exv10w7



 





Exhibit 10.7




LOAN AND SECURITY AGREEMENT




     THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of July 19, 2007 (the
“Effective Date”) between SILICON VALLEY BANK, a California corporation with a loan
production office located at One Newton Executive Park, Suite 200, 2221 Washington Street,
Newton, Massachusetts 02462 (“Bank”), and SOUNDBITE COMMUNICATIONS, INC., a Delaware
corporation (“Borrower”), provides the terms on which Bank shall lend to Borrower and
Borrower shall repay Bank. The parties agree as follows:



     1 ACCOUNTING AND OTHER TERMS



     Accounting terms not defined in this Agreement shall be construed following GAAP.
Calculations and determinations must be made following GAAP. 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, Bank
shall make
Advances not exceeding 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. The Revolving Line
may be terminated at any
time without penalty or premium.




     2.1.2 Letters of Credit Sublimit.



          (a) As part of the Revolving Line, 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 Line 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.




          (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, with notice to Borrower, 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, 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 Hundred Thousand Dollars ($100,000.00) (the “FX Reserve”). The aggregate amount
of FX Forward
Contracts at any one time may not exceed ten (10) times the amount of the FX Reserve and the
aggregate amount of
FX Forward Contracts may not exceed One Million Dollars ($1,000,000.00), inclusive of Credit
Extensions relating
to Sections 2.1.2 and 2.1.4.



     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 Equipment Advances.



          (a) Availability. Subject to the terms and conditions of this Agreement, during the
Draw
Period, Bank shall make advances (each, an “Equipment Advance” and, collectively, “Equipment
Advances”) not
exceeding the Equipment Line. Equipment Advances may only be used to finance Eligible
Equipment purchased
within ninety (90) days (determined based upon the applicable invoice date of such Eligible
Equipment) before the
date of each Equipment Advance, and no Equipment Advance may exceed 100% of the total invoice
for Eligible
Equipment, excluding taxes, shipping, warranty charges, freight discounts and installation
expenses relating to such
Eligible Equipment. Notwithstanding the foregoing, the initial Equipment Advance (the
“Initial Equipment
Advance”) hereunder may be used to reimburse Borrower for Eligible Equipment purchased within
one hundred
fifty (150) days, provided that such Initial Equipment Advance is requested within ten (10)
calendar days of the
Effective Date and it may be used to refinance equipment previously financed by Comerica Bank.
Unless otherwise
agreed to by Bank, not more than 25% of the proceeds of the Equipment Line shall be used to
finance Other
Equipment. After repayment, no Equipment Advance may be reborrowed.




          (b) Repayment. Each Equipment Advance is payable in: (i) thirty-six (36) consecutive
equal
monthly installments of principal, calculated by Bank, based upon (A) the amount of the
Equipment Advance, and
(B) an amortization schedule equal to thirty-six (36) months, plus (ii) interest on the
outstanding principal amount of
the Equipment Advance at the rate set forth in Section 2.3(a)(ii), beginning on the first
Business Day of the month
following the Funding Date of such Equipment Advance and continuing thereafter on the first
Business Day of each
successive calendar month. All unpaid principal and accrued interest is due and payable in
full on the Equipment
Maturity Date. Payments received after 2:00 p.m. Eastern time are considered received at the
opening of business
on the next Business Day. An Equipment Advance may only be prepaid in accordance with
Sections 2.1.5(c) and
2.1.5(d).




          (c) Mandatory Prepayment Upon an Acceleration. If the Equipment Advances
are
accelerated following the occurrence of an Event of Default, Borrower shall immediately pay to
Bank an amount
equal to the sum of (i) all outstanding principal plus accrued and unpaid interest, and (ii)
all other sums, if any, that
shall have become due and payable, including interest at the Default Rate with respect to any
past due amounts.




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          (d) Permitted Prepayment of Equipment Advances. So long as no Event of Default has
occurred and is continuing, Borrower shall have the option to prepay a particular Equipment
Advance advanced by Bank under this Agreement, provided Borrower (i) delivers written notice to
Bank of its election to prepay the Equipment Advance at least five (5) days prior to such
prepayment, and (ii) pays, on the date of such prepayment (A) all outstanding principal plus
accrued and unpaid interest of such Equipment Advance, and (B) all other sums, if any, that shall
have become due and payable in connection with such Equipment Advance, including interest at the
Default Rate with respect to any past due amounts.




     2.2 Overadvances. If, at any time, the Credit Extensions under Sections 2.1.1, 2.1.2, 2.1.3
and 2.1.4
exceed the lesser of either (a) the Revolving Line or (b) the Borrowing Base, Borrower shall
immediately pay to
Bank in cash such excess (the “Overadvance”). To the extent that the Overadvance exists as a
result of Bank
decreasing the percentages of the Borrowing Base, or adjustment of the criteria for Eligible
Accounts, Borrower
shall have two (2) Business Days to pay such portion of the Overadvance.



     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 one quarter of one
percent (0.25%) above the Prime Rate; provided however, if Borrower maintains Adjusted Liquidity
in an amount greater than Seven Million Dollars ($7,000,000.00) at all times during any month and
Liquidity in an amount greater than Seven Million Dollars ($7,000,000.00) as of the last day of
such month, then, from the Bank’s receipt of Borrower’s reporting documents reflecting the
attainment of such Liquidity levels and until either (A) Borrower’s Adjusted Liquidity is equal to
or less than Seven Million Dollars ($7,000,000.00) at any time, or (B) Borrower’s Liquidity is
equal to or less than Seven Million Dollars ($7,000,000.00) as of the last day of any month, the
principal amount outstanding under the Revolving Line shall accrue interest at a floating per
annum rate equal to the Prime Rate. Interest hereunder shall be payable monthly in accordance with
Section 2.3(f) below.



               (ii) Equipment Advances. Subject to Section 2.3(b), the principal amount
outstanding for each Equipment Advance shall accrue interest at a floating per annum rate equal to
one percent (1.0%) above the Prime Rate; provided however, if Borrower maintains Adjusted Liquidity
in an amount greater than Seven Million Dollars ($7,000,000.00) at all times during any month and
Liquidity in an amount greater than Seven Million Dollars ($7,000,000.00) as of the last day of
such month, then, from the Bank’s receipt of Borrower’s reporting documents reflecting the
attainment of such Liquidity levels and until either (A) Borrower’s Adjusted Liquidity is equal to
or less than Seven Million Dollars ($7,000,000.00) at any time, or (B) Borrower’s Liquidity is
equal to or less than Seven Million Dollars ($7,000,000.00) as of the last day of any month, the
principal amount outstanding for each Equipment Advance shall accrue interest at a floating per
annum rate equal to the Prime Rate plus one half of one percent (0.50%). Interest hereunder 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.




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          (f) Payments. Unless otherwise provided, interest is payable monthly on the first
(Ist)
Business Day of each month. Payments of principal and/or interest received after 2:00 p.m.
Eastern time are considered received at the opening of business on the next Business Day. When
a payment is due on a day that is not a Business Day, the payment is due the next Business Day
and additional fees or interest, as applicable, shall continue to accrue.




     2.4 Fees. Borrower shall pay to Bank:



          (a) Commitment Fee. A fully earned, non-refundable commitment fee of Twelve
Thousand
Five Hundred Dollars ($12,500.00) (the “Commitment Fee”) shall be earned as of the date
hereof, and shall be
payable on the earlier to occur of (i) the occurrence of an Event of Default, (ii) the
early termination of this
Agreement, or (iii) December 31, 2007; provided however, if on December 31, 2007, Equipment
Advances made by
Bank exceed fifty percent (50.0%) of the Equipment Line, then the Commitment Fee shall be
deemed waived by
Bank. For the purposes of this calculation, any amount of Equipment Advances used by
Borrower to refinance
Borrower’s term loan with Comerica Bank (A) shall not be included in calculating the amount
of Equipment
Advances made by Bank and (B) shall be subtracted from the Equipment Line;




          (b) Due Diligence Fee. A fully-earned, non-refundable due diligence fee of
Fifteen
Thousand Dollars ($15,000.00) has previously been paid by Borrower. Any portion of the
due diligence fee not
utilized to pay Bank Expenses shall be applied towards any other fees due and payable
hereunder;




          (c) Letter of Credit Fee. Bank’s customary fees and expenses for the issuance or
renewal of
Letters of Credit, upon the issuance, each anniversary of the issuance, and the renewal of
such Letter of Credit;




          (d) Unused Revolving Line Facility Fee. A fee (the “Unused Revolving Line Facility
Fee”),
payable quarterly, in arrears, on a calendar year basis, 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. For the
purposes of this
calculation, any Credit Extensions made pursuant to Sections 2.1.2, 2.1.3, and 2.1.4 shall
not be included in
calculating usage under the Revolving Line. 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 Agreement or the suspension or termination of Bank’s obligation to make
loans and advances
hereunder. Notwithstanding the foregoing, the Unused Revolving Line Facility Fee shall not
be due and payable for
any quarter in which Borrower maintained (i) Adjusted Liquidity in an amount greater than
Seven Million Dollars
($7,000,000.00) at all times during such quarter, and (ii) Liquidity in an amount greater
than Seven Million Dollars
($7,000,000.00) as of the last day of each month during such quarter; and




          (e) 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.




     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 Agreements;




          (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;




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          (e) Borrower shall have delivered a payoff letter from Comerica Bank indicating that all
amounts to Comerica Bank will be paid in full with the initial Credit Extension and that all
Liens in favor of
Comerica Bank will be released;




          (f) Borrower shall have delivered evidence that (i) the Liens securing Indebtedness owed by
Borrower to Comerica will be terminated and (ii) the documents and/or filings evidencing the
perfection of such
Liens, including without limitation any financing statements and/or control agreements, have
or will, concurrently
with the initial Credit Extension, be terminated;




          (g) 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;




          (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; 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) except as otherwise provided in Section 3.4, timely receipt of an
executed
Payment/Advance Form;




          (b) the representations and warranties in Section 5 shall be true in all material respects on
the
date of the Payment/Advance Form 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 reasonable 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, nor has there been any material adverse deviation by Borrower from the most
recent business plan of
Borrower presented to and accepted by Bank.




     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.



          (a) Advances. 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 shall deliver to
Bank by electronic mail or facsimile a completed Payment/Advance Form 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




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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.




          (b) Equipment Advances. Subject to the prior satisfaction of all other applicable
conditions to the making of an Equipment Advance set forth in this Agreement, to obtain an
Equipment Advance, Borrower must notify Bank (which notice shall be irrevocable) by electronic
mail or facsimile no later than 12:00 noon Eastern time one (1) Business Day before the proposed
Funding Date. The notice shall be a Payment/Advance Form, must be signed by a Responsible Officer
or designee, and shall include a summary listing of the Equipment being financed in form and
substance acceptable to Bank.




     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 in
an amount in excess of Two Hundred Fifty Thousand Dollars ($250,000.00), 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, if any, 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 has
delivered to Bank a completed certificate signed by Borrower (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 in all material respects. If Borrower is 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 have a material adverse
effect on Borrower’s business.



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     5.2 Collateral. Borrower has good title to, and has rights in or 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. As of the Effective Date, 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, or of
which Borrower has given Bank notice and taken such actions as are necessary to give Bank a
perfected security
interest therein. The Accounts are bona fide, existing obligations of the Account Debtors.



     The Collateral is not in the possession of any third party bailee (such as a warehouse)
except as otherwise provided in the Perfection Certificate. None of the components of the
Collateral shall be maintained at locations other than as provided in the Perfection
Certificate or as Borrower has given Bank notice pursuant to Section 7.2. 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.



     Except for any Financed Equipment which is the subject of the prior financing arrangements
with Comerica Bank and which is being refinanced hereunder, all Financed Equipment is new,
except for such Financed Equipment that has been disclosed in writing to Bank by Borrower as
“used” and that Bank, in its sole discretion, has agreed to finance. All Inventory is in all
material respects of good and marketable quality, free from material defects.



     Except as noted on the Perfection Certificate, Borrower is not a party to, nor is bound
by, any license or other agreement with respect to which 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. For any Eligible Account in any Borrowing Base Certificate,
all
statements made and all unpaid balances appearing in all invoices, instruments and other
documents evidencing such
Eligible 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 Eligible Account shall comply in all material respects
with all applicable laws and
governmental rules and regulations. Borrower has no knowledge of any actual or imminent
Insolvency Proceeding
of any Account Debtor whose accounts is 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 Eligible Accounts are genuine, and all such documents, instruments and agreements are
legally enforceable in
accordance with their terms.



     5.4 Litigation. There are no actions or proceedings pending or, to the knowledge of the
Responsible
Officers, threatened in writing by or against Borrower or any of its Subsidiaries involving
more than Two Hundred
Fifty Thousand Dollars ($250,000.00).



     5.5 No Material Deterioration 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 of 1940. 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



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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, except where the failure to do so would not reasonably be
expected to have a material adverse effect on Borrower’s business or operations.




     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 have timely paid all foreign, federal,
state and local taxes,
assessments, deposits and contributions owed by Borrower, except where the amount of
associated tax liability does
not exceed Seventy-Five Thousand Dollars ($75,000.00). 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 purchase Eligible Equipment, 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 reasonably be expected to have a
material adverse effect on
Borrower’s business.



     6.2 Financial Statements, Reports, Certificates.



          (a) Deliver to Bank: (i) as soon as available, but no later than thirty (30) days after the
last day of each month, a company prepared consolidated balance sheet and income statement
covering Borrower’s consolidated operations during the period certified by a Responsible Officer
and in a form acceptable to Bank; (ii) as soon as available, but no later than one hundred fifty
(150) days after the last day of Borrower’s fiscal year, audited consolidated financial statements
prepared under GAAP, consistently applied, together with an unqualified opinion on the financial
statements from an independent certified public accounting firm acceptable to Bank in its
reasonable




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discretion; (iii) within five (5) days of delivery, copies of all statements, reports and
notices made available to Borrower’s security holders or to any holders of Subordinated Debt;
(iv) in the event that Borrower becomes subject to the reporting requirements under the
Securities Exchange Act of 1934, as amended, within five (5) days of 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; (v) a prompt report of any legal actions
pending or, to Borrower’s knowledge, threatened against Borrower or any of its Subsidiaries
that could reasonably be expected to result in damages or costs to Borrower or any of its
Subsidiaries of Two Hundred Fifty Thousand Dollars ($250,000.00) or more; (vi) as soon as
available and no later than forty-five (45) days after approval by Borrower’s Board of
Directors, Borrower’s Financial projections for current fiscal year as approved by Borrower’s
Board of Directors; and (vii) budgets, sales projections, operating plans and other financial
information reasonably requested by Bank.




          (b) Within thirty (30) days after the last day of each month in which Credit Extensions
made
pursuant to Section 2.1.1, 2.1.2, 2.1.3, or 2.1.4 are outstanding or in which any such
Credit Extensions have been
requested, deliver to Bank a duly completed Borrowing Base Certificate signed by a
Responsible Officer, with aged
listings of accounts receivable (by invoice date).




          (c) Within thirty (30) days after the last day of each month, deliver to Bank with the
monthly
financial statements, a duly completed Compliance Certificate signed by a Responsible
Officer setting forth
calculations showing compliance with the financial covenants set forth in this Agreement.




          (d) Allow Bank to audit Borrower’s Collateral at Borrower’s expense. Such audits shall be
conducted no more often than once every twelve (12) months unless a Default or an Event of
Default has occurred
and is continuing. Borrower hereby acknowledges that the first such audit will be
conducted within ninety (90) days
after the Effective Date.




     6.3 Inventory; Returns. Keep all Inventory in good and marketable condition, free from
material
defects. Returns and allowances between Borrower and its Account Debtors shall follow
Borrower’s customary
practices as they exist at the Effective Date. Borrower must promptly notify Bank of all
returns, recoveries, disputes
and claims that involve more than Two Hundred Fifty Thousand Dollars ($250,000.00).



     6.4 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.



     6.5 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 loss payable
endorsement showing Bank as 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 twenty (20)
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 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
Five Hundred Thousand Dollars ($500,000.00), 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 6.5 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 6.5, and take any action under the policies Bank deems prudent.



     6.6 Operating Accounts.



          (a) As of the date that is thirty (30) days after the Effective Date, maintain its
and its Subsidiaries’ primary operating accounts with Bank and Bank’s affiliates. In addition,
Borrower shall maintain cash




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or securities with Bank and Bank’s affiliates in an amount equal to at least the lesser of:
(i) a majority Borrower’s cash or securities in excess of that amount used for Borrower’s
current operations, and (ii) the aggregate amount of outstanding Obligations. Notwithstanding
the foregoing, as of the Effective date Borrower shall maintain at least one (1) operating
account with Bank.




          (b) 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, 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.




     6.7 Financial Covenants.



          Borrower shall maintain at all times, to be tested as of the last day of each month,
unless otherwise noted:




          (a) Minimum Quarterly Net Revenue. Borrower shall have quarterly net revenue of at
least:
(i) Six Million Seven Hundred Fifty Thousand Dollars ($6,750,000.00) as of the quarter
ended March 31, 2007; (ii)
Eight Million Dollars ($8,000,000.00) as of the quarter ending June 30, 2007; (iii) Nine
Million Dollars
($9,000,000.00) as of the quarter ending September 30, 2007; (iv) Ten Million Two Hundred
Fifty Thousand
Dollars ($ 10,250,000.00) as of the quarter ending December 31, 2007; and (v) as of March
31, 2008 and as of the
last day of each quarter thereafter, the greater of (A) Ten Million Dollars
($10,000,000.00), and (B) seventy five
percent (75%) of Borrower’s Board-approved operating plan. Notwithstanding the foregoing,
this covenant shall
not be tested with respect to any quarter in which Borrower maintained (1) Adjusted
Liquidity in an amount greater
than Seven Million Dollars ($7,000,000.00) at all times during such quarter, and (2)
Liquidity in an amount greater
than Seven Million Dollars ($7,000,000.00) as of the last day of each month during such
quarter.




          (b) Liquidity. Borrower shall maintain Liquidity, to be tested as of the last
day of each
month (or more frequently upon the request of Bank), of at least Five Million Five Hundred
Thousand Dollars
($5,500,000.00).




     6.8 Protection of Intellectual Property Rights. Except as shall be consistent with sound
business
practices, Borrower shall protect, defend and maintain the validity and enforceability of
its intellectual property.



     6.9 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.



     6.10 Further Assurances. 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.



     6.11 Landlord’s Waiver. Within thirty (30) days of Bank’s request, deliver a landlord’s
consent
executed by Borrower’s landlord in favor of Bank, in form and substance acceptable to Bank
in Bank’s sole and
absolute discretion, with respect to Borrower’s leased location in Ashburn, Virginia.



     6.12 Change in Management. Notify Bank of any material change in management, within thirty
(30)
days of such change.



     7    NEGATIVE COVENANTS



     Borrower shall not do any of the following without Bank’s prior written consent:



     7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose
of (collectively
“Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or
property, except for:



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     (a) Transfers in the ordinary course of business (or with respect to assets or property
which is obsolete
or no longer useful in the business) for reasonably equivalent consideration;



     (b) Transfers of property in connection with sale-leaseback transactions;



     (c) Transfers of property to the extent such property is exchanged for credit against, or
proceeds are
promptly applied to, the purchase price of other property used or useful in the business of
Borrower or its
Subsidiaries;



     (d) Transfers constituting non-exclusive licenses and similar arrangements for the use of
the property
of Borrower or its Subsidiaries in the ordinary course of business and other non-perpetual
licenses that may be
exclusive in some respects other than territory (and/or that may be exclusive as to
territory only in discreet
geographical areas outside of the United States), but that could not result in a legal
transfer of Borrower’s title in the
licensed property;



     (e) Transfers otherwise permitted by the Loan Documents;



     (f) sales or discounting of delinquent accounts in the ordinary course of business;



     (g) Transfers associated with the making or disposition of a Permitted
Investment;



     (h) Transfers in connection with a permitted acquisition of a
portion of the assets or rights acquired;



     (i) Transfers (i) from any Subsidiary to Borrower, and (ii) from Borrower to its
Subsidiaries in an
amount up to One Million Dollars ($1,000,000.00) in the aggregate per year; and



     (j) Transfers of assets (other than Accounts and Inventory (unless such Transfer is in
the ordinary
course of Borrower’s business)) not otherwise permitted in this Section 7.1, provided, that the
aggregate book value of all such Transfers by Borrower and its Subsidiaries, together, shall
not exceed in any fiscal year, five percent (5.0%) of Borrower’s consolidated total assets as
of the last day of the fiscal year immediately preceding the date of determination.



     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) prior to the
consummation of an underwritten initial public offering of Borrower’s stock, 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 60% 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 One Hundred
Thousand Dollars ($100,000) 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.



     7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to
merge or
consolidate, with any Person other than with Borrower or any Subsidiary, or acquire, or
permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or property of a
Person other than Borrower or any
Subsidiary, except where no Event of Default has occurred and is continuing or would
result from such action
during the term of this Agreement, and (a) Borrower is the surviving entity or (b) such
merger or consolidation is a
Transfer otherwise permitted pursuant to Section 7.1 hereof.



     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



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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 Liens” herein.




     7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to
the
terms of Section 6.6(b) hereof.



     7.7 Distributions; Investments, (a) Pay any dividends or make any distribution or payment
or
redeem, retire or purchase any capital stock other than Permitted Distributions; or (b)
directly or indirectly acquire
or own any Person, or make any Investment in any Person, other than Permitted Investments, or
permit any of its
Subsidiaries to do so.



     7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any
material
transaction with any Affiliate of Borrower except for (a) transactions that are in the
ordinary course of Borrower’s
business (except that such transactions do not need to be in the ordinary course of Borrower’s
business if the
Affiliate is a Subsidiary), upon fair and reasonable terms (when viewed in the context of any
series of transactions of
which it may be a part, if applicable) that are no less favorable to Borrower than would be
obtained in an arm’s
length transaction with a non-affiliated Person; or (b) transactions among Borrower and its
Subsidiaries and among
Borrower’s Subsidiaries so long as no Event of Default exists or could reasonably be expected
to result therefrom.



     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 (a) make any payment of principal or interest on any
Credit
Extension on its due date, or (b) pay any other Obligations within three (3) Business Days
after such Obligations are
due and payable (which three (3) Business Day grace period will not apply to payments due on
the Revolving Line
Maturity Date or Equipment Maturity Date). 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);



     8.2 Covenant Default.



          (a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.5, 6.6, 6.7, 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




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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 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 Two Hundred Fifty Thousand Dollars ($250,000) 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. If Borrower fails to (a) make any payment that is due and payable with
respect to any Material Indebtedness and such failure continues after the applicable grace or
notice period, if any,
specified in the agreement or instrument relating thereto (unless waived), or (b) perform or
observe any other
condition or covenant, or any other event shall occur or condition exist under any agreement
or instrument relating
to any Material Indebtedness, and such failure continues after the applicable grace or notice
period, if any, specified
in the agreement or instrument relating thereto and the effect of such failure, event or
condition is to cause the holder
or holders of such Material Indebtedness to accelerate the maturity of such Material
Indebtedness or cause the
mandatory repurchase of any Material Indebtedness;



     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 Fifty Thousand Dollars ($250,000) (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. Any creditor of Borrower that signed a subordination, intercreditor, or
other
similar 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) (i) a material
impairment in the perfection or priority of Bank’s Lien in the collateral provided by
Guarantor or in the value of
such collateral or (ii) 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.



     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:



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          (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 Forward 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) 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).




     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.



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     9.3 Accounts Verification; Collection. Whether or not an Event of Default has occurred and
is
continuing, Bank may notify any Person owing Borrower money of Bank’s security interest in
such funds and verify
the amount of such account. After the occurrence of an Event of Default, any amounts received
by Borrower shall
be held in trust by Borrower for Bank, and, if requested by Bank, Borrower shall immediately
deliver such receipts
to Bank in the form received from the Account Debtor, with proper endorsements for deposit.



     9.4 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 charged by Bank, 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.



     9.5 Application of Payments and Proceeds. Unless an Event of Default has occurred and is
continuing, Bank shall apply any funds in its possession, whether from Borrower account
balances, payments, or
proceeds realized as the result of any collection of Accounts or other disposition of the
Collateral, first, to Bank
Expenses, including without limitation, the reasonable costs, expenses, liabilities,
obligations and attorneys’ fees
incurred by Bank in the exercise of its rights under this Agreement; second, to the interest
due upon any of the
Obligations; and third, to the principal of the Obligations and any applicable fees and other
charges, 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 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.



     9.6 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.



     9.7 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.



     9.8 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”) by any party to this Agreement or any other Loan Document must be in writing and
shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual
receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or
certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when
sent by electronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a
reputable overnight courier with all charges prepaid; or when delivered, if hand-




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delivered by messenger, all of which shall be addressed to the party to be notified and sent to the
address, facsimile number, or email address indicated below. Bank or Borrower may change its
address or facsimile number by giving the other party written notice thereof in accordance with the
terms of this Section 10.




	 	 	 	 	 
	 

	 	If to Borrower:
	 	SoundBite Communications, Inc.
	 

	 	 	 	Two Burlington Woods Drive
	 

	 	 	 	Burlington, Massachusetts
	 

	 	 	 	Attn: Mr. Christopher Hemme, Vice President of Operations 
	 

	 	 	 	Fax:781-273-0115
	 

	 	 	 	Email: chemme@soundbite.com
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Wilmer Cutler Pickering Hale and Dorr LLP
	 

	 	 	 	60 State Street
	 

	 	 	 	Boston, Massachusetts 02109
	 

	 	 	 	Attn: Mitchel Appelbaum, Esquire
	 

	 	 	 	Fax:(617)526-5000
	 

	 	 	 	Email: mitchel.appelbaum@wilmerhale.com
	 
	 	 	 	 
	 

	 	If to Bank:
	 	Silicon Valley Bank
	 

	 	 	 	One Newton Executive Park, Suite 200
	 

	 	 	 	2221 Washington Street
	 

	 	 	 	Newton, Massachusetts 02462
	 

	 	 	 	Attn: Mr. Michael Fell
	 

	 	 	 	Fax: (617)969-4395
	 

	 	 	 	Email: MFell@svb.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






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     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 if for any reason
Bank cannot avail itself of such courts in the Commonwealth of Massachusetts,
Borrower accepts jurisdiction of the courts and venue in Santa Clara County,
California. NOTWITHSTANDING THE FOREGOING, BANK SHALL 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.



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, assign,
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 Time of Essence. Time is of the essence for the performance of all Obligations in this Agreement.



     12.4 Severability of Provisions. Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.



     12.5 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.



     12.6 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered,
is an original, and all taken together, constitute one Agreement.



     12.7 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.



     12.8
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



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Subsidiaries or Affiliates (provided, however, Bank shall use commercially
reasonable efforts in obtaining such Subsidiary’s or Affiliate’s agreement to the
terms of this provision); (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.




     12.9 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.



     “Adjusted Liquidity” is the aggregate of (a) Borrower’s unrestricted cash at
Bank, plus (b) Eligible Accounts, plus (c) Borrower’s unbilled but earned month to
date revenue (for such month only) minus (d) the aggregate amount of Credit
Extensions made pursuant to Sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4.



     “Advance” or “Advances” means an advance (or advances) under the Revolving Line.



     “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.



     “Borrower” is defined in the preamble hereof



-18-









 






     “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 eighty percent (80.0%) of Eligible Accounts, as determined
by Bank from Borrower’s most recent Borrowing Base Certificate; provided, however,
that Bank, upon notice to Borrower, 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 in the form attached hereto as
Exhibit C.



     “Borrowing Resolutions” are, with respect to any Person, those resolutions
adopted by such Person’s Board of Directors 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” are (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., (c) Bank’s certificates of deposit issued maturing no more than one
(1) year after issue; and (d) money market funds at least ninety-five percent (95%)
of the assets of which constitute Cash Equivalents of the kinds described in clauses
(a) through (c) of this definition.



     “Cash Management Services” is defined in Section 2.1.4.



     “Cash Management Services Sublimit” is defined in Section 2.1.4.



     “Claims” are defined in Section 12.2.



     “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.



     “Commitment Fee” is defined in Section 2.4(a).



     “Commodity Account” is any “commodity account” as defined in the Code with such
additions to such term as may hereafter be made.



     “Communication” is defined in Section 10.



     “Compliance Certificate” is that certain certificate in the form attached hereto as
Exhibit D.



-19-









 






     “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, Equipment Advance, Letter of Credit, FX
Forward Contract, amount utilized for Cash Management Services, or any other
extension of credit by Bank for Borrower’s benefit.



     “Default” is 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      , maintained with Bank.


     “Dollars,”
“dollars” and “$” each mean lawful money of the United States.



     “Draw Period” is the period of time from the Effective Date through the
earliest to occur of (a) December 31, 2007, or (b) an Event of Default; provided
that during the existence of any Default which has not become an Event of Default,
no additional Equipment Advances are required to be made.



     “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, and upon notice to Borrower, to adjust any of the criteria set forth
below and to establish new criteria in its good faith business judgment. 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;



     (c) Accounts owing from an Account Debtor, fifty percent (50%) or more of whose
Accounts have not been paid within one hundred twenty days (120) days of invoice date;



     (d) Credit balances over one hundred twenty (120) days from invoice date;



     (e) Accounts owing from an Account Debtor, including Affiliates, whose total
obligations to Borrower exceed twenty-five percent (25%) of all Accounts, for the amounts that
exceed that percentage, unless



-20-









 




Bank approves in writing; provided that with respect to the Accounts of
NCO, such percent shall be thirty-five percent (35%);




     (f) Accounts owing from an Account Debtor which does not have its principal
place of business in the United States;



     (g) Accounts owing from an Account Debtor which is a federal, state or local
government entity or any department, agency, or instrumentality thereof;



     (i) 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;



     (j) 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;



     (k) Accounts for which the Account Debtor is Borrower’s Affiliate, officer, employee,
or agent;



     (l) 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;



     (m) Accounts owing from an Account Debtor with respect to which
Borrower has received Deferred Revenue (but only to the extent of such deferred
revenue);



     (n) Accounts for which Bank in its good faith business judgment determines
collection to be doubtful; and



     (o) other Accounts Bank deems ineligible, after consultation with
Borrower, in the exercise of its good faith business judgment.



     “Eligible Equipment” is (a) general purpose computer equipment, office
equipment, test and laboratory equipment, furnishings, subject to the limitations set
forth herein, and (b) Other Equipment that complies with all of Borrower’s
representations and warranties to Bank and which is reasonably acceptable to Bank in
all respects and in which Bank has a first priority Lien. Bank hereby acknowledges
that any Equipment refinanced by Bank (which was previously financed by Comerica
Bank) with the Initial Equipment Advance shall be deemed to be Eligible Equipment.



     “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.



     “Equipment Advance” is defined in Section 2. l.5(a).



     “Equipment Line” is an Equipment Advance or Equipment Advances in an aggregate
amount of up to Seven Million Five Hundred Thousand Dollars ($7,500,000.00)
outstanding at any time.



     “Equipment Maturity Date” is, for each Equipment Advance, the earliest of (a)
the first Business Day of the month that is thirty-six (36) months after the month in
which such Equipment Advance was made, or (b) the occurrence of an Event of Default.



     “ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations.



     “Event of Default” is defined in Section 8.



     “Event of Loss” is defined in Section 2.1.5(c).



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     “Financed Equipment” is all present and future Eligible Equipment in
which Borrower has any interest, the purchase of which is financed by an Equipment
Advance.



     “Foreign Currency” means lawful money of a country other than the United States.



     “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.



     “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.



     “Initial Equipment Advance” is defined in Section 2.1.5(a).



     “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.



     “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).



-22-









 






     “Letter of Credit Reserve” has the meaning set forth in Section 2.1.2(d).



     “Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or other
encumbrance.



     “Liquidity” is the aggregate of (a) Borrower’s unrestricted cash at Bank, plus
(b) Eligible Accounts, minus (c) the aggregate amount of Credit Extensions made
pursuant to Sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4.



     “Loan Documents” are, collectively, this Agreement, the Perfection Certificate,
the subordination agreement, 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.



     “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 substantial
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.



     “Material Indebtedness” is any Indebtedness the principal amount of which is
equal to or greater than Seven Hundred Fifty Thousand Dollars ($750,000.00).



     “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 Loan Documents, including, without limitation, all
obligations relating to letters of credit (including reimbursement obligations for
drawn and undrawn letters of credit), cash management services, and foreign exchange
contracts, if any, and including interest accruing after Insolvency Proceedings
begin and 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 thirty (30) days prior to the Effective Date, and, its
bylaws in current form, each of the foregoing with all current amendments or
modifications thereto.



     “Other Equipment” is computer software and software licenses and other similar
property and soft costs approved by Bank, including taxes, shipping, warranty
charges, freight discounts and installation expenses.



     “Payment/Advance Form” is that certain form attached
hereto as Exhibit B.


     “Perfection Certificate” is
defined in Section 5.1.



     “Permitted Distributions” means:



     (a) purchases of capital stock from former employees, consultants and
directors pursuant to repurchase agreements or other similar agreements in an aggregate amount not to
exceed Two Hundred Fifty Thousand Dollars ($250,000.00) in any fiscal year provided that at the time of
such purchase no Default or Event of Default has occurred and is continuing;



     (b) distributions or dividends consisting solely of Borrower’s capital stock;



     (c) purchases for value of any rights distributed in connection with any stockholder rights
plan;



     (d) purchases of capital stock or options to acquire such capital stock with
the proceeds received from a substantially concurrent issuance of capital stock or convertible securities;



     (e) purchases of capital stock pledged as collateral for loans to employees;



     (f) purchases of capital stock in connection with the exercise of stock options or stock
appreciation rights by way of cashless exercise or in connection with the satisfaction of withholding tax
obligations;



-23-









 






     (g) purchases of fractional shares of capital stock arising
out of stock dividends, splits or combinations or business combinations; and



     (h) the settlement or performance of such Person’s obligations
under any equity derivative transaction, option contract or similar transaction or
combination of transactions.



     “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 Liens permitted under clause (c) of the definition of 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.



     “Permitted Investments” are:



     (a) Investments shown on the Perfection Certificate and existing on the Effective Date;



     (b) Investments consisting of (i) travel advances and employee relocation loans
and other employee loans and advances in the ordinary course of business, and (ii) loans to
employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to
employee stock purchase plans or agreements approved by Borrower’s Board of Directors; and



     (c) 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 Borrower’s Books  if they have no priority over any of Bank’s Liens;



     (c) purchase money Liens (i) on Equipment acquired or held by Borrower incurred
for financing the acquisition of the Equipment securing no more than Five Hundred Thousand
Dollars ($500,000.00) 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; and



     (d) Leases or subleases and non-exclusive licenses or sublicenses granted in
the ordinary course of Borrower’s business, if the leases, subleases, licenses and sublicenses do not
prohibit granting Bank a security interest;



     (e) Mechanic’s Liens arising in the ordinary course of business and which are
not delinquent for more than thirty (30) days or are being contested in good faith by appropriate
proceedings, provided they have no priority over any of Bank’s Liens and the aggregate amount of the Indebtedness secured
by such Liens does not exceed One Hundred Thousand Dollars ($100,000.00) in the aggregate;



-24-









 






     (f) Liens in favor of other financial institutions arising in connection
with Borrower’s deposit and/or securities accounts held at such institutions, provided that Bank has a perfected
security interest in the amounts held in such deposit and/or securities accounts;



     (g) Liens arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default;



     (h) Security deposits with Borrower’s or Borrower’s Subsidiary’s landlord;



     (i) Deposits or pledges to secure the performance of bids, tenders, contracts, public or
statutory obligations, surety, stay, appeal, indemnity, performance or other similar bonds or
similar obligations arising in the ordinary course of business; and



     (j) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by
Liens described in (a) through (i), but any extension, renewal or replacement Lien
must be limited to the property encumbered by the existing Lien and the principal amount
of the indebtedness may not increase.



     “Person” is any individual, sole proprietorship, partnership, limited liability
company, joint venture, company, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, firm, joint stock company,
estate, entity or government agency.



     “Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate.



     “Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made



     “Responsible Officer” is any of the Chief Executive Officer, President, Chief
Financial Officer and Controller of Borrower.



     “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 July 17, 2008.



     “Securities Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made.



     “Settlement Date” is defined in Section 2.1.3.



     “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” is, with respect to any Person, any Person of which more than 50%
of the voting stock or other equity interests (in the case of Persons other than
corporations) is owned or controlled, directly or indirectly, by such Person or one
or more Affiliates of such Person.



     “Transfer” is defined in Section 7.1.



     “Unused Revolving Line Facility Fee” is defined in Section 2.3(c).



[Signature page follows.]




-25-









 






     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:




SOUNDBITE COMMUNICATIONS, INC.




	 	 	 	 	 
	By:

	 	/s/ Peter Shields
 

	 	 
	Name:

	 	Peter Shields	 	 
	 

	 	 	 	 
	Title:

	 	CEO	 	 
	 

	 	 	 	 





BANK:



SILICON VALLEY BANK




	 	 	 	 	 
	By

	 	/s/ Michael J. Fell
 

	 	 
	Name:

	 	Michael J. Fell	 	 
	 

	 	 	 	 
	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 (except as provided below), 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.



     Notwithstanding the foregoing, the Collateral does not include any of the
following, whether now owned or hereafter acquired: (a) any copyright rights,
copyright applications, copyright registrations and like protections in each work
of authorship and derivative work, whether published or unpublished, any patents,
patent applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the
same, trademarks, service marks and, to the extent permitted under applicable law,
any applications therefor, whether registered or not, and the goodwill of the
business of Borrower connected with and symbolized thereby, know-how, operating
manuals, trade secret rights, rights to unpatented inventions, and any claims for
damage by way of any past, present, or future infringement of any of the foregoing;
provided, however, the Collateral shall include all Accounts, license and royalty
fees and other revenues, proceeds, or income arising out of or relating to any of
the foregoing, and (b) Equipment financed by Oracle prior to the Effective Date
(provided, however, such Equipment shall be part of the Collateral if at any time
Oracle no longer has a security interest in such Equipment).



     Pursuant to the terms of a certain negative pledge arrangement with Bank,
Borrower has agreed not to encumber any of its copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
patent applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the
same, trademarks, service marks and, to the extent permitted under applicable law,
any applications therefor, whether registered or not, and the goodwill of the
business of Borrower connected with and symbolized thereby, know-how, operating
manuals, trade secret rights, rights to unpatented inventions, and any claims for
damage by way of any past, present, or future infringement of any of the foregoing,
without Bank’s prior written consent.



1









 





EXHIBIT B




Loan Payment/Advance Request Form 




Deadline
for same day processing is Noon E.S.T.*









1









 





EXHIBIT C 




BORROWING BASE CERTIFICATE





Borrower:
SoundBite Communications, Inc.




Lender: Silicon Valley Bank




Commitment Amount: $ 1,500,000.00




	 	 	 	 	 
	ACCOUNTS RECEIVABLE	 	 
	1.

	 	Accounts Receivable Book Value as of                                         
	 	$                                        
	2.

	 	Additions (please explain on reverse)
	 	$                                        
	3.

	 	TOTAL ACCOUNTS RECEIVABLE
	 	$                                        
	 
	 	 	 	 
	ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)	 	 
	4.

	 	Amounts over 90 days due
	 	$                                        
	5.

	 	Balance of 50% over 90 day accounts
	 	$                                        
	6.

	 	Credit balances over 90 days
	 	$                                        
	7.

	 	Concentration Limits
	 	$                                        
	8.

	 	Foreign Accounts
	 	$                                        
	9.

	 	Governmental Accounts
	 	$                                        
	10.

	 	Contra Accounts
	 	$                                        
	11.

	 	Promotion or Demo Accounts
	 	$                                        
	12.

	 	Intercompany/Employee Accounts
	 	$                                        
	13.

	 	Disputed Accounts
	 	$                                        
	14.

	 	Deferred Revenue

	 	$                                        
	15.

	 	Other (please explain on reverse)
	 	$                                        
	16.

	 	TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS
	 	$                                        
	17.

	 	Eligible Accounts (#3 minus #16)
	 	$                                        
	18.

	 	ELIGIBLE AMOUNT OF ACCOUNTS (80.0% of #17)
	 	$                                        
	 
	 	 	 	 
	BALANCES	 	 
	19.

	 	Maximum Loan Amount
	 	$                                        
	20.

	 	Total Funds Available [Lesser of #19 or #18]
	 	$                                        
	21.

	 	Present balance owing on Line of Credit
	 	$                                        
	22.

	 	Outstanding under Sublimits
	 	 
	23.

	 	RESERVE POSITION (#20 minus #21 and #22)
	 	$                                        





The undersigned represents and warrants for and on behalf of the Borrower that this
is true, complete and correct, and that the information in this Borrowing Base
Certificate complies with the representations and warranties in the Loan and Security
Agreement between the undersigned and Silicon Valley Bank.






	 	 	 	 	 
	COMMENTS:
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Authorized Signer 	 	 
	Date:
	 	 	 	 
	 

	 	 	 	 













BANK USE ONLY




	 	 	 	 	 	 	 
	 

	 	Received by:
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	AUTHORIZED SIGNER 	 	 






	 	 	 	 	 	 	 
	 

	 	Date:
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Verified:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	AUTHORIZED SIGNER	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Compliance Status:            Yes       No	 	 















 1














 














EXHIBIT D




COMPLIANCE CERTIFICATE




	 	 	 	 	 	 	 
	TO:

	 	SILICON VALLEY BANK
	 	Date: 	 	 
	 

	 	 	 	 	 
	FROM:

	 	SOUNDBITE COMMUNICATIONS, INC.	 	 	 	 






     The undersigned authorized officer of SoundBite Communications, Inc.
(“Borrower”) certifies in such capacity 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 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)

	 	FYE within 150 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, when
Advances are outstanding or have
been requested

	 	Yes    No
	 
	 	 	 	 
	Board Projections

	 	Annually and within 45 days of
approval
	 	Yes    No






	 	 	 	 	 	 	 	 	 
	Financial Covenant

	 	Required

	 	Actual
	 	Complies
	Maintain on a Quarterly Basis:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Minimum Net Income

	 	*	$                    
	 	$                    
	 	Yes    No
	 
	 	 	 	 	 	 	 	 
	Maintain on a Daily Basis
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Minimum Liquidity

	 		$5,500,000.00	 	 	$                    
	 	Yes    No








 




	
	*As set forth in Section 6.7(a) of the Loan and Security Agreement





1






 





     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.”)



 





 





 





	 	 	 	 	 	 	 
	SoundBite Communications, Inc.	 	BANK USE ONLY
	 
	 	 	 	 	 	 
	 

	 	 	 	Received by:	 	 
	 

	 	 	 	 

	By:

	 	 	 	 	 	AUTHORIZED SIGNER
	 
	 	 	 	 
	Name:

	 	 	 	Date:	 	 
	 
	 	 

	Title:

	 	 	 	 	 	 
	 
	 	 

	 

	 	 	 	Verified:	 	 
	 
	 	 

	 

	 	 	 	 	 	AUTHORIZED SIGNER
	 

	 	 	 	Date:
	 	 
	 

	 	 
	 	 

	 

	 	 	 	 	 	 
	 
	 	 

	 

	 	 	 	 Compliance Status:
               Yes      No






2









 





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.      Net Revenue (Section 6.7(a))



Required:            $                    *



Actual:                $                    



                                 
 No, not in compliance
                                                                                
Yes, in compliance



 





* As set forth in Section 6.7(a) of the Loan and Security Agreement



II.     Liquidity (Section 6.7(b))



Required:       $5,500,000.00



Actual:           $                    



                                 
No,
not in
compliance                                                                                     Yes, in compliance






3