Loan and Security Agreement between eGain and Silicon Valley Bank



  
 Exhibit 10.1

  
 Loan and Security Agreement 
  
 This Loan and Security Agreement dated October 29, 2004 between SILICON VALLEY BANK
(“Bank”), whose address is 3003 Tasman Drive, Santa Clara, California 95054 and eGain Communications Corporation, a Delaware corporation (“Borrower”), whose address is 345 E. Middlefield Road, Mountain View, California 94043
provides the terms on which Bank will lend to Borrower and Borrower will repay Bank. 
  
 This Agreement amends and restates in its entirety the Accounts Receivable Purchase Agreement between Bank and Borrower dated September 24, 2002 (as previously amended, the “Prior Agreement”). The unpaid balance of any outstanding
Obligations under the Prior Agreement shall constitute the opening balance of Advances under this Agreement. All other documents, instruments and agreements between Bank and Borrower shall continue in full force and effect, including without
limitation the the Intellectual Property Security Agreement between Borrower and Bank dated September 24, 2002. 
  
 The parties agree as follows: 
  

	1.	ACCOUNTING AND OTHER TERMS. 

  
 Accounting terms not defined in this Agreement will 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,” in this or any Loan Document. 
  

	2.	LOAN AND TERMS OF PAYMENT. 

  

	2.1.	Promise to Pay. 

  
 Borrower promises to pay Bank the unpaid principal amount of all Credit Extensions and interest on the unpaid principal amount of the Credit Extensions.

  

	2.1.1.	 Revolving Advances. 

  
 (a) Bank will make Advances not exceeding the Credit Limit shown on Schedule 1 to the Agreement (the “Schedule”). Amounts borrowed under this
Section may be repaid and reborrowed during the term of this Agreement. 
  
 (b) To obtain an Advance, Borrower must notify Bank by facsimile or telephone by 12:00 p.m. Pacific time on the Business Day the Advance is to be made, and provide Bank with a Transaction Report Form in the form of Exhibit B hereto. Bank
will credit Advances to Borrower’s deposit account. Bank may make Advances under this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Advances are necessary to meet Obligations
which have become due. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Borrower will indemnify Bank for any loss Bank suffers due to such reliance. 
  
 (c) The Committed Revolving Line terminates on the Revolving Maturity Date,
when all Advances are immediately payable. 
  










	2.1.2.	 Letters of Credit Sublimit. 

  
 Bank will issue or have issued letters of credit (the “Letters of Credit”) for Borrower’s account not exceeding the amount shown on the
Schedule. Borrower shall secure all of Borrower’s reimbursement obligations relating to all outstanding Letters of Credit by unencumbered cash on terms acceptable to Bank on or before the Revolving Maturity Date if the term of this Agreement is
not extended by Bank. Borrower agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably request. 
  

	2.1.3.	 Foreign Exchange Sublimit. 

  
 If there is availability under the Committed Revolving Line and the Borrowing Base, then Borrower may enter into foreign exchange forward contracts with
the Bank under which Borrower commits to purchase from or sell to Bank a set amount of foreign currency more than one business day after the contract date (the “FX Forward Contract”). Bank will subtract 10% of each outstanding FX Forward
Contract from the foreign exchange sublimit which is set forth in the Schedule (the “FX Reserve”). The total FX Forward Contracts at any one time may not exceed 10 times the amount of the FX Reserve. Bank may terminate the FX Forward
Contracts if an Event of Default occurs. 
  

	2.1.4.	 Cash Management Services Sublimit. 

  
 Borrower may use up to the Cash Management Services Sublimit shown on the Schedule for Bank’s Cash Management Services, which may include merchant
services, direct deposit of payroll, business credit card, and check cashing services identified in various cash management services agreements related to such services (the “Cash Management Services”). Such aggregate amounts utilized
under the Cash Management Services Sublimit will at all times reduce the amount otherwise available to be borrowed under the Committed Revolving Line. 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 Revolving Advances under the Committed Revolving Line and will accrue interest at the rate for Revolving Advances. 
  

	2.1.5.	 Reserves. 

  
 Bank shall have the right, from time to time, to establish and deduct the following reserves from the amount of Advances, Letters of Credit and other
financial accommodations under the lending formula(s) provided in the Schedule: (a) reserves to reflect events, conditions, contingencies or risks which, as determined by Bank in good faith, do or may affect adversely (i) the Collateral or any other
property which is security for the Obligations or its value (including without limitation any increase in delinquencies of Accounts), (ii) the assets, business or prospects of Borrower, or (iii) the security interests and other rights of Bank in the
Collateral (including the enforceability, perfection and priority thereof); and (b) reserves to reflect Bank’s good faith belief that any collateral report or financial information furnished by or on behalf of Borrower to Bank is or may have
been incomplete, inaccurate or misleading in any material respect. 
  

	2.2.	Overadvances. 

  
 If Borrower’s Obligations under Section 2.1.1, 2.1.2 and 2.1.3 exceed the lesser of either (i) the Committed Revolving Line or (ii) the Borrowing
Base, Borrower must immediately pay Bank the excess. 
  

	2.3.	Interest Rate, Payments. 

  
 (a) Interest Rate. Advances accrue interest on the outstanding principal balance at the interest rate set forth in the Schedule. After an Event of
Default, Obligations accrue interest at 5 percent above the rate effective immediately before the Event of Default. The interest rate increases or decreases when the Prime Rate changes. Interest is computed on a 360 day year for the actual number of
days elapsed. 
  

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 (b) Payments. Interest due on the Committed Revolving Line is payable on the last Business Day of each
month. Bank may debit any of Borrower’s deposit accounts maintained with Bank, including the Accounts shown on Schedule 2, for principal and interest payments owing or any amounts Borrower owes Bank. Bank will promptly notify Borrower when it
debits Borrower’s accounts. These debits are not a set-off. Payments received after 12:00 noon Pacific time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day,
the payment is due the next Business Day and additional fees or interest accrue. 
  
 (c) Interest Computation; Float Charge. In computing interest on the Obligations, all Payments received after 12:00 Noon on any day shall be deemed received on the next Business Day. In addition, Bank shall be
entitled to charge Borrower a “float” charge in an amount equal to three Business Days interest, at the interest rate applicable to the Loans, on all Payments received by Bank. The float charge for each month shall be payable on the last
day of the month. Bank shall not be required to credit Borrower’s account for the amount of any item of payment which is unsatisfactory to Bank in its good faith business judgment, and Bank may charge Borrower’s loan account for the amount
of any item of payment which is returned to Bank unpaid. 
  

	2.4.	Fees. 

  
 Borrower will pay: 
  
 (a) Facility Fee. A fully earned, non refundable Facility Fee in the amount shown on the Schedule, which shall be due on the Closing Date; and 

 
 (b) Bank Expenses. All Bank Expenses (including reasonable attorneys’
fees and reasonable expenses) incurred through and after the date of this Agreement, are payable 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 it receive the agreements, documents and fees it
requires. 
  

	3.2.	Conditions Precedent to all Credit Extensions. 

  
 Bank’s obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following: 
  
 (a) Timely receipt of any Transaction Report Form; and 
  
 (b) The representations and warranties in Section 5 must be true (subject to
the materiality provisions in Section 5) on the date of the Transaction Report Form and on the effective date of each Credit Extension and no Event of Default may 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 of Section 5 remain true. 
  

	4.	CREATION OF SECURITY INTEREST. 

  

	4.1.	Grant of Security Interest. 

  
 Borrower grants Bank a continuing security interest in all presently existing and later acquired Collateral to secure all Obligations and performance of
each of Borrower’s duties under the Loan Documents. Except for Permitted Liens, the Bank will, at all times, have a first-priority security interest in 

  

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all of the Collateral. Bank’s lien and security interest in the Collateral will continue until Borrower fully satisfies its Obligations, and all
obligations of the Bank to make Advances or otherwise extend credit accommodations have terminated. 
  

	4.2.	Authorization to File Financing Statements. 

  
 Borrower authorizes Bank to file financing statements without notice to Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in order
to perfect or protect Bank’s interest in the Collateral. 
  

	5.	REPRESENTATIONS AND WARRANTIES. 

  
 Borrower represents and warrants that the following statements are true and correct on the date hereof and Borrower covenants that the following
statements will continue to be true and correct throughout the term of this Agreement and so long as any Obligations are outstanding: 
  

	5.1.	Due Organization and Authorization. 

  
 Borrower and each of its Subsidiaries is duly existing and in good standing in its state of formation and qualified and licensed to do business in, and in
good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change. Borrower has not
changed its state of formation or its organizational structure or type or any organizational number (if any) assigned by its jurisdiction of formation. 
  
 The execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower’s formation documents, nor
constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which it is a party or by which it is bound in which the default could reasonably be expected to cause a
Material Adverse Change. 
  

	5.2.	Collateral. 

  
 Borrower has good title to the Collateral, free of Liens except Permitted Liens. Borrower has no other deposit account, other than the deposit accounts
described in Schedule 2. Each Account with respect to which Advances are requested by Borrower shall, on the date each Advance is requested and made, represent an undisputed bona fide existing unconditional obligation of the account debtor created
by the sale, delivery, and acceptance of goods or the rendition of services in the ordinary course of Borrower’s business. The Collateral is not in the possession of any third party bailee (such as at a warehouse). In the event that Borrower,
after the date hereof, intends to store or otherwise deliver the Collateral to such a bailee, then Borrower will receive the prior written consent of Bank and such bailee must acknowledge in writing that the bailee is holding such Collateral for the
benefit of Bank. Borrower has no notice of any actual or imminent Insolvency Proceeding of any account debtor whose accounts are an Eligible Account in any Borrowing Base Certificate. All Inventory is in all material respects of good and marketable
quality, free from material defects. Borrower is the sole owner of the Intellectual Property, except for non-exclusive licenses granted to its customers in the ordinary course of business. Each Patent is, to the best of Borrower’s knowledge,
valid and enforceable and no part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and no claim has been made that any part of the Intellectual Property violates the rights of any third party, except to the
extent such claim could not reasonably be expected to cause a Material Adverse Change. 
  

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	5.3.	Litigation. 

  
 Except as shown in the Schedule, there are no actions or proceedings pending or, to the knowledge of Borrower’s Responsible Officers and legal
counsel, threatened by or against Borrower or any Subsidiary, which could result in damages or costs to Borrower or any Subsidiary of $100,000 or more, or in which an adverse decision could reasonably be expected to cause a Material Adverse Change.

  

	5.4.	No Material Adverse Change in Financial Statements. 

  
 All consolidated financial statements for Borrower, and any Subsidiary, 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. 
  

	5.5.	Regulatory Compliance. 

  
 Borrower is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company
Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor
Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to cause a Material Adverse Change. None of Borrower’s or any Subsidiary’s 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 Subsidiary has timely filed all
required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith with adequate reserves under GAAP and which do not result in any tax lien on any of the Collateral. Borrower and each
Subsidiary has 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 could not reasonably be expected to cause a Material Adverse Change. 
  

	5.6.	Subsidiaries. 

  
 Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments. 
  

	5.7.	Representations; Full Disclosure. 

  
 The information in Schedule 2 is true and correct as of the date hereof. No written representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank (taken together with all such written certificates and written statements 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. 
  

	6.	AFFIRMATIVE COVENANTS. 

  
 Borrower will do all of the following for so long as Bank has an obligation to lend, or there are outstanding Obligations: 
  

	6.1.	Government Compliance. 

  
 Borrower will maintain its and all Subsidiaries’ legal existence and good standing in its jurisdiction of formation and maintain qualification in
each jurisdiction in which the failure to so qualify would reasonably be expected to cause a material adverse effect on Borrower’s business or operations. 

  

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Borrower will comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, noncompliance with which could have
a material adverse effect on Borrower’s business or operations or would reasonably be expected to cause a Material Adverse Change. 
  

	6.2.	Financial Statements, Reports, Certificates. 

  
 (a) Borrower will deliver to Bank: (i) as soon as available, but no later than 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 120 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 reasonably
acceptable to Bank; (iii) a prompt report of any legal actions pending or threatened against Borrower or any Subsidiary that could result in damages or costs to Borrower or any Subsidiary of $100,000 or more, or in which an adverse decision could
reasonably be expected to cause a Material Adverse Change; (iv) budgets, sales projections, operating plans or other financial information Bank reasonably requests; (v) prompt notice of any material change in the composition of the Intellectual
Property, including any subsequent ownership right of Borrower in or to any copyright, patent or trademark not shown in any intellectual property security agreement between Borrower and Bank or knowledge of an event that materially adversely affects
the value of the Intellectual Property; and (vi) annual projections approved by Borrower’s Board of Directors, in the same form, and at the same times, as provided to Borrower’s venture capital investors. 
  
 (b) Within 15 days after the last day of each month, Borrower will deliver to
Bank a Transaction Report Form signed by a Responsible Officer in the form of Exhibit B, with aged listings of accounts receivable and accounts payable, and a schedule of Borrower’s deferred revenue. 
  
 (c) Within 30 days after the last day of each month, Borrower will deliver to
Bank with the monthly financial statements a Compliance Certificate signed by a Responsible Officer in the form of Exhibit C. 
  
 (d) Transaction reports and schedules of collections, each week and at the time of each Advance request, on Bank’s standard form. 
  
 (e) Allow Bank to audit Borrower’s Collateral at Borrower’s
expense. Such audits will be conducted no more often than three times in any consecutive twelve-month period, unless an Event of Default or an event which, with notice or passage of time or both would constitute an Event of Default, has occurred and
is continuing, or in Bank’s good faith business judgment, there has been deterioration in Borrower’s financial performance or the Collateral or its performance. The foregoing audits shall be at Borrower’s expense and the charge
therefor shall be $750 per person per day (or such higher amount as shall represent Bank’s then current standard charge for the same), plus reasonable out-of-pocket expenses. 
  

	6.3.	Inventory; Returns. 

  
 Borrower will keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower’s customary practices as they exist at execution of this Agreement. Borrower must promptly notify Bank of all returns, recoveries, disputes and claims, that involve more than $50,000. 
  

	6.4.	Taxes. 

  
 Borrower will make, and cause each Subsidiary to make, timely payment of all material federal, state, and local taxes or assessments (except for taxes or
assessments being contested in good faith with 

  

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adequate reserves under GAAP and which do not result in any tax lien on any of the Collateral) and will deliver to Bank, on demand, appropriate certificates
attesting to the payment. 
  

	6.5.	Insurance. 

  
 Borrower will keep its business and the Collateral insured for risks and in amounts, as Bank may reasonably request. Insurance policies will be in a form,
with companies, and in amounts that are satisfactory to Bank in Bank’s reasonable discretion. All property policies will have a lender’s loss payable endorsement showing Bank as an additional loss payee and all liability policies will show
the Bank as an additional insured and provide that the insurer must give Bank at least 20 days notice before canceling its policy. At Bank’s request, Borrower will deliver certified copies of policies and evidence of all premium payments.
Proceeds payable under any policy will, at Bank’s option, be payable to Bank on account of the Obligations. 
  

	6.6.	Primary Accounts. 

  
 Borrower will maintain its primary depository and operating accounts with Bank. Without limiting the generality of the foregoing, Borrower shall, at all
times, maintain (i) not less than 85% of its total cash and investments on deposit with Bank and its affiliates, and (ii) not less than the lesser of $1,750,000 or 85% of Borrower’s total cash, on deposit with Bank. 
  

	6.7.	Financial Covenants. 

  
 Borrower will comply with the financial covenants set forth on the Schedule. 
  

	6.8.	Registration of Intellectual Property Rights. 

  
 Borrower has no present maskworks, software, computer programs and other works of authorship registered with the United States Copyright Office except as
disclosed in the Intellectual Property Security Agreement between Borrower and Bank dated September 24, 2002, and Borrower shall not hereafter register any maskworks, software, computer programs or other works of authorship subject to United States
copyright protection with the United States Copyright Office without first complying with the following: (i) providing Bank with at least 15 days prior written notice thereof, (ii) providing Bank with a copy of the application for any such
registration and (iii) executing and filing such other instruments, and taking such further actions as Bank may reasonably request from time to time to perfect or continue the perfection of Bank’s interest in the Collateral, including without
limitation the filing with the United States Copyright Office, simultaneously with the filing by Borrower of the application for any such registration, of a copy of this Agreement or a Supplement hereto in form acceptable to Bank identifying the
maskworks, software, computer programs or other works of authorship being registered and confirming the grant of a security interest therein in favor of Bank. 
  

Borrower will (i) protect, defend and maintain the validity and enforceability of the Intellectual Property and promptly advise Bank in writing of
material infringements and (ii) not allow any Intellectual Property to be abandoned, forfeited or dedicated to the public without Bank’s written consent. 
  

	6.9.	Collection of Accounts. 

  
 Borrower shall concurrently enter into a lockbox agreement in such form as Silicon shall specify and shall at all times direct that all Account Debtors
make payment of all Accounts and General Intangibles to the lockbox set up pursuant to said agreement. If for any reason any Payments on any Accounts or General Intangibles are paid to Borrower, agrees that it will not commingle such payments and
proceeds with any of Borrower’s other funds or property, but will hold such payments and proceeds separate and apart from such other funds and property and in an express trust for Bank, and Borrower 

  

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shall immediately deposit all such payments in said lockbox. Bank or its designee may, at any time, notify Account Debtors that the Accounts have been
assigned to Bank. 
  

	6.10.	Further Assurances. 

  
 Borrower will execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s security interest in
the Collateral or to effect the purposes of this Agreement. 
  

	7.	NEGATIVE COVENANTS. 

  
 Borrower will not do any of the following without Bank’s prior written consent, which will not be unreasonably withheld, for so long as Bank has an
obligation to lend and there are any outstanding Obligations: 
  

	7.1.	Dispositions. 

  
 Convey, sell, lease, transfer or otherwise dispose of (collectively “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part
of its business or property or any Collateral, except for Transfers (i) of Inventory in the ordinary course of business; (ii) of non-exclusive licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the
ordinary course of business; or (iii) of worn out or obsolete Equipment. 
  

	7.2.	Changes in Business, Non-Ordinary Course Transactions, Ownership, Management or Locations of Collateral. 

  
 Engage in or permit any of its Subsidiaries to engage in any business other
than the businesses currently engaged in by Borrower or reasonably related thereto, or enter into any transaction outside the ordinary course of business, or permit there to be a Change in Control. Borrower will not, without at least 30 days prior
written notice to the Bank, relocate its chief executive office, change its state of formation (including reincorporation), change its organizational number or name or add any new offices or business locations (including warehouses) in which
Borrower maintains or stores over $5,000 in Collateral. 
  

	7.3.	Mergers or Acquisitions. 

  
 Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another Person, except that a Subsidiary may merge or consolidate into another Subsidiary or into Borrower. 
  

	7.4.	Indebtedness. 

  
 Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness. 
  

	7.5.	Encumbrance. 

  
 Create, incur, or allow any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit
any of its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to the first priority security interest granted here, subject to Permitted Liens. 
  

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	7.6.	Distributions; Investments. 

  
 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. Pay any dividends (other than dividends payable solely in stock of the Borrower) or make any distribution or payment or redeem, retire or purchase any capital stock. 
  

	7.7.	Transactions with Affiliates. 

  
 Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for transactions that are in the
ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a nonaffiliated Person. 
  

	7.8.	Subordinated Debt. 

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

	7.9.	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, 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 operations or would reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so. 
  

	8.	EVENTS OF DEFAULT. 

  
 Any one of the following is an Event of Default: 
  

	8.1.	Payment Default. 

  
 If Borrower fails to pay any of the Obligations within 3 days after their due date. 
  

	8.2.	Certain Defaults. 

  
 If Borrower (i) fails to provide the financial statements called for by Section 6.2 hereof or by any other provisions of this Agreement, within the time
therein provided; or (ii) Borrower breaches any of the financial covenants set forth in Section 6.7 of this Agreement; or (iii) fails to perform or comply with any other term, condition or covenant in any other agreement between Borrower and Bank
which is not cured within any cure period provided in such agreement. 
  

	8.3.	Other Defaults. 

  
 If Borrower fails to perform or comply with any other term, condition or covenant in this Agreement (other than as set forth in Section 8.1 or 8.2 above),
and such failure is not cured within 30 days after the date it occurs 
  

	8.4.	Material Adverse Change. 

  
 A Material Adverse Change occurs. 
  

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	8.5.	Attachment. 

  
 If any of Borrower’s assets having a value in the aggregate of more than $50,000 is attached, seized, levied on, or comes into possession of a
trustee or receiver and the attachment, seizure or levy is not removed in 10 days, or if Borrower is enjoined, restrained, or prevented by court order from conducting a material part of its business or if a judgment or other claim becomes a Lien on
a material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed against any of Borrower’s assets by any government agency and not paid within 10 days after Borrower receives notice. These are not Events of
Default if stayed or if a bond is posted pending contest by Borrower; 
  

	8.6.	Insolvency. 

  
 If Borrower fails to pay its debts generally as they mature, or if Borrower begins an Insolvency Proceeding, or if an Insolvency Proceeding is begun
against Borrower and not dismissed or stayed within 30 days; 
  

	8.7.	Other Agreements. 

  
 If there is a default in any agreement between Borrower and a third party that gives the third party the right to accelerate any Indebtedness exceeding
$100,000 or that could cause a Material Adverse Change; 
  

	8.8.	Judgments. 

  
 If a money judgment(s) in the aggregate of at least $50,000 is rendered against Borrower and is unsatisfied and unstayed for 10 days; 
  

	8.9.	Misrepresentations. 

  
 If Borrower or any Person acting for Borrower makes any material misrepresentation or material misstatement now or later in any warranty or representation
in this Agreement or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document; or 
  

	8.10.	 Guaranty. 

  
 Any guaranty of any Obligations ceases for any reason to be in full force or any Guarantor does not perform any obligation under any guaranty of any of
the Obligations, or any material misrepresentation or material misstatement exists now or later in any warranty or representation in any guaranty of the Obligations or in any certificate delivered to Bank in connection with the guaranty, or any
circumstance described in Sections 8.5, 6 or 8 occurs to any Guarantor. 
  
 No Credit Extensions will be made during any of the cure periods set forth in Sections 8.1-8.10 above. 
  

	9.	BANK’S RIGHTS AND REMEDIES. 

  

	9.1.	Rights and Remedies. 

  
 When an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following: 
  
 (a) Declare all Obligations immediately due and payable (but if an Event of
Default described in Section 8.6 occurs all Obligations are immediately due and payable without any action by Bank); 
  

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 (b) Stop advancing money or extending credit for Borrower’s benefit under this Agreement or under
any other agreement between Borrower and Bank; 
  
 (c) Settle or
adjust disputes and claims directly with account debtors for amounts, on terms and in any order that Bank considers advisable; 
  
 (d) Make any payments and do any acts it considers necessary or reasonable to protect its security interest in the Collateral. Borrower will assemble the
Collateral if Bank requires 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; 
  
 (e) 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; 
  
 (f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is granted a non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, Intellectual Property, and advertising matter, and 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; and 
  
 (g) Dispose of the Collateral according to the Code. 
  

	9.2.	Power of Attorney. 

  
 Effective only when an Event of Default occurs and continues, Borrower irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower’s
name on any checks or other forms of payment or security; (ii) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against account debtors, (iii) make, settle, and adjust all claims under Borrower’s insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly with account debtors, for amounts and on terms Bank determines reasonable; and (v) transfer the Collateral into the name of Bank or a third party as the Code permits.
Bank may exercise the power of attorney to sign Borrower’s name on any documents necessary to perfect or continue the perfection of any security interest regardless of whether an Event of Default has occurred. Bank’s appointment as
Borrower’s attorney in fact, and all of Bank’s rights and powers, are coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank’s obligation to provide Credit Extensions terminates.

  

	9.3.	Accounts Collection. 

  
 When an Event of Default occurs and continues, Bank may notify any Person owing Borrower money of Bank’s security interest in the funds and demand
payment of, and collect any Accounts, general intangibles and other Collateral, and, in connection therewith, Borrower irrevocably authorizes Bank to endorse or sign Borrower’s name on all collections, receipts, instruments and other documents,
and, in Bank’s good faith business judgment, to grant extensions of time to pay, compromise claims and settle Accounts and general intangibles for less than face value. When an Event of Default occurs and continues, Borrower shall collect all
payments in trust for Bank and, if requested by Bank, immediately deliver the payments to Bank in the form received from the account debtor, with proper endorsements for deposit. 
  

 11 









	9.4.	Bank Expenses. 

  
 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 applicable rate
and secured by the Collateral. No payments by Bank shall be deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default. 
  

	9.5.	Bank’s Liability for Collateral. 

  
 If Bank complies with reasonable banking practices and Section 9207 of the Code, it is not liable for: (a) the safekeeping of the Collateral; (b) any loss
or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other person. Borrower bears all risk of loss, damage or destruction of the Collateral. 
  

	9.6.	Remedies Cumulative. 

  
 Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements 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 is not a waiver, election, or acquiescence.
No waiver is effective unless signed by Bank and then is only effective for the specific instance and purpose for which it was given. 
  

	9.7.	Demand Waiver. 

  
 Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable. 
  

	10.	NOTICES. 

  
 All notices or demands by any party about this Agreement or any other related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt requested, or by fax to the addresses set forth at the beginning of this Agreement and, in the case of notices by fax, to the latest fax number a party as for the other
party. A party may change its notice address by giving the other party written notice. 
  

	11.	CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER. 

  
 California law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Santa Clara County, California. 
  
 BORROWER AND BANK EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN BANK AND
BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF BANK OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH BANK OR BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL. 
  


 12 









	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
under it without Bank’s prior written consent which may be granted or withheld in Bank’s discretion. Bank has the right, without the consent of or notice to Borrower, to sell, transfer, negotiate, or grant participation in all or any part
of, or any interest in, Bank’s obligations, rights and benefits under this Agreement. 
  

	12.2.	Indemnification. 

  
 Borrower will indemnify, defend and hold harmless Bank and its officers, employees, and agents against: (a) all obligations, demands, claims, and
liabilities asserted by any other Person 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 consequential to transactions between Bank and
Borrower (including reasonable attorneys fees and expenses), except for losses 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 Provision. 

  
 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 and signed by Borrower and Bank. This Agreement represents the entire agreement about this subject
matter, and supersedes prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement 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, are 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 while any Obligations remain outstanding. The obligations of
Borrower in Section 12.2 to indemnify Bank will survive until all statutes of limitations for actions that may be brought against Bank have run. 
  

	12.8.	Confidentiality. 

  
 In handling any confidential information, Bank will exercise the same degree of care that it exercises for its own proprietary information, but disclosure
of information may be made (i) to Bank’s subsidiaries or affiliates in connection with their business with Borrower, (ii) to prospective transferees or purchasers of any interest in the loans (provided, however, Bank shall use commercially
reasonable 

  

 13 








 
efforts in obtaining such prospective transferee or purchasers agreement of the terms of this provision), (iii) as required by law, regulation, subpoena, or
other order, (iv) as required in connection with Bank’s examination or audit and (v) as Bank considers appropriate exercising remedies under this Agreement. Confidential information does not include information that either: (a) 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 (b) 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.	Attorneys’ Fees, Costs and Expenses. 

  
 In any action or proceeding between Borrower and Bank arising out of the Loan Documents, the prevailing party will be entitled to recover its reasonable
attorneys’ fees and other reasonable costs and expenses incurred, in addition to any other relief to which it may be entitled. 
  

	13.	DEFINITIONS. 

  

	13.1.	Definitions. 

  
 In this Agreement: 
  
 “Accounts” is defined on Exhibit A hereto. 
  
 “Advance” or “Advances” is a loan advance (or advances) under the Committed Revolving Line. 
  
 “Affiliate” means (I) any of Borrower’s officers or
directors, and if Borrower is a limited liability company, Borrower’s managers and members, and if Borrower is a partnership, Borrower’s general and limited partners; (ii) a Person that, directly or indirectly, owns or controls, is
controlled by or is under common control with Borrower, and any of such person’s officers or directors, and if such person is a limited liability company, such person’s managers and members, and if such person is a partnership, such
person’s general and limited partners. 
  
 “Bank
Expenses” are all audit fees and expenses and reasonable costs and expenses (including reasonable attorneys’ fees and expenses) for preparing, negotiating, administering, defending and enforcing the Loan Documents (including appeals or
Insolvency Proceedings), or otherwise relating to Borrower or the Loan Documents, including, but not limited to, any reasonable attorneys’ fees and costs Bank incurs in order to do the following: obtain legal advice in connection with this
Agreement or Borrower; enforce, or seek to enforce, any of Bank’s rights; prosecute actions against, or defend actions by, account debtors; commence, intervene in, or defend any action or proceeding; initiate any complaint to be relieved of the
automatic stay in bankruptcy; file or prosecute any bankruptcy claim, third-party claim, or other claim; protect, obtain possession of, lease, dispose of, or otherwise enforce Bank’s security interest in, the Collateral; and otherwise represent
Bank in any litigation relating to Borrower. 
  
 “Borrower’s Books” are all Borrower’s books and records including ledgers, records regarding Borrower’s assets or liabilities, the Collateral, business operations or financial condition and all computer
programs or discs or any equipment containing the information. 
  
 “Borrowing Base” is as set forth in the Schedule. 
  
 “Business Day” is any day that is not a Saturday, Sunday or a day on which the Bank is closed. 
  
 “Change in Control” is a transaction in which any “person” or “group” (within the meaning of Section 13(d) and
14(d)(2) of the securities Exchange Act of 1934, as amended (the “Act”)) becomes the” beneficial owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of greater than 49% of the shares of all classes of stock
then outstanding of a Person ordinarily entitled to vote in the election of 

  

 14 








 
the directors of such Person. Excluded from this definition is the proposed preferred stock conversion outlined in the Form 8-K filed, by the Borrower, with
the Securities and Exchange Commission on September 30, 2004. 
  
 “Closing Date” is the date of this Agreement. 
  
 “Code” is the California Uniform Commercial Code, in effect from time to time. 
  
 “Collateral” is the property described on Exhibit A. 
  
 “Committed Revolving Line” is defined in the Schedule. 
  
 “Contingent Obligation” is, for any Person, any direct or
indirect liability, contingent or not, of that Person for (i) 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; (ii) any obligations for undrawn letters of credit for the account of that Person; and (iii) 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 the guarantee or other support arrangement. 
  
 “Credit Extension” is each Advance, Letter of Credit, Exchange Contract, or any other extension of credit
by Bank for Borrower’s benefit. 
  
 “Eligible
Accounts” are Accounts in the ordinary course of Borrower’s business that meet all Borrower’s representations and warranties in Section 5; but Bank may change eligibility standards by giving Borrower notice. Unless Bank agrees
otherwise in writing, Eligible Accounts will not include: 
  
 (a)
Accounts that the account debtor has not paid within 90 days of invoice date; 
  
 (b) Accounts owing from an account debtor, 50% or more of whose Accounts have not been paid within 90 days of invoice date; 
  
 (c) Credit balances; 
  
 (d) Accounts for an account debtor, including Affiliates, whose total obligations to Borrower exceed 25% of all Accounts, for the amounts that exceed that
percentage; 
  
 (e) Accounts for which the account debtor does not
have its principal place of business in the United States, except for Accounts fully covered by letters of credit advised through Bank and acceptable to Bank in its discretion, or covered by an FCIA insurance policy acceptable to Bank in its
discretion (in which event any deductible under said policy shall be deducted from the amount of such Eligible Account); 
  
 (f) Accounts for which the account debtor is a federal, state or local government entity or any department, agency, or instrumentality, unless, in the
case of the federal government, there is compliance with the Assignment of Claims Act; 
  
 (g) Accounts for which Borrower owes the account debtor, but only up to the amount owed (sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts); 
  

 15 








 (h) Accounts for demonstration or promotional equipment, or in which goods are consigned, sales
guaranteed, sale or return, sale on approval, bill and hold, or other terms if account debtor’s payment may be conditional; 
  
 (i) Accounts for which the account debtor is Borrower’s Affiliate, officer, employee, or agent; 
  
 (j) Accounts in which the account debtor disputes liability or makes any
claim or Bank believes there may be a basis for dispute (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; 
  
 (k) Accounts arising from hosting, maintenance or support services, except
for hosting services that have been fully delivered; 
  
 (l)
Accounts as to which there is deferred revenue which, in Bank’s good faith business judgment, represents a potential offset to such Account; 
  
 (k) Accounts for which Bank reasonably determines collection to be doubtful. 
  
 “Equipment” is defined on Exhibit A hereto. 
  
 “ERISA” is the Employment Retirement Income Security Act of 1974, and its regulations. 
  
 “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. 
  
 “good faith business judgment”
means honesty in fact and good faith (as defined in Section 1201 of the Code) in the exercise of Bank’s business judgment. 
  
 “Guarantor” is any present or future guarantor of any 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. 
  
 “Insolvency Proceeding” are proceedings 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. 
  
 “Intellectual Property” is
defined on Exhibit A hereto 
  
 “Inventory” is
defined on Exhibit A hereto. 
  
 “Investment” is
any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance or capital contribution to any Person. 
  

“Letter of Credit” is defined in Section 2.1.2. 
  
 “Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.

  

 16 








 “Loan Documents” are, collectively, this Agreement, any note, or notes or guaranties
executed by Borrower or Guarantor, and any other present or future agreement between Borrower and/or for the benefit of Bank in connection with this Agreement, all as amended, extended or restated. 
  
 “Material Adverse Change” is any of the following: (i) a
material adverse change in the business, operations, or condition (financial or otherwise) of the Borrower, or (ii) a material impairment of the prospect of repayment of any portion of the Obligations; or (iii) a material impairment of the value or
priority of Bank’s security interests in the Collateral. 
  
 “Obligations” are debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later, including cash management services, letters of credit and foreign exchange contracts, if any and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank. 
  
 “Patents” are patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues,
extensions and continuations in part of the same. 
  
 “Payment” means all checks, wire transfers and other items of payment received by Bank (including proceeds of Accounts and payment of the Obligations in full) for credit to Borrower’s outstanding Advances or, if the
balance of the Advances have been reduced to zero, for credit to its Deposit Accounts. 
  
 “Permitted Indebtedness” is: 
  
 (a) Borrower’s indebtedness to Bank under this Agreement or any other Loan Document; 
  
 (b) Indebtedness existing on the Closing Date and shown on Schedule 2; 
  
 (c) Subordinated Debt; 
  
 (d) Indebtedness to trade creditors incurred in the ordinary course of business; and 
  
 (e) Indebtedness secured by Permitted Liens. 
  
 “Permitted Investments” are: 
  
 (a) Investments shown on Schedule 2 and existing on the Closing Date; and 
  
 (b) (i) marketable direct obligations issued or unconditionally guaranteed by
the United States or its agency or any State maturing within 1 year from its acquisition, (ii) commercial paper maturing no more than 1 year after its creation and having the highest rating from either Standard & Poor’s Corporation or
Moody’s Investors Service, Inc., and (iii) Bank’s certificates of deposit issued maturing no more than 1 year after issue. 
  
 “Permitted Liens” are: 
  
 (a) Liens existing on the Closing Date and shown on Schedule 2 or arising under this Agreement or other Loan Documents; 
  
 (b) Liens for taxes, fees, assessments or other government charges or levies,
either not delinquent or being contested in good faith and for which Borrower maintains adequate reserves on its Books, if they have no priority over any of Bank’s security interests; 
  

 17 








 (c) Purchase money Liens (i) on Equipment acquired or held by Borrower or its Subsidiaries incurred for
financing the acquisition of the Equipment, or (ii) existing on equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the equipment; 
  
 (d) Nonexclusive licenses and non-exclusive sublicenses granted by Borrower in the ordinary course of its business;

  
 (e) Leases or subleases granted in the ordinary course of
Borrower’s business, including in connection with Borrower’s leased premises or leased property; 
  
 (f) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal
or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase. 
  
 “Person” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company association, 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. 
  
 “Quick Assets” is, on any date, the Borrower’s
consolidated, unrestricted cash, cash equivalents, net billed accounts receivable and investments with maturities of fewer than 12 months determined according to GAAP. 
  
 “Responsible Officer” is each of the Chief Executive Officer, the President, the Chief Financial Officer
and the Controller of Borrower. 
  
 “Revolving Maturity
Date” is set forth on the Schedule. 
  
 “Schedule” is Schedule 1 to this Agreement. 
  
 “Schedule 2” is Schedule 2 to this Agreement. 
  
 “Subordinated Debt” is debt incurred by Borrower subordinated to Borrower’s indebtedness owed to Bank and which is reflected in a written agreement in a manner and form acceptable to Bank and approved by Bank in
writing. 
  
 “Subsidiary” is for any Person, or
any other business entity of which more than 50% of the voting stock or other equity interests is owned or controlled, directly or indirectly, by the Person or one or more Affiliates of the Person. 
  

									
	 Borrower:
	 	 	 	 Bank:

			
	 eGain Communications Corporation
	 	 	 	 Silicon Valley Bank

					
	By	 	/s/ Eric N. Smit	 	 	 	By	 	/s/ Albert Martinez
	 Name
	 	Eric N. Smit	 	 	 	 Name
	 	Albert Martinez
	 Title
	 	Chief Financial Officer	 	 	 	 Title
	 	Vice President

  
 Version: -2 dated 7/23/02 

 
 Document Version: -2 
  

 18 








 Schedule 1 to 
  
 Loan and Security Agreement 
  

			
	Borrower:	  	eGain Communications Corporation
		
	Date:	  	October 29, 2004

  
  
 This Schedule forms an integral part of the Loan and Security Agreement (the “Loan Agreement”) between Silicon Valley Bank (“Bank”) and the
above-borrowers (jointly and severally “Borrower”) of even date. (Capitalized terms used herein, which are not defined, shall have the meanings set forth in the Loan Agreement.) 
  

			
	 1.      CREDIT LIMIT
	  	 
	 (Section 2.1.1):
	  	An amount not to exceed
		
	 	  	 (a)    the lesser of

		
	 	  	 (1)    $1,500,000 at any one time outstanding (the “Committed Revolving Line”), minus all amounts for
services utilized under the Cash Management Services Sublimit, or

		
	 	  	 (2)    80% (an “Advance Rate”) of the amount of Borrower’s Eligible Accounts (the “Borrowing
Base”);

		
	 	  	Minus
		
	 	  	 (b)    the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), and the FX
Reserve and minus all amounts for services utilized under the Cash Management Services Sublimit.

		
	 	  	Bank may, from time to time, modify the Advance Rate, in its good faith business judgment, upon notice to the Borrower, based on changes in collection experience with respect to Accounts or
other issues or factors relating to the Accounts or other Collateral.
		
	 Letter of Credit Sublimit
	  	 
	 (Section 2.1.2):
	  	$1,500,000
		
	 	  	Bank will issue or have issued Letters of Credit for Borrower’s account not exceeding (i) the lesser of the Committed Revolving Line or the Borrowing Base, minus (ii) the outstanding
principal balance of

  

 19 









			
	Silicon Valley Bank	  	Schedule to Loan and Security Agreement

  

			
	 	  	the Advances minus the FX Reserve and minus all amounts for services utilized under the Cash Management Services Sublimit; however, the face amount of outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit) may not exceed the Letter of Credit Sublimit set forth above.
		
	 FX Reserve
	  	 
	 (Section 2.1.3):
	  	$1,500,000
		
	 Cash Management
	  	 
	 Services Sublimit
	  	 
	 (Section 2.1.4):
	  	$1,500,000
		
	 2.      INTEREST.
	  	 
		
	 Interest Rate
	  	 
	 (Section 2.3(a)):
	  	A rate equal to the Prime Rate in effect from time to time, plus 2.5% per annum (the “Regular Rate”), provided that if Borrower has an Adjusted Quick Ratio of greater than 2.00 to
1.00 at the end of two consecutive calendar quarters, then the interest rate shall be reduced to a rate equal to the Prime Rate in effect from time to time, plus 1.75% per annum (the “Reduced Rate”).
		
	 	  	If the interest rate is reduced to the Reduced Rate as provided above, and as of the end of any month thereafter Borrower’s Adjusted Quick Ratio is 2.00 to 1.00 or less, then the
interest rate shall return to the Regular Rate.
		
	 	  	A reduction in interest rate to the Reduced Rate or a return to the Regular Rate, based on Borrower’s Adjusted Quick Ratio as set forth above, shall go into effect following
Silicon’s review of Borrower’s financial statements and confirmation as to Borrower’s Adjusted Quick Ratio.
		
	 	  	As used herein, “Adjusted Quick Ratio” means the ratio of (i) Borrower’s cash, cash equivalents and Accounts to (ii) Borrower’s current liabilities (excluding deferred
revenue).
		
	 	  	As used herein, “Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or issued by any agency thereof and backed by
the full faith and credit of the United States, in each case maturing within 1 year from the date of acquisition thereof, (b) marketable direct

  

 20 










			
	Silicon Valley Bank	  	Schedule to Loan and Security Agreement

  


			
	 	  	obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within 1 year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable from either S&P or Moody’s, (c) commercial paper maturing no more than 270 days from the date of acquisition thereof and, at the time of acquisition, having a
rating of A-1 or P-1, or better, from S&P or Moody’s, money market funds investing primarily in any of the foregoing, and (d) certificates of deposit or bankers’ acceptances maturing within 1 year from the date of acquisition thereof
either (i) issued by Silicon or any bank organized under the laws of the United States or any state thereof which bank has a rating of A or A2, or better, from S&P or Moody’s, or (ii) certificates of deposit less than or equal to $100,000
in the aggregate issued by any other bank insured by the Federal Deposit Insurance Corporation.
		
	 3.      FEES 
 (Section2.4(a)):
	  	 
		
	 Facility Fee:
	  	$10,000, payable concurrently herewith.
		
	 Collateral Monitoring
	  	 
	 Fee:
	  	$750 per month, payable in arrears (prorated for any partial month at the beginning and at termination of this Agreement).
		
	 4.      REVOLVING MATURITY
	  	 
	 DATE
	  	 
	 (Section 13.1):
	  	One year from the date hereof.
		
	 5.      FINANCIAL COVENANTS
	  	 
	 (Section 6.7):
	  	Borrower shall comply with each of the following covenants. Compliance shall be determined as of the end of each month, except as otherwise specifically provided below:
		
	 	  	 (a)    During the period from the date hereof to and including November 30, 2004, Borrower’s EBITDA for each
rolling three-month period ending as of the end of each month shall not be less than a negative $600,000.


  

 21 










			
	Silicon Valley Bank	  	Schedule to Loan and Security Agreement

  


			
	 	 	 (b)    From and after November 30, 2004, Borrower’s EBIT for each rolling three-month period ending as of the end
of each month shall not be less than a negative $500,000.

		
	 	 	 (c)    For the period from the date hereof to the end of each month hereafter, Borrower’s total EBIT shall not be
less than a negative $1,500,000.

		
	 	 	 (d)    Example. For example, if at August 31, 2005, Borrower’s EBIT for the three months ended August 31, 2005 was
negative $450,000, Borrower would be in compliance with the covenant in clause (b) above. If at August 31, 2005, Borrower’s EBIT for the three months ended August 31, 2005 was negative $550,000, Borrower would not be in compliance with the
covenant in clause (b) above. If at August 31, 2005, Borrower’s EBIT for the period from the date hereof to and including August 31, 2005 was negative $1,550,000, Borrower would not be in compliance with the covenant in clause (c)
above.

		
	 	 	 (e)    As used herein, “EBITDA” means Borrower’s earnings before interest, taxes, depreciation and other
non-cash amortization expenses and other non-cash expenses of Borrower, determined in accordance with generally accepted accounting principles, consistently applied.

		
	 	 	 (f)     As used herein, “EBIT” means Borrower’s earnings before interest, and taxes, determined in
accordance with generally accepted accounting principles, consistently applied.


  

									
	 Borrower:
	 	 	 	 Bank:

			
	 eGain Communications Corporation
	 	 	 	 Silicon Valley Bank

					
	By	 	/s/ Eric N. Smit	 	 	 	By	 	/s/ Albert Martinez
	 Name
	 	Eric N. Smit	 	 	 	 Name
	 	Albert Martinez
	 Title
	 	Chief Financial Officer	 	 	 	 Title
	 	Vice President

  

 22