Exhibit 10.12


 


 


HIRERIGHT,
INC.



LOAN AND SECURITY AGREEMENT


 





















 


This LOAN AND SECURITY AGREEMENT is entered into as of
April 18, 2002, by and between COMERICA BANK-CALIFORNIA (“Bank”) and
HIRERIGHT, INC. (“Borrower”).


 


RECITALS


 


Borrower wishes to obtain credit from time to time
from Bank, and Bank desires to extend credit to Borrower.  This Agreement sets forth the terms on which
Bank will advance credit to Borrower, and Borrower will repay the amounts owing
to Bank.


 


AGREEMENT


 


The parties agree as follows:


 


1.             DEFINITIONS
AND CONSTRUCTION.


 


1.1           Definitions.  As used in this Agreement, the following
terms shall have the following definitions:


 


“Accounts” means all presently existing and hereafter
arising accounts, contract rights, and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods (including, without
limitation, the licensing of software and other technology) or the rendering of
services by Borrower, whether or not earned by performance, and any and all
credit insurance, guaranties, and other security therefor, as well as all
merchandise returned to or reclaimed by Borrower and Borrower’s Books relating
to any of the foregoing.


 


“Advance” or “Advances” means a cash advance or cash
advances under the Revolving Facility.


 


“Affiliate” means, with respect to any Person, any
Person that owns or controls directly or indirectly such Person, any Person
that controls or is controlled by or is under common control with such Person,
and each of such Person’s senior executive officers, directors, and partners.


 


“Bank Expenses” means all:  reasonable costs or expenses (including
reasonable attorneys’ fees and expenses) incurred in connection with the
preparation, negotiation, administration, and enforcement of the Loan Documents;
reasonable Collateral audit fees; and Bank’s reasonable attorneys’ fees and
expenses incurred in amending, enforcing or defending the Loan Documents
(including fees and expenses of appeal), incurred before, during and after an
Insolvency Proceeding, whether or not suit is brought.


 


“Borrower’s Books” means all of Borrower’s books and
records including:  ledgers; records
concerning Borrower’s assets or liabilities, the Collateral, business
operations or financial condition; and all computer programs, or tape files,
and the equipment, containing such information.


 


“Borrowing Base” means an amount equal to seventy-five
percent (75%) of Eligible Accounts, as determined by Bank with reference to the
most recent Borrowing Base Certificate delivered by Borrower.


 


“Bridge Facility” means the facility pursuant to which
certain investors have agreed to make available to Borrower the aggregate
principal amount of Four Million Two Hundred Thousand Dollars ($4,200,000).


 


“Bridge Notes” means the Convertible Subordinated
Promissory Notes issued or issuable by Borrower in connection with the Bridge
Facility, in the aggregate principal amount of Four Million Two Hundred
Thousand Dollars ($4,200,000).


 


“Business Day” means any day that is not a Saturday,
Sunday, or other day on which banks in the State of California are authorized
or required to close.


 


“Change in Control” shall mean 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) becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Securities Exchange Act of
1934), directly or indirectly, of a sufficient number of shares of all classes
of stock then outstanding of Borrower ordinarily entitled to vote in the
election of directors, 


 


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empowering such “person”
or “group” to elect a majority of the Board of Directors of Borrower, who did
not have such power before such transaction.


 


“Closing Date” means the date of this Agreement.


 


“Code” means the California Uniform Commercial Code.


 


“Collateral” means the property described on Exhibit A
attached hereto.


 


“Contingent Obligation” means, as applied to any
Person, any direct or indirect liability, contingent or otherwise, of that Person
with respect to (i) any indebtedness, lease, dividend, letter of credit or
other obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to
undrawn letters of credit, corporate credit cards, or merchant services issued
or provided for the account of that Person; and (iii) all obligations
arising under any interest rate, currency or commodity swap agreement, interest
rate cap agreement, interest rate collar agreement, or other agreement or
arrangement designed to protect such Person against fluctuation in interest
rates, currency exchange rates or commodity prices; provided, however, that the
term “Contingent Obligation” shall not include endorsements for collection or
deposit in the ordinary course of business. 
The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determined amount of the primary obligation in respect
of which such Contingent Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof as determined
by such Person in good faith; provided, however, that such amount shall not in
any event exceed the maximum amount of the obligations under the guarantee or
other support arrangement.


 


“Copyrights” means any and all copyright rights,
copyright applications, copyright registrations and like protections in each
work or authorship and derivative work thereof, whether published or
unpublished and whether or not the same also constitutes a trade secret, now or
hereafter existing, created, acquired or held.


 


“Credit Extension” means each Advance, the issuance of
credit cards under Section 2.1(b), or any other extension of credit by
Bank for the benefit of Borrower hereunder.


 


“Current Assets” means, as of any applicable date, all
amounts that should, in accordance with GAAP, be included as current assets on
the consolidated balance sheet of Borrower and its Subsidiaries as at such
date.


 


“Current Liabilities” means, as of any applicable
date, all amounts that should, in accordance with GAAP, be included as current
liabilities on the consolidated balance sheet of Borrower and its Subsidiaries,
as at such date, plus, to the extent not already included therein, all
outstanding Credit Extensions made under this Agreement, including all
Indebtedness that is payable upon demand or within one year from the date of
determination thereof unless such Indebtedness is renewable or extendible at
the option of Borrower or any Subsidiary to a date more than one year from the
date of determination.


 


“Daily Balance” means the amount of the Obligations
owed at the end of a given day.


 


“Eligible Accounts” means those Accounts that arise in
the ordinary course of Borrower’s business that comply with all of Borrower’s
representations and warranties to Bank set forth in Section 5.4; provided,
that standards of eligibility may be fixed and revised from time to time by
Bank in Bank’s reasonable judgment and upon notification thereof to Borrower in
accordance with the provisions hereof. 
Unless otherwise agreed to by Bank, Eligible Accounts shall not include
the following:


 


(a)           Accounts
that the account debtor has failed to pay within ninety (90) days of invoice
date;


 


(b)           Accounts
with respect to an account debtor, twenty-five percent (25%) of whose Accounts
the account debtor has failed to pay within ninety (90) days of invoice date;


 


(c)           Accounts
with respect to which the account debtor is an officer, employee, or agent of
Borrower;


 


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(d)           Accounts
with respect to which goods are placed on consignment, guaranteed sale, sale or
return, sale on approval, bill and hold, or other terms by reason of which the
payment by the account debtor may be conditional;


 


(e)           Accounts
with respect to which the account debtor is an Affiliate of Borrower;


 


(f)            Accounts
with respect to which the account debtor does not have its principal place of
business in the United States, except for Eligible Foreign Accounts;


 


(g)           Accounts
with respect to which the account debtor is the United States or any
department, agency, or instrumentality of the United States;


 


(h)           Accounts
with respect to which Borrower is liable to the account debtor for goods sold
or services rendered by the account debtor to Borrower, but only to the extent
of any amounts owing to the account debtor against amounts owed to Borrower;


 


(i)            Accounts
with respect to an account debtor, including Subsidiaries and Affiliates, whose
total obligations to Borrower exceed twenty percent (20%) of all Accounts, to
the extent such obligations exceed the aforementioned percentage, except as
approved in writing by Bank; notwithstanding the foregoing, the obligations to
Borrower owing from Cingular and Administaff may not exceed forty percent (40%)
and thirty percent (30%), respectively;


 


(j)            Accounts
with respect to which the account debtor disputes liability or makes any claim
with respect thereto as to which Bank believes, in its sole discretion, that
there may be a basis for dispute (but only to the extent of the amount subject
to such dispute or claim), or is subject to any Insolvency Proceeding, or
becomes insolvent, or goes out of business; and


 


(k)           Accounts
the collection of which Bank reasonably determines to be doubtful.


 


“Eligible Foreign Accounts” means Accounts with
respect to which the account debtor does not have its principal place of
business in the United States and that (i) are supported by one or more
letters of credit in an amount and of a tenor, and issued by a financial
institution, acceptable to Bank, or (ii) that Bank approves on a
case-by-case basis.


 


“Equipment” means all present and future machinery,
equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and
attachments in which Borrower has any interest.


 


“Equity Event” means the sale or issuance by Borrower
of its Series D equity securities, on terms and from investors acceptable
to Bank, which acceptance shall not be unreasonably withheld, pursuant to which
Borrower receives net proceeds in the aggregate amount of at least Six Million
Five Hundred Thousand Dollars ($6,500,000), excluding (for purposes of
calculating such amount) conversion of the Bridge Notes, but including
(for purposes of calculating such amount) the Three Million Dollars
($3,000,000) in proceeds received in connection with such sale and issuance
prior to the Closing Date.


 


“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended, and the regulations thereunder.


 


“Event of Default” has the meaning assigned in Article 8.


 


“GAAP” means generally accepted accounting principles
as in effect from time to time.


 


“Indebtedness” means (a) all indebtedness for
borrowed money or the deferred purchase price of property or services,
including without limitation reimbursement and other obligations with respect
to surety bonds and letters of credit, (b) all obligations evidenced by
notes, bonds, debentures or similar instruments, (c) all capital lease
obligations and (d) all Contingent Obligations.


 


“Insolvency Proceeding” means any proceeding commenced
by or against any person or entity under any provision of the United States
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, formal or informal
moratoria, compositions, extension generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.


 


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“Intellectual Property Collateral” means all of
Borrower’s right, title, and interest in and to the following:


 


(a)           Copyrights,
Trademarks and Patents;


 


(b)           Any
and all trade secrets, and any and all intellectual property rights in computer
software and computer software products now or hereafter existing, created,
acquired or held;


 


(c)           Any
and all design rights which may be available to Borrower now or hereafter existing,
created, acquired or held;


 


(d)           Any
and all claims for damages by way of past, present and future infringement of
any of the rights included above, with the right, but not the obligation, to
sue for and collect such damages for said use or infringement of the
intellectual property rights identified above;


 


(e)           All
licenses or other rights to use any of the Copyrights, Patents or Trademarks,
and all license fees and royalties arising from such use to the extent
permitted by such license or rights; 


 


(f)            All
amendments, renewals and extensions of any of the Copyrights, Trademarks or
Patents; and


 


(g)           All
proceeds and products of the foregoing, including without limitation all
payments under insurance or any indemnity or warranty payable in respect of any
of the foregoing.


 


“Inventory” means all present and future inventory in
which Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and
any documents of title representing any of the above, and Borrower’s Books
relating to any of the foregoing.


 


“Investment” means any beneficial ownership of
(including stock, partnership interest or other securities) any Person, or any
loan, advance or capital contribution to any Person.


 


“IRC” means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.


 


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


 


“Loan Documents” means, collectively, this Agreement,
any note or notes executed by Borrower, and any other agreement entered into
between Borrower and Bank in connection with this Agreement, all as amended or
extended from time to time.


 


“Material Adverse Effect” means a material adverse
effect on (i) the business operations, condition (financial or otherwise)
or prospects of Borrower and its Subsidiaries taken as a whole or (ii) the
ability of Borrower to repay the Obligations or otherwise perform its
obligations under the Loan Documents or (iii) the value or priority of
Bank’s security interests in the Collateral.


 


“Negotiable Collateral” means all of Borrower’s
present and future letters of credit of which it is a beneficiary, notes,
drafts, instruments, securities, documents of title, and chattel paper, and
Borrower’s Books relating to any of the foregoing.


 


“Obligations” means all debt, principal, interest,
Bank Expenses and other amounts owed to Bank by Borrower pursuant to this
Agreement or any other agreement, whether absolute or contingent, due or to
become due, now existing or hereafter arising, including any interest that
accrues after the commencement of an Insolvency Proceeding and including any
debt, liability, or obligation owing from Borrower to others that Bank may have
obtained by assignment or otherwise.


 


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“Patents” means all patents, patent applications and
like protections including without limitation improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part of the
same.


 


“Periodic Payments” means all installments or similar
recurring payments that Borrower may now or hereafter become obligated to pay
to Bank pursuant to the terms and provisions of any instrument, or agreement
now or hereafter in existence between Borrower and Bank.


 


“Permitted Indebtedness” means:


 


(a)           Indebtedness
of Borrower in favor of Bank arising under this Agreement or any other Loan
Document;


 


(b)           Indebtedness
existing on the Closing Date and disclosed in the Schedule;


 


(c)           Indebtedness
secured by a lien described in clause (c) of the defined term “Permitted
Liens,” provided (i) such Indebtedness does not exceed the lesser of the
cost or fair market value of the equipment financed with such Indebtedness and (ii) such
Indebtedness does not exceed $300,000 in the aggregate at any given time; and


 


(d)           Subordinated
Debt.


 


“Permitted Investment” means:


 


(a)           Investments
existing on the Closing Date disclosed in the Schedule; and


 


(b)           (i) marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or any agency or any State thereof maturing within one (1) year
from the date of acquisition thereof, (ii) commercial paper maturing no
more than one (1) year from the date of creation thereof and currently
having rating of at least A-2 or P-2 from either Standard & Poor’s
Corporation or Moody’s Investors Service, (iii) certificates of deposit
maturing no more than one (1) year from the date of investment therein
issued by Bank and (iv) Bank’s money market accounts.


 


“Permitted Liens” means the following:


 


(a)           Any
Liens existing on the Closing Date and disclosed in the Schedule or
arising under this Agreement or the other Loan Documents;


 


(b)           Liens
for taxes, fees, assessments or other governmental charges or levies, either
not delinquent or being contested in good faith by appropriate proceedings,
provided the same have no priority over any of Bank’s security interests;


 


(c)           Liens
(i) upon or in any equipment which was not financed by Bank acquired or
held by Borrower or any of its Subsidiaries to secure the purchase price of
such equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the
time of its acquisition, provided that the Lien is confined solely to the property
so acquired and improvements thereon, and the proceeds of such equipment;


 


(d)           Liens
incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by Liens of the type described in clauses (a) through
(c) above, provided that any extension, renewal or replacement Lien shall
be limited to the property encumbered by the existing Lien and the principal
amount of the indebtedness being extended, renewed or refinanced does not
increase.


 


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


 


“Prime Rate” means the variable rate of interest, per
annum, most recently announced by Bank, as its “prime rate,” whether or not
such announced rate is the lowest rate available from Bank.


 


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“Responsible Officer” means each of the Chief
Executive Officer, the Chief Operating Officer, the Chief Financial Officer and
the Controller of Borrower.


 


“Revolving Facility” means the facility under which
Borrower may request Bank to issue Advances, as specified in Section 2.1(a) hereof.


 


“Revolving Line” means a credit extension of up to Two
Million Dollars ($2,000,000).


 


“Revolving Maturity Date” means February 28,
2003.


 


“Schedule” means the schedule of exceptions
attached hereto and approved by Bank, if any.


 


“Subordinated Debt” means any debt incurred by
Borrower that is subordinated to the debt owing by Borrower to Bank on terms
acceptable to Bank (and identified as being such by Borrower and Bank).


 


“Subsidiary” means any corporation, company or
partnership in which (i) any general partnership interest or (ii) more
than 50% of the stock or other units of ownership which by the terms thereof
has the ordinary voting power to elect the Board of Directors, managers or
trustees of the entity, at the time as of which any determination is being
made, is owned by Borrower, either directly or through an Affiliate.


 


“Trademarks” means any trademark and servicemark
rights, whether registered or not, applications to register and registrations
of the same and like protections, and the entire goodwill of the business of
Borrower connected with and symbolized by such trademarks.


 


1.2           Accounting
Terms. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP and all calculations made hereunder shall be
made in accordance with GAAP.  When used
herein, the terms “financial statements” shall include the notes and schedules
thereto.


 


2.             LOAN
AND TERMS OF PAYMENT.


 


2.1           Credit
Extensions.


 


Borrower promises to pay to the order of Bank, in
lawful money of the United States of America, the aggregate unpaid principal
amount of all Credit Extensions made by Bank to Borrower hereunder.  Borrower shall also pay interest on the
unpaid principal amount of such Credit Extensions at rates in accordance with
the terms hereof.


 


(a)           Revolving
Advances.


 


(i)            Subject
to and upon the terms and conditions of this Agreement, Borrower may request
Advances in an aggregate outstanding amount not to exceed the lesser of (i) the
Revolving Line or (ii) the Borrowing Base; provided, however,
that Borrower may request Advances of up to $250,000 without regard to the
Borrowing Base.  Subject to the terms and
conditions of this Agreement, amounts borrowed pursuant to this Section 2.1(a) may
be repaid and reborrowed at any time prior to the Revolving Maturity Date, at
which time all Advances under this Section 2.1(a) shall be
immediately due and payable.  Borrower
may prepay any Advances without penalty or premium.


 


(ii)           Whenever
Borrower desires an Advance, Borrower will notify Bank by facsimile transmission
or telephone no later than 3:00 p.m. Pacific time, on the Business Day
that the Advance is to be made.  Each
such notification shall be promptly confirmed by a Payment/Advance Form in
substantially the form of Exhibit B hereto.  Bank is authorized to make Advances under
this Agreement, based upon instructions received from a Responsible Officer or
a designee of a Responsible Officer, or without instructions if in Bank’s
discretion such Advances are necessary to meet Obligations which have become due
and remain unpaid.  Bank shall be
entitled to rely on any telephonic notice given by a person who Bank reasonably
believes to be a Responsible Officer or a designee thereof, and Borrower shall
indemnify and hold Bank harmless for any damages or loss suffered by Bank as a
result of such reliance.  Bank will
credit the amount of Advances made under this Section 2.1(a) to
Borrower’s deposit account.


 


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2.2           Overadvances.  If the aggregate amount of the outstanding
Advances plus the aggregate face amount of all outstanding Letters of
Credit exceeds the lesser of the Revolving Line or the Borrowing Base at any
time, Borrower shall immediately pay to Bank, in cash, the amount of such
excess.


 


2.3           Interest
Rates, Payments, and Calculations.


 


(a)           Interest
Rate.  Except as set forth in Section 2.3(b),
the Advances shall bear interest, on the outstanding Daily Balance thereof, at
a rate equal to one and one half percent (1.50%) above the Prime Rate.


 


(b)           Late
Fee; Default Rate.  If any payment is
not made within ten (10) days after the date such payment is due, Borrower
shall pay Bank a late fee equal to the lesser of (i) five percent (5%) of
the amount of such unpaid amount or (ii) the maximum amount permitted to
be charged under applicable law.  All
Obligations shall bear interest, from and after the occurrence and during the
continuance of an Event of Default, at a rate equal to five (5) percentage
points above the interest rate applicable immediately prior to the occurrence
of the Event of Default.


 


(c)           Payments.  Interest hereunder shall be due and payable
on the last calendar day of each month during the term hereof.  Bank shall, at its option, charge such
interest, all Bank Expenses, and all Periodic Payments against any of Borrower’s
deposit accounts or against the Revolving Line, in which case those amounts
shall thereafter accrue interest at the rate then applicable hereunder.  Any interest not paid when due shall be
compounded by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder.  All payments shall be free and clear of any
taxes, withholdings, duties, impositions or other charges, to the end that Bank
will receive the entire amount of any Obligations payable hereunder, regardless
of source of payment.


 


(d)           Computation.  In the event the Prime Rate is changed from
time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased, effective as of the day the Prime Rate is changed, by
an amount equal to such change in the Prime Rate.  All interest chargeable under the Loan
Documents shall be computed on the basis of a three hundred sixty (360) day
year for the actual number of days elapsed.


 


2.4           Crediting
Payments.  Prior to the occurrence of
an Event of Default, Bank shall credit a wire transfer of funds, check or other
item of payment to such deposit account or Obligation as Borrower specifies.  After the occurrence of an Event of Default,
the receipt by Bank of any wire transfer of funds, check, or other item of
payment shall be immediately applied to conditionally reduce Obligations, but
shall not be considered a payment on account unless such payment is of
immediately available federal funds or unless and until such check or other
item of payment is honored when presented for payment.  Notwithstanding anything to the contrary
contained herein, any wire transfer or payment received by Bank after 12:00
noon Pacific time shall be deemed to have been received by Bank as of the
opening of business on the immediately following Business Day.  Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.


 


2.5           Fees.  Borrower shall pay to Bank the following:


 


(a)           Non-Usage
Fee.  In addition to other amounts
due or to become due, Borrower shall pay Bank a fee equal to three-eighths of
one percent (0.375%) of the difference between the Revolving Line and the
average daily balance outstanding under the Revolving Line during the term
hereof, paid quarterly in arrears commencing with the quarter ending June 30,
2002, which shall be nonrefundable; and


 


(b)           Bank
Expenses.  On the Closing Date, all
Bank Expenses incurred through the Closing Date, including reasonable attorneys’
fees and expenses and, after the Closing Date, all Bank Expenses, including
reasonable attorneys’ fees and expenses, as and when they become due.


 


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2.6           Additional
Costs.  In case any law, regulation,
treaty or official directive or the interpretation or application thereof by
any court or any governmental authority charged with the administration thereof
or the compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):


 


(a)           subjects
Bank to any tax with respect to payments of principal or interest or any other
amounts payable hereunder by Borrower or otherwise with respect to the
transactions contemplated hereby (except for taxes on the overall net income of
Bank imposed by the United States of America or any political subdivision
thereof);


 


(b)           imposes,
modifies or deems applicable any deposit insurance, reserve, special deposit or
similar requirement against assets held by, or deposits in or for the account
of, or loans by, Bank; or


 


(c)           imposes
upon Bank any other condition with respect to its performance under this
Agreement,


 


and the result of any of the foregoing is to increase
the cost to Bank, reduce the income receivable by Bank or impose any expense
upon Bank with respect to the Obligations, Bank shall notify Borrower
thereof.  Borrower agrees to pay to Bank
the amount of such increase in cost, reduction in income or additional expense
as and when such cost, reduction or expense is incurred or determined, upon
presentation by Bank of a statement of the amount and setting forth Bank’s
calculation thereof, all in reasonable detail, which statement shall be deemed
true and correct absent manifest error.


 


2.7           Term.  This Agreement shall become effective on the
Closing Date and, subject to Section 12.7, shall continue in full force
and effect for so long as any Obligations remain outstanding or Bank has any
obligation to make Credit Extensions under this Agreement.  Notwithstanding the foregoing, Bank shall have
the right to terminate its obligation to make Credit Extensions under this
Agreement immediately and without notice upon the occurrence and during the
continuance of an Event of Default. 
Notwithstanding termination, Bank’s Lien on the Collateral shall remain
in effect for so long as any Obligations are outstanding.


 


3.             CONDITIONS
OF LOANS.


 


3.1           Conditions
Precedent to Initial Credit Extension. 
The obligation of Bank to make the initial Credit Extension is subject
to the condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, the following:


 


(a)           this
Agreement;


 


(b)           a
certificate of the Secretary of Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this Agreement;


 


(c)           a
financing statement (Form UCC-1);


 


(d)           an
intellectual property security agreement;


 


(e)           a
warrant to purchase Borrower’s capital stock;


 


(f)            a
subordination agreement executed by each of the holders of the Bridge Notes;


 


(g)           the
fully executed documents prepared in connection with the Bridge Facility and
the related sale and issuance of Borrower’s Series D equity securities;


 


(h)           Borrower’s
fiscal year end 2000 audited financial statements;


 


(i)            agreement
to provide insurance;


 


(j)            payment
of the fees and Bank Expenses then due specified in Section 2.5 hereof;


 


(k)           an
audit of the Collateral, the results of which shall be satisfactory to Bank;
and


 


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


 


3.2           Conditions
Precedent to all Credit Extensions. 
The obligation of Bank to make each Credit Extension, including the
initial Credit Extension, is further subject to the following conditions:


 


(a)           timely
receipt by Bank of the Payment/Advance Form as provided in Section 2.1;
and


 


(b)           the
representations and warranties contained in Section 5 shall be true and
correct in all material respects on and as of the date of such Payment/Advance Form and
on the effective date of each Credit Extension as though made at and as of each
such date, and no Event of Default shall have occurred and be continuing, or
would exist after giving effect to such Credit Extension (provided, however,
that those representations and warranties expressly referring to another date
shall be true, correct and complete in all material respects as of such
date).  The making of each Credit
Extension shall be deemed to be a representation and warranty by Borrower on
the date of such Credit Extension as to the accuracy of the facts referred to
in this Section 3.2.


 


4.             CREATION
OF SECURITY INTEREST.


 


4.1           Grant
of Security Interest.  Borrower
grants and pledges to Bank a continuing security interest in all presently
existing and hereafter acquired or arising Collateral in order to secure prompt
repayment of any and all Obligations and in order to secure prompt performance
by Borrower of each of its covenants and duties under the Loan Documents.  Except as set forth in the Schedule, such
security interest constitutes a valid, first priority security interest in the
presently existing Collateral, and will constitute a valid, first priority
security interest in Collateral acquired after the date hereof.


 


4.2           Delivery
of Additional Documentation Required. 
Borrower shall from time to time execute and deliver to Bank, at the
request of Bank, all Negotiable Collateral, all financing statements and other
documents that Bank may reasonably request, in form satisfactory to Bank, to
perfect and continue the perfection of Bank’s security interests in the
Collateral and in order to fully consummate all of the transactions
contemplated under the Loan Documents.


 


4.3           Right
to Inspect.  Bank (through any of its
officers, employees, or agents) shall have the right, upon reasonable prior
notice, from time to time during Borrower’s usual business hours but no more
than twice a year (unless an Event of Default has occurred and is continuing),
to inspect Borrower’s Books and to make copies thereof and to check, test, and
appraise the Collateral in order to verify Borrower’s financial condition or
the amount, condition of, or any other matter relating to, the Collateral.


 


5.             REPRESENTATIONS
AND WARRANTIES.


 


Borrower represents and
warrants as follows:


 


5.1           Due
Organization and Qualification. 
Borrower and each Subsidiary is a corporation duly existing under the
laws of its state of incorporation and qualified and licensed to do business in
any state in which the conduct of its business or its ownership of property
requires that it be so qualified.


 


5.2           Due
Authorization; No Conflict.  The
execution, delivery, and performance of the Loan Documents are within Borrower’s
powers, have been duly authorized, and are not in conflict with nor constitute
a breach of any provision contained in Borrower’s Articles of Incorporation or
Bylaws, nor will they constitute an event of default under any material
agreement to which Borrower is a party or by which Borrower is bound.  Borrower is not in default under any material
agreement to which it is a party or by which it is bound.


 


5.3           No
Prior Encumbrances.  Borrower has
good and marketable title to its property, free and clear of Liens, except for
Permitted Liens.


 


5.4           Bona
Fide Eligible Accounts.  The Eligible
Accounts are bona fide existing obligations. 
The property and services giving rise to such Eligible Accounts has been
delivered or rendered to the account debtor or to the account debtor’s agent
for immediate and unconditional acceptance by the account debtor.  Borrower has 


 


9





















 


not received notice of actual or imminent Insolvency
Proceeding of any account debtor that is included in any Borrowing Base
Certificate as an Eligible Account.


 


5.5           Merchantable
Inventory.  All Inventory is in all
material respects of good and marketable quality, free from all material
defects, except for Inventory for which adequate reserves have been made.


 


5.6           Intellectual
Property Collateral.  Borrower is the
sole owner of the Intellectual Property Collateral, except for non-exclusive
licenses granted by Borrower to its customers in the ordinary course of
business.  Each of the Patents is valid
and enforceable, and no part of the Intellectual Property Collateral has been
judged invalid or unenforceable, in whole or in part, and no claim has been
made that any part of the Intellectual Property Collateral violates the rights
of any third party.  Except as set forth
in the Schedule, Borrower’s rights as a licensee of intellectual property do
not give rise to more than five percent (5%) of its gross revenue in any given
month, including without limitation revenue derived from the sale, licensing,
rendering or disposition of any product or service.  Except as set forth in the Schedule, Borrower
is not a party to, or bound by, any agreement that restricts the grant by
Borrower of a security interest in Borrower’s rights under such agreement.


 


5.7           Name;
Location of Chief Executive Office. 
Except as disclosed in the Schedule, Borrower has not done business
under any name other than that specified on the signature page hereof.  The chief executive office of Borrower is
located at the address indicated in Section 10 hereof.  All Borrower’s Inventory and Equipment is
located only at the location set forth in Section 10 hereof.


 


5.8           Litigation.  Except as set forth in the Schedule, there
are no actions or proceedings pending by or against Borrower or any Subsidiary
before any court or administrative agency in which an adverse decision could
have a Material Adverse Effect, or a material adverse effect on Borrower’s
interest or Bank’s security interest in the Collateral.


 


5.9           No
Material Adverse Change in Financial Statements.  All consolidated and consolidating financial
statements related to Borrower and any Subsidiary that Bank has received from
Borrower fairly present in all material respects Borrower’s financial condition
as of the date thereof and Borrower’s consolidated and consolidating results of
operations for the period then ended. 
There has not been a material adverse change in the consolidated or the
consolidating financial condition of Borrower since the date of the most recent
of such financial statements submitted to Bank.


 


5.10         Solvency,
Payment of Debts.  Borrower is
solvent and able to pay its debts (including trade debts) as they mature.


 


5.11         Regulatory
Compliance.  Borrower and each
Subsidiary have met the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA, and no event has occurred
resulting from Borrower’s failure to comply with ERISA that could result in
Borrower’s incurring any material liability. 
Borrower is not an “investment company” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940.  Borrower is not engaged principally, or as
one of the important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulations T and U of the Board of Governors of the Federal Reserve System).  Borrower has complied with all the provisions
of the Federal Fair Labor Standards Act. 
Borrower has not violated any statutes, laws, ordinances or rules applicable
to it, violation of which could have a Material Adverse Effect.


 


5.12         Environmental
Condition.  Except as disclosed in
the Schedule, none of Borrower’s or any Subsidiary’s properties or assets has
ever been used by Borrower or any Subsidiary or, to the best of Borrower’s
knowledge, by previous owners or operators, in the disposal of, or to produce,
store, handle, treat, release, or transport, any hazardous waste or hazardous
substance other than in accordance with applicable law; to the best of Borrower’s
knowledge, none of Borrower’s properties or assets has ever been designated or
identified in any manner pursuant to any environmental protection statute as a
hazardous waste or hazardous substance disposal site, or a candidate for
closure pursuant to any environmental protection statute; no lien arising under
any environmental protection statute has attached to any revenues or to any
real or personal property owned by Borrower or any Subsidiary; and neither
Borrower nor any Subsidiary has received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other federal, state or
other governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous
waste or hazardous substances into the environment.


 


10





















 


5.13         Taxes.  Borrower and each Subsidiary have filed or
caused to be filed all tax returns required to be filed, and have paid, or have
made adequate provision for the payment of, all taxes reflected therein.


 


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


 


5.15         Government
Consents.  Borrower and each
Subsidiary have obtained all consents, approvals and authorizations of, made
all declarations or filings with, and given all notices to, all governmental
authorities that are necessary for the continued operation of Borrower’s
business as currently conducted, the failure to obtain which could have a
Material Adverse Effect.


 


5.16         Accounts.  None of Borrower’s nor any Subsidiary’s
property is maintained or invested with a Person other than Bank.


 


5.17         Full
Disclosure.  No representation,
warranty or other statement made by Borrower in any certificate or written
statement furnished to Bank contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained in such certificates or statements not misleading.


 


6.             AFFIRMATIVE
COVENANTS.


 


Borrower covenants and
agrees that, until payment in full of all outstanding Obligations, and for so
long as Bank may have any commitment to make a Credit Extension hereunder,
Borrower shall do all of the following:


 


6.1           Good
Standing.  Borrower shall maintain
its and each of its Subsidiaries’ corporate existence and good standing in its
jurisdiction of incorporation and maintain qualification in each jurisdiction
in which it is required under applicable law. 
Borrower shall maintain, and shall cause each of its Subsidiaries to
maintain, in force all licenses, approvals and agreements, the loss of which
could have a Material Adverse Effect.


 


6.2           Government
Compliance.  Borrower shall meet, and
shall cause each Subsidiary to meet, the minimum funding requirements of ERISA
with respect to any employee benefit plans subject to ERISA.  Borrower shall comply, and shall cause each
Subsidiary to comply, with all statutes, laws, ordinances and government rules and
regulations to which it is subject, noncompliance with which could have a
Material Adverse Effect.


 


6.3           Financial
Statements, Reports, Certificates. 
Borrower shall deliver the following to Bank:  (a) as soon as available, but in any
event within thirty (30) days after the end of each calendar month, a company
prepared consolidated balance sheet, income, and cash flow statement covering
Borrower’s consolidated operations during such period, prepared in accordance
with GAAP, consistently applied, in a form acceptable to Bank and certified by
a Responsible Officer; (b) as soon as available, but in any event within (i) one
hundred fifty (150) days of Borrower’s fiscal year ended 2001 (which shall
reflect no material adverse changes from the company-prepared financial
statements for the same period) and, thereafter, (ii) one hundred twenty
(120) days after the end of Borrower’s fiscal year, in each case audited
consolidated financial statements of Borrower prepared in accordance with GAAP,
consistently applied, together with an unqualified opinion on such financial
statements of an independent certified public accounting firm reasonably
acceptable to Bank; (c) if applicable, copies of all statements, reports
and notices sent or made available generally by Borrower to its security
holders or to any holders of Subordinated Debt and all reports on
Forms 10-K and 10-Q filed with the Securities and Exchange Commission; (d) promptly
upon receipt of notice thereof, a 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 Fifty Thousand Dollars ($50,000) or
more; (e) such budgets, sales projections, operating plans or other
financial information as Bank may reasonably request from time to time
generally prepared by Borrower in the ordinary course of business, including
but not limited to Borrower’s annual business plan (including operating budget)
within thirty (30) days following Borrower’s fiscal year end; and (f) within
thirty (30) days of the last day of each fiscal quarter, a report signed by
Borrower, in form reasonably acceptable to Bank, listing any applications or
registrations that Borrower has made or filed in respect of any Patents,
Copyrights or Trademarks and the status of any outstanding applications or
registrations, as well as any material change in Borrower’s intellectual
property, including but not limited to any subsequent ownership right of
Borrower in or to any Trademark, Patent or Copyright not specified in Exhibits
A, B, 


 


11





















 


and C of
the Intellectual Property Security Agreement delivered to Bank by Borrower in
connection with this Agreement.


 


Within twenty (20) days after the last day of each
month, Borrower shall deliver to Bank a Borrowing Base Certificate signed by a
Responsible Officer in substantially the form of Exhibit C hereto,
together with aged listings of accounts receivable and accounts payable.


 


Borrower shall deliver to Bank with the monthly
financial statements a Compliance Certificate signed by a Responsible Officer
in substantially the form of Exhibit D hereto.


 


Bank shall have a right from time to time hereafter to
audit Borrower’s Accounts and appraise Collateral at Borrower’s expense,
provided that such audits will be conducted no more often than every six (6) months
unless an Event of Default has occurred and is continuing.


 


6.4           Inventory;
Returns.  Borrower shall keep all
Inventory in good and marketable condition, free from all material defects
except for Inventory for which adequate reserves have been made.  Returns and allowances, if any, as between
Borrower and its account debtors shall be on the same basis and in accordance
with the usual customary practices of Borrower, as they exist at the time of
the execution and delivery of this Agreement. 
Borrower shall promptly notify Bank of all returns and recoveries and of
all disputes and claims, where the return, recovery, dispute or claim involves
more than Fifty Thousand Dollars ($50,000).


 


6.5           Taxes.  Borrower shall make, and shall cause each
Subsidiary to make, due and timely payment or deposit of all material federal,
state, and local taxes, assessments, or contributions required of it by law,
and will execute and deliver to Bank, on demand, appropriate certificates
attesting to the payment or deposit thereof; and Borrower will make, and will cause
each Subsidiary to make, timely payment or deposit of all material tax payments
and withholding taxes required of it by applicable laws, including, but not
limited to, those laws concerning F.I.C.A., F.U.T.A., state disability, and
local, state, and federal income taxes, and will, upon request, furnish Bank
with proof satisfactory to Bank indicating that Borrower or a Subsidiary has
made such payments or deposits; provided that Borrower or a Subsidiary need not
make any payment if the amount or validity of such payment is contested in good
faith by appropriate proceedings and is reserved against (to the extent
required by GAAP) by Borrower.


 


6.6           Insurance.


 


(a)           Borrower,
at its expense, shall keep the Collateral insured against loss or damage by
fire, theft, explosion, sprinklers, and all other hazards and risks, and in
such amounts, as ordinarily insured against by other owners in similar
businesses conducted in the locations where Borrower’s business is conducted on
the date hereof.  Borrower shall also
maintain insurance relating to Borrower’s business, ownership and use of the
Collateral in amounts and of a type that are customary to businesses similar to
Borrower’s.


 


(b)           All
such policies of insurance shall be in such form, with such companies, and in
such amounts as are reasonably satisfactory to Bank.  All such policies of property insurance shall
contain a lender’s loss payable endorsement, in a form satisfactory to Bank,
showing Bank as an additional loss payee thereof, and all liability insurance
policies shall show the Bank as an additional insured and shall specify that
the insurer must give at least twenty (20) days notice to Bank before canceling
its policy for any reason.  Upon Bank’s
request, Borrower shall deliver to Bank certified copies of such policies of
insurance and evidence of the payments of all premiums therefor.  All proceeds payable under any such policy
shall, at the option of Bank, be payable to Bank to be applied on account of
the Obligations.


 


6.7           Accounts.  Borrower shall maintain and shall cause each
of its Subsidiaries to maintain its primary depository, operating, and
investment accounts with Bank.


 


6.8           Quick
Ratio.  Borrower shall maintain, as
of the last day of each calendar month, a ratio of (a) the sum of (i) cash,
plus (ii) ninety percent (90%) of Eligible Accounts, plus (iii) availability
under the Bridge Facility (as of any date of determination) to (b) Current
Liabilities plus, to the extent not already included therein, all
Indebtedness (including without limitation any Contingent Obligations) owing
from Borrower to Bank, of at least 1.75 to 1.00.


 


12





















 


6.9           Performance
to Plan.  As of any date of
determination, which shall be the last calendar day of each calendar month,
commencing January 1, 2002, Borrower shall generate revenue and incur
expenses, for the three (3) month period ending on such date, of no less
than eighty percent (80%) of the projected revenue, and no more than one
hundred twenty percent (120%) of the projected expenses, for the same period
contained in the projection provided to Bank dated March 15, 2002, a true
and correct copy of which is attached hereto as Exhibit E.


 


6.10         Equity
Event; Bridge Draw.  Borrower shall
consummate the Equity Event by the earlier of (a) two (2) weeks prior
to maturity of the Bridge Notes, or (b) December 15, 2002.  In the event Borrower does not timely
consummate the Equity Event as set forth in the preceding sentence, Borrower
shall draw all remaining availability under the Bridge Facility on or before
the later of such dates.


 


6.11         Registration
of Intellectual Property Rights.


 


(a)           Borrower
shall register or cause to be registered on an expedited basis (to the extent
not already registered) with the United States Patent and Trademark Office or
the United States Copyright Office, as applicable:  (i) those intellectual property rights
listed on Exhibits A, B and C to the Intellectual Property
Security Agreement delivered to Bank by Borrower in connection with this
Agreement, within thirty (30) days of the date of this Agreement, (ii) all
registerable intellectual property rights Borrower has developed as of the date
of this Agreement but heretofore failed to register, within thirty (30) days of
the date of this Agreement, and (iii) those additional intellectual
property rights developed or acquired by Borrower from time to time in
connection with any product or service, prior to the sale or licensing of such
product or the rendering of such service to any third party, and prior to
Borrower’s use of such product (including without limitation major revisions or
additions to the intellectual property rights listed on such Exhibits A,
B and C).  Borrower shall
give Bank notice of all such applications or registrations.


 


(b)           Borrower
shall execute and deliver such additional instruments and documents from time
to time as Bank shall reasonably request to perfect Bank’s security interest in
the Intellectual Property Collateral.


 


(c)           Borrower
shall (i) protect, defend and maintain the validity and enforceability of
the Trademarks, Patents and Copyrights, (ii) use its best efforts to
detect infringements of the Trademarks, Patents and Copyrights and promptly
advise Bank in writing of material infringements detected and (iii) not
allow any material Trademarks, Patents or Copyrights to be abandoned, forfeited
or dedicated to the public without the written consent of Bank, which shall not
be unreasonably withheld.


 


(d)           Bank
may audit Borrower’s Intellectual Property Collateral to confirm compliance
with this Section, provided such audit may not occur more often than twice per
year, unless an Event of Default has occurred and is continuing.  Bank shall have the right, but not the
obligation, to take, at Borrower’s sole expense, any actions that Borrower is
required under this Section to take but which Borrower fails to take,
after fifteen (15) days’ notice to Borrower. 
Borrower shall reimburse and indemnify Bank for all reasonable costs and
reasonable expenses incurred in the reasonable exercise of its rights under
this Section.


 


6.12         Further
Assurances.  At any time and from
time to time Borrower shall execute and deliver such further instruments and
take such further action as may reasonably be requested by Bank to effect the
purposes of this Agreement.


 


7.             NEGATIVE
COVENANTS.


 


Borrower covenants and
agrees that, so long as any credit hereunder shall be available and until
payment in full of the outstanding Obligations or for so long as Bank may have
any commitment to make any Credit Extensions, Borrower will not do any of the
following:


 


7.1           Dispositions.  Convey, sell, lease, transfer or otherwise
dispose of (collectively, a “Transfer”), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, other than:  (i) Transfers of Inventory in the
ordinary course of business; (ii) Transfers 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) Transfers of
worn-out or obsolete Equipment which was not financed by Bank.


 


13





















 


7.2           Change
in Business; Change in Control or Executive Office.  Engage in any business, or permit any of its
Subsidiaries to engage in any business, other than the businesses currently
engaged in by Borrower and any business substantially similar or related
thereto (or incidental thereto); or cease to conduct business in the manner
conducted by Borrower as of the Closing Date; or suffer or permit a Change in
Control; or without thirty (30) days prior written notification to Bank,
relocate its chief executive office or state of incorporation; or without Bank’s
prior written consent, change the date on which its fiscal year ends.


 


7.3           Mergers
or Acquisitions.  Merge or
consolidate, or permit any of its Subsidiaries to merge or consolidate, with or
into any other business organization, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person.


 


7.4           Indebtedness.  Create, incur, assume or be or remain liable
with respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.


 


7.5           Encumbrances.  Create, incur, assume or suffer to exist any
Lien with respect to any of its property, or assign or otherwise convey any
right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries so to do, except for Permitted Liens.  Agree with any Person other than Bank not to
grant a security interest in, or otherwise encumber, any of its property, or
permit any Subsidiary to do so.


 


7.6           Distributions.  Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock, or permit any of its Subsidiaries to do so, except that
Borrower may repurchase the stock of former employees pursuant to stock
repurchase agreements as long as an Event of Default does not exist prior to
such repurchase or would not exist after giving effect to such repurchase.


 


7.7           Investments.  Directly or indirectly acquire or own, or
make any Investment in or to any Person, or permit any of its Subsidiaries so
to do, other than Permitted Investments; or maintain or invest any of its
property with a Person other than Bank or permit any of its Subsidiaries to do
so unless such Person has entered into an account control agreement with Bank
in form and substance satisfactory to Bank; or suffer or permit any Subsidiary
to be a party to, or be bound by, an agreement that restricts such Subsidiary
from paying dividends or otherwise distributing property to Borrower.


 


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


 


7.9           Subordinated
Debt.  Make any payment in respect of
any Subordinated Debt, or permit any of its Subsidiaries to make any such
payment, except in compliance with the terms of such Subordinated Debt, or
amend any provision contained in any documentation relating to the Subordinated
Debt without Bank’s prior written consent.


 


7.10         Inventory
and Equipment.  Store the Inventory
or the Equipment with a bailee, warehouseman, or other third party unless the
third party has been notified of Bank’s security interest and Bank (a) has
received an acknowledgment from the third party that it is holding or will hold
the Inventory or Equipment for Bank’s benefit or (b) is in pledge
possession of the warehouse receipt, where negotiable, covering such Inventory
or Equipment.  Store or maintain any Equipment
or Inventory at a location other than the location set forth in Section 10
of this Agreement.


 


7.11         Compliance.  Become an “investment company” or be
controlled by an “investment company,” within the meaning of the Investment
Company Act of 1940, or become principally engaged in, or undertake as one of
its important activities, the business of extending credit for the purpose of
purchasing or carrying margin stock, or use the proceeds of any Credit
Extension for such 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 law or regulation, which
violation could have a Material Adverse Effect, or a material adverse effect on
the Collateral or the priority of Bank’s Lien on the Collateral, or permit any
of its Subsidiaries to do any of the foregoing.


 


14





















 


7.12         Negative
Pledge Agreements.  Permit the
inclusion in any contract to which it or a Subsidiary becomes a party of any
provisions that could restrict or invalidate the creation of a security
interest in any of Borrower’s or such Subsidiary’s property.


 


8.             EVENTS
OF DEFAULT.


 


Any one or more of the
following events shall constitute an Event of Default by Borrower under this
Agreement:


 


8.1           Payment
Default.  If Borrower fails to pay,
when due, any of the Obligations;


 


8.2           Covenant
Default.  If Borrower fails to
perform any obligation under Article 6 or violates any of the covenants
contained in Article 7 of this Agreement, or fails or neglects to perform,
keep, or observe any other material term, provision, condition, covenant, or
agreement contained in this Agreement, in any of the Loan Documents, or in any
other present or future agreement between Borrower and Bank and as to any
default under such other term, provision, condition, covenant or agreement that
can be cured, has failed to cure such default within ten (10) days after
Borrower receives notice thereof or any officer of Borrower becomes aware
thereof; provided, however, that if the default cannot by its nature be cured
within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is
likely to be cured within a reasonable time, then Borrower shall have an
additional reasonable period (which shall not in any case exceed thirty (30)
days) to attempt to cure such default, and within such reasonable time period
the failure to have cured such default shall not be deemed an Event of Default
(provided that no Credit Extensions will be required to be made during such
cure period);


 


8.3           Material
Adverse Effect.  If there occurs any
circumstance or circumstances that could have a Material Adverse Effect;


 


8.4           Attachment.  If any portion of Borrower’s assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the possession of any trustee, receiver or person acting in a
similar capacity and such attachment, seizure, writ or distress warrant or levy
has not been removed, discharged or rescinded within ten (10) days, or if
Borrower is enjoined, restrained, or in any way prevented by court order from
continuing to conduct all or any material part of its business affairs, or if a
judgment or other claim becomes a lien or encumbrance upon any material portion
of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower’s assets by the United States
Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, and the same is not paid
within ten (10) days after Borrower receives notice thereof, provided that
none of the foregoing shall constitute an Event of Default where such action or
event is stayed or an adequate bond has been posted pending a good faith
contest by Borrower (provided that no Credit Extensions will be required to be
made during such cure period);


 


8.5           Insolvency.  If Borrower becomes insolvent, or if an
Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding
is commenced against Borrower and is not dismissed or stayed within thirty (30)
days (provided that no Credit Extensions will be made prior to the dismissal of
such Insolvency Proceeding);


 


8.6           Other
Agreements.  If there is a default or
other failure to perform in any agreement to which Borrower is a party or by
which it is bound resulting in a right by a third party or parties, whether or
not exercised, to accelerate the maturity of any Indebtedness in an amount in
excess of Fifty Thousand Dollars ($50,000); or which could have a Material
Adverse Effect;


 


8.7           Subordinated
Debt.  If Borrower makes any payment
on account of Subordinated Debt, except to the extent such payment is allowed
under any subordination agreement entered into with Bank;


 


8.8           Judgments.  If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least Fifty Thousand
Dollars ($50,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of ten (10) days (provided that no
Credit Extensions will be made prior to the satisfaction or stay of such
judgment); or


 


8.9           Misrepresentations.  If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set
forth herein or in any certificate delivered to Bank by any 


 


15





















 


Responsible Officer pursuant to this Agreement or to
induce Bank to enter into this Agreement or any other Loan Document.


 


9.             BANK’S
RIGHTS AND REMEDIES.


 


9.1           Rights
and Remedies.  Upon the occurrence
and during the continuance of an Event of Default, Bank may, at its election,
without notice of its election and without demand, do any one or more of the
following, all of which are authorized by Borrower:


 


(a)           Declare
all Obligations, whether evidenced by this Agreement, by any of the other Loan
Documents, or otherwise, immediately due and payable (provided that upon the
occurrence of an Event of Default described in Section 8.5, all
Obligations shall become immediately due and payable without any action by
Bank);


 


(b)           Cease
advancing money or extending credit to or for the benefit of Borrower 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, upon
terms and in whatever order that Bank reasonably considers advisable;


 


(d)           Make
such payments and do such acts as Bank considers necessary or reasonable to
protect its security interest in the Collateral.  Borrower agrees to assemble the Collateral if
Bank so requires, and to make the Collateral available to Bank as Bank may designate.  Borrower authorizes Bank to enter the
premises where the Collateral is located, to take and maintain possession of
the Collateral, or any part of it, and to pay, purchase, contest, or compromise
any encumbrance, charge, or lien which in Bank’s determination appears to be
prior or superior to its security interest and to pay all expenses incurred in
connection therewith.  With respect to
any of Borrower’s owned premises, Borrower hereby grants Bank a license to
enter into possession of such premises and to occupy the same, without charge,
in order to exercise any of Bank’s rights or remedies provided herein, at law,
in equity, or otherwise;


 


(e)           Set
off and apply to the Obligations any and all (i) balances and deposits of
Borrower held by Bank, or (ii) indebtedness at any time owing to or for
the credit or the account of Borrower held by Bank;


 


(f)            Ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell (in the manner provided for herein) the Collateral.  Bank is hereby granted a license or other
right, solely pursuant to the provisions of this Section 9.1, to use,
without charge, Borrower’s labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks, service marks, and advertising
matter, or any property of a similar nature, 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 9.1,
Borrower’s rights under all licenses and all franchise agreements shall inure
to Bank’s benefit;


 


(g)           Dispose
of the Collateral by way of one or more contracts or transactions, for cash or
on terms, in such manner and at such places (including Borrower’s premises) as
Bank determines is commercially reasonable, and apply any proceeds to the
Obligations in whatever manner or order Bank deems appropriate;


 


(h)           Bank
may credit bid and purchase at any public sale; and


 


(i)            Any
deficiency that exists after disposition of the Collateral as provided above
will be paid immediately by Borrower.


 


9.2           Power
of Attorney.  Effective only upon the
occurrence and during the continuance of an Event of Default, Borrower hereby
irrevocably appoints Bank (and any of Bank’s designated officers, or employees)
as Borrower’s true and lawful attorney to: 
(a) send requests for verification of Accounts or notify account
debtors of Bank’s security interest in the Accounts; (b) endorse Borrower’s
name on any checks or other forms of payment or security that may come into
Bank’s possession; (c) sign Borrower’s name on any invoice or bill of
lading relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account debtors;
(d) dispose of any Collateral; (e) make, settle, and adjust all
claims under and decisions 


 


16





















 


with respect to
Borrower’s policies of insurance; (f) settle and adjust disputes and
claims respecting the accounts directly with account debtors, for amounts and
upon terms which Bank determines to be reasonable; (g) to file, in its
sole discretion, one or more financing or continuation statements and
amendments thereto, relative to any of the Collateral without the signature of
Borrower where permitted by law; and (h) to transfer the Intellectual
Property Collateral into the name of Bank or a third party to the extent
permitted under the California Uniform Commercial Code; provided Bank may
exercise such power of attorney to sign the name of Borrower on any of the
documents described in Section 4.2 regardless of whether an Event of
Default has occurred, including without limitation to modify, in its sole
discretion, any intellectual property security agreement entered into between
Borrower and Bank without first obtaining Borrower’s approval of or signature
to such modification by amending Exhibits A, B, and C, thereof, as appropriate,
to include reference to any right, title or interest in any Copyrights, Patents
or Trademarks acquired by Borrower after the execution hereof or to delete any
reference to any right, title or interest in any Copyrights, Patents or
Trademarks in which Borrower no longer has or claims to have any right, title
or interest.  The appointment of Bank as
Borrower’s attorney in fact, and each and every one of Bank’s rights and
powers, being coupled with an interest, is irrevocable until all of the
Obligations have been fully repaid and performed and Bank’s obligation to
provide Credit Extensions hereunder is terminated.


 


9.3           Accounts
Collection.  At any time during the
term of this Agreement, Bank may notify any Person owing funds to Borrower of
Bank’s security interest in such funds and verify the amount of such
Account.  Borrower shall collect all
amounts owing to Borrower for Bank, receive in trust all payments as Bank’s
trustee, and immediately deliver such payments to Bank in their original form
as received from the account debtor, with proper endorsements for deposit.


 


9.4           Bank
Expenses.  If Borrower fails to pay
any amounts or furnish any required proof of payment due to third persons or
entities, as required under the terms of this Agreement, then Bank may do any
or all of the following after reasonable notice to Borrower:  (a) make payment of the same or any part
thereof; (b) set up such reserves under a loan facility in Section 2.1
as Bank deems necessary to protect Bank from the exposure created by such
failure; or (c) obtain and maintain insurance policies of the type
discussed in Section 6.6 of this Agreement, and take any action with
respect to such policies as Bank deems prudent. 
Any amounts so paid or deposited by Bank shall constitute Bank Expenses,
shall be immediately due and payable, and shall bear interest at the then applicable
rate hereinabove provided, and shall be secured by the Collateral.  Any payments made by Bank shall not
constitute an agreement by Bank to make similar payments in the future or a
waiver by Bank of any Event of Default under this Agreement.


 


9.5           Bank’s
Liability for Collateral.  So long as
Bank complies with reasonable banking practices, Bank shall not in any way or
manner be liable or responsible for:  (a) the
safekeeping of the Collateral; (b) any loss or damage thereto occurring or
arising in any manner or fashion from any cause; (c) any diminution in the
value thereof; or (d) any act or default of any carrier, warehouseman,
bailee, forwarding agency, or other person whomsoever.  All risk of loss, damage or destruction of
the Collateral shall be borne by Borrower.


 


9.6           Remedies
Cumulative.  Bank’s rights and
remedies under this Agreement, the Loan Documents, and all other agreements
shall be cumulative.  Bank shall have all
other rights and remedies not inconsistent herewith as provided under the Code,
by law, or in equity.  No exercise by
Bank of one right or remedy shall be deemed an election, and no waiver by Bank
of any Event of Default on Borrower’s part shall be deemed a continuing
waiver.  No delay by Bank shall
constitute a waiver, election, or acquiescence by it.  No waiver by Bank shall be effective unless
made in a written document signed on behalf of Bank and then shall be effective
only in the specific instance and for the specific purpose for which it was
given.


 


9.7           Demand;
Protest.  Borrower waives demand,
protest, notice of protest, 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 at any time held by Bank on which
Borrower may in any way be liable.


 


10.           NOTICES.


 


Unless otherwise provided
in this Agreement, all notices or demands by any party relating to this
Agreement or any other agreement entered into in connection herewith shall be
in writing and (except for financial statements and other informational
documents which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by a recognized overnight delivery service, certified
mail, postage prepaid, return receipt requested, or by telefacsimile to
Borrower or to Bank, as the case may be, at its addresses set forth below:


 


17





















 


	
  If to Borrower:

  	
  HIRERIGHT, INC.

  
	
   

  	
  2200 Main Street,
  Suite 400

  
	
   

  	
  Irvine, California
  92614

  
	
   

  	
  Attn: Chief Financial
  Officer

  
	
   

  	
  FAX: (949) 428-5801

  
	
   

  	
   

  
	
  If to Bank:

  	
  Comerica
  Bank-California

  
	
   

  	
  333 W. Santa Clara
  St.

  
	
   

  	
  San Jose, CA 95113

  
	
   

  	
  Attn: Corporate Banking
  Center

  
	
   

  	
   

  
	
  with a copy to:

  	
  Comerica Bank-California

  
	
   

  	
  4 Venture,
  Suite 305 (M/C 4630)

  
	
   

  	
  Irvine, California
  92618

  
	
   

  	
  Attn: Bonnie E.
  Kehe, SVP and Manager

  
	
   

  	
  FAX: (949) 754-5105

  



 


The parties hereto may change the address at which
they are to receive notices hereunder, by notice in writing in the foregoing manner
given to the other.


 


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


 


This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State
of California, without regard to principles of conflicts of law.  Each of Borrower and Bank hereby submits to
the exclusive jurisdiction of the state and Federal courts located in the
County of Santa Clara, State of California. 
BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
OR STATUTORY CLAIMS.  EACH PARTY
RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. 
EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH
ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.


 


12.           GENERAL
PROVISIONS.


 


12.1         Successors
and Assigns.  This Agreement shall
bind and inure to the benefit of the respective successors and permitted
assigns of each of the parties; provided, however, that neither this Agreement
nor any rights hereunder may be assigned by Borrower without Bank’s prior
written consent, which consent may be granted or withheld in Bank’s sole
discretion.  Bank shall have 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 hereunder.


 


12.2         Indemnification.  Borrower shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against:  (a) all obligations, demands, claims,
and liabilities claimed or asserted by any other party in connection with the
transactions contemplated by this Agreement; and (b) all losses or Bank
Expenses in any way suffered, incurred, or paid by Bank as a result of or in
any way arising out of, following, or consequential to transactions between
Bank and Borrower whether under this Agreement, or otherwise (including without
limitation 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 set forth in this Agreement.


 


12.4         Severability
of Provisions.  Each provision of
this Agreement shall be severable from every other provision of this Agreement
for the purpose of determining the legal enforceability of any specific
provision.


 


18





















 


12.5         Amendments
in Writing, Integration.  Neither
this Agreement nor the Loan Documents can be amended or terminated orally.  All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement and the Loan Documents, if any,
are merged 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, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.


 


12.7         Survival.  All covenants, representations and warranties
made in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding or Bank has any obligation to make Credit
Extensions to Borrower.  The obligations
of Borrower to indemnify Bank with respect to the expenses, damages, losses,
costs and liabilities described in Section 12.2 shall survive until all
applicable statute of limitations periods with respect to actions that may be
brought against Bank have run.


 


19





















 


IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed as of the date first above written.


 


 


	
   

  	
  HIRERIGHT, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/ Richard Little

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  CFO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COMERICA BANK-CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/ Justin A. Miller

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  CBO

  	
   

  



 


20





















 


	
  DEBTOR

  	
  HIRERIGHT, INC.

  
	
   

  	
   

  
	
  SECURED PARTY:

  	
  COMERICA BANK-CALIFORNIA

  



 


EXHIBIT A


 


COLLATERAL DESCRIPTION
ATTACHMENT

TO LOAN AND SECURITY AGREEMENT


 


All personal property of Borrower (herein referred to
as “Borrower” or “Debtor”) whether presently existing or hereafter created or
acquired, and wherever located, including, but not limited to:


 


(a)           all
accounts (including health-care-insurance receivables), chattel paper
(including tangible and electronic chattel paper), deposit accounts, documents
(including negotiable documents), equipment (including all accessions and
additions thereto), general intangibles (including payment intangibles and
software), goods (including fixtures), instruments (including promissory
notes), inventory (including all goods held for sale or lease or to be
furnished under a contract of service, and including returns and
repossessions), investment property (including securities and securities
entitlements), letter of credit rights, money, and all of Debtor’s books and
records with respect to any of the foregoing, and the computers and equipment
containing said books and records;


 


(b)           all
common law and statutory copyrights and copyright registrations, applications
for registration, now existing or hereafter arising, in the United States of
America or in any foreign jurisdiction, obtained or to be obtained on or in
connection with any of the forgoing, or any parts thereof or any underlying or
component elements of any of the forgoing, together with the right to copyright
and all rights to renew or extend such copyrights and the right (but not the
obligation) of Secured Party to sue in its own name and/or in the name of the
Debtor for past, present and future infringements of copyright;


 


(c)           all
trademarks, service marks, trade names and service names and the goodwill
associated therewith, together with the right to trademark and all rights to
renew or extend such trademarks and the right (but not the obligation) of
Secured Party to sue in its own name and/or in the name of the Debtor for past,
present and future infringements of trademark;


 


(d)           all
(i) patents and patent applications filed in the United States Patent and
Trademark Office or any similar office of any foreign jurisdiction, and
interests under patent license agreements, including, without limitation, the
inventions and improvements described and claimed therein, (ii) licenses
pertaining to any patent whether Debtor is licensor or licensee, (iii) income,
royalties, damages, payments, accounts and accounts receivable now or hereafter
due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past, present or future infringements
thereof, (iv) right (but not the obligation) to sue in the name of Debtor
and/or in the name of Secured Party for past, present and future infringements
thereof, (v) rights corresponding thereto throughout the world in all
jurisdictions in which such patents have been issued or applied for, and (vi) reissues,
divisions, continuations, renewals, extensions and continuations-in-part with
respect to any of the foregoing; and


 


(e)           any
and all cash proceeds and/or noncash proceeds of any of the foregoing,
including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment.  All terms above have the meanings given to
them in the California Uniform Commercial Code, as amended or supplemented from
time to time, including revised Division 9 of the Uniform Commercial
Code-Secured Transactions, added by Stats. 1999, c.991 (S.B. 45), Section 35,
operative July 1, 2002.


 


21





















 


EXHIBIT B


 


LOAN PAYMENT/ADVANCE
TELEPHONE REQUEST FORM



DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., PACIFIC TIME


 


	
  TO: TECHNOLOGY AND LIFE SCIENCES DIVISION

  	
  DATE: 

  	
   

  	
   

  
	
   

  	
   

  
	
  FAX #: 650-846-6840
  Attn: Compliance

  	
  TIME: 

  	
   

  	
   

  



 


	
  FROM: 

  	
  HIRERIGHT, INC.

  
	
  CLIENT
  NAME (BORROWER)

  
	
   

  	
   

  	
   

  
	
  REQUESTED BY:

  	
   

  
	
  AUTHORIZED
  SIGNER’S NAME

  
	
   

  	
   

  	
   

  
	
  AUTHORIZED SIGNATURE:

  	
   

  
	
   

  	
   

  	
   

  
	
  PHONE NUMBER:

  	
   

  
	
   

  	
   

  	
   

  
	
  FROM ACCOUNT #

  	
   

  	
   

  	
  TO ACCOUNT #

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  REQUESTED TRANSACTION
  TYPE

  	
   

  	
  REQUEST DOLLAR AMOUNT

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  PRINCIPAL INCREASE
  (ADVANCE)

  	
   

  	
  $

  	
   

  	
   

  
	
  PRINCIPAL PAYMENT
  (ONLY)

  	
   

  	
  $

  	
   

  	
   

  
	
  INTEREST PAYMENT (ONLY)

  	
   

  	
  $

  	
   

  	
   

  
	
  PRINCIPAL AND INTEREST
  (PAYMENT)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OTHER INSTRUCTIONS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  All representations and warranties of Borrower
  stated in the Loan and Security Agreement are true, correct and complete in
  all material respects as of the date of the telephone request for an Advance
  confirmed by this Borrowing Certificate; provided, however, that those
  representations and warranties expressly referring to another date shall be
  true, correct and complete in all material respects as of such date.

  
	
   

  
	
  BANK USE ONLY

  
	
   

  
	
  TELEPHONE REQUEST:

  
	
   

  
	
  The following person is authorized to request the
  loan payment transfer/loan advance on the advance designated account and is
  known to me.

  
	
   

  
	
   

  	
   

  	
   

  
	
  Authorized
  Requester

  	
   

  	
  Phone
  #

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Received
  By (Bank)

  	
   

  	
  Phone
  #

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Authorized
  Signature (Bank)

  
																



 


22





















 


EXHIBIT C


 


BORROWING BASE
CERTIFICATE


 


 


	
  Borrower: HIRERIGHT, INC.

  	
  Lender: Comerica
  Bank-California

  



 


Commitment Amount: 
$2,000,000*


 


	
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Accounts Receivable Book Value as of            

  	
   

  	
  $

  	
   

  
	
   

  	
  2.

  	
  Additions (please explain on reverse)

  	
   

  	
  $

  	
   

  
	
   

  	
  3.

  	
  TOTAL ACCOUNTS RECEIVABLE

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  	
   

  	
   

  
	
   

  	
  4.

  	
  Amounts over 90 days due

  	
  $

  	
   

  	
   

  
	
   

  	
  5.

  	
  Balance of 25% over 90 day accounts

  	
  $

  	
   

  	
   

  
	
   

  	
  6.

  	
  Concentration Limits

  	
   

  	
   

  	
   

  
	
   

  	
  7.

  	
  Foreign Accounts

  	
  $

  	
   

  	
   

  
	
   

  	
  8.

  	
  Governmental Accounts

  	
  $

  	
   

  	
   

  
	
   

  	
  9.

  	
  Contra Accounts

  	
  $

  	
   

  	
   

  
	
   

  	
  10.

  	
  Demo Accounts

  	
  $

  	
   

  	
   

  
	
   

  	
  11.

  	
  Intercompany/Employee Accounts

  	
  $

  	
   

  	
   

  
	
   

  	
  12.

  	
  Other (please explain on reverse)

  	
  $

  	
   

  	
   

  
	
   

  	
  13.

  	
  TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
  $

  	
   

  
	
   

  	
  14.

  	
  Eligible Accounts (#3 minus #13)

  	
   

  	
  $

  	
   

  
	
   

  	
  15.

  	
  LOAN VALUE OF ACCOUNTS (75% of #14)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BALANCES

  	
   

  	
   

  	
   

  
	
   

  	
  *Non-Formula Amount

  	
   

  	
  $

  	
  250,000

  	
   

  
	
   

  	
  16.

  	
  Maximum Loan Amount

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
   

  	
  17.

  	
  Total Funds Available [Lesser of #16 or #15]

  	
   

  	
  $

  	
   

  
	
   

  	
  18.

  	
  Present balance owing on Line of Credit

  	
   

  	
  $

  	
   

  
	
   

  	
  19.

  	
  Outstanding under Sublimits

  	
   

  	
  $

  	
   

  
	
   

  	
  20.

  	
  RESERVE POSITION (#17 minus #18 and #19)

  	
   

  	
  $

  	
   

  



 


The undersigned represents and
warrants that the foregoing is true, complete and correct, and that the
information reflected in this Borrowing Base Certificate complies with the
representations and warranties set forth in the Loan and Security Agreement
between the undersigned and Comerica Bank-California.


 


	
  HIRERIGHT, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Authorized
  Signer

  	
   

  	
   

  



 


23





















 


EXHIBIT D

COMPLIANCE CERTIFICATE


 


	
  TO:

  	
  COMERICA BANK-CALIFORNIA

  
	
   

  	
   

  
	
  FROM:

  	
  HIRERIGHT, INC.

  



 


The undersigned authorized officer of HIRERIGHT, INC.
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower
is in complete compliance for the period ending                                 
with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct as of the date hereof.  Attached
herewith are the required documents supporting the above certification.  The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.


 


Please
indicate compliance status by circling Yes/No under “Complies” column.


 


	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial statements

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Annual (CPA Audited)

  	
   

  	
  FYE within 120 days (150 days FYE ‘01)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  10K and 10Q

  	
   

  	
  (as applicable)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R & A/P Agings, Borrowing Base Cert.

  	
   

  	
  Monthly within 20 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R Audit

  	
   

  	
  Initial and Semi-Annual

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  IP Report

  	
   

  	
  Quarterly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total amount of Borrower’s cash and investments

  	
   

  	
  Amount:  $                

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total amount of Borrower’s cash and investments
  maintained with Bank

  	
   

  	
  Amount:  $                

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  



 


	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Measured
  on a Monthly basis

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum
  Quick Ratio

  	
   

  	
  1.75:1.00

  	
   

  	
               :1.00

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Performance to Plan (rolling 3-months)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Revenues

  	
   

  	
  80% of Plan

  	
   

  	
              %
  of 

  Plan

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum Expenses

  	
   

  	
  120%
  of Plan

  	
   

  	
              %
  of 

  Plan

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equity Event

  	
   

  	
  At
  least $6,500,000 Earlier of

  (a) 2 weeks from maturity of 

  	
   

  	
  $

  	
                    

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
  Bridge
  Notes or (b) 12/15/02

  	
   

  	
  $

  	
                    

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  



 






(1)           excludes
$4.2 MM in Bridge Notes; includes Series D proceeds received prior to
Closing Date.


 


	
  Comments Regarding Exceptions:
  See Attached.

  	
  BANK USE ONLY 

  
	
   

  	
   

  	
   

  
	
  Sincerely,

  	
  Received by:

  	
   

  	
   

  
	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
  Verified:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TITLE

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Compliance Status

  	
  Yes         No                  

  
	
  DATE

  	
   

  	
   

  	
   

  
								



 


24





















 


EXHIBIT E


(Projections dated March 15,
2002)

[hardcopy to be inserted]


 


25





















 


SCHEDULE OF
EXCEPTIONS


 


Permitted Indebtedness (Section 1.1)


 


 


Permitted Investments (Section 1.1)


 


 


Permitted Liens (Section 1.1)


 


 


Inbound Licenses (Section 5.6)


 


 


Prior Names (Section 5.7)


 


 


Litigation (Section 5.8)


 


26





















 


CORPORATE RESOLUTIONS TO BORROW


 


Borrower:             HIRERIGHT, INC.


 


I, the undersigned Secretary or Assistant Secretary of
HIRERIGHT, INC. (the “Corporation”), HEREBY CERTIFY that the Corporation is
organized and existing under and by virtue of the laws of the State of California.


 


I FURTHER CERTIFY that attached hereto as Attachments
1 and 2 are true and complete copies of the Articles of Incorporation, as
amended, and the Restated Bylaws of the Corporation, each of which is in full
force and effect on the date hereof.


 


I FURTHER CERTIFY that at a meeting of the Directors
of the Corporation, duly called and held, at which a quorum was present and
voting (or by other duly authorized corporate action in lieu of a meeting), the
following resolutions were adopted.


 


BE IT RESOLVED, that any one (1) of the following
named officers, employees, or agents of this Corporation, whose actual
signatures are shown below:


 


	
  NAMES

  	
   

  	
  POSITIONS

  	
   

  	
  ACTUAL
  SIGNATURES

  
	
    

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


acting for and on behalf of this Corporation and as
its act and deed be, and they hereby are, authorized and empowered:


 


Borrow Money.  To borrow from time to time from Comerica
Bank-California (“Bank”), on such terms as may be agreed upon between the
officers, employees, or agents of the Corporation and Bank, such sum or sums of
money as in their judgment should be borrowed, without limitation.


 


Execute Loan Documents.  To execute and deliver to Bank that certain
Loan and Security Agreement dated as of April 18, 2002 (the “Loan
Agreement”) and any other agreement entered into between Corporation and Bank
in connection with the Loan Agreement, including any amendments, all as amended
or extended from time to time (collectively, with the Loan Agreement, the “Loan
Documents”), and also to execute and deliver to Bank one or more renewals,
extensions, modifications, refinancings, consolidations, or substitutions for
the Loan Documents, or any portion thereof.


 


Grant Security.  To grant a security interest to Bank in the
Collateral described in the Loan Documents, which security interest shall
secure all of the Corporation’s Obligations, as described in the Loan
Documents.


 


Negotiate Items.  To draw, endorse, and discount with Bank all
drafts, trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation or in which the Corporation may have
an interest, and either to receive cash for the same or to cause such proceeds
to be credited to the account of the Corporation with Bank, or to cause such
other disposition of the proceeds derived therefrom as they may deem advisable.


 


Warrants.  To issue Bank warrants to purchase the
Corporation’s capital stock.


 


Letters of Credit.  To execute letter of credit applications and
other related documents pertaining to Bank’s issuance of letters of credit.


 


1





















 


Further Acts.  In the case of lines of credit, to designate
additional or alternate individuals as being authorized to request advances
thereunder, and in all cases, to do and perform such other acts and things, to
pay any and all fees and costs, and to execute and deliver such other documents
and agreements as they may in their discretion deem reasonably necessary or
proper in order to carry into effect the provisions of these Resolutions.


 


BE IT FURTHER RESOLVED, that any and all acts
authorized pursuant to these resolutions and performed prior to the passage of
these resolutions are hereby ratified and approved, that these Resolutions
shall remain in full force and effect and Bank may rely on these Resolutions
until written notice of their revocation shall have been delivered to and
received by Bank.  Any such notice shall
not affect any of the Corporation’s agreements or commitments in effect at the
time notice is given.


 


I FURTHER CERTIFY that the officers, employees, and
agents named above are duly elected, appointed, or employed by or for the
Corporation, as the case may be, and occupy the positions set forth opposite
their respective names; that the foregoing Resolutions now stand of record on
the books of the Corporation; and that the Resolutions are in full force and
effect and have not been modified or revoked in any manner whatsoever.


 


IN WITNESS WHEREOF, I have hereunto set my hand on April        ,
2002 and attest that the signatures set opposite the names listed above are
their genuine signatures.


 


	
   

  	
  CERTIFIED AND ATTESTED BY:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  X

  	
   

  



 


2





















 


COMERICA
BANK-CALIFORNIA

Member FDIC



ITEMIZATION OF AMOUNT FINANCED

DISBURSEMENT INSTRUCTIONS

(Revolver)


 


	
  Name(s): 
  HIRERIGHT, INC.

  	
  Date:  April 18, 2002

  
	
   

  	
   

  
	
  $

  	
  credited to deposit account No. 1891-20655-7
  when Advances are requested by Borrower

  
	
   

  	
   

  
	
  Amounts paid to others on your behalf:

  
	
  $

  	
  to Comerica Bank-California for Loan Fee

  
	
  $

  	
  to Comerica Bank-California for Document Fee

  
	
  $

  	
  to Comerica Bank-California for accounts receivable
  audit (estimate)

  
	
  $

  	
  to Bank counsel fees and expenses

  
	
  $

  	
  to                                

  
	
  $

  	
  to                                

  
	
  $

  	
  TOTAL (AMOUNT FINANCED)

  
			



 


Upon consummation of this transaction, this document
will also serve as the authorization for Comerica Bank-California to disburse
the loan proceeds as stated above.


 


	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Signature

  



 


1





















 


AGREEMENT
TO PROVIDE INSURANCE


 


	
  TO:

  	
  COMERICA BANK-CALIFORNIA

  	
  Date: April 18, 2002

  
	
   

  	
  attn: Collateral Operations, M/C 4604

  	
   

  
	
   

  	
  9920 South La Cienega Blvd, 14th Floor

  	
   

  
	
   

  	
  Inglewood, CA 90301

  	
  Borrower: HIRERIGHT, INC.

  



 


In consideration of a loan in the amount of
$2,000,000, secured by all tangible personal property including inventory and
equipment.


 


I/We agree to obtain adequate insurance coverage to
remain in force during the term of the loan.


 


I/We also agree to advise the below named agent to add
Comerica Bank-California as lender’s loss payable on the new or existing
insurance policy, and to furnish Bank at above address with a copy of said
policy/endorsements and any subsequent renewal policies.


 


I/We understand that the policy must contain:


 


1.             Fire
and extended coverage in an amount sufficient to cover:


 


(a)           The
amount of the loan, OR


 


(b)           All
existing encumbrances, whichever is greater,


 


But not in excess of the replacement value of the
improvements on the real property.


 


2.             Lender’s
“Loss Payable” Endorsement Form 438 BFU in favor of Comerica
Bank-California, or any other form acceptable to Bank.


 


INSURANCE
INFORMATION


 


	
  Insurance Co./Agent

  	
  Telephone No.:

  
	
   

  	
   

  
	
  Agent’s Address:

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature of Obligor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature of Obligor:

  	
   

  	
   

  
					



 


	
  FOR BANK USE ONLY

  	
   

  
	
   

  	
   

  
	
  INSURANCE VERIFICATION: Date:

  	
   

  	
   

  
	
   

  	
   

  
	
  Person spoken to:

  	
   

  	
   

  
	
   

  	
   

  
	
  Policy Number:

  	
   

  	
   

  
	
   

  	
   

  
	
  Effective From:

  	
   

  	
  To:

  	
   

  	
   

  
	
   

  	
   

  
	
  Verified by:

  	
   

  	
   

  
							



 


2





















 


	
  COMERICA
  BANK-CALIFORNIA

  	
   

  	
   

  
	
  Member
  FDIC

  	
   

  	
  AUTOMATIC
  DEBIT AUTHORIZATION

  
	
   

  	
   

  	
   

  



 


	
  To:  Comerica Bank-California

   

  Re:  Loan #                                                           

   

  You are hereby authorized and instructed to charge
  account No. 1891-20655-7 in the name of HIRERIGHT, INC.

  
	
  for principal and interest payments due on above
  referenced loan as set forth below and credit the loan referenced above.

   

  •              Debit each interest payment as it
  becomes due according to the terms of the note and any renewals or amendments
  thereof.

   

  •              Debit each principal payment as it
  becomes due according to the terms of the note and any renewals or amendments
  thereof.

   

  This Authorization is to remain in full force and
  effect until revoked in writing.

  



 


	
  Borrower Signature

  	
  Date

  
	
   

  	
  April 18, 2002

  
	
   

  	
  April 18, 2002

  



 


3





















 


	
  COMERICA
  BANK-CALIFORNIA

  	
   

  	
   

  
	
  Member
  FDIC

  	
   

  	
  AUTOMATIC
  DEBIT AUTHORIZATION

  
	
   

  	
   

  	
   

  



 


	
  To:  Comerica Bank-California

   

  Re:  Loan #                                                  

   

  You are hereby authorized and instructed to charge
  account No. 1891-20655-7 in the name of HIRERIGHT, INC.

  
	
  for principal and interest payments due on above
  referenced loan as set forth below and credit the loan referenced above.

   

  •              Debit each interest payment as it
  becomes due according to the terms of the note and any renewals or amendments
  thereof.

   

  •              Debit each principal payment as it
  becomes due according to the terms of the note and any renewals or amendments
  thereof.

   

  This Authorization is to remain in full force and
  effect until revoked in writing.

  
	
   

  



 


	
  Borrower Signature

  	
  Date

  
	
   

  	
  April 18, 2002

  
	
   

  	
  April 18, 2002

  



 


4





















 


	
  DEBTOR:

  	
  HIRERIGHT, INC.

  
	
   

  	
   

  
	
  SECURED PARTY:

  	
  COMERICA BANK-CALIFORNIA

  



 


EXHIBIT A


 


COLLATERAL DESCRIPTION
ATTACHMENT

TO UCC-1 FINANCING STATEMENT


 


All personal property of Borrower (herein referred to
as “Borrower” or “Debtor”) whether presently existing or hereafter created or
acquired, and wherever located, including, but not limited to:


 


(a)           all
accounts (including health-care-insurance receivables), chattel paper (including
tangible and electronic chattel paper), deposit accounts, documents (including
negotiable documents), equipment (including all accessions and additions
thereto), general intangibles (including payment intangibles and software),
goods (including fixtures), instruments (including promissory notes), inventory
(including all goods held for sale or lease or to be furnished under a contract
of service, and including returns and repossessions), investment property
(including securities and securities entitlements), letter of credit rights,
money, and all of Debtor’s books and records with respect to any of the
foregoing, and the computers and equipment containing said books and records;


 


(b)           all
common law and statutory copyrights and copyright registrations, applications
for registration, now existing or hereafter arising, in the United States of
America or in any foreign jurisdiction, obtained or to be obtained on or in
connection with any of the forgoing, or any parts thereof or any underlying or
component elements of any of the forgoing, together with the right to copyright
and all rights to renew or extend such copyrights and the right (but not the
obligation) of Secured Party to sue in its own name and/or in the name of the
Debtor for past, present and future infringements of copyright;


 


(c)           all
trademarks, service marks, trade names and service names and the goodwill
associated therewith, together with the right to trademark and all rights to
renew or extend such trademarks and the right (but not the obligation) of
Secured Party to sue in its own name and/or in the name of the Debtor for past,
present and future infringements of trademark;


 


(d)           all
(i) patents and patent applications filed in the United States Patent and
Trademark Office or any similar office of any foreign jurisdiction, and
interests under patent license agreements, including, without limitation, the
inventions and improvements described and claimed therein, (ii) licenses
pertaining to any patent whether Debtor is licensor or licensee, (iii) income,
royalties, damages, payments, accounts and accounts receivable now or hereafter
due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past, present or future infringements
thereof, (iv) right (but not the obligation) to sue in the name of Debtor
and/or in the name of Secured Party for past, present and future infringements
thereof, (v) rights corresponding thereto throughout the world in all
jurisdictions in which such patents have been issued or applied for, and (vi) reissues,
divisions, continuations, renewals, extensions and continuations-in-part with
respect to any of the foregoing; and


 


(e)           any
and all cash proceeds and/or noncash proceeds of any of the foregoing,
including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment.  All terms above have the meanings given to
them in the California Uniform Commercial Code, as amended or supplemented from
time to time, including revised Division 9 of the Uniform Commercial
Code-Secured Transactions, added by Stats. 1999, c.991 (S.B. 45), Section 35,
operative July 1, 2002.


 




















FIRST AMENDMENT

TO

LOAN AND SECURITY AGREEMENT


This
First Amendment to Loan and Security Agreement is entered into as of August 6,
2002 (the “Amendment”), by and between COMERICA BANK-CALIFORNIA (“Bank”) and
HIRERIGHT, INC. (“Borrower”).


RECITALS


Borrower
and Bank are parties to that certain Loan and Security Agreement dated as April
18, 2002, as amended from time to time (the “Agreement”).  The parties desire to amend the Agreement in
accordance with the terms of this Amendment.


NOW,
THEREFORE, the parties agree as follows:


1.             Section
6.8 of the Agreement hereby is amended in its entirety to read as follows:


“6.8         Quick Ratio.  Borrower shall maintain, as of the last day
of each calendar month, a ratio of (a) the sum of (i) cash, plus (ii)
ninety percent (90%) of Eligible Accounts, plus (iii) availability under
the Bridge Facility (as of any date of determination) to (b) Current
Liabilities (excluding the aggregate outstanding amount owing under the Bridge
Facility) plus, to the extent not already included therein, all
Indebtedness (including without limitation any Contingent Obligations) owing
from Borrower to Bank, of at least 1.75 to 1.00.”


2.             Section
6.9 of the Agreement hereby is amended in its entirety to read as follows:


“6.9         Performance to Plan.  As of any date of determination, which shall
be the last calendar day of each calendar month, commencing June 30, 2002,
Borrower shall generate revenue and incur expenses, for the three (3) month
period ending on such date, of no less than seventy percent (70%) of the
projected revenue, and no more than one hundred twenty percent (120%) of the
projected expenses, for the same period contained in the projection provided to
Bank dated March 15, 2002, a true and correct copy of which is attached hereto
as Exhibit E.”


3.             The
Exhibit D Compliance Certificate of the Agreement shall be replaced in
its entirety by the Exhibit D Compliance Certificate attached hereto.


4.             Unless
otherwise defined, all capitalized terms in this Amendment shall be as defined
in the Agreement.  Except as amended, the
Agreement remains in full force and effect.


5.             Borrower
represents and warrants that the representations and warranties contained in
the Agreement are true and correct as of the date of this Amendment, and that
no Event of Default has occurred and is continuing.


6.             This
Amendment may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one instrument.


7.             As
a condition to the effectiveness of this Amendment, Bank shall have received,
in form and substance satisfactory to Bank, the following:


(a)           this Amendment, duly executed by
Borrower;


(b)           an amendment fee equal to $2,000;


(c)           an amount equal to all Bank Expenses
incurred to date; and


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


 


1

















IN WITNESS WHEREOF, the undersigned have
executed this Amendment as of the first date above written.


 


	
   

  	
  HIRERIGHT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  Richard Little

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Richard
  Little

  	
   

  
	
   

  	
  Title:

  	
   

  	
  CFO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMERICA
  BANK-CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  Justin A. Miller

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Justin
  A. Miller

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Commercial
  Banking Officer

  	
   

  
						



 


2














SECOND
AMENDMENT

TO

LOAN AND SECURITY AGREEMENT


This Second Amendment to
Credit Agreement and Note is entered into as of December 27, 2002 (the
“Amendment”), by and between COMERICA BANK-CALIFORNIA (“Bank”) and HIRERIGHT,
INC. (“Borrower”).


RECITALS


Borrower and Bank are
parties to that certain Loan and Security Agreement dated as of April 18,
2002, as the same may be amended from time to time, including by that certain
First Amendment to Loan and Security Agreement dated as of August 6, 2002
(collectively, the “Loan Agreement”). 
The parties desire to amend the Loan Documents in accordance with the
terms of this Amendment.


NOW, THEREFORE, the parties
agree as follows:


1.             Section 1.1 of the Loan
Agreement hereby is amended by adding or amending certain defined terms as
follows:


“Equity Event” hereby is
amended and replaced in its entirety to read as follows:


“ “Equity Event A” means the
sale or issuance by Borrower of convertible notes, on terms and from investors
acceptable to Bank, which acceptance shall not be unreasonably withheld,
pursuant to which Borrower receives net proceeds in the aggregate amount of at
least Five Hundred Thousand Dollars ($500,000), including (for purposes
of calculating such amount) Five Hundred Thousand Dollars $500,000 in proceeds
received on or about December 11, 2002.


“Equity Event B” means the
sale or issuance by Borrower of its Series D equity securities or notes
convertible into its Series D equity securities, on terms and from
investors acceptable to Bank, which acceptance shall not be unreasonably
withheld, pursuant to which Borrower receives net proceeds in the aggregate
amount of at least Three Million Four Hundred Fifty Thousand Dollars
($3,450,000), including (for purposes of calculating such amount)
conversion of the notes issued in connection with Equity Event A.”


New
subsection (e) hereby is added to the definition of “Permitted Indebtedness” as
follows:


“(e)         Indebtedness in connection with Equity Event A.”


“Revolving Line” means a
credit extension of up to One Million Dollars ($1,000,000).


2.             Section 6.7 hereby is amended
and restated in its entirety as follows:


“6.7         Accounts. 
Borrower shall maintain and shall cause each of its Subsidiaries to
maintain its primary depository, operating, and investment accounts with Bank; provided
that commencing December 31, 2002 and continuing at all times thereafter,
Borrower shall maintain a minimum cash balance with Bank equal to the lesser of
(a) the outstanding principal balance of the Obligations, or (b) One
Million Dollars ($1,000,000).


3.             Bank hereby waives
Borrower’s failure to comply with Section 6.8 of the Loan Agreement, as in
effect prior to the date of this Amendment, solely for the month ended
October 31, 2002 and, subject to timely consummation of Equity Event B,
for the month ended November 30, 2002.


 

















4.             Subject to (a) receipt by Bank
of signed and accepted term sheets and purchase (and ancillary) agreements
related to the closing of Equity Event B, on terms and from investors
reasonably acceptable to Bank, and (b) timely consummation of Equity Event
B, Section 6.10 of the Loan Agreement shall be deemed amended and restated
in its entirety to read as follows:


“6.10       Equity Events. 
Borrower shall consummate: 
(i) Equity Event A by no later than December 13, 2002 (which Bank
acknowledges has been consummated); and (ii) Equity Event B by no later
then December 31, 2002.”


5.             New Section 6.13 hereby is
added to the Loan Agreement as follows:


“6.13       Principal Reduction. 
By December 31, 2002, Borrower permanently shall reduce the
principal amount of the Obligations by at least Two Hundred Thousand Dollars
($200,000).


6.             Subject to timely consummation of the Equity Events as
defined in Section 6.10 of the Loan Agreement as in effect after the
effective date of this Amendment, Bank shall be deemed to waive any violation
of Sections 7.4 or 7.8 of the Loan Agreement which might otherwise arise
as a result of consummation of such Equity Events.


7.             Subject to timely consummation of the Equity Events as
defined in Section 6.10 of the Loan Agreement as in effect after the
effective date of this Amendment, Bank shall be deemed to waive any violation
of Sections 7.4 or 7.8 of the Loan Agreement which might arise as a result
of (a) the sale or issuance by Borrower of (i) its Series E
equity securities or (ii) warrants to purchase its Series E equity
securities, each in transactions completed prior to January 15, 2003, or
(b) the subsequent issuance of any Series E equity securities upon
exercise of a warrant issued prior to January 15, 2003.


8.             The references to “$2,000,000” in Exhibit C to the
Loan Agreement (Borrowing Base Certificate) shall mean and refer to
“$1,000,000.”


9.             Exhibit D to the Loan Agreement hereby is replaced
with Exhibit D attached hereto.


10.           This Amendment amends and restates in its entirety that
certain Second Amendment to Loan and Security Agreement dated as of
December 16, 2002 (the “Superceded Amendment”), which Superceded Amendment
shall be deemed null and void ab initio
and of no force or effect.


11.           Unless otherwise defined, all capitalized terms in this
Amendment shall be as defined in the Loan Documents, as applicable.  Except as amended, the Loan Documents remain
in full force and effect.


12.           Borrower represents and warrants that the representations
and warranties contained in the Credit Agreement are true and correct as of the
date of this Amendment, and that no Event of Default has occurred and is
continuing.


13.           This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.


14.           As a condition to the effectiveness
of this Amendment, Bank shall have received, in form and substance satisfactory
to Bank, the following:


(a)           this Amendment, duly executed by Borrower;


(b)           an Affirmation of Subordination Agreement, executed by the
Subordinated Debt holders;


(c)           an Amendment Fee equal to $5,000, which shall be fully
earned and nonrefundable as of the date of this Amendment;


 

















(d)           an amount equal to all Bank Expenses incurred to date in
connection with the Loan Documents; and


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


IN WITNESS WHEREOF, the
undersigned have executed this Amendment as of the first date above written.


 


	
   

  	
   

  	
  COMERICA BANK-CALIFORNIA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Justin A. Miller

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Justin A. Miller

  	
   

  
	
   

  	
   

  	
  Title:

  	
  CBO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HIRERIGHT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Eric Boden

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Eric Boden

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President & CEO

  	
   

  
							



 

















EXHIBIT D

COMPLIANCE CERTIFICATE


TO:                         COMERICA BANK-CALIFORNIA


FROM:                   HIRERIGHT, INC.


The undersigned authorized
officer of HIRERIGHT, INC. hereby certifies that in accordance with the terms
and conditions of the Loan and Security Agreement between Borrower and Bank
(the “Agreement”), (i) Borrower is in complete compliance for the period
ending
                               
with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct as of the date hereof.  Attached
herewith are the required documents supporting the above certification.  The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.


Please indicate compliance status by circling Yes/No under
“Complies” column.


	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial statements

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  Annual (CPA Audited)

  	
   

  	
  FYE within 120 days (150 days FYE ‘01)

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  10K and 10Q

  	
   

  	
  (as applicable)

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  A/R & A/P Agings, Borrowing Base Cert.

  	
   

  	
  Monthly within 20 days

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  A/R Audit

  	
   

  	
  Initial and Semi-Annual

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  IP Report

  	
   

  	
  Quarterly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  Total amount of Borrower’s cash and investments

  	
   

  	
  Amount: $ 

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  Total amount of Borrower’s cash and investments 

  maintained with Bank

  	
   

  	
  Amount: $ 

  	
   

  	
  Yes

  	
   

  	
  No

  



 


	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintain on a Monthly Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Quick Ratio

  	
   

  	
  1.75:1.00

  	
   

  	
          :1.00

  	
   

  	
  Yes

  	
   

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Performance to Plan (rolling 3-months)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Revenues

  	
   

  	
  70 of Plan

  	
  %

  	
           of Plan

  	
  %

  	
  Yes

  	
   

  	
  No

  
	
  Maximum Expenses

  	
   

  	
  120 of Plan

  	
  %

  	
           of Plan

  	
  %

  	
  Yes

  	
   

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintain at all Times:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Cash in Bank (lesser of)

  	
   

  	
  $1,000,000
  or principal balance

  	
   

  	
  $

  	
                 

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  Minimum Principal Reduction (by 12/31/02)

  	
   

  	
  $200,000

  	
   

  	
  $

  	
  200,000

  	
   

  	
  Yes

  	
   

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equity Event A1 (aggregate)
  (no later than 12/13/02)

  	
   

  	
  $500,000

  	
   

  	
  $

  	
                 

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  Equity Event B2 (aggregate) 

  (no later than 12/31/02)

  	
   

  	
  $3,450,000

  	
   

  	
  $

  	
                 

  	
   

  	
  Yes

  	
   

  	
  No

  



 






1      Includes $500,000 in proceeds received on or about
December 11, 2002.

2      Includes proceeds in connection
with Equity Event A.


 


	
  Comments regarding
  Exceptions: See Attached.

  	
   

  	
  BANK USE
  ONLY

  
	
   

  	
   

  	
   

  
	
  Sincerely,

  	
   

  	
  Received by:

  
	
   

  	
   

  	
  AUTHORIZED
  SIGNER

  
	
   

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  
	
  TITLE

  	
   

  	
  Verified:

  
	
   

  	
   

  	
  AUTHORIZED
  SIGNER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance Status                               Yes         No

  
	
  DATE

  	
   

  	
   

  



 














 


THIRD AMENDMENT

TO

LOAN AND SECURITY AGREEMENT


 


This Third Amendment to Loan and Security Agreement
is entered into as of January 23, 2003 (the “Amendment”), by and between
COMERICA BANK-CALIFORNIA (“Bank”) and HIRERIGHT, INC. (“Borrower”).


 


RECITALS


 


Borrower and Bank are parties to that certain Loan
and Security Agreement dated as April 18, 2002, as the same may be amended
from time to time, including by that certain First Amendment to Loan and
Security Agreement dated as of August 6, 2002, and that certain Second
Amendment to Loan and Security Agreement dated as of December 16, 2002
(collectively, the “Loan Agreement”). 
The parties desire to amend the Loan Documents in accordance with the
terms of this Amendment.


 


NOW, THEREFORE, the parties agree as follows:


 


1.             Bank hereby waives Borrower’s failure to comply with
Section 6.9 of the Loan Agreement, solely for the months ended
November 31, 2002 and December 31, 2002.


 


2.             Unless otherwise defined, all capitalized terms in this
Amendment shall be as defined in the Loan Agreement.  Except as amended, the Loan Documents remain
in full force and effect.


 


3.             Borrower represents and warrants that the
representations and warranties contained in the Loan Agreement are true and
correct as of the date of this Amendment, and that no Event of Default has
occurred and is continuing.


 


4.             This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.


 


5.             As a condition to the effectiveness of this Amendment,
Bank shall have received, in form and substance satisfactory to Bank, the
following:


 


(a)           this Amendment, duly executed by
Borrower;


 


(b)           an amount equal to all Bank Expenses
incurred to date in connection with the Loan Documents; and


 


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


 

















 


IN
WITNESS WHEREOF, the undersigned have executed this Amendment as of the first
date above written.


 


	
   

  	
   

  	
  COMERICA BANK-CALIFORNIA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Justin A. Miller

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Justin A. Miller

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Comerica Banking Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HIRERIGHT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard Little

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard Little

  	
   

  
	
   

  	
   

  	
  Title:

  	
  CFO

  	
   

  
							



 


2














 


FOURTH AMENDMENT

TO

LOAN AND SECURITY AGREEMENT


 


This Fourth Amendment to Credit Agreement and Note is entered into as of
February 27, 2003 (the “Amendment”), by and between COMERICA
BANK-CALIFORNIA (“Bank”) and HIRERIGHT, INC. (“Borrower”).


 


RECITALS


 


Borrower and Bank are parties to that certain Loan and Security Agreement
dated as of April 18, 2002, as amended from time to time, including by
that certain First Amendment to Loan and Security Agreement dated as of
August 6, 2002, that certain Second Amendment to Loan and Security
Agreement dated as of December 27, 2002, and that certain Third Amendment
to Loan and Security Agreement dated as of January 23, 2003 (collectively,
the “Loan Agreement”). The parties desire to amend the Loan Agreement in
accordance with the terms of this Amendment.


 


NOW, THEREFORE, the parties agree as follows:


 


1.             Section 1.1 of the
Loan Agreement hereby is amended by adding or amending certain defined terms as
follows:


 


“Revolving Line” means a credit extension of up to Two Million Dollars
($2,000,000).


 


“Revolving Maturity Date” means May 31, 2004.


 


(a)           Subsection (i) of the
defined term “Eligible Accounts” hereby is amended and restated in its entirety
to read as follows:


 


“(i) Accounts with respect to an account debtor, including Subsidiaries and
Affiliates, whose total obligations to Borrower exceed twenty percent (20%) of
all Accounts, to the extent such obligations exceed the aforementioned
percentage, except as approved in writing by Bank; notwithstanding the
foregoing, the obligations to Borrower owing from Schwan’s Frozen Foods may not
exceed thirty percent (30%);”


 


2.             Section 2.3(a) of
the Agreement hereby is amended and restated in its entirety to read as
follows:


 


“2.3(a)  Interest Rate. Except
as set forth in Section 2.3(b), the Advances shall bear interest, on the
outstanding Daily Balance thereof, at a rate equal to one percent (1.00%) above
the Prime Rate.”


 


3.             Section 2.5(a) of
the Loan Agreement hereby is amended and restated in its entirety to read as
follows:


 


“2.5(a)  Intentionally Omitted.”


 


4.             Section 6.7 of the
Loan Agreement hereby is amended and restated in its entirety to read as
follows:


 


“6.7         Accounts. Borrower
shall maintain and shall cause each of its Subsidiaries (other than HireRight
Estonia) to maintain its primary depository, operating, and investment accounts
with Bank.”


 


5.             Section 6.8 of the
Loan Agreement hereby is amended and restated in its entirety to read as
follows:


 


“6.8         Quick Ratio.
Borrower shall maintain, as of the last day of each calendar month, a ratio of
(a) the sum of (i) cash (which shall not be less than Five Hundred
Thousand Dollars ($500,000) at all times maintained with Bank), plus
(ii) ninety percent (90%) of Net Accounts Receivable to (b) Current
Liabilities plus, to the extent not already included therein, all
Indebtedness (including without limitation any Contingent Obligations) owing
from 


 


1

















 


Borrower to Bank, of at least 1.75 to 1.00. As used herein, “Net Accounts
Receivable” means gross Accounts Receivable minus reserves for Accounts
Receivable.”


 


6.             Section 6.9 of the
Loan Agreement hereby is amended and restated in its entirety to read as
follows:


 


“6.9         Intentionally Omitted.”


 


7.             Section 6.10 of
the Loan Agreement hereby is amended and restated in its entirety to read as
follows:


 


“6.10       Intentionally Omitted.”


 


8.             Section 6.13 of
the Loan Agreement hereby is amended and restated in its entirety to read as
follows:


 


“6.13       Intentionally Omitted.”


 


9.             Exhibit B to the
Loan Agreement hereby is replaced with Exhibit B attached hereto.


 


10.           Exhibit C to the
Loan Agreement hereby is replaced with Exhibit C attached hereto.


 


11.           Exhibit D to the
Loan Agreement hereby is replaced with Exhibit D attached hereto.


 


12.           Exhibit E to the Loan
Agreement hereby is omitted.


 


13.           Unless otherwise
defined, all capitalized terms in this Amendment shall be as defined in the
Loan Agreement, as applicable. Except as amended, the Loan Agreement remains in
full force and effect.


 


14.           Borrower represents and
warrants that the representations and warranties contained in the Loan
Agreement are true and correct as of the date of this Amendment (provided,
however, that those representations and warranties expressly referring to
another date shall be true and correct in all material respects as of such
date), and that no Event of Default has occurred and is continuing.


 


15.           This Amendment may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one instrument.


 


16.           As a condition to the
effectiveness of this Amendment, Bank shall have received, in form and
substance satisfactory to Bank, the following:


 


(a)           this Amendment, duly
executed by Borrower;


 


(b)           a certificate of the
Secretary of Borrower with respect to incumbency and resolutions authorizing
the execution and delivery of this Agreement;


 


(c)           a Warrant to purchase
14,160 shares of Borrower’s Series E Preferred Stock (the “First
Warrant”), which First Warrant shall vest upon execution and delivery of this
Amendment;


 


(d)           a Warrant to purchase
28,321 shares of Borrower’s Series E Preferred Stock (the “Second
Warrant”), which Second Warrant shall be issued and delivered with this
Amendment, but which shall vest upon the occurrence of both of the
following:  (a) the issuance of the
first Advance under the Revolving Facility after (or contemporaneously with)
the date of this Amendment, and (b) an EBITDA loss for the Company
exceeding $800,000 for the year ended 12/31/03;


 


(e)           a Commitment Fee equal
to $7,500, which shall be fully earned and nonrefundable as of the date of this
Amendment;


 


2

















 


(f)            an amount equal to all
Bank Expenses incurred to date in connection with the Loan Agreement, to the
extent not previously received by Bank; and


 


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


 


17.           Finally, as a condition
to the issuance of the First Advance under the Revolving Facility after (or
contemporaneously with) the date of this Amendment, Bank shall have received:


 


(a)           Borrower’s fiscal year
end 2002 audited financial statements; and


 


(b)           an audit of the
Collateral, the results of which shall be satisfactory to Bank.


 


IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
first date above written.


 


 


	
   

  	
   

  	
  COMERICA
  BANK-CALIFORNIA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Justin A.
  Miller

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Justin A. Miller

  	
   

  
	
   

  	
   

  	
  Title:

  	
  CBO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HIRERIGHT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard Little

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard Little

  	
   

  
	
   

  	
   

  	
  Title:

  	
  CFO

  	
   

  
							



 


3

















 


EXHIBIT B


 


TECHNOLOGY &
LIFE SCIENCES DIVISION

LOAN ANALYSIS

LOAN ADVANCE/PAYDOWN REQUEST FORM


 


DEADLINE FOR SAME DAY PROCESSING IS [3:00*
P.M., P.S.T. / 3:30 P.M. E.S.T.]

DEADLINE FOR EQUIPMENT ADVANCES IS [3:00 P.M., P.S.T. / 3:30 P.M. E.S.T.]**

DEADLINE FOR WIRE TRANSFERS IS [1:30 P.M., P.S.T. / 3:30 P.M. E.S.T.]

[*At month end and the day before a holiday,
the cut off time is 1:30 P.M., P.S.T.]

**Subject to 3 day advance notice.


 


	
  TO:

  	
  Loan Analysis

  	
   

  	
  DATE:

  	
   

  	
   

  	
  TIME:

  	
   

  
	
  FAX #:

  	
  (650) 846-6840

  	
   

  	
   

  	
   

  	
   

  



 


	
  FROM:

  	
  HIRERIGHT, INC.

  	
   

  	
  TELEPHONE REQUEST (For Bank Use Only):

  
	
   

  	
  Borrower’s name

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  The following person is authorized to request the loan payment
  transfer/loan advance on the designated account and is known to me.  

  
	
  FROM:

  	
   

  	
   

  
	
   

  	
  Authorized Signer’s Name

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FROM:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signature (Borrower)

  	
   

  	
   

  	
  Authorized Request & Phone #

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PHONE #:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Received by (Bank) & Phone #

  
	
  FROM ACCOUNT #:

  	
   

  	
   

  	
   

  	
   

  
	
  (please include Note number, if applicable)

  	
   

  	
   

  	
   

  
	
  TO ACCOUNT #:

  	
   

  	
   

  	
   

  	
  Authorized Signature (Bank)

  
	
  (Please include Note number, if applicable)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  REQUESTED TRANSACTION TYPE

  	
  REQUESTED DOLLAR AMOUNT

  	
   

  	
  For Bank Use Only

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PRINCIPAL INCREASE* (ADVANCE)

  	
   

  	
  $

  	
   

  	
   

  	
  Date Rec’d:

  	
   

  
	
  PRINCIPAL PAYMENT (ONLY)

  	
   

  	
  $

  	
   

  	
   

  	
  Time:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Comp. Status:

  	
  YES     NO

  
	
  OTHER INSTRUCTIONS:

  	
   

  	
   

  	
   

  	
   

  	
  Status Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Time:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Approval:

  	
   

  
													



 


All representations and warranties of Borrower stated in the Loan Agreement
are true, correct and complete in all material respects as of the date of the
telephone request for and advance confirmed by this Borrowing Certificate,
including without limitation the representation that Borrower has paid for and
owns the equipment financed by the Bank; provided, however, that those
representations and warranties the date expressly referring to another date
shall be true, correct and complete in all material respects as of such date.


 


	
  *IS THERE A WIRE REQUEST TIED TO THIS LOAN ADVANCE?
  (PLEASE CIRCLE ONE)

  	
   

  	
  YES

  	
   

  	
  NO

  



If YES, the Outgoing Wire Transfer
Instructions must be completed below.


 


	
  OUTGOING WIRE TRANSFER INSTRUCTIONS

  	
  Fed Reference Number

  	
   

  	
  Bank Transfer Number

  
	
   

  	
   

  	
   

  	
   

  
	
  The items marked with an asterisk (*)
  are required to be completed.

  
	
   

  	
   

  	
   

  	
   

  
	
  *Beneficiary Name

  	
   

  
	
  *Beneficiary Account Number

  	
   

  
	
  *Beneficiary Address

  	
   

  
	
  Currency Type

  	
  US DOLLARS ONLY

  
	
  *ABA Routing Number (9 Digits)

  	
   

  
	
  *Receiving Institution Name

  	
   

  
	
  *Receiving Institution Address

  	
   

  
	
  *Wire Account

  	
  $

  
					



 

















 


EXHIBIT C


 


BORROWING BASE CERTIFICATE


 


	
  Borrower:   HIRERIGHT, INC.

  	
   

  	
   

  	
   

  	
  Lender: Comerica Bank-

  
	
  California

  	
   

  	
   

  	
   

  	
   

  
	
  Commitment Amount:   $2,000,000*

  	
   

  	
   

  	
   

  	
   

  



 


	
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Accounts Receivable Book Value as of

  	
   

  	
  $

  
	
  2.

  	
   

  	
  Additions (please explain on reverse)

  	
   

  	
  $

  
	
  3.

  	
   

  	
  TOTAL ACCOUNTS RECEIVABLE

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  	
   

  
	
  4.

  	
   

  	
  Amounts over 90 days due

  	
  $

  	
   

  
	
  5.

  	
   

  	
  Balance of 25% over 90 day accounts

  	
  $

  	
   

  
	
  6.

  	
   

  	
  Concentration Limits

  	
   

  	
   

  
	
  7.

  	
   

  	
  Foreign Accounts

  	
  $

  	
   

  
	
  8.

  	
   

  	
  Governmental Accounts

  	
  $

  	
   

  
	
  9.

  	
   

  	
  Contra Accounts

  	
  $

  	
   

  
	
  10.

  	
   

  	
  Demo Accounts

  	
  $

  	
   

  
	
  11.

  	
   

  	
  Intercompany/Employee Accounts

  	
  $

  	
   

  
	
  12.

  	
   

  	
  Other (please explain on reverse)

  	
  $

  	
   

  
	
  13

  	
   

  	
  TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
  $

  
	
  14.

  	
   

  	
  Eligible Accounts (#3 minus #13)

  	
   

  	
  $

  
	
  15.

  	
   

  	
  LOAN VALUE OF ACCOUNTS (75% of #14)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  	
   

  	
   

  
									



 






	
   

  	
   

  	
  *Non-Formula Amount

  	
   

  	
  $

  	
  250,000

  
	
  16.

  	
   

  	
  Maximum Loan Amount

  	
   

  	
  $

  	
  2,000,000

  
	
  17.

  	
   

  	
  Total Funds Available [Lesser of #16 or #15]

  	
   

  	
  $

  
	
  18.

  	
   

  	
  Present balance owing on Line of Credit

  	
   

  	
  $

  
	
  19.

  	
   

  	
  Outstanding under Sublimits

  	
   

  	
  $

  
	
  20.

  	
   

  	
  RESERVE POSITION (#17 minus #18 and #19)

  	
   

  	
  $

  
							



 


The undersigned represents and warrants that the
foregoing is true, complete and correct, and that the information reflected in
this Borrowing Base Certificate complies with the representations and
warranties set forth in the Loan and Security Agreement between the undersigned
and Comerica Bank-California.


 


HIRERIGHT, INC.


 


	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signer

  	
   

  



 

















 


EXHIBIT D


 


COMPLIANCE CERTIFICATE


 


TO:         COMERICA BANK-CALIFORNIA


 


FROM:   HIRERIGHT, INC.


 


The undersigned authorized officer of HIRERIGHT, INC. hereby certifies that
in accordance with the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the “Agreement”), (i) Borrower is in complete
compliance for the period ending                       
with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct as of the date hereof. Attached herewith are the required documents
supporting the above certification. The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.


 


Please indicate
compliance status by circling Yes/No under “Complies” column.


 


	
  Reporting
  Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial statements

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Annual (CPA Audited)

  	
   

  	
  FYE within 120 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  10K and 10Q

  	
   

  	
  (as applicable)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R & A/P Agings, Borrowing
  Base Cert.

  	
   

  	
  Monthly within 20 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R Audit

  	
   

  	
  Initial and Semi-Annual

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  IP Report

  	
   

  	
  Quarterly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total amount of Borrower’s cash and
  investments

  	
   

  	
  Amount: $

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total amount of Borrower’s cash and
  investments maintained with Bank

  	
   

  	
  Amount: $

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  



 


	
  Financial
  Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintain on a Monthly
  Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum
  Quick Ratio

  	
   

  	
  1.75:1.00

  	
   

  	
          :1.00

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  



 


	
  Comments Regarding Exceptions:
  See Attached.

  	
  BANK USE ONLY 

  
	
   

  	
   

  	
   

  
	
  Sincerely,

  	
  Received by:

  	
   

  	
   

  
	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
   

  	
  Verified:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TITLE

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Compliance Status

  	
  Yes         No          

  
	
  DATE

  	
   

  	
   

  	
   

  	
   

  
								



 






 










 


FIFTH AMENDMENT

TO LOAN AND SECURITY AGREEMENT


 


This Fifth Amendment to Loan and Security Agreement (this “Amendment”) is
entered into as of February 2, 2004, by and between COMERICA BANK,
successor by merger to COMERICA BANK-CALIFORNIA (“Bank”) and HIRERIGHT, INC.
(“Borrower”).


 


RECITALS


 


Borrower and Bank are parties to that certain Loan and Security Agreement
dated as of April 18, 2002, as amended from time to time, including but
not limited to that certain First Amendment to Loan and Security Agreement
dated as of August 6, 2002, that certain Second Amendment to Loan and
Security Agreement dated as of December 27, 2002, that certain Third
Amendment to Loan and Security Agreement dated as of January 23, 2003, and
that certain Fourth Amendment to Loan and Security Agreement dated as of
February 27, 2003 (collectively, the “Agreement”). The parties desire to
amend the Agreement in accordance with the terms of this Amendment.


 


NOW, THEREFORE, the parties agree as follows:


 


1.             Section 6.8 of the
Agreement hereby is amended and restated in its entirety to read as follows:


 


“6.8         Quick
Ratio. Borrower shall at all times maintain, measured as of the last day of
each calendar month, a ratio of (a) the sum of (i) cash (which shall
not be less than Five Hundred Thousand Dollars ($500,000) at all times
maintained with Bank), plus (ii) ninety percent (90%) of Net
Accounts Receivable, to (b) Current Liabilities plus, to the extent
not already included therein, all Indebtedness (including without limitation
any Contingent Obligations) owing from Borrower to Bank, of at least 1.25 to
1.00. As used herein, “Net Accounts Receivable” means gross Accounts Receivable
minus reserves for Accounts Receivable.”


 


2.             Exhibit D to the
Agreement hereby is replaced with Exhibit D attached hereto.


 


3.             No course of dealing on
the part of Bank or its officers, nor any failure or delay in the exercise of
any right by Bank, shall operate as a waiver thereof, and any single or partial
exercise of any such right shall not preclude any later exercise of any such
right. Bank’s failure at any time to require strict performance by a Borrower
of any provision shall not affect any right of Bank thereafter to demand strict
compliance and performance. Any suspension or waiver of a right must be in writing
signed by an officer of Bank.


 


4.             Unless otherwise
defined, all initially capitalized terms in this Amendment shall be as defined
in the Agreement. The Agreement, as amended hereby, shall be and remain in full
force and effect in accordance with its respective terms and hereby is ratified
and confirmed in all respects. Except as expressly set forth herein, the
execution, delivery, and performance of this Amendment shall not operate as a
waiver of, or as an amendment of, any right, power, or remedy of Bank under the
Agreement, as in effect prior to the date hereof.


 


5.             Borrower represents and
warrants that the Representations and Warranties contained in the Agreement are
true and correct as of the date of this Amendment, and that no Event of Default
has occurred and is continuing.


 


1

















 


6.             As a condition to the
effectiveness of this Amendment, Bank shall have received, in form and
substance satisfactory to Bank, the following:


 


(a)           this Amendment, duly
executed by Borrower;


 


(b)           all reasonable Bank
Expenses incurred through the date of this Amendment, which may be debited from
any of Borrower’s accounts; and


 


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


 


7.             This Amendment may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one instrument.


 


IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
first date above written.


 


	
   

  	
  HIRERIGHT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMERICA BANK, successor by merger to

  COMERICA BANK-CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
				



 


2

















 


EXHIBIT D

COMPLIANCE CERTIFICATE


 


	
  TO:

  	
  COMERICA BANK

  
	
   

  	
   

  
	
  FROM:

  	
  HIRERIGHT, INC.

  



 


The undersigned authorized officer of HIRERIGHT, INC. hereby certifies that
in accordance with the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (as amended from time to time, the “Agreement”),
(i) Borrower is in complete compliance for the period
ending                           
with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct as of the date hereof. Attached herewith are the required documents
supporting the above certification. The Officer further certifies that these
are prepared in accordance with Generally Accepted Accounting Principles (GAAP)
and are consistently applied from one period to the next except as explained in
an accompanying letter or footnotes.


 


Please indicate
compliance status by circling Yes/No under “Complies” column.


 


	
  Reporting
  Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial statements

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Annual (CPA Audited)

  	
   

  	
  FYE within 120 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  10K and 10Q

  	
   

  	
  (as applicable)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R & A/P Agings, Borrowing
  Base Cert.

  	
   

  	
  Monthly within 20 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R Audit

  	
   

  	
  Initial and Semi-Annual

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  IP Report

  	
   

  	
  Quarterly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total amount of Borrower’s cash and
  investments

  	
   

  	
  Amount:  $

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total amount of Borrower’s cash and
  investments maintained with Bank

  	
   

  	
  Amount:  $

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  



 


	
  Financial
  Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Measured on a Monthly Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Quick
  Ratio

  	
   

  	
  1.25:1.00

  	
   

  	
          :1.00

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  



 


	
  Comments regarding Exceptions:
  See Attached.

  	
  BANK USE ONLY 

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Sincerely,

  	
  Received by:

  	
   

  	
   

  
	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
  Verified:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
  TITLE

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance Status

  	
  Yes         No      

  
								



 


3














SIXTH AMENDMENT

TO LOAN AND SECURITY AGREEMENT


 


This Sixth Amendment to Loan and Security Agreement
(this “Amendment”) is entered into as of May 31, 2004, by and between
COMERICA BANK, successor by merger to COMERICA BANK-CALIFORNIA (“Bank”) and
HIRERIGHT, INC. (“Borrower”).


 


RECITALS


 


Borrower and Bank are parties to that certain Loan and
Security Agreement dated as of April 18, 2002, as amended from time to
time, including but not limited to that certain First Amendment to Loan and
Security Agreement dated as of August 6, 2002, that certain Second
Amendment to Loan and Security Agreement dated as of December 27, 2002,
that certain Third Amendment to Loan and Security Agreement dated as of
January 23, 2003, that certain Fourth Amendment to Loan and Security
Agreement dated as of February 27, 2003 and that certain Fifth Amendment
to Loan and Security Agreement dated as of February 2, 2004 (collectively,
the “Agreement”).  The parties desire to
amend the Agreement in accordance with the terms of this Amendment.


 


NOW, THEREFORE, the parties agree as follows:


 


1.             The following defined
terms in Section 1.1 of the Agreement hereby are amended or restated as
follows:


 


“Permitted Indebtedness” means:


 


(a)           Indebtedness
of Borrower in favor of Bank arising under this Agreement or any other Loan
Document;


 


(b)           Indebtedness
existing on the Closing Date and disclosed in the Schedule;


 


(c)           Indebtedness
secured by a lien described in clause (c) of the defined term “Permitted
Liens,” provided (i) such Indebtedness does not exceed the lesser of the
cost or fair market value of the equipment financed with such Indebtedness and
(ii) such Indebtedness does not exceed One Million Dollars ($1,000,000) in
the aggregate at any given time.


 


“Revolving Line” means a credit extension of up to
Three Million Dollars ($3,000,000).


 


“Revolving Maturity Date” means May 31, 2006.


 


2.             Section 2.3(a)
of the Agreement hereby is amended and restated in its entirety to read as
follows:


 


“(a)         Interest
Rate.  Except as set forth in
Section 2.3(b), the Advances shall bear interest, on the outstanding Daily
Balance thereof, at a rate equal to three quarters of one percent (0.75%) above
the Prime Rate.”


 


3.             Section 2.5(a)
of the Agreement hereby is amended and restated in its entirety to read as
follows:


 


“(a)         Facility
Fee.  On the date of this Amendment,
and each anniversary thereafter, a facility fee equal to $7,500, which Bank may
debit from any of Borrower’s accounts.”


 


4.             Section 6.8 of
the Agreement hereby is amended and restated in its entirety to read as
follows:


 


“6.8         Quick
Ratio.  Borrower shall at all times
maintain, measured as of the last day of each calendar month, a ratio of
(a) the sum of (i) cash (which shall not be less than Two Hundred
Fifty Thousand Dollars ($250,000) at all times maintained with Bank), plus
(ii) ninety percent (90%) of Net Accounts Receivable, to (b) Current
Liabilities plus, to the extent not already included therein, all
Indebtedness (including without limitation 


 


1

















 


any Contingent Obligations) owing from Borrower to
Bank, of at least 1.25 to 1.00.  As used
herein, “Net Accounts Receivable” means gross Accounts Receivable minus
reserves for Accounts Receivable.”


 


5.             Exhibit C to the
Agreement hereby is replaced with Exhibit C attached hereto.


 


6.             Exhibit D to the
Agreement hereby is replaced with Exhibit D attached hereto.


 


7.             The Schedule to the
Agreement hereby is replaced with the Schedule attached hereto.


 


8.             All references in the
Loan Documents (except the Warrant) to Bank’s address at 9920 S. La
Cienega Blvd., Suite 1401, Inglewood, CA 90301, shall mean and refer to 2321
Rosecrans Ave., Suite 5000, El Segundo, CA 90245.  The reference in the Warrant to Bank’s
address(es) shall mean and refer to 500 Woodward Avenue, 32nd Floor, MC 3379,
Detroit, MI 48226.


 


9.             Section 12 of
the Agreement as in effect prior to the date of this Amendment hereby is
renumbered to read “Section 13,” and references to Section 12
throughout the Agreement as in effect prior to the date of this Amendment shall
mean and refer to “Section 13.” New Section 12 hereby is added to the
Agreement to read as follows:


 


“12.         JUDICIAL
REFERENCE.


 


If and only if the jury trial waiver set forth in
Section 11 of this Agreement is invalidated for any reason by a court of
law, statute or otherwise, the reference provisions set forth below shall be
substituted in place of the jury trial waiver. 
So long as the jury trial waiver remains valid, the reference provisions
set forth in this Section shall be inapplicable.


 


12.1         Each
controversy, dispute or claim (each, a “Claim”) between the parties arising out
of or relating to this Agreement, any security agreement executed by Borrower
in favor of Bank, any note executed by Borrower in favor of Bank or any other
document, instrument or agreement executed by Borrower with or in favor of Bank
(collectively in this Section, the “Loan Documents”), other than (i) all
matters in connection with nonjudicial foreclosure of security interests in
real or personal property; or (ii) the appointment of a receiver or the
exercise of other provisional remedies (any of which may be initiated pursuant
to applicable law) that are not settled in writing within fifteen (15) days
after the date on which a party subject to the Loan Documents gives written
notice to all other parties that a Claim exists (the “Claim Date”) shall be
resolved by a reference proceeding in California in accordance with the
provisions of Section 638 et seq. of the California Code of Civil
Procedure, or their successor sections (“CCP”), which shall constitute the
exclusive remedy for the resolution of any Claim concerning the Loan Documents,
including whether such Claim is subject to the reference proceeding.  Except as set forth in this section, the
parties waive the right to initiate legal proceedings against each other
concerning each such Claim.  Venue for
these proceedings shall be in the Superior Court in the County where the real
property, if any, is located or in a County where venue is otherwise
appropriate under state law (the “Court”). 
By mutual agreement, the parties shall select a retired Judge of the
Court to serve as referee, and if they cannot so agree within fifteen (15) days
after the Claim Date, the Presiding Judge of the Court (or his or her
representative) shall promptly select the referee.  A request for appointment of a referee may be
heard on an ex parte or expedited basis. 
The referee shall be appointed to sit as a temporary judge, with all the
powers for a temporary judge, as authorized by law, and upon selection should
take and subscribe to the oath of office as provided for in Rule 244 of
the California Rules of Court (or any subsequently enacted Rule).  Each party shall have one peremptory
challenge pursuant to CCP §170.6.  Upon
being selected, the referee shall (a) be requested to set the matter for a
status and trial-setting conference within fifteen (15) days after the date of
selection and (b) if practicable, try any and all issues of law or fact
and report a statement of decision upon them within ninety (90) days of the
date of selection.  The referee will have
power to expand or limit the amount of discovery a party may employ.  Any decision rendered by the referee will be
final, binding and conclusive, and judgment shall be entered pursuant to CCP
§644 in any court in the State of California having jurisdiction.  The parties shall complete all discovery no
later than fifteen (15) days before the first trial date established by the
referee.  The referee may extend such
period in the event of a party’s refusal to provide requested discovery for any
reason whatsoever, including, without limitation, 


 


2

















 


legal objections raised to such discovery or
unavailability of a witness due to absence or illness.  No party shall be entitled to “priority” in
conducting discovery. Either party may take depositions upon seven (7) days
written notice, and shall respond to requests for production or inspection of
documents within ten (10) days after service. 
All disputes relating to discovery which cannot be resolved by the
parties shall be submitted to the referee whose decision shall be final and
binding upon the parties.  Pending
appointment of the referee as provided herein, the Superior Court is empowered
to issue temporary and/or provisional remedies, as appropriate.


 


12.2         Except
as expressly set forth herein, the referee shall determine the manner in which
the reference proceeding is conducted including the time and place of all
hearings, the order of presentation of evidence, and all other questions that
arise with respect to the course of the reference proceeding.  Except for trial, all proceedings and
hearings conducted before the referee shall be conducted without a court
reporter unless a party requests a court reporter.  The party making such a request shall have
the obligation to arrange for and pay for the court reporter.  Subject to the referee’s power to award costs
to the prevailing party, the parties shall equally bear the costs of the court
reporter at the trial and the referee’s expenses.


 


12.3         The
referee shall determine all issues in accordance with existing California case
and statutory law.  California rules of
evidence applicable to proceedings at law will apply to the reference
proceeding.  The referee shall be
empowered to enter equitable as well as legal relief, to provide all temporary
and/or provisional remedies and to enter equitable orders that shall be binding
upon the parties.  At the close of the
reference proceeding, the referee shall issue a single judgment at disposing of
all the claims of the parties that are the subject of the reference.  The parties reserve the right (i) to
contest or appeal from the final judgment or any appealable order or appealable
judgment entered by the referee and (ii) to obtain findings of fact,
conclusions of laws, a written statement of decision, and (iii) to move
for a new trial or a different judgment, which new trial, if granted, shall be
a reference proceeding under this provision.


 


12.4         If
the enabling legislation which provides for appointment of a referee is
repealed (and no successor statute is enacted), any dispute between the parties
that would otherwise be determined by the reference procedure herein described
will be resolved and determined by arbitration conducted by a retired judge of
the Court, in accordance with the California Arbitration Act §1280 through
§1294.2 of the CCP as amended from time to time.  The limitations with respect to discovery as
set forth in this Section shall apply to any such arbitration proceeding.”


 


10.           No course of dealing on
the part of Bank or its officers, nor any failure or delay in the exercise of
any right by Bank, shall operate as a waiver thereof, and any single or partial
exercise of any such right shall not preclude any later exercise of any such
right.  Bank’s failure at any time to
require strict performance by a Borrower of any provision shall not affect any
right of Bank thereafter to demand strict compliance and performance.  Any suspension or waiver of a right must be
in writing signed by an officer of Bank.


 


11.           Unless otherwise
defined, all initially capitalized terms in this Amendment shall be as defined
in the Agreement.  The Agreement, as
amended hereby, shall be and remain in full force and effect in accordance with
its respective terms and hereby is ratified and confirmed in all respects.  Except as expressly set forth herein, the
execution, delivery, and performance of this Amendment shall not operate as a waiver
of, or as an amendment of, any right, power, or remedy of Bank under the
Agreement, as in effect prior to the date hereof.


 


12.           Borrower represents and
warrants that the Representations and Warranties contained in the Agreement are
true and correct as of the date of this Amendment, and that no Event of Default
has occurred and is continuing.


 


13.           As a condition to the
effectiveness of this Amendment, Bank shall have received, in form and
substance satisfactory to Bank, the following:


 


(a)           this
Amendment, duly executed by Borrower;


 


3

















 


(b)           a
Certificate of the Secretary of Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this Amendment;


 


(c)           the
Facility Fee due under Section 2.5(a) of the Agreement, which may be
debited from any of Borrower’s accounts;


 


(d)           all
reasonable Bank Expenses incurred through the date of this Amendment, which may
be debited from any of Borrower’s accounts;


 


(e)           a
warrant to purchase Borrower’s capital stock;


 


(f)            an
Agreement to Provide Insurance in the form attached hereto; and


 


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


 


14.           This Amendment may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one instrument.


 


IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of the first date above written.


 


	
   

  	
  HIRERIGHT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Little

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMERICA BANK, successor by merger to 

  COMERICA BANK-CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  AVP

  
				



 


4

















 


EXHIBIT C


 


BORROWING BASE CERTIFICATE


 


	
  Borrower:   HIRERIGHT, INC.

  	
   

  	
   

  	
   

  	
  Lender: Comerica Bank-

  
	
  Commitment Amount:   $3,000,000*

  	
   

  	
   

  	
   

  	
   

  



 


	
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Accounts Receivable Book Value as of

  	
   

  	
  $

  
	
  2.

  	
   

  	
  Additions (please explain on reverse)

  	
   

  	
  $

  
	
  3.

  	
   

  	
  TOTAL ACCOUNTS RECEIVABLE

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  	
   

  
	
  4.

  	
   

  	
  Amounts over 90 days due

  	
  $

  	
   

  
	
  5.

  	
   

  	
  Balance of 25% over 90 day accounts

  	
  $

  	
   

  
	
  6.

  	
   

  	
  Concentration Limits

  	
   

  	
   

  
	
  7.

  	
   

  	
  Foreign Accounts

  	
  $

  	
   

  
	
  8.

  	
   

  	
  Governmental Accounts

  	
  $

  	
   

  
	
  9.

  	
   

  	
  Contra Accounts

  	
  $

  	
   

  
	
  10.

  	
   

  	
  Demo Accounts

  	
  $

  	
   

  
	
  11.

  	
   

  	
  Intercompany/Employee Accounts

  	
  $

  	
   

  
	
  12.

  	
   

  	
  Other (please explain on reverse)

  	
  $

  	
   

  
	
  13.

  	
   

  	
  TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
  $

  
	
  14.

  	
   

  	
  Eligible Accounts (#3 minus #13)

  	
   

  	
  $

  
	
  15.

  	
   

  	
  LOAN VALUE OF ACCOUNTS (75% of #14)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  *Non-Formula Amount

  	
   

  	
  $

  	
  250,000

  
	
  16.

  	
   

  	
  Maximum Loan Amount

  	
   

  	
  $

  	
  3,000,000

  
	
  17.

  	
   

  	
  Total Funds Available [Lesser of #16 or #15]

  	
   

  	
  $

  
	
  18.

  	
   

  	
  Present balance owing on Line of Credit

  	
   

  	
  $

  
	
  19.

  	
   

  	
  Outstanding under Sublimits

  	
   

  	
  $

  
	
  20.

  	
   

  	
  RESERVE POSITION (#17 minus #18 and #19)

  	
   

  	
  $

  
											



 


The undersigned represents and warrants that the foregoing
is true, complete and correct, and that the information reflected in this
Borrowing Base Certificate complies with the representations and warranties set
forth in the Loan and Security Agreement between the undersigned and Comerica
Bank.


 


HIRERIGHT,
INC.


 


 


	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signer

  	
   

  



 


5

















 


EXHIBIT D

COMPLIANCE CERTIFICATE


 


TO:                   COMERICA
BANK


 


FROM:             HIRERIGHT,
INC.


 


The undersigned authorized officer of HIRERIGHT, INC.
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (as amended from time to time,
the “Agreement”), (i) Borrower is in complete compliance for the period
ending                       
with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct as of the date hereof.  Attached
herewith are the required documents supporting the above certification.  The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.


 


Please
indicate compliance status by circling Yes/No under “Complies” column.


 


	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly
  financial statements

  	
   

  	
  Monthly
  within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Annual
  (CPA Audited)

  	
   

  	
  FYE
  within 120 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  10K
  and 10Q

  	
   

  	
  (as
  applicable)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R &
  A/P Agings, Borrowing Base Cert.

  	
   

  	
  Monthly
  within 20 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R
  Audit

  	
   

  	
  Initial
  and Semi-Annual

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  IP
  Report

  	
   

  	
  Quarterly
  within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total
  amount of Borrower’s cash and investments

  	
   

  	
  Amount:  $

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total
  amount of Borrower’s cash and investments maintained with Bank

  	
   

  	
  Amount:  $

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  



 


	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Measured
  on a Monthly basis

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum
  Quick Ratio

  	
   

  	
  1.25:1.00
  

  	
   

  	
          :1.00

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  [Minimum
  Cash on Deposit with Bank]

  	
   

  	
  $

  	
  250,000

  	
   

  	
  $

  	
   

  	
  Yes

  	
   

  	
  No]

  	
   

  
											



 


	
  Comments Regarding Exceptions: See Attached.

  	
  BANK USE ONLY 

  
	
   

  	
   

  	
   

  
	
  Sincerely,

  	
  Received by:

  	
   

  	
   

  
	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Verified:

  	
   

  	
   

  
	
  TITLE

  	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Compliance Status

  	
  Yes         No

  
									



 


6

















 


CORPORATE
RESOLUTIONS TO BORROW


 


Borrower:             HIRERIGHT, INC.


 


I, the undersigned Secretary or Assistant Secretary of
HIRERIGHT, INC. (the “Corporation”), HEREBY CERTIFY that the Corporation is
organized and existing under and by virtue of the laws of the state of its
incorporation.


 


I FURTHER CERTIFY that attached hereto as Attachments
1 and 2 are true and complete copies of the Certificate/Articles of
Incorporation, as amended, and the Bylaws of the Corporation, each of which is
in full force and effect on the date hereof.


 


I FURTHER CERTIFY that at a meeting of the Directors
of the Corporation duly called and held, at which a quorum was present and
voting, (or by other duly authorized corporate action in lieu of a meeting),
the following resolutions were adopted.


 


BE IT RESOLVED, that any one (1) of the following named officers, employees, or agents
of this Corporation, whose actual signatures are shown below:


 


	
  NAMES

  	
   

  	
  POSITIONS

  	
   

  	
  ACTUAL SIGNATURES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


acting
for an on behalf of this Corporation and as its act and deed be, and they
hereby are, authorized and empowered:


 


Borrow Money.  To borrow from time to time from Comerica
Bank (“Bank”), on such terms as may be agreed upon between the officers,
employees, or agents and Bank, such sum or sums of money as in their judgment
should be borrowed, without limitation, including such sums as are specified in
that certain Loan and Security Agreement dated as of April 18, 2002, as
amended from time to time, including but not limited to that certain First
Amendment to Loan and Security Agreement dated as of August 6, 2002, that
certain Second Amendment to Loan and Security Agreement dated as of
December 27, 2002, that certain Third Amendment to Loan and Security
Agreement dated as of January 23, 2003, that certain Fourth Amendment to
Loan and Security Agreement dated as of February 27, 2003, that certain
Fifth Amendment to Loan and Security Agreement dated as of February 2,
2004 and that certain Sixth Amendment to Loan and Security Agreement dated as
of May 31, 2004 (the “Amendment”).


 


Execute Amendments.  To execute and deliver to Bank the Amendment,
and also to execute and deliver to Bank one or more renewals, extensions,
modifications, consolidations, or substitutions therefore.


 


Grant Security.  To grant a security interest to Bank in the
Collateral described in the Amendment, which security interest shall secure all
of the Corporation’s Obligations, as described in the Amendment.


 


Warrants.  To issue a warrant to purchase the
Corporation’s capital stock.


 


Letters of Credit; Foreign Exchange.  To execute letters of credit applications,
foreign exchange agreements and other related documents pertaining to Bank’s
issuance of letters of credit and foreign exchange contracts.


 


Negotiate Items.  To draw, endorse, and discount with Bank all
drafts, trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation or in which the Corporation may have
an interest, and either to receive cash for the same or to cause such proceeds
to be credited to the account 


 


1

















 


of the Corporation with Bank, or to cause such other
disposition of the proceeds derived therefrom as they may deem advisable.


 


Further Acts.  In the case of lines of credit, to designate
additional or alternate individuals as being authorized to request advances
thereunder, and in all cases, to do and perform such other acts and things, to
pay any and all fees and costs, and to execute and deliver such other documents
and agreements as they may in their discretion deem reasonably necessary or
proper in order to carry into effect the provisions of these resolutions.


 


BE IT FURTHER RESOLVED, that any and all acts
authorized pursuant to these resolutions and performed prior to the passage of
these resolutions are hereby ratified and approved, that these resolutions
shall remain in full force and effect and Bank may rely on these resolutions
until written notice of their revocation shall have been delivered to and
received by Bank.  Any such notice shall
not affect any of the Corporation’s agreements or commitments in effect at the
time notice is given.


 


I FURTHER CERTIFY that the officers, employees, and
agents named above are duly elected, appointed, or employed by or for the
Corporation, as the case may be, and occupy the positions set forth opposite
their respective names; that the foregoing resolutions now stand of record on
the books of the Corporation; and that the Resolutions are in full force and
effect and have not been modified or revoked in any manner whatsoever.


 


IN WITNESS WHEREOF, I have hereunto set my hand on
May 31, 2004 and attest that the signatures set opposite the names listed
above are their genuine signatures.


 


	
   

  	
   

  	
  CERTIFIED
  TO AND ATTESTED BY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  X

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  The above statements are correct.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
  SIGNATURE OF OFFICER OR DIRECTOR

  	
   

  
	
   

  	
  OR, IF NONE, A SHAREHOLDER OTHER

  	
   

  
	
   

  	
  THAN SECRETARY WHEN SECRETARY IS

  	
   

  
	
   

  	
  AUTHORIZED TO SIGN ALONE.

  	
   

  
									



 


Failure to complete the above when
the Secretary is authorized to sign alone shall constitute a certification by
the Secretary that the Secretary is the sole Shareholder, Director and Officer
of the Corporation.


 


2

















 


COMERICA
BANK

Member FDIC


 


ITEMIZATION
OF AMOUNT FINANCED

DISBURSEMENT INSTRUCTIONS

(Revolver)


 


	
  Name(s):     HIRERIGHT,
  INC.

  	
  Date: May 31, 2004

  



 


$3,000,000              credited to deposit account No.               
when Advances are requested by Borrower

Amounts paid to others on your behalf:


 


	
  $

  	
   

  	
   

  	
  to
  Comerica Bank for Loan Fee

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
  to
  Comerica Bank for Document Fee

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
  to
  Comerica Bank for accounts receivable audit (estimate)

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
  to
  Bank counsel fees and expenses

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
  to

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
  to

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
  TOTAL
  (AMOUNT FINANCED)

  
							



 


Upon
consummation of this transaction, this document will also serve as the
authorization for Comerica Bank to disburse the loan proceeds as stated above.


 


	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Signature

  



 


1

















 


AGREEMENT
TO PROVIDE INSURANCE


 


	
  TO:

  	
   

  	
  COMERICA BANK

  	
   

  	
  Date: May 31, 2004

  
	
   

  	
   

  	
  attn: Collateral Operations, M/C 4604

  	
   

  	
   

  
	
   

  	
   

  	
  2321 Rosecrans Ave., Suite 5000

  	
   

  	
   

  
	
   

  	
   

  	
  El Segundo, CA 90245

  	
   

  	
  Borrower: HIRERIGHT, INC.

  



 


In consideration of a loan in the amount of
$3,000,000, secured by all tangible personal property including inventory and
equipment.


 


I/We agree to obtain adequate insurance coverage to
remain in force during the term of the loan.


 


I/We also agree to advise the below named agent to add
Comerica Bank as lender’s loss payable on the new or existing insurance policy,
and to furnish Bank at above address with a copy of said policy/endorsements
and any subsequent renewal policies.


 


I/We understand that the policy must contain:


 


1.             Fire
and extended coverage in an amount sufficient to cover:


 


The amount of the loan, OR


 


All existing encumbrances, whichever is greater,


 


But not in excess of the replacement value of the
improvements on the real property.


 


2.             Lender’s
“Loss Payable” Endorsement Form 438 BFU in favor of Comerica Bank, or any
other form acceptable to Bank.


 


INSURANCE
INFORMATION


 


	
  Insurance Co./Agent

  	
  Telephone No.:

  
	
   

  	
   

  
	
  Agent’s Address:

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature of Obligor:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature of Obligor:

  	
   

  	
   

  
					



 


FOR BANK USE ONLY


 


	
  INSURANCE
  VERIFICATION: Date:

  	
   

  	
   

  	
   

  
	
   

  
	
  Person
  spoken to:

  	
   

  	
   

  	
   

  
	
   

  
	
  Policy
  Number:

  	
   

  	
   

  	
   

  
	
   

  
	
  Effective
  From:

  	
   

  	
   To:

  	
   

  	
   

  
	
   

  
	
  Verified
  by: 

  	
   

  	
   

  	
   

  
										



 


2

















 


	
  COMERICA BANK

  	
   

  	
   

  
	
   

  	
  Member
  FDIC

  	
   

  	
  AUTOMATIC
  DEBIT AUTHORIZATION

  
				



 


	
  To:  Comerica
  Bank

   

  Re:  Loan # 

   

  You
  are hereby authorized and instructed to charge account No.                             
  in the name of HIRERIGHT, INC.

  
	
  for
  principal and interest payments due on above referenced loan as set forth
  below and credit the loan referenced above.

   

  x           Debit each interest
  payment as it becomes due according to the terms of the Loan and Security
  Agreement and any renewals or amendments thereof.

   

  x           Debit each principal
  payment as it becomes due according to the terms of the Loan and Security
  Agreement and any renewals or amendments thereof.

   

  x           Debit each payment
  for Bank Expenses as it becomes due according to the terms of the Loan and
  Security Agreement and any renewals or amendments thereof.

   

  This
  Authorization is to remain in full force and effect until revoked in writing.

  



 


	
  Borrower Signature

  	
  Date

  
	
   

  	
   

  
	
   

  	
  May 31,
  2004

  
	
   

  	
   

  
	
   

  	
  May 31,
  2004

  



 


3














 


SEVENTH AMENDMENT

TO LOAN AND SECURITY AGREEMENT


 


This Seventh Amendment to Loan and Security Agreement
(this “Amendment”) is entered into as of December 22, 2004, by and between
COMERICA BANK, successor by merger to COMERICA BANK-CALIFORNIA (“Bank”) and HIRERIGHT,
INC. (“Borrower”).


 


RECITALS


 


Borrower and Bank are parties to that certain Loan and
Security Agreement dated as of April 18, 2002, as amended from time to
time, including but not limited to that certain First Amendment to Loan and
Security Agreement dated as of August 6, 2002, that certain Second
Amendment to Loan and Security Agreement dated as of December 27, 2002,
that certain Third Amendment to Loan and Security Agreement dated as of January 23,
2003, that certain Fourth Amendment to Loan and Security Agreement dated as of February 27,
2003, that certain Fifth Amendment to Loan and Security Agreement dated as of February 2,
2004 and that certain Sixth Amendment to Loan and Security Agreement dated as
of May 31, 2004 (collectively, the “Agreement”).  The parties desire to amend the Agreement in
accordance with the terms of this Amendment.


 


NOW, THEREFORE, the parties agree as follows:


 


1.             The following defined terms in Section 1.1 of the
Agreement hereby are amended or restated as follows:


 


“Revolving Line” means a
credit extension of up to Four Million Five Hundred Thousand Dollars
($4,500,000).


 


“Revolving Maturity Date”
means December 31, 2006.


 


“Term Loan” has the
meaning set forth in Section 2.1(b).


 


“Term Loan Maturity Date”
means December 31, 2007.


 


2.             The first sentence of Section 2.1(a)(i) of
the Agreement hereby is amended and restated in its entirety to read as
follows:


 


“Subject to and upon the terms and conditions of this
Agreement, Borrower may request Advances in an aggregate outstanding amount not
to exceed the lesser of (i) the Revolving Line or (ii) the Borrowing
Base, in any event minus Advances under the Credit Card Sublimit; provided,
however, that Borrower may request Advances of up to $500,000 without regard to
the Borrowing Base.”


 


3.             New Section 2.1(b) hereby is added to the
Agreement to read as follows:


 


“(b)         Term Loan.


 


(i)            Subject to and upon the terms and
conditions of this Agreement, on the date of this Amendment or as soon
thereafter as is practical, Bank shall make one term loan to Borrower in an
aggregate amount not to exceed One Million Five Hundred Thousand Dollars
($1,500,000) (the “Term Loan”), which amount shall be used for permanent
working capital.


 


(ii)           Interest shall accrue from the date the
Term Loan is made at the rate specified in Section 2.3(a), and shall be
payable monthly on the first day of each month commencing on the first day of
the first month after the Term Loan is made. 
The Term Loan shall be repaid in thirty-six (36) equal monthly installments
of principal plus accrued but unpaid interest, commencing on the first day of
the first month after the Term Loan is made and continuing on the same day of
each month thereafter through the Term Loan Maturity Date, at which time all
amounts owing under this Section 2.1(b) shall be immediately due and
payable.  The Term Loan, once repaid, may
not be reborrowed.  Borrower may prepay
the Term Loan without penalty or premium.


 


4.             Section 2.3(a) of the Agreement hereby is
amended and restated in its entirety to read as follows:


 


1

















 


“(a)         Interest Rate.


 


(i)            Advances.  Except as set
forth in Section 2.3(b), the Advances shall bear interest, on the
outstanding Daily Balance thereof, at a rate equal to one half of one percent
(0.50%) above the Prime Rate.


 


(ii)           Term Loan.  Except as set
forth in Section 2.3(b), the Term Loan shall bear interest, on the
outstanding Daily Balance thereof, at a rate equal to one three quarters of one
percent (0.75%) above the Prime Rate”


 


5.             Section 2.5(a) of the Agreement hereby is
amended and restated in its entirety to read as follows:


 


“(a)         Facility Fee. 
On the date of this Amendment, and on December 31, 2005, a facility
fee equal to $11,250, on account of the Revolving Line; and, on the date of
this Amendment, a facility fee equal to $7,500, on account of the Term Loan;
each of which shall be non-refundable.”


 


6.             New Section 2.5(c) hereby is added to the
Agreement to read as follows:


 


“(c)         Non-Usage Fee. 
In addition to other amounts due or to become due, Borrower shall pay
Bank a fee equal to one quarter of one percent (0.25%) of the difference
between the Revolving Line and the average daily balance outstanding under the
Revolving Line during the term hereof, paid quarterly in arrears commencing
with the quarter ending March 31, 2004, which shall be nonrefundable”


 


7.             Section 6.3(e) of the Agreement hereby is
amended and restated in its entirety to read as follows:


 


“(e) such budgets, sales projections, operating
plans or other financial information as Bank may reasonably request from time
to time generally prepared by Borrower in the ordinary course of business,
including but not limited to Borrower’s annual business plan (including
operating budget) within thirty (30) days following Borrower’s fiscal year end,
and Borrower’s budget for 2006, by no later than January 31, 2006;”


 


8.             Section 6.8 of the Agreement hereby is amended
and restated in its entirety to read as follows:


 


“6.8         Liquidity Ratio.  Borrower shall at all times maintain,
measured as of the last day of each calendar month, a ratio of (a) the sum
of (i) unrestricted cash and cash equivalents (which shall not be less
than Five Hundred Thousand Dollars ($500,000) at all times maintained with
Bank), plus (ii) Net Accounts Receivable, to (b) all
Indebtedness (including without limitation any Contingent Obligations) owing
from Borrower to Bank (including Letters of Credit, except to the extent
cash-secured), of at least 1.50 to 1.00. 
As used herein, “Net Accounts Receivable” means gross Accounts
Receivable minus reserves for Accounts Receivable.”


 


9.             Section 6.9 of the Agreement hereby is amended
and restated in its entirety to read as follows:


 


“6.9         EBITDA.  At any time
during Borrower’s fiscal year 2005, Borrower shall not have EBITDA losses
greater than One Million Two Hundred Fifty Thousand Dollars ($1,250,000).  At any time during Borrower’s fiscal year
2006, Borrower shall not have EBITDA losses greater than Five Hundred Thousand
Dollars ($500,000); and shall generate positive EBITDA of at least Five Hundred
Thousand Dollars ($500,000) for the fiscal year ending December 31,
2006.  As used herein, “EBITDA” means “earnings
before interest, taxes, depreciation and amortization, as determined in
accordance with GAAP.”


 


10.           Exhibit C to the Agreement hereby is replaced
with Exhibit C attached hereto.


 


11.           Exhibit D to the Agreement hereby is replaced
with Exhibit D attached hereto.


 


12.           The Schedule to the Agreement hereby is replaced
with the Schedule attached hereto.


 


13.           No course of dealing on the part of Bank or its
officers, nor any failure or delay in the exercise of any right by Bank, shall
operate as a waiver thereof, and any single or partial exercise of any such
right shall not preclude any later exercise of any such right.  Bank’s failure at any time to require strict
performance by a Borrower of any provision shall not affect any right of Bank 


 


2

















 


thereafter to demand strict compliance and
performance.  Any suspension or waiver of
a right must be in writing signed by an officer of Bank.


 


14.           Unless otherwise defined, all initially capitalized
terms in this Amendment shall be as defined in the Agreement.  The Agreement, as amended hereby, shall be
and remain in full force and effect in accordance with its respective terms and
hereby is ratified and confirmed in all respects.  Except as expressly set forth herein, the
execution, delivery, and performance of this Amendment shall not operate as a
waiver of, or as an amendment of, any right, power, or remedy of Bank under the
Agreement, as in effect prior to the date hereof.


 


15.           Borrower represents and warrants that the
Representations and Warranties contained in the Agreement are true and correct
as of the date of this Amendment, and that no Event of Default has occurred and
is continuing.


 


16.           As a condition to the effectiveness of this Amendment,
Bank shall have received, in form and substance satisfactory to Bank, the
following:


 


(a)           this Amendment, duly executed by Borrower;


 


(b)           a Certificate of the Secretary of Borrower with
respect to incumbency and resolutions authorizing the execution and delivery of
this Amendment;


 


(c)           the Facility Fee due under Section 2.5(a) of
the Agreement, which may be debited from any of Borrower’s accounts;


 


(d)           all reasonable Bank Expenses incurred through the date
of this Amendment, which may be debited from any of Borrower’s accounts;


 


(e)           a warrant to purchase Borrower’s capital stock;


 


(f)            an Agreement to Provide Insurance in the form attached
hereto; and


 


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


 


17.           This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.


 


IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of the first date above written.


 


	
   

  	
  HIRERIGHT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Little

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CFO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMERICA BANK,
  successor by merger to

  
	
   

  	
  COMERICA
  BANK-CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  AVP

  	
   

  
					



 


3

















 


EXHIBIT C


 


BORROWING BASE CERTIFICATE


	
  Borrower: HIRERIGHT, INC.

  	
  Lender: Comerica Bank

  
	
  Commitment Amount: $4,500,000*

  



 


	
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Accounts Receivable Book Value as of       

  	
   

  	
   

  	
   

  	
  $

  	
                      

  	
   

  
	
  2.

  	
   

  	
  Additions (please explain on reverse)

  	
   

  	
   

  	
   

  	
  $

  	
                     

  	
   

  
	
  3.

  	
   

  	
  TOTAL ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
  $

  	
                     

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Amounts over 90 days due

  	
   

  	
  $

  	
                     

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Balance of 25% over 90 day accounts

  	
   

  	
  $

  	
                     

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Concentration Limits

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Foreign Accounts

  	
   

  	
  $

  	
                     

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Governmental Accounts

  	
   

  	
  $

  	
                     

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Contra Accounts

  	
   

  	
  $

  	
                     

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Demo Accounts

  	
   

  	
  $

  	
                     

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Intercompany/Employee Accounts

  	
   

  	
  $

  	
                     

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Other (please explain on reverse)

  	
   

  	
  $

  	
                     

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS

  	
   

  	
   

  	
   

  	
  $

  	
                     

  	
   

  
	
  14.

  	
   

  	
  Eligible Accounts (#3 minus #13)

  	
   

  	
   

  	
   

  	
  $

  	
                     

  	
   

  
	
  15.

  	
   

  	
  LOAN VALUE OF ACCOUNTS (75% of #14)

  	
   

  	
   

  	
   

  	
  $

  	
                     

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  *Non-Formula Amount

  	
   

  	
   

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  16.

  	
   

  	
  Maximum Loan Amount

  	
   

  	
   

  	
   

  	
  $

  	
  4,500,000

  	
   

  
	
  17.

  	
   

  	
  Total Funds Available [Lesser of #16 or #15]

  	
   

  	
   

  	
   

  	
  $

  	
                     

  	
   

  
	
  18.

  	
   

  	
  Present balance owing on Line of Credit

  	
   

  	
   

  	
   

  	
  $

  	
                     

  	
   

  
	
  19.

  	
   

  	
  Outstanding under Sublimits

  	
   

  	
   

  	
   

  	
  $

  	
                     

  	
   

  
	
  20.

  	
   

  	
  RESERVE POSITION (#17 minus #18 and #19)

  	
   

  	
   

  	
   

  	
  $

  	
                     

  	
   

  



 


The undersigned represents and warrants that the
foregoing is true, complete and correct, and that the information reflected in
this Borrowing Base Certificate complies with the representations and
warranties set forth in the Loan and Security Agreement between the undersigned
and Comerica Bank.


	
  HIRERIGHT, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signer

  	
   

  	
   

  
					



 

















 


EXHIBIT D

COMPLIANCE CERTIFICATE


 


TO:                         COMERICA BANK


 


FROM:                   HIRERIGHT, INC.


 


The undersigned authorized officer of HIRERIGHT, INC.
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (as amended from time to time,
the “Agreement”), (i) Borrower is in complete compliance for the period
ending                       
with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct as of the date hereof.  Attached
herewith are the required documents supporting the above certification.  The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.


 


Please indicate
compliance status by circling Yes/No under “Complies” column.


 


	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial statements

  	
   

  	
  Monthly
  within 30 days

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Annual (CPA Audited)

  	
   

  	
  FYE within
  120 days

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  10K and 10Q

  	
   

  	
  (as
  applicable)

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R & A/P Agings, Borrowing Base
  Cert.

  	
   

  	
  Monthly
  within 20 days

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R Audit

  	
   

  	
  Initial and
  Semi-Annual

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  IP Report

  	
   

  	
  Quarterly
  within 30 days

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  2006 Budget

  	
   

  	
  By
  January 31, 2006

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total amount of Borrower’s cash and
  investments

  	
   

  	
  Amount: $                

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total amount of Borrower’s cash and
  investments maintained with Bank

  	
   

  	
  Amount: $                

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  	
   

  
	
  Measured on a Monthly Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Liquidity Ratio

  	
   

  	
  1.50:1.00

  	
   

  	
            :1.00

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  EBITDA

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  At any time during FY05

  	
   

  	
  Losses not
  greater than $1,250,000

  	
   

  	
  $

  	
                 

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  At any time during FY06

  	
   

  	
  Losses not
  greater than $500,000

  	
   

  	
  $

  	
                 

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  FYE 2006

  	
   

  	
  $

  	
  500,000

  	
   

  	
  $

  	
                 

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
													



 


	
  Comments Regarding Exceptions: See Attached.

  	
  BANK USE ONLY

  
	
   

  	
   

  
	
   

  	
  Received by: 

  	
   

  
	
  Sincerely,

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNATURE

  	
  Verified:

  	
   

  
	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  
	
  TITLE

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Compliance Status

  	
  Yes

  	
  No

  
									



 


1

















 


Corporation
Resolutions and Incumbency Certification

Authority to Procure Loans


 


I certify that I am the duly elected and qualified
Secretary of HIRERIGHT, INC.; that the following is a true and correct copy of
resolutions duly adopted by the Board of Directors of the Corporation in
accordance with its bylaws and applicable statutes.


 


Copy of Resolutions:


 


Be it Resolved, That:


 


1.                                       Any one (1) of the following                                             
(insert titles only) of the Corporation are/is authorized, for, on behalf of,
and in the name of the Corporation to:


 


(a)                                  Negotiate and procure loans, letters of
credit and other credit or financial accommodations from Comerica Bank (“Bank”),
a Michigan banking corporation, including, without limitation, that certain
Loan and Security Agreement dated as of April 18, 2002, as amended from
time to time, including but not limited to that certain Seventh Amendment to
Loan and Security Agreement dated as of December 22, 2004, as may
subsequently be amended from time to time.


 


(b)                                 Discount with the Bank, commercial or
other business paper belonging to the Corporation made or drawn by or upon
third parties, without limit as to amount;


 


(c)                                  Purchase, sell, exchange, assign, endorse
for transfer and/or deliver certificates and/or instruments representing
stocks, bonds, evidences of Indebtedness or other securities owned by the
Corporation, whether or not registered in the name of the Corporation;


 


(d)                                 Give security for any liabilities of the
Corporation to the Bank by grant, security interest, assignment, lien, deed of
trust or mortgage upon any real or personal property, tangible or intangible of
the Corporation;


 


(e)                                  Issue a warrant or warrants to purchase
the Corporation’s capital stock; and


 


(f)                                    Execute and deliver in form and content
as may be required by the Bank any and all notes, evidences of Indebtedness,
applications for letters of credit, guaranties, subordination agreements, loan
and security agreements, financing statements, assignments, liens, deeds of
trust, mortgages, trust receipts and other agreements, instruments or documents
to carry out the purposes of these Resolutions, any or all of which may relate
to all or to substantially all of the Corporation’s property and assets.


 


2.                                       Said Bank be and it is authorized and
directed to pay the proceeds of any such loans or discounts as directed by the
persons so authorized to sign, whether so payable to the order of any of said
persons in their individual capacities or not, and whether such proceeds are
deposited to the individual credit of any of said persons or not;


 


1

















 


3.                                       Any and all agreements, instruments and
documents previously executed and acts and things previously done to carry out
the purposes of these Resolutions are ratified, confirmed and approved as the
act or acts of the Corporation.


 


4.                                       These Resolutions shall continue in
force, and the Bank may consider the holders of said offices and their
signatures to be and continue to be as set forth in a certified copy of these
Resolutions delivered to the Bank, until notice to the contrary in writing is
duly served on the Bank (such notice to have no effect on any action previously
taken by the Bank in reliance on these Resolutions).


 


5.                                       Any person, corporation or other legal
entity dealing with the Bank may rely upon a certificate signed by an officer
of the Bank to effect that these Resolutions and any agreement, instrument or
document executed pursuant to them are still in full force and effect and
binding upon the Corporation.


 


6.                                       The Bank may consider the holders of the
offices of the Corporation and their signatures, respectively, to be and
continue to be as set forth in the Certificate of the Secretary of the
Corporation until notice to the contrary in writing is duly served on the Bank.


 


I further certify that the above Resolutions are in
full force and effect as of the date of this Certificate; that these
Resolutions and any borrowings or financial accommodations under these
Resolutions have been properly noted in the corporate books and records, and
have not been rescinded, annulled, revoked or modified; that neither the
foregoing Resolutions nor any actions to be taken pursuant to them are or will
be in contravention of any provision of the articles of incorporation or bylaws
of the Corporation or of any agreement, indenture or other instrument to which
the Corporation is a party or by which it is bound; and that neither the
articles of incorporation nor bylaws of the Corporation nor any agreement,
indenture or other instrument to which the Corporation is a party or by which
it is bound require the vote or consent of shareholders of the Corporation to
authorize any act, matter or thing described in the foregoing Resolutions.


 


I further certify that the following named persons
have been duly elected to the offices set opposite their respective names, that
they continue to hold these offices at the present time, and that the
signatures which appear below are the genuine, original signatures of each
respectively:


 


(PLEASE SUPPLY GENUINE SIGNATURES OF AUTHORIZED
SIGNERS BELOW)


 


	
  NAME (Type or Print)

  	
   

  	
  TITLE

  	
   

  	
  SIGNATURE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


2

















 


In Witness Whereof, I have affixed my name as
Secretary and have caused the corporate seal (where available) of said
Corporation to be affixed on December 22, 2004.


 


	
   

  	
   

  	
   

  
	
   

  	
  Secretary

  



 


	
  The Above
  Statements are Correct.

  	
   

  
	
   

  	
  SIGNATURE OF OFFICER OR DIRECTOR OR, IF NONE. A
  SHAREHOLDER OTHER THAN SECRETARY WHEN SECRETARY IS AUTHORIZED TO SIGN ALONE.

  



 


Failure to complete the above when the Secretary
is authorized to sign alone shall constitute a certification by the Secretary
that the Secretary is the sole Shareholder, Director and Officer of the
Corporation.


 


3

















 


COMERICA BANK


Member FDIC


 


ITEMIZATION OF
AMOUNT FINANCED


DISBURSEMENT
INSTRUCTIONS


(Revolver)


 


	
  Name(s): HIRERIGHT,
  INC.

  	
   

  	
  Date: December 22,
  2004

  



 


	
  $

  	
  4,500,000

  	
   

  	
  credited to deposit account No. 1891-206557
  when Advances are requested by Borrower

  
	
   

  	
   

  	
   

  
	
  Amounts paid to others on your behalf:

  
	
   

  
	
  $

  	
   

  	
  to Comerica Bank for Loan Fee

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
  to Comerica Bank for Document Fee

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
  to Comerica Bank for accounts receivable audit
  (estimate)

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
  to Bank counsel fees and expenses

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
  to 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
  to 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
  TOTAL (AMOUNT FINANCED)

  



 


Upon consummation of this transaction, this document
will also serve as the authorization for Comerica Bank to disburse the loan
proceeds as stated above.


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Signature

  



 


1

















 


AGREEMENT TO
PROVIDE INSURANCE


 


	
  TO:

  	
  COMERICA BANK

  	
   

  	
   

  	
  Date: December 22,
  2004

  
	
   

  	
  attn: Deni M. Snider, MC 4770

  	
   

  	
   

  	
   

  
	
   

  	
  75 E. Trimble Road

  	
   

  	
   

  	
   

  
	
   

  	
  San Jose, CA 95131

  	
   

  	
   

  	
  Borrower: HIRERIGHT, INC.

  



 


In consideration of a loan in the amount of
$6,000,000, secured by all tangible personal property including inventory and
equipment.


 


I/We agree to obtain adequate insurance coverage to
remain in force during the term of the loan.


 


I/We also agree to advise the below named agent to add
Comerica Bank as lender’s loss payable on the new or existing insurance policy,
and to furnish Bank at above address with a copy of said policy/endorsements
and any subsequent renewal policies.


 


I/We understand that the policy must contain:


 


1.             Fire
and extended coverage in an amount sufficient to cover:


 


The amount of the loan,
OR


 


All existing
encumbrances, whichever is greater,


 


But not in excess of the replacement value of the
improvements on the real property.


 


2.             Lender’s
“Loss Payable” Endorsement Form 438 BFU in favor of Comerica Bank, or any
other form acceptable to Bank.


 


INSURANCE
INFORMATION


 


	
  Insurance Co./Agent

  	
  Telephone No.:

  



 


	
  Agent’s Address:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature of Obligor: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature of Obligor: 

  	
   

  	
   

  



 


	
  FOR BANK USE ONLY

  	
   

  
	
   

  	
   

  
	
  INSURANCE VERIFICATION: Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Person Spoken to:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Policy Number:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Effective From:

  	
   

  	
  To: 

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Verified by: 

  	
   

  	
   

  	
   

  
	
   

  
											



 


2

















 


	
  COMERICA
  BANK

  	
   

  	
   

  
	
  Member FDIC

  	
   

  	
  AUTOMATIC DEBIT AUTHORIZATION

  
	
   

  	
   

  	
   

  



 


	
  To:
  Comerica Bank

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Re:
   Loan #                                                         

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  You
  are hereby authorized and instructed to charge account No. 1891-206557
  in the name of HIRERIGHT, INC. for principal and interest payments due on
  above referenced loan as set forth below and credit the loan referenced
  above.

  
	
   

  	
   

  	
   

  
	
   

  	
  x

  	
  Debit each interest payment as it becomes due
  according to the terms of the Loan and Security Agreement and any renewals or
  amendments thereof.

  
	
   

  	
   

  
	
   

  	
  x

  	
  Debit each principal payment as it becomes due according
  to the terms of the Loan and Security Agreement 

  
	
   

  	
  and any renewals or amendments thereof.

  
	
   

  	
   

  
	
   

  	
  x

  	
  Debit each payment for Bank Expenses as it becomes
  due according to the terms of the Loan and Security 

  
	
   

  	
  Agreement and any renewals or amendments thereof.

  
	
   

  	
   

  
	
  This
  Authorization is to remain in full force and effect until revoked in writing.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Borrower Signature

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  December 22, 2004

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  December 22, 2004

  
						



 


3














 


EIGHTH AMENDMENT TO LOAN AND SECURITY AGREEMENT


 


This Eighth Amendment to Loan and Security Agreement
(this “Amendment”) is entered into as of December 31, 2006, by and between
COMERICA BANK, successor by merger to COMERICA BANK-CALIFORNIA (“Bank”) and HIRERIGHT,
INC. (“Borrower”).


 


RECITALS


 


Borrower and Bank are parties to that certain Loan and
Security Agreement dated as of April 18, 2002, as amended from time to
time including by that certain First Amendment to Loan and Security Agreement
dated as of August 6, 2002, that certain Second Amendment to Loan and
Security Agreement dated as of December 16, 2002, that certain Third
Amendment to Loan and Security Agreement dated as of January 23, 2003,
that certain Fourth Amendment to Loan and Security Agreement dated as of
February 27, 2003, that certain Fifth Amendment to Loan and Security
Agreement dated as of February 2, 2004, that certain Sixth Amendment to
Loan and Security Agreement dated as of May 31, 2004 and that certain
Seventh Amendment to Loan and Security Agreement dated as of December 22,
2004 (the “Agreement”). The parties desire to amend the Agreement in accordance
with the terms of this Amendment.


 


NOW, THEREFORE, the parties agree as follows:


 


1.             The following defined terms in
Section 1.1 of the Agreement hereby are added, amended or restated as
follows:


 


“Cash” means unrestricted cash and cash equivalents.


 


“Net Accounts Receivable” means gross Accounts
receivable minus reserves for Accounts receivable.


 


“Revolving Line” means a credit extension of up to
Five Million Dollars ($5,000,000).


 


“Revolving Maturity Date” means December 31,
2007.


 


2.             The defined terms “Borrowing Base”,
“Eligible Accounts” and “Eligible Foreign Accounts” are hereby deleted from the
Agreement in their entirety.


 


3.             Section 2.1(a)(i) of the
Agreement is hereby amended and restated in its entirety to read as follows:


 


“(i)          Subject
to and upon the terms and conditions of this Agreement (1) Borrower may
request Advances in an aggregate outstanding amount not to exceed the Revolving
Line and (2) amounts borrowed pursuant to this Section 2.1(a) may be
repaid and reborrowed at any time prior to the Revolving Maturity Date, at
which time all Advances under this Section 2.1(a) shall be immediately due
and payable. Borrower may prepay any Advances without penalty or premium.”


 


4.             Section 2.2 of the Agreement
is hereby amended and restated in its entirety to read as follows:


 


“2.2         Intentionally
Omitted.”


 


5.             Section 2.3(a)(i) of the
Agreement is hereby amended and restated in its entirety to read as


 


follows:


 


“(i)          Except
as set forth in Section 2.3(b), the Advances shall bear interest, on the
outstanding daily balance thereof, as set forth in the LIBOR Addendum to
Loan & Security Agreement attached as Exhibit C.”


 


6.             The second paragraph of
Section 6.3 of the Agreement (referencing delivery of the Borrowing Base
Certificate) is hereby deleted in its entirety.


 


1

















 


7.             Section 6.8 of the Agreement
is hereby amended and restated in its entirety to read as follows:


 


“6.8         Liquidity
Ratio. Borrower shall at all times maintain, measured as of the last day of
each calendar month, a ratio of (a) the sum of (i) Cash (which shall
not be less than One Million Dollars ($1,000,000) at all times maintained with
Bank), plus, (ii) Net Accounts Receivable to (b) all
Indebtedness (including without limitation any Contingent Obligations) owing
from Borrower to Bank (including Letters of Credit, except to the extent
cash-secured), of at least 1.75 to 1.00.”


 


8.             Section 6.9 of the Agreement
is hereby amended and restated in its entirety to read as follows:


 


“6.9         Intentionally
Omitted.”


 


9.             All references in the Loan
Documents (except any Warrants issued by Borrower to Bank) to Bank’s address at
333 W. Santa Clara St., San Jose, CA, 95113 shall mean and refer to 75
East Trimble Road, M/C 4770, San Jose, California 95131, Attn:  Manager, FAX: (408) 556-5091. The reference
in any Warrants to Bank’s address(es) shall mean and refer to 500 Woodward
Avenue, 32nd Floor, MC 3379, Detroit, MI 48226.


 


10.           Section 7.3 of the Agreement is
hereby amended and restated in its entirety to read as follows:


 


“7.3         Mergers
or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to
merge or consolidate, with or into any other business organization (other than
mergers or consolidations of a Subsidiary into another Subsidiary or into
Borrower), or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person except
where (i) such transactions do not in the aggregate exceed Two Million
Dollars ($2,000,000) during any fiscal year, (ii) no Event of Default has
occurred, is continuing or would exist after giving effect to such
transactions, (iii) such transactions do not result in a Change in
Control, and (iv) Borrower is the surviving entity.”


 


11.           Section 11 of the Agreement is
hereby amended and restated in its entirety to read as follows:


 


“11.         CHOICE
OF LAW AND VENUE; JURY TRIAL WAIVER.


 


This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California, without regard
to principles of conflicts of law. Each of Borrower and Bank hereby submits to
the exclusive jurisdiction of the state and Federal courts located in the
County of Santa Clara, State of California. THE UNDERSIGNED ACKNOWLEDGE THAT
THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED
UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS
OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL
PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR
AGREEMENT BETWEEN THE UNDERSIGNED PARTIES.”


 


12.           Section 12 of the Agreement
hereby is amended and restated in its entirety to read as follows:


 


“12          REFERENCE
PROVISION.


 


In the event the Jury Trial Waiver set forth above is
not enforceable, the parties elect to proceed under this Judicial Reference
Provision.


 


12.1         Mechanics.


 


(a)           With
the exception of the items specified in clause (c), below, any controversy,
dispute or claim (each, a “Claim”) between the parties arising out of or
relating to this Agreement or any other document, instrument or agreement
between the undersigned parties (collectively in this Section, the “Comerica
Documents”), will be resolved by a reference proceeding in California in
accordance with the provisions of Sections 638 et seq. of the
California Code of Civil Procedure (“CCP”), or their successor sections, which
shall constitute the exclusive remedy for the resolution of any Claim,
including whether the Claim is subject to the reference proceeding. Except as
otherwise provided in the Comerica Documents, venue for the reference
proceeding will be in the state or federal 


 

















 


court in the county or district where the real
property involved in the action, if any, is located or in the state or federal
court in the county or district where venue is otherwise appropriate under
applicable law (the “Court”).


 


(b)           The
matters that shall not be subject to a reference are the following:  (i) nonjudicial foreclosure of any
security interests in real or personal property, (ii) exercise of
self-help remedies (including, without limitation, set-off),
(iii) appointment of a receiver and (iv) temporary, provisional or
ancillary remedies (including, without limitation, writs of attachment, writs of
possession, temporary restraining orders or preliminary injunctions). This
reference provision does not limit the right of any party to exercise or oppose
any of the rights and remedies described in clauses (i) and (ii) or
to seek or oppose from a court of competent jurisdiction any of the items
described in clauses (iii) and (iv). The exercise of, or opposition to,
any of those items does not waive the right of any party to a reference
pursuant to this reference provision as provided herein.


 


(c)           The
referee shall be a retired judge or justice selected by mutual written
agreement of the parties. If the parties do not agree within ten (10) days of a
written request to do so by any party, then, upon request of any party, the
referee shall be selected by the Presiding Judge of the Court (or his or her
representative). A request for appointment of a referee may be heard on an ex
parte or expedited basis, and the parties agree that irreparable harm would
result if ex parte relief is not granted. Pursuant to CCP § 170.6, each party
shall have one peremptory challenge to the referee selected by the Presiding
Judge of the Court (or his or her representative).


 


(d)           The
parties agree that time is of the essence in conducting the reference
proceedings. Accordingly, the referee shall be requested, subject to change in
the time periods specified herein for good cause shown, to (i) set the
matter for a status and trial-setting conference within fifteen (15) days after
the date of selection of the referee, (ii) if practicable, try all issues
of law or fact within one hundred twenty (120) days after the date of the
conference and (iii) report a statement of decision within twenty (20)
days after the matter has been submitted for decision.


 


(e)           The
referee will have power to expand or limit the amount and duration of discovery.
The referee may set or extend discovery deadlines or cutoffs for good cause,
including a party’s failure to provide requested discovery for any reason
whatsoever. Unless otherwise ordered based upon good cause shown, no party
shall be entitled to “priority” in conducting discovery, depositions may be
taken by either party upon seven (7) days written notice, and all other
discovery shall be responded to within fifteen (15) days after service. All
disputes relating to discovery which cannot be resolved by the parties shall be
submitted to the referee whose decision shall be final and binding.


 


12.2         Procedures.
Except as expressly set forth herein, the referee shall determine the manner in
which the reference proceeding is conducted including the time and place of
hearings, the order of presentation of evidence, and all other questions that
arise with respect to the course of the reference proceeding. All proceedings
and hearings conducted before the referee, except for trial, shall be conducted
without a court reporter, except that when any party so requests, a court
reporter will be used at any hearing conducted before the referee, and the
referee will be provided a courtesy copy of the transcript. The party making
such a request shall have the obligation to arrange for and pay the court
reporter. Subject to the referee’s power to award costs to the prevailing
party, the parties will equally share the cost of the referee and the court
reporter at trial.


 


12.3         Application
of Law. The referee shall be required to determine all issues in accordance
with existing case law and the statutory laws of the State of California. The
rules of evidence applicable to proceedings at law in the State of California
will be applicable to the reference proceeding. The referee shall be empowered
to enter equitable as well as legal relief, enter equitable orders that will be
binding on the parties and rule on any motion which would be authorized in a
court proceeding, including without limitation motions for summary judgment or
summary adjudication. The referee shall issue a decision at the close of the
reference proceeding which disposes of all claims of the parties that are the
subject of the reference. Pursuant to CCP § 644, such decision shall be
entered by the Court as a judgment or an order in the same manner as if the
action had been tried by the Court and any such decision will be final, binding
and conclusive. The parties reserve the right to appeal from the final judgment
or order or from any appealable decision or order entered by the referee. The
parties reserve the right to findings of fact, conclusions of laws, a written
statement of decision, and the right to move for a new trial or a different
judgment, which new trial, if granted, is also to be a reference proceeding
under this provision.


 

















 


12.4         Repeal.
If the enabling legislation which provides for appointment of a referee is
repealed (and no successor statute is enacted), any dispute between the parties
that would otherwise be determined by reference procedure will be resolved and
determined by arbitration. The arbitration will be conducted by a retired judge
or justice, in accordance with the California Arbitration Act § 1280
through § 1294.2 of the CCP as amended from time to time. The limitations
with respect to discovery set forth above shall apply to any such arbitration
proceeding.


 


12.5         THE
PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS
RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY
A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH
COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY,
AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION
WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING
OUT OF OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER COMERICA
DOCUMENTS.”


 


13.           Exhibit C to the Agreement is
hereby replaced with Exhibit C attached hereto.


 


14.           Exhibit D to the Agreement is
hereby replaced with Exhibit C attached hereto.


 


15.           No course of dealing on the part of
Bank or its officers, nor any failure or delay in the exercise of any right by
Bank, shall operate as a waiver thereof, and any single or partial exercise of
any such right shall not preclude any later exercise of any such right. Bank’s
failure at any time to require strict performance by Borrower of any provision
shall not affect any right of Bank thereafter to demand strict compliance and
performance. Any suspension or waiver of a right must be in writing signed by
an officer of Bank.


 


16.           Unless otherwise defined, all
initially capitalized terms in this Amendment shall be as defined in the
Agreement. The Agreement, as amended hereby, shall be and remain in full force
and effect in accordance with its respective terms and hereby is ratified and
confirmed in all respects. Except as expressly set forth herein, the execution,
delivery, and performance of this Amendment shall not operate as a waiver of,
or as an amendment of, any right, power, or remedy of Bank under the Agreement,
as in effect prior to the date hereof.


 


17.           Borrower represents and warrants that
the Representations and Warranties contained in the Agreement are true and
correct as of the date of this Amendment, and that no Event of Default has
occurred and is continuing.


 


18.           As a condition to the effectiveness
of this Amendment, Bank shall have received, in form and substance satisfactory
to Bank, the following:


 


(a)           this
Amendment, duly executed by Borrower;


 


(b)           a
Certificate of the Secretary of Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this Amendment;


 


(c)           a
facility fee in the amount of $12,500, which may be debited from any of
Borrower’s accounts;


 


(d)           all
reasonable Bank Expenses incurred through the date of this Amendment, which may
be debited from any of Borrower’s accounts; and


 


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


 


19.           This Amendment may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one instrument.


 

















 


IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of the first date above written


 


 


	
   

  	
  HIRERIGHT,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard Little

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  
	
   

  	
  COMERICA
  BANK, successor by merger to 

  COMERICA BANK-CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CBO

  
				



 


[Signature Page to Eight
Amendment to Loan & Security Agreement]


 

















 


Exhibit C


 


LIBOR ADDENDUM


 

















 


EXHIBIT D

COMPLIANCE CERTIFICATE


 


	
  TO:

  	
  COMERICA BANK

  
	
   

  	
   

  
	
  FROM:

  	
  HIRERIGHT, INC.

  



 


The undersigned authorized officer of HIRERIGHT, INC.
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (the “Agreement”),
(i) Borrower is in complete compliance for the period ending                                  
with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct as of the date hereof. Attached herewith are the required documents
supporting the above certification. The Officer further certifies that these
are prepared in accordance with Generally Accepted Accounting Principles (GAAP)
and are consistently applied from one period to the next except as explained in
an accompanying letter or footnotes.


 


Please indicate compliance status
by circling Yes/No under “Complies” column.


 


	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly
  financial statements

  	
   

  	
  Monthly
  within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Annual
  (CPA Audited)

  	
   

  	
  FYE
  within 150 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  10K
  and 10Q

  	
   

  	
  (as
  applicable)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Compliance
  Cert.

  	
   

  	
  Monthly
  within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R
  Audit

  	
   

  	
  Annual
  (by 7/31/07)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  IP
  Report

  	
   

  	
  Quarterly
  within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Annual
  Business Plan

  	
   

  	
  FYE
  within 30 days

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  amount of Borrower’s cash and investments

  	
   

  	
  Amount:
  $

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Total
  amount of Borrower’s cash and investments maintained with Bank

  	
   

  	
  Amount:
  $

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  



 


	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Measured
  on a Monthly Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum
  Liquidity Ratio

  	
   

  	
  1.75:1.00

  	
   

  	
          :1.00

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  



 


	
  Comments Regarding Exceptions:
  See Attached.

  	
  BANK USE ONLY 

  
	
   

  	
   

  	
   

  
	
  Sincerely,

  	
  Received by:

  	
   

  	
   

  
	
   

  	
   

  	
                AUTHORIZED
  SIGNER

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
  SIGNATURE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Verified:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
            AUTHORIZED
  SIGNER

  
	
   

  	
  TITLE

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Compliance Status

  	
  Yes         No

  
	
   

  	
  DATE

  	
   

  	
   

  	
   

  
								



 














 


LIBOR/PRIME RATE


Addendum To Loan and Security
Agreement


 


This LIBOR/Prime Rate Addendum to Loan and Security
Agreement (this “Addendum”) is entered into as of December 31, 2006, by
and between COMERICA BANK, successor by merger to COMERICA BANK-CALIFORNIA (“Bank”)
and HIRERIGHT, INC. (“Borrower”). This Addendum supplements the terms of the
Loan Agreement (as defined below).


 


1.     Definitions.


 


(a)           Advance.
As used herein, “Advance” means a borrowing requested by Borrower and made by
Bank under the Loan Agreement, including a LIBOR Option Advance and/or a Prime
Rate Option Advance.


 


(b)           Business
Day. As used herein, “Business Day” means any day except a Saturday, Sunday
or any other day designated as a holiday under Federal or California statute or
regulation.


 


(c)           LIBOR.
As used herein, “LIBOR” means the rate per annum (rounded upward if necessary,
to the nearest whole 1/8 of 1 %) and determined pursuant to the following
formula:


 


	
   

  	
  LIBOR =

  	
  Base LIBOR

  	
   

  
	
  100% - LIBOR Reserve Percentage

  	
   

  



 


(i)         “Base
LIBOR” means the rate per annum determined by Bank at which deposits for the
relevant LIBOR Period would be offered to Bank in the approximate amount of the
relevant LIBOR Option Advance in the inter-bank LIBOR market selected by Bank,
upon request of Bank at 10:00 a.m. California time, on the day that is the
first day of such LIBOR Period.


 


(ii)        “LIBOR
Reserve Percentage” means the reserve percentage prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for “Eurocurrency
Liabilities” (as defined in Regulation D of the Federal Reserve Board, as
amended), adjusted by Bank for expected changes in such reserve percentage
during the applicable LIBOR Period.


 


(d)           LIBOR
Business Day. As used herein, “LIBOR Business Day” means a Business day on
which dealings in Dollar deposits may be carried out in the interbank LIBOR
market.


 


(e)           LIBOR
Period. As used herein, “LIBOR Period” means, with respect to a LIBOR
Option Advance:


 


(i)         initially,
the period commencing on, as the case may be, the date the Advance is made or
the date on which the Advance is converted to a LIBOR Option Advance, and
continuing for, in every case, a period of 30, 60 or 90 days thereafter so long
as the LIBOR Option Advance is quoted for such period in the applicable interbank
LIBOR market, as such period is selected by Borrower in the notice of Advance
as provided in the Loan Agreement or in the notice of conversion as provided in
this Addendum; and


 


(ii)        thereafter,
each period commencing on the last day of the next preceding LIBOR Period
applicable to such LIBOR Option Advance and continuing for, in every case, a
period of 30, 60 or 90 days thereafter so long as the LIBOR Option Advance is
quoted for such period in the applicable interbank LIBOR market, as such period
is selected by Borrower in the notice of continuation as provided in this
Addendum.


 


(f)            Loan
Agreement. As used herein, “Loan Agreement” means that certain Loan and
Security Agreement by and between Bank and Borrower dated as of April 18,
2002, as amended from time to time including by that certain First Amendment to
Loan and Security Agreement dated as of August 6, 2002, that certain
Second Amendment to Loan and Security Agreement dated as of December 16,
2002, that certain Third Amendment to Loan and Security Agreement dated as of
January 23, 2003, that certain Fourth Amendment to Loan and Security
Agreement dated as of February 27, 2003, that certain Fifth Amendment to
Loan and Security Agreement dated as


 

















 


of
February 2, 2004, that certain Sixth Amendment to Loan and Security
Agreement dated as of May 31, 2004, that certain Seventh Amendment to Loan
and Security Agreement dated as of December 22, 2004 and that certain
Eighth Amendment to Loan and Security Agreement dated as of December 31,
2006


 


(g)           Regulation
D. As used herein, “Regulation D” means Regulation D of the Board of
Governors of the Federal Reserve System as amended or supplemented from time to
time.


 


(h)           Regulatory
Development. As used herein, “Regulatory Development:” means any or all of
the following:  (i) any change in
any law, regulation or interpretation thereof by any public authority (whether
or not having the force of law); (ii) the application of any existing law,
regulation or the interpretation thereof by any public authority (whether or
not having the force of law); and (iii) compliance by Bank with any
request or directive (whether or not having the force of law) of any public
authority.


 


2.     Interest
Rate Options. Borrower shall have the following options regarding the
interest rate to be paid by Borrower on Advances under the Loan Agreement:


 


(a)           A
rate equal to two percent (2.00%) above Bank’s LIBOR, (the “LIBOR Option
Advance”), which LIBOR Option Advance shall be in effect during the relevant
LIBOR Period; or


 


(b)           A
rate equal to the “Prime Rate” as referenced in the Loan Agreement and quoted
from time to time by Bank as such rate may change from time to time (the “Prime
Rate Option”).


 


3.     LIBOR
Option Advance. The minimum LIBOR Option Advance will not be less than One
Million and 00/100 Dollars ($1,000,000) for any LIBOR Option Advance.


 


4.     Payment
of Interest on LIBOR Option Advances. Interest on each LIBOR Option Advance
shall be payable pursuant to the terms of the Loan Agreement. Interest on such
LIBOR Option Advance shall be computed on the basis of a 360-day year and shall
be assessed for the actual number of days elapsed from the first day of the
LIBOR Period applicable thereto but not including the last day thereof.


 


5.     Bank’s
Records Re: LIBOR Option Advances. With respect to each LIBOR Option
Advance, Bank is hereby authorized to note the date, principal amount, interest
rate and LIBOR Period applicable thereto and any payments made thereon on Bank’s
books and records (either manually or by electronic entry) and/or on any schedule
attached to the Loan Agreement, which notations shall be prima facie evidence
of the accuracy of the information noted.


 


6.     Selection/Conversion
of Interest Rate Options. At the time any Advance is requested under the
Loan Agreement and/or Borrower wishes to select the LIBOR Option Advance for
all or a portion of the outstanding principal balance of the Loan Agreement,
and at the end of each LIBOR Period, Borrower shall give Bank notice specifying
(a) the interest rate option selected by Borrower; (b) the principal
amount subject thereto; and (c) if the LIBOR Option Advance is selected,
the length of the applicable LIBOR Period. Any such notice may be given by
telephone so long as, with respect to each LIBOR Option Advance selected by
Borrower, (i) Bank receives written confirmation from Borrower not later
than three (3) LIBOR Business Days after such telephone notice is given; and
(ii) such notice is given to Bank prior to 10:00 a.m., California time, on
the first day of the LIBOR Period. For each LIBOR Option Advance requested
hereunder, Bank will quote the applicable fixed LIBOR Rate to Borrower at
approximately 10:00 a.m., California time, on the first day of the LIBOR Period.
If Borrower does not immediately accept the rate quoted by Bank, any subsequent
acceptance by Borrower shall be subject to a redetermination of the rate by
Bank; provided, however, that if Borrower fails to accept any such quotation as
given, then the quoted rate shall expire and Bank shall have no obligation to
permit a LIBOR Option Advance to be selected on such day. If no specific
designation of interest is made at the time any Advance is requested under the
Loan Agreement or at the end of any LIBOR Period, Borrower shall be deemed to
have selected the Prime Rate Option for such Advance or the principal amount to
which such LIBOR Period applied. At any time the LIBOR Option Advance is in
effect, Borrower may, at the end of the applicable LIBOR Period, convert to the
Prime Rate Option. At any time the Prime Rate Option is in effect, Borrower may
convert to the LIBOR OPTION ADVANCE, and shall designate a LIBOR Period.


 

















 


7.     Default
Interest Rate. From and after the maturity date of the Loan Agreement, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of the Loan
Agreement shall bear interest until paid in full at an increased rate per annum
(computed on the basis of a 360-day year, actual days elapsed) equal to five
percent (5.00%) above the rate of interest from time to time applicable to the
Loan Agreement.


 


8.     Prepayment.
In the event that the LIBOR Option Advance is the applicable interest rate for
all or any part of the outstanding principal balance of the Loan Agreement, and
any payment or prepayment of any such outstanding principal balance of the Loan
Agreement shall occur on any day other than the last day of the applicable
LIBOR Period (whether voluntarily, by acceleration, required payment, or
otherwise), or if Borrower elects the LIBOR Option Advance as the applicable
interest rate for all or any part of the outstanding principal balance of the
Loan Agreement in accordance with the terms and conditions hereof, and,
subsequent to such election, but prior to the commencement of the applicable
LIBOR Period, Borrower revokes such election for any reason whatsoever, or if
the applicable interest rate in respect of any outstanding principal balance of
the Loan Agreement hereunder shall be changed, for any reason whatsoever, from
the LIBOR Option Advance to the Prime Rate Option prior to the last day of the
applicable LIBOR Period, or if Borrower shall fail to make any payment of
principal or interest hereunder at any time that the LIBOR Option Advance is
the applicable interest rate hereunder in respect of such outstanding principal
balance of the Loan Agreement, Borrower shall reimburse Bank, on demand, for
any resulting loss, cost or expense incurred by Bank as a result thereof,
including, without limitation, any such loss, cost or expense incurred in
obtaining, liquidating, employing or redeploying deposits from third parties. Such
amount payable by Borrower to Bank may include, without limitation, an amount
equal to the excess, if any, of (a) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, refunded or
converted, for the period from the date of such prepayment or of such failure
to borrow, refund or convert, through the last day of the relevant LIBOR
Period, at the applicable rate of interest for such outstanding principal
balance of the Loan Agreement, as provided under this Loan Agreement, over
(b) the amount of interest (as reasonably determined by Bank) which would
have accrued to Bank on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank eurodollar market. Calculation of
any amounts payable to Bank under this paragraph shall be made as though Bank
shall have actually funded or committed to fund the relevant outstanding
principal balance of the Loan Agreement hereunder through the purchase of an
underlying deposit in an amount equal to the amount of such outstanding
principal balance of the Loan Agreement and having a maturity comparable to the
relevant LIBOR Period; provided, however, that Bank may fund the outstanding
principal balance of the Loan Agreement hereunder in any manner it deems fit
and the foregoing assumptions shall be utilized only for the purpose of the
calculation of amounts payable under this paragraph. Upon the written request
of Borrower, Bank shall deliver to Borrower a certificate setting forth the
basis for determining such losses, costs and expenses, which certificate shall
be conclusively presumed correct, absent manifest error. Any prepayment
hereunder shall also be accompanied by the payment of all accrued and unpaid
interest on the amount so prepaid. Any outstanding principal balance of the
Loan Agreement which is bearing interest at such time at the Prime Rate Option
may be prepaid without penalty or premium. Partial prepayments hereunder shall
be applied to the installments hereunder in the inverse order of their
maturities.


 


BY
INITIALING BELOW, BORROWER ACKNOWLEDGE(S) AND AGREE(S) THAT:  (A) THERE IS NO RIGHT TO PREPAY ANY
LIBOR OPTION ADVANCE, IN WHOLE OR IN PART, WITHOUT PAYING THE PREPAYMENT AMOUNT
SET FORTH HEREIN (“PREPAYMENT AMOUNT”), EXCEPT AS OTHERWISE REQUIRED UNDER
APPLICABLE LAW; (B) BORROWER SHALL BE LIABLE FOR PAYMENT OF THE PREPAYMENT
AMOUNT IF BANK EXERCISES ITS RIGHT TO ACCELERATE PAYMENT OF ANY LIBOR OPTION
ADVANCE AS PART OR ALL OF THE OBLIGATIONS OWING UNDER THE NOTE, INCLUDING
WITHOUT LIMITATION, ACCELERATION UNDER A DUE-ON-SALE PROVISION;
(C) BORROWER WAIVES ANY RIGHTS UNDER SECTION 2954.10 OF THE
CALIFORNIA CIVIL CODE, OR ANY SUCCESSOR STATUTE; AND (D) BANK HAS MADE
EACH LIBOR OPTION ADVANCE PURSUANT TO THE NOTE IN RELIANCE ON THESE AGREEMENTS.


 


	
   

  	
   

  	
   

  	
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  BORROWER’S INITIALS

  	
   

  	
   

  	
   

  



 


9.     Hold
Harmless and Indemnification. Borrower agrees to indemnify Bank and to hold
Bank harmless from, and to reimburse Bank on demand for, all losses and
expenses which Bank sustains or incurs as a result of 


 


1

















 


(i) any payment of a LIBOR Option Advance prior
to the last day of the applicable LIBOR Period for any reason, including,
without limitation, termination of the Loan Agreement, whether pursuant to this
Addendum or the occurrence of an Event of Default; (ii) any termination of
a LIBOR Period prior to the date it would otherwise end in accordance with this
Addendum; or (iii) any failure by Borrower, for any reason, to borrow any
portion of a LIBOR Option Advance.


 


10.   Funding
Losses. The indemnification and hold harmless provisions set forth in this
Addendum shall include, without limitation, all losses and expenses arising
from interest and fees that Bank pays to lenders of funds it obtains in order
to fund the loans to Borrower on the basis of the LIBOR Option Advance(s) and
all losses incurred in liquidating or re-deploying deposits from which such
funds were obtained and loss of profit for the period after termination. A
written statement by Bank to Borrower of such losses and expenses shall be
conclusive and binding, absent manifest error, for all purposes. This
obligation shall survive the termination of this Addendum and the payment of
the Loan Agreement.


 


11.   Regulatory
Developments Or Other Circumstances Relating To Illegality or Impracticality of
LIBOR. If any Regulatory Development or other circumstances relating to the
interbank Euro-dollar markets shall, at any time, in Bank’s reasonable
determination , make it unlawful or impractical for Bank to fund or maintain,
during any LIBOR Period, to determine or charge interest rates based upon
LIBOR, Bank shall give notice of such circumstances to Borrower and:


 


(a)           In
the case of a LIBOR Period in progress, Borrower shall, if requested by Bank,
promptly pay any interest which had accrued prior to such request and the date
of such request shall be deemed to be the last day of the term of the LIBOR
Period; and


 


(b)           No
LIBOR Period may be designated thereafter until Bank determines that such would
be practical.


 


12.   Additional
Costs. Borrower shall pay to Bank from time to time, upon Bank’s request,
such amounts as Bank determines are needed to compensate Bank for any costs it
incurred which are attributable to Bank having made or maintained a LIBOR
Option Advance or to Bank’s obligation to make a LIBOR Option Advance, or any
reduction in any amount receivable by Bank hereunder with respect to any LIBOR
Option Advance or such obligation (such increases in costs and reductions in
amounts receivable being herein called “Additional Costs”), resulting from any
Regulatory Developments, which (i) change the basis of taxation of any
amounts payable to Bank hereunder with respect to taxation of any amounts
payable to Bank hereunder with respect to any LIBOR Option Advance (other than
taxes imposed on the overall net income of Bank for any LIBOR Option Advance by
the jurisdiction where Bank is headquartered or the jurisdiction where Bank
extends the LIBOR Option Advance; (ii) impose or modify any reserve,
special deposit, or similar requirements relating to any extensions of credit
or other assets of, or any deposits with or other liabilities of, Bank
(including any LIBOR Option Advance or any deposits referred to in the
definition of LIBOR); or (iii) impose any other condition affecting this
Addendum (or any of such extension of credit or liabilities). Bank shall notify
Borrower of any event occurring after the date hereof which entitles Bank to
compensation pursuant to this paragraph as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation. Determinations
by Bank for purposes of this paragraph, shall be conclusive, provided that such
determinations are made on a reasonable basis.


 


13.   Legal
Effect. Except as specifically modified hereby, all of the terms and
conditions of the Loan Agreement remain in full force and effect.


 

















 


IN WITNESS WHEREOF, the parties have agreed to the foregoing
as of the date first set forth above.


 


	
  HIRERIGHT, INC.

  	
   

  	
  COMERICA BANK, successor by merger to

  
	
   

  	
   

  	
  COMERICA BANK – CALIFORNIA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  CFO

  	
   

  	
  Title:

  	
   

  
							



 


[Signature Page to
LIBOR Addendum to Loan and Security Agreement]


 

















 


PRIME RATE/LIBOR RATE ADVANCE REQUEST FORM


 


The undersigned hereby certifies as follows:


 


I,                                                 ,
am the duly elected and acting                                                 
of HIRERIGHT, INC. (“Borrower”).


 


This Prime Rate/LIBOR Rate Advance Request Form is
delivered on behalf of Borrower to Comerica Bank, pursuant to that certain Loan and Security Agreement among Borrower
and Comerica Bank, dated as of [LSA DATE] (the “Agreement”). The terms used
herein which are defined in the Agreement have the same meaning herein as
ascribed to them therein.


 


Borrower hereby requests on                                           ,
20     , an Advance/conversion from one rate to
another, as follows:


 


(a)           The
date on which the Advance is to be made/converted is                               ,
20     .


 


(b)           The
amount of the Advance/conversion is to be                                     
($                      ),
in the form of a Prime Rate Advance of $                                    ;
and/or a LIBOR Rate Advance of $                                    for
a LIBOR Interest Period of                                     
days.


 


All representations and warranties of Borrower stated
in the Agreement are true, correct and complete in all material respects as of
the date of this Request; provided, however, that those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date.


 


IN WITNESS WHEREOF, this Prime Rate/LIBOR Rate Advance
Request Form is executed by the undersigned as of this                          
day of                                     ,
20        .


 


 


	
   

  	
  HIRERIGHT,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: