Document:

CardioDynamics International

 EXHIBIT 10.1 
  
 CARDIODYNAMICS INTERNATIONAL CORPORATION 
  
 CHARTER 
  
 AUDIT COMMITTEE OF THE BOARD OF DIRECTORS 
  
 July 17, 2003 
  
 I. PURPOSE 
  
 The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing: the financial
reports and other financial information provided by the Corporation to any governmental body or the public; the Corporation’s system of internal controls regarding finance, accounting, legal compliance and ethics that management and the Board
have established; and the Corporation’s auditing, accounting and financial reporting processes. Consistent with this function, the Audit Committee encourages continuous improvement of, and adherence to, the Corporation’s policies,
procedures and practices at all levels. The Audit Committee’s primary duties and responsibilities are to: 
  
 Serve as an independent and objective party to monitor the Corporation’s financial reporting process and internal control system. 
  
 Review and appraise the audit efforts of the Corporation’s independent
accountants and internal auditing department. 
  
 Provide an open
avenue of communication among the independent accountants, financial and senior management, and the Board of Directors. 
  
 The Audit Committee will primarily fulfill these responsibilities by carrying out the activities enumerated in Section IV of this Charter. 

 II. COMPOSITION 
  
 The Audit Committee shall consist of three or more directors as determined by the Board, each of whom shall be independent directors, and free from any
relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Committee. All members of the Committee shall have a working familiarity with basic finance and accounting
practices and, providing a qualified candidate is reasonably available, at least one member shall meet the requirements for and be designated as the “Audit Committee Financial Expert” as defined by Section 407 of the SEC rules. 

 
 The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board and shall serve until their successors shall be duly elected and qualified. Unless a chair is elected by the full Board, the members of the Committee may designate a chair by majority vote of the full Committee
membership. 
  
 III. MEETINGS 
  
 The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. The Committee shall meet with management and the independent accountants in separate executive sessions, as necessary or appropriate, to discuss any matters that the Committee or any of these groups believe should be discussed
privately. The Committee may ask members of management or others to attend the meetings and provide pertinent information as necessary. 
  
 IV. RESPONSIBILITIES AND DUTIES 
  
 To fulfill its responsibilities and duties the Audit Committee shall: 
  
 Documents/Reports Review 
  

	1.	Review and update this Charter periodically, as conditions dictate. 

  

	2.	Review the Corporation’s annual financial statements and any financial reports or other financial information submitted to the public, including any certification, report,
opinion, or review rendered by the independent accountants. 

  

 2 

	3.	Maintain minutes or other records of meetings and activities of the Committee. 

  

	4.	Develop, disclose and maintain a Code of Ethics to deter wrongdoing and promote honest and ethical conduct, which meets the requirements of Section 406 of the SEC rules, including
disclosure of any changes to, or waivers of, the Code of Ethics. 

  

	5.	Take appropriate measures to assure that no officer, director, or any person acting under their direction, fraudulently influences, coerces, manipulates, or misleads the auditor
engaged in the audit of its financial statements for the purpose of rendering the financial statements materially misleading. 

  
 Independent Public Accountants 
  

	6.	Be directly responsible for the appointment, removal, compensation and oversight of the work of any independent public accounting firm employed by the Company for the purpose of
preparing or issuing an audit report or related work, including resolution of disagreements between the Company’s management and such firm regarding financial reporting, and including, with respect to the engagement of any such firm, authority
to engage such firm for auditing services and non-audit services, as such terms are used in the Sarbanes-Oxley Act of 2002, with each such firm reporting directly to the Audit Committee. 

  

	7.	In connection with its oversight of the audit process, have the authority to engage experts and consultants, including counsel, in furtherance of such responsibilities and the
carrying out of its duties hereunder. 

  

	8.	Consider the independence and effectiveness of the independent public accountants and assure that any non-audit services (as defined by Sarbanes-Oxley) are allowable and
pre-approved by the Audit Committee. On a regular basis, the Committee shall review and discuss with the accountants all significant relationships the accountants have with the Corporation to determine the accountants’ independence.

  

	9.	Approve the fees and other compensation to be paid to the independent public accountants and disclose such fees billed by the independent accountant separately reporting audit,
audit-related, tax and all other fees for the two most recent years. Describe, in qualitative terms, the types of services provided under each category. 

  

 3 

	10.	Review the performance of the independent accountants and approve any proposed discharge of the independent accountants when circumstances warrant. 

  

	11.	Periodically consult with the independent accountants out of the presence of management about internal controls and the fullness and accuracy Corporation’s financial
statements. 

  
 Financial Reporting Processes 
  

	12.	In consultation with the independent accountants, review the integrity of the Corporation’s financial reporting and disclosure processes. 

  

	13.	Consider the independent accountants’ judgments about the quality and appropriateness of the Corporation’s accounting principles as applied in its financial reporting.

  

	14.	Consider and approve, if appropriate, major changes to the Corporation’s accounting principles and practices as suggested by the independent public accountants or management.

  
 Process Improvement 
  

	15.	Following completion of the annual audit, review with management and the independent accountants any significant difficulties encountered during the course of the audit, including
any restrictions on the scope of work or access to required information. 

  

	16.	Review any significant disagreement among management and the independent accountants in connection with the preparation of the financial statements. 

  

	17.	Review with the independent accountants and management the extent to which changes or improvements in financial or accounting practices, as approved by the Audit Committee, have
been implemented. 

  

 4 

 Ethical and Legal Compliance 
  

	18.	Review, with the Corporation’s counsel, legal compliance matters including corporate securities trading policies. 

  

	19.	Review, with the Corporation’s counsel, any legal matter that could have significant impact on the Corporation’s financial statements. 

  

	20.	Perform any other activities consistent with this Charter, the Corporation’s By-laws and governing law, as the Committee or the Board deems necessary or appropriate.

  
 The Committee has the responsibility and powers
set for in this Charter, however, it is not the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in compliance with generally accepted accounting
principles. This is the responsibility of management and the independent accountants 
  

 5Third Loan Modification dated August 29, 2003

 EXHIBIT 10.13 
  
 THIRD LOAN MODIFICATION AGREEMENT 
  
 This Third Loan Modification Agreement (this “Loan Modification Agreement”) is entered into as of August
            , 2003 by and between SABA SOFTWARE, INC., a Delaware corporation (the “Borrower”) and SILICON VALLEY BANK (“Bank”). 
  
 1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be owing
by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other documents, a Loan and Security Agreement, dated August 30, 2002, as may be amended from time to time, (the “Loan Agreement”). The Loan Agreement provided for, among
other things, a Committed Revolving Line in the original principal amount of Six Million Dollars ($6,000,000), a Committed Equipment Line in the original principal amount of One Million Dollars ($1,000,000), and a Term Loan 1 in the original
principal amount of One Million Two Hundred Thousand Dollars ($1,200,000). Defined terms used but not otherwise defined herein shall have the same meanings as in the Loan Agreement. 
  
 2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as described in the Loan Agreement.
Additionally, Borrower has executed a Negative Pledge Agreement dated August 30, 2002. 
  
 Hereinafter, the above-described security documents and guaranties, together with all other documents securing repayment of the Obligations shall be referred to as the “Security Documents”. Hereinafter, the
Security Documents, together with all other documents evidencing or securing the Obligations shall be referred to as the “Existing Loan Documents”. 
  
 3. DESCRIPTION OF CHANGE IN TERMS. 
  

	 	3.1	Modifications to Loan Agreement. 

  
 3.1.1 The following Section 2.1.4B is hereby added to the Loan Agreement immediately after Section 2.1.4A. 
  
 2.1.4B Equipment Facility 2. 
  
 (a) Subject to the terms and conditions of this Agreement, Bank agrees to lend to Borrower, from time to time prior to the Equipment Facility 2 Commitment
Termination Date, equipment advances (each an “Equipment Facility 2 Advance” and collectively the “Equipment Facility 2 Advances”) in an aggregate amount not to exceed the Committed Equipment Facility 2 Line. When repaid, the
Equipment Facility 2 Advances may not be re-borrowed. The proceeds of the Equipment Facility 2 Advances will be used solely to reimburse Borrower for the purchase of (i) new Eligible Equipment Facility 2 Equipment purchased within 90 days of the
Equipment Facility 2 Advance and (ii) used Eligible Equipment Facility 2 Equipment purchased within 180 days of the Equipment Facility 2 Advance; provided, however, that used Eligible Equipment Facility 2 Equipment purchased more than 90 days
earlier, but not more than 180 days earlier, may be financed only with the first Equipment Facility 2 Advance. Bank’s obligation to lend hereunder shall terminate on the earlier of (i) the occurrence and continuance of an Event of Default, or
(ii) the Equipment Facility 2 Commitment Termination Date. 
  
 (b) To obtain an Equipment Facility 2 Advance, Borrower must notify Bank (the notice is irrevocable) by facsimile no later than 12:00 p.m. Pacific time 5 Business Days before the day on which the Equipment Facility 2 Advance is to be made.
With respect to 

  

 
Equipment Facility 2 Advances that are Option 3 Loans, the notice in the form of Exhibit B (Payment/Advance Form) must be signed by a Responsible Officer or
designee and include a copy of the invoice(s) for the Eligible Equipment Facility 2 Equipment being financed. With respect to Equipment Facility 2 Advances that are Option 4 Loans, Borrower will complete a Loan Supplement substantially in the form
of Exhibit E on the Funding Date. 
  
 (c) If Borrower satisfies
the conditions of each Equipment Facility 2 Advance specified in this Section 2.1.4B, Bank will disburse such Equipment Facility 2 Advance by internal transfer to Borrower’s deposit account with Bank. Each Equipment Facility 2 Advance may not
exceed (i) 100% of the Original Stated Cost for Equipment Facility 2 Advances for the financing of Eligible Equipment Facility 2 Equipment purchased within 90 days of the Equipment Facility 2 Advance and (ii) 75% of the Original Stated Cost for
Equipment Facility 2 Advances for the financing of Eligible Equipment Facility 2 Equipment purchased more than 90 days but less than 180 days before the relevant Equipment Facility 2 Advance. 
  
 (d) Bank’s obligation to lend the undisbursed portion of the Committed
Equipment Facility 2 Line will terminate if, in Bank’s sole discretion, there has been a material adverse change in the general affairs, management, results of operation, condition (financial or otherwise) or the prospects of Borrower, whether
or not arising from transactions in the ordinary course of business, or there has been any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank prior to August
        , 2003. 
  
 3.1.2 Sections
2.2(a) – (h) of the Loan Agreement are hereby amended in their entirety to read as follows: 
  
 (a) Advances and Term Loan 1 Interest Rates. (i) Advances accrue interest on the outstanding principal balance at a per annum rate equal
to the greater of: (x) 5.00%; or (y) 100 basis points (1%) above the Prime Rate; and (ii) the Term Loan 1 accrues interest on the outstanding principal balance at a rate of interest per annum equal to the greater of: (A) 150 basis points (1.50%)
above the Prime Rate or (B) 5.75%. After an Event of Default, Obligations accrue interest at 5 percent above the rate effective immediately before the Event of Default. The interest rate increases or decreases when the Prime Rate changes. Interest
is computed on a 360 day year for the actual number of days elapsed.. 
  
 (b) Equipment Advances and Equipment Facility 2 Advances Interest Rates. Equipment Advances accrue interest on the outstanding principal balance at a per annum rate equal to (at Borrower’s option) the Option 1
Basic Rate or the Option 2 Basic Rate. Equipment Facility 2 Advances accrue interest on the outstanding principal balance at a per annum rate equal to (at Borrower’s option) the Option 3 Basic Rate or the Option 4 Basic Rate. After an Event of
Default, Obligations accrue interest at 5 percentage points above the rate effective immediately before the Event of Default. The interest rate on the Option 1 Loans and Option 3 Loans increases or decreases when the Prime Rate changes. The interest
rate on the Option 2 Loans and Option 4 Loans will be determined on the Funding Date and shall remain fixed for the life of such loan. Interest is computed on a 360 day year for the actual number of days elapsed. 
  
 (c) Principal and Interest Payments On Payment Dates.
Borrower will pay interest due on Advances under the Committed Revolving Line on the first Business Day of each month. For Equipment Advances bearing the Option 1 Basic Rate (the “Option 1 Loans”) and Equipment Facility 2 Advances bearing
the Option 3 Basic Rate (“Option 3 Loans”), Borrower will make 36 equal monthly installments of principal plus accrued interest for each Option 1 Loan and Option 3 Loan, calculated by multiplying the Option 1 Basic Rate or Option 3 Basic
Rate, as applicable, by the outstanding Loan Amount for such Equipment Advances and Equipment Facility 2 Advances plus principal due as of such Payment Date. For Equipment Advances bearing interest at the Option 2 Basic Rate (the 

  

 
“Option 2 Loans”) and Equipment Facility 2 Advances bearing interest at the Option 4 Basic Rate (“Option 4 Loans”), Borrower will make
payments monthly of principal in advance and accrued interest for each Option 2 Loan and Option 4 Loan, calculated by multiplying the applicable Loan Factor by the Loan Amount for such Equipment Advance or Equipment Facility 2 Advance, as
applicable, as of such Payment Date (payments on the Option 1 Loans, the Option 2 Loans, the Option 3 Loans and the Option 4 Loans are collectively referred to herein as “Scheduled Payments”). Scheduled Payments are due on the first
Business Day of the month following the Funding Date (or commencing on the Funding Date if the Funding Date is the first Business Day of the month) with respect to such Equipment Advance or Equipment Facility 2 Advance and continuing thereafter
during the Equipment Loan Repayment Period on the first Business Day of each calendar month (each a “Payment Date”). All unpaid principal and accrued interest is due and payable in full on the last Payment Date with respect to such
Equipment Advance or Equipment Facility 2 Advance. Payments received after 12:00 noon Pacific time are considered received at the opening of business on the next Business Day. An Equipment Advance or Equipment Facility 2 Advance may only be prepaid
in accordance with Sections 2.2(e), 2.2 (f), 2.2 (g), and 2.2 (h). 
  
 (d) Interim Payment. In addition to the Scheduled Payments, on the Funding Date for each Equipment Advance or Equipment Facility 2 Advance (unless the Funding Date is the first Business Day of the month) Borrower
shall pay to Bank the projected interest to accrue from the Funding Date to the first Payment Date, pursuant to paragraph “(b)” of this Section. 
  
 (e) Prepayment Upon an Event of Loss. If any Financed Equipment is subject to an Event of Loss and Borrower is required to or elects to
prepay the Equipment Advance or Equipment Facility 2 Advance with respect to such Financed Equipment pursuant to Section 6.6, then such Equipment Advance or Equipment Facility 2 Advance, as applicable, shall be prepaid to the extent and in the
manner provided in such section. 
  
 (f)
Mandatory Prepayment Upon an Acceleration. If the Equipment Advances, Equipment Facility 2 Advances and the Advances are accelerated following the occurrence of an Event of Default (other than following an Event of Loss), then Borrower will
immediately pay to Bank (i) all accrued and unpaid Scheduled Payments (including principal and interest) with respect to each Equipment Advance and Equipment Facility 2 Advance, (ii) all remaining Scheduled Payments (including principal and interest
unpaid) in accordance with the terms of Section 2.2(g) and 2.2(h) below, (iii) all principal and accrued interest with respect to the Advances, and (iv) all other sums, if any, that shall have become due and payable with respect to any Equipment
Advance, Equipment Facility 2 Advance or Advance. 
  
 (g) Permitted Prepayment of Option 1 Loans and Option 3 Loans. Borrower shall have the option to prepay all or any portion of the Option 1 Loans and Option 3 Loans advanced by Bank under this Agreement, without penalty or premium, provided
no Event of Default has occurred and is continuing and Borrower (i) provides written notice to Bank of its election to prepay the Option 1 Loans or Option 3 Loans at least thirty (30) days prior to such prepayment, and (ii) pays, on the date of the
prepayment (A) all due but unpaid Scheduled Payments as of the date of prepayment (including principal and interest) with respect to each Option 1 Loan or Option 3 Loan being prepaid and (B) all other sums, if any, that shall have become due and
payable hereunder relating to such Option 1 Loans or Option 3 Loans with respect to this Agreement. 
  
 (h) Permitted Prepayment of Option 2 Loans and Option 4 Loans. Borrower shall have the option to prepay all, but not less than all, of
each of the Option 2 Loans and Option 4 Loans advanced by Bank under this Agreement, provided no Event of Default has 

  

 
occurred and is continuing and Borrower (i) provides written notice to Bank of its election to prepay the Option 2 Loans or Option 4 Loans at least thirty
(30) days prior to such prepayment, and (ii) pays, on the date of the prepayment (A) all outstanding principal with respect to all of the Option 2 Loans or Option 4 Loans, (B) all unpaid accrued interest with respect to all of the Option 2 Loans or
Option 4 Loans, and (C) all other sums, if any, that shall have become due and payable hereunder relating to such Option 2 Loans or Option 4 Loans with respect to this Agreement. 
  
 3.1.3 Section 2.3(c) of the Loan Agreement is hereby amended to read as follows: 
  
 (c) Letters of Credit. A non-refundable letter of credit fee equal to 1.25%
of the face amount of such Letter of Credit, payable on the issuance date of such Letter of Credit and thereafter annually in advance and fully earned upon payment. 
  
 3.1.4 Section 2.4 of the Loan Agreement is hereby amended to read as follows: 
  
 2.4 Termination of Commitment. So long as there are no outstanding Advances, Letters of Credit, FX Forward Contracts,
Equipment Advances or Equipment Facility 2 Advances outstanding, Borrower may at any time with 5 days written notice to Bank, terminate the Committed Revolving Line, the Committed Equipment Line and the Committed Equipment Facility 2 Line. Upon
Borrower’s payment in full of all Obligations then due and payable, this Agreement shall terminate; provided, however, that payments relating to Obligations arising out of Equipment Advances and Equipment Facility 2 Advances shall be in
accordance with the terms of Section 2.2(g) and 2.2(h). 
  
 3.1.5 Section 6.6(b)
of the Loan Agreement is hereby amended to read as follows: 
  
 (b) During the continuance of an Event of Default, on or before the Payment Date after such Event of Loss for each such item of Financed Equipment subject to such Event of Loss, Borrower will, at Bank’s option, pay to Bank an amount
equal to the sum of: (i) all accrued and unpaid Scheduled Payments (with respect to such Equipment Advance or Equipment Facility 2 Advance related to the Event of Loss) due prior to the next such Payment Date, (ii) all regularly Scheduled Payments
(including principal and interest), plus (iii) all other sums (other than remaining Scheduled Payments), if any, that shall have become due and payable with respect to such Equipment Advance or Equipment Facility 2 Advance, including interest at the
Default Rate with respect to any past due amounts. 
  
 3.1.6 Section 6.7 of the
Loan Agreement is hereby amended to read as follows: 
  
 6.7
Borrower’s Deposit and Investment Accounts. Borrower will maintain at all times at Bank or one of Bank’s affiliates no less than 100% of its Investable Funds. 
  
 3.1.7 Section 6.8(i) of the Loan Agreement is hereby amended in its entirety to read as follows: 
  
 (i) Cash. Borrower shall have unrestricted cash and cash equivalents
of no less than $15,000,000. 
  
 3.1.8 The following definitions are either added
(as to newly defined terms) to, or amended and restated in their entirety (as to existing defined terms) in, Section 13.1 of the Loan Agreement as follows: 
  
 “Committed Equipment Facility 2 Line” is Bank’s commitment to make Equipment Facility 2 Advances of up to $500,000.

  
 “Commitment Termination Date” is August
        , 2004. 
  

 “Credit Extension” is each Advance, Equipment Advance, Equipment Facility 2 Advance,
Letter of Credit, FX Forward Contract, Term Loan 1, or any other extension of credit by Bank for Borrower’s benefit. 
  
 “Eligible Accounts”, subsection (l) only: 
  
 (l) The amount received on behalf of any Account constituting Deferred Revenue, provided, however, that notwithstanding the foregoing: (i) if
Borrower’s Deferred Revenue Allowance Ratio, measured as of the last day of a calendar quarter, is less than or equal to 2.00 to 1.00, then, for the next succeeding calendar quarter no portion (0%) of its Deferred Revenue (as set forth on its
Deferred Revenue Schedule) shall be deemed to constitute “Eligible Accounts,” (ii) if Borrower’s Deferred Revenue Allowance Ratio, measured as of the last day of a calendar quarter, is greater than 2.00 to 1.00 but less than or equal
to 2.85 to 1.00, then, for the next succeeding calendar quarter, 50% of its Deferred Revenue (as set forth on its Deferred Revenue Schedule) shall be deemed to constitute “Eligible Accounts,” or (iii) if Borrower’s Deferred Revenue
Allowance Ratio, measured as of the last day of a calendar quarter, is greater than 2.85 to 1.00, then, for the next succeeding calendar quarter, 100% of its Deferred Revenue (as set forth on its Deferred Revenue Schedule) shall be deemed to
constitute “Eligible Accounts. 
  
 “Eligible
Equipment Facility 2 Equipment” is new or used general purpose computer equipment, office equipment, test and laboratory equipment, furnishings, and Other Equipment Facility 2 Equipment that complies with all of Borrower’s
representations and warranties to Bank and which is acceptable to Bank in all respects and is located in the United States. 
  
 “Equipment Facility 2 Advance” is defined in Section 2.1.4B. 
  
 “Equipment Facility 2 Commitment Termination Date” is May
        , 2004. 
  
 “Financed Equipment” is any Equipment financed with an Equipment Advance or an Equipment Facility 2 Advance. 
  
 “Funding Date” is any date on which an Equipment Advance or Equipment Facility 2 Advance is made to or on account of Borrower.

  
 “Loan Amount” is the aggregate amount of
each Equipment Advance or Equipment Facility 2 Advance, as applicable. 
  
 “Loan Factor” is the percentage which results from amortizing the Option 2 Loan or Option 4 Loan, as applicable, over the Equipment Loan Repayment Period, using the Option 2 Basic Rate or the Option 4 Basic Rate,
respectively, as the interest rate as set forth in the applicable Loan Supplement. 
  
 “Maturity Date” is, with respect to each Equipment Advance or Equipment Facility 2 Advance, the last day of the Equipment Loan Repayment Period for such Equipment Advance or Equipment Facility 2
Advance, respectively, or if earlier, the date of acceleration of such Equipment Advance or Equipment Facility 2 Advance by Bank following an Event of Default and, with respect to the Advances, the Revolving Maturity Date. 
  
 “Option 4 Basic Rate” is a rate of interest equal to the
per annum rate of interest (based on a year of 360 days) equal to the sum of (a) the U.S. Treasury note yield to maturity for a 

  

 
term equal to the Treasury Note Maturity as quoted in The Wall Street Journal as of the Funding Date, plus (b) the Option 4 Loan Margin. 
  
 “Option 4 Loan” is defined in Section 2.2. 
  
 “Option 4 Loan Margin” is 370 basis points. 
  
 “Option 3 Basic Rate” is a rate of interest equal to the
per annum rate of interest (based on a year of 360 days) equal to the greater of (a) five and one half percent (5.5%) or (b) the sum of (i) Prime Rate, plus (ii) the Option 3 Loan Margin. 
  
 “Option 3 Loan” is defined in Section 2.2. 
  
 “Option 3 Loan Margin” is 150 basis points. 
  
 “Original Stated Cost” is (i), the original cost to the
Borrower of the item of new Equipment net of any and all freight, installation, tax or (ii) the fair market value assigned to such item of used Equipment by mutual agreement of Borrower and Bank at the time of making of the Equipment Advance or
Equipment Facility 2 Advance, as applicable. 
  

 “Other Equipment Facility 2 Equipment” is leasehold improvements, intangible property
such as transferable computer software and transferable software licenses, equipment specifically designed or manufactured for Borrower, other intangible property, limited use property and other similar property and sales tax, freight, maintenance,
and installation costs. Unless otherwise agreed to by Bank, not more than 30% of the Eligible Equipment Facility 2 Equipment financed with the proceeds of each Equipment Facility 2 Advance shall consist of Other Equipment Facility 2 Equipment.

  
 “Revolving Maturity Date” is August
        , 2004. 
  
 3.1.9 Exhibit B
(Loan Payment/Advance Request Form), Exhibit D (Compliance Certificate), and Exhibit E (Loan Supplement) to the Loan Agreement are hereby replaced in their entirety by the Exhibit B, Exhibit D, and Exhibit E attached hereto. 
  
 4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above. 
  
 5. PAYMENT OF EXPENSES
AND LOAN FEE. Borrower shall pay Bank: (i) all of Bank’s out-of-pocket expenses not to exceed $                     relating to the
preparation and negotiation of this Loan Modification Agreement; and (ii) a modification fee in the amount of $18,750 (the “Modification Fee”). 
  
 6. NO DEFENSES OF BORROWER. Borrower agrees that, as of the date hereof, it has no knowledge of any defenses against the obligations to pay any amounts under the
Obligations. 
  
 7. CONTINUING VALIDITY. Borrower understands and agrees
that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan Modification Agreement, the
terms of the Existing Loan Documents remain unchanged and in full force and effect. Bank’s agreement to modifications to the existing Obligations pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Obligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Obligations. It is the intention of Bank and Borrower to retain as liable parties all makers and endorsers of Existing Loan
Documents, unless the party is expressly released by Bank in writing. No maker, endorser, or guarantor will be released by virtue of this Loan Modification Agreement. 
  
 8. CONDITIONS. The effectiveness of this Loan Modification Agreement is conditioned upon payment receipt by Bank of: (i) a fully
executed copy of this Loan Modification Agreement; (ii) all of Bank’s out-of-pocket expenses; and (iii) the Modification Fee. 
  
 This Loan Modification Agreement is executed as of the date first written above. 
  

	BORROWER:	 	 	 	BANK:
			
	SABA SOFTWARE, INC.	 	 	 	SILICON VALLEY BANK
					
	By:	 	 	 	 	 	By:	 	 
	 	
	 	 	 	 	

					
	 Name:
	 	 	 	 	 	 Name:
	 	 
	 	
	 	 	 	 	

					
	 Title:
	 	 	 	 	 	 Title:
	 	 
	 	
	 	 	 	 	

  

 EXHIBIT B 
  

LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM 
  
 DEADLINE FOR SAME DAY PROCESSING IS 12 NOON, P.S.T. 
  

	TO: CENTRAL CLIENT SERVICE DIVISION	 	DATE:   ________________________________
		
	FAX #: (650) 320 - 0016	 	TIME:    __________________________

  

		
	 FROM:

	 	SABA SOFTWARE, INC.
	 	

 CLIENT NAME (BORROWER) 
  
 REQUESTED BY:                                  
                                        
                                        
                                        
                                        
                      
 AUTHORIZED
SIGNER’S NAME 
  
 AUTHORIZED SIGNATURE:                                 
                                        
                                        
                                        
                                         

  
 PHONE NUMBER:                                  
                                        
                                        
                                        
                                        
                    
  
 FROM ACCOUNT # _______________    TO ACCOUNT #___________________________________________________________

  

	 REQUESTED TRANSACTION TYPE AMOUNT

	  	REQUESTED DOLLAR

		
	 PRINCIPAL INCREASE (REVOLVING ADVANCE)
	  	$_________________
	 PRINCIPAL PAYMENT (REVOLVING ADVANCE ONLY)
	  	$_________________
	 INTEREST PAYMENT–REVOLVING ADVANCES (ONLY)
	  	$_________________
	 PRINCIPAL AND INTEREST–REVOLVING LINE (PAYMENT)
	  	$_________________
	 PRINCIPAL INCREASE (OPTION 1 LOAN)
	  	$_________________
	 PRINCIPAL PAYMENT – OPTION 1 LOAN (ONLY)
	  	$_________________
	 INTEREST PAYMENT – OPTION 1 LOAN (ONLY)
	  	$_________________
	 PRINCIPAL AND INTEREST – OPTION 1 LOAN (PAYMENT)
	  	$_________________
	 PRINCIPAL INCREASE (OPTION 3 LOAN)
	  	$_________________
	 PRINCIPAL PAYMENT – OPTION 3 LOAN (ONLY)
	  	$_________________
	 INTEREST PAYMENT – OPTION 3 LOAN (ONLY)
	  	$_________________
	 PRINCIPAL AND INTEREST – OPTION 3 LOAN (PAYMENT)
	  	$_________________

  
 OTHER INSTRUCTIONS:                                 
                                        
                                        
                                        
                                        
          
  
                                       
                                        
                                        
                                        
                                        
                                        
           
  
 All
Borrower’s representations and warranties in the Loan and Security Agreement are true, correct and complete in all material respects on the date of the telephone request for an Advance, Equipment Advance or Equipment Facility 2 Advance
confirmed by this Borrowing Certificate; but those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of that date. 

 BANK USE ONLY 
  
 TELEPHONE REQUEST: 
  
 The following person is authorized to request the loan payment transfer/loan advance on the advance designated account and is known to me. 
  

			
	  	 	 	 	  
	
	 	 	

	Authorized Requester	 	 	 	Phone #
			
	  	 	 	 	  
	
	 	 	

	Received By (Bank)	 	 	 	Phone #
	 	 	 	 	 
	 	 	 
	 	

	 	 	 	 	Authorized Signature (Bank)

 EXHIBIT D 
  

COMPLIANCE CERTIFICATE 
  

	 TO:
	  	SILICON VALLEY BANK
	 	  	3003 Tasman Drive
	 	  	Santa Clara, CA 95054
		
	 FROM:
	  	SABA SOFTWARE, INC.
	 	  	2400 Bridge Parkway
	 	  	Redwood Shores, CA 94065

  
 The undersigned
authorized officer of SABA SOFTWARE, INC. (“Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for the
period ending                              with all required covenants except as noted below and (ii)
all representations and warranties in the Agreement are true and correct in all material respects on this date. Attached are the required documents supporting the certification. The Officer certifies that these are prepared in accordance with
Generally Accepted Accounting Principles (GAAP) consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The Officer acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. 
  
 Please indicate compliance status by circling Yes/No under “Complies” column. 
  

	 Reporting Covenant

	  	 Required

	  	Complies

	Monthly financial statements + CC	  	Monthly within 30 days	  	Yes	  	No
	Annual (Audited)	  	FYE within 120 days	  	Yes	  	No
	8-K except with respect to certifications	  	Within 5 days after filing with SEC	  	Yes	  	No
	A/R & A/P Agings	  	Monthly within 20 days	  	Yes	  	No
	Borrowing Base Certificate	  	Monthly within 20 days	  	Yes	  	No

  

	 Financial Covenant

	  	Required

	  	Actual

	  	Complies

					
	 Maintain on a Monthly Basis (unless otherwise specified):
	  	 	  	 	  	 	  	 
					
	Profitability. Borrower will have a minimum net profit of no less than (or may suffer a net loss not to exceed) the following amounts for the fiscal quarter end immediately opposite
to such amounts:	  	 	  	$_______	  	Yes	  	No
					
	 August 31, 2003
	  	($3,500,000)	  	 	  	 	  	 
					
	 November 30, 2003
	  	($1,900,000)	  	 	  	 	  	 
					
	 February 28, 2004
	  	($500,000)	  	 	  	 	  	 
					
	 May 31, 2004 and every fiscal quarter thereafter
	  	$1	  	 	  	 	  	 
					
	 Cash
	  	$15,000,000	  	$_______	  	Yes	  	No

	 BANK USE ONLY
 Comments Regarding
Exceptions: See Attached.
	  	 
		
	 Sincerely,
	  	Received
by:                                       
                                        
              
	 	  	AUTHORIZED SIGNER
		
	 SABA SOFTWARE, INC.
	  	 
		
	
	  	Date:                                     
                                        
                               
	 SIGNATURE
	  	 
		
	
	  	Verified:                                     
                                        
                        
	 TITLE
	  	AUTHORIZED SIGNER
		
	
	  	Date:                                     
                                        
                               
	 Date
	  	  
 Compliance Status:                                   
                          Yes        No

 EXHIBIT E 
 FORM OF LOAN AGREEMENT SUPPLEMENT 
 LOAN AGREEMENT SUPPLEMENT No. [    ]

  
 LOAN AGREEMENT SUPPLEMENT No.
[    ], dated                     , 200   (“Supplement”), to the Loan and Security
Agreement dated August 30, 2002 (the “Loan Agreement) by and between the undersigned (“Borrower”), and Silicon Valley Bank (“Bank”). 
  
 Capitalized terms used herein but not otherwise defined herein are used with the respective meanings given to such terms in the Loan Agreement.

  
 To secure the prompt payment by Borrower of all amounts from
time to time outstanding under the Loan Agreement, and the performance by Borrower of all the terms contained in the Loan Agreement, Borrower grants Bank, a first priority security interest in each item of equipment and other property described in
Annex A hereto, which equipment and other property shall be deemed to be additional Financed Equipment and Collateral. The Loan Agreement is hereby incorporated by reference herein and is hereby ratified, approved and confirmed. 
  
 Annex A (Equipment Schedule) and Annex B (Loan Terms Schedule) are attached
hereto. 
  
 The proceeds of the Loan should be transferred to
Borrower’s account with Bank set forth below: 
  
 Bank
Name:        Silicon Valley Bank 
 Account No.: 
  
 Borrower hereby certifies that (a) the foregoing information is true and correct and
authorizes Bank to endorse in its respective books and records, the Option 2 Basic Rate or Option 4 Basic Rate, as applicable, applicable to the Funding Date of the Option 2 Loan or Option 4 Loan contemplated in this Loan Agreement Supplement and
the principal amount set forth in the Loan Terms Schedule; (b) the representations and warranties made by Borrower in the Loan Agreement are true and correct in all material respects on the date hereof and will be true and correct in all material
respects on such Funding Date. No Event of Default has occurred and is continuing under the Loan Agreement. This Supplement may be executed by Borrower and Bank in separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the same instrument. 
  
 This Supplement is delivered as of this day and year first above written. 
  

	SILICON VALLEY BANK	 	 	 	SABA SOFTWARE, INC.
					
	By:	 	 	 	 	 	By:	 	 
	 	
	 	 	 	 	

	Name:  	 	 	 	 	 	Name:  	 	 
	 	
	 	 	 	 	

	Title:	 	 	 	 	 	Title:	 	 
	 	
	 	 	 	 	

  
 Annex A - Description of Financed
Equipment 
 Annex B - Loan Terms Schedule 

 Annex A to Exhibit E 
  
 The Financed Equipment being financed with the Equipment Advance or Equipment Facility 2 Advance with respect to which this
Loan Agreement Supplement is being executed is listed below. Upon the funding of such Equipment Advance or Equipment Facility 2 Advance, this schedule automatically shall be deemed to be a part of the Collateral. 
  

	 Description of Equipment

	 	 Make

	 	 Model

	 	 Serial #

	 	 Invoice #

 Annex B to Exhibit E 
  
 LOAN TERMS SCHEDULE #             
  
 Loan Funding Date:
                            , 200   
 Original Loan Amount: $                     
 Option 2 Basic Rate or Option 4 Basic Rate (circle one):             % 
 Loan Factor:             % 
 Scheduled Payment Dates and Amounts*: 
  
 One (1) payment of $                     due
                     
  
              payment of
$                     due monthly in advance from
                 through                     .

  
 One (1) payment of
$                     due
                                        .

  
 Maturity Date:
                                        

  

	 Payment No.

	  	Payment Date

	 1
	  	 
	 2
	  	 
	 3
	  	 
	 4
	  	 
	 ...
	  	 
	 35
	  	 
	 [36]
	  	 
	 ...
	  	 

  

	*/	The amount of each Scheduled Payment will change as the Loan Amount changes.

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