Document:

form10k043013ex10-13.htm

To:              American Magna Corp.

701 N. Green Valley Parkway, Suite 200

Henderson, NV 89074

AMERICAN MAGNA CORP.

INVESTMENT CONFIRMATION

The undersigned, intending to be legally bound, hereby irrevocably subscribes for and agrees to purchase ________ shares of the common stock of American Magna Corp., a Nevada corporation f/k/a Dakota Gold Corp. (the "Company"), for a purchase price of $_______, or $0.01 per share. Simultaneous with the execution and delivery of this confirmation to the Company, the undersigned is either delivering a check made payable to “American Magna Corp.”, sending a wire transfer payment directly to the Company’s bank account or to the account of counsel to the Company, which is acting as the escrow agent on behalf of the Company.

The undersigned agrees and acknowledges that the escrow agent is hereby authorized to release the funds to the Company when the Company informs the escrow agent that it is satisfied that it has received the appropriate documentation from the investor in order to issue the shares.

The undersigned acknowledges that it or he, as the case may be, has received or has reviewed (a) a copy of the prospectus of the Company which was declared effective with the Securities and Exchange Commission on March 14, 2013 (registration no. 333-185450) with respect to 30,000,000 shares of stock being offered by the Company and (b) all the filings made by the Company since such date. The undersigned is not relying on the Company or its affiliates or representatives with respect to economic considerations involved in this investment, but has relied solely on its own advisors.

The undersigned represents and warrants to the Company and its representatives the following:

(i) neither the undersigned investor in the Company nor any of its affiliates is now, and has never been, an officer, director, or more than 5% shareholder of the Company or in any other way affiliated of the Company, as that term is defined in Rule 144(a)(1);

(ii) neither the undersigned investor nor any of its affiliates is an underwriter with respect to the shares being purchased hereunder, nor will the shares be part of any proposed transaction deemed to be a distribution of securities of the Company;

(iii) neither the undersigned investor nor any of its affiliates has any agreement with any other party with respect to the shares of the Company;

(iv) neither the undersigned investor nor any of its affiliates owns directly or indirectly any shares in the Company other than the shares being purchased herein; and

  

  

  

(v)           no other party other than the undersigned has or will own any interest in the shares being purchased herein.

The undersigned further acknowledges that although the shares of common stock being purchased from the Company are registered securities under the U.S. Securities Act of 1933, as amended, there may be restrictions on the resale of the shares imposed by the particular state law where the undersigned resides or in a jurisdiction outside of the United States. Accordingly, the undersigned will not offer to sell or sell the Shares in any jurisdiction unless the undersigned obtains all required consents, if any.

The undersigned understands that an investment in the shares is a speculative investment which involves a high degree of risk and the potential loss of his entire investment. The undersigned is further aware that no federal or state agency has (i) made any finding or determination as to the fairness of this investment, (ii) made any recommendation or endorsement of the shares or the Company, or (iii) guaranteed or insured any investment in the Shares or any investment made by the Company. The undersigned understands that the price of the stock purchased hereby bears no relation to the assets, book value or net worth of the Company and was determined arbitrarily by the Company.

The undersigned understands all of the foregoing statements. The undersigned agrees and acknowledges that the Company and its representatives will rely upon the completeness and accuracy of the statements contained herein for the purpose of issuing a stock certificate to the undersigned and that the Company will not issue a stock certificate to the undersigned without the execution and delivery of this letter by the undersigned investor.

The undersigned has full capacity and authority to execute and deliver this letter to the Company.

Date: ______

Amount of Investment:  $_____                                                                                                Number of Shares: ______

  

  

  

	
1.

	
Print Full Name of Investor:

	
Individual:

	  	  	
______________________________

	  	  	
First, Middle, Last

	  	  	  
	  	  	
Partnership, Corporation, Trust, Custodial Account, Other:

	  	  	  
	  	  	
____________________________________________________________

	  	  	
Name of Entity

	  	  	  
	
2.

	
Permanent Address of Investor:

	
____________________________________________________________

	  	  	
______________________________

	  	  	  
	
3.

	
Name of Primary Contact Person:

Title:

	
____________________________________________________________

	  	  	  
	
4.

	
Telephone Number:

	
______________________________

	  	  	  
	
5.

	
E-Mail Address:

	
____________________________________________________________

	  	  	  
	
6.

	
Facsimile Number:

Permanent Address:

 

	
____________________________________

	
 

7.

	
 

Social Security or EIN of Investor:

(attach an executed Form W-8)

 

	
 

____________________________________________________________

	
8.

	
Authorized Signatory:

Title:

	
____________________________________

____________________________________

If Investor is an entity, provide copy of Articles of Incorporation, Certificate of Formation or other evidence of existence, as well as a copy of board resolution or other evidence of authorization to purchase the shares of the Company.

  

  

  

ACCEPTANCE OF SUBSCRIPTION

(to be filed out only by the Company)

The Company hereby accepts the above application of ____________________ for subscription for Shares on behalf of the Company.

Dated: _____________

AMERICAN MAGNA CORP.

By:______________________________

	
  

	
Herb Duerr – PresidentExhibit 10.1

EXHIBIT 10.1
 
	
		
	 
	Invibio®
biomedical solutions
Invibio  LTD
Technology Centre Hillhouse International
Thornton Cleveleys. Lancashire FY5 4QD UK
Tel. +44 (0)1253 866812 Tel +44 (0)1253 851458
info@invibio.com                         www.invibio.com

17th July 2014

LDR Medical
Technopole de L'Aube
BP 2-10 902
Troyes cedex 9
France

Dear Sirs,

Letter of Amendment in respect of Supply Agreement between Invibio Ltd. and LDR Medical dated January 31 2003 and subsequent Amendments (the "Agreement").

Following our discussions we are writing to confirm that pursuant to section 27.1 of the Agreement we have agreed to make the following amendment to the Agreement:

		
	1.
	Clause 3 of the Agreement shall be amended such that the Term of the Agreement shall be extended until the 31st of August 2014 inclusive. 

All capitalized terms used in this Letter shall have the same meaning as when used in the Agreement.

This letter and all matters arising from or connected with it are governed by English Law.

Except as expressly provided in this letter of amendment, all other terms, conditions, and provisions of the Agreement shall continue in full force and effect as provided therein. 

	
			
	 
	 
	 

	/s/ John Devine
	 
	/s/ Eric Vigneron

	An authorised signatory for and on behalf of Invibio, Ltd.
	 
	An authorised signatory for and on behalf of LDR Medical

	 
	 
	 

	Name: John Devine
	 
	Name: Eric Vigneron

	Position: Emerging Business Director
	 
	Position: Deputy General Manager

	Date: July 24, 2014
	 
	Date: July 24, 2014brdr8kexhibit101

Exhibit 10.1   SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT   THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this   “Agreement”) dated as of July 24, 2014 (the “Effective Date”) between SILICON VALLEY BANK, a California   corporation with a loan production office located at 505 Fifth Avenue, 11th Floor, New York, New York 10017   (“Bank”), and BORDERFREE, INC., a Delaware corporation (“Borrower”), provides the terms on which Bank   shall lend to Borrower and Borrower shall repay Bank.  This Agreement amends and restates in its entirety that   certain Amended and Restated Loan and Security Agreement dated as of April 18, 2013, between Borrower and   Bank, as amended by that certain First Loan Modification Agreement dated as of October 29, 2013, between   Borrower and Bank, as further amended by that certain Second Loan Modification Agreement dated as of February   14, 2014, between Borrower and Bank, as further amended by that certain Third Loan Modification Agreement   dated as of April 21, 2014, between Borrower and Bank, as further amended by that certain Fourth Loan   Modification Agreement dated as of May 23, 2014, between Borrower and Bank, and as further amended by that   certain Fifth Loan Modification Agreement dated as of June 24, 2014, between Borrower and Bank (the “Prior   Agreement”).  The parties agree that the Prior Agreement is hereby superseded and replaced in its entirety by this   Agreement, and the parties hereto further 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 the foregoing, all financial covenant calculations   shall be computed with respect to Borrower only, and not on a consolidated basis.  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.   2.1.1 Revolving Advances.   (a) Availability.  Subject to the terms and conditions of this Agreement, Bank shall 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.   2.1.2 Non-Formula Revolving Advances.   (a) Availability.  Subject to the terms and conditions of this Agreement, during the Non-   Formula Revolving Line Draw Period, Bank shall make Non-Formula Advances not exceeding the Non-Formula   Revolving Line Availability Amount.  Amounts borrowed under the Non-Formula Revolving Line may be repaid   and, prior to the applicable Non-Formula Revolving Line Maturity Date, reborrowed, subject to the applicable terms   and conditions precedent herein.   (b) Termination; Repayment.  The Non-Formula Revolving Line terminates on the   applicable Non-Formula Revolving Line Maturity Date, when the principal amount of all Non-Formula Advances,   the unpaid interest thereon, and all other Obligations relating to the Non-Formula Revolving Line shall be   immediately due and payable.   2.2 Overadvances.  If, at any time, during any Formula Period, the outstanding principal amount of   any Advances exceeds the lesser of either (a) the Revolving Line or (b) 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 the Default Rate.     

 

   -2-   2.3 Payment of Interest on the Credit Extensions.     (a) Interest Rate. Subject to Section 2.3(b), the outstanding principal amount of any and all   Advances and Non-Formula Advances, shall in each case accrue interest at a floating per annum rate equal to the   Prime Rate, which interest shall be payable monthly in accordance with Section 2.3(d) below in arrears.   (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 four percent (4.0%) 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 2.3(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 in arrears on the first   calendar day 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 2:00 p.m. Eastern 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.   2.4 Fees.  Borrower shall pay to Bank:    (a) Commitment Fee.  A fully earned, non-refundable commitment fee of (i) Thirty   Thousand Dollars ($30,000.00), on the Effective Date, and (ii) Thirty Thousand Dollars ($30,000.00), on the date   which is the one (1) year anniversary of the Effective Date;    (b) Bank Expenses.  All Bank Expenses incurred and invoiced to Borrower through and after   the Effective Date, when due (or, if no stated due date, upon demand by Bank); and   (c) 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 2.4 pursuant to the terms of Section 2.5(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 2.4.   2.5 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 2:00 p.m. Eastern time on the date   when due.  Payments of principal and/or interest received after 2:00 p.m. Eastern 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 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.   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:       

 

   -3-   (a) duly executed original signatures to the Loan Documents dated prior to or as of the   Effective Date;   (b) duly executed original signatures to the Control Agreement(s);   (c) 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;   (d) duly executed original 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 original signature   thereto;   (g) evidence satisfactory to Bank that the insurance policies and endorsements required by   Section 6.5 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   (h) payment of the fees and Bank Expenses then due as specified in Section 2.4 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) except as otherwise provided in Section 3.4, timely receipt of an executed   Payment/Advance Form;     (b) the representations and warranties in this Agreement shall be true, accurate, and complete   in all material respects on the date of the Payment/Advance Form 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 are true, accurate, and complete in all material respects as of the date thereof; 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 reasonable satisfaction that there has not been any material   impairment in the general affairs, results of operation, financial condition or the prospect of repayment of the   Obligations when due, or 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.  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.   3.4 Procedures for Borrowing.  Subject to the prior satisfaction of all other applicable conditions to   the making of a Credit Extension set forth in this Agreement, to obtain a Credit Extension, Borrower shall notify   Bank (which notice shall be irrevocable) by electronic mail, facsimile, or telephone by 2:00 p.m. Eastern time on the   proposed Funding Date of the Credit Extension.  Together with any such electronic or facsimile notification,   Borrower shall deliver to Bank by electronic mail or facsimile a completed Payment/Advance Form executed by a   Responsible Officer or his or her designee.  Bank may rely on any telephone notice given by a person whom Bank   reasonably believes is a Responsible Officer or designee.  Bank shall credit the Credit Extensions to the Designated   Deposit Account.  Bank may make Credit Extensions under this Agreement based on instructions from a     

 

   -4-   Responsible Officer or his or her designee or without instructions if the Credit Extensions 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 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”.  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;     

 

   -5-   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 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 term of Section 6.6(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.  Other than mobile Equipment in the possession of Borrower’s employees or   agents, 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) non-   exclusive 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 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.   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.     (a) For any Eligible Account in any Borrowing Base Certificate, all statements made and all   unpaid balances appearing in all invoices, instruments and other documents evidencing such 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.  Whether or not an Event of Default has occurred and is   continuing, Bank may notify any Account Debtor owing Borrower money of Bank’s security interest in such funds   and verify the amount of such Eligible Account.   (b) 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 Certificate.  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.     

 

   -6-   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, Five Hundred Thousand Dollars ($500,000.00).   5.5 Financial Statements; Financial Condition.  All consolidated financial statements for Borrower   and its Subsidiaries delivered to Bank fairly present in all material respects Borrower’s consolidated financial   condition and Borrower’s consolidated results of operations as of the date thereof.  There has not been any material   deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements   submitted to Bank.   5.6 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 Borrower’s knowledge, by previous Persons, in disposing, producing,   storing, treating, or transporting any hazardous 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 Government 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 Ten Thousand Dollars   ($10,000.00).     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.    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 as 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   certificate or written statement given to Bank in connection with the Loan Documents, as of the date such   representation, warranty, or other statement was made, taken together with all such written certificates and written   statements given to Bank, contains any untrue statement of a material fact or omits to state a material fact necessary   to make the statements contained in the certificates or statements, in light of the circumstances in which they were   made, 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).     

 

   -7-   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) Except as described in the Perfection Certificate or permitted by Section 7.3, 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, Certificates.  Provide Bank with the following:   (a) Borrowing Base Reports.  Within forty-five (45) days after the last day of each quarter,   aged listings of accounts receivable and accounts payable (by invoice date) (the “Borrowing Base Reports”);   provided, however, that during any Formula Period, Borrower shall provide Bank with the Borrowing Base Reports   within thirty (30) days after the last day of each month in which Advances are outstanding or an Advance request   has been made;   (b) Borrowing Base Certificate.  Within forty-five (45) days after the last day of each quarter,   and together with the Borrowing Base Reports, a duly completed Borrowing Base Certificate signed by a   Responsible Officer; provided, however, that during any Formula Period, Borrower shall provide Bank with a duly   completed Borrowing Base Certificate signed by a Responsible Officer, together with the Borrowing Base Reports,   within thirty (30) days after the last day of each month in which Advances are outstanding or an Advance request   has been made;   (c) Quarterly Financial Statements.  As soon as available, but no later than forty-five (45)   days after the last day of each quarter, a company prepared consolidated balance sheet and income statement   covering Borrower’s consolidated operations for such quarter certified by a Responsible Officer and in a form   acceptable to Bank (the “Quarterly Financial Statements”);    (d) Quarterly Compliance Certificate.  Within forty-five (45) days after the last day of each   quarter and together with the Quarterly Financial Statements, a duly completed Compliance Certificate signed by a   Responsible Officer, certifying that as of the end of such quarter, 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 set forth in this Agreement and such other information as Bank may reasonably request;   (e) Annual Audited Financial Statements.  As soon as available, but no later than ninety (90)   days after the last day of Borrower’s fiscal year, audited consolidated financial statements prepared under GAAP,   consistently applied, together with an unqualified opinion on the financial statements from PricewaterhouseCoopers   LLP or another independent certified public accounting firm;   (f) Other Statements.  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;   (g) SEC Filings.  As soon as available, but to later than five (5) days after filing with the   SEC, copies of Borrower’s 10K, 10Q, and 8K reports. Documents required to be delivered pursuant to this Section   6.2(g) (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;    (h) Legal Action Notice.  A prompt report of any legal actions pending or threatened in   writing against Borrower or any of its Subsidiaries that could reasonably be expected to result in damages or costs to   Borrower or any of its Subsidiaries of, individually or in the aggregate, Five Hundred Thousand Dollars   ($500,000.00) or more;      

 

   -8-   (i) Projections.  As soon as available, but no later than forty-five (45) days after the last day   of Borrower’s fiscal year, or within ten (10) days after any material updates thereto, annual Board-approved   operating budgets and projections in a form acceptable to Bank; and   (j) Other Financial Information.  Other financial information reasonably requested by Bank.    6.3 Inventory; Returns.  Keep all Inventory in good and marketable condition, free from material   defects.  Returns and allowances between Borrower and its Account Debtors shall follow Borrower’s customary   practices as they exist at the Effective Date.  Borrower must promptly notify Bank of all returns, recoveries, disputes   and claims that involve more than Five Hundred Thousand Dollars ($500,000.00).   6.4 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.   6.5 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   lender loss payee.  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.  Notwithstanding the foregoing, (a) so long as no Event of Default has occurred   and is continuing, Borrower shall have the option of applying the proceeds of any casualty policy up to Five   Hundred Thousand Dollars ($500,000.00) in the aggregate for all losses under all casualty policies in any one year,   toward the replacement or repair of destroyed or damaged property; provided that any such replaced or repaired   property (i) shall be of equal or like value as the replaced or repaired Collateral and (ii) shall be deemed Collateral in   which Bank has been granted a first priority security interest, and (b) after the occurrence and during the   continuance of an Event of Default, all proceeds payable under such casualty policy shall, at the option of Bank, be   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 6.5 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 6.5 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 6.5, and take any action under the policies Bank deems prudent.   6.6 Operating Accounts.   (a) Maintain its primary and its Subsidiaries’ and its parent’s primary U.S. operating and   other deposit accounts and securities accounts with Bank and Bank’s Affiliates, and maintain with Bank and Bank’s   Affiliates accounts in the name of the Borrower containing at least Thirty Million Dollars ($30,000,000.00).    Without limiting the foregoing, Borrower may maintain (i) accounts with PayPal, or other payment transmitters or   services, provided that (A) any individual account shall not contain more than Five Million Dollars ($5,000,000.00)   at any time, and (B) the aggregate amount contained in all such accounts shall not exceed Seven Million Dollars   ($7,000,000.00) at any time, and (ii) Offshore Accounts, provided that the maximum aggregate balance in such   Offshore Accounts shall not exceed Fifteen Million Dollars ($15,000,000.00) (the “Permitted Amount”) at any   time.   (b) 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     

 

   -9-   Account in accordance with the terms hereunder which Control Agreement may not be terminated without the prior   written consent of Bank.  The provisions of the previous sentence shall not apply to (i) Offshore Accounts so long as   the maximum aggregate balance in such Offshore Accounts does not exceed the Permitted Amount, or (ii) 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.   6.7 Financial Covenants.  Maintain at all times, subject to periodic reporting as of the last day of   each fiscal quarter, unless otherwise noted:   (a) Adjusted Quick Ratio.  Commencing with the quarter ending June 30, 2014, and as of the   last day of each quarter thereafter, an Adjusted Quick Ratio of at least 1.20 to 1.00.    (b) Net Income.  To be reported as of the last day of each quarter, Net Income of at least (i)   ($2,500,000.00) for the quarter ending June 30, 2014, (ii) ($2,350,000.00) for the quarter ending September 30,   2014, (iii) $1,400,000.00 for the quarter ending December 31, 2014, and (iv) for each quarter thereafter, the Net   Income covenant levels will be mutually agreed upon by Borrower and Bank based upon Borrower’s 2015 Board-   approved projections and budget.  The failure of Borrower and Bank to mutually agree in writing, on or before   February 28, 2015, to any covenant levels for the period after December 31, 2014, shall result in an immediate Event   of Default for which there shall be no grace or cure period.   6.8 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.     (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 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.   6.9 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 reasonably deem them 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.   6.10 Access to Collateral; Books and Records.  Allow Bank, or its agents, 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), to   inspect the Collateral and audit and copy Borrower’s Books.  Such inspections or audits shall be conducted no more   often than once every twelve (12) months 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 at Borrower’s expense.   6.11 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 Governmental Authority regarding compliance with or maintenance of Governmental   Approvals or Requirements of Law or that could reasonably be expected to have a material adverse effect on any of   the Governmental Approvals or otherwise on the operations of Borrower and its Subsidiaries.   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     

 

   -10-   reasonable judgment of Borrower, no longer economically practicable to maintain or useful in the ordinary course of   business of Borrower; (c) consisting of Permitted Liens and Permitted Investments; (d) consisting of the sale or   issuance of any stock of Borrower permitted under Section 7.2 of this Agreement; (e) consisting of Borrower’s use   or transfer of money or Cash Equivalents in the ordinary course of its business for the payment of ordinary course   business expenses in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents;   and (f) of non-exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course of   business.   7.2 Changes in Business, Management, Ownership, 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; or (c) (i) if any Key   Person ceases to hold such office with Borrower and replacements satisfactory to Bank are not made within thirty   (30) days after such Key Person’s departure from Borrower; or (ii) enter into any transaction or series of related   transactions in which the stockholders of Borrower who were not stockholders immediately prior to the first such   transaction own more than forty percent (40%) of the voting stock of Borrower immediately after giving effect to   such transaction or related series of such transactions (other than by the sale of Borrower’s equity securities in a   public offering or to venture capital or other institutional or strategic investors so long as Borrower identifies to   Bank the 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).   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 each such new offices or business location contains less than One   Hundred Thousand Dollars ($100,000.00) in Borrower’s assets or property) or deliver any portion of the Collateral   valued, individually or in the aggregate, in excess of One Hundred Thousand Dollars ($100,000.00) 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 deliver any   portion of the Collateral valued, individually or in the aggregate, in excess of Five Hundred Thousand Dollars   ($500,000.00) 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, and such bailee shall execute and deliver a bailee agreement in form and substance   satisfactory to Bank in its reasonable discretion.   7.3 Mergers or Acquisitions.  Merge or consolidate, or permit any of its Subsidiaries to merge or   consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of   the capital stock or property of another Person (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 the Collateral, 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 6.6(b) hereof.   7.7 Distributions; Investments.  (a) Pay any dividends or make any distribution or payment or   redeem, retire or purchase any capital stock, provided that (i) Borrower may convert any of its convertible securities   into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, (ii)   Borrower may pay dividends solely in common stock, and (iii) Borrower may repurchase the stock of former   employees or consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist at   the time of such repurchase and would not exist after giving effect to such repurchase, provided such repurchase   does not exceed in the aggregate of Five Hundred Thousand Dollars ($500,000.00) per fiscal year; or (b) directly or     

 

   -11-   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.  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 proceeds of any Credit Extension for that purpose; fail to (a) meet the minimum   funding requirements of ERISA, (b) prevent a Reportable Event or Prohibited Transaction, as defined in ERISA,   from occurring, or (c) comply with the Federal Fair Labor Standards Act, the failure of any of the conditions   described in clauses (a) through (c) which could reasonably be expected to have a material adverse effect on   Borrower’s business; 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.     (a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4, 6.5, 6.6, 6.7, or   6.8(b), or violates any covenant in Section 7; or   (b) Borrower 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 this Section 8) 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, that if the   default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be   cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower   shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default,   and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but   no Credit Extensions shall be made during such cure period).  Cure periods provided under this section shall not   apply, among other things, to financial covenants or any other covenants set forth in clause (a) above;   8.3 [Reserved.]   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     

 

   -12-   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;    8.5 Insolvency.  (a) Borrower is unable to pay its debts (including trade debts) as they become due or   otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is   begun against Borrower and is not dismissed or stayed within forty-five (45) 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 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 Five Hundred   Thousand Dollars ($500,000.00); or (b) any breach or default by Borrower, the result of which could have a material   adverse effect on Borrower’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 Five Hundred Thousand Dollars   ($500,000.00) (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   8.10 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 causes, or could reasonably be expected to cause, a material adverse effect on Borrower’s business.   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, to the extent not prohibited by applicable law:   (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     

 

   -13-   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;   (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 at any location that is reasonably convenient to Bank and Borrower.  Bank may   enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay,   purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all   expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge by   Borrower, to exercise any of Bank’s rights or remedies;   (g) apply to the Obligations then due any (i) balances and deposits of Borrower it holds, or   (ii) any amount held by Bank owing to or for the credit or the account of Borrower;   (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, 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,   exercisable upon the occurrence and during the continuance of an Event of Default, to:  (a) endorse Borrower’s   name on any checks or other forms of payment or security; (b) sign Borrower’s name on any invoice or bill of lading   for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the Accounts   directly with Account Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust   all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security   interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to   terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third party as the Code   permits.  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 (other than inchoate indemnity obligations) have been satisfied in   full and Bank is under no further obligation to make Credit Extensions hereunder.  Bank’s foregoing appointment as   Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable until all   Obligations have been fully repaid and performed and Bank’s obligation to provide Credit Extensions terminates.   9.3 Protective Payments.  If Borrower fails to obtain the insurance called for by Section 6.5 or fails   to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this   Agreement or any other Loan Document 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.     

 

   -14-   9.4 Application of Payments and Proceeds Upon Default.  If an Event of Default has occurred and   is continuing, 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 pursuant to Section 9.1, 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 applicable law and 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.   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: Borderfree, Inc.    292 Madison Avenue, 5th Floor    New York, New York 10017     Attn:  Ed Neumann    Fax:  (212) 299-3528    Email:   Ed.Neumann@borderfree.com      with a copy to: Goodwin Procter LLP    53 State Street    Boston, Massachusetts  02109    Attn: Mark D. Smith, Esquire    Fax: (617) 523-1231    Email: marksmith@goodwinprocter.com     

 

   -15-      If to Bank: Silicon Valley Bank     505 Fifth Avenue, 11th Floor    New York, New York 10017    Attn:  Ms. Melissa Stepanis    Fax:   (212) 688-5994    Email:   mstepanis@svb.com     with a copy to: Riemer & Braunstein LLP    Three Center Plaza    Boston, Massachusetts  02108    Attn: David A. Ephraim, Esquire    Fax: (617) 692-3455    Email: DEphraim@riemerlaw.com   11. CHOICE OF LAW, VENUE, AND JURY TRIAL WAIVER   New York 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 New York, New York; 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.   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.   This Section 11 shall survive the termination of this Agreement.   12. GENERAL PROVISIONS   12.1 Termination Prior to Revolving Line Maturity Date; Survival.  All covenants, representations   and warranties made in this Agreement 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 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.     

 

   -16-   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 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 termination of this Agreement.   12.10 Right of Set Off.  Borrower hereby grants to Bank, a lien, security interest and right of set off 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 Bank subsidiary) 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 set off the same   or any part thereof and apply the same to any Obligation of Borrower then due regardless of the adequacy of any   other collateral securing the Obligations.  ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS     

 

   -17-   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.   12.11 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 Captions.  The headings used in this Agreement are for convenience only and shall not affect the   interpretation of this Agreement.   12.13 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.   12.14 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.   12.15 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 any “account” as 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 Borrower.   “Account Debtor” is any “account debtor” as defined in the Code with such additions to such term as may   hereafter be made.   “Advance” or “Advances” means a revolving credit loan (or revolving credit loans) under the Revolving   Line.   “Adjusted Quick Ratio” is the ratio of (a) Quick Assets to (b) Current Liabilities minus the current portion   of Deferred Revenue.   “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.   “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 any Credit Extension request, on behalf of Borrower.   “Availability Amount” is the Revolving Line minus the outstanding principal balance of any Advances;   provided, however, that during any Formula Period, the Availability Amount shall be (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.     

 

   -18-   “Bank Expenses” are all documented audit fees and expenses, costs, and expenses (including reasonable   documented 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.   “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” means Borrower’s board of directors.   “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 (a) eighty percent (80%) of Eligible Accounts, as determined by Bank from   Borrower’s most recent Borrowing Base Certificate, plus (b) provided that at all times Borrower maintains   unrestricted cash with Bank in an aggregate amount in excess of the amount of all Obligations, seventy-five percent   (75%) of Borrower’s Credit Card Receivables; provided, however, that Bank has the right, after consultation with   Borrower, to decrease the foregoing percentages 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 Certificate” is that certain certificate in the form attached hereto as Exhibit B.   “Borrowing Base Report” is defined in Section 6.2(a).   “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 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, and if any   determination of a “Business Day” shall relate to an FX Contract, the term “Business Day” shall mean a day on   which dealings are carried on in the country of settlement of the Foreign Currency.   “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.; and (c) Bank’s certificates of   deposit issued maturing no more than one (1) year after issue.   “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 New York; 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 New     

 

   -19-   York, 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.   “Compliance Certificate” is that certain certificate in the form attached hereto as Exhibit C.   “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 Card Receivables” means all receivables of Borrower outstanding for less than thirty (30) days   that consist of credit card payments from customers, less all offsets, reserves, and other deductions determined by   Bank in Bank’s sole and absolute discretion.   “Credit Extension” is any Advance, Overadvance, or any other extension of credit by Bank for Borrower’s   benefit.   “Current Liabilities” are all Obligations and liabilities of Borrower to Bank, plus, without duplication, the   aggregate amount of Borrower’s Total Liabilities that mature within one (1) year, including all obligations of   Borrower to Bank pursuant to any Bank Services Agreement.   “Default Rate” is defined in Section 2.3(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 multicurrency account denominated in Dollars, account number   XXXXXX484, maintained by Borrower with Bank.   “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.   “Draw Period A” is defined in the definition of Non-Formula Revolving Line Draw Period.     

 

   -20-   “Draw Period B” is defined in the definition of Non-Formula Revolving Line Draw Period.   “Effective Date” is defined in the preamble hereof.   “Eligible Accounts” means Accounts which arise in the ordinary course of Borrower’s business that meet   all Borrower’s representations and warranties in Section 5.3.  Bank reserves the right, after consultation with   Borrower, at any time after the Effective Date to adjust any of the criteria set forth below and to establish new   criteria in its good faith business judgment.  Unless Bank otherwise agrees in writing, Eligible Accounts shall not   include:   (a) Accounts for which the Account Debtor is Borrower’s Affiliate, officer, employee, or   agent;   (b) Accounts that the Account Debtor has not paid within ninety (90) days of invoice date   regardless of invoice payment period terms;   (c) Accounts with credit balances over ninety (90) days 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 of invoice date;   (e) Accounts owing from an Account Debtor which does not have its principal place of   business in the United States;   (f) Accounts billed from and/or payable to Borrower outside of the United States (sometimes   called foreign invoiced accounts);   (g) 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);    (h) 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;   (i) 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;   (j) 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);   (k) Accounts subject to contractual arrangements between Borrower and an Account Debtor   where payments shall be scheduled or due according to completion or fulfillment requirements where the Account   Debtor has a right of offset for damages suffered as a result of Borrower’s failure to perform in accordance with the   contract (sometimes called contracts accounts receivable, progress billings, milestone billings, or fulfillment   contracts);   (l) 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);   (m) Accounts subject to trust provisions, subrogation rights of a bonding company, or a   statutory trust;   (n) 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);   (o) Accounts for which the Account Debtor has not been invoiced;   (p) Accounts that represent non-trade receivables or that are derived by means other than in   the ordinary course of Borrower’s business;     

 

   -21-   (q) Accounts for which Borrower has permitted Account Debtor’s payment to extend beyond   90 days;   (r) Accounts arising from chargebacks, debit memos or other payment deductions taken by   an Account Debtor;   (s) Accounts arising from product returns and/or exchanges (sometimes called “warranty” or   “RMA” accounts);   (t) 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, or becomes   insolvent, or goes out of business;    (u)  Accounts owing from an Account Debtor with respect to which Borrower has received   Deferred Revenue (but only to the extent of such Deferred Revenue);   (v) Accounts owing from an Account Debtor, whose total obligations to Borrower exceed   twenty-five percent (25%) of all Accounts, for the amounts that exceed that percentage, unless Bank approves in   writing; and   (w) Accounts for which Bank, after consultation with Borrower, 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.   “Foreign Currency” means lawful money of a country other than the United States.   “Formula Period” is any period of time, on and after the Effective Date, during which Borrower and its   Subsidiaries maintain unrestricted cash with Bank or Bank’s Affiliates in an aggregate amount of less than Forty   Million Dollars ($40,000,000.00).    “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,     

 

   -22-   legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities   exchange and any self-regulatory organization.   “Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services, such   as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes,   bonds, debentures or similar instruments, (c) capital lease obligations, and (d) Contingent Obligations.   “Indemnified Person” is defined in Section 12.3.   “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, 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.   “Israeli Subsidiary” is Borderfree Research and Development Ltd. f/k/a FiftyOne Research and   Development, Ltd.   “Key Person” is Borrower’s Chief Executive Officer (who is, as of the Effective Date, Michael   DeSimone).    “Letter of Credit” is a standby or commercial letter of credit issued by Bank upon request of Borrower   based upon an application, guarantee, indemnity, or similar agreement.   “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, the Warrant, the Perfection Certificate, any Bank Services   Agreement, any subordination agreement, any note, or notes or guaranties executed by Borrower, and any other   present or future agreement by Borrower with or for the benefit of Bank in connection with this Agreement or Bank   Services, all as amended, restated, or otherwise modified.   “Net Income” means, as calculated for Borrower for any period as at any date of determination, the net   profit (or loss), after provision for taxes and tax-related distributions permitted hereunder, but excluding (a) non-   cash expenses relating to (i) employee stock compensation agreements or (ii) the Warrant, (b) gains or losses in   connection with the sale of the Global Settlements Service in August 2011, and market-based royalties and   outsourcing servicing fees earned as a result of such sale, and (c) other one-time or non-cash expenses in an   aggregate amount not to exceed One Million Dollars ($1,000,000.00) (or such higher amount which, for the     

 

   -23-   purposes of this definition only, may be approved by Bank in writing on a case by case basis in its sole and absolute   discretion), of Borrower for such period taken as a single accounting period.   “Non-Formula Advance” or “Non-Formula Advances” means a revolving credit loan (or revolving   credit loans) under the Non-Formula Revolving Line.   “Non-Formula Revolving Line” is an aggregate principal amount equal to Six Million Dollars   ($6,000,000.00).     “Non-Formula Revolving Line Availability Amount” is the Non-Formula Revolving Line minus the   outstanding principal balance of any Non-Formula Advances.    “Non-Formula Revolving Line Draw Period” is (a) the period of time commencing on November 15,   2014, through the earlier to occur of (i) January 15, 2015, or (ii) an Event of Default (“Draw Period A”); and (b) the   period of time commencing on November 15, 2015, through the earlier to occur of (i) January 15, 2016, or (ii) an   Event of Default (“Draw Period B”); provided that, in each case, Borrower shall provide Bank with evidence   acceptable to Bank in Bank’s sole and absolute discretion that Borrower is and shall be in compliance with the   financial covenants set forth in Section 6.7 both prior to and after the date on which any Non-Formula Advance   request is made.   “Non-Formula Revolving Line Maturity Date” is (a) for Non-Formula Advances made during Draw   Period A, January 15, 2015, and (b) for Non-Formula Advances made during Draw Period B, January 15, 2016.    “Obligations” are Borrower’s obligations to pay when due any debts, principal, interest, fees, Bank   Expenses, and other amounts Borrower owes Bank now or later, whether under this Agreement, the other Loan   Documents (other than the Warrant), or otherwise, including, without limitation, any 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 (other than the Warrant).   “Offshore Accounts” are accounts maintained by Borrower or its Subsidiaries outside the United States   with other financial institutions (other than Bank or Bank’s Affiliates),   “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 2.2.   “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/Advance Form” is that certain form attached hereto as Exhibit D.   “Perfection Certificate” is defined in Section 5.1.   “Permitted Amount” is defined in Section 6.6(a).   “Permitted Indebtedness” is:   (a) Borrower’s Indebtedness to Bank under this Agreement and the other Loan Documents;   (b) Indebtedness existing on the Effective Date and shown on the Perfection Certificate;   (c) Subordinated Debt;   (d) unsecured Indebtedness to trade creditors incurred in the ordinary course of business;    (e) Indebtedness incurred as a result of endorsing negotiable instruments received in the   ordinary course of business;   (f) Indebtedness secured by Liens permitted under clauses (a) and (c) of the definition of   “Permitted Liens” hereunder; and   (g) extensions, refinancings, modifications, amendments and restatements of any items of   Permitted Indebtedness (a) through (f) above, provided that the principal amount thereof is not increased or the     

 

   -24-   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   and shown on the Perfection Certificate;   (b) Investments consisting of Cash Equivalents;   (c) Investments consisting of the endorsement of negotiable instruments for deposit or   collection or similar transactions in the ordinary course of Borrower;   (d) Investments consisting of deposit accounts in which Bank has a first priority perfected   security interest;    (e) Investments accepted in connection with Transfers permitted by Section 7.1;   (f) Investments consisting of (i) travel advances and employee relocation loans and other   employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors   relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase   plans or agreements approved by Borrower’s Board;   (g) Investments (including debt obligations) received in connection with the bankruptcy or   reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with,   customers or suppliers arising in the ordinary course of business;   (h) Investments consisting of notes receivable of, or prepaid royalties and other credit   extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business; provided that this   paragraph (h) shall not apply to Investments of Borrower in any Subsidiary; and   (i) Investments by Borrower in its Subsidiaries in an aggregate amount not to exceed Four   Million Dollars ($4,000,000.00) per month.    “Permitted Liens” are:   (a) Liens existing on the Effective Date and shown on the Perfection Certificate or arising   under this Agreement and 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 its 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 Five Hundred Thousand Dollars ($500,000.00) 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;   (d) Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature   arising in the ordinary course of business so long as such Liens attach only to Inventory, securing liabilities in the   aggregate amount not to exceed One Hundred Thousand Dollars ($100,000.00) and which are not delinquent or   remain payable without penalty or which are being contested in good faith and by appropriate proceedings which   proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;    (e) Liens to secure payment of workers’ compensation, employment insurance, old-age   pensions, social security and other like obligations incurred in the ordinary course of business (other than Liens   imposed by ERISA);   (f) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by   Liens described in (a) through (e), 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;   (g) leases or subleases of real property granted in the ordinary course of Borrower’s business   (or, if referring to another Person, in the ordinary course of such Person’s business), and leases, subleases, non-   exclusive licenses or sublicenses of personal property (other than Intellectual Property) granted in the ordinary     

 

   -25-   course of Borrower’s business (or, if referring to another Person, in the ordinary course of such Person’s business),   if the leases, subleases, licenses and sublicenses do not prohibit granting Bank a security interest therein;   (h) non-exclusive license of Intellectual Property granted to third parties in the ordinary   course of business;   (i) Liens arising from attachments or judgments, orders, or decrees in circumstances not   constituting an Event of Default under Sections 8.4 and 8.7; and   (j) Liens in favor of other financial institutions arising in connection with Borrower’s   deposit and/or securities accounts held at such institutions, provided that Bank has a first priority perfected security   interest in the amounts held in such deposit and/or securities accounts; and    (k) Liens on Israeli Subsidiary’s account no. 03830090 in favor of Bank Leumi, securing   bank guarantees issued by Bank Leumi with reimbursement obligations not to exceed an aggregate amount of Nine   Hundred Thousand Shekels (NIS 900,000) at any time.   “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.   “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 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).    “Quarterly Financial Statements” is defined in Section 6.2(c).   “Quick Assets” is, on any date, Borrower’s (a) unrestricted cash, plus (b) net billed accounts receivable,   determined according to GAAP, plus (c) funds held on deposit at American Express.    “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.   “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 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 the Bank’s right to sell any Collateral.   “Revolving Line” is an aggregate principal amount equal to Twelve Million Dollars ($12,000,000.00).   “Revolving Line Maturity Date” is July 24, 2016.   “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.     

 

   -26-   “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 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.    “Total Liabilities” is on any day, obligations that should, under GAAP, be classified as liabilities on   Borrower’s consolidated balance sheet, including all Indebtedness and current portion of Subordinated Debt   permitted by Bank to be paid by Borrower, but excluding all other Subordinated Debt.   “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.   “Warrant” is (i) that certain Warrant to Purchase Stock dated as of September 17, 2009 executed by   Borrower in favor of Bank, and (ii) that certain Warrant to Purchase Stock dated as of March 29, 2012 executed by   Borrower in favor of Bank   [Signature page follows.]     

 

 Signature Page to Second Amended and Restated Loan and Security Agreement   IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the   Effective Date.      BORROWER:   BORDERFREE, INC.   By: /s/Mike DeSimone   Name: Mike DeSimone    Title: CEO      BANK:   SILICON VALLEY BANK   By: /s/Mickey Swift   Name: Mickey Swift    Title: Vice President     

 

   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, all 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-1   EXHIBIT B - BORROWING BASE CERTIFICATE      Borrower: BORDERFREE, INC.   Lender: SILICON VALLEY BANK   Commitment Amount: $12,000,000.00   ACCOUNTS RECEIVABLE    1 Accounts Receivable (invoiced) Book Value as of ____________________ $_______________   2 Additions (Please explain on next page) $_______________   3 Less:  Intercompany / Employee / Non-Trade Accounts $_______________   4 NET TRADE ACCOUNTS RECEIVABLE $_______________       ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)    5 90 Days Past Invoice Date $_______________   6 Credit Balances over 90 Days  $_______________   7 Balance of 50% over 90 Day Accounts (Cross-Age or Current Affected) $_______________   8 Foreign Account Debtor Accounts $_______________   9 Foreign Invoiced and/or Collected Accounts $_______________   10 Contra / Customer Deposit Accounts $_______________   11 U.S. Government Accounts $_______________   12 Promotion or Demo Accounts; Guaranteed Sale or Consignment Sale Accounts $_______________   13 Accounts with Memo or Pre-Billings $_______________   14 Contract Accounts; Accounts with Progress / Milestone Billings $_______________   15 Accounts for Retainage Billings $_______________   16 Trust / Bonded Accounts $_______________   17 Bill and Hold Accounts $_______________   18 Unbilled Accounts $_______________   19 Non-Trade Accounts (If not already deducted above) $_______________   20 Accounts with Extended Term Invoices (Net 90+) $_______________   21 Chargebacks Accounts / Debit Memos $_______________   22 Product Returns / Exchanges $_______________   23 Disputed Accounts; Insolvent Account Debtor Accounts $_______________   24 Deferred Revenue, if applicable / Other (Please explain on next page) $_______________   25 Concentration Limits $_______________   26 TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $_______________         27 Eligible Accounts (#4 minus #26) $_______________   28 ELIGIBLE AMOUNT OF ACCOUNTS (80% of #27) $_______________       29 75% of Borrower’s Credit Card Receivables (if eligible under the Loan    Agreement)   $_______________       BALANCES    30 Maximum Loan Amount $12,000,000.00   31 Total Funds Available (Lesser of #30 or (#28 plus #29)) $_______________   32 Present balance owing on Line of Credit $_______________   33 RESERVE POSITION (#31 minus #32) $_______________      [Continued on following page.]     

 

   Exhibit B-2   Explanatory comments from previous page:   _____________________________________________________________________________________________   _____________________________________________________________________________________________   _____________________________________________________________________________________________         The undersigned represents and warrants that this is true, complete and correct, and that the information in this   Borrowing Base Certificate complies with the representations and warranties in the Loan and Security Agreement   between the undersigned and Silicon Valley Bank.   COMMENTS:            BORDERFREE, INC.      By: ___________________________   Authorized Signer   Date:     BANK USE ONLY   Received by: _____________________   AUTHORIZED SIGNER   Date:   __________________________      Verified: ________________________   AUTHORIZED SIGNER   Date: ___________________________   Compliance Status: Yes No              

 

   Exhibit C-1   EXHIBIT C   COMPLIANCE CERTIFICATE      TO: SILICON VALLEY BANK      Date:         FROM:  BORDERFREE, INC.      The undersigned authorized officer of BORDERFREE, INC. (“Borrower”) certifies that under the terms and   conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”):   (1) Borrower is in compliance for the period ending _______________ with all required covenants except as noted   below; (2) there are no Events of Default; (3) all representations and warranties in the Agreement are true and correct in all   material respects on this date except as noted below; 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; (4) Borrower, and each of its Subsidiaries, 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 as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement; and (5) 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.     Attached are the required documents supporting the certification.  The undersigned certifies that these are prepared in   accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or   footnotes.  The undersigned 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.  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   Quarterly financial statements with    Compliance Certificate   Quarterly within 45 days Yes   No   Annual financial statement (CPA Audited)  FYE within 90 days Yes   No   10-Q, 10-K and 8-K Within 5 days after filing with SEC Yes   No   Borrowing Base Certificate and A/R & A/P Agings Quarterly within 45 days (except   during a Formula Period, when   delivery is required within 30 days   after the last day of each month in   which Advances are outstanding or an   Advance request has been made)   Yes   No   Board-approved Projections FYE within 45 days and within 10   days of any material updates   Yes   No      Financial Covenants Required Actual Complies        Maintain at all times (reported on a quarterly basis):          Adjusted Quick Ratio 1.20:1.00 _____:1.00 Yes   No   Maintain at all times (reported on a quarterly basis):           Net Income $_______* $_______ Yes   No   * As set forth in Section 6.7(b) of the Agreement.    The following financial covenant analyses and information set forth in Schedule 1 attached hereto are true and   accurate as of the date of this Certificate.     

 

   Exhibit C-2      Other Matters      Have there been any amendments of or other changes to the capitalization table of   Borrower and to the Operating Documents of Borrower or any of its Subsidiaries?  If yes,   provide copies of any such amendments or changes with this Compliance Certificate.   Yes No      Borrower only has accounts at the following institutions:               Aggregate balance in all accounts maintained with PayPal, or other payment transmitters or services:  $        Does the balance in any account maintained with PayPal, or any other payment transmitter or service, exceed $5,000,000?     Yes  No      Does the aggregate balance in all Offshore Accounts exceed $15,000,000?   Yes  No            The following are the exceptions with respect to the certification above:  (If no exceptions exist, state “No   exceptions to note.”)      ---------------------------------------------------------------------------------------------------------------------------------------------------   -----------------------------------------------------------------------------------------------------------------------------------------------      BORDERFREE, INC.         By:     Name:     Title:        BANK USE ONLY      Received by: _____________________   AUTHORIZED SIGNER   Date:  _________________________      Verified: ________________________   AUTHORIZED SIGNER   Date:  _________________________      Compliance Status: Yes     No        

 

   Exhibit C-3   Schedule 1 to Compliance Certificate      Financial Covenants of Borrower        In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan   Agreement shall govern.      Dated: ____________________      I. Adjusted Quick Ratio (Section 6.7(a))   Required: 1.20:1.00      Actual:   ____:1.00         A. Aggregate value of the unrestricted cash of Borrower $       B. Aggregate value of the net billed accounts receivable of Borrower  $       C. Aggregate value of funds of Borrower held on deposit at American Express      $    D. Quick Assets (the sum of lines A through C) $       E. Aggregate value of Obligations to Bank  $       F. Aggregate value of liabilities that should, under GAAP, be classified as liabilities on   Borrower’s consolidated balance sheet, including all Indebtedness and current portion of   Subordinated Debt permitted by Bank to be paid by Borrower, but excluding all other   Subordinated Debt, and not otherwise reflected in line E above, that mature within one (1) year,   including all obligations of Borrower to Bank pursuant to any Bank Services Agreement       $          G. Current Liabilities (the sum of lines E and F) $       H. Aggregate value of all amounts received or invoiced by Borrower in advance    of performance under contracts and not yet recognized as revenue   $    I. Line G minus line H $    J. Adjusted Quick Ratio (line D divided by line I)        Is line J equal to or greater than 1.20:1:00?          No, not in compliance        Yes, in compliance        

 

   Exhibit C-4   II. Net Income (Section 6.7(b))         Required: (i) ($2,500,000.00) for the quarter ending June 30, 2014, (ii) ($2,350,000.00) for the quarter ending   September 30, 2014, (iii) $1,400,000.00 for the quarter ending December 31, 2014, and (iv) for   each quarter thereafter, the Net Income covenant levels will be mutually agreed upon by Borrower   and Bank based upon Borrower’s 2015 Board-approved projections and budget.  The failure of   Borrower and Bank to mutually agree in writing, on or before February 28, 2015, to any covenant   levels for the period after December 31, 2014, shall result in an immediate Event of Default for   which there shall be no grace or cure period.      Actual:  $_______            No, not in compliance        Yes, in compliance           

 

      EXHIBIT D – LOAN PAYMENT/ADVANCE REQUEST FORM      DEADLINE FOR SAME DAY PROCESSING IS 2:00 P.M. EASTERN TIME      Fax To:   Date: _____________________      LOAN PAYMENT:    BORDERFREE, INC.      From Account #________________________________ To Account #__________________________________________________   (Deposit Account #)      (Loan Account #)   Principal $____________________________________ and/or Interest $________________________________________________   Authorized Signature:  Phone Number:     Print Name/Title:           LOAN ADVANCE:   Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an outgoing wire.   From Account #________________________________ To Account #__________________________________________________   (Loan Account #)      (Deposit Account #)   Amount of Advance $___________________________   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   request for an advance; 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:      Authorized Signature:  Phone Number:     Print Name/Title:           OUTGOING WIRE REQUEST:   Complete only if all or a portion of funds from the loan advance above is to be wired.   Deadline for same day processing is 2:00 p.m., Eastern Time       Beneficiary Name: _____________________________  Amount of Wire: $    Beneficiary Bank: ______________________________  Account Number:     City and State:     Beneficiary Bank Transit (ABA) #:   Beneficiary Bank Code (Swift, Sort, Chip, etc.):     (For International Wire Only)   Intermediary Bank:   Transit (ABA) #:     For Further Credit to:     Special Instruction:        By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and   conditions set forth in the agreements(s) covering funds transfer service(s), which agreements(s) were previously received and executed by me (us).      Authorized Signature: ___________________________ 2nd Signature (if required): _______________________________________   Print Name/Title: ______________________________ Print Name/Title: ______________________________________________   Telephone #:     Telephone #:

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