**Exhibit 10.23**

 

 

**SILICON VALLEY BANK LOAN ANDSECURITY AGREEMENT**

 

**ThisLOAN AND SECURITY AGREEMENT** (this “Agreement”) dated as of June 16, 2005, between **SILICON VALLEY BANK**, a California chartered bank, with itsprincipal place of business at 3003 Tasman Drive, Santa Clara, California 95054 (FAX                        )(“Bank”) and **VERSANT CORPORATION**, a California corporation, with offices at 6539Dumbarton Circle, Fremont, California 94555 (FAX 510-789-1515) (“Borrower”),provides the terms on which Bank shall lend to Borrower and Borrower shallrepay Bank. The parties agree asfollows:

 

**1****                                        ****ACCOUNTING AND OTHER TERMS**

 

Accounting terms not definedin this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP.The term “financial statements” includes the notes and schedules. The terms “including”and “includes” always mean “including (or includes) without limitation,” inthis or any Loan Document. Capitalized terms in this Agreement shall have themeanings set forth in Section 13. All other terms contained in thisAgreement, unless otherwise indicated, shall have the meanings provided by theCode, to the extent such terms are defined therein.

 

**2****                                        ****LOAN AND TERMS OF PAYMENT**

 

**2.1****                              ****Promise to Pay****.** Borrower hereby unconditionally promises topay Bank the unpaid principal amountof all Advances hereunder with all interest, fees and finance charges duethereon as and when due in accordance with this Agreement.

 

**2.1.1****                    ****Financing of Accounts****.**

 

(a)                                  Availability. Subject to the terms of this Agreement, Borrower may request that Bankfinance specific EligibleAccounts. Bank may, in its good faith business discretion in each instance, financesuch Eligible Accounts byextending credit to Borrower in an amount equal to the result of the AdvanceRate multiplied by the faceamount of the Eligible Account (the “Advance”). Bank may, in its solediscretion, change the percentage of the Advance Rate for a particular EligibleAccount on a case by case basis; provided, however, only while the Streamline Agreement (as defined in Section 13hereof) is in effect, Bank will promptly notify Borrower before implementing such change. When Bankmakes an Advance, the Eligible Account becomes a “Financed Receivable.”

 

(b)                                 Maximum Advances. The aggregate face amount of all FinancedReceivables outstanding at any time may not exceed the Facility Amount, and theBank shall have no obligation to make Advances in excess of Three MillionDollars ($3,000,000) in the aggregate at anytime outstanding.

 

(c)                                  Borrowing Procedure. Borrower will deliver an InvoiceTransmittal for each Eligible Account it offers. Bank may rely on informationset forth in or provided with the Invoice Transmittal.

 

(d)                                 Credit Quality; Confirmations. Bank may, at its option, conduct a creditcheck of the Account Debtor foreach Account requested by Borrower for financing hereunder in order to approveany such Account Debtor’s creditbefore agreeing to finance such Account. Bank may also verify directly with therespective Account Debtors the validity, amount and other matters relating tothe Accounts (including confirmations of Borrower’s representations in Section 5.3) by means of mail,telephone or otherwise, either in the name of Borrower

 

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or Bank from time to time inits sole discretion; provided, however, only while the StreamlineAgreement is in effect,Bank will promptly notify Borrower before pursuing such verification.

 

(e)                                  Accounts Notification/Collection. Bank may notify any Person owing Borrowermoney of Bank’s securityinterest in the funds and verify and/or collect the amount of the Account.

 

(f)                                    Early Termination. This Agreement may be terminated prior tothe Maturity Date as follows: (i) byBorrower, effective three Business Days after written notice of termination isgiven to Bank; or (ii) by Bankat any time after the occurrence of an Event of Default, without notice,effective immediately. If this Agreementis terminated early by Borrower for any reason, Borrower shall pay to Bank atermination fee in an amountequal to Fifteen Thousand Dollars ($15,000) (the “Early Termination Fee”). TheEarly Termination Fee shall be due and payable on the effective date of suchtermination and thereafter shall bear interest at a rate equal to the highest rate applicable to any of theObligations. Notwithstanding the foregoing, Bank agrees to waive the EarlyTermination Fee if Bank agrees to refinance and redocument this Agreement underanother division of Bank (in its sole and exclusive discretion) prior to theMaturity Date.

 

(g)                                 Maturity. This Agreement shall terminate and all Obligations outstandinghereunder shall be immediately due and payable on the Maturity Date.

 

(h)                                 Suspension of Advances. Borrower’s ability to request that Bankfinance Eligible Accountshereunder will terminate if, in Bank’s sole discretion, there has been amaterial adverse change in the general affairs, management, results ofoperation, condition (financial or otherwise) or the prospect of repayment ofthe Obligations, or there has been any material adverse deviation by Borrowerfrom the most recent business plan of Borrower presented to and accepted byBank prior to the execution of this Agreement; provided, however,only while the StreamlineAgreement is in effect, Bank will promptly notify Borrower before taking suchaction.

 

**2.2****                              ****Collections, Finance Charges,Remittances and Fees****.** The Obligations shall be subject to thefollowing fees and Finance Charges. Unpaid fees and Finance Charges may, inBank’s discretion, accrue interest and fees as described in Section 9.2hereof.

 

**2.2.1****                    ****Collections****.** Collections will be credited to the FinancedReceivable Balance for such Financed Receivable, but if there is an Event of Default, Bank may applyCollections to the Obligations in any order it chooses. If Bank receives apayment for both a Financed Receivable and a non-Financed Receivable, the fundswill first be applied to the Financed Receivable and, if there is no Event ofDefault then existing, the excess will be remitted to Borrower, subject to Section 2.2.7.

 

**2.2.2****                    ****Facility Fee****.** A fully earned, non-refundable facility feeof Twenty Thousand Dollars ($20,000) is due upon execution of this Agreement, and an additional fully earned(as of the date of this Agreement), non-refundable facility fee of Fifteen Thousand Dollars ($15,000) is payableon the first anniversary of the date of this Agreement.

 

**2.2.3****                    ****Finance Charges****.** All Collections received by Bank shall bedeemed applied by Bank on account of the Obligations three (3) BusinessDays after receipt of the Collections. Borrower will pay a finance charge (the “FinanceCharge”) on each Financed Receivable which is equal to the Applicable Rate dividedby 360 multiplied by the number of days each such FinancedReceivable is outstanding multiplied by the outstanding FinancedReceivable Balance. The Finance Charge is payable when the Advance made basedon such Financed Receivable is payable in accordance with Section 2.3hereof.

 

**2.2.4****                    ****Collateral Handling Fee****.** If the Streamline Agreement is in not ineffect, Borrower will pay to Banka collateral handling fee equal to 0.375% per month of the Financed ReceivableBalance for each Financed Receivableoutstanding based upon a 360 day year (the “Collateral Handling Fee”). This feeis charged on a daily basis which is equal to the Collateral Handling Feedivided by 30, multiplied by the number of days each such Financed Receivableis outstanding, multiplied by the outstanding Financed Receivable Balance. TheCollateral Handling Fee is payable when the Advance made based on such FinancedReceivable is payable in accordance with Section 2.3 hereof. In computingCollateral Handling Fees under this Agreement, all Collections received by Bank

 

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shallbe deemed applied by Bank on account of Obligations three (3) BusinessDays after receipt of the Collections. After an Event of Default, theCollateral Handling Fee will increase an additional 0.50% effective immediatelyupon such Event of Default.

 

**2.2.4.5****          ****Warrant Waiver Fee****.** Borrower shall pay to Bank a Warrant WaiverFee equal to $25,000 if the Borrower requests Bank to waive the requirement ofproviding a Warrant to Purchase Stock as a condition precedent to any Advances.The Warrant Waiver Fee, if applicable, is fully earned and payable on the dateof this Agreement.

 

**2.2.5****                    ****Accounting****.** After each Reconciliation Period, Bank willprovide an accounting of the transactionsfor that Reconciliation Period, including the amount of all Financed Receivables,all Collections, Adjustments,Finance Charges, Collateral Handling Fee and the Facility Fee. If Borrower doesnot object to the accounting in writing within thirty (30) days it shall beconsidered accurate. All Finance Charges and other interest and fees are calculated on the basis of a 360day year and actual days elapsed.

 

**2.2.6****                    ****Deductions****.** Bank may deduct fees, Finance Charges,Advances which become due pursuant to Section 2.3, and other amounts due pursuant to this Agreement fromany Advances made or Collections received by Bank.

 

**2.2.7****                    ****Lockbox; Account CollectionServices****.** Borrower shall direct each Account Debtor(and each depository institutionwhere proceeds of Accounts are on deposit) to remit payments with respect tothe Accounts to a lockboxaccount established with Bank or to wire transfer payments to a cash collateralaccount that Bank controls (collectively, the “Lockbox”). It will be consideredan immediate Event of Default if the Lockbox is not set-up and operationalwithin forty-five (45) days from the date of this Agreement. Until such Lockboxis established, the proceeds ofthe Accounts shall be paid by the Account Debtors to an address consented to byBank. Upon receipt by Borrowerof such proceeds, the Borrower shall immediately transfer and deliver same toBank, along with a detailed cashreceipts journal. Provided no Event of Default exists or an event that withnotice or lapse of time will be an Event of Default, within three (3) daysof receipt of such amounts by Bank, Bank will turn over to Borrower the proceeds of the Accounts other thanCollections with respect to Financed Receivables and the amount of Collectionsin excess of the amounts for which Bank has made an Advance to Borrower, lessany amounts due to Bank, such as the Finance Charge, the Facility Fee, paymentsdue to Bank, other fees and expenses, or otherwise; provided, however, Bank mayhold such excess amount with respect to Financed Receivables as a reserve untilthe end of the applicable Reconciliation Period if Bank, in its discretion,determines that other Financed Receivable(s) may no longer qualify as anEligible Account at any time prior to the end of the subject ReconciliationPeriod. This Section doesnot impose any affirmative duty on Bank to perform any act other than as specificallyset forth herein. All Accounts and the proceeds thereof are Collateral and ifan Event of Default occurs, Bank may apply the proceeds of such Accounts to the Obligations.

 

**2.2.8****                    ****Good Faith Deposit****.** Borrower has paid to Bank a Good FaithDeposit of $10,000 (the “Good Faith Deposit”) to initiate Bank’s due diligencereview process. Any portion of the Good Faith Deposit not utilized to pay BankExpenses will be applied to the Facility Fee. Borrower will be provided with a$6,000 credit from the Good Faith Deposit towards the payment of Bank Expensesconsisting of attorneys’ fees and expenses; provided, however, Borrowerunderstands and agrees that any Bank Expenses consisting of attorneys’ fees andexpenses in excess of such $6,000 credit shall continue to constituteObligations, and the Borrower shall pay the same when due and payable.

 

**2.3****                              ****Repayment of Obligations; Adjustments****.**

** **

**2.3.1****                    ****Repayment****.** Borrower will repay each Advance on theearliest of: (a) the date on which payment is received of the FinancedReceivable with respect to which the Advance was made, (b) the date onwhich the Financed Receivable is no longer an Eligible Account, (c) thedate on which any Adjustment is asserted to the Financed Receivable (but onlyto the extent of the Adjustment if the Financed Receivable remains otherwise anEligible Account), (d) thedate on which there is a breach of any warranty or representation set forth in Section 5.3,or (e) the Maturity Date(including any early termination). Each payment will also include all accruedFinance Charges and CollateralHandling Fees with respect to such Advance and all other amounts then due andpayable hereunder.

 

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**2.3.2****                    ****Repayment on Event of Default****.** When there is an Event of Default, Borrowerwill, if Bank demands (or, uponthe occurrence of an Event of Default under Section 8.5, immediatelywithout notice or demand fromBank) repay all of the Advances. The demand may, at Bank’s option, include theAdvance for each Financed Receivablethen outstanding and all accrued Finance Charges, the Early Termination Fee,Collateral Handling Fee, WarrantWaiver Fee, attorneys and professional fees, court costs and expenses, and anyother Obligations.

 

**2.3.3****                    ****Debit of Accounts****.** Bank may debit any of Borrower’s depositaccounts for payments or any amounts Borrower owes Bank hereunder. Bank shallpromptly notify Borrower when it debits Borrower’s accounts. These debits shallnot constitute a set-off.

 

**2.3.4****                    ****Adjustments****.** If at any time during the term of thisAgreement any Account Debtor asserts an Adjustment or if Borrower issues a credit memorandum or if any of therepresentations, warranties or covenants set forth in Section 5.3 are notlonger true in all material respects, Borrower will promptly advise Bank.

 

**2.4****                              ****Power of Attorney****.** Borrower irrevocably appoints Bank and itssuccessors and assigns as attorney-in-factand authorizes Bank, to: (i) following the occurrence of an Event ofDefault, sell, assign, transfer, pledge,compromise, or discharge all or any part of the Financed Receivables; (ii) followingthe occurrence of an Event of Default, demand, collect, sue, and give releasesto any Account Debtor for monies due and compromise, prosecute, or defend any action, claim, caseor proceeding about the Financed Receivables, including filing a claim orvoting a claim in any bankruptcy case in Bank’s or Borrower’s name, as Bankchooses; (iii) following the occurrence of an Event of Default, prepare,file and sign Borrower’s name on any notice, claim, assignment, demand, draft, or notice of or satisfactionof lien or mechanics’ lien or similar document; (iv) regardless of whetherthere has been an Event of Default, notify all Account Debtors to pay Bankdirectly; (v) regardless of whether there has been an Event of Default, receive, open, and dispose of mailaddressed to Borrower; (vi) regardless of whether there has been an Event of Default, endorseBorrower’s name on checks or other instruments (to the extent necessary to pay amounts owed pursuant to thisAgreement); and (vii) regardless of whether there has been an Event of Default, execute on Borrower’s behalf anyinstruments, documents, financing statements to perfect Bank’s interests in theFinanced Receivables and Collateral and do all acts and things necessary orexpedient, as determined solelyand exclusively by Bank, to protect or preserve, Bank’s rights and remediesunder this Agreement, as directedby Bank.

 

**3****                                        ****CONDITIONS OF LOANS**

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**3.1****                              ****Conditions Precedent to Initial Advance****.** Bank’s agreement to make the initial Advanceis subject to the conditionprecedent that Bank shall have received, in form and substance satisfactory toBank, such documents, andcompletion of such other matters, as Bank may reasonably deem necessary orappropriate, including, withoutlimitation, subject to the condition precedent that Bank shall have received,in form and substance satisfactoryto Bank, the following:

 

(a)                                  a certificate of the Secretary of Borrowerwith respect to articles, bylaws, incumbency and resolutions authorizing the execution and delivery of thisAgreement;

 

(b)                                 an Intellectual Property Security Agreement;

 

(c)                                  subordination agreements/intercreditoragreements by certain Persons, if applicable; 

 

(d)                                 Perfection Certificate(s) by Borrower;

 

(e)                                  Warrant to Purchase Stock, if applicable;

 

(f)                                    Account Control Agreement/ Investment AccountControl Agreement, if applicable;

 

(g)                                 insurance certificates;

 

(h)                                 payment of the fees and Bank Expenses thendue and payable;

 

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(i)                                     Certificate of Foreign Qualification (ifapplicable);

 

(j)                                     Certificate of Good Standing/Legal Existence;and

 

(k)                                  such other documents, and completion of suchother matters, as Bank may reasonably deem necessary or appropriate.

 

**3.2****                             ****Conditions Precedent to allAdvances****.** Bank’s agreement to make each Advance,including the initial Advance,is subject to the following:

 

(a)                                  receipt of the Invoice Transmittal;

 

(b)                                 Bank shall have (at its option) conducted the confirmationsand verifications as described in Section 2.1.1 (d); and

 

(c)                                  each of the representations and warranties in Section 5shall be true on the date of the InvoiceTransmittal and on the effective date of each Advance and no Event of Defaultshall have occurred and be continuing,or result from the Advance. Each Advance is Borrower’srepresentation and warranty on that date that the representations and warranties in Section 5remain true.

 

**4****                                        ****CREATION OF SECURITY INTEREST**

 

**4.1****                              ****Grant of Security Interest****.** Borrower hereby grants Bank, to secure thepayment and performance in fullof all of the Obligations and the performance of each of Borrower’s dutiesunder the Loan Documents, a continuing security interest in, and pledges andassigns to Bank, the Collateral, wherever located, whether now owned or hereafteracquired or arising, and all proceeds and products thereof. Borrower warrantsand represents that the security interest granted herein shall be a firstpriority security interest in the Collateral.

 

Except as noted on thePerfection Certificate, Borrower is not a party to, nor is bound by, anymaterial license or other agreement with respect to which Borrower is thelicensee that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’sinterest in such license or agreement or any other property. Borrower will provide written notice to Bankwithin 30 days of entering or becoming bound by any such license or agreement which is reasonably likely to have amaterial impact on Borrower’s business or financial condition (other thanover-the-counter software that is commercially available to the public).Borrower shall take such steps as Bank requests to obtain the consent of, authorization by, or waiver by, anyperson whose consent or waiver is necessary for all such licenses or contractrights to be deemed “Collateral” and for Bank to have a security interest in itthat might otherwise be restricted or prohibited by law or by the terms of anysuch license or agreement (such consent or authorization may include a licensor’s agreement to a contingentassignment of the license to Bank if the Bank determines that is necessary inits good faith judgment), whether now existing or entered into in the future.

 

If the Agreement isterminated, Bank’s lien and security interest in the Collateral shall continueuntil Borrower fully satisfiesits Obligations. If Borrower shall at any time, acquire a commercial tortclaim, Borrower shall promptlynotify Bank in a writing signed by Borrower of the brief details thereof andgrant to Bank in such writing asecurity interest therein and in the proceeds thereof, all upon the terms ofthis Agreement, with such writingto be in form and substance satisfactory to Bank.

 

**4.2****                              ****Authorization to File FinancingStatements****.** Borrower hereby authorizes Bank to filefinancing statements, without notice to Borrower, with all appropriatejurisdictions in order to perfect or protect Bank’s interest or rightshereunder, which financing statements may indicate the Collateral as “allassets of the Debtor” or words of similar effect, or as being of an equal orlesser scope, or with greater detail, all in Bank’s discretion.

 

**5****                                        ****REPRESENTATIONS AND WARRANTIES**

 

Borrower represents andwarrants as follows:

 

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**5.1****                              ****Due Organization andAuthorization****.** Borrower and each Subsidiary is duly existingand in good standing in itsstate of formation and qualified and licensed to do business in, and in goodstanding in, any state in which the conduct of its business or its ownership ofproperty requires that it be qualified except where the failure to do so could not reasonably be expected tocause a Material Adverse Change. Borrower represents and warrants to Bank that: (a) Borrower’s exact legalname is that indicated on the Perfection Certificate and on the signature page hereof;and (b) Borrower is an organization of the type, and is organized in thejurisdiction, set forth in the PerfectionCertificate; and (c) the Perfection Certificate accurately sets forthBorrower’s organizational identificationnumber or accurately states that Borrower has none; and (d) the PerfectionCertificate accurately sets forthBorrower’s place of business, or, if more than one, its chief executive officeas well as Borrower’s mailing addressif different, and (e) all other information set forth on the Perfection Certificatepertaining to Borrower is accurate and complete. If Borrower does not now havean organizational identification number, but later obtains one, Borrower shallforthwith notify Bank of such organizational identification number.

 

The execution, delivery andperformance of the Loan Documents have been duly authorized, and do notconflict with Borrower’s organizational documents, nor constitute an event ofdefault under any material agreement by which Borrower is bound. Borrower isnot in default under any agreement to which or by which it is bound in whichthe default could reasonably be expected to cause a Material Adverse Change.

 

**5.2****                              ****Collateral****.** Borrower has good title to the Collateral,free of Liens except Permitted Liens. All inventory is in all material respects of good and marketable quality,free from material defects. Borrower has no deposit account, other than thedeposit accounts with Bank and deposit accounts described in the Perfection Certificate delivered to Bank in connectionherewith. The Collateral is not in the possession of any third party bailee(such as a warehouse). Except as hereafter disclosed to Bank in writing byBorrower, none of the components ofthe Collateral shall be maintained at locations other than as provided in thePerfection Certificate. In the event that Borrower, after the date hereof,intends to store or otherwise deliver any portion of the Collateral to abailee, then Borrower will first receive the written consent of Bank and suchbailee must acknowledge in writing that the bailee is holding such Collateralfor the benefit of Bank.

 

**5.3****                             ****Financed Receivables****.** Borrower represents and warrants for eachFinanced Receivable:

 

(a)                                  Each Financed Receivable is an EligibleAccount;

 

(b)                                 Borrower is the owner with legal right tosell, transfer, assign and encumber such Financed Receivable;

 

(c)                                  The correct amount is on the InvoiceTransmittal and is not disputed;

 

(d)                                 Payment is not contingent on any obligation orcontract and Borrower has fulfilled all its obligations as of the InvoiceTransmittal date;

 

(e)                                  Each Financed Receivable is based on anactual sale and delivery of goods and/or services rendered, is due to Borrower,is not past due or in default, has not been previously sold, assigned,transferred, or pledged and is free of any liens, security interests andencumbrances other than Permitted Liens;

 

(f)                                    There are no defenses, offsets, counterclaimsor agreements for which the Account Debtor may claim any deduction or discount;

 

(g)                                 Borrower reasonably believes no AccountDebtor is insolvent or subject to any Insolvency Proceedings;

 

(h)                                 Borrower has not filed or had filed againstit Insolvency Proceedings and does not anticipate any filing;

 

(i)                                     Bank has the right to endorse and/ or requireBorrower to endorse all payments received on Financed Receivables and allproceeds of Collateral; and

 

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(j)                                     No representation, warranty or other statementof Borrower in any certificate or written statement given to Bank contains any untrue statement of a materialfact or omits to state a material fact necessary to make the statementcontained in the certificates or statement not misleading.

 

**5.4****                              ****Litigation****.** There are no actions or proceedings pendingor, to the knowledge of Borrower’s ResponsibleOfficers or legal counsel, threatened by or against Borrower or any Subsidiaryin which an adverse decision could reasonably be expected to cause a MaterialAdverse Change.

 

**5.5****                              ****No Material Deviation inFinancial Statements****.** All consolidated financial statements for Borrower and any Subsidiary delivered to Bankfairly present in all material respects Borrower’s consolidated financialcondition and Borrower’s consolidated results of operations. There has not beenany material deterioration in Borrower’s consolidated financial condition sincethe date of the most recent financial statements submitted to Bank.

 

**5.6****                              ****Solvency****.** Borrower is able to pay its debts (includingtrade debts) as they mature.

 

**5.7****                              ****Regulatory Compliance****.** Borrower is not an “investment company” or acompany “controlled” by an “investment company” under the Investment CompanyAct. Borrower is not engaged as one of its important activities in extending credit for marginstock (under Regulations X, T and U of the Federal Reserve Board of Governors).Borrower has complied in all material respects with the Federal Fair LaborStandards Act. Borrower has not violated any laws, ordinances or rules, theviolation of which could reasonably be expected to cause a Material Adverse Change. None of Borrower’s orany Subsidiary’s properties or assets has been used by Borrower or anySubsidiary or, to the best of Borrower’s knowledge, by previous Persons, indisposing, producing, storing, treating,or transporting any hazardous substance other than legally. Borrower and eachSubsidiary has timely filed all required tax returns and paid, or made adequateprovision to pay, all material taxes, except those being contested in goodfaith with adequate reserves under GAAP. Borrower and each Subsidiary hasobtained all consents, approvals and authorizations of, made all declarationsor filings with, and given all notices to, all government authorities that arenecessary to continue its business as currently conducted except where thefailure to obtain or make such consents, declarations, notices or filings wouldnot reasonably be expected to cause a Material Adverse Change.

 

**5.8****                              ****Subsidiaries****.** Borrower does not own any stock, partnershipinterest or other equity securities except for Permitted Investments.

 

**5.9****                              ****Full Disclosure****.** No written representation, warranty or otherstatement of Borrower in any certificate or written statement given to Bankcontains any untrue statement of a material fact or omits to state a materialfact necessary to make the statements contained in the certificates orstatements not misleading.

 

**6****                                        ****AFFIRMATIVE COVENANTS**

 

Borrower shall do all of thefollowing:

 

**6.1****                              ****Government Compliance****.** Borrower shall maintain its and allSubsidiaries’ legal existence and goodstanding in its jurisdiction of formation and maintain qualification in eachjurisdiction in which the failure to so qualify would reasonably be expected tohave a material adverse effect on Borrower’s business or operations. Borrower shall comply, and have eachSubsidiary comply, with all laws, ordinances and regulations to which it issubject, noncompliance with which could have a material adverse effect onBorrower’s business or operations or would reasonably be expected to cause a Material Adverse Change.

 

**6.2****                              ****Financial Statements, Reports,Certificates****.**

 

(a)                                  Borrower shall deliver to Bank:  (i) assoon as available, but no later than **thirty (30)**days after the last day of each month, a company prepared consolidated balancesheet and income statement covering Borrower’s consolidated operations duringthe period certified by a Responsible Officer and in a form acceptable to Bank;(ii) as soon as available, but no later than **one hundredtwenty (120)** days after the last day of Borrower’s

 

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fiscal year, or as providedfor by the Securities and Exchange Commission, audited consolidated financial statements prepared under GAAP, consistentlyapplied, together with, if available, an unqualified opinion on the financialstatements from an independent certified public accounting firm reasonablyacceptable to Bank; (iii) [omitted];(iv) a prompt report of any legal actions pending or threatened againstBorrower or any Subsidiary that couldresult in damages or costs to Borrower or any Subsidiary of One HundredThousand Dollars ($100,000.00) or more; (v) prompt notice of any materialchange in the composition of the intellectual property, or the registration ofany copyright, including any subsequent ownership right of Borrower in or toany Copyright, Patent or Trademark notshown in the IP Agreement or knowledge of an event that materially adverselyaffects the value of the intellectual property; and (vi) budgets, salesprojections, operating plans or other financial information reasonablyrequested by Bank.

 

(b)                                 Within **thirty (30)**days after the last day of each month, Borrower shall deliver to Bank with themonthly financial statements a Compliance Certificate signed by a Responsible Officerin the form of **Exhibit B.**

 

(c)                                  Borrower will allow Bank to audit Borrower’sCollateral, including, but not limited to, Borrower’s Accounts and accountsreceivable, at Borrower’s expense, upon reasonable notice to Borrower;provided, however, prior to the occurrence of an Event of Default, Borrowershall be obligated to pay for not more than one (1) audit per year;provided, further, that provided no Event of Default has occurred and iscontinuing, Bank will not require such audits unless Borrower maintains anAdvances balance outstanding for thirty (30) consecutive days. After theoccurrence of an Event of Default, Bank may audit Borrower’s Collateral,including, but not limited to, Borrower’s Accounts and accounts receivable atBorrower’s expense and at Bank’s sole and exclusive discretion and withoutnotification and authorization from Borrower.

 

(d)                                 Upon Bank’s request, provide a written reportrespecting any Financed Receivable, if payment of any Financed Receivable doesnot occur by its due date and include the reasons for the delay.

 

(e)                                  Provide Bank with, as soon as available, butno later than thirty (30) days following each Reconciliation Period, an agedlisting of accounts receivable and accounts payable by invoice date, in form acceptableto Bank.

 

(f)                                    Provide Bank with, as soon as available, butno later than thirty (30) days following each Reconciliation Period, a DeferredRevenue report, in form acceptable to Bank.

 

(g)                                 Provide Bank, no later than 60 days followingthe end of Borrower’s then current fiscal year, Borrower’s annual operatingbudget (including income statements, balance sheets and cash flow statements,by month) for Borrower’s upcoming fiscal year.

 

**6.3****                              ****Taxes****.** Borrower shall make, and cause eachSubsidiary to make, timely payment of all material federal, state, and local taxes orassessments (other than taxes and assessments which Borrower is contesting ingood faith, with adequatereserves maintained in accordance with GAAP) and will deliver to Bank, ondemand, appropriate certificates attesting to such payments.

 

**6.4****                              ****Insurance****.** Borrower shall keep its business and theCollateral insured for risks and in amounts, and as Bank may reasonablyrequest. Insurance policies shall be in a form, with companies, and in amountsthat are satisfactory to Bank. All property policies shall have a lender’s losspayable endorsement showing Bank as an additional loss payee and all liabilitypolicies shall show Bank as an additional insured and all policies shall provide that the insurer must give Bank atleast twenty (20) days notice before canceling its policy. At Bank’s request, Borrower shall deliver certifiedcopies of policies and evidence of all premium payments. Proceeds payable under any policy shall, at Bank’s option, bepayable to Bank on account of the Obligations. If Borrower fails to obtaininsurance as required under this Section or to pay any amount or furnishany required proof of payment to third persons and Bank, Bank may make all orpart of such payment or obtain such insurance policies required in this Section andtake any action under the policies Bank deems prudent.

 

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**6.5****                              ****Accounts****.**

 

(a)                                  In order to permit Bank to monitor Borrower’sfinancial performance and condition, Borrower, and all Borrower’s Subsidiarieslocated in the United States of America, shall maintain Borrower’s, and such Subsidiaries, primary depository andoperating accounts and securities accounts with Bank. Notwithstanding theforegoing, the following Subsidiaries of Borrower will not be subject to thisprovision: Versant GmbH, Versant Ltd.and Versant India Pvt. Ltd.

 

(b)                                 Borrower shall identify to Bank, in writing,any bank or securities account opened by Borrower with any institution other than Bank. In addition, for eachsuch account that Borrower at any time opens or maintains, Borrower shall, atBank’s request and option, pursuant to an agreement in form and substance acceptable to Bank, cause the depository bankor securities intermediary to agree that such account is the collateral of Bank pursuant to the terms hereunder. Theprovisions of the previous sentence shall not apply to deposit accountsexclusively used for payroll, payroll taxes and other employee wage and benefitpayments to or for the benefitof Borrower’s employees.

 

**6.6****                              ****Financial Covenants****.** Omitted.

 

**6**.**7****                              ****Further Assurances****.** Borrower shall execute any furtherinstruments and take further action as Bank reasonably requests to perfect orcontinue Bank’s security interest in the Collateral or to effect the purposesof this Agreement.

 

**7****                                        ****NEGATIVE COVENANTS**

 

Borrower shall not do any ofthe following without Bank’s prior written consent (which shall be a matter ofBank’s good faith business judgment).

 

**7.1****                              ****Dispositions****.** Convey, sell, lease, transfer or otherwisedispose of (collectively a “Transfer”), or permit any of its Subsidiaries toTransfer, all or any part of its business or property, except for Transfers (i) ofinventory in the ordinary course of business; (ii) of non-exclusivelicenses and similar arrangements for the use of the property of Borrower orits Subsidiaries in the ordinary course of business; or (iii) of worn-outor obsolete equipment.

 

**7.2****                              ****Changes in Business, Ownership,Management or Business Locations****.** Engage in or permitany of its Subsidiaries to engage in any business other than the businessescurrently engaged in by Borrower or reasonably related thereto, or have a material change in its ownership(other than by the sale of Borrower’s equity securities in a public offering orto venture capital investors so long as Borrower identifies to Bank the venturecapital investors prior to theclosing of the investment), or management. Borrower shall not, without at leastthirty (30) days prior written notice to Bank: (i) [omitted], or (ii) changeits jurisdiction of organization, or (iii) change its organizationalstructure or type, or (iv) change its legal name, or (v) change anyorganizational number (if any) assigned by its jurisdiction of organization.

 

**7.3****                              ****Mergers or Acquisitions****.** Merge or consolidate, or permit any of itsSubsidiaries to merge or consolidate, with any other Person, or acquire, orpermit any of its Subsidiaries to acquire, all or substantially all of thecapital stock or property of another Person. A Subsidiary may merge orconsolidate into another Subsidiary or into Borrower.

 

**7.4****                              ****Indebtedness****.** Create, incur, assume, or be liable for anyIndebtedness, or permit any Subsidiary to do so, other than PermittedIndebtedness.

 

**7.5****                              ****Encumbrance****.** Create, incur, or allow any Lien on any ofits property, including the intellectual property, or assign or convey anyright to receive income, including the sale of any Accounts, or permit any ofits Subsidiaries to do so, except for Permitted Liens, or permit any Collateralnot to be subject to the first priority security interest granted herein. TheCollateral may also be subject to Permitted Liens.

 

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**7.6****                              ****Distributions; Investments****.**   (i) Directly orindirectly 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;or (ii) pay any dividendsor make any distribution or payment or redeem, retire or purchase any capitalstock.

 

**7.7****                              ****Transactions with Affiliates****.** Directly or indirectly enter into or permitto exist any material transaction with any Affiliate of Borrower, except fortransactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms thatare no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliatedPerson.

 

**7.8****                              ****Subordinated Debt****.** Make or permit any payment on anySubordinated Debt, except under the terms of the Subordinated Debt, or amend any provision in any documentrelating to the Subordinated Debt, without Bank’s prior written consent.

 

**7.9****                              ****Compliance****.** Become an “investment company” or a companycontrolled by an “investment company”,under the Investment Company Act of 1940 or undertake as one of its importantactivities extending credit topurchase or carry margin stock, or use the proceeds of any Advance for thatpurpose; fail to meet the minimumfunding requirements of ERISA, permit a Reportable Event or ProhibitedTransaction, as defined in ERISA, to occur; fail to comply with the FederalFair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected tohave a material adverse effect on Borrower’s business or operations or would reasonably be expected to cause aMaterial Adverse Change, or permit any of its Subsidiaries to do so.

 

**8****                                        ****EVENTS OF DEFAULT**

 

Any one of the following isan Event of Default:

 

**8.1****                              ****Payment Default****.** Borrower fails to pay any of the Obligationswhen due;

 

**8.2****                              ****Covenant Default****.** Borrower fails or neglects to perform anyobligation in Section 6 or violates any covenant in Section 7 or fails or neglects to perform, keep,or observe any other material term, provision, condition, covenant or agreementcontained in this Agreement, any Loan Documents and as to any default undersuch 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, graceand cure periods provided under this section shall not apply to financialcovenants or any other covenants that are required to be satisfied, completedor tested by a date certain;

 

**8.3****                              ****Material Adverse Change****.** A Material Adverse Change occurs;

 

**8.4****                              ****Attachment****.** (i) Any portion of Borrower’s assets isattached, seized, levied on, or comes into possession of a trustee or receiverand the attachment, seizure or levy is not removed in ten (10) days; (ii) theservice of process upon Borrowerseeking to attach, by trustee or similar process, any funds of Borrower ondeposit with Bank, or any entityunder the control of Bank (including a subsidiary); (iii) Borrower isenjoined, restrained, or preventedby court order from conducting any part of its business; (iv) a judgmentor other claim becomes a Lien on a portion of Borrower’s assets; or (v) anotice of lien, levy, or assessment is filed against any of Borrower’s assetsby any government agency and notpaid within ten (10) days after Borrower receives notice;

 

**8.5****                              ****Insolvency****.**   (i) Borrower is unableto pay its debts (including trade debts) as they become due or otherwisebecomes insolvent; (ii) Borrower begins an Insolvency Proceeding; or (iii) anInsolvency Proceeding is begunagainst Borrower and not dismissed or stayed within thirty (30) days (but noAdvances shall be made before anyInsolvency Proceeding is dismissed);

 

**8.6****                              ****Other Agreements****.** If there is a default in any agreement towhich Borrower is a party with a thirdparty or parties resulting in a right by such third party or parties, whetheror not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of One HundredThousand Dollars ($100,000) or that could result in a Material Adverse Change;

 

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**8.7****                              ****Judgments****.**  If a judgment or judgments forthe payment of money in an amount, individually or in the aggregate, of at least Two HundredThousand Dollars ($200,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a periodof ten (10) days (provided that no Advances will be made prior to the satisfaction or stay of such judgment);

 

**8.8****                              ****Misrepresentations****.** If Borrower or any Person acting for Borrowermakes any material misrepresentationor material misstatement now or later in any warranty or representation in thisAgreement or in any writingdelivered to Bank or to induce Bank to enter this Agreement or any LoanDocument;

 

**8.9****                              ****Subordinated Debt****.** A default or breach occurs under anyagreement between Borrower and any creditor of Borrower that signed asubordination agreement with Bank, or any creditor that has signed asubordination agreement with Bank breaches any terms of the subordinationagreement.

 

**8.10****                       ****Guaranty****.  **(i) Any guaranty of any Obligationsterminates or ceases for any reason to be in full force; or (ii) anyGuarantor does not perform any obligation under any guaranty of theObligations; or (iii) any materialmisrepresentation or material misstatement exists now or later in any warrantyor representation in any guaranty of the Obligations or in any certificatedelivered to Bank in connection with the guaranty; or (iv) anycircumstance described in Section 7, or Sections 8.4, 8.5 or 8.7 occurs toany Guarantor, or (v) the death, liquidation, winding up, termination ofexistence, or insolvency of any Guarantor.

 

**9****                                        ****BANK’S RIGHTS AND REMEDIES**

** **

**9.1****                              ****Rights and Remedies****.** When an Event of Default occurs and continuesBank may, without notice ordemand, do any or all of the following:

 

(a)                                  Declare all Obligations immediately due andpayable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately dueand payable without any action by Bank);

 

(b)                                 Stop advancing money or extending credit forBorrower’s benefit under this Agreement or under any other agreement between Borrower and Bank;

 

(c)                                  Settle or adjust disputes and claims directlywith Account Debtors for amounts, on terms and in any order that Bank considersadvisable and notify any Person owing Borrower money of Bank’s securityinterest in such funds and verify the amount of such account. Borrower shallcollect all payments in trust for Bank and, if requested by Bank, immediatelydeliver the payments to Bank in the form received from the Account Debtor, withproper endorsements for deposit;

 

(d)                                 Make any payments and do any acts itconsiders necessary or reasonable to protect its security interest in theCollateral. Borrower shall assemble the Collateral if Bank requests and make itavailable as Bank designates. Bank may enter premises where the Collateral islocated, 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 securityinterest and pay all expenses incurred. Borrower grants Bank a license to enterand occupy any of its premises, without charge, to exercise any of Bank’srights or remedies;

 

(e)                                  Apply to the Obligations any (i) balancesand deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for thecredit or the account of Borrower;

 

(f)                                    Ship, reclaim, recover, store, finish,maintain, repair, prepare for sale, advertise for sale, and sell theCollateral. Bank is hereby granted a non-exclusive, royalty-free license orother 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 pertainsto the Collateral, in completing production of, advertising for sale, andselling any Collateral and, in connection with Bank’s exercise of its rights under this Section, Borrower’srights under all licenses and all franchise agreements inure to Bank’s benefit;

 

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(g)                                 Place a “hold” on any account maintained withBank and/or deliver a notice of exclusive control, any entitlement order, orother directions or instructions pursuant to any control agreement or similar agreementsproviding control of any Collateral; and

 

(h)                                 Exercise all rights and remedies and disposeof the Collateral according to the Code.

 

**9.2****                              ****Bank Expenses; Unpaid Fees****.** Any amounts paid by Bank as provided hereinshall constitute Bank Expenses and are immediately due and payable, and shallbear interest at the Default Rate and be secured by the Collateral. No paymentsby Bank shall be deemed an agreement to make similar payments in the future orBank’s waiver of any Event of Default. In addition, any amounts advancedhereunder which are not based on FinancedReceivables (including, without limitation, unpaid fees and Finance Charges asdescribed in Section 2.2) shallaccrue interest at the Default Rate and be secured by the Collateral.

 

**9.3****                              ****Bank’s Liability for Collateral****.** So long as Bank complies with reasonablebanking practices regarding thesafekeeping of collateral, Bank shall not be liable or responsible for: (a) thesafekeeping of the Collateral; (b) anyloss or damage to the Collateral; (c) any diminution in the value of theCollateral; or (d) any act or default of any carrier, warehouseman,bailee, or other Person. Borrower bears all risk of loss, damage or destructionof the Collateral.

 

**9.4****                              ****Remedies Cumulative****.** Bank’s rights and remedies under thisAgreement, the Loan Documents, andall other agreements are cumulative. Bank has all rights and remedies providedunder the Code, by law, or in equity. Bank’s exercise of one right or remedy isnot an election, and Bank’s waiver of any Event of Default is not a continuingwaiver. Bank’s delay is not a waiver, election, or acquiescence. No waiverhereunder shall be effective unlesssigned by Bank and then is only effective for the specific instance and purposefor which it was given.

 

**9.5****                              ****Demand Waiver****.** Borrower waives demand, notice of default ordishonor, notice of payment and nonpayment, notice of any default, nonpaymentat maturity, release, compromise, settlement, extension, or renewal ofaccounts, documents, instruments, chattel paper, and guarantees held by Bank onwhich Borrower is liable.

 

**9.6****                              ****Default Rate****.** After the occurrence of an Event of Default,all Obligations shall accrue interest at the Applicable Rate plus five percent (5.0%) per annum (the “DefaultRate”).

 

**10****                                 ****NOTICES****.**

 

Notices or demands by eitherparty about this Agreement must be in writing and personally delivered or sent by an overnight delivery service, bycertified mail postage prepaid return receipt requested, or by fax to the addresses listed at the beginning of thisAgreement. A party may change notice address by written notice to the otherparty.

 

**11****                                 ****CHOICE OF LAW, VENUE AND JURYTRIAL WAIVER**

 

California lawgoverns the Loan Documents without regard to principles of conflicts of law.Borrower and Bank each submit to the exclusive jurisdiction of the State andFederal courts in California and Borrower accepts jurisdiction of the courtsand venue in Santa Clara County, California. NOTWITHSTANDING THEFOREGOING, BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINSTBORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANKDEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TOOTHERWISE ENFORCE BANK’S RIGHTS AGAINST BORROWER OR ITS PROPERTY.

 

BORROWER AND BANK EACH WAIVETHEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF ORBASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS AMATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTYHAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

 

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**12****                                 ****GENERAL PROVISIONS**

** **

**12.1****                       ****Successors and Assigns****.** This Agreement binds and is for the benefitof the successors and permitted assigns of each party. Borrower may not assignthis Agreement or any rights or Obligations under it without Bank’s priorwritten consent which may be granted or withheld in Bank’s discretion. Bank hasthe right, without the consent of or notice to Borrower, to sell, transfer,negotiate, or grant participation in all or any part of, or any interest in,Bank’s obligations, rights and benefits under this Agreement, the LoanDocuments or any related agreement.

 

**12.2****                       ****Indemnification****.** Borrower hereby indemnifies, defends andholds Bank and its officers, employees, directors and agents harmless against: (a) allobligations, demands, claims, and liabilities asserted by any other party inconnection with the transactions contemplated by the Loan Documents; and (b) alllosses or Bank Expenses incurred,or paid by Bank from, following, or consequential to transactions between Bankand Borrower (including reasonable attorneys’ fees and expenses), except forlosses caused by Bank’s gross negligence or willful misconduct.

 

**12.3****                       ****Right of Set-Off****.** Borrower hereby grants to Bank, a lien,security interest and right of setoff as security for all Obligations to Bank, whether now existing or hereafterarising upon and against all deposits, credits, collateral and property, now orhereafter in the possession, custody, safekeeping or control of Bank or anyentity under the control of Bank (including a Bank subsidiary) or in transit toany of them. At any time after the occurrence and during the continuance of anEvent of Default, without demand or notice, Bank may set off the same or anypart thereof and apply the same to any liability or obligation of Borrower eventhough unmatured and regardless of the adequacy of any other collateralsecuring the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITSRIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THEOBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCHDEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY,VOLUNTARILY AND IRREVOCABLY WAIVED.

 

**12.4****                       ****Time of Essence****.** Time is of the essence for the performance ofall Obligations in this Agreement.

 

**12.5****                       ****Severability of Provision****.** Each provision of this Agreement is severablefrom every other provision in determining the enforceability of any provision.

 

**12.6****                       ****Amendments in Writing;Integration****.** All amendments to this Agreement must be inwriting signed by both Bank and Borrower. This Agreement and the Loan Documentsrepresent the entire agreement about this subject matter, and supersede priornegotiations or agreements. All prior agreements, understandings,representations, warranties, and negotiations between the parties about thesubject matter of this Agreement and the Loan Documents merge into thisAgreement and the Loan Documents.

 

**12.7****                       ****Counterparts****.** This Agreement may be executed in any numberof counterparts and by different parties on separate counterparts, each ofwhich, when executed and delivered, are an original, and all taken together,constitute one Agreement.

 

**12.8****                       ****Survival****.** All covenants, representations andwarranties made in this Agreement continue in full force while any Obligationsremain outstanding. The obligation of Borrower in Section 12.2 toindemnify Bank shall survive until the statute of limitations with respect tosuch claim or cause of action shall have run.

 

**12.9****                       ****Confidentiality****.** In handling any confidential information,Bank shall exercise the same degree of care that it exercises for its ownproprietary information, but disclosure of information may be made: (i) toBank’s subsidiaries or affiliates in connection with their business withBorrower; (ii) to prospective transferees or purchasers of any interest in the Advances(provided, however, Bank shall use commercially reasonable efforts in obtaining such prospective transferee’s orpurchaser’s agreement to the terms of this provision); (iii) as requiredby law, regulation, subpoena, or other order, (iv) as required inconnection with Bank’s examination or audit; and (v) as Bank considersappropriate in exercising remedies under this Agreement. Confidentialinformation does not include

 

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information that either: (a) is in the public domain or in Bank’spossession when disclosed to Bank, or becomes part of the public domain afterdisclosure to Bank; or (b) is disclosed to Bank by a third party, if Bankdoes not know that thethird party is prohibited from disclosing the information.

 

**12.10****                ****Attorneys’ Fees, Costs andExpenses****.** In any action or proceeding between Borrowerand Bank arising out of the LoanDocuments, the prevailing party will be entitled to recover its reasonableattorneys’ fees and other reasonable costs and expenses incurred, in additionto any other relief to which it may be entitled.

 

**13****                                 ****DEFINITIONS**

** **

**13.1****                       ****Definitions****.** In this Agreement:

 

**“Accounts”** are all existing and later arising accounts,contract rights, and other obligations owed Borrower in connection with its sale or lease of goods (includinglicensing software and other technology) or provision of services, all creditinsurance, guaranties, other security and all merchandise returned or reclaimedby Borrower and Borrower’s Books relating to any of the foregoing.

 

**“Account Debtor”** is as defined in the Code and shall include,without limitation, any person liable on any Financed Receivable, such as, aguarantor of the Financed Receivable and any issuer of a letter of credit orbanker’s acceptance.

 

**“Adjusted Quick Ratio”** is the ratio of Quick Assets to CurrentLiabilities minus Deferred Revenue.

 

**“Adjustments”** are all discounts, allowances, returns,disputes, counterclaims, offsets, defenses, rights of recoupment, rights ofreturn, warranty claims, or short payments, asserted by or on behalf of anyAccount Debtor for any Financed Receivable.

 

**“Advance”** is defined in Section 2.1.1.

 

**“Advance Rate”** is eighty percent (80.0%), net of any offsetsrelated to each specific Account Debtor.

 

**“Affiliate”** is a Person that owns or controls directly orindirectly the Person, any Person that controls or is controlled by or is under common control withthe Person, and each of that Person’s senior executive officers, directors, partners and, for any Person thatis a limited liability company, that Person’s managers and members.

 

**“Applicable Rate”** is, while the Streamline Agreement is ineffect, a per annum rate equal to the Prime Rate plus four percent (4.0%);otherwise, a per annum rate equal to the Prime Rate plus four and one-halfpercent (4.5%).

 

**“Bank Expenses”** are all audit fees and expenses and reasonablecosts or expenses (including reasonable attorneys’ fees and expenses) forpreparing, negotiating, administering, defending and enforcing the LoanDocuments (including appeals or Insolvency Proceedings).

 

**“Borrower’s Books”** are all Borrower’s books and recordsincluding ledgers, records regarding Borrower’s assets or liabilities, the Collateral, business operations or financialcondition and all computer programs or discs or any equipment containing theinformation.

 

**“Business Day”** is any day that is not a Saturday, Sunday ora day on which Bank is closed.

 

**“Closing Date”** is the date of this Agreement.

 

**“Code”** is the Uniform Commercial Code as adopted inCalifornia, as amended and as may be amended and in effect from time to time.

 

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**“Collateral”** is any and all properties, rights and assetsof Borrower granted by Borrower to Bank or arising under the Code, now, or inthe future, in which Borrower obtains an interest, or the power to transferrights, as described on **Exhibit A.**

** **

**“Collateral Handling Fee”** is defined in Section 2.2.4.

 

**“Collections”** are all funds received by Bank from or onbehalf of an Account Debtor for Financed Receivables.

 

**“Compliance Certificate”** is attached as **Exhibit B.**

** **

**“Contingent Obligation”** is, for any Person, any direct or indirectliability, contingent or not, of that Person for (i) any indebtedness, lease, dividend, letter of creditor other obligation of another such as an obligation directly or indirectlyguaranteed, endorsed, co-made, discounted or sold with recourse by that Person,or for which that Person isdirectly or indirectly liable; (ii) any obligations for undrawn letters ofcredit for the account of that Person; and (iii) all obligations from anyinterest rate, currency or commodity swap agreement, interest rate cap orcollar agreement, or other agreement or arrangement designated to protect aPerson against fluctuation in interest rates, currency exchange rates or commodity prices; but “ContingentObligation” does not include endorsements in the ordinary course of business.The amount of a Contingent Obligation is the stated or determined amount of theprimary obligation for which the Contingent Obligation is made or, if notdeterminable, the maximum reasonably anticipated liability for it determined bythe Person in good faith; but the amount may not exceed the maximum of theobligations under the guarantee or other support arrangement.

 

**“Current Liabilities”** is all obligations and liabilities ofBorrower to Bank, plus, without duplication, the aggregate amount of Borrower’sTotal Liabilities which mature within one (1) year.

 

**“Default Rate”** is defined in Section 9.6.

 

**“Deferred Revenue”** is all amounts received or invoiced, asappropriate, in advance of performance under contracts and not yet recognizedas revenue.

 

**“Early Termination Fee”** is defined in Section 2.1.1.

 

**“Eligible Accounts”** are billed Accounts in the ordinary course ofBorrower’s business that meet all Borrower’s representations and warranties in Section 5.3,have been, at the option of Bank, confirmed in accordance with Section 2.1.1(d), and are due and owing from Account Debtors deemed creditworthy by Bank inits sole discretion. Withoutlimiting the fact that the determination of which Accounts are eligiblehereunder is a matter of Bank discretion in each instance, Eligible Accountsshall not include the following Accounts (which listing may be amended or changed in Bank’s discretion withnotice to Borrower):

 

(a)                                  Accounts that the Account Debtor has not paidwithin ninety (90) days of invoice date;

 

(b)                                 Accounts for an Account Debtor, fifty percent(50%) or more of whose Accounts have not been paid within ninety (90) days ofinvoice date;

 

(c)                                  Accounts for which the Account Debtor does nothave its principal place of business in the United States, unless agreed to byBank in writing, in its sole discretion, on a case-by-case basis;

 

(d)                                 Accounts for which the Account Debtor is afederal, state or local government entity or any department, agency, or instrumentalitythereof except for Accounts of the United States if the payee has assigned its payment rights to Bank and the assignment hasbeen acknowledged under the Assignment of Claims Act of 1940 (31 U.S.C. 3727);

 

(e)                                  Accounts for which Borrower owes the AccountDebtor, but only up to the amount owed (sometimes called “contra” accounts,accounts payable, customer deposits or credit accounts);

 

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(f)                                    Accounts for demonstration or promotionalequipment, or in which goods are consigned, sales guaranteed, sale or return,sale on approval, bill and hold, or other terms if the Account Debtor’s paymentmay be conditional;

 

(g)                                 Accounts for which the Account Debtor isBorrower’s Affiliate, officer, employee, or agent;

 

(h)                                 Accounts in which the Account Debtor disputesliability or makes any claim and Bank believes there may be a basis for dispute(but only up to the disputed or claimed amount), or if the Account Debtor issubject to an InsolvencyProceeding, or becomes insolvent, or goes out of business;

 

(i)                                     Accounts for which Bank reasonably determinescollection to be doubtful or any Accounts which are unacceptable to Bank for any reason.

 

**“ERISA”** is the Employment Retirement Income SecurityAct of 1974, and its regulations. 

 

**“Events of Default”** are set forth in Article 8.

 

**“Facility Amount”** is Three Million Seven Hundred and FiftyThousand Dollars ($3,750,000).

 

**“Facility Fee”** is defined in Section 2.2.2.

 

**“Finance Charges”** is defined in Section 2.2.3.

 

**“Financed Receivables”** are all those Eligible Accounts, includingtheir proceeds which Bank finances and makes an Advance, as set forth in Section 2.1.1.A Financed Receivable stops being a Financed Receivable (but remainsCollateral) when the Advance made for the Financed Receivable has been fullypaid.

 

**“Financed Receivable Balance”** is the total outstanding gross face amount,at any time, of any Financed Receivable.

 

**“GAAP”** is generally accepted accounting principles.

 

**“Good Faith Deposit”** is defined in Section 2.2.8.

 

**“Guarantor”** is any present or future guarantor of theObligations.

 

**“Indebtedness”** is (a) indebtedness for borrowed moneyor the deferred price of property or services, such as reimbursement and other obligations forsurety bonds and letters of credit, (b) obligations evidenced by notes,bonds, debentures or similar instruments, (c) capital lease obligationsand (d) Contingent Obligations.

 

**“Insolvency Proceeding”** is any proceeding by or against any Personunder the United States Bankruptcy Code,or any other bankruptcy or insolvency law, including assignments for the benefitof creditors, compositions, extensionsgenerally with its creditors, or proceedings seeking reorganization,arrangement, or other relief.

 

**“Investment”** is any beneficial ownership of (includingstock, partnership interest or other securities) any Person, or any loan,advance or capital contribution to any Person.

 

**“Invoice Transmittal”** shows Eligible Accounts which Bank may financeand, for each such Account, includes the Account Debtor’s, name, address,invoice amount, invoice date and invoice number.

 

**“Intellectual Property Collateral”** is a defined in the IP Agreement.

 

**“IP Agreement”** is a certain Intellectual Property SecurityAgreement executed and delivered by Borrower to Bank.

 

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**“Lockbox”** is defined in Section 2.2.7.

 

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

 

**“Loan Documents”** are, collectively, this Agreement, any note,or notes or guaranties executed by Borroweror Guarantor, and any other present or future agreement between Borrower and/orfor the benefit of Bank in connection with this Agreement, all as amended,extended or restated.

 

**“Material Adverse Change”** is: (i) A material impairment in theperfection or priority of Bank’s security interest in the Collateral or in the value of such Collateral; (ii) amaterial adverse change in the business, operations, or condition (financial orotherwise) of Borrower; or (iii) a material impairment of the prospect ofrepayment of any portion of theObligations.

 

**“Maturity Date”** is two (2) years from the date of thisAgreement.

 

**“Obligations”** are all advances, liabilities, obligations,covenants and duties owing, arising, due or payable by Borrower to Bank now orlater under this Agreement or any other document, instrument or agreement,account (including those acquiredby assignment) primary or secondary, such as all Advances, Finance Charges,Facility Fee, Early Termination Fee, Collateral Handling Fee, Warrant WaiverFee, interest, fees, expenses, professional fees and attorneys’ fees, or other amounts now or hereafter owing byBorrower to Bank.

 

**“Perfection Certificate”** is a certain representations and warrantiesletter agreement previously executed and delivered by Borrower to Bank inconnection with this Agreement.

 

**“Permitted Indebtedness”** is:

 

(a)                                  Borrower’s indebtedness to Bank under thisAgreement or the Loan Documents;

 

(b)                                 Subordinated Debt;

 

(c)                                  Indebtedness to trade creditors incurred inthe ordinary course of business; and

 

(d)                                 Indebtedness secured by Permitted Liens.

 

**“PermittedInvestments”** are: (i) marketabledirect obligations issued or unconditionally guaranteed by the United States orits agency or any state maturing within 1 year from its acquisition, (ii) commercialpaper maturing no more than 1 year after its creation and having the highestrating from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc., (iii) Bank’s certificatesof deposit issued maturing no more than 1 year after issue, (iv) any other investments administered throughBank. 

 

**“Permitted Liens”** are:

 

(a)                                  Liens arising under this Agreement or otherLoan Documents;

 

(b)                                 Liens for taxes, fees, assessments or othergovernment charges or levies, either not delinquent or being contested in good faith and for whichBorrower maintains adequate reserves on its Books, if they have no priority over any of Bank’s securityinterests;

 

(c)                                  Purchase money Liens securing no more than $50,000in the aggregate amount outstanding (i) on equipment acquired or held byBorrower incurred for financing the acquisition of the equipment, or (ii) existing on equipment whenacquired, if the Lien is confined to the property and improvements andthe proceeds of the equipment;

 

(d)                                 Leases or subleases and non-exclusivelicenses or sublicenses granted in the ordinary course of Borrower’s business, ifthe leases, subleases, licenses and sublicenses permit granting Bank a securityinterest;

 

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(e)                                  Liens incurred in the extension, renewal orrefinancing of the indebtedness secured by Liens described in (a) through (d), but any extension, renewal orreplacement Lien must be limited to the property encumbered by the existingLien 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 orgovernment agency.

 

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

 

**“Reconciliation Day”** is the last calendar day of each month.

 

**“Reconciliation Period”** is each calendar month.

 

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

 

**“Streamline Agreement”** is that certain Streamline Facility Agreementof approximate even date herewith executedand delivered by Borrower to Bank.

 

**“Subordinated Debt”** is debt incurred by Borrower subordinated toBorrower’s debt to Bank (pursuant to a subordination agreement entered intobetween Bank, Borrower and the subordinated creditor), on terms acceptable toBank.

 

**“Subsidiary”** is any Person, corporation, partnership,limited liability company, joint venture, or any other business entity of which more than 50% of thevoting stock or other equity interests is owned or controlled, directly orindirectly, by the Person or one or more Affiliates of the Person.

 

**“Tangible Net Worth”** is, on any date, the consolidated totalassets of Borrower and its Subsidiaries minus (i) any amounts attributable to (a) goodwill,(b) intangible items including unamortized debt discount and expense, patents, trade and service marks and names,copyrights and research and development expenses except prepaid expenses, and (c) reserves not alreadydeducted from assets, minus (ii) Total Liabilities, plus (iii) SubordinatedDebt.

 

**“Total Liabilities”** is on any day, obligations that should, underGAAP, be classified as liabilities on Borrower’s consolidated balance sheet,including all Indebtedness, and current portion of Subordinated Debt permitted by Bank to be paid by Borrower, butexcluding all other Subordinated Debt.

 

**“Warrant Waiver Fee”** shall have the meaning as set forth in Section 2.2.4.5hereof.

 

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IN WITNESS WHEREOF, theparties hereto have caused this Agreement to be executed as a sealed instrument under the laws of the State ofCalifornia as of the date first above written.

 

BORROWER:

 

VERSANTCORPORATION

 

 
| By     |  /s/ Jochen Witte |   |
|--------|------------------------|--------|
| Name:  |  JOCHEN WITTE     |   |
| Title: |  CEO              |   |
|        |                        |        |  |  |

 

BANK:

 

SILICON VALLEY BANK

 

 
| By     |  /s/ Brett Maver |   |
|--------|-----------------------|--------|
| Name:  |  BRETT MAVER     |   |
| Title: |  VP              |   |
|        |                       |        |  |  |

 

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**EXHIBIT A**

 

The Collateral consists ofall of Borrower’s right, title and interest in and to the following:

 

All goods, equipment,inventory, contract rights or rights to payment of money, leases, licenseagreements, franchiseagreements, general intangibles (including payment intangibles) accounts(including health-care receivables), documents, instruments (including anypromissory notes), chattel paper (whether tangible or electronic), cash,deposit accounts, fixtures, letters of credit rights (whether or not the letterof credit is evidenced by a writing), commercial tort claims, securities, andall other investment property, supporting obligations, and financial assets,whether now owned or hereafter acquired, wherever located; and any copyrightrights, copyright applications,copyright registrations and like protections in each work of authorship andderivative work, whether publishedor unpublished, now owned or later acquired; any patents, trademarks, servicemarks and applications therefor; trade styles, trade names, any trade secretrights, including any rights to unpatented inventions, know-how, operatingmanuals, license rights and agreements and confidential information, now ownedor hereafter acquired; or anyclaims for damages by way of any past, present and future infingement of any ofthe foregoing; and all Borrower’sbooks relating to the foregoing and any and all claims, rights and interests inany 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.

 

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**EXHIBIT B**

 

 

**SILICONVALLEY BANK**

**SPECIALTYFINANCE DIVISION**

**Compliance Certificate**

 

I, as authorized officer ofVersant Corporation (“Borrower”) certify under the Loan and Security Agreement (the “Agreement”) between Borrowerand Silicon Valley Bank (“Bank”) as follows (all capitalized terms used herein shall have the meaning set forthin the Agreement):

 

**Borrower represents and warrantsfor each Financed Receivable:**

 

Each Financed Receivable isan Eligible Account.

 

Borrower is the owner withlegal right to sell, transfer, assign and encumber such Financed Receivable;

 

The correct amount is on theInvoice Transmittal and is not disputed;

 

Payment is not contingent onany obligation or contract and Borrower has fulfilled all its obligations as ofthe Invoice Transmittaldate;

 

EachFinanced Receivable is based on an actual sale and delivery of goods and/orservices rendered, is due to Borrower, is not past due or in default, has notbeen previously sold, assigned, transferred, or pledged and is free of anyliens, security interests and encumbrances other than Permitted Liens;

 

There are no defenses,offsets, counterclaims or agreements for which the Account Debtor may claim anydeduction or discount;

 

It reasonably believes noAccount Debtor is insolvent or subject to any Insolvency Proceedings;

 

It has not filed or had filedagainst it Insolvency Proceedings and does not anticipate any filing;

 

Bank has the right to endorseand/ or require Borrower to endorse all payments received on Financed Receivablesand all proceeds ofCollateral.

 

No representation, warrantyor other statement of Borrower in any certificate or written statement given toBank contains any untruestatement of a material fact or omits to state a material fact necessary tomake the statement contained inthe certificates or statement not misleading.

 

**Additionally, Borrower representsand warrants as follows:**

 

Borrower and each Subsidiaryis duly existing and in good standing in its state of formation and qualifiedand licensed to do businessin, and in good standing in, any state in which the conduct of its business orits ownership of property requires that it be qualified except where thefailure to do so could not reasonably be expected to cause a Material AdverseChange. The execution, delivery and performance of the Loan Documents have beenduly 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 indefault under any agreement to which or by which it is bound in which thedefault could reasonably be expected to cause a Material Adverse Change.

 

Borrower has good title tothe Collateral, free of Liens except Permitted Liens. All inventory is in allmaterial respects of good and marketable quality, free from material defects.

 

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Borrower is not an “investmentcompany” or a company “controlled” by an “investment company” under the Investment Company Act. Borrower is notengaged as one of its important activities in extending credit for margin stock(under Regulations X, T and U of the Federal Reserve Board of Governors).Borrower has complied in all material respects with the Federal Fair LaborStandards Act. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonablybe expected to cause a Material Adverse Change. None of Borrower’s or anySubsidiary’s properties or assets has been used by Borrower or any Subsidiaryor, 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 Subsidiary has timely filed all required tax returns and paid, or made adequate provision to pay, allmaterial taxes, except those being contested in good faith with adequate reserves under GAAP. Borrower and eachSubsidiary has obtained all consents, approvals and authorizations of, made alldeclarations or filings with, and given all notices to, all governmentauthorities that are necessary to continue its business as currently conductedexcept where the failure to obtain or make such consents, declarations, noticesor filings would not reasonably be expected to cause a Material Adverse Change.

 

All representations andwarranties in the Agreement are true and correct in all material respects onthis date, and the Borrower represents that there is no existing Event ofDefault.

 

Sincerely,

 
| Signature: | /s/ Jochen Witte |   |
|------------|------------------|--------|
|       |             |   |
| Title:     | CEO              |   |
|       |             |   |
| Date:      | June 17, 2005    |   |

 

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