounts, as
determined by Bank from Borrower’s most recent Borrowing Base Certificate
(provided however, if Borrower is unable, at any time, to either: (i) maintain
an Adjusted Quick Ratio of at least 1.50 to 1.0, or (ii) (a) maintain an
Adjusted Quick Ratio of at least 1.15 to 1.0, and (b) at all times maintain
unrestricted and unencumbered cash, in accounts with the Bank in amount of at
least Two Million Dollars ($2,000,000.00), then the Borrowing Base will be
seventy-five percent (75.0%) of Eligible Accounts, net of any offsets related to
each specific Account Debtor, including, without limitation, Deferred Revenue),
minus if Borrower's Adjusted Quick Ratio is less than 1.25 to 1.0, at any time,
the outstanding Obligations under the Term Loan; provided, however, that Bank
may decrease the foregoing percentages in its good faith business judgment,
based on events, conditions, contingencies, or risks which, as determined by
Bank, may adversely affect Collateral.
 
“Borrowing Base Certificate” is that certain certificate included within each
Transaction Report.
 
“Borrowing Resolutions” are, with respect to any Person, those resolutions
adopted by such Person’s Board of Directors or other appropriate body and
delivered by such Person to Bank approving the Loan Documents to which such
Person is a party and the transactions contemplated thereby, together with a
certificate executed by its secretary on behalf of such Person certifying that
(a) such Person has the authority to execute, deliver, and perform its
obligations under each of the Loan Documents to which it is a party, (b) that
attached as Exhibit A to such certificate is a true, correct, and complete copy
of the resolutions then in full force and effect authorizing and ratifying the
execution, delivery, and performance by such Person of the Loan Documents to
which it is a party, (c) the name(s) of the Person(s) authorized to execute the
Loan Documents on behalf of such Person, together with a sample of the true
signature(s) of such Person(s), and (d) that Bank may conclusively rely on such
certificate unless and until such Person shall have delivered to Bank a further
certificate canceling or amending such prior certificate.
 
“Business Day” is any day that is not a Saturday, Sunday or a day on which Bank
is closed.
 
“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 & Poor’s Ratings
Group or Moody’s Investors Service, Inc., and (c) Bank’s certificates of deposit
issued maturing no more than one (1) year after issue.
 
“Cash Management Services” is defined in Section 2.1.4.
 
“Cash Management Services Sublimit” is defined in Section 2.1.4.
 
“Code” is the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the Commonwealth of Massachusetts; 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, Bank’s Lien on any Collateral is governed by the
Uniform Commercial Code in effect in a jurisdiction other than the Commonwealth
of Massachusetts, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes on 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.
 
 

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“Communication” is defined in Section 10.
 
“Compliance Certificate” is that certain certificate in the form attached hereto
as Exhibit D.
 
“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 directly
or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by
that Person, or for which that Person is directly or indirectly liable; (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.
 
“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.
 
“Credit Extension” is any Advance, Letter of Credit, Term Loan, FX Forward
Contract, amount utilized for Cash Management Services, or any other extension
of credit by Bank for Borrower’s benefit.
 
“Current Liabilities” are all obligations and liabilities of Borrower to Bank,
plus, without duplication, the aggregate amount of Borrower’s Total Liabilities
that mature within one (1) year.
 
“Default” means any event which with notice or passage of time or both, would
constitute an Event of Default.
 
“Default Rate” is defined in Section 2.3(b).
 
“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 Borrower’s deposit account, account number
3300055128 maintained with Bank.
 
“Dollars,” “dollars” and “$” each mean lawful money of the United States.
 
“Effective Date” is defined in the preamble of this Agreement.
 
“Eligible Accounts” are Accounts which arise in the ordinary course of
Borrower’s business that meet all Borrower’s representations and warranties in
Section 5.3. Bank reserves the right, at any time and from time to 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. Without limiting the
fact that the determination of which Accounts are eligible for borrowing is a
matter of Bank’s good faith judgment, the following (“Minimum Eligibility
Requirements”) are the minimum requirements for an Account to be an Eligible
Account. Unless Bank agrees otherwise in writing, Eligible Accounts shall not
include:
 
(a)    Accounts for which the Account Debtor has not been invoiced;
 
(b)    Accounts that the Account Debtor has not paid within ninety (90) days of
invoice date;
 

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(c)    Accounts owing from an Account Debtor, fifty percent (50%) or more of
whose Accounts have not been paid within ninety (90) days of invoice date;
 
(d)    Credit balances over ninety (90) days from invoice date;

 
(e)    Accounts owing from an Account Debtor, including Affiliates, whose total
obligations to Borrower exceed fifty percent (50.0%) of all Accounts, for the
amounts that exceed that percentage, unless Bank approves in writing;
 
(f)     Accounts owing from an Account Debtor which does not have its principal
place of business in the United States, except for Eligible Foreign Accounts;
 
(g)    Accounts owing from an Account Debtor which is a federal, state or local
government entity or any department, agency, or instrumentality thereof except
for Accounts of the United States or state or local government if 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 or corresponding
state or local laws or regulations;
 
(h)    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 otherwise - sometimes called “contra” accounts, accounts payable,
customer deposits or credit accounts), with the exception of customary credits,
adjustments and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business;
 
(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”, “bill and hold”, or other terms if Account Debtor’s payment may be
conditional;
 
(j)     Accounts for which the Account Debtor is Borrower’s Affiliate, officer,
employee, or agent;
 
(k)    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;
 
(l)     Accounts owing from an Account Debtor with respect to which Borrower has
received deferred revenue (but only to the extent of such deferred revenue);
 
(m)   Accounts for which Bank in its good faith business judgment determines
collection to be doubtful; and
 
(n)    other Accounts Bank deems ineligible in the exercise of its good faith
business judgment.
 
“Eligible Foreign Accounts” are Accounts for which the Account Debtor does not
have its principal place of business in the United States but are otherwise
Eligible Accounts, and that Bank approves in writing in its sole and absolute
discretion, on a case by case basis. Eligible Foreign Accounts shall include
Waitrose, Somerfield, Argos, and Intermarche.
 
“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 Employment Retirement Income Security Act of 1974, and its
regulations.
 
“Event of Default” is defined in Section 8.
 
"Existing Loan Agreement" means that certain Loan and Security Agreement dated
as of December 29, 2003, as amended and in effect, by and between the Borrower
and the Bank.
 
“Foreign Currency” means lawful money of a country other than the United States.
 
 

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“Funding Date” is any date on which a Credit Extension is made to or on account
of Borrower which shall be a Business Day.
 
“FX Business Day” is any day when (a) Bank’s Foreign Exchange Department is
conducting its normal business and (b) the Foreign Currency being purchased or
sold by Borrower is available to Bank from the entity from which Bank shall buy
or sell such Foreign Currency.

 
“FX Forward Contract” is defined in Section 2.1.3.
 
“FX Reserve” is defined in Section 2.1.3.
 
“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 copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
trademarks, service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, any trade secret rights,
including any rights to unpatented inventions, payment intangibles, royalties,
contract rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income and other
tax refunds, security and other deposits, 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.
 
“Guarantor” is any present or future guarantor of the Obligations, including
Verbex Acquisition Corporation.
 
“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and (d)
Contingent Obligations.
 
“Insolvency Proceeding” is any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
 
“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 Borrower’s 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.
 
"IP Agreement" is that certain Intellectual Property Security Agreement dated as
of December 29, 2003, by and between the Borrower and the Bank.
 
“Letter of Credit” means a standby letter of credit issued by Bank or another
institution based upon an application, guarantee, indemnity or similar agreement
on the part of Bank as set forth in Section 2.1.2.
 
“Letter of Credit Application” is defined in Section 2.1.2(a).
 
“Letter of Credit Reserve” has the meaning set forth in Section 2.1.2(d).

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“Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or
other encumbrance.
 
“Loan Documents” are, collectively, this Agreement, the Perfection Certificate,
any note, or notes or guaranties executed by Borrower or any Guarantor, and any
other present or future agreement between Borrower any Guarantor and/or for the
benefit of Bank in connection with this Agreement, all as amended, restated, or
otherwise modified.
 
"LockBox" is defined in Section 6.9.

 
“Material Adverse Change” is (a) a material impairment in the perfection or
priority of Bank’s Lien in the Collateral or in the value of such Collateral;
(b) a material adverse change in the business, operations, or condition
(financial or otherwise) of Borrower; (c) a material impairment of the prospect
of repayment of any portion of the Obligations; or (d) Bank determines, based
upon information available to it and in its reasonable judgment, that there is a
reasonable likelihood that Borrower shall fail to comply with one or more of the
financial covenants in Section 6 during the next succeeding financial reporting
period.
 
"Minimum Eligibility Requirements" is defined in the defined term "Eligible
Accounts".
 
“Obligations” are Borrower’s obligation to pay when due any debts, principal,
interest, Bank Expenses and other amounts Borrower owes Bank now or later,
whether under this Agreement, the Existing Loan Agreement, the Loan Documents,
or otherwise, including, without limitation, all obligations relating to 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 the performance of
Borrower’s duties under the Loan Documents.
 
“Operating Documents” are, for any Person, such Person’s formation documents, as
certified with the Secretary of State of such Person’s state of formation on a
date that is no earlier than 30 days prior to the Effective Date, and its bylaws
in current form, each of the foregoing with all current amendments or
modifications thereto.
 
“Payment” means all checks, wire transfers and other items of payment received
by Bank (including proceeds of Accounts and payment of all the Obligations in
full) for credit to Borrower’s outstanding Credit Extensions or, if the balance
of the Credit Extensions has been reduced to zero, for credit to its Deposit
Accounts.
 
“Payment Date” is the first day of each calendar month.
 
“Perfection Certificate” is defined in Section 5.1.
 
"Permitted Accounts" is defined in Section 6.6(a).
 
“Permitted Indebtedness” is:
 
(a)    Borrower’s 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 secured by Permitted Liens; and
 
(f)    extensions, refinancings, modifications, amendments and restatements of
any items of Permitted Indebtedness (a) through (e) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified
to impose more burdensome terms upon Borrower or its Subsidiary, as the case may
be.
 

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“Permitted Investments” are:
 
(a)    Investments shown on the Perfection Certificate and existing on the
Effective Date; and
 
(b)    Cash Equivalents.
 
“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 not delinquent or being contested in good faith and for which Borrower
maintains adequate reserves on its Books, if they have no priority over any of
Bank’s Liens;
 
(c)    purchase money Liens and capital leases (i) on Equipment acquired or held
by Borrower incurred for financing the acquisition of the Equipment securing no
more than Five Hundred Thousand Dollars ($500,000.00) 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 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;
 
(e)    carrier's, warehousemen's, mechanics', materialmen's, repairmen's,
landlord's liens or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than thirty (30) days or which are
being contested in good faith by appropriate proceedings and for which
appropriate reserves have been made therefor;
 
(f)    pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements; and
 
(g)    deposits to secure the performance of tenders, bids or leases, trade
contracts (other than for borrowed money), statutory obligations, surety,
customs, stay and appeal bonds, performance and return of money bonds,
government contracts and other obligations of a like nature in an amount not to
exceed Fifty Thousand Dollars ($50,000.00), in the aggregate.
 
“Person” is any individual, sole proprietorship, partnership, limited liability
company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
 
“Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not
Bank’s lowest rate.
 
"Profitability Event" is the confirmation by the Bank that Borrower has
maintained, after the Effective Date, a net profit of at least One Dollar
($1.00), for two (2) consecutive fiscal quarters.
 
“Quick Assets” is, on any date, Borrower’s, unrestricted cash, plus net billed
accounts receivable.
 
"Quick Liabilities" are Current Liabilities, less (i) the current portion of
Subordinated Debt and Deferred Revenue, and less (ii) accrued bonuses due to
employees.
 
“Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made.
 
“Reserves” means, as of any date of determination, such amounts as Bank may from
time to time establish and revise in good faith reducing the amount of Advances,
Letters of Credit and other financial accommodations which would otherwise be
available to Borrower under the lending formulas: (a) to reflect events,
conditions, contingencies or risks which, as determined by Bank in good faith,
do or may affect (i) the Collateral or any other
 

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property which is security for the Obligations or its value (including without
limitation any increase in delinquencies of Accounts), (ii) the assets or
business 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 Bank’s good faith 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 in good faith 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 Borrower's: (i) Chief Financial Officer, who
is currently Paul Commons, (ii) President, who is currently Scott Yetter, and
(iii) Controller, who is currently Ken Riley.
 
“Revolving Line” is an Advance or Advances in an aggregate amount of up to One
Million Five Hundred Thousand Dollars ($1,500,000.00) outstanding at any time.
 
“Revolving Line Maturity Date” is December ___, 2007 (364 days from the
Effective Date).
 
“Securities Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made.
 
“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of
Borrower’s 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” means, with respect to any Person, any Person of which more than
50% of the voting stock or other equity interests is owned or controlled,
directly or indirectly, by such Person or one or more Affiliates of such Person.
 
“Term Loan” is a loan made by Bank pursuant to the terms of Section 2.1.5
hereof.
 
“Term Loan” is an aggregate amount equal to One Million Five Hundred Thousand
Dollars ($1,500,000.00) outstanding at any time.
 
“Term Loan Maturity Date” is March 1, 2010.
 
“Term Loan Payment” is defined in Section 2.1.5(b).
 
“Total Liabilities” is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower’s consolidated balance sheet, including
all Indebtedness, and current portion of Subordinated Debt permitted by Bank to
be paid by Borrower, but excluding all other Subordinated Debt.
 
“Transfer” is defined in Section 7.1.
 
“Transaction Report” is that certain form attached hereto as Exhibit B.
 
“Unused Revolving Line Facility Fee” is defined in Section 2.4(b).
 

 

 
 Signature page follows.
 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as a sealed instrument under the laws of the Commonwealth of Massachusetts as of
the Effective Date.
 
BORROWER:
 
VOXWARE, INC.
 
By     /s/ Paul Commons                                                   
 
Name:     Paul Commons                                                  
 
Title:     Vice President and Chief Financial Officer    
 
BANK:
 
SILICON VALLEY BANK
 
By     /s/ Richard White                                                      
Name:     Richard White                                                     
 
Title:     Relationship Manager                                         
 

 

[Signature page to Loan and Security Agreement]

--------------------------------------------------------------------------------

EXHIBIT A

The Collateral consists of all of Borrower’s 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, commercial tort claims, documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, certificates of deposit, 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 Borrower’s Books relating to the foregoing, and any and all claims, rights
and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.
 
 
 
 
 
 
 
 
 

 
1

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EXHIBIT B
Transaction Report
[EXCEL spreadsheet to be provided separately from lending officer.]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
1

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EXHIBIT C

COMPLIANCE CERTIFICATE
 
TO:
SILICON VALLEY BANK
Date: _______________________________
FROM:
VOXWARE, INC.
 

The undersigned authorized officer of Voxware, Inc. (“Borrower”) certifies that
under the terms and conditions of the 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 generally 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.
 
Reporting Covenant
Required
Complies
     
Monthly financial statements with
Compliance Certificate
Monthly within 30 days
Yes No
Annual financial statement (CPA Audited) + CC
FYE within 120 days
Yes No
10-Q, 10-K and 8-K
Within 5 days after filing with SEC
Yes No
Borrowing Base Certificate A/R Agings
Monthly within 30 days
Yes No
Audit
Annually and within 45 days of Effective
Date
Yes No
Board approved projections Annually Yes No
The following Intellectual Property was registered after the Effective Date (if
no registrations, state “None”)
____________________________________________________________________________

Financial Covenant
Required
Actual
Complies
Minimum Cash Balances
$2,500,000.00
$
Yes No
Minimum Quarterly Net Loss/Net Income
$______ *
$
Yes No

Adjusted Quick Ratio**
 
Actual
Minimum Adjusted Quick Ratio
   

 
* As set forth in Section 6.7(b) of the Agreement

** Note, this is not a financial covenant.

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The following financial covenant analyses 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: (If no
exceptions exist, state “No exceptions to note.”)

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 
Voxware, Inc.
 
 
By:  ______________________________________  
Name:    Paul Commons                                                       
Title:   Vice President and CFO                                          
BANK USE ONLY
 
Received by: _____________________
authorized signer
Date:  _________________________
 
Verified: ________________________
authorized signer
Date:  _________________________
 
Compliance Status:       Yes     No

 
 
 
 
 
 
 
 
 

 

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Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

Dated: ____________________

In the event of a conflict between this Schedule and the Loan Agreement, the
terms of the Loan Agreement shall control.

I.
TANGIBLE NET WORTH

 

A.
Aggregate value of total assets of Borrower and
 
$
_______
 
B.
Aggregate value of goodwill of Borrower
 
$
_______
 
C.
Aggregate value of intangible assets of Borrower
 
$
_______
 
D.
Aggregate value of any reserves not already deducted from assets
 
$
_______
 
E.
Aggregate value of obligations owing to Borrower from officers or other
directors
 
$
_______
 
F.
Aggregate value of liabilities of Borrower (including all Indebtedness)
and current portion of Subordinated Debt permitted by Bank to be paid by
Borrower (but no other Subordinated Debt)
 
 
$
_______
 
G.
Value of Subordinated Debt
 
$
_______
 
H.
Tangible Net Worth (line A minus line B minus line C minus line D minus line E
minus line F, plus line G)
 
$
_______
 

Is line H equal to or greater than $_____________?

_____  No, not in compliance
_____  Yes, in compliance
   

II.
ADJUSTED QUICK RATIO

 

A.
Aggregate value of the unrestricted cash of Borrower
 
$
_______
 
B.
Aggregate value of the net billed accounts receivable of Borrower
 
$
_______
 
C.
Quick Assets (the sum of lines A and B)
 
$
_______
 
D.
Aggregate value of Obligations to Bank
 
$
_______
 
E.
Aggregate value of liabilities of Borrower (including all Indebtedness)
that matures within one (1) year and current portion of Subordinated Debt
permitted by Bank to be paid by Borrower
 

$

_______
 
F
Aggregate value of (i) the current portion of Subordinated Debt and Deferred
Revenue and (ii) accrued bonuses due to employees
       
G.
Quick Liabilities (the sum of lines D, E minus F)
 
$
_______
 
G.
Adjusted Quick Ratio (line C divided by line G)
 
 
_______
 

Is line G equal to or greater than 1.25:1:00?