Document:

Exhibit 10.10

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of June 8, 2018 (the “Effective Date”) between SILICON VALLEY BANK, a California corporation (“Bank”), and PROGYNY, INC., a Delaware corporation (“Borrower”), provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The parties agree as follows:

 

1.                                      ACCOUNTING AND OTHER TERMS

 

Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Notwithstanding any terms in this Agreement to the contrary, for purposes of any financial covenant and other financial calculations in this Agreement (other than for purposes of updating the Borrowing Base) which are made in whole or in part based upon the Availability Amount as of the last day of a particular month, calculations relying on information from a Borrowing Base Statement shall be derived from the Borrowing Base Statement delivered within seven (7) days of month end pursuant to Section 6.2(a) (and not, for clarity, any more recent Borrowing Base Statement delivered after such period), and the actual delivery date of such Borrowing Base Statement shall be deemed to be the last day of the applicable month. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.

 

2.                                      LOAN AND TERMS OF PAYMENT

 

2.1                               Promise to Pay. Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with this Agreement.

 

2.2                               Revolving Line.

 

(a)                                 Availability. Subject to the terms and conditions of this Agreement and to deduction of Reserves, Bank may, in its good faith business discretion, make Advances not exceeding the Availability Amount. Amounts borrowed under the Revolving Line may be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable terms and conditions precedent herein.

 

(b)                                 Termination; Repayment. The Revolving Line terminates on the Revolving Line Maturity Date, when the principal amount of all Advances, the unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately due and payable.

 

2.3                               Overadvances. If, at any time, the outstanding principal amount of any Advances exceeds the lesser of either the Revolving Line or the Borrowing Base, Borrower shall immediately pay to Bank in cash the amount of such excess (such excess, the “Overadvance”). Without limiting Borrower’s obligation to repay Bank any Overadvance, Borrower agrees to pay Bank interest on the outstanding amount of any Overadvance, on demand, at a per annum rate equal to the rate that is otherwise applicable to Advances plus five percent (5.0%).

 

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2.4                               Payment of Interest on the Credit Extensions.

 

(a)                                 Interest Rate. Subject to Section 2.4(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the greater of (i) (A) the Prime Rate when a Streamline Period is in effect or (B) one-half percent (0.50%) above the Prime Rate when a Streamline Period is not in effect and (ii) four and three-quarters percent (4.75%), which interest shall be payable monthly in accordance with Section 2.4(d) below.

 

(b)                                 Default Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at a rate per annum which is five percent (5.0%) above the rate that is otherwise applicable thereto (the “Default Rate”). Fees and expenses which are required to be paid by Borrower pursuant to the Loan Documents (including, without limitation, Bank Expenses) but are not paid when due shall bear interest until paid at a rate equal to the highest rate applicable to the Obligations. Payment or acceptance of the increased interest rate provided in this Section 2.4(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank.

 

(c)                                  Adjustment to Interest Rate. Changes to the interest rate of any Credit Extension based on changes to the Prime Rate shall be effective on the effective date of any change to the Prime Rate and to the extent of any such change.

 

(d)                                 Payment; Interest Computation. Interest is payable monthly on the Payment Date of each month and shall be computed on the basis of a 360-day year for the actual number of days elapsed. In computing interest, (i) all payments received after 12:00 p.m. Pacific time on any day shall be deemed received at the opening of business on the next Business Day, and (ii) the date of the making of any Credit Extension shall be included and the date of payment shall be excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is made, such day shall be included in computing interest on such Credit Extension.

 

2.5                               Fees. Borrower shall pay to Bank:

 

(a)                                 Good Faith Deposit. Borrower has paid to Bank a deposit of Twenty-Five Thousand Dollars ($25,000) (the “Good Faith Deposit”) to initiate Bank’s due diligence review process. Any portion of the Good Faith Deposit not utilized to pay Bank Expenses through the Effective Date will be applied towards fees and expenses owed by Borrower to Bank hereunder. This deposit is fully refundable if Bank, which approval is in the sole discretion of Bank, does not approve this transaction. If, subsequent to Bank’s approval, Borrower does not proceed with this transaction, or fails to execute final document, Bank shall retain the Deposit.

 

(b)                                 Revolving Line Commitment Fee. A fully earned, non-refundable commitment fee (the “Revolving Line Commitment Fee”) of Two Hundred Twenty-Five Thousand Dollars ($225,000), payable in three installments with the first (1st) installment of Seventy-Five Thousand Dollars ($75,000) due on the first (1st) anniversary of the Effective Date, the second (2nd) installment of Seventy-Five Thousand Dollars ($75,000) due on the second (2nd) anniversary of the Effective Date, and the third (3rd) installment of Seventy-Five Thousand Dollars

 

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($75,000) due on the third (3rd) anniversary of the Effective Date; Upon the earlier to occur of the termination of this Agreement or the occurrence an Event of Default, Borrower shall pay to Bank the remaining balance of the Revolving Line Commitment Fee (if any).

 

(c)                                  Termination Fee. Upon termination of this Agreement or the termination of the Revolving Line for any reason prior to the Revolving Line Maturity Date, in addition to the payment of any other amounts then-owing, a termination fee (the “Termination Fee”) in an amount equal to Three Hundred Thousand Dollars ($300,000), provided that no Termination Fee shall be charged if the credit facility hereunder is replaced with a new facility from Bank;

 

(d)                                 Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due (or, if no stated due date, upon demand by Bank).

 

(e)                                  Fees Fully Earned. Unless otherwise provided in this Agreement or in a separate writing by Bank, Borrower shall not be entitled to any credit, rebate, or repayment of any fees earned by Bank pursuant to this Agreement notwithstanding any termination of this Agreement or the suspension or termination of Bank’s obligation to make loans and advances hereunder. Bank may deduct amounts owing by Borrower under the clauses of this Section 2.5 pursuant to the terms of Section 2.6(c). Bank shall provide Borrower written notice of deductions made from the Designated Deposit Account pursuant to the terms of the clauses of this Section 2.5.

 

2.6                               Payments; Application of Payments; Debit of Accounts.

 

(a)                                 All payments to be made by Borrower under any Loan Document shall be made in immediately available funds in Dollars, without setoff or counterclaim, before 12:00 p.m. Pacific time on the date when due. Payments of principal and/or interest received after 12:00 p.m. Pacific time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid.

 

(b)                                 Bank has the exclusive right to determine the order and manner in which all payments with respect to the Obligations may be applied. Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or apply any payments required to be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application is not specified elsewhere in this Agreement.

 

(c)                                  Bank may debit any of Borrower’s deposit accounts, including the Designated Deposit Account, for principal and interest payments or any other amounts Borrower owes Bank when due. These debits shall not constitute a set-off.

 

2.7                               Withholding. Payments received by Bank from Borrower under this Agreement will be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority (including any interest, additions to tax or penalties applicable thereto). Specifically, however, if at any time any Governmental Authority, applicable

 

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law, regulation or international agreement requires Borrower to make any withholding or deduction from any such payment or other sum payable hereunder to Bank, Borrower hereby covenants and agrees that the amount due from Borrower with respect to such payment or other sum payable hereunder will be increased to the extent necessary to ensure that, after the making of such required withholding or deduction, Bank receives a net sum equal to the sum which it would have received had no withholding or deduction been required, and Borrower shall pay the full amount withheld or deducted to the relevant Governmental Authority. Borrower will, upon request, furnish Bank with proof reasonably satisfactory to Bank indicating that Borrower has made such withholding payment; provided, however, that Borrower need not make any withholding payment if the amount or validity of such withholding payment is contested in good faith by appropriate and timely proceedings and as to which payment in full is bonded or reserved against by Borrower. The agreements and obligations of Borrower contained in this Section 2.7 shall survive the termination of this Agreement.

 

3.                                      CONDITIONS OF LOANS

 

3.1                               Conditions Precedent to Initial Credit Extension. Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, such documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate, including, without limitation:

 

(a)                                 duly executed signatures to the Loan Documents;

 

(b)                                 the Operating Documents and long-form good standing certificates of Borrower certified by the Secretary of State (or equivalent agency) of Borrower’s jurisdiction of organization or formation and each jurisdiction in which Borrower is qualified to conduct business, each as of a date no earlier than thirty (30) days prior to the Effective Date;

 

(c)                                  a secretary’s certificate of Borrower with respect to such Borrower’s Operating Documents, incumbency, specimen signatures and resolutions authorizing the execution and delivery of this Agreement and the other Loan Documents to which it is a party;

 

(d)                                 duly executed signatures to the completed Borrowing Resolutions for Borrower;

 

(e)                                  certified copies, dated as of a recent date, of financing statement searches, as Bank may request, accompanied by written evidence (including any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or have been or, in connection with the initial Credit Extension, will be terminated or released;

 

(f)                                   the Perfection Certificate of Borrower, together with the duly executed signature thereto;

 

(g)                                  a landlord’s consent in favor of Bank for each of Borrower’s leased locations, by the respective landlord thereof, together with the duly executed original signatures thereto;

 

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(h)                                 a bailee’s waiver in favor of Bank for each location where Borrower maintains property with a third party, by each such third party, together with the duly executed original signatures thereto;

 

(i)                                     with respect to the initial Advance, a completed Borrowing Base Statement (and any schedules related thereto and including any other information requested by Bank with respect to Borrower’s Accounts); and

 

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

 

3.2                               Conditions Precedent to all Credit Extensions. Bank’s obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following conditions precedent:

 

(a)                                 timely receipt of the Credit Extension request and any materials and documents required by Section 3.4;

 

(b)                                 the representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date of the proposed Credit Extension and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties in this Agreement remain true, accurate, and complete in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and

 

(c)                                  Bank determines to its satisfaction that there has not been any material impairment in the general affairs, management, results of operation, financial condition or the prospect of repayment of the Obligations, nor any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank.

 

3.3                               Covenant to Deliver.

 

(a)                                 Borrower agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a condition precedent to any Credit Extension. Borrower expressly agrees that a Credit Extension made prior to the receipt by Bank of any such item shall not constitute a waiver by Bank of Borrower’s obligation to deliver such item, and the making of any Credit Extension in the absence of a required item shall be in Bank’s sole discretion.

 

(b)                                 Unless otherwise provided in writing, within thirty (30) days after the Effective Date, Bank shall have received, in form and substance satisfactory to Bank, (i) evidence satisfactory to Bank that the insurance policies and endorsements required by Section 6.7

 

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hereof are in full force and effect, together with appropriate evidence showing lender loss payable and/or additional insured clauses or endorsements in favor of Bank, and (ii) a Control Agreement with Wells Fargo with respect to the WF Account, together with the duly executed signatures thereto.

 

3.4                               Procedures for Borrowing.

 

(a)                                 Advances. Subject to the prior satisfaction of all other applicable conditions to the making of an Advance set forth in this Agreement, to obtain an Advance, Borrower (via an individual duly authorized by an Administrator) shall notify Bank (which notice shall be irrevocable) by electronic mail by 12:00 p.m. Pacific time on the Funding Date of the Advance. Such notice shall be made by Borrower through Bank’s online banking program, provided, however, if Borrower is not utilizing Bank’s online banking program, then such notice shall be in a written format acceptable to Bank that is executed by an Authorized Signer. Bank shall have received satisfactory evidence that the Board has approved that such Authorized Signer may provide such notices and request Advances. In connection with any such notification, Borrower must promptly deliver to Bank by electronic mail or through Bank’s online banking program such reports and information, including without limitation, sales journals, cash receipts journals, accounts receivable aging reports, as Bank may request in its sole discretion. Bank shall credit proceeds of an Advance to the Designated Deposit Account. Bank may make Advances under this Agreement based on instructions from an Authorized Signer or without instructions if the Advances are necessary to meet Obligations which have become due.

 

4.                                      CREATION OF SECURITY INTEREST

 

4.1                               Grant of Security Interest. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.

 

Borrower acknowledges that it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank. Regardless of the terms of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations hereunder and that it is the intent of Borrower and Bank to have all such Obligations secured by the first priority perfected security interest in the Collateral granted herein (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Bank’s Lien in this Agreement).

 

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at the sole cost and expense of Borrower, release its Liens in the Collateral and all rights therein shall revert to Borrower. In the event (x) all Obligations (other than inchoate indemnity obligations), except for Bank Services, are satisfied in full, and (y) this Agreement is terminated, Bank shall terminate the security interest granted herein upon Borrower providing cash collateral acceptable to Bank in its good faith business judgment for Bank Services, if any. In the event such Bank Services consist

 

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of outstanding Letters of Credit, Borrower shall provide to Bank cash collateral in an amount equal to (x) if such Letters of Credit are denominated in Dollars, then at least one hundred five percent (105.0%); and (y) if such Letters of Credit are denominated in a Foreign Currency, then at least one hundred ten percent (110.0%), of the Dollar Equivalent of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its business judgment), to secure all of the Obligations relating to such Letters of Credit.

 

4.2                               Priority of Security Interest. Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Bank’s Lien under this Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the general details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank.

 

4.3                               Authorization to File Financing Statements. Borrower hereby authorizes Bank to file financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition of the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Bank under the Code. Such financing statements may indicate the Collateral as “all assets of the Debtor” or words of similar effect, or as being of an equal or lesser scope, or with greater detail, all in Bank’s discretion.

 

5.                                      REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants as follows:

 

5.1                               Due Organization, Authorization; Power and Authority. Borrower is duly existing and in good standing as a Registered Organization in its jurisdiction of formation and is qualified and licensed to do business and is in good standing in any jurisdiction in which the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrower’s business. In connection with this Agreement, Borrower has delivered to Bank a completed certificate signed by Borrower, entitled “Perfection Certificate” (the “Perfection Certificate”). Borrower represents and warrants to Bank that (a) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth Borrower’s organizational identification number or accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth Borrower’s place of business, or, if more than one, its chief executive office as well as Borrower’s mailing address (if different than its chief executive office); (e) Borrower (and each of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete (it being understood and agreed that Borrower may from time to time update certain

 

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information in the Perfection Certificate after the Effective Date to the extent permitted by one or more specific provisions in this Agreement). If Borrower is not now a Registered Organization but later becomes one, Borrower shall promptly notify Bank of such occurrence and provide Bank with Borrower’s organizational identification number.

 

The execution, delivery and performance by Borrower of the Loan Documents to which it is a party have been duly authorized, and do not (i) conflict with any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and effect), or (v) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or acceleration of, any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which it is a party or by which it is bound in which the default could reasonably be expected to have a material adverse effect on Borrower’s business.

 

5.2                               Collateral. Borrower has good title to, rights in, and the power to transfer each item of the Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no Collateral Accounts at or with any bank or financial institution other than Bank or Bank’s Affiliates except for the Collateral Accounts described in the Perfection Certificate delivered to Bank in connection herewith and which Borrower has taken such actions as are necessary to give Bank a perfected security interest therein, pursuant to the terms of Section 6.8(b). The Accounts are bona fide, existing obligations of the Account Debtors.

 

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

 

All Inventory is in all material respects of good and marketable quality, free from material defects.

 

Borrower is the sole owner of the Intellectual Property which it owns or purports to own except for (a) nonexclusive licenses granted to its customers in the ordinary course of business, (b) over-the-counter software that is commercially available to the public, and (c) material Intellectual Property licensed to Borrower and noted on the Perfection Certificate. Each Patent which it owns or purports to own and which is material to Borrower’s business is valid and enforceable, and no part of the Intellectual Property which Borrower owns or purports to own and which is material to Borrower’s business has been judged invalid or unenforceable, in whole or in part. To the best of Borrower’s knowledge, no claim has been made that any part of the Intellectual Property violates the rights of any third party except to the extent such claim would not reasonably be expected to have a material adverse effect on Borrower’s business.

 

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Except as noted on the Perfection Certificate, Borrower is not a party to, nor is it bound by, any Restricted License.

 

5.3                               Accounts Receivable; Inventory.

 

(a)                                 For each Account with respect to which Advances are requested, on the date each Advance is requested and made, such Account shall be an Eligible Account.

 

(b)                                 All statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing the Eligible Accounts are and shall be true and correct and all such invoices, instruments and other documents, and all of Borrower’s Books are genuine and in all respects what they purport to be. All sales and other transactions underlying or giving rise to each Eligible Account shall comply in all material respects with all applicable laws and governmental rules and regulations. Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor whose accounts are Eligible Accounts in any Borrowing Base Statement. To the best of Borrower’s knowledge, all signatures and endorsements on all documents, instruments, and agreements relating to all Eligible Accounts are genuine, and all such documents, instruments and agreements are legally enforceable in accordance with their terms.

 

5.4                               Litigation. There are no actions or proceedings pending or, to the knowledge of any Responsible Officer, threatened in writing by or against Borrower or any of its Subsidiaries involving more than, individually or in the aggregate, Fifty Thousand Dollars ($50,000).

 

5.5                               Financial Statements; Financial Condition. All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Bank by submission to the Financial Statement Repository or otherwise submitted to Bank fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations. There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements submitted to the Financial Statement Repository or otherwise submitted to Bank.

 

5.6                               Solvency. The fair salable value of Borrower’s consolidated assets (including goodwill minus disposition costs) exceeds the fair value of Borrower’s liabilities; Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature.

 

5.7                               Regulatory Compliance. Borrower is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act of 1940, as amended. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors). Borrower (a) has complied in all material respects with all Requirements of Law, and (b) has not violated any Requirements of Law the violation of which could reasonably be expected to have a material adverse effect on its business. None of Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous

 

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substance other than legally. Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Governmental Authorities that are necessary to continue their respective businesses as currently conducted.

 

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

 

5.9                               Tax Returns and Payments; Pension Contributions. Borrower has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except (a) to the extent such taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor, or (b) if such taxes, assessments, deposits and contributions do not, individually or in the aggregate, exceed Five Thousand Dollars ($5,000).

 

To the extent Borrower defers payment of any contested taxes, Borrower shall (i) notify Bank in writing of the commencement of, and any material development in, the proceedings, and (ii) post bonds or take any other steps required to prevent the Governmental Authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien.” Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior tax years which could result in additional taxes becoming due and payable by Borrower in excess of Five Thousand Dollars ($5,000). Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

 

5.10                        Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely to repay in full the Existing Bank Indebtedness and for working capital and to fund its general business requirements and not for personal, family, household or agricultural purposes.

 

5.11                        Full Disclosure. No written representation, warranty or other statement of Borrower in any report, certificate, or written statement submitted to the Financial Statement Repository or otherwise submitted to Bank, as of the date such representation, warranty, or other statement was made, taken together with all such written reports, written certificates and written statements submitted to the Financial Statement Repository or otherwise submitted to Bank, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the reports, certificates, or written statements not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

 

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5.12                        Definition of “Knowledge.” For purposes of the Loan Documents, whenever a representation or warranty is made to Borrower’s knowledge or awareness, to the “best of” Borrower’s knowledge, or with a similar qualification, knowledge or awareness means the actual knowledge, after reasonable investigation, of any Responsible Officer.

 

6.                                      AFFIRMATIVE COVENANTS

 

Borrower shall do all of the following:

 

6.1                               Government Compliance.

 

(a)                                 Maintain its and all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on Borrower’s business or operations. Borrower shall comply, and have each Subsidiary comply, in all material respects, with all laws, ordinances and regulations to which it is subject.

 

(b)                                 Obtain all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents to which it is a party and the grant of a security interest to Bank in all of its property. Borrower shall promptly provide copies of any such obtained Governmental Approvals to Bank.

 

6.2                               Financial Statements, Reports. Provide Bank with the following by submitting to the Financial Statement Repository or otherwise submitting to Bank:

 

(a)                                 a Borrowing Base Statement (and any schedules related thereto and including any other information requested by Bank with respect to Borrower’s Accounts), including, without limitation, a detailed accounts receivable ledger (i) when a Streamline Period is not in effect, no later than Friday of each week and with each request for an Advance, and (ii) when a Streamline Period is in effect, within seven (7) days after the end of each month;

 

(b)                                 within thirty (30) days after the end of each month, (A) monthly accounts receivable agings, aged by invoice date, (B) monthly accounts payable agings, aged by invoice date, and outstanding or held check registers, if any, and (C) monthly reconciliations of accounts receivable agings (aged by invoice date), detailed Account Debtor listing, Deferred Revenue report, and general ledger;

 

(c)                                  as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared balance sheet and income statement covering Borrower’s consolidated operations for such month in a form acceptable to Bank (the “Monthly Financial Statements”);

 

(d)                                 within thirty (30) days after the last day of each month and together with the Monthly Financial Statements, a completed Compliance Statement confirming that, as of the end of such month, Borrower was in full compliance with all of the terms and conditions of this Agreement, and setting forth calculations showing compliance with the financial covenants

 

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set forth in this Agreement and such other information as Bank may reasonably request, including, without limitation, a statement that at the end of such month there were no held checks;

 

(e)                                  within the later of thirty (30) days after (i) the last day of each fiscal year of Borrower or (ii) approval by Borrower’s Board of Directors, and in each case, contemporaneously with any updates or amendments thereto, (A) annual operating budgets (including income statements, balance sheets and cash flow statements, by month) for the upcoming fiscal year of Borrower, and (B) annual financial projections for the following fiscal year (on a quarterly basis), in each case as approved by the Board, together with any related business forecasts used in the preparation of such annual financial projections;

 

(f)                                   as soon as available, and in any event within one hundred eighty (180) days following the end of Borrower’s fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Bank; provided, however, for any fiscal year for which the Board does not require Borrower to prepare audited financial statements, Borrower shall instead deliver to Bank, as soon as available, but no later than sixty (60) days after the last day of Borrower’s fiscal year, a company prepared consolidated balance sheet and income statement covering Borrower’s consolidated operations during such fiscal year in a form reasonably acceptable to Bank;

 

(g)                                  prompt written notice of any changes to the beneficial ownership information set out in items 2(d) and (e) of the Perfection Certificate. Borrower understands and acknowledges that Bank relies on such true, accurate and up-to-date beneficial ownership information to meet Bank’s regulatory obligations to obtain, verify and record information about the beneficial owners of its legal entity customers;

 

(h)                                 in the event that Borrower becomes subject to the reporting requirements under the Exchange Act within five (5) days of filing, copies of all periodic and other reports, proxy statements and other materials filed by Borrower and/or any Guarantor with the SEC, any Governmental Authority succeeding to any or all of the functions of the SEC or with any national securities exchange, or distributed to its shareholders, as the case may be. Documents required to be delivered pursuant to the terms hereof (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link thereto, on Borrower’s website on the internet at Borrower’s website address; provided, however, Borrower shall promptly notify Bank in writing (which may be by electronic mail) of the posting of any such documents;

 

(i)                                     within five (5) days of delivery, copies of all statements, reports and notices made available to Borrower’s security holders or to any holders of Subordinated Debt;

 

(j)                                    prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, Fifty Thousand Dollars ($50,000) or more; and

 

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(k)                                 promptly, from time to time, such other information regarding Borrower or compliance with the terms of any Loan Documents as reasonably requested by Bank.

 

Any submission by Borrower of a Compliance Statement, or any other financial statement submitted to the Financial Statement Repository pursuant to this Section 6.2 or otherwise submitted to Bank shall be deemed to be a representation by Borrower that (i) as of the date of such Compliance Statement, Borrowing Base Statement or other financial statement, the information and calculations set forth therein are true, accurate, and correct, (ii) as of the end of the compliance period set forth in such submission, Borrower is in complete compliance with all required covenants except as noted in such Compliance Statement, Borrowing Base Certificate or other financial statement, as applicable; (iii) as of the date of such submission, no Events of Default have occurred or are continuing; (iv) all representations and warranties other than any representations or warranties that are made as of a specific date in Section 5 remain true and correct in all material respects as of the date of such submission except as noted in such Compliance Statement, Borrowing Base Statement or other financial statement, as applicable; (v) as of the date of such submission, Borrower and each of its Subsidiaries have timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9; and (vi) as of the date of such submission, no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank.

 

6.3                               Accounts Receivable.

 

(a)                                 Schedules and Documents Relating to Accounts. Borrower shall deliver to Bank transaction reports and schedules of collections, as provided in Section 6.2, on Bank’s standard forms; provided, however, that Borrower’s failure to execute and deliver the same shall not affect or limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall Bank’s failure to advance or lend against a specific Account affect or limit Bank’s Lien and other rights therein. If requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s request, originals) of all contracts, orders, invoices, and other similar documents, and all shipping instructions, delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or disposition of which gave rise to such Accounts. In addition, Borrower shall deliver to Bank, on its request, the originals of all instruments, chattel paper, security agreements, guarantees and other documents and property evidencing or securing any Accounts, in the same form as received, with all necessary indorsements, and copies of all credit memos.

 

(b)                                 Disputes. Borrower shall promptly notify Bank of all disputes or claims in excess of Five Thousand Dollars ($5,000) relating to Accounts. Borrower may forgive (completely or partially), compromise, or settle any Account for less than payment in full, or agree to do any of the foregoing so long as (i) Borrower does so in good faith, in a commercially reasonable manner, in the ordinary course of business, in arm’s-length transactions, and reports the same to Bank in the regular reports provided to Bank; (ii) no Event of Default has occurred and is continuing; and (iii) after taking into account all such discounts, settlements and forgiveness, the total outstanding Advances will not exceed the lesser of the Revolving Line or the Borrowing Base.

 

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(c)                                  Collection of Accounts. Borrower shall direct Account Debtors to deliver or transmit all proceeds of Accounts into a lockbox account, or such other “blocked account” as specified by Bank (either such account, the “Cash Collateral Account”); provided that payments with respect to Accounts owing by Microsoft may be first directed to the WF Account as long as Borrower is in compliance with Sections 3.3(b) and 6.8(b) hereof. Whether or not an Event of Default has occurred and is continuing, Borrower shall immediately deliver all payments on and proceeds of Accounts to the Cash Collateral Account. Subject to Bank’s right to maintain a reserve pursuant to Section 6.3(d), all amounts received in the Cash Collateral Account shall be (i) when a Streamline Period is not in effect, applied to immediately reduce the Obligations under the Revolving Line (unless Bank, in its sole discretion, at times when an Event of Default exists, elects not to so apply such amounts), or (ii) when a Streamline Period is in effect, transferred on a daily basis to Borrower’s operating account with Bank. Borrower hereby authorizes Bank to transfer to the Cash Collateral Account any amounts that Bank reasonably determines are proceeds of the Accounts (provided that Bank is under no obligation to do so and this allowance shall in no event relieve Borrower of its obligations hereunder).

 

(d)                                 Reserves. Notwithstanding any terms in this Agreement to the contrary, at times when an Event of Default exists, Bank may hold any proceeds of the Accounts and any amounts in the Cash Collateral Account that are not applied to the Obligations pursuant to Section 6.3(c) above (including amounts otherwise required to be transferred to Borrower’s operating account with Bank when a Streamline Period is in effect) as a reserve to be applied to any Obligations regardless of whether such Obligations are then due and payable.

 

(e)                                  Returns. Provided no Event of Default has occurred and is continuing, if any Account Debtor returns any Inventory to Borrower, Borrower shall promptly (i) determine the reason for such return, (ii) issue a credit memorandum to the Account Debtor in the appropriate amount, and (iii) provide a copy of such credit memorandum to Bank, upon request from Bank. In the event any attempted return occurs after the occurrence and during the continuance of any Event of Default, Borrower shall hold the returned Inventory in trust for Bank, and immediately notify Bank of the return of the Inventory.

 

(f)                                   Verifications; Confirmations; Credit Quality; Notifications. Bank may, from time to time, (i) verify and confirm directly with the respective Account Debtors the validity, amount and other matters relating to the Accounts, either in the name of Borrower or Bank or such other name as Bank may choose, and notify any Account Debtor of Bank’s security interest in such Account and/or (ii) conduct a credit check of any Account Debtor to approve any such Account Debtor’s credit. In addition, Bank may notify Account Debtors to make payments in respect of Accounts directly to Bank.

 

(g)                                  No Liability. Bank shall not be responsible or liable for any shortage or discrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition of which gives rise to an Account, or for any error, act, omission, or delay of any kind occurring in the settlement, failure to settle, collection or failure to collect any Account, or for settling any Account in good faith for less than the full amount thereof, nor shall Bank be deemed to be responsible for any of Borrower’s obligations under any contract or agreement giving rise to an Account. Nothing herein shall, however, relieve Bank from liability for its own gross negligence or willful misconduct.

 

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6.4                               Remittance of Proceeds. Except as otherwise provided in Section 6.3(c), deliver, in kind, all proceeds arising from the disposition of any Collateral to Bank in the original form in which received by Borrower not later than the following Business Day after receipt by Borrower, to be applied to the Obligations (a) prior to an Event of Default, pursuant to the terms of Section 6.3(c) hereof, and (b) after the occurrence and during the continuance of an Event of Default, pursuant to the terms of Section 9.4 hereof; provided that, if no Event of Default has occurred and is continuing, Borrower shall not be obligated to remit to Bank the proceeds of the sale of worn out or obsolete Equipment disposed of by Borrower in good faith in an arm’s length transaction for an aggregate purchase price of Twenty Five Thousand Dollars ($25,000) or less (for all such transactions in any fiscal year). Borrower agrees that it will not commingle proceeds of Collateral with any of Borrower’s other funds or property, but will hold such proceeds separate and apart from such other funds and property and in an express trust for Bank. Nothing in this Section 6.4 limits the restrictions on disposition of Collateral set forth elsewhere in this Agreement.

 

6.5                               Taxes; Pensions. Timely file, and require each of its Subsidiaries to timely file, all required tax returns and reports and timely pay, and require each of its Subsidiaries to timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower and each of its Subsidiaries, except for deferred payment of any taxes contested pursuant to the terms of Section 5.9 hereof, and shall deliver to Bank, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.

 

6.6                               Access to Collateral; Books and Records. At reasonable times, on one (1) Business Day’s notice (provided no notice is required if an Event of Default has occurred and is continuing), Bank, or its agents, shall have the right to inspect the Collateral and the right to audit and copy Borrower’s Books. The foregoing inspections and audits shall be conducted no more often than once every twelve (12) months (or more frequently as Bank in its sole discretion determines that conditions warrant) unless an Event of Default has occurred and is continuing in which case such inspections and audits shall occur as often as Bank shall determine is necessary. The foregoing inspections and audits shall be conducted at Borrower’s expense and the charge therefor shall be One Thousand Dollars ($1,000) per person per day (or such higher amount as shall represent Bank’s then-current standard charge for the same), plus reasonable out-of-pocket expenses. In the event Borrower and Bank schedule an audit more than eight (8) days in advance, and Borrower cancels or seeks to or reschedules the audit with less than eight (8) days written notice to Bank, then (without limiting any of Bank’s rights or remedies) Borrower shall pay Bank a fee of Two Thousand Dollars ($2,000) plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of the cancellation or rescheduling. Borrower hereby acknowledges and agrees that the Initial Audit will be conducted within thirty (30) days after the Effective Date.

 

6.7                               Insurance.

 

(a)                                 Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s industry and location and as Bank may reasonably request. Insurance policies shall be in a form, with financially sound and reputable insurance companies that are not Affiliates of Borrower, and in amounts that are satisfactory to Bank. All property policies shall have a lender’s loss payable endorsement showing Bank as the sole lender loss payee.

 

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All liability policies shall show, or have endorsements showing, Bank as an additional insured. Bank shall be named as lender loss payee and/or additional insured with respect to any such insurance providing coverage in respect of any Collateral.

 

(b)                                 Ensure that proceeds payable under any property policy are, at Bank’s option, payable to Bank on account of the Obligations.

 

(c)                                  At Bank’s request, Borrower shall deliver certified copies of insurance policies and evidence of all premium payments. Each provider of any such insurance required under this Section 6.7 shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to Bank, that it will give Bank thirty (30) days prior written notice before any such policy or policies shall be materially altered or canceled. If Borrower fails to obtain insurance as required under this Section 6.7 or to pay any amount or furnish  any required proof of payment to third persons and Bank, Bank may make all or part of such payment or obtain such insurance policies required in this Section 6.7, and take any action under the policies Bank deems prudent.

 

6.8                               Accounts.

 

(a)                                 Maintain with Bank and Bank’s Affiliates Borrower’s and all of its Subsidiaries’ banking (including the Cash Collateral Account, their operating and other deposit accounts, securities/investment accounts, cash management and excess deposits, asset management, letters of credit and business credit cards). Notwithstanding the foregoing, or anything to the contrary herein, Borrower may maintain the WF Account, provided (i) the aggregate balance of the WF Account does not exceed Two Hundred Thousand Dollars ($200,000) at any time and (ii) Borrower sweeps the funds in the WF Account to Borrower’s operating account maintained with Bank every three (3) calendar days or as otherwise required by law. Any Guarantor shall maintain all depository, operating and securities/investment accounts with Bank and Bank’s Affiliates.

 

(b)                                 In addition to and without limiting the restrictions in (a), Borrower shall provide Bank five (5) days prior written notice before establishing any Collateral Account at or with any bank or financial institution other than Bank or Bank’s Affiliates. For each Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder which Control Agreement may not be terminated without the prior written consent of Bank which consent shall not be unreasonably withheld or delayed. The provisions of the previous sentence shall not apply to (i) deposit accounts exclusively used for payroll, payroll taxes, and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Bank by Borrower as such, and (ii) the WF Account, provided (x) the aggregate balance of the WF Account does not exceed Two Hundred Thousand Dollars ($200,000) at any time and (y) Borrower sweeps the funds in the WF Account to Borrower’s operating account maintained with Bank every three (3) calendar days or as otherwise required by law.

 

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6.9                               Financial Covenant. Maintain as of the last day of each fiscal quarter, unless otherwise noted, on a consolidated basis with respect to Borrower, minimum revenue of at least the following amounts measured as set forth below:

 

	
Fiscal Quarter Ending
    	
 
    	
Minimum Revenue
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
March 31,   2018, measured for the trailing three (3) month period then ended
    	
 
    	
$
    	
19,141,000
    	
 
    
	
June 30,   2018, measured for the trailing six (6) month period then ended
    	
 
    	
$
    	
42,059,000
    	
 
    
	
September 30,   2018, measured for the trailing nine (9) month period then ended
    	
 
    	
$
    	
64,160,000
    	
 
    
	
December 31,   2018 measured for the trailing twelve (12) month period then ended
    	
 
    	
$
    	
85,780,000
    	
 
    

 

Commencing with the fiscal quarter ending March 31, 2019 and as of the last day of each fiscal quarter thereafter, the Minimum Revenue financial covenant set forth in this Section shall be calculated so that Borrower shall be required to maintain a minimum of seventy-five percent of (75%) of Borrower’s projected revenues as set forth in Borrower’s annual financial projections approved by the Board which shall be delivered to Bank, in form and substance satisfactory to Bank, no later than January 31, 2019 (the “New Minimum Revenue Financial Covenant”). Borrower’s failure to use good faith efforts to reach an agreement with Bank on the New Minimum Revenue Financial Covenant and to execute and deliver to Bank an amendment to this Agreement which provides the terms for such New Minimum Revenue Financial Covenant no later than February 28, 2019 shall constitute an immediate Event of Default under this Agreement.

 

6.10                        Protection of Intellectual Property Rights.

 

(a)                                 (i) Protect, defend and maintain the validity and enforceability of its Intellectual Property; (ii) promptly advise Bank in writing of material infringements or any other event that could reasonably be expected to materially and adversely affect the value of its Intellectual Property; and (iii) not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s written consent which consent shall not be unreasonably withheld or delayed.

 

(b)                                 Provide written notice to Bank within ten (10) days of entering or becoming bound by any Restricted License (other than over-the-counter software that is commercially available to the public). Borrower shall take such steps as Bank requests to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (i) any Restricted License to be deemed “Collateral” and for Bank to have a security interest in it that might otherwise

 

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be restricted or prohibited by law or by the terms of any such Restricted License, whether now existing or entered into in the future, and (ii) Bank to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Bank’s rights and remedies under this Agreement and the other Loan Documents.

 

6.11                        Litigation Cooperation. From the date hereof and continuing through the termination of this Agreement, make available to Bank, without expense to Bank, Borrower and its officers, employees and agents and Borrower’s books and records, to the extent that Bank may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against Bank with respect to any Collateral or relating to Borrower.

 

6.12                        Online Banking.

 

(a)                                 Utilize Bank’s online banking platform for all matters requested by Bank which shall include, without limitation (and without request by Bank for the following matters), uploading information pertaining to Accounts and Account Debtors, requesting approval for exceptions, requesting Credit Extensions, and uploading financial statements and other reports required to be delivered by this Agreement (including, without limitation, those described in Section 6.2 of this Agreement).

 

(b)                                 Comply with the terms of the Bank’s Online Banking Agreement as in effect from time to time and ensure that all persons utilizing the Bank’s online banking platform are duly authorized to do so by an Administrator. Bank shall be entitled to assume the authenticity, accuracy and completeness on any information, instruction or request for a Credit Extension submitted via Bank’s online banking platform and to further assume that any submissions or requests made via Bank’s online banking platform have been duly authorized by an Administrator.

 

6.13                        Formation or Acquisition of Subsidiaries. Notwithstanding and without limiting the negative covenants contained in Sections 7.3 and 7.7 hereof, at the time that Borrower or any Guarantor forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Effective Date, Borrower and such Guarantor shall (a) cause such new Subsidiary to provide to Bank a joinder to this Agreement to become a co-borrower hereunder or a Guaranty to become a Guarantor hereunder, together with such appropriate financing statements and/or Control Agreements, all in form and substance satisfactory to Bank (including being sufficient to grant Bank a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to Bank appropriate certificates and powers and financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary, in form and substance satisfactory to Bank; and (c) provide to Bank all other documentation in form and substance satisfactory to Bank, including one or more opinions of counsel satisfactory to Bank, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above. Any document, agreement, or instrument executed or issued pursuant to this Section 6.13 shall be a Loan Document.

 

6.14                        Further Assurances. Execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral or to effect the purposes of this Agreement. Deliver to Bank, within five (5) days after the same are sent or received, copies of all correspondence, reports, documents and other filings with any

 

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Governmental Authority regarding compliance with or maintenance of Governmental Approvals or Requirements of Law that are not in the ordinary course or that could reasonably be expected to have a material effect on any of the Governmental Approvals or otherwise on the operations of Borrower or any of its Subsidiaries; provided, however, that upon Bank’s request, Borrower shall deliver to Bank any such copies of correspondence, reports, documents and other filings with any Governmental Authority regarding compliance with or maintenance of Governmental Approvals or Requirements of Law.

 

7.                                      NEGATIVE COVENANTS

 

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

 

7.1                               Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn-out or obsolete Equipment that is, in the reasonable judgment of Borrower, no longer economically practicable to maintain or useful in the ordinary course of business of Borrower; and (c) consisting of Permitted Liens and Permitted Investments.

 

7.2                               Changes in Business, Management, Control, or Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or dissolve; (c) fail to provide notice to Bank of any Key Person departing from or ceasing to be employed by Borrower within thirty (30) days after his or her departure from Borrower; or (d) permit or suffer any Change in Control.

 

Borrower shall not, without at least thirty (30) days prior written notice to Bank: (1) add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than Two Hundred Thousand Dollars ($200,000) in Borrower’s assets or property (excluding any rental payments under the lease itself)) or deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Two Hundred Thousand Dollars ($200,000) to a bailee at a location other than to a bailee and at a location already disclosed in the Perfection Certificate, (2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization. If Borrower intends to add any new offices or business locations, including warehouses, containing in excess of Two Hundred Thousand Dollars ($200,000.00) of Borrower’s assets or property (excluding any rental payments under the lease itself), then Borrower will first receive the written consent of Bank which consent shall not be unreasonably withheld or delayed, and the landlord of any such new offices or business locations, including warehouses, shall execute and deliver a landlord consent in form and substance satisfactory to Bank. If Borrower intends to deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Two Hundred Thousand Dollars ($200,000) to a bailee, and Bank and such bailee are not already parties to a bailee agreement governing both the Collateral and the location to which Borrower intends to deliver the Collateral, then Borrower will first receive the written consent of Bank which consent shall not be unreasonably withheld or delayed, and such bailee shall execute and deliver a bailee agreement in form and substance satisfactory to Bank.

 

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7.3                               Mergers or Acquisitions. Without Bank’s prior written consent which consent shall not be unreasonably withheld or delayed, merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person (including, without limitation, by the formation of any Subsidiary). A Subsidiary may merge or consolidate into another Subsidiary or into Borrower.

 

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

 

7.5                               Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority security interest granted herein, or enter into any agreement, document, instrument or other arrangement (except with or in favor of Bank) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s Intellectual Property, except as is otherwise permitted in Section 7.1 hereof and the definition of “Permitted Liens” herein.

 

7.6                               Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.8(b) hereof.

 

7.7                               Distributions; Investments. Without Bank’s prior written consent which consent shall not be unreasonably withheld or delayed, (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock; or (b) directly or indirectly make any Investment (including, without limitation, by the formation of any Subsidiary) other than Permitted Investments, or permit any of its Subsidiaries to do so.

 

7.8                               Transactions with Affiliates. Without Bank’s prior written consent which consent shall not be unreasonably withheld or delayed, 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. (a) Make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof, provide for earlier or greater principal, interest, or other payments thereon, or adversely affect the subordination thereof to Obligations owed to Bank.

 

7.10                        Compliance. Become an “investment company” or a company controlled by an “investment company”, under the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the

 

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proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

 

8.                                      EVENTS OF DEFAULT

 

Any one of the following shall constitute an event of default (an “Event of Default”) under this Agreement:

 

8.1                               Payment Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension when due, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the Revolving Line Maturity Date). During the cure period, the failure to make or pay any payment specified under clause (b) hereunder is not an Event of Default (but no Credit Extension will be made during the cure period);

 

8.2                               Covenant Default. Borrower (a) fails or neglects to perform any obligation in Section 6 of this Agreement or violates any covenant in Section 7 of this Agreement or (b) fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement or any Loan Documents and as to any default (other than those specified in clause (a)) under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after the occurrence thereof; provided, however, grace and cure periods provided under this Section 8.2 shall not apply, among other things, to financial covenants or any other covenants that are required to be satisfied, completed or tested by a date certain or any covenants set forth in clause (a);

 

8.3                               Material Adverse Change. A Material Adverse Change occurs;

 

8.4                               Attachment; Levy; Restraint on Business.

 

(a)                                 (i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity under the control of Borrower (including a Subsidiary), or (ii) a notice of lien or levy is filed against any of Borrower’s assets by any Governmental Authority, and the same under subclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during any ten (10) day cure period; or

 

(b)                                 (i) any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver, or (ii) any court order enjoins, restrains, or prevents Borrower from conducting all or any material part of its business;

 

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8.5                               Insolvency. (a) Borrower or any of its Subsidiaries is unable to pay its debts (including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower or any of its Subsidiaries begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower or any of its Subsidiaries and is not dismissed or stayed within thirty (30) days (but no Credit Extensions shall be made while any of the conditions described in clause (a) exist and/or until any Insolvency Proceeding is dismissed);

 

8.6                               Other Agreements. There is, under any agreement to which Borrower or any Guarantor is a party with a third party or parties, (a) any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount individually or in the aggregate in excess of Fifty Thousand Dollars ($50,000); or (b) any breach or default by Borrower or Guarantor, the result of which could have a material adverse effect on Borrower’s or any Guarantor’s business;

 

8.7                               Judgments; Penalties. One or more fines, penalties or final judgments, orders or decrees for the payment of money in an amount, individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower by any Governmental Authority, and the same are not, within ten (10) days after the entry, assessment or issuance thereof, discharged, satisfied, or paid, or after execution thereof, stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay (provided that no Credit Extensions will be made prior to the satisfaction, payment, discharge, stay, or bonding of such fine, penalty, judgment, order or decree);

 

8.8                               Misrepresentations. Borrower or any Person acting for Borrower makes any representation, warranty, or other statement now or later in this Agreement, any Loan Document or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such representation, warranty, or other statement is incorrect in any material respect when made;

 

8.9                               Subordinated Debt. Any document, instrument, or agreement evidencing any Subordinated Debt shall for any reason be revoked or invalidated or otherwise cease to be in full force and effect, any Person shall be in breach thereof or contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the Obligations shall for any reason be subordinated or shall not have the priority contemplated by this Agreement or any applicable subordination or intercreditor agreement;

 

8.10                        Guaranty. (a) Any guaranty of any Obligations terminates or ceases for any reason to be in full force and effect; (b) any Guarantor does not perform any obligation or covenant under any guaranty of the Obligations; (c) any circumstance described in Sections 8.3, 8.4, 8.5, 8.6, 8.7, or 8.8 of this Agreement occurs with respect to any Guarantor, (d) the death, liquidation, winding up, or termination of existence of any Guarantor; or (e) (i) a material impairment in the perfection or priority of Bank’s Lien in the collateral provided by Guarantor or in the value of such collateral or (ii) a material adverse change in the general affairs, management, results of operation, condition (financial or otherwise) or the prospect of repayment of the Obligations occurs with respect to any Guarantor; or

 

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8.11                        Governmental Approvals. Any Governmental Approval shall have been (a) revoked, rescinded, suspended, modified in an adverse manner or not renewed in the ordinary course for a full term or (b) subject to any decision by a Governmental Authority that designates a hearing with respect to any applications for renewal of any of such Governmental Approval or that could result in the Governmental Authority taking any of the actions described in clause (a) above, and such decision or such revocation, rescission, suspension, modification or non-renewal (i) causes, or could reasonably be expected to cause, a Material Adverse Change, or (ii) adversely affects the legal qualifications of Borrower or any of its Subsidiaries to hold such Governmental Approval in any applicable jurisdiction and such revocation, rescission, suspension, modification or non-renewal could reasonably be expected to affect the status of or legal qualifications of Borrower or any of its Subsidiaries to hold any Governmental Approval in any other jurisdiction.

 

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, without notice or demand, do any or all of the following:

 

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

 

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

 

(c)                                  demand that Borrower (i) deposit cash with Bank in an amount equal to at least (A) one hundred five percent (105.0%) of the Dollar Equivalent of the aggregate face amount of all Letters of Credit denominated in Dollars remaining undrawn, and (B) one hundred ten percent (110.0%) of the Dollar Equivalent of the aggregate face amount of all Letters of Credit denominated in a Foreign Currency remaining undrawn (plus, in each case, all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment)), to secure all of the Obligations relating to such Letters of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining term of any Letters of Credit;

 

(d)                                 terminate any FX Contracts;

 

(e)                                  verify the amount of, demand payment of and performance under, and collect any Accounts and General Intangibles, settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Bank considers advisable, and notify any Person owing Borrower money of Bank’s security interest in such funds. Borrower shall collect all payments in trust for Bank and, if requested by Bank, immediately deliver the payments to Bank in the form received from the Account Debtor, with proper endorsements for deposit;

 

(f)                                   make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral. Borrower shall assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral,

 

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and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies;

 

(g)                                  apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) amount held by Bank owing to or for the credit or the account of Borrower;

 

(h)                                 ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name, trade secrets, trade names, Trademarks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section 9.1, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit;

 

(i)                                     place a “hold” on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral;

 

(j)                                    demand and receive possession of Borrower’s Books; and

 

(k)                                 exercise all rights and remedies available to Bank under the Loan Documents or at law or equity, including all remedies provided under the Code (including disposal of the Collateral pursuant to the terms thereof).

 

9.2                               Power of Attorney. Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact to: (a) exercisable following the occurrence of an Event of Default, (i) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against Account Debtors; (ii) demand, collect, sue, and give releases to any Account Debtor for monies due, settle and adjust disputes and claims about the Accounts directly with Account Debtors, and compromise, prosecute, or defend any action, claim, case, or proceeding about any Collateral (including filing a claim or voting a claim in any bankruptcy case in Bank’s or Borrower’s name, as Bank chooses);

 

(a)                                 make, settle, and adjust all claims under Borrower’s insurance policies; (iv) pay, contest or settle any Lien, charge, encumbrance, security interest, or other claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; (v) transfer the Collateral into the name of Bank or a third party as the Code permits; and (vi) receive, open and dispose of mail addressed to Borrower; and (b) regardless of whether an Event of Default has occurred, (i) endorse Borrower’s name on any checks, payment instruments, or other forms of payment or security; and (ii) notify all Account Debtors to pay Bank directly. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full and the Loan Documents have been terminated. Bank’s foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are

 

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irrevocable until all Obligations have been fully repaid and performed and the Loan Documents have been terminated.

 

9.3                               Protective Payments. If Borrower fails to obtain the insurance called for by Section 6.7 or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document or which may be required to preserve the Collateral, Bank may obtain such insurance or make such payment, and all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the then highest rate applicable to the Obligations, and secured by the Collateral. Bank will make reasonable efforts to provide Borrower with notice of Bank obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default.

 

9.4                               Application of Payments and Proceeds. Bank shall have the right to apply in any order any funds in its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations. Bank shall pay any surplus to Borrower by credit to the Designated Deposit Account or to other Persons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency. If Bank, directly or indirectly, enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Bank of cash therefor.

 

9.5                               Bank’s Liability for Collateral. So long as Bank complies with reasonable banking practices regarding the safekeeping of the Collateral in the possession or under the control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral.

 

9.6                               No Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to require strict performance by Borrower of any provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by the party granting the waiver and then is only effective for the specific instance and purpose for which it is given. Bank’s rights and remedies under this Agreement and the other Loan Documents are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election and shall not preclude Bank from exercising any other remedy under this Agreement or other remedy available at law or in equity, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay in exercising any remedy is not a waiver, election, or acquiescence.

 

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

 

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10.                               NOTICES

 

All notices, consents, requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given,

 

or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email address indicated below. Bank or Borrower may change its mailing or electronic mail address or facsimile number by giving the other party written notice thereof in accordance with the terms of this Section 10:

 

	
If to Borrower:
    	
 
    	
Progyny, Inc.
    
	
 
    	
 
    	
245 5th Avenue, 4th Floor
    
	
 
    	
 
    	
New York City, New York   10016
    
	
 
    	
 
    	
Attn: Jennifer Bealer,   SVP & General Counsel
    
	
 
    	
 
    	
Email:   jennifer.bealer@progyny.com
    
	
 
    	
 
    	
 
    
	
If to Bank:
    	
 
    	
Silicon Valley Bank 2400 Hanover St.
    
	
 
    	
 
    	
Palo Alto, California   94304
    
	
 
    	
 
    	
Attn: Michelle Lai,   Vice President
    
	
 
    	
 
    	
Email: mlai@svb.com
    

 

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

 

Except as otherwise expressly provided in any of the Loan Documents, California law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Bank from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Bank. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, or subsequently provided by Borrower in accordance with, Section 10 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

 

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TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

 

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between them arising at any time shall be decided by a reference to a private judge, mutually selected by the parties (or, if they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with California Code of Civil Procedure Section 638 (or pursuant to comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby submit to the jurisdiction of such court. The reference proceedings shall be conducted pursuant to and in accordance with the provisions of California Code of Civil Procedure Sections 638 through 645.1, inclusive. The private judge shall have the power, among others, to grant provisional relief, including without limitation, entering temporary restraining orders, issuing preliminary and permanent injunctions and appointing receivers. All such proceedings shall be closed to the public and confidential and all records relating thereto shall be permanently sealed. If during the course of any dispute, a party desires to seek provisional relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then such party may apply to the Santa Clara County, California Superior Court for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before a court under the rules of evidence applicable to judicial proceedings. The parties shall be entitled to discovery which shall be conducted in the same manner as it would be before a court under the rules of discovery applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all discovery rules and orders applicable to judicial proceedings in the same manner as a trial court judge. The parties agree that the selected or appointed private judge shall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shall report a statement of decision thereon pursuant to California Code of Civil Procedure Section 644(a). Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies, foreclose against collateral, or obtain provisional remedies. The private judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph.

 

This Section 11 shall survive the termination of this Agreement.

 

12.                               GENERAL PROVISIONS

 

12.1                        Termination Prior to Maturity Date; Survival. All covenants, representations and warranties made in this Agreement shall continue in full force until this Agreement has terminated pursuant to its terms and all Obligations have been satisfied. So long as Borrower has satisfied the Obligations (other than inchoate indemnity obligations, and any other

 

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obligations which, by their terms, are to survive the termination of this Agreement, and any Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement), this Agreement may be terminated prior to the Revolving Line Maturity Date by Borrower, effective three (3) Business Days after written notice of termination is given to Bank. Those obligations that are expressly specified in this Agreement as surviving this Agreement’s termination shall continue to survive notwithstanding this Agreement’s termination.

 

12.2                        Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights or obligations under it without Bank’s prior written consent (which may be granted or withheld in Bank’s discretion). Bank has the right, without the consent of or notice to Borrower, to sell, transfer, assign, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights, and benefits under this Agreement and the other Loan Documents.

 

12.3                        Indemnification. Borrower agrees to indemnify, defend and hold Bank and its directors, officers, employees, agents, attorneys, or any other Person affiliated with or representing Bank (each, an “Indemnified Person”) harmless against: (i) all obligations, demands, claims, and liabilities (collectively, “Claims”) claimed or asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (ii) all losses or expenses (including Bank Expenses) in any way suffered, incurred, or paid by such Indemnified Person as a result of, following from, consequential to, or arising from transactions between Bank and Borrower (including reasonable attorneys’ fees and expenses), except for Claims and/or losses directly caused by such Indemnified Person’s gross negligence or willful misconduct.

 

This Section 12.3 shall survive until all statutes of limitation with respect to the Claims, losses, and expenses for which indemnity is given shall have run.

 

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

 

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

 

12.6                        Correction of Loan Documents. Bank may correct patent errors and fill in any blanks in the Loan Documents consistent with the agreement of the parties.

 

12.7                        Amendments in Writing; Waiver; Integration. No purported amendment or modification of any Loan Document, or waiver, discharge or termination of any obligation under any Loan Document, shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writing signed by the party against which enforcement or admission is sought. Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have any other effect on any Loan Document. Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall not apply to any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver. The Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or

 

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agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of the Loan Documents merge into the Loan Documents.

 

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

 

12.9                        Confidentiality. In handling any confidential information, Bank shall exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made: (a) to Bank’s Subsidiaries or Affiliates (such Subsidiaries and Affiliates, together with Bank, collectively, “Bank Entities”); (b) to prospective transferees or purchasers of any interest in the Credit Extensions (provided, however, Bank shall use its best efforts to obtain any prospective transferee’s or purchaser’s agreement to the terms of this provision; (c) as required by law, regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise required in connection with Bank’s examination or audit; (e) as Bank considers appropriate in exercising remedies under the Loan Documents; and (f) to third-party service providers of Bank so long as such service providers have executed a confidentiality agreement with Bank with terms no less restrictive than those contained herein. Confidential information does not include information that is either: (i) in the public domain or in Bank’s possession when disclosed to Bank, or becomes part of the public domain (other than as a result of its disclosure by Bank in violation of this Agreement) after disclosure to Bank; or (ii) disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information.

 

Bank Entities may use anonymous forms of confidential information for aggregate datasets, for analyses or reporting, and for any other uses not expressly prohibited in writing by Borrower. The provisions of the immediately preceding sentence shall survive the termination of this Agreement.

 

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

 

12.11                 Electronic Execution of Documents. The words “execution,” “signed,” “signature” and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.

 

12.12                 Right of Setoff. Borrower hereby grants to Bank a Lien and a right of setoff as security for all Obligations to Bank, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Bank or any entity under the control of Bank (including a subsidiary of Bank) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Bank may setoff the same or any part thereof and

 

29

 

apply the same to any liability or Obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

12.13                 Captions. The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

 

12.14                 Construction of Agreement. The parties mutually acknowledge that they and their attorneys have participated in the preparation and negotiation of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty to exist.

 

12.15                 Relationship. The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement. The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arm’s-length contract.

 

12.16                 Third Parties. Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights or remedies under or by reason of this Agreement on any persons other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any person not an express party to this Agreement; or (c) give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement.

 

13.                               DEFINITIONS

 

13.1                        Definitions. As used in the Loan Documents, the word “shall” is mandatory, the word “may” is permissive, the word “or” is not exclusive, the words “includes” and “including” are not limiting, the singular includes the plural, and numbers denoting amounts that are set off in brackets are negative. As used in this Agreement, the following capitalized terms have the following meanings:

 

“Account” is, as to any Person, any “account” of such Person as “account” is defined in the Code with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other sums owing to such Person.

 

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

 

“Administrator” is an individual that is named:

 

(a)                                 as an “Administrator” in the “SVB Online Services” form completed by Borrower with the authority to determine who will be authorized to use SVB Online

 

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Services (as defined in Bank’s Online Banking Agreement as in effect from time to time) on behalf of Borrower; and

 

(b)                                 as an Authorized Signer of Borrower in an approval by the Board.

 

“Advance” or “Advances” means a revolving credit loan (or revolving credit loans) under the Revolving Line.

 

“Advance Rate” is (a) fifty percent (50%) prior to the Initial Audit, and (b) eighty percent (80%) after the Initial Audit.

 

“Affiliate” is, with respect to any Person, each other Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members. For purposes of the definition of Eligible Accounts, Affiliate shall include a Specified Affiliate.

 

“Agreement” is defined in the preamble hereof.

 

“Authorized Signer” is any individual listed in Borrower’s Borrowing Resolution who is authorized to execute the Loan Documents, including making (and executing if applicable) any Credit Extension request, on behalf of Borrower.

 

“Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the amount available under the Borrowing Base minus (b) the outstanding principal balance of any Advances.

 

“Bank” is defined in the preamble hereof.

 

“Bank Entities” is defined in Section 12.9.

 

“Bank Expenses” are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses) for preparing, amending, negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings) or otherwise incurred with respect to Borrower or any Guarantor.

 

“Bank Services” are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to Borrower or any of its Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, cash management services (including, without limitation, merchant services, direct deposit of payroll, business credit cards, and check cashing services), interest rate swap arrangements, and foreign exchange services as any such products or services may be identified in Bank’s various agreements related thereto (each, a “Bank Services Agreement”).

 

“Bank Services Agreement” is defined in the definition of Bank Services.

 

“Board” is Borrower’s board of directors.

 

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“Borrower” is defined in the preamble hereof.

 

“Borrower’s Books” are all Borrower’s books and records including ledgers, federal and state tax returns, records regarding Borrower’s assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.

 

“Borrowing Base” is the Advance Rate multiplied by Eligible Accounts, as determined by Bank from Borrower’s most recent Borrowing Base Statement (and as may subsequently be updated by Bank based upon information received by Bank including, without limitation, Accounts that are paid and/or billed following the date of the Borrowing Base Report); provided, however, that the aggregate outstanding principal balance of Advances made against First Year Accounts shall not exceed thirty-five percent (35%) the aggregate outstanding balance of all Advances; provided, further, that Bank has the right to decrease the foregoing amounts in its good faith business judgment to mitigate the impact of events, conditions, contingencies, or risks which may adversely affect the Collateral or its value.

 

“Borrowing Base Statement” is that certain report of the value of certain Collateral in the form specified by Bank to Borrower from time to time.

 

“Borrowing Resolutions” are, with respect to any Person, those resolutions adopted by such Person’s board of directors (and, if required under the terms of such Person’s Operating Documents, stockholders) and delivered by such Person to Bank approving the Loan Documents to which such Person is a party and the transactions contemplated thereby, together with a certificate executed by its secretary on behalf of such Person certifying (a) such Person has the authority to execute, deliver, and perform its obligations under each of the Loan Documents to which it is a party, (b) that set forth as a part of or attached as an exhibit to such certificate is a true, correct, and complete copy of the resolutions then in full force and effect authorizing and ratifying the execution, delivery, and performance by such Person of the Loan Documents to which it is a party, (c) the name(s) of the Person(s) authorized to execute the Loan Documents, including making (and executing if applicable) any Credit Extension request, on behalf of such Person, together with a sample of the true signature(s) of such Person(s), and (d) that Bank may conclusively rely on such certificate unless and until such Person shall have delivered to Bank a further certificate canceling or amending such prior certificate.

 

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

 

“Cash Collateral Account” is defined in Section 6.3(c).

 

“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.; (c) Bank’s certificates of deposit issued maturing no more than one (1) year after issue; and (d) money market funds at least ninety-five percent (95%) of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (c) of this definition.

 

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“Change in Control” means (a) at any time, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), (other than KPCB and TPG Capital) shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 25% or more of the ordinary voting power for the election of directors of Borrower (determined on a fully diluted basis) other than by the sale of Borrower’s equity securities in a public offering or to venture capital or private equity investors so long as Borrower identifies to Bank the venture capital or private equity investors at least seven (7) Business Days prior to the closing of the transaction and provides to Bank a description of the material terms of the transaction; (b) during any period of twelve (12) consecutive months, a majority of the members of the board of directors or other equivalent governing body of Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body; (c) KPCB and TPG Capital cease to collectively own at least twenty-five percent (25%) of the voting securities of Borrower; or (d) at any time, Borrower shall cease to own and control, of record and beneficially, directly or indirectly, one hundred percent (100.0%) of each class of outstanding capital stock of each subsidiary of Borrower free and clear of all Liens (except Liens created by this Agreement).

 

“Claims” is defined in Section 12.3.

 

“Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of California; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of California, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.

 

“Collateral” is any and all properties, rights and assets of Borrower described on Exhibit A.

 

“Collateral Account” is any Deposit Account, Securities Account, or Commodity Account.

 

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

 

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“Compliance Statement” is that certain statement in the form attached hereto as Exhibit B.

 

“Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation, in each case, directly or indirectly guaranteed, endorsed, co made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement.

 

“Control Agreement” is any control agreement entered into among the depository institution at which Borrower maintains a Deposit Account or the securities intermediary or commodity intermediary at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Bank pursuant to which Bank obtains control (within the meaning of the Code) over such Deposit Account, Securities Account, or Commodity Account.

 

“Copyrights” are any and all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.

 

“Credit Extension” is any Advance, any Overadvance, or any other extension of credit by Bank for Borrower’s benefit.

 

“Currency” is coined money and such other banknotes or other paper money as are authorized by law and circulate as a medium of exchange.

 

“Default Rate” is defined in Section 2.4(b).

 

“Deferred Revenue” is all amounts received or invoiced in advance of performance under contracts and not yet recognized as revenue.

 

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

 

“Designated Deposit Account” is the account number ending 123 (last three digits) maintained by Borrower with Bank (provided, however, if no such account number is included, then the Designated Deposit Account shall be any deposit account of Borrower maintained with Bank as chosen by Bank).

 

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“Dollars,” “dollars” or use of the sign “$” means only lawful money of the United States and not any other currency, regardless of whether that currency uses the “$” sign to denote its currency or may be readily converted into lawful money of the United States.

 

“Dollar Equivalent” is, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Bank at such time on the basis of the then-prevailing rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency.

 

“Effective Date” is defined in the preamble hereof.

 

“Eligible Accounts” means Accounts owing to Borrower which arise in the ordinary course of Borrower’s business that meet all Borrower’s representations and warranties in Section 5.3, that have been, at the option of Bank, confirmed in accordance with Section 6.3(f) of this Agreement, and are due and owing from Account Debtors deemed creditworthy by Bank in its sole discretion. Bank reserves the right, at any time after the Effective Date, in its sole discretion in each instance, to either (i) adjust any of the criteria set forth below and to establish new criteria or (ii) deem any Accounts owing from a particular Account Debtor or Account Debtors to not meet the criteria to be Eligible Accounts. Unless Bank otherwise agrees in writing, Eligible Accounts shall not include:

 

(a)                                 Accounts (i) for which the Account Debtor is Borrower’s Affiliate, officer, employee, investor, or agent, or (ii) that are intercompany Accounts;

 

(b)                                 Accounts that the Account Debtor has not paid within ninety (90) days (or up to one hundred twenty (120) days for First Year Accounts) of invoice date regardless of invoice payment period terms;

 

(c)                                  Accounts with credit balances over ninety (90) days (or up to one hundred twenty (120) days for First Year Accounts) from invoice date;

 

(d)                                 Accounts owing from an Account Debtor if fifty percent (50%) or more of the Accounts owing from such Account Debtor have not been paid within ninety (90) days (or up to one hundred twenty (120) days for First Year Accounts) of invoice date;

 

(e)                                  Accounts owing from an Account Debtor (i) which does not have its principal place of business in the United States or (ii) whose billing address (as set forth in the applicable invoice for such Account) is not in the United States unless in the case of both (i) and (ii) such Accounts are otherwise approved by Bank in writing;

 

(f)                                   Accounts billed from and/or payable to Borrower outside of the United States (sometimes called foreign invoiced accounts);

 

(g)                                  Accounts in which Bank does not have a first priority, perfected security interest under all applicable laws;

 

(h)                                 Accounts billed and/or payable in a Currency other than Dollars;

 

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(i)                                     Accounts owing from an Account Debtor to the extent that Borrower is indebted or obligated in any manner to the Account Debtor (as creditor, lessor, supplier or otherwise - sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts);

 

(j)                                    Accounts with or in respect of accruals for marketing allowances, incentive rebates, price protection, cooperative advertising and other similar marketing credits, unless otherwise approved by Bank in writing;

 

(k)                                 Accounts owing from an Account Debtor which is a United States government entity or any department, agency, or instrumentality thereof unless Borrower has assigned its payment rights to Bank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940, as amended;

 

(l)                                     Accounts with customer deposits and/or with respect to which Borrower has received an upfront payment, to the extent of such customer deposit and/or upfront payment;

 

(m)                             Accounts for demonstration or promotional equipment, or in which goods are consigned, or sold on a “sale guaranteed”, “sale or return”, “sale on approval”, or other terms if Account Debtor’s payment may be conditional;

 

(n)                                 Accounts owing from an Account Debtor where goods or services have not yet been rendered to the Account Debtor (sometimes called memo billings or pre-billings);

 

(o)                                 Accounts subject to contractual arrangements between Borrower and an Account Debtor where payments shall be scheduled or due according to completion or fulfillment requirements (sometimes called contracts accounts receivable, progress billings, milestone billings, or fulfillment contracts);

 

(p)                                 Accounts owing from an Account Debtor the amount of which may be subject to withholding based on the Account Debtor’s satisfaction of Borrower’s complete performance (but only to the extent of the amount withheld; sometimes called retainage billings);

 

(q)                                 Accounts subject to trust provisions, subrogation rights of a bonding company, or a statutory trust;

 

(r)                                    Accounts owing from an Account Debtor that has been invoiced for goods that have not been shipped to the Account Debtor unless Bank, Borrower, and the Account Debtor have entered into an agreement acceptable to Bank wherein the Account Debtor acknowledges that (i) it has title to and has ownership of the goods wherever located, (ii) a bona fide sale of the goods has occurred, and (iii) it owes payment for such goods in accordance with invoices from Borrower (sometimes called “bill and hold” accounts);

 

(s)                                   Accounts for which the Account Debtor has not been invoiced;

 

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(t)                                    Accounts that represent non-trade receivables or that are derived by means other than in the ordinary course of Borrower’s business;

 

(u)                                 Accounts for which Borrower has permitted Account Debtor’s payment to extend beyond ninety (90) days (including Accounts with a due date that is more than ninety (90) days from invoice date) (or, in both cases, one hundred twenty (120) days for First Year Accounts);

 

(v)                                 Accounts arising from chargebacks, debit memos or other payment deductions taken by an Account Debtor;

 

(w)                               Accounts arising from product returns and/or exchanges (sometimes called “warranty” or “RMA” accounts);

 

(x)                                 Accounts in which the Account Debtor disputes liability or makes any claim (but only up to the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding (whether voluntary or involuntary), or becomes insolvent, or goes out of business;

 

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

 

(z)                                  Accounts owing from an Account Debtor (except for Accounts with respect to which the Account Debtor is Google), whose total obligations to Borrower exceed twenty-five percent (25.0%) of all Accounts, for the amounts that exceed that percentage, unless Bank approves in writing; and (aa) Accounts for which Bank in its good faith business judgment determines collection to be doubtful, including, without limitation, accounts represented by “refreshed” or “recycled” invoices.

 

“Equipment” is all “equipment” as defined in the Code with such additions to such term as may hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.

 

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

 

“Event of Default” is defined in Section 8.

 

“Exchange Act” is the Securities Exchange Act of 1934, as amended.

 

“Existing Bank Indebtedness” is the Indebtedness of Borrower to Bank under the Existing Bank Loan Agreement including the final payment and prepayment fee thereunder.

 

“Existing Bank Loan Agreement” is that certain Amended and Restated Loan and Security Agreement dated November 9, 2015, by and between Borrower and Bank, as the same has been amended, modified, supplemented or restated from time to time.

 

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“Financial Statement Repository” is L43f1c@svb.com or such other means of collecting information approved and designated by Bank after providing notice thereof to Borrower from time to time.

 

“First Year Accounts” means Accounts arising from new contracts with new Account Debtors that are launched in a calendar year, provided that such Accounts shall only be deemed First Year Accounts until June 30th of such calendar year.

 

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

 

“Funding Date” is any date on which a Credit Extension is made to or for the account of Borrower which shall be a Business Day.

 

“FX Contract” is any foreign exchange contract by and between Borrower and Bank under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency on a specified date.

 

“GAAP” is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.

 

“General Intangibles” is all “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation, all Intellectual Property, claims, income and other tax refunds, security and other deposits, payment intangibles, contract rights, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.

 

“Governmental Approval” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.

 

“Governmental Authority” is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization.

 

“Guarantor” is any Person providing a Guaranty in favor of Bank.

 

“Guaranty” is any guarantee of all or any part of the Obligations, as the same may from time to time be amended, restated, modified or otherwise supplemented.

 

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b)

 

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obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, and (d) Contingent Obligations.

 

“Indemnified Person” is defined in Section 12.3.

 

“Initial Audit” is Bank’s inspection of Borrower’s Accounts, the Collateral, and Borrower’s Books, with results satisfactory to Bank in its sole and absolute discretion.

 

“Insolvency Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

 

“Intellectual Property” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following:

 

(a)                                 its Copyrights, Trademarks and Patents;

 

(b)                                 any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how and operating manuals;

 

(c)                                  any and all source code;

 

(d)                                 any and all design rights which may be available to such Person;

 

(e)                                  any and all claims for damages by way of past, present and future infringement of any of the foregoing, 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; and

 

(f)                                   all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.

 

“Inventory” is all “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above.

 

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

 

“Key Person” is each of Borrower’s (a) Chief Executive Officer, who is David Schlanger as of the Effective Date, and (b) Chief Financial Officer, who is Pete Anevski as of the Effective Date.

 

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“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise against any property.

 

“Loan Documents” are, collectively, this Agreement and any schedules, exhibits, certificates, notices, and any other documents related to this Agreement, any Bank Services Agreement, any subordination agreement, any note, or notes or guaranties executed by Borrower or any Guarantor, and any other present or future agreement by Borrower and/or any Guarantor with or for the benefit of Bank, all as amended, restated, or otherwise modified.

 

“Material Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower; (c) a material impairment of the prospect of repayment of any portion of the Obligations; or (d) Bank determines, based upon information available to it and in its reasonable judgment, that there is a reasonable likelihood that Borrower shall fail to comply with one or more of the financial covenants in Section 6 during the next succeeding financial reporting period.

 

“Monthly Financial Statements” is defined in Section 6.2(c).

 

“New Minimum Revenue Financial Covenant” is defined in Section 6.9.

 

“Obligations” are Borrower’s obligations to pay when due any debts, principal, interest, fees, Bank Expenses, the Revolving Line Commitment Fee, the Termination Fee, and other amounts Borrower owes Bank now or later, whether under this Agreement, the other Loan Documents, or otherwise, including, without limitation, all obligations relating to Bank Services and interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s duties under the Loan Documents.

 

“Operating Documents” are, for any Person, such Person’s formation documents, as certified by the Secretary of State (or equivalent agency) of such Person’s jurisdiction of organization on a date that is no earlier than thirty (30) days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.

 

“Overadvance” is defined in Section 2.3.

 

“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.

 

“Payment Date” is with respect to Advances, the last calendar day of each month.

 

“Perfection Certificate” is defined in Section 5.1.

 

“Permitted Indebtedness” is:

 

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(a)                                 Borrower’s Indebtedness to Bank under this Agreement and the other Loan Documents;

 

(b)                                 Indebtedness existing on the Effective Date which is shown on the Perfection Certificate;

 

(c)                                  Subordinated Debt;

 

(d)                                 unsecured Indebtedness to trade creditors incurred in the ordinary course of business; and

 

(e)                                  extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (d) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.

 

“Permitted Investments” are:

 

(a)                                 Investments (including, without limitation, Subsidiaries) existing on the Effective Date which are shown on the Perfection Certificate; and

 

(b)                                 Investments consisting of Cash Equivalents;

 

“Permitted Liens” are:

 

(a)                                 Liens existing on the Effective Date which are shown on the Perfection Certificate or arising under this Agreement or the other Loan Documents;

 

(b)                                 Liens for taxes, fees, assessments or other government charges or levies, either (i) not due and payable or (ii) being contested in good faith and for which Borrower maintains adequate reserves on Borrower’s Books, provided that no notice of any such Lien has been filed or recorded under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations adopted thereunder;

 

(c)                                  purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment securing no more than Fifty Thousand Dollars ($50,000) in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the Equipment; and

 

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

 

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

 

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“Prime Rate” is the rate of interest per annum from time to time published in the money rates section of The Wall Street Journal or any successor publication thereto as the “prime rate” then in effect; provided that, in the event such rate of interest is less than zero, such rate shall be deemed to be zero for purposes of this Agreement; and provided further that if such rate of interest, as set forth from time to time in the money rates section of The Wall Street Journal, becomes unavailable for any reason as determined by Bank, the “Prime Rate” shall mean the rate of interest per annum announced by Bank as its prime rate in effect at its principal office in the State of California (such Bank announced Prime Rate not being intended to be the lowest rate of interest charged by Bank in connection with extensions of credit to debtors); provided that, in the event such rate of interest is less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

 

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

 

“Regulatory Change” means, with respect to Bank, any change on or after the date of this Agreement in United States federal, state, or foreign laws or regulations, including Regulation D, or the adoption or making on or after such date of any interpretations, directives, or requests applying to a class of lenders including Bank, of or under any United States federal or state, or any foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof.

 

“Requirement of Law” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

“Reserves” means, as of any date of determination, such amounts as Bank may from time to time establish and revise in its good faith business judgment, reducing the amount of Advances and other financial accommodations which would otherwise be available to Borrower (a) to reflect events, conditions, contingencies or risks which, as determined by Bank in its good faith business judgment, do or may adversely affect (i) the Collateral or any other property which is security for the Obligations or its value (including without limitation any increase in delinquencies of Accounts), (ii) the assets, business or prospects of Borrower or any Guarantor, or (iii) the security interests and other rights of Bank in the Collateral (including the enforceability, perfection and priority thereof); or (b) to reflect Bank’s reasonable belief that any collateral report or financial information furnished by or on behalf of Borrower or any Guarantor to Bank is or may have been incomplete, inaccurate or misleading in any material respect; or (c) in respect of any state of facts which Bank determines constitutes an Event of Default or may, with notice or passage of time or both, constitute an Event of Default.

 

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

 

“Restricted License” is any material license or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security

 

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interest in Borrower’s interest in such license or agreement or any other property, or (b) for which a default under or termination of could interfere with Bank’s right to sell any Collateral.

 

“Revolving Line” is an aggregate principal amount equal to Fifteen Million Dollars ($15,000,000).

 

“Revolving Line Commitment Fee” is defined in Section 2.5(b).

 

“Revolving Line Maturity Date” is June 8, 2021.

 

“SEC” shall mean the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority.

 

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

 

“Specified Affiliate” is any Person (a) more than ten percent (10.0%) of whose aggregate issued and outstanding equity or ownership securities or interests, voting, non-voting or both, are owned or held directly or indirectly, beneficially or of record, by Borrower, and/or (b) whose equity or ownership securities or interests representing more than ten percent (10.0%) of such Person’s total outstanding combined voting power are owned or held directly or indirectly, beneficially or of record, by Borrower.

 

“Streamline Balance” is defined in the definition of Streamline Period.

 

“Streamline Period” is, on and after the Effective Date, provided no Event of Default has occurred and is continuing, the period (a) commencing on the first day of the month following the day that Borrower provides to Bank a written report that Borrower has, for each consecutive day in the immediately preceding month Unrestricted Cash, as determined by Bank in its discretion, in an amount at all times greater than Five Million Dollars ($5,000,000) (the “Streamline Balance”); and (b) terminating on the earlier to occur of (i) the occurrence of an Event of Default, and (ii) the first day thereafter in which Borrower fails to maintain the Streamline Balance, as determined by Bank in its discretion. Upon the termination of a Streamline Period, Borrower must maintain the Streamline Balance each consecutive day for one (1) fiscal quarter as determined by Bank in its discretion, prior to entering into a subsequent Streamline Period. Borrower shall give Bank prior written notice of Borrower’s election to enter into any such Streamline Period, and each such Streamline Period shall commence on the first day of the monthly period following the date Bank determines, in its reasonable discretion, that the Streamline Balance has been achieved.

 

“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now or hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Bank entered into between Bank and the other creditor), on terms acceptable to Bank.

 

“Subsidiary” is, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such

 

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corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless the context otherwise requires, each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.

 

“Termination Fee” is defined in Section 2.5(c).

 

“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.

 

“Transfer” is defined in Section 7.1.

 

“Unrestricted Cash” is, at any time, the aggregate amount of Borrower’s unrestricted and unencumbered cash and Cash Equivalents maintained with Bank (other than any security interests in favor of Bank, except to the extent such security interests secure cash collateral for Bank Services).

 

“Wells Fargo” means Wells Fargo Bank, National Association.

 

“WF Account” means the Deposit Account (account number ending in 000 (last three digits)) maintained by Borrower with Wells Fargo as of the Effective Date, over which Bank has a perfected security interest and a Control Agreement has been entered into with Wells Fargo with respect thereto.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the Effective Date.

 

	
 
    	
BORROWER:
    
	
 
    	
 
    
	
 
    	
PROGYNY, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ David Schlanger
    
	
 
    	
 
    
	
 
    	
Name: David Schlanger
    
	
 
    	
 
    
	
 
    	
Title: CEO
    
	
 
    	
 
    
	
 
    	
BANK:
    
	
 
    	
 
    
	
 
    	
SILICON VALLEY BANK
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Michelle Lai
    
	
 
    	
 
    
	
 
    	
Name: Michelle Lai
    
	
 
    	
 
    
	
 
    	
Title: Vice President
    

 

Signature Page to Loan and Security Agreement

 

 

EXHIBIT A - COLLATERAL DESCRIPTION

 

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

 

All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles (except as provided below), commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, certificates of deposit, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

 

Notwithstanding the foregoing, the Collateral does not include any Intellectual Property; provided, however, the Collateral shall include all Accounts and all proceeds of Intellectual Property. If a judicial authority (including a U.S. Bankruptcy Court) would hold that a security interest in the underlying Intellectual Property is necessary to have a security interest in such Accounts and such property that are proceeds of Intellectual Property, then the Collateral shall automatically, and effective as of the Effective Date, include the Intellectual Property to the extent necessary to permit perfection of Bank’s security interest in such Accounts and such other property of Borrower that are proceeds of the Intellectual Property.

 

Pursuant to the terms of a certain negative pledge arrangement with Bank, Borrower has agreed not to encumber any of its Intellectual Property without Bank’s prior written consent.

 

 

EXHIBIT B
 COMPLIANCE STATEMENT

 

	
TO:
    	
 
    	
SILICON VALLEY BANK
    	
 
    	
Date:
    	
 
    	
 
    
	
FROM:
    	
 
    	
PROGYNY, INC.
    	
 
    	
 
    

 

Under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), Borrower is in complete compliance for the period ending with all required covenants except as noted below. Attached are the required documents evidencing such compliance, setting forth calculations prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

 

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

 

	
Reporting Covenants
    	
 
    	
Required
    	
 
    	
Complies
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Monthly financial statements with Compliance   Statement
    	
 
    	
Monthly within 30 days
    	
 
    	
Yes No
    
	
Annual financial statements (CPA Audited)
    	
 
    	
If audited required by Board, FYE within 180 days;   otherwise, company prepared financial statements FYE within 60 days
    	
 
    	
Yes No
    
	
10-Q, 10-K and 8-K
    	
 
    	
Within 5 days after filing with SEC
    	
 
    	
Yes No
    
	
A/R & A/P Agings and Deferred Revenue   report
    	
 
    	
Monthly within 30 days
    	
 
    	
Yes No
    
	
Borrowing Base Statement (including detailed AR   ledger report)
    	
 
    	
When a Streamline Period is not in effect, weekly on   Friday of each week; and when a Streamline Period is in effect, monthly   within 7 days of month end
    	
 
    	
Yes No
    
	
Board approved projections
    	
 
    	
Within 30 days of later of Board Approval or FYE,   and as amended/updated
    	
 
    	
Yes No
    

 

	
Financial Covenant
    	
 
    	
Required
    	
 
    	
Actual
    	
 
    	
Complies
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Maintain on a Quarterly Basis:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Minimum Revenue
    	
 
    	
See attached schedule
    	
 
    	
$        
    	
 
    	
Yes No
    

 

 

	
Unrestricted Cash
    	
 
    	
Streamline Period
    	
 
    	
Interest Rate for
   Advances
    	
 
    	
Applies
    
	
Unrestricted Cash >$5,000,000
    	
 
    	
Yes
    	
 
    	
Prime Rate
    	
 
    	
Yes No
    
	
Unrestricted Cash < $5,000,000
    	
 
    	
No
    	
 
    	
Prime Rate + 0.50%
    	
 
    	
Yes No
    

 

The following streamline eligibility, financial covenant and performance pricing analyses and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Compliance Statement.

 

The following are the exceptions with respect to the statements above: (If no exceptions exist, state “No exceptions to note.”)

 

B-2

 

Schedule 1 to Compliance Statement

 

Financial Covenants of Borrower and Streamline Period and Performance Pricing Criteria

 

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

 

Dated:

 

I.                                        Minimum Revenue — Financial Covenant (Section 6.9)

 

Required: As of the last day of each fiscal quarter, on a consolidated basis with respect to Borrower, minimum revenue of at least the following amounts at the following times:

 

	
Fiscal Quarter Ending
    	
 
    	
Minimum Revenue
    	
 
    
	
March 31,   2018, measured for the trailing three (3) month period then ended
    	
 
    	
$
    	
19,141,000
    	
 
    
	
June 30,   2018, measured for the trailing six (6) month period then ended
    	
 
    	
$
    	
42,059,000
    	
 
    
	
September 30,   2018, measured for the trailing nine (9) month period then ended
    	
 
    	
$
    	
64,160,000
    	
 
    
	
December 31,   2018 measured for the trailing twelve (12) month period then ended
    	
 
    	
$
    	
85,780,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
A.
    	
 
    	
Revenue
    	
 
    	
$
    
							

 

Is line A equal to or greater than the required amount?

 

No, not in compliance                                                Yes, in compliance

 

B-3Exhibit 10.11

SUBLEASE   AGREEMENT THIS SUBLEASE AGREEMENT (this "Sublease") is made as of   the 19...tb..d. ay of July, 2019, by and between IPREO Holdings, LLC., a   Delaware limited liability company with an address at 1359 Broadway, New   York, N.Y. 10018 ("Sublandlord"), and Progyny, Inc., a Delaware   corporation, with an address from and after the Corrunencement Date at 1359   Broadway, 2nd Floor, New York, N.Y. 10018 ("Subtenant"). Recitals:   A. Pursuant to that certain Agreement of Lease dated April 16, 2004, between   ESRT Broadway, LLC., a Delaware limited liability company (successor in   interest to Marlboro Building Associates, LLC), as l andlord ("Master   Landlord"), and Sublandlord (successor in interest to I-Deal, LLC), as   Tenant (the "Original Lease"), which Original Lease has been   amended by the First Amendment of Lease dated December 1 , 2008; the Second   Amendment of Lease dated December 9 2013 (the "Second Amendment");   the Third Amendment of Lease dated March 20, 2015; the FoUlth Amendment of   Lease dated October 12, 2015 (the "Fourth Amendment"); the Fifth   Amendment of Lease dated April 14, 2016; the Sixth Amendment of Lease dated   April 25, 2017; and the Seventh Amendment of Lease dated April 12, 2018; and   the Eighth Amendment of Lease dated March 28, 2019 (collectively, the   "Master Lease" a full and complete copy of which is attached as   Exhibit A, with only material financial terms or confidential information   redacted), Master Landlord leased to Sublandlord that certain space   consisting of the entire second floor, the entire third floor and a portion   of the sixth t1oor (collectively, the "Premises") within the   building located at 1359 Broadway, New York, New York (the "Buildin   g"), more particularly defined in the Master Lease. B. Subtenant desires   to Sublease from Sublandlord and Sublandlord desires to Sublease to Subtenant   (i) a portion of the Premises consisting of the entire second floor,   containing 24, 216 rentable square feet ("2nd Floor Sublease   Premises"); and (ii) a portion of the third floor containing 996 rentable   square feet ("3rd Floor Sublease Premises"), as shown on Exhibit B   attached hereto and made part hercof(the 2nd Floor Sublease Premises and 3m   Floor Sublease Premises being collectively refeJTed to herein as the   "Subleased Premises"). NOW, THEREFORE, in consideration of the   mutual promises and covenants contained herein, and subject to consent of the   Master Landlord, Sublandlord and Subtenant agree as follows: SUBLEASED   PREMISES. Subject to the terms and conditions contained in the 1. Master   Lease, Sublandlord hereby subleases to Subtenant and Subtenant hereby   subleases from Sublandlord the Subleased Premises. Except for the 2nd Floor   Sublease Premises and the 3m Floor Sublease Premises that comprises the   Subleased Premises, the Subleased Premises shall not include any other   portion of the Premises leased under the Master Lease and, except for the   Subleased Premises, Subtenant shall have no right to access or use of any   portion of the Prem ises leased to Sublandlord under the Master Lease,   including without limitation, the Storage Space. Sublandlord shall deliver   the Subleased Premises broom clean and in good condition, free and clear of   all mechanics liens and violations and with all utilities functional and   located within the Premises, including without limitation, the tenant   controlled HVAC units servicing the Premises sufficient to 

    

 

provide heating   and air conditioning to tl1e Premises in quantities that are customary and   adequate for similar size premises in the New York City area. The parties   acknowledge that, as of the date of this Sublease, the units servicing the   Premises, installed and located within the 3ro Floor Premises which are in   good working order and condition. Except as set forth above, and in Section 6   below, the Subleased Premises shall be delivered to Subtenant in   "AS-IS" condition as of the date of tltis Sublease, without any   obligation on the part of Sublandlord to make any changes, modifications or   alterations to the Subleased Premises. 2. TERM AND POSSESSION. Subtenant   shall Sublease the Subleased Premises commencing on the first business day   (the "Conunencement Date") that the parties receive a fully   executed original of this Sublease and Master Landlord's consent to this   Sublease in writing (the ''Master Landlord's Consent"), executed by   Master Landlord, Subtenant and Sublandlord; provided that if Master   Landlord's Consent is not received by September 30,2019, then this Sublease   shall be of no further force and effect, the parties shall have no   obligations towards the other and Sublandlord shall return the Security   Deposit wiiliin five (5) days thereafter. The term of this Sublease shall   expire on 11 :59 PM on May 30, 2029 ("Expiration Date"), unless   sooner terminated in accordance with ilie terms of the Master Lease or this   Sublease. The period of time between the Conunencement Date and the   Expiration Date shall be referred to herein as the "Sublease Tenn".   3. BASE RENT AND ADDITIONAL RENT. (a) Base Rent. Subtenant shall pay   Sublandlord for the Subleased Premises during the Sublease Term base rent   ("Base Rent") in the runow1t of 2nd Floor Sublease Premises: (i)   $51.00 per RSF or $1,235,016.00 per annum through ilie end of the 5°' Lease   Year, payable in monthly installments of$102,918.00; and (ii) $56.00 per RSF   or $1,356,096.00 per annum, payable in monthly installments of $113,008,   through the Expiration Date; and 3rd Floor Sublease Premises: $51.00 per RSF   or $50,796 per annum, payable in monilily installments of$4,233.00, through   the Expiration Date. If the Rent Commencement Date (as hereinafter defined)   is other than the first day of a calendar month, Base Rent for the initial   partial calendar month shall be prorated on a per diem basis and shall be due   and payable on t11e Rent Commencement Date. Base Rent shall not include   telephone or internet usage, and Subtenant shall be responsible for arranging   and paying for such services. Following the Abatement Period (defined below),   each monthly installment of Base Rent shall be due and payable to Sublandlord   on or before the first day of each month at ilie address written above or   such other address in the United States of America as designated by   Sublandlord. Notwithstanding the foregoing, providing there is no Default   after notice and opportunity to cure as may be provided herein or in the   Master Lease by Subtenant, ilie l3ase Rent for the first eight (8) full   months ("Abatement Period") following the Commencement Date shall   be fully abated ("Rent Abatement"). Accordingly, Subtenant's   obligation to pay Base Rent shall commence on the first day of ilie eleventh   (1 lth) full monili of the Sublease Term ("Rent Commencement   Date"). The Rent Abatement shall not apply to Additional Rent (defined   below). 2 

    

 

Base Rent due   under this Sublease shall be paid to Sublandlord without abatement,   deduction, or offset (except the Rent Abatement expressly set forth above and   as set forth in Section 6 hereof) and is payable, at Subtenant's option, by   wire transfer. If Subtenant fails to pay the Base Rent as provided above   within five (5) business days of the same being due, Subtenant shall pay   Sublandlord, on demand, an administrative late payment fee equal to an annual   rate of three percent (3%) of the amount due, which sum Sublandlord and   Subtenant agree fairly represents Sublandlord's cost and expense in carrying   and processing delinquent accounts. Pursuant to Section 17 below, Subtenant,   upon execution of this Sublease, shall deliver to Sublandlord the Prepaid   Base Rent. (b) Additional Rent. In addition to Base Rent, Subtenant shall be   responsible forreimbursing Sublandlord for (i) Subtemmt's Proportionate Share   of Expenses that exceed the Expenses chargeable to Sublandlord under the   Master Lease for the calendar year 2019, subject to Section 1 (B)(iv) of the   Original Lease; (ii) electrical utility costs, which are separately   sub-metered to the Subleased Premises, plus five (5%) percent administrative   charge, and shall be payable in the amounts billed to Sublandlord under   Section 3 ofthe Original Lease; and (iii) Subtenant's Proportionate Share of   real estate taxes except that the base tax year for purposes of this Sublease   shall mean the tax year commencing on July 1, 2019 and ending on June 30,2020   and (iv) Subtenant's Proportionate Share of routine and scheduled maintenance   expenses under Sublandlord HVAC maintenance contract (a copy of which is   attached hereto as Exhibit D). During the Sublease Tenn, Sublandlord agrees   to maintain such HVAC maintenance contracts with a third-party vendor   selected from time to time by Sublandlord and Subtenant shall pay Subtenant's   Proportionate Share thereof so long as such cost is commercially reasonable,   in no event shall the cost to Subtenant exceed $20,000 on an annual basis,   charged to Subtenant in monthly installments. Aside from the foregoing   Expenses, electric utility costs and real estate taxes (collectively,   "Additional Rent"), Subtenant shaJI not be responsible for the   payment of any other Expenses that may become due under the Master Lease;   provided, however, that Subtenant agrees to pay all additional charges   imposed by Master Landlord for any additional services or materials provided   by Master Landlord to the Subleased Premises which are incUITed due to a   request or action of Subtenant, including but not limited overtime HVAC or   other special services, which costs and charges shall be included as part of   the Additional Rent. For clarification purposes, Sublandlord shall be   responsible for any expenses under the HVAC maintenance contract that are   associated with any repairs and replacement approved by Sublandlord, acting   reasonably and in good faith. The Additional Rent due hereunder shall be paid   within twenty (20) business days from receipt of an invoice from Sublru1dlord   setting forth such amounts in reasonable detail. "Subtenant's   Proportionate Share"shall mean 5.686% for the purposes of items (i) and   (iii) in Section 3(b) and shall mean 52.59% for the purposes of item (iv) in   Section 3(b). Notwithstanding anything contained herein or in the Master   Lease to the contrary, Subtenant shall not be charged for any freight   elevator service in connection with its initial move­ in to the Subleased   Premises, and any costs associated therewith shall be borne exclusively by   Sublandlord. 3 

    

 

4. ASSIGNMENT   AND SUBLETTING. Subtenant shall not further sublease or assign this Sublease   in whole or in part without the prior written approval of (i) Sublandlord,   which approval shall not be unreasonably conditioned, withheld, or delayed;   and (ii) Master Landlord, whose consent may be gran ted or withheld in   accordance with the Master Lease. Any such request for sublease or assignment   shall be made by Subtenant pursuant to the terms and conditions of the Master   Lease. 5. USE OF SUBLEASED PREMISES. Subject to the Master Lease, and the   rules and regulations issued from time to time by the Master Landlord,   Subtenant may access the Subleased Premises 24x7x365 for all uses permitted   under the Master Lease. Subtenant will not use or permit the Subleased   Premises to be used or occupied for any purpose or in any manner prohibited   by any applicable Laws. Subtenant will not commit waste or suffer or permit   waste to be committed in, on, or about the Subleased Premises. Subtenant will   conduct its business and control its employees, agents, guests and invitees   in such a manner as not to create any nuisance or interfere with, annoy, or   disturb any other tenant or occupant of the Building or Sublandlord in its   operation of the BuHding. Subtenant, at i ts sole cost, will comply with all   laws, statutes, ordinances and governmental rules, regulations or   requirements now in force or in force after the date hereof, with the   requirements of any board of fire underwriters or other body constituted now   or after the date hereof, with any directive or occupancy certificate issued   pursuant to any law by any public officer, solely insofar as they relate to   the condition, use or occupancy of the Subleased Premises, or alterations   made due to Subtenant's status under applicable laws or due to any physical limitations   or handicaps of Subtenant's employees, officers, directors or invitees.   Sublandlord does not make, and expressly disclai ms, any representation or   warranty that the Subleased Premises are suitable for any use other than the   Permitted Use described in the Master Lease, or are permitted under   applicable laws, including zoning laws. 6. SUBLANDLORD WORK. Sublandlord, at   its cost and expense and in accordance with the terms and conditions of the   Master Lease and subject to Master Landlord's consent, (i) shall cure and   restore all existing slab cuts within the Subleased Premises in accordance   with the Master Lease, (ii) remove and enclose the existing stairwell between   the 2nd Floor Subleased Premises and the 3ro Floor Subleased Premises and   restore all damage caused thereby in accordance with the Master Lease; and   (iii) deliver the currently existing tenant-controlled ai r cooling units   (the "HVAC Units") in good working order and condition   (collectively, "Sublandlord Work"). All or a portion of the Sublandlord   Work may be performed either by Sublandlord or by Master Landlord; provided   that whoever undertakes such work shall use commercially reasonable efforts   to require that items (i) and (ii) of Sublandlord Work to be performed in an   encapsulated area with sufficient protection so as to minimize dust and   damage to the 2nd Floor Sublease Premises and the 3rd Floor Sublease   Premises, including without limitation the HVAC units. Sublandlord will use   reasonable efforts to complete the Sublandlord Work on or before August   15,2019. If the Sublandlord Work is not completed on or before August 15,   2019, subject only to delays caused by force majeure, Subtenant shall receive   an additional rent abatement equal to one (1) day for each day that the   Sublandlord Work is delayed beyond August 1 2019; provided, however that if   Sublandlord Work is not completed for any reason other than force majeure by   December 31, 2019, then Subtenant shall receive a furtherrent abatement equal   to three (3) days for each day Sublandlord Work is delayed beyond December   31,2019 and, for the avoidance of doubt, Sublandlord shall ensure that the   Subleased Premises are made broom clean at its cost upon completion of   Sublandlord Work. Provided the Subleased Premises are 4 

    

 

delivered in   accordance with this Section 6, Sublandlord shall have no further liability   to Subtenant for delays to the completion of the Sublandlord Work.   Sublandlord shall promptly perform the Sublandlord Work in accordance with a   scope of work prepared by Subland lord or Master Landlord, and shall cause   the Sublandlord Work to be performed in a good and workmanlike manner, and in   compliance with all applicable Laws, rules and regulations. Subtenant   acknowledges that Master Landlord may require access to the Subleased   Premises after the Commencement Date, in order to perform the Sublandlord   Work, and any such access shall not be deemed a default by Sublandlord or a   violation of Subtenant's right to use and enjoy the Subleased Premises.   Subtenant acknowledges that the Sublandlord Work may create noise and dust,   and may require Subland lord to temporarily relocate Subtenant's work   stations or to temporarily cease work within the Subleased Premises   ("Interruptions"), and, providing Sublandlord causes its contractors   to use commercially reasonable eff011s to minimize such Interruptions   (including without limitation sealing off this area with floor to ceiling   plastic), neither Sublandlord nor is contractors shall have liability, and   Subtenant expressly waives any claims, for damages or losses resulting from   any such Interruptions except to the extent caused by Master Landlord's or   Sublandlord's gross negligence or willful misconduct. In no event shall   Sublandlord have any liability to Subtenant for damage caused to Subtenant's   property which arises from or in connection with Su btenant's failure to move   or protect Subtenant's property during the performance of the Sublandlord   Work or for any interruption to Subtenant's business as a result of the   Sublandlord Work. 7. COMPLIANCE WITH MASTER LEASE. (a) Except as otherwise   provided by this Sublease, all the tcnns and conditions contained in the   Master Lease are incorporated as terms and conditions of this Sublease (with   references in the Master Lease to "Landlord" and "Tenant"   being deemed to refer to "Master Landlord" and   "Sublandlord") except that where the term "Landlord" is   used in the context of ownership or management of the Build ing, such term   shall be deemed to mean "Master Landlord", so that except to the   extent that they are inconsistent with or modified by the provisions of this   Sublease, for the purpose of incorporation by reference each and every term,   covenant and condition of the Master Lease binding upon or inuring to the   benefit of Sublandlord thereunder shall, in respect of this Sublease, be   binding upon or inure to the benefit of Subtenant, with the same force and   effect as if such terms, covenants and conditions were compl etely set forth   in this Sublease, except that for purposes of this Sublease: (i) references   in the Master Lease to "this date", "the date hereof,   "the date of this Lease" and similar references shall be deemed to   refer to the date of this Sublease; (ii) references in the Master Lease to   the "Premises" shall be deemed to refer to the "Subleased   Premises" hereunder; (iii) references in the Master Lease to the   "term" sha1Ibe deemed to refer to the Sublease Term; references in   the Master Lease to "thi s Lease" shall be deemed to refer to   "tltis Sublease" (except when such reference in the Master Lease   is, by its terms (unless modified by this Sublease), a reference to any other   section of the Master Lease, in which event such reference shall be deemed to   refer to tl1e particular section of the Master Lease); (iv) 5 

    

 

(v) references   in the Master Lease to the "Expiration Date" shall be deemed to   refer to the "Expiration Date" hereunder; (vi) the following   provisions of the Master Lease and Exhibits annexed thereto shall be deemed   deleted: Section 28, Section 49, Section 50 of the Original Lease, Exhibit   A-2 and Exhibit B of the Original Lease; the word "replacement" in   the second sentence of Section 31(B)(i) of the Original Lease; Exhibit A-1,   Exhibit A-2, Exhibit A-3 and Exhibit A-4 of the Second Amendment; Section   2(E) and Section 6 of the Second Amendment; Exhibit A to the Fourth   Amendment; all references to the "Additional Space"in the Fourth   Amendment; and all references to the "Storage Space". (vii) where   reference is made in the following Sections to "Landlord", the same   shall be deemed to refer to "Master Landlord": Section 24(B),   Section 30, Section 31, Section 39, Section 51, and Section 52 ofthe Original   Lease. (viii) If Sublandlord is required to give its consent or approval to a   matter as to which consent or approval has been requested by Subtenant,   Sublandlord, at Subtenant's reasonable cost and expense, shall cooperate   reasonably with Subtenant in endeavoring to obtain any required Master   Landlord's consent or approval upon provided that if Subtenant agrees or is   otherwise obligated to make any payments to Sublandlord in com1ection with   such request for such consent or approval, Subtenant shall pay same as   additional rent. Sublandlord shall promptly forward to Master Landlord such   requests as Subtenant may submit for approval or consent from Master   Landlord. Except as otherwise provided by this Sublease, (i) Subtenant shall,   tlrroughout the Sublease Term, assume and perform, for the benefit   ofSublandlord, all ofthe obligations, covenants and agreements of Sublandlord   as subtenant under the Sublease and Sublandlord as tenant under the Master   Lease, to the extent that the same apply to the Subleased Premises, and (ii)   Sublandlord grants to Subtenant, for fue duration of the Sublease Term, all   of the rights and privileges granted Sublandlord under tl1e Sublease with   respect to the Subleased Premises. Subland lord hereby represents and   warrants that the Sublease is in full force and effect, no default or event   that would consti tute a default after expiration of applicable notice and   cure period exists under the Sublease. Sublandlord agrees to defend,   indemnify, and hold Subtenant harmless from and against any and all   liabilities, losses, costs, expenses (including reasonable attorneys' fees   and expenses), suits, claims, demands, or judgments of any nature arising   from or related to Sublandlord's default or breach under the Master Lease.   The foregoing indemnity obligation shall survive the expiration or   termination of this Sublease. Notwithstanding t11e foregoing: (b) (I) Tllis   Sublease is subject to all of the terms and cond itions of the Master Lease,   except that Subtenant shall have no right (i) to any allowance or funds   granted to Sublandlord for the improvement of the Subleased Premises or as a   rent credit right; or (ii) to exercise any option to renew or extend ilie   Sublease Term; (iii) to expand or contract the Subleased Premises (whether by   right of first refusal, right of first offer or other similar rights), or to   surrender or terminate any portion oftlle Subleased Premises, to the extent   any such rights or options are contained in the Master Lease; 6 

    

 

or (iv) to   install any equipment, antennas or communication devices on the roof of the   Building. Sublandlord a1:,rrees to use its good faith and commercially   reasonable efforts to cause the Master Landlord to pe.rfonn for Subtenant's   bene'fit any of Master Landlord's obligations under the Master Lease. If   Master Landlord defaults in its obligations under the Master Lease,   Sublandlord shall have no obligation to bring suit or commence any legal   action to enforce such obligations against the Master Landlord provided,   however, that, if Master Landlord defaults in its obligations under the   Master Lease with regard to the Subleased Premises, Subtenant shall be   entitled to bring any action or proceeding or to take any steps to enforce   such obligation of Master Landlord with regard to the Subleased Premises in i   ts own name without Sublandlord's consent, provided that Subtenant shall bear   any and all costs and expenses in connection therewith. Subtenant agrees that   Sublandlord shaJI not be required to dispute any determinations or other   assertions or claims of Master Landlord or to make any assertions or claims   against Master Landlord regarding the obligations of Sublandlord under the   Master Lease, as incorporated herein. Should Sublandlord elect not to dispute   any such determinations, assertions or claims by Master Landlord, or not to   make any such assertion or claim against Master Landlord, Sublandlord hereby   agrees that Subtenant may do so in its own name without Sublandlord's consent   and may resolve such disputes, claims or assertions to its own satisfaction,   provided that (i) Subtenant shall notify Sublandlord prior to commencing any   such dispute or making any such assertion or claim, (ii) Subtenant shall bear   any and all costs and expenses of any such dispute, claim, assertion and/or   settlement, and (iii) Sublandlord shall not be bound without its consent (not   to be unreasonably withheld) by any settlement, agreement or resolution   reached by Subtenant and Master Landlord in regard to any such dispute, claim   or assertion, or by any settlement decree, judgment or penalty resulting   therefrom. If Sublandlord shall elect to dispute any determinations, assertions   or claims by Master Landlord or to make any assertion or claim against Master   Landlord, then Subtenant may join in such dispute, claim or assertion. (2)   This Sublease and all of Subtenant's rights hereunder are expressly subject   to and subordinate to all of the terms of the Sublease and Master Lease. In   the event of a conflict between the tenns of this Sublease and the tenns of   the Sublease or the Master Lease, as between Sublandlord and Subtenant, the   terms of this Sublease shall govern to the extent the terms do not cause a   breach under the Sublease or Master Lease. (3) Except for Sublandlord Work,   Subtenant shall be solely responsible for making any and all alterations   and/or improvements necessary for Subtenant's intended use of the Subleased   Premises. Any and all improvements pertonned within the Subleased Premises   shall be subject to Master Landlord's written approval, in accordance with   the Master Lease. Sublandlord shall not unreasonably withhold, delay or   condition its approval to any such improvements or alterations.   Notwithstanding the foregoing, Subtenant shall provide Sublandlord with a   copy of all relevant information regarding such alterations (including plans   and specifications) associated with such work at the same time, and to the   extent such information is required to be delivered to Master Landlord for   approval. Subtenant shall not commit or permit to be committed on the   Subleased Premises any act or omission that violates any term or condition of   the Master Lease. Tn addition to the foregoing, Subtenant agrees to defend,   indemnify, and hold Sublandlord harmless from and against any and all   liabilities, losses, costs, expenses (including reasonable attorneys' fees   and expenses), suits, claims, demands, or judgments of any nature arising   from or related to the repair or restoration of any alterations performed by   Subtenant within the Subleased Premises except for 7 

    

 

Sublandlord   Work. The foregoing indemnity obligation shall survive the expiration or   earlier termination ofthis Sublease. (4) Subtenant shall perform all   maintenance and repairs to the Subleased Premises required to be pe1fonned by   Sublandlord under the Master Lease. (5) Subtenant shall pay for any   adclitional communications, insta11ation and operation of any T1 lines, fiber   or other cable or communications lines, which shall be installed, at   Subtenant's sole cost and expense and subject to consent of the Master   Landlord. (6) Any policies of insurance required to be carried and maintained   under the Master Lease by Sublandlord shall also be carried by Subtenant and   Subtenant shall name Sublandlord and Master Landlord as additional i11sureds,   as well as any other persons required to be named as insured pursuant to the   Master Lease. (c) Notwithstanding anything contained herein to the contrary,   for so long as thisSublease remains valid and there is no default by   Subtenant beyond any applicable notice and cure period, Sublandlord   represents and warrants that it shall not, at any time during the Sublease   Term, exercise the Original Office Premises Surrender Option set forth Ln the   Fourth Amendment. 8. FURNITURE. I n consideration for the sum of $1.00 and   the promises exchanged herein, and pursuant to the Bill of Sale attached   hereto as Exhibit C ("Bill of Sale"), Sublandlord transfers to   Subtenant all of its right, title and interest in and to the furniture,   fixtures and equipment (collectively, the "Furniture") located   within the Subleased Premises as of the Commencement Date, and as listed on   Schedule One to the Bill of Sale. Upon expiration of the Sublease Term,   Subtenant shall be responsible for removing the Furniture to the extent   required under the Master Lease. 9. SUBTENANT DEFAULT. Subtenant shall be in   default under this Sublease if any one or more of the following events   ("Defaults") shall happen and be continuing, following any   specified notice and cure period: (i) Subtenant fails to make payment when   due of the Base Rent within five (5) business days of receipt of written   notice from Sublandlord, or Subtenant fails to perform or observe any other   covenant or condition to be performed or complied with by Subtenant under   this Sublease or the Master Lease within thirty (30) days after receipt of   notice from Sublandlord, providing that, if Subtenant is diligently pursuing   a cure of such default, said thirty (30) day period shall be extended for up   to an additional thirty (30) days as long as Subtenant works continuously to   cure such default; (ii) Subtenant shall have an attachment or execution   levied upon Subtenant's mlerest under this Sublease and same is not vacated   within sixty (60) days upon receipt of written notice thereof by Subtenant;   (iii) Subtenant makes an assignment for the benefit of its creditors, or the   interest of Subtenant in the Subleased Premises is sold under recourse,   execution or other legal process; (iv) Subtenant files or there is filed   against Subtenant a petition in bankruptcy or a petition or answer seeking   reorganization under the Federal bankruptcy law or any other applicable   statute and same is not dismissed within sixty (60) days; or (v) an order is   entered adjudicatlng Subtenant a banlaupt or approving an involuntary   petition seeking reorganization of Subtenant under the Federal bankmptcy law   or any other applicable statute or appointing a receiver, trustee or   conservator for all or any substantial part ofthe property of Subtenant;   then, and in any of these events, 8 

    

 

Sublandlord   shall have all of the remedies set forth in the Master Lease, as well as   those allowed by Jaw or in equity. 10. SUBLANDLORD DEFAULT.Sublandlord shall   be in default ("Sublandlord Default") under this Sublease if   Sublandlord fails to perform or observe any other covenant or condition to be   perfonned or complied with by Sublandlord under this Sublease, or is default   under the Master Lease beyond any applicable notice and cure periods, and   Sublandlord fails to cure such default within thirty (30) days after receipt   of notice from Subtenant; providing that, if such default cannot reasonably   cured within such thirty (30) day period, Sublandlord may have such   additional time but not to exceed a total of ninety (90) days) to cure such   default, as long as Sublandlord works continuously to cure such default.   LIMITATION OF LIABILITY. Regardless of cause, except as set forth herein, 1   1. Sublandlord shall not be liable to Subtenant for consequential damages,   including without limitation, lost profits, indirect or punitive damages,   and, to the maximum extent permitted by law, the parties fully waive, any   right to seck or collect such consequential damages, and Subtenant hereby   expressly waives and fully releases Suhlandlord from all such consequential   damages. Notwithstanding anything herein to the contrary, the total dollar   amount of Sublandlord's liability to Subtenant, and/or its officers,   partners, employees, agents, customers and/or invitees, or any person   claiming through or under Subtenant, on account of claims for personal injury   or property damage will not exceed the aggregate sum of all monies paid to   Sublandlord by Subtenant under thi s Sublease. 12. SUBTENANT INDEMNITY.   Except to the extent of the waivers contained in Section 16 of this Sublease,   Subtenant will indemnify, defend and hold harmless Sublandlord and Master   Landlord, their employees and agents from and against all losses, costs,   damages, expenses and liabilities, including reasonable attorneys' fees and   disbursements, which Sublandlord or Master Landlord may incur or pay out by   reason of (i) any accidents, damages or injuries to persons or property   occurring in, on or about the Subleased Premises during the period commencing   on the Possession Date and ending on the latter to occur of (A) the   Expiration Date, or (B) the date Subtenant actually vacates the Subleased   Premises in accordance with, and in the condition required by, this Sublease,   (except to the extent the same has been caused by, if as to Sublandlord or   its agents, employees, contractors or invitees gross negligence or   intenlionally wrongful act or, if as to Master Landlord, the negligence or   intentionally wrongful act of Master Landlord), (ii) any breach or default of   this Sublease on Subtenant's part, (iii) any work done after the date hereof   in or to the Subleased Premises by or on behalf of Subtenant, or (iv) any act   or omission on the part of Subtenant, or any person claiming through or under   Subtenant relating to Subtenant's use of the Subleased Premises. 13.   SUBLANDLORD INDEMNITY. Except to the extent of the waivers contained in   Section 16 of this Sublease, during the Sublease Term Sublandlord will   indemnify, defend and hold harmless Subtenant and its employees and agents   from and against all losses, costs, damages, expenses and liabilities,   including reasonable attorneys' fees and disbursements, which Subtenant may   incur or pay out to the extent caused by (i) Sublandlord 's negligence or   intentionally wrongful act, (ii) any breach or default of this Sublease by   Sublandlord, (iii) any work done after the date hereof in or to the Subleased   Premises by or on behalf of Sublandlord including Sublandlord's 9 

    

 

Work, or (iv)   any act or omission on the part of Sublandlord, or any person claiming   through or under Sublandlord relating to Sublandlord 's use of the Premises.   14. SIGNAGE. Subject to consent of the Master Landlord, Subtenant may install   signage within the Subleased Premises. Sublandlord will cooperate with   Subtenant to obtain such consent from the Master Landlord. Upon the   Expiration Date or earlier termination of this Sublease, Subtenant, at its   cost and expense, shall be responsible for installing, maintaining and   removing he signage, as well as restoring the affected areas to i ts original   condition. Except as set forth herein, Subtenant shall have no right to any   other signage under Section 27, or any other provision of the Master Lease.   Sublandlord will use reasonable efforts to assist the Subtenant as to   obtaining directory listings at the Building and lettering on the door to the   Subleased Premises as may be requested by the Subtenant. 15. NOTICES. All   notices, requests and other communication required or desired to be given   under this Sublease, or required by law, shall be in writing and sent to the   parties at the addresses below. Notices shall be deemed given when and if (a)   personally delivered, (b) delivered by overnight private cowier service which   in the ordinary cow-se of its business maintains a record of receipt of each   of its deliveries, or (c) when delivered by United States mail, postage   prepaid, certified, return receipt requested, addressed to the parties   hereto, at their respective addresses set forth in the first paragraph of   this Sublease, and in the case of Subtenant, with a copy to the address of   the Subleased Premises duri ng its occupancy of the Subleased Premises.   Notices to Sublandlord: SUBLANDLORD: c/o: lHS Markit 15 Inverness Way East   Englewood, CO 80112 Attn: Workplace Resow-ces SUBTENANT: Progyny, Inc. 1359   Broadway 2nd Floor New York, New York 10018 Attent ion: David Falk with a   copy to: David N. Schumeister, Esq. 29 West 19th Street, 2nd Floor New York,   New York 10011 16. SURRENDER AND RESTORATION. Subtenant shall surrender the   Subleased Premises in the manner required by the Master Lease; provided,   however, that in no event shall Subtenant be required to remove any   alterations, improvements, computer/data/telephone cabling or personal   property installed in or brought into the Subleased Premises by or for the   benefit of 10 

    

 

Sublandlord.   Notwithstanding anything contained in the Master Lease or this Sublease to   the contrary, except as set forth in the immediately preceding sentence   Subtenant shall have no obligation to restore the Premises to any condition   existing prior to the Sublease Commencement Date. If during the Sublease   Term, Subtenant performs or installs alterations which it is required to   remove pursuant to the Master Lease, then Subtenant shall, at its sole cost   and expense, remove such alterations and restore the affected areas to the   condi tion that existed just prior to the date that such alteration. 17.   PREPAID BASE RENT. Upon execution ofthis Sublease, Subtenant shall provide   and Sublandlord shall hold the first two (2) months Base Rent ("Prepaid   Base Rent"), which shall be applied against such first and second   month's Rent, following the Abatement Period. h1 the absence of a default hy   Subtenant, the Prepaid Base Rent shall be applied to the Base Rent due for   the first and second month's Base Rent of the Sublease Term from and after   the Abatement Period. In the event of a default which is not cured following   notice and any applicable cw·e period prior to the end of the Abatement   Period, the Prepaid Base Rent may be applied to cure any default by   Sublandlord. 18. SECURITY DEPOSIT. Upon execution ofthis Sublease, Subtenant   shall provide and Sublandlord shall hold, a cash equivalent secw·ity deposit   (which shall be in the form of a letter of credit ("Letter of   Credit")) in the amom1t of five (5) months' rent ($535,266.30). The   Letter of Credit shall be in a form and substance that is reasonably approved   by Sublandlord and attached hereto and incorporated herein as Exhibit E. The   Letter of Credit shall be issued by a federally chartered bank approved by   Sublandlord and licensed to do business in the State ofNew York or Colorado   ("Issuing Bank"), such that Sublandlord may present a d raft Letter   of Credit to a branch of the Issuing Bank in either such State. The agreed   upon Letter of Credit shall be annexed to and incorporated into thjs   Sublease. Subtenant shall pay all fees incurred as a result of the drafting,   negotiating, posting or drawing down (if any) upon the Letter of Credit. In   the absence of a default by Subtenant, the Security Deposit or Letter of   Credit shall be returned within thirty (30) days following the Expiration   Date of the Sublease Term. ill the event of a default which is not cured   followi ng notice and any applicable cure period, or to compensate   Sublandlord for any other loss or damage which Sublandlord may suffer by   reason of Subtenant's default, the Security Deposit or any portion thereof,   may be applied to cure any default by Subtenant, and if a Letter of Credit is   posted, Sublandlord may draw down upon the Letter of Credit in amounts   necessary to cure such default after notice and opportunity to cure as   provided herein. In either such event, Subtenant shall deposit with   Sublandlord such sums as are required to restore the Security Deposit to its   original amount or provide Sublandlord with a replacement Letter of Credit.   Unless otherwise required by law, Sublandlord will not be required to keep   the Security Deposit separate from its general funds and Subtenant will not   be entitled to interest on the Security Deposit. The Security Deposit will   not be deemed a limitation on Sublandlord's damages or a payment of   liquidated damages or a payment of Rent due for the last month of the   Sublease Term. 19.GOVERNiNG LAW. This Sublease shall be constmed, and the   rights and obligations ofSublandlord and Subtenant hereunder shall be   determined, in accordance with the laws of the State ofNew York. 11 

    

 

20. JURY   WAIVER. IF ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM IS BROUGHT BY   SUBLANDLORD OR SUBTENANT AGAINST THE OTHER OR THEIR SUCCESSORS OR ASSIGNS   WITH RESPECT TO ANY MATTER WHATSOEVER ARISING OUT OF OR IN CONNECTION WITH   THIS S UBLEASE, THE USE AND OCCUPANCY OF THE SUBLEASED PREMISES, THE   RELATIONSHIP BETWEEN SUBLANDLORD AND SUBTENANT, ANY CLAIM FOR INJURY OR   DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY , SUBLANDLORD AND SUBTENANT EACH   HEREBY KNOWINGLY AND VOLUNTARI LY WANES TRIAL BY JURY. IF SUBLANDLORD   COMMENCES ANY SUMMARY PROCEEDING FOR NONPAYMENT OF RENT, SUBTENANT WILL NOT   INTERPOSE (AND WAIVES THE RIGHT TO INTERPOSE) ANY COUNTERCLAIM IN ANY SUCH   PROCEEDING. 21. AMENDMENTS TO THE MASTER LEASE. Sublandlord shall not consent   to or make any modification or amendment to the Master Lease that would   materially adversely affect Subtenant's rights or materially increase Subtenant's   obligations under this Sublease, without Subtenant's prior written consent,   which consent shall not be unreasonably withheld, condi tioned or delayed.   21. NO MODIFICATION OF SUBLEASE. The agreements between the parties contained   in this Sublease relate only to the righ ts and obligations between   Sublandlord and Subtenant and their respecti ve heirs, personal   representative, successors and pennitted assigns, and are not intended in any   way to interpret, amend or in any manner affect the tenns and provisions of   the Sublease or Master Lease. This Sublease shall not be modified or amended   except in writing signed by both Sublandlord and Subtenant. 22. ENTIRE   AGREEMENT. This Sublease and the Master Landlord Consent constitute the   entire agreement between the parties hereto and supersedes all prior   understandings. 23. SEVERABILITY. If any provision of this Sublease proves to   be illegal, invalid or unenforceable, the remainder of this Sublease will not   be affected by such finding, and in lieu of each provision of this Sublease   that is illegal, invalid or unenforceable, a provision will be added as a   part of this Sublease as similar in terms to such illegal, invalid or   unenforceable provision as may be possible and be legal, valid and   enforceable. 24. NO WAIVER. No waiver by either party of any agreement, cond   ition, or provision contained in this Sublease will not be deemed to be a   waiver of any subsequent breach of the same or any other agreement,   condition, or provision contained in this Sublease. 25. MASTER LANDLORD   CONSENT. This Sublease is expressl y contingent and conditioned upon   Sublandlord, at Sublandlord's sole cost and expense, obtaining the written   consent of Master Landlord, as required by the tem1s ofthe Master Lease.   Sublandlord will submit this Sublease promptly to Master Landlord and use all   reasonable efforts to obtain such consent as soon as reasonably possible.   Sublandlord and Subtenant hereby agree that in the event such consent is   obtained after the Commencement Date set forth herein, the Commencement Date   shall be revised to be the date that is one (1) business day after such   consent is obtained, and the postponement of Subtenant's obligat ion to pay   Base Rent until the revi sed Commencement Date shall be Subtenant's sole   remedy therefor. If Master Land lord's Consent is not obtained on or 12 

    

 

before the date   that is thirty (30) days after the date of this Sublease, Subtenant may   terminate this Sublease, without cost or expense. 26. BROKERS. Subtenant and   Sublandlord represent and warrant to each other that they have not dealt with   any broker other than CBRE, Inc., who represented Sublandlord, and Newmark   Knight Frank, who represented Subtenant (Newmark and CBRE are referred to   herein as the "Brokers"), which represented Subtenant, in   connection with this Sublease and that no other broker or person other than   the Brokers had any part or was instrumental in any way in bringing about   this transaction. Subtenant and Sublandlord shall indemnify and hold each   other harmless from and against any and all loss, claims, liabilities,   damages and expenses, including, without limitation, attorneys' fees and   expenses and court costs, arising out of or in connection with any breach or   alleged breach of the above representations or any claim by any person or   entity other than the Brokers for brokerage commissions or other compensation   in connection with the consummation of this Sublease. Any commission due and   owing to the Brokers shall be paid by Sublandlord, or by CBRE on its behalf,   pursuant to a separate agreement(s) with Sublandlord. The provisions of this Section   shall survive the expiration or sooner termination of this Sublease. 27. Use   and Enjoyment. (a) Subtenant shall have and enjoy the same rights to have   facilities and services furnished by Landlord as Sublandlord possesses under   the provisions of the Master Lease. Sublandlord agrees that if at any time   during the Sublease Term such facilities or services are not f1.1mished or   are improperly fumished to Subtenant, then, upon receipt of written notice   fTom Subtenant specifying such failure, Sublandlord shall use its reasonable   efforts to cause such facilities and/or services to be resumed or properly   furnished or performed by Landlord insofar as the same apply to or affect the   Premises. If Sublandlord shall commence litigation in order to obtain any such   work, facilities, services or duties for Subtenant, which litigation   Subtenant may join, and whether or not it so joins, Subtenant shall pay all   reasonable costs and expenses (including reasonable attorney's fees) incurred   in connection therewith. No such litigation shall be commenced without   Subtenant's prior written approval, not to be unreasonably withheld,   conditioned or delayed. Sublandlord agrees to use reasonable efforts to   enforce Subtenant's rights against Landlord under the Master Lease for the benefit   of Subtenant and to forward (i) to Landlord any notices or requests for   consent as Subtenant may request, and (ii) to Subtenant any responses from   Landlord with respect to such notices or requests), providing that   Sublandlord shall be under no obligation to commence litigation, arbitration,   or any fonnal or informal legal proceeding. (b) Sublandlord agrees to use   reasonable efforts to enforce Subtenant's rights against Landlord under the   Master Lease for the benefit of Subtenant with regard to approvals for   Alterations requiring consent of Landlord (and to forward (i) to Landlord any   notices or requests for consent as Subtenant may request, and (ii) to   Subtenant any responses from Landlord with respect to such notices or   requests). 26. REPRESENTATIONS OF SUBLANDLORD. Sublandlord represents,   warrants and covenants to Subtenant that: A. Organization and Capitalization.   Sublandlord is a limited liability company duJy organized and validly   existing and in good standing under the laws of Delaware and is licensed and   in good standing to do business in New York. 13 

    

 

B. Validity and   Execution of Agreement. Sublandlord has full legal right, power and authority   to execute and deliver tllis Sublease and to perform its obligations   hereunder. This Sublease has been duly authorized, executed and delivered by   Sublandlord and constitutes the valid and binding obligation of Sublandlord   enforceable against Sublancllord in accordance with its terms, except as such   enforcement may be limited by bankruptcy, insolvency, reorganization,   moratorium and other laws of general application affecting the rights and   remedies of creditors. C. Legal Proceedings. There are no actions or   proceedings pending or, to the knowledge of Sublandlord, threatened against,   Sublandlord wllich, if adversely determined, would reasonably be expected to   adversel y affect or restrict the ability of Sublandlord to perform its   obligations under the Master Lease or tllis Sublease. 27. REPRESENTATIONS OF   SUBTENANT. Subtenant represents, warrants and covenants to Sublandlord that:   Organization and Capital ization. Subtenant is a corporation duly organized   and A. validly existing and in good standing under the laws of Delaware and   is licensed and in good standing to do business in New York. B. Validity and   Execution of Agreement. Subtenant has full legal right, power and authority   to execute and deliver this Sublease and to perform its obligat-ions   hereunder. Subject to Master Landlord's Consent, this Sublease has been duly   authorized, executed and delivered by Subtenant and constitutes the valid and   binding obligation of Subtenant enforceable against Subtenant in accordance   with its terms, except as such enforcement may be limited by bankruptcy,   insolvency, reorganization, moratorium and other Jaws of general application   affecting the rights and remedies of creditors. C. Legal Proceedings. There   are no actions or proceedings pending or, to the knowledge of Subtenant,   threatened against, Subtenant which, if adversely detennined, would reasonably   be expected to adversely affect or restrict the ability of Subtenant   obligations under the Master Lease or this Sublease. to perform its   [signatures on following page] 14 

    

 

lN WITNESS   WHEREOF, the parties have hereu n to set thei r hands as of the date first   above wri tten. SUBLANDLORD: IPREO HOLD1NGS, LL,..·_ I A ; (sjlh.cJS..--I ts:   SL]'_[ (apCY Ci..b.. l[(.o.._S-SUBTENANT: PROGr Y· c. 1 1 J'"j   ltf/:f}[;z='=;t-;-IL:-----;,,v Its:( £0 _ I

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