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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
--- Act of 1934 for the quarterly period ended September 30, 1996
Transition Report Pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934 for the transition period from _____ to _____.
Commission File Number: 0-27468
ULTRADATA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2746681
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5020 Franklin Drive, Pleasanton, CA 94588-3031
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code:
510/463-8356
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-------- ---------
As of October 31, 1996, Registrant had outstanding 7,525,864 shares of Common
Stock, $.001 par value.
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ULTRADATA CORPORATION
TABLE OF CONTENTS
<TABLE>
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PAGE
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PART 1 FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Balance Sheets as of September 30, 1996 and
December 31, 1995 3
Statements of Operations for the Three Months and
Nine Months Ended September 30, 1996 and 1995 4
Statements of Cash Flows for the Nine Months
Ended September 30, 1996 and 1995 5
Notes to Financial Statements 6
ITEM 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II ITEM 6 - Exhibits and Reports on Form 8-K 12
SIGNATURES 13
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2
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<TABLE>
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ULTRADATA CORPORATION
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
SEPT. 30, DEC. 31,
1996 1995
----------- --------
(unaudited)
<S> <C> <C>
ASSETS
------
Current assets:
Cash, cash equivalents, and short $ 3,746 $ 1,124
term investments
Trade accounts receivable, net 6,303 4,242
Unbilled revenues 6,007 2,252
Inventories 1,786 1,251
Prepaid expenses and other current 1,391 774
assets
Deferred income taxes 680 843
---------- --------
Total current assets 19,913 10,486
Property and equipment, net 3,896 2,940
Stockholder notes receivable -- 1,453
Deferred income taxes 46 64
Other assets 254 192
---------- --------
$ 24,109 $ 15,135
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Bank borrowings $ -- $ 1,000
Current portion of debt 24 234
Accounts payable 2,855 5,219
Accrued expenses 1,889 1,735
Income taxes payable -- 107
Deferred revenue and customer
advances 2,294 3,737
---------- --------
Total current liabilities 7,062 12,032
Deferred revenue and customer advances 1,260 1,542
Debt, excluding current portion 20 43
---------- --------
Total liabilities 8,342 13,617
---------- --------
Stockholder's equity:
Preferred stock; par value $.001 per
share; 2,000,000 shares authorized;
none outstanding -- --
Common stock; par value $.001 per share;
23,000,000 shares authorized;
7,484,000 shares outstanding at
September 30, 1996, 5,742,000 shares
outstanding at December 31, 1995 7 6
Additional paid-in capital 14,753 4
Retained earnings 1,007 1,508
---------- --------
Total stockholders' equity 15,767 1,518
---------- --------
$ 24,109 $ 15,135
========== ========
</TABLE>
3
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ULTRADATA CORPORATION
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1996 1995 1996 1995
------- ------ ------- -------
<S> <C> <C> <C> <C>
REVENUE
Software $ 1,929 $3,453 $10,059 $ 6,396
Maintenance 2,290 1,817 6,246 5,335
Services and other 1,878 1,094 5,807 3,162
Hardware 2,595 2,717 11,629 5,734
------- ------ ------- -------
TOTAL REVENUE 8,692 9,081 33,741 20,627
------- ------ ------- -------
COST OF GOODS SOLD
Software 408 563 2,077 972
Maintenance 1,359 785 3,553 2,414
Services and other 1,733 880 5,598 2,500
Hardware 1,801 1,882 8,097 4,274
------- ------ ------- -------
TOTAL COST OF GOODS SOLD 5,301 4,110 19,325 10,160
------- ------ ------- -------
GROSS MARGIN 3,391 4,971 14,416 10,467
------- ------ ------- -------
Product development 1,627 911 4,402 2,785
Selling, general and administrative 4,376 3,084 11,125 8,370
------- ------ ------- -------
6,003 3,995 15,527 11,155
------- ------ ------- -------
OPERATING (LOSS) INCOME (2,612) 976 (1,111) (688)
Interest income (expense), net 96 (49) 316 (26)
------- ------ ------- -------
(LOSS) INCOME BEFORE INCOME TAXES (2,516) 928 (795) (714)
Income tax (benefit) expense (931) 352 (294) (270)
------- ------ ------- -------
NET (LOSS) INCOME AFTER TAXES $(1,585) $ 576 $ (501) $ (444)
======= ====== ======= =======
NET (LOSS) INCOME PER SHARE $ (0.21) $ 0.09 $ (0.07) $ (0.07)
======= ====== ======= =======
Shared used in per share computations 7,432 6,092 7,086 5,940
======= ====== ======= =======
</TABLE>
4
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ULTRADATA CORPORATION
STATEMENTS OF CASH FLOWS
IN THOUSANDS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
1996 1995
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (501) $ (444)
Adjustments to reconcile net loss
to net cash (used for) provided by
operating activities:
Depreciation and amortization 781 609
Deferred income taxes 181 --
Equity in earnings of
unconsolidated subsidiary (62) (74)
Changes in operating assets and
liabilities:
Trade accounts receivable (2,061) (1,699)
Unbilled revenues (3,755) 123
Inventories (535) (736)
Prepaid expenses and other
assets (617) (193)
Accounts payable (2,364) 1,283
Accrued expenses 154 435
Income taxes payable (107) (524)
Deferred revenue and customer
advances (1,725) 1,830
-------- -------
Net cash (used for) provided by
operating activities (10,611) 610
-------- -------
Cash flows from investing activities:
Capital expenditures (1,737) (1,396)
Decrease in stockholder notes
receivable 1,453 0
-------- -------
Net cash used for investing
activities (284) (1,396)
-------- -------
Cash flows from financing activities:
Bank borrowings, net (1,000) 1,000
Repayment of debt and capital lease
obligations (233) (334)
Stockholder distributions 0 (480)
Net proceeds from initial public
offering 14,750 0
-------- -------
Net cash provided by financing
activities 13,517 186
-------- -------
Net increase (decrease) in cash 2,622 (600)
Cash and cash equivalents at beginning
of period 1,124 881
-------- -------
Cash and cash equivalents at end of
period $ 3,746 $ 281
======== =======
</TABLE>
5
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ULTRADATA CORPORATION
Notes to Financial Statements
September 30, 1996 and 1995
1. BASIS OF PRESENTATION
These unaudited financial statements have been prepared in accordance with the
instructions for Form 10-Q and therefore certain information and footnote
disclosures normally contained in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
The accompanying interim financial statements should be read in conjunction with
the Company's registration statement on Form S-1 for the year ended December 31,
1995, which contains information about the Company's financial statements and
accounting practices.
The accompanying unaudited financial statements of the Company reflect all
adjustments of a normal recurring nature which are, in the opinion of
management, necessary to present a fair statement of the financial position as
of September 30, 1996 and the results of operations and cash flows for the
interim periods presented.
2. REVENUE RECOGNITION
The Company recognizes revenues from licenses of computer software provided that
a noncancelable license agreement has been signed, the software and related
documentation have been shipped, there are no material uncertainties regarding
customer acceptance, collection of the resulting receivable is deemed probable,
and no other significant vendor obligations exist. Maintenance revenues are
deferred and recognized over the related contract period, generally three months
to five years. Services and other revenues generated from professional
consulting and training services and software customization services are
recognized as the services are performed. Hardware revenues are recognized upon
shipment.
<TABLE>
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3. ACCRUED EXPENSES
A summary of accrued expenses follows (in thousands):
SEPT. 30, DEC.31,
1996 1995
--------- -------
<S> <C> <C>
Accrued payables $ 789 $ 621
Accrued vacation 648 496
Accrued 401(k) contribution 150 275
Other 302 343
------ ------
$1,889 $1,735
====== ======
</TABLE>
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS INCLUDES A NUMBER OF FORWARD-LOOKING STATEMENTS WHICH REFLECT THE
COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE.
THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES,
INCLUDING THOSE DISCUSSED BELOW, THAT COULD CAUSE RESULTS TO DIFFER MATERIALLY
FROM HISTORICAL RESULTS OR THOSE ANTICIPATED. IN THIS REPORT THE WORDS
"EXPECTS", "ANTICIPATES", "BELIEVES" AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-
LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF.
OVERVIEW
ULTRADATA Corporation (the "Company") develops and markets open architecture,
on-line information processing systems for the credit union and financial
services markets. The Company's core ULTRAFIS system, together with its array of
complementary application modules, provides an open architecture, fully-
integrated on-line information processing system with advanced database
management capabilities that supports financial services such as checking,
savings and investment accounts, credit and debit cards, ATM access and consumer
lending. The ULTRAFIS system was designed specifically to take advantage of open
mainstream computing standards such as the UNIX operating system and SQL-
compatible databases. The Company's products provide networking independence and
run on a broad range of industry-leading UNIX hardware platforms.
The Company has also developed client-server application modules such as the
Company's Automated Loan Processing System product, which was introduced for
existing ULTRAFIS system customers in the second half of 1994 and UltraAccess
Remote Banking, which was introduced in the first quarter of 1996. The Company
continues to market UltraAccess and other client-server application modules as
stand alone products for credit unions and other segments of the financial
services market.
The Company derives its revenues from software license fees, maintenance fees,
service bureau operation fees and disaster recovery services, custom
development, training and installation services and sales of third party
software and hardware products. A significant portion of the Company's revenues
are derived from substantial contracts with organizations that have long
decision-making cycles, typically from six to twelve months. The decision to
purchase the Company's products is followed by an installation and training
cycle, which is labor-intensive and generally requires from three to twelve
months to complete.
RESULTS OF OPERATIONS
REVENUES
Revenues for the three months ended September 30, 1996 decreased 4% over the
same period last year from $9.1 million to $8.7 million. In the first nine
months of 1996 revenues increased 64% to $33.7 million compared to $20.6
million for the same period in 1995.
The following table sets forth the Company's revenue and gross margin and gross
margin as a percentage of revenues for the three month periods ended September
30, 1996 and 1995, respectively:
7
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<TABLE>
<CAPTION>
REVENUE GROSS MARGIN GROSS MARGIN %
(IN THOUSANDS) (IN THOUSANDS) % CHANGE
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
-------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Software $1,929 $3,453 $1,521 $2,890 79% 84% (5%)
Maintenance 2,290 1,817 931 1,032 41% 57% (16%)
Services & Other 1,878 1,094 145 214 8% 20% (12%)
Hardware 2,595 2,717 794 835 31% 31% --
------ ------ ------ ------ -- -- ---
$8,692 $9,081 $3,391 $4,971 39% 55% (16%)
====== ====== ====== ====== == == ====
</TABLE>
Software revenues decreased by 45% from $3.5 million in the third quarter of
1995 to $1.9 million in the third quarter of 1996. Software revenues increased
57% from $6.4 million in the first nine months of 1995 to $10.1 million during
the same period of 1996. The decrease in software revenues during the third
quarter of 1996 is attributed primarily to fewer decisions being made by credit
unions within the Company's targeted market in the third quarter of 1996 than in
the third quarter of 1995.
Maintenance revenues increased by 26% from $1.8 million in the third quarter of
1995 to $2.3 million in the third quarter of 1996. Maintenance revenue
increased by 17% from $5.3 million in the nine months ended September 30, 1995
to $6.3 million during the same period of 1996. The increase in both periods
were primarily a result of growth in new ULTRAFIS system customers and the
recognition of deferred maintenance billings for 1996 installed customers. The
Company's installed customer base grew from approximately 151 systems on
September 30, 1995 to approximately 171 systems on September 30, 1996.
Services and other revenues increased by 72% from $1.1 million in the third
quarter of 1995 to $1.9 million in the third quarter of 1996. Services and
other revenue increased by 84% from $3.2 million in the first nine months of
1995 to $5.8 million during the same period of 1996. The revenue growth in both
periods was primarily due to increases in training and installation activities
due to the number of new customer and application module installations.
Services and other revenues also includes custom development, service bureau
operation fees and disaster recovery contracts.
Hardware revenues of $2.6 million in the third quarter of 1996 were consistent
with hardware revenues for the same period of the prior year. Hardware
revenues remained flat primarily because shipment of certain hardware orders was
delayed from the third quarter of 1996 to the fourth quarter of 1996 as a result
of difficulties encountered by the Company in integrating and fully utilizing a
new hardware vendor. Hardware revenue increased 103% from $5.7 million in the
nine months ended September 30, 1995 to $11.6 million during the same period of
1996.
In the third quarter of 1996 and 1995, revenues from hardware sales represented
approximately 30% of total revenues. The percentage of hardware revenues
depends on the mix of customer orders and the timing of particular customer
installations and can be expected to fluctuate substantially from quarter to
quarter.
Gross margin as a percentage of total revenue declined 16% from 55% in the third
quarter of 1995 to 39% in third quarter of 1996. This decline results from the
lower mix of high margin software, which represented 22% of third quarter 1996
total revenues versus 38% of the third quarter 1995 revenues, as well as
declines in margins for the maintenance and services and other revenue.
Software gross margin as a percentage of software revenue declined 5% due to a
higher proportion of sales of software purchased and licensed from third
parties. This change in mix was due to the higher volume of third party software
and fewer new customer sales of the Company's software products. Software gross
8
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margin as a percentage of software revenue also declined by 5% for the nine
months ending September 30, 1995 compared to the same period in 1996.
Services and other revenues gross margin as a percentage of services and other
revenues declined by 12% for the third quarter of 1996 primarily due to
increased costs experienced by the Company for travel and direct expenses on
contracts completed during the third quarter. Additional reductions in margin
were caused by an increase in lower margin training and installation labor
services.
Hardware gross margin as a percentage of hardware revenues remained consistent
at 31% for the third quarter of 1996 and 1995.
The following table sets forth the Company's operating expenses, the dollar
amount and percentage by which operating expenses increased, and operating
expenses as a percentage of revenue, for the three month periods ended September
30, 1996:
<TABLE>
<CAPTION>
THREE MONTHS INCREASE AS A PERCENTAGE OF
ENDED REVENUE
SEPTEMBER 30,
---------------------------------------------------------------
1996 1995 $ % 1996 1995
<S> <C> <C> <C> <C> <C> <C>
OPERATING EXPENSES
Product Development $1,627 $ 911 $ 716 79% 19% 10%
Selling, general and administrative 4,375 3,084 1,291 42% 50% 34%
------ ------ ------ -- -- --
$6,002 $3,995 $2,007 50% 69% 44%
====== ====== ====== == == ==
</TABLE>
Product development expenses increased from $911,000 in the third quarter of
1995 to $1.6 million in the third quarter of 1996. The increase was primarily
for staffing to support new product development programs such as UltraAccess
Remote Banking modules, Financial Services Platform module (FSP), Optical Disk
Systems module, Voice Response IV module, product enhancements, and regulatory
compliance. Product development expenses as a percentage to total revenues
increased from 10% to 19% during the third quarter of 1996 compared to the same
period in 1995 due to the lower total revenue for third quarter of 1996. The
Company anticipates that future development expenses will increase in absolute
dollars.
Selling, general and administrative expenses increased from $3.1 million in
third quarter 1995 to $4.4 million in third quarter 1996. The increase was
primarily due to the Company increasing the accounts receivable reserve by
$930,000 during the quarter and additional increases in staff hired to address
the sale of the Company's increasing array of application modules to the
existing customer base and for enhancing the product marketing function for
these and other new products. Selling, general and administrative expenses as a
percentage of total revenues increased from 34% to 50%. The Company anticipates
that future selling, general and administrative expenses will increase in
absolute dollars.
INTEREST INCOME, NET
Interest income, net increased to $96,000 in the third quarter of 1996 compared
to interest expense of $49,000 in the third quarter of 1995, primarily because
of the earnings from investment of the funds generated from the Company's
initial public offering.
9
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FUTURE OPERATING RESULTS
The Company's operating performance each quarter is subject to various risks and
uncertainties as discussed in this report and in the Company's Prospectus dated
February 15, 1996. This report on Form 10-Q should be read in conjunction with
such Prospectus, particularly "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained therein.
The Company's future operating results will depend upon conditions in its market
that may affect demand for its products and its abilities to enhance its
existing products and introduce new products on a timely basis. The Company must
also manage growth effectively as failure to do so could materially and
adversely affect its business and operating results. In particular, the Company
has reorganized its management structure in an effort to address changes in its
business and is adapting its financial and operational control systems to
respond to such changes. The Company is in the early stages of this
reorganization process and there can be no assurances that the Company will
achieve these objectives. In addition, installation of the Company's ULTRAFIS
system is a complex process that must typically be done without any disruption
of the customer's service. Because a portion of the Company's contracts
typically include development of custom software, a failure by the Company to
anticipate the time and expenses associated with such development could result
in increased costs, delays, or reduced revenues and margin. Failure by the
Company to successfully install an ULTRAFIS system could result in significant
loss of revenue in a particular quarter and fluctuation in the Company's results
of operations. Although the Company schedules the installations of its products
several months in advance, its ability to achieve its revenue plans, both in the
near term and in the long term, depends on the Company's continued ability to
sign new customer contracts and to complete such contracts on schedule. A
substantial portion of the Company's revenues for the third quarter were
recorded at or near the end of the quarter. Failure to close new customer
contracts as a result of lost sales or deferrals of customer decisions could
have a material adverse impact on the future operating results. There can be no
assurance that sales or installations will continue to occur at historical rates
or in accordance with the Company's expectations. Because the Company's
operating expenses are based on anticipated revenue levels and a high percentage
of the Company's expenses are relatively fixed, a small variation in the timing
of the recognition of specific revenues could cause significant variations in
operating results from quarter to quarter.
Substantially all of the Company's revenues historically have been related to
the Company's ULTRAFIS system, and the Company expects that for several years a
substantial portion of its revenues will continue to be related to the ULTRAFIS
system. The Company's success will depend in large part on its ability to
maintain and enhance the ULTRAFIS system and to develop, on a timely and cost-
effective basis utilizing new technologies, application modules that meet
evolving customer needs. In addition, a principal focus of the Company's
development activities at this time is the development of standalone products.
This is a market with which the Company is unfamiliar and, although the Company
has sold its first standalone product, UltraAccess Remote Banking, the Company
can not assure that it will be successful in developing and marketing new
standalone products on a timely basis, or that there will be customer demand
for, or acceptance of, such products. Any failure by the Company to anticipate
or to respond adequately to new and changing market conditions, enhance the
ULTRAFIS system and develop application modules, compete with new product
offerings by third parties, complete new standalone product offerings, respond
to emerging industry standards, adapt to changing technologies, maintain sales
of the Company's products, or continue to sign and complete new customer
contracts would have a material adverse effect on the Company's results of
operations.
On October 25, 1996, the U.S. District Court issued a nationwide injunction
("Order") barring federal credit unions from extending membership benefits to
individuals who are not part of the credit union's original charter group. The
Order imposes limits on new customers that a federal credit union may attract.
This Order is presently on appeal. In response to the Order, the NCUA
implemented an interim policy statement, effective November 14, 1996,
providing a broader definition of core field of membership and allowing
federal credit unions affected by the Order to restructure their existing
fields of membership. Some federal credit unions have expressed reluctance to
pursue extensive capital purchases until the appeals process is complete and
the impact of the Order is further assessed. Although federal credit unions
represent approximately 50% of all credit unions and less than half of these
credit unions are affected by this ruling, if this ruling results in deferred
customer purchase decisions for the Company's products, it could have a
material adverse impact on the Company's business, financial condition and
results of operations.
10
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LIQUIDITY AND CAPITAL RESOURCES
The Company's management believes current cash and cash equivalents, primarily
generated from the proceeds of the initial public offering and expected cash
generated from operations, will satisfy its expected working capital and capital
expenditure requirements through the immediate future.
During the third quarter of 1996 the Company entered into two new credit
facilities with Silicon Valley Bank. The first credit facility is a $5.0
million dollar non-secured revolving line of credit that is to be used for
working capital as the Company requires. The second instrument is a $1.5
million dollar capital equipment facility to be used as the Company requires
the purchase of capital assets and leasehold improvements. The Company
currently has no outstanding debt against these facilities.
Capital expenditures of $411,000 in the third quarter of 1996 was the result of
computer equipment purchased to accommodate headcount growth and the upgrading
of the sales staff's computers to more fully utilize new sales tools available.
Net cash used for operations was $11.0 million for the nine months ending
September 30, 1996, of which $3.8 million was due to unbilled revenue. For the
nine months ended September 30, 1995, net cash provided from operations was
$610,000. Unbilled revenue, increased to $6.0 million for the nine months
ending September 30, 1996 compared to $2.3 million at December 31, 1995. The
increase in unbilled revenue was primarily related to the number of large
contract sales and add-on and upgrade sales to existing customers for software,
hardware and services. The Company's contract billing terms typically are spread
out over a series of events (from contract execution through final acceptance)
that generally span a six to nine month period resulting in unbilled revenues.
The Company implemented a new billing policy during the latter part of the
second quarter of 1996 that is intended to better match the timing of the
billing and recognition of revenue, which should assist in the reduction of the
higher level of the unbilled revenue. Unbilled revenue for the period ending
September 30, 1996 decreased $2.5 million from the period ending June 30, 1996.
Because this policy is new, there can be no assurances that the Company will
continue to realize expected improvements in the near term or that collections
will occur as expected.
During the nine months ended September 30, 1996 deferred revenue decreased $1.7
million primarily due to recognizing revenue from prior period contract sales
and the timing of sales generated for the current period. Deferred revenue is
also a function of the timing differences between the Company's contractual
billing cycle and the revenue recognition policy. If the implementation of the
new billing policy brings the benefits that the Company anticipates it should
create a balancing effect between unbilled revenue and deferred revenue.
Net cash used for operations as a result of accounts payable was $2.4 million
for the nine months ending 1996 compared to $1.3 million provided to operations
during the same period of 1995. The increase use of the cash from operations
for accounts payable resulted in a 26% decrease in the total outstanding
accounts payable due to vendors from September 30, 1995 to September 30, 1996.
11
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.19 ULTRADATA CORPORATION LOAN AGREEMENT (UNSECURED) between the Company and
Silicon Valley Bank dated as of September 23, 1996.
10.20 CORPORATE RESOLUTIONS TO BORROW between the Company and Silicon Valley
Bank dated as of September 23, 1996.
10.21 LIBOR SUPPLEMENT TO AGREEMENT between the Company and Silicon Valley Bank
dated as of September 23, 1996.
11.01 Computation of Earnings per Share (in thousands except per share data)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPT. 30, SEPT. 30,
--------------------------------------
1996 1995 1996 1995
------- ------ ------ ------
<S> <C> <C> <C> <C>
Net Income (loss) $(1,585) $ 576 $ (501) $ (444)
======= ====== ====== ======
Weighted average outstanding shares 7,432 5,742 7,086 5,742
Common stock equivalents -- 253 -- --
Common stock equivalents accounted for
under Staff Accounting Bulletin No. 83 -- 97 -- 198
------- ------ ------ ------
7,432 6,092 7,086 5,940
======= ====== ====== ======
$ (0.21) $ 0.09 $(0.07) $(0.07)
======= ====== ====== ======
</TABLE>
27.1 Financial Data Schedule
(b) There have been no reports filed on Form 8-K during the quarter ended
September 30, 1996.
12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Ultradata
Corporation has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ULTRADATA CORPORATION
Date November 19, 1996 By /s/ NIGEL P. GALLOP
-------------------------- -------------------------------
Nigel P. Gallop
Chief Executive Officer and
Chief Accounting Officer
13
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EXHIBIT 10.19
- --------------------------------------------------------------------------------
ULTRADATA CORPORATION
LOAN AGREEMENT
(UNSECURED)
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
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<TABLE>
<CAPTION>
<C> <C> <S> <C>
1. DEFINITIONS AND CONSTRUCTION......................................... 1
1.1 Definitions.................................................... 1
1.2 Accounting Terms............................................... 5
2. LOAN AND TERMS OF PAYMENT............................................ 5
2.1 Revolving and Equipment Facilities............................. 5
2.2 Overadvances................................................... 6
2.3 Interest Rates, Payments, and Calculations..................... 6
2.4 Crediting Payments............................................. 7
2.5 Fees........................................................... 7
2.6 Additional Costs............................................... 7
2.7 Term........................................................... 8
3. CONDITIONS OF LOANS.................................................. 8
3.1 Conditions Precedent to Initial Advance or Equipment Advance... 8
3.2 Conditions Precedent to all Advances or Equipment Advances..... 8
4. REPRESENTATIONS AND WARRANTIES....................................... 9
4.1 Due Organization and Qualification............................. 9
4.2 Due Authorization; No Conflict................................. 9
4.3 No Prior Encumbrances.......................................... 9
4.4 Litigation..................................................... 9
4.5 No Material Adverse Change in Financial Statements............. 9
4.6 Solvency....................................................... 9
4.7 Regulatory Compliance.......................................... 9
4.8 Environmental Condition........................................ 9
4.9 Taxes.......................................................... 10
4.10 Subsidiaries................................................... 10
4.11 Government Consents............................................ 10
4.12 Full Disclosure................................................ 10
5. AFFIRMATIVE COVENANTS................................................ 10
5.1 Good Standing.................................................. 10
5.2 Government Compliance.......................................... 10
5.3 Financial Statements, Reports, Certificates.................... 10
5.4 Inventory; Returns............................................. 11
5.5 Taxes.......................................................... 11
5.6 Insurance...................................................... 11
5.7 Principal Depository........................................... 11
5.8 Quick Ratio.................................................... 11
5.9 Debt-Net Worth Ratio........................................... 12
5.10 Debt Service Coverage.......................................... 12
5.11 Further Assurances............................................. 12
6. NEGATIVE COVENANTS................................................... 12
6.1 Dispositions................................................... 12
6.2 Change in Business............................................. 12
6.3 Mergers or Acquisitions........................................ 12
6.4 Indebtedness................................................... 12
6.5 Encumbrances................................................... 12
6.6 Distributions.................................................. 12
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
6.7 Investments................................................... 12
6.8 Transactions with Affiliates.................................. 12
6.9 Subordinated Debt............................................. 13
6.10 Compliance.................................................... 13
7. EVENTS OF DEFAULT................................................... 13
7.1 Payment Default............................................... 13
7.2 Covenant Default.............................................. 13
7.3 Material Adverse Change....................................... 13
7.4 Attachment.................................................... 13
7.5 Insolvency.................................................... 14
7.6 Other Agreements.............................................. 14
7.7 Subordinated Debt............................................. 14
7.8 Judgments..................................................... 14
7.9 Misrepresentations............................................ 14
8. BANK'S RIGHTS AND REMEDIES.......................................... 14
8.1 Rights and Remedies........................................... 14
8.2 Bank Expenses................................................. 14
8.3 Remedies Cumulative........................................... 15
8.4 Demand; Protest............................................... 15
9. NOTICES............................................................. 15
10. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.......................... 15
11. GENERAL PROVISIONS.................................................. 16
11.1 Successors and Assigns........................................ 16
11.2 Indemnification............................................... 16
11.3 Time of Essence............................................... 16
11.4 Severability of Provisions.................................... 16
11.5 Amendments in Writing, Integration............................ 16
11.6 Counterparts.................................................. 16
11.7 Survival...................................................... 16
</TABLE>
ii
<PAGE>
This LOAN AGREEMENT is entered into as of September 23, 1996, by and
between SILICON VALLEY BANK ("Bank") and ULTRADATA CORPORATION ("Borrower").
RECITALS
--------
Borrower wishes to obtain credit from time to time from Bank, and Bank
desires to extend credit to Borrower. This Agreement sets forth the terms on
which Bank will advance credit to Borrower, and Borrower will repay the amounts
owing to Bank.
AGREEMENT
---------
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
----------------------------
1.1 Definitions. As used in this Agreement, the following terms
-----------
shall have the following definitions:
"Advance" or "Advances" means an advance under the Revolving
Facility.
"Affiliate" means, with respect to any Person, any Person that
owns or controls directly or indirectly such Person, any Person that controls or
is controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, and partners.
"Bank Expenses" means all: reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
the preparation, negotiation, administration, and enforcement of the Loan
Documents; and Bank's reasonable attorneys' fees and expenses incurred in
amending, enforcing or defending the Loan Documents, whether or not suit is
brought.
"Borrower's Books" means all of Borrower's books and records
including: ledgers; records concerning Borrower's assets or liabilities,
business operations or financial condition; and all computer programs, or tape
files, and the equipment, containing such information.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which banks in the State of California are authorized or required
to close.
"Committed Line" means Five Million Dollars ($5,000,000).
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term "Contingent Obligation" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such
1
<PAGE>
amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement.
"Current Liabilities" means, as of any applicable date, all
amounts that should, in accordance with GAAP, be included as current liabilities
on the consolidated balance sheet of Borrower and its Subsidiaries, as at such
date, plus, to the extent not already included therein, all outstanding Advances
and current position of Equipment Advances made under this Agreement, including
all Indebtedness that is payable upon demand or within one year from the date of
determination thereof unless such Indebtedness is renewable or extendable at the
option of Borrower or any Subsidiary to a date more than one year from the date
of determination, but excluding Subordinated Debt.
"Daily Balance" means the amount of the Advances owed at the end
of a given day.
"Eligible Equipment" means computer equipment, office equipment
and other machines and office equipment as approved by Bank in its sole
discretion (i) in which the Bank has a valid first priority perfected security
interest, and (ii) delivered to Borrower by the manufacturer or vendor after,
upon or not more than sixty (60) days prior to the date of the Equipment Advance
with respect to such equipment which equipment is new and has not previously
been used by any Person.
"Equipment" means all present and future machinery, equipment,
tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments
in which Borrower has any interest.
"Equipment Advance" or "Equipment Advances" means an advance
under the Equipment Facility.
"Equipment Availability Date" means the earlier of (i) the date
that the aggregate amount of all outstanding Equipment Advances equals One
Million Five Hundred Thousand Dollars ($1,500,000), or (ii) June 30, 1997.
"Equipment Facility" means the facility under which Borrower may
request Bank to issue cash advances, as specified in Section 2.1.2 hereof.
"Equipment Facility Maturity Date" means the date of the third
anniversary of the Equipment Availability Date.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"Indebtedness" means (a) all indebtedness for borrowed money or
the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.
"Insolvency Proceeding" means any proceeding commenced by or
against any person or entity under any provision of the United States Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or
2
<PAGE>
informal moratoria, compositions, extension generally with its creditors, or
proceedings seeking reorganization, arrangement, or other relief.
"Inventory" means all present and future inventory in which
Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and Borrower's Books relating
to any of the foregoing.
"Investment" means any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.
"LIBOR Supplement" means the LIBOR Supplement to Agreement by and
between Bank and Borrower of even date herewith.
"Lien" means any mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.
"Loan Documents" means, collectively, this Agreement, any note or
notes executed by Borrower, and any other agreement entered into between
Borrower and Bank in connection with this Agreement, all as amended or extended
from time to time.
"Material Adverse Effect" means a material adverse effect on (i)
the business operations or condition (financial or otherwise) of Borrower and
its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents.
"Maturity Date" means the date immediately preceding the first
anniversary of the date of this Agreement.
"Obligations" means all debt, principal, interest, Bank Expenses
and other amounts owed to Bank by Borrower pursuant to this Agreement or any
other agreement, whether absolute or contingent, due or to become due, now
existing or hereafter arising, including any interest that accrues after the
commencement of an Insolvency Proceeding and including any debt, liability, or
obligation owing from Borrower to others that Bank may have obtained by
assignment or otherwise.
"Periodic Payments" means all installments or similar recurring
payments that Borrower may now or hereafter become obligated to pay to Bank
pursuant to the terms and provisions of any instrument, or agreement now or
hereafter in existence between Borrower and Bank.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Bank arising under this
Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed in
the Schedule;
3
<PAGE>
(c) Subordinated Debt; and
(d) Indebtedness to trade creditors incurred in the ordinary
course of business.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in the
Schedule; and
(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency or any State thereof
maturing within one (1) year from the date of acquisition thereof, (ii)
commercial paper maturing no more than one (1) year from the date of creation
thereof and currently having the highest rating obtainable from either Standard
& Poor's Corporation or Moody's Investors Service, Inc., and (iii) certificates
of deposit maturing no more than one (1) year from the date of investment
therein issued by Bank.
"Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and disclosed in the
Schedule;
(b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over any of Bank's
--------
security interests;
(c) Liens (i) upon or in any Equipment acquired or held by
Borrower or any of its Subsidiaries to secure the purchase price of such
Equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such Equipment, or (ii) existing on such Equipment at the time of
its acquisition, provided that the Lien is confined solely to the property so
--------
acquired and improvements thereon, and the proceeds of such Equipment and,
provided further such Equipment is not financed under this Agreement; and
- -------- -------
(d) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (c) above, provided that any extension, renewal or
--------
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase.
"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.
"Prime Rate" means the variable rate of interest, per annum, most
recently announced by Bank, as its "prime rate," whether or not such announced
rate is the lowest rate available from Bank.
"Quick Assets" means, at any date as of which the amount thereof
shall be determined, the consolidated cash, cash-equivalents, billed accounts
receivable and investments, with maturities not to exceed 90 days, of Borrower
determined in accordance with GAAP.
"Responsible Officer" means each of the Chief Executive Officer,
the Chief Financial Officer and the Controller of Borrower.
4
<PAGE>
"Revolving Facility" means the facility under which Borrower may
request Bank to issue cash advances, as specified in Section 2.1.1 hereof.
"Schedule" means the schedule of exceptions attached hereto.
"Subordinated Debt" means any debt incurred by Borrower that is
subordinated to the debt owing by Borrower to Bank on terms acceptable to Bank
(and identified as being such by Borrower and Bank).
"Subsidiary" means any corporation or partnership in which (i)
any general partnership interest or (ii) more than 50% of the stock of which by
the terms thereof ordinary voting power to elect the Board of Directors,
managers or trustees of the entity shall, at the time as of which any
determination is being made, be owned by Borrower, either directly or through an
Affiliate.
"Tangible Net Worth" means at any date as of which the amount
thereof shall be determined, the consolidated total assets of Borrower and its
Subsidiaries minus, without duplication, (i) the sum of any amounts attributable
-----
to (a) goodwill, (b) intangible items such as unamortized debt discount and
expense, patents, trade and service marks and names, copyrights and research and
development expenses except prepaid expenses, and (c) all reserves not already
deducted from assets, and (ii) Total Liabilities.
---
"Total Liabilities" means at any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
GAAP be classified as liabilities on the consolidated balance sheet of Borrower,
including in any event all Indebtedness, but specifically excluding Subordinated
Debt.
1.2 Accounting Terms. All accounting terms not specifical
----------------
defined herein shall be construed in accordance with GAAP and all calculations
made hereunder shall be made in accordance with GAAP. When used herein, the
terms "financial statements" shall include the notes and schedules thereto.
2. LOAN AND TERMS OF PAYMENT
-------------------------
2.1 Revolving and Equipment Facilities.
----------------------------------
2.1.1 Revolving Facility.
--------- --------
(a) Advances. Subject to and upon the terms and
--------
conditions of this Agreement, Bank agrees to make Advances to Borrower in an
aggregate amount outstanding at any time not to exceed the Committed Line.
Subject to the terms and conditions of this Agreement, amounts borrowed pursuant
to this Section 2.1.1 may be repaid and reborrowed at any time before the
Maturity Date.
(b) Procedures. Whenever Borrower desires an Advance,
----------
Borrower will notify Bank by facsimile transmission or telephone no later than
3:00 p.m. California time, on the Business Day that the Advance is to be made.
Each such notification shall be promptly confirmed by a Payment/Advance Form in
substantially the form of Exhibit A hereto or a LIBOR Rate Advance Form as
---------
attached to the LIBOR Supplement. Bank is authorized to make Advances under
this Agreement or under the LIBOR Supplement, based upon instructions received
from a Responsible Officer, or without instructions if in Bank's discretion such
Advances are necessary to meet Obligations which have become due and remain
unpaid. Bank shall be entitled to rely on any telephonic notice given by a
person who Bank reasonably believes to be a Responsible Officer, and Borrower
shall indemnify and hold Bank harmless for any damages or loss suffered by Bank
as a
5
<PAGE>
result of such reliance. Bank will credit the amount of Advances made under
this Section 2.1.1 to Borrower's deposit account.
(c) Maturity. The Revolving Facility shall terminate on
--------
the Maturity Date, at which time all Advances under this Section 2.1.1 shall be
immediately due and payable.
2.1.2 Equipment Facility.
--------- --------
(a) Equipment Advances. Subject to and upon the terms and
------------------
conditions of this Agreement, Bank agrees at any time from the date hereof
through Equipment Availability Date to make Equipment Advances to Borrower in an
aggregate principal amount of up to One Million Five Hundred Thousand Dollars
($1,500,000). On the date of each Equipment Advance, Borrower shall provide
invoices and other documents as requested by Bank, in form and content
satisfactory to Bank, demonstrating that the Equipment Advances then outstanding
(i) shall be used to finance or refinance, as the case may be, Eligible
Equipment, and (ii) shall not exceed one hundred percent (100%) of the cost of
such Eligible Equipment, excluding any and all installation, freight or warranty
expenses or sales taxes. Amounts borrowed pursuant to this Section 2.1.2 may not
be reborrowed once repaid.
(b) Procedures. When Borrower desires to obtain an
----------
Equipment Advance, Borrower shall notify Bank (which notice shall be
irrevocable) by facsimile transmission received no later than 3:00 p.m.
California time one (1) Business Day before the day on which the Equipment
Advance is requested to be made. Such notice shall be in substantially the form
of Exhibit A hereto or a LIBOR Rate Advance Form as attached to the LIBOR
---------
Supplement. Bank is authorized to make Equipment Advances under this Agreement
based upon instructions received from a Responsible Officer. The written notice
shall be signed by a Responsible Officer and include a copy of the invoice for
the Eligible Equipment to be financed.
(c) Payments/Maturity. Interest shall accrue from the date
-----------------
of each Equipment Advance at the rate specified in Section 2.3(b), and shall be
payable monthly on the twenty-second calendar day of the month for each month
through the month in which the Equipment Availability Date falls. All Equipment
Advances that are outstanding on the Equipment Availability Date will be payable
in thirty-six (36) equal monthly installments of principal, plus accrued
interest, beginning on the last day of the month in which the Equipment
Availability Date falls. All amounts outstanding under the Equipment Facility
and all amounts due under this Agreement shall be paid in full on the Equipment
Facility Maturity Date.
2.2 Overadvances. If, at any time or for any reason, the amount of
------------
Obligations owed by Borrower to Bank pursuant to Section 2.1.1 of this Agreement
is greater than the Committed Line, Borrower shall immediately pay to Bank, in
cash, the amount of such excess.
2.3 Interest Rates, Payments, and Calculations.
------------------------------------------
(a) LIBOR Option. Borrower shall be entitled to request Advances
------------
or Equipment Advances in accordance with the LIBOR Supplement, which shall
govern all LIBOR Rate Advances or LIBOR Rate Equipment Advances, as defined
therein.
(b) Interest Rate. Except as set forth in Section 2.3(c), any
-------------
Advances shall bear interest, on the average Daily Balance, at a rate equal to
either the Prime Rate or the rate specified in the LIBOR Supplement. Except as
set forth in Section 2.3(c), any Equipment Advances shall bear interest at a
rate equal to (i) one-quarter of a percentage point (0.25%) above the Prime
Rate, or (ii) the rate specified in the LIBOR Supplement.
6
<PAGE>
(c) Default Rate. All Obligations shall bear interest, from and
------------
after the occurrence of an Event of Default, at a rate equal to five (5)
percentage points above the interest rate applicable immediately prior to the
occurrence of the Event of Default.
(d) Payments. Interest hereunder shall be due and payable on the
--------
twenty-second calendar day of each month during the term hereof. Bank shall, at
its option, charge such interest, all Bank Expenses, and all Periodic Payments
against any of Borrower's deposit accounts or against the Committed Line, in
which case those amounts shall thereafter accrue interest at the rate then
applicable hereunder. Any interest not paid when due shall be compounded by
becoming a part of the Obligations, and such interest shall thereafter accrue
interest at the rate then applicable hereunder.
(e) Computation. In the event the Prime Rate is changed from time
-----------
to time hereafter, the applicable rate of interest hereunder shall be increased
or decreased effective as of 12:01 a.m. on the day the Prime Rate is changed, by
an amount equal to such change in the Prime Rate. All interest chargeable under
the Loan Documents shall be computed on the basis of a three hundred sixty (360)
day year for the actual number of days elapsed.
2.4 Crediting Payments. Prior to the occurrence of an Event of
------------------
Default, Bank shall credit a wire transfer of funds, check or other item of
payment to such deposit account or Obligation as Borrower specifies. After the
occurrence of an Event of Default, the receipt by Bank of any wire transfer of
funds, check, or other item of payment shall be immediately applied to
conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary contained herein, any wire
transfer or payment received by Bank after 12:00 noon California time shall be
deemed to have been received by Bank as of the opening of business on the
immediately following Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.
2.5 Fees. Borrower shall pay to Bank the following:
---
(a) Financial Examination and Appraisal Fees. Bank's customary
----------------------------------------
fees and out-of-pocket expenses for Bank's financial analysis and examination of
Borrower performed from time to time by Bank or its agents; and
(b) Bank Expenses. Upon the date hereof, all Bank Expenses
-------------
incurred through the Closing Date, including reasonable attorneys' fees and
expenses.
2.6 Additional Costs. In case any change in any law, regulation,
----------------
treaty or official directive or the interpretation or application thereof by any
court or any governmental authority charged with the administration thereof or
the compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law), in each case
after the date of this Agreement:
(a) subjects Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by Borrower or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of Bank imposed by the United States of America or any
political subdivision thereof);
7
<PAGE>
(b) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, Bank; or
(c) imposes upon Bank any other condition with respect to its
performance under this Agreement,
and the result of any of the foregoing is to increase the cost to Bank, reduce
the income receivable by Bank or impose any expense upon Bank with respect to
any loans, Bank shall notify Borrower thereof. Borrower agrees to pay to Bank
the amount of such increase in cost, reduction in income or additional expense
as and when such cost, reduction or expense is incurred or determined, upon
presentation by Bank of a statement of the amount and setting forth Bank's
calculation thereof, all in reasonable detail, which statement shall be deemed
true and correct absent manifest error.
2.7 Term. This Agreement shall become effective on the Closing Date
----
and, subject to Section 11.7, shall continue in full force and effect for a term
ending on the Maturity Date. Notwithstanding the foregoing, Bank shall have the
right to terminate its obligation to make Advances or Equipment Advances under
this Agreement immediately and without notice upon the occurrence and during the
continuance of an Event of Default.
3. CONDITIONS OF LOANS
-------------------
3.1 Conditions Precedent to Initial Advance or Equipment Advance.
------------------------------------------------------------
The obligation of Bank to make the initial Advance or Equipment Advance is
subject to the condition precedent that Bank shall have received, in form and
substance satisfactory to Bank, the following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower with respect to
articles, bylaws, incumbency and resolutions authorizing the execution and
delivery of this Agreement;
(c) the LIBOR Supplement;
(d) payment of the fees and Bank Expenses then due specified in
Section 2.5 hereof;
(e) evidence of completion of an audit of Borrower's Accounts
(condition precedent to initial Advance only); and
(f) such other documents, and completion of such other matters,
as Bank may reasonably deem necessary or appropriate.
3.2 Conditions Precedent to all Advances or Equipment Advances. The
----------------------------------------------------------
obligation of Bank to make each Advance or Equipment Advance, including the
initial Advance or Equipment Advance, is further subject to the following
conditions:
(a) timely receipt by Bank of the Payment/Advance Form or LIBOR
Rate Advance Form as provided in Section 2.1.1 and 2.1.2; and
(b) the representations and warranties contained in Section 4
shall be true and correct in all material respects on and as of the date of such
Payment/Advance Form or LIBOR Rate Advance Form and on the effective date of
each Advance or Equipment Advance as though
8
<PAGE>
made at and as of each such date, and no Event of Default shall have occurred
and be continuing, or would result from such Advance or Equipment Advance. The
making of each Advance or Equipment Advance shall be deemed to be a
representation and warranty by Borrower on the date of such Advance or Equipment
Advance as to the accuracy of the facts referred to in this Section 3.2(b).
4. REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower represents and warrants as follows:
4.1 Due Organization and Qualification. Borrower and each Subsidiary
----------------------------------
is a corporation duly existing and in good standing under the laws of its state
of incorporation and qualified and licensed to do business in, and is in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be so qualified.
4.2 Due Authorization; No Conflict. The execution, delivery, and
------------------------------
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Certificate of Incorporation or Bylaws, nor
will they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound. Borrower is not in default
under any agreement to which it is a party or by which it is bound, which
default could have a Material Adverse Effect.
4.3 No Prior Encumbrances. Borrower has good and indefeasible title
---------------------
to the Collateral, free and clear of Liens, except for Permitted Liens.
4.4 Litigation. Except as set forth in the Schedule, there are no
----------
actions or proceedings pending by or against Borrower or any Subsidiary before
any court or administrative agency in which an adverse decision could have a
Material Adverse Effect. Borrower does not have knowledge of any such pending
or threatened actions or proceedings.
4.5 No Material Adverse Change in Financial Statements. All
--------------------------------------------------
consolidated financial statements related to Borrower and any Subsidiary that
have been delivered by Borrower to Bank fairly present in all material respects
Borrower's consolidated financial condition as of the date thereof and
Borrower's consolidated results of operations for the period then ended. There
has not been a material adverse change in the consolidated financial condition
of Borrower since the date of the most recent of such financial statements
submitted to Bank.
4.6 Solvency. Borrower is solvent and able to pay its debts
--------
(including trade debts) as they mature.
4.7 Regulatory Compliance. Borrower and each Subsidiary has met the
---------------------
minimum funding requirements of ERISA with respect to any employee benefit plans
subject to ERISA. No event has occurred resulting from Borrower's failure to
comply with ERISA that is reasonably likely to result in Borrower's incurring
any liability that could have a Material Adverse Effect. Borrower is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940. Borrower is not engaged
principally, or as one of the important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations G, T and U of the Board of Governors of the Federal
Reserve System). Borrower has complied with all the provisions of the Federal
Fair Labor Standards Act. Borrower has not violated any statutes, laws,
ordinances or rules applicable to it, violation of which could have a Material
Adverse Effect.
4.8 Environmental Condition. None of Borrower's or any Subsidiary's
-----------------------
properties or assets has ever been used by Borrower or any Subsidiary or, to the
best of Borrower's knowledge, by previous owners or operators, in the disposal
of, or to produce, store, handle, treat, release, or
9
<PAGE>
transport, any hazardous waste or hazardous substance other than in accordance
with applicable law; to the best of Borrower's knowledge, none of Borrower's
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for closure pursuant to any
environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste
or hazardous substances into the environment.
4.9 Taxes. Borrower and each Subsidiary has filed or caused to be
-----
filed all tax returns required to be filed, and has paid, or has made adequate
provision for the payment of, all taxes reflected therein.
4.10 Subsidiaries. Borrower does not own any stock, partnership
------------
interest or other equity securities of any Person, except for Permitted
Investments.
4.11 Government Consents. Borrower and each Subsidiary has obtained
-------------------
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower's business as currently conducted.
4.12 Full Disclosure. No representation, warranty or other statement
---------------
made by Borrower in any certificate or written statement furnished to Bank
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates
or statements not misleading.
5. AFFIRMATIVE COVENANTS
---------------------
Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Bank may have any commitment to make
an Advance or Equipment Advance hereunder, Borrower shall do all of the
following:
5.1 Good Standing. Borrower shall maintain its and each of its
-------------
Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could have a Material Adverse Effect. Borrower shall
maintain, and shall cause each of its Subsidiaries to maintain, to the extent
consistent with prudent management of Borrower's business, in force all
licenses, approvals and agreements, the loss of which could have a Material
Adverse Effect.
5.2 Government Compliance. Borrower shall meet, and shall cause each
---------------------
Subsidiary to meet, the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which could have a Material Adverse Effect.
5.3 Financial Statements, Reports, Certificates. Borrower shall
-------------------------------------------
deliver to Bank: (a) as soon as available, but in any event within forty-five
(45) days after the end of each quarter, a company prepared consolidated balance
sheet and income statement covering Borrower's consolidated operations during
such period, certified by a Responsible Officer; (b) as soon as available, but
in any event within ninety (90) days after the end of Borrower's fiscal year,
audited consolidated financial statements of Borrower prepared in accordance
with GAAP, consistently applied, together with an unqualified opinion on such
financial statements of an independent certified public accounting firm
10
<PAGE>
reasonably acceptable to Bank; (c) within five (5) days upon becoming available,
copies of all statements, reports and notices sent or made available generally
by Borrower to its security holders or to any holders of Subordinated Debt and
all reports on Form 10-K and 10-Q filed with the Securities and Exchange
Commission; (d) promptly upon receipt of notice thereof, a report of any legal
actions pending or threatened against Borrower or any Subsidiary that could
result in damages or costs to Borrower or any Subsidiary of One Hundred Thousand
Dollars ($100,000) or more; and (e) such budgets, sales projections, operating
plans or other financial information as Bank may reasonably request from time to
time.
Borrower shall deliver to Bank with the annual financial statements a
Compliance Certificate signed by a Responsible Officer in substantially the form
of Exhibit C hereto.
---------
Within twenty-five (25) days after the last day of each calendar month in
which any Advances have been outstanding, Borrower shall deliver to Bank an aged
listings of accounts receivable and accounts payable.
5.4 Inventory; Returns. Borrower shall keep all Inventory in good
------------------
and marketable condition, free from all material defects. Returns and
allowances, if any, as between Borrower and its account debtors shall be on the
same basis and in accordance with the usual customary practices of Borrower, as
they exist at the time of the execution and delivery of this Agreement.
Borrower shall promptly notify Bank of all returns and recoveries and of all
disputes and claims, where the return, recovery, dispute or claim involves more
than Fifty Thousand Dollars ($50,000).
5.5 Taxes. Borrower shall make, and shall cause each Subsidiary to
-----
make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to Bank, on demand, appropriate certificates attesting to
the payment or deposit thereof; and Borrower will make, and will cause each
Subsidiary to make, timely payment or deposit of all material tax payments and
withholding taxes required of it by applicable laws, including, but not limited
to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, and federal income taxes, and will, upon request, furnish Bank with proof
satisfactory to Bank indicating that Borrower or a Subsidiary has made such
payments or deposits; provided that Borrower or a Subsidiary need not make any
payment if the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP)
by Borrower.
5.6 Insurance.
---------
(a) Borrower, at its expense, shall keep its business insured
against loss or damage by fire, theft, explosion, sprinklers, and all other
hazards and risks, and in such amounts, as ordinarily insured against by other
owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain insurance
relating to Borrower's ownership and use of its assets in amounts and of a type
that are customary to businesses similar to Borrower's.
5.7 Principal Depository. Borrower shall maintain its principal
--------------------
depository and operating accounts with Bank.
5.8 Quick Ratio. Subject to the following sentence, Borrower shall
-----------
maintain, as of the last day of each of Borrower's fiscal quarters, a ratio of
Quick Assets to Current Liabilities (minus current portion of deferred revenue)
of at least 1.25 to 1.0. Beginning with the fiscal quarter ending March 31,
1997, Borrower shall maintain, as of the last day of each of Borrower's fiscal
quarters, a ratio of Quick Assets to Current Liabilities (minus current portion
of defined revenue) of at least 1.5 to 1.0.
11
<PAGE>
5.9 Debt-Net Worth Ratio. Borrower shall maintain, as of the last
--------------------
day of each of Borrower's fiscal quarters, a ratio of Total Liabilities (minus
current portion of deferred revenue) less Subordinated Debt to Tangible Net
Worth plus Subordinated Debt of not more than 1.0 to 1.0.
5.10 Debt Service Coverage. Borrower shall maintain, as of the last
---------------------
day of each of Borrower's fiscal quarters, a ratio of (a) the sum of (i)
earnings after tax plus (ii) interest expense and non-cash equivalents, plus or
---- ----
minus, as appropriate, (iii) any decrease or increase in capitalized software to
- -----
(b) the sum of (i) current portion of long term debt and capitalized leases plus
----
(ii) interest expense of at least 1.5 to 1.0.
5.11 Further Assurances. At any time and from time to time Borrower
------------------
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Bank to effect the purposes of this Agreement.
6. NEGATIVE COVENANTS
------------------
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the outstanding Obligations or
for so long as Bank may have any commitment to make any Advances or Equipment
Advances, Borrower will not do any of the following:
6.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose
------------
of (collectively, a "Transfer"), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, other than: (i) Transfers of
Inventory in the ordinary course of business; (ii) Transfers of non-exclusive
licenses and similar arrangements for the use of the property of Borrower or its
Subsidiaries; or (iii) Transfers of worn-out or obsolete Equipment.
6.2 Change in Business. Engage in any business, or permit any of its
------------------
Subsidiaries to engage in any business, other than the businesses currently
engaged in by Borrower and any business substantially similar or related thereto
(or incidental thereto), or suffer a material change in Borrower's ownership.
Borrower will not, without thirty (30) days prior written notification to Bank,
relocate its chief executive office.
6.3 Mergers or Acquisitions. Merge or consolidate, or permit any of
-----------------------
its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person.
6.4 Indebtedness. Create, incur, assume or be or remain liable with
------------
respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.
6.5 Encumbrances. Create, incur, assume or suffer to exist any Lien
------------
with respect to any of its property, or assign or otherwise convey any right to
receive income, including the sale of any Accounts, or permit any of its
Subsidiaries so to do, except for Permitted Liens.
6.6 Distributions. Pay any dividends or make any other distribution
-------------
or payment on account of or in redemption, retirement or purchase of any capital
stock.
6.7 Investments. Directly or indirectly acquire or own, or make any
-----------
Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments.
6.8 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
12
<PAGE>
course of Borrower's business, upon fair and reasonable terms that are no less
favorable to Borrower than would be obtained in an arm's length transaction with
a nonaffiliated Person.
6.9 Subordinated Debt. Make any payment in respect of any
-----------------
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Bank's prior written consent.
6.10 Compliance. Become an "investment company" controlled by an
----------
"investment company," within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose.
Fail to meet the minimum funding requirements of ERISA, permit a Reportable
Event or Prohibited Transaction, as defined in ERISA, to occur, fail to comply
with the Federal Fair Labor Standards Act or violate any law or regulation,
which violation could have a Material Adverse Effect, or permit any of its
Subsidiaries to do any of the foregoing.
7. EVENTS OF DEFAULT
-----------------
Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement:
7.1 Payment Default. If Borrower fails to pay the principal of, or
---------------
any interest on, any Advances or Equipment Advance when due and payable; or
fails to pay any portion of any other Obligations not constituting such
principal or interest, including without limitation Bank Expenses, within thirty
(30) days of receipt by Borrower of an invoice for such other Obligations;
7.2 Covenant Default. If Borrower fails to perform any obligation
----------------
under Sections 5.7, 5.8, 5.9 or 5.10, or violates any of the covenants contained
in Article 6 of this Agreement, or fails or neglects to perform, keep, or
observe any other material term, provision, condition, covenant, or agreement
contained in this Agreement, in any of the Loan Documents, or in any other
present or future agreement between Borrower and Bank and as to any default
under such other term, provision, condition, covenant or agreement that can be
cured, has failed to cure such default within ten (10) days after Borrower
receives notice thereof or any officer of Borrower becomes aware thereof;
provided, however, that if the default cannot by its nature be cured within the
ten (10) day period or cannot after diligent attempts by Borrower be cured
within such ten (10) day period, and such default is likely to be cured within a
reasonable time, then Borrower shall have an additional reasonable period (which
shall not in any case exceed thirty (30) days) to attempt to cure such default,
and within such reasonable time period the failure to have cured such default
shall not be deemed an Event of Default (provided that no Advances or Equipment
Advances will be required to be made during such cure period);
7.3 Material Adverse Change. If there occurs a material adverse
-----------------------
change in Borrower's business or financial condition, or if there is a material
impairment of the prospect of repayment of any portion of the Obligations;
7.4 Attachment. If any material portion of Borrower's assets is
----------
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within ten (10) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or
13
<PAGE>
instrumentality thereof, or by any state, county, municipal, or governmental
agency, and the same is not paid within ten (10) days after Borrower receives
notice thereof, provided that none of the foregoing shall constitute an Event of
Default where such action or event is stayed or an adequate bond has been posted
pending a good faith contest by Borrower (provided that no Advances or Equipment
Advances will be required to be made during such cure period);
7.5 Insolvency. If Borrower becomes insolvent, or if an Insolvency
----------
Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced
against Borrower and is not dismissed or stayed within ten (10) days (provided
that no Advances or Equipment Advances will be made prior to the dismissal of
such Insolvency Proceeding);
7.6 Other Agreements. If there is a default in any agreement to
----------------
which Borrower is a party with a third party or parties resulting in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of One Hundred Thousand
Dollars ($100,000) or that could have a Material Adverse Effect;
7.7 Subordinated Debt. If Borrower makes any payment on account of
-----------------
Subordinated Debt, except to the extent such payment is allowed under any
subordination agreement entered into with Bank;
7.8 Judgments. If a judgment or judgments for the payment of money
---------
in an amount, individually or in the aggregate, of at least Fifty Thousand
Dollars ($50,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of ten (10) days (provided that no
Advances or Equipment Advances will be made prior to the satisfaction or stay of
such judgment); or
7.9 Misrepresentations. If any material misrepresentation or
------------------
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Bank by any Responsible
Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document.
8. BANK'S RIGHTS AND REMEDIES
--------------------------
8.1 Rights and Remedies. Upon the occurrence and during the
-------------------
continuance of an Event of Default, Bank may, at its election, without notice of
its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement,
by any of the other Loan Documents, or otherwise, immediately due and payable
(provided that upon the occurrence of an Event of Default described in Section
7.5 all Obligations shall become immediately due and payable without any action
by Bank);
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement or under any other agreement between
Borrower and Bank;
(c) Without notice to Borrower set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by Bank, or
(ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Bank.
8.2 Bank Expenses. If Borrower fails to pay any amounts or furnish
-------------
any required proof of payment due to third persons or entities, as required
under the terms of this Agreement, then Bank may do any or all of the following:
(a) make payment of the same or any part thereof; (b) set up such reserves under
the Revolving Facility as Bank deems necessary to protect Bank from the exposure
created by such failure; or (c) obtain and maintain insurance policies of the
type discussed in
14
<PAGE>
Section 6.6 of this Agreement, and take any action with respect to such policies
as Bank deems prudent. Any amounts so paid or deposited by Bank shall
constitute Bank Expenses, shall be immediately due and payable, and shall bear
interest at the then applicable rate hereinabove provided. Any payments made by
Bank shall not constitute an agreement by Bank to make similar payments in the
future or a waiver by Bank of any Event of Default under this Agreement.
8.3 Remedies Cumulative. Bank's rights and remedies under this
-------------------
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Bank of one right
or remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Borrower's part shall be deemed a continuing waiver. No delay by
Bank shall constitute a waiver, election, or acquiescence by it. No waiver by
Bank shall be effective unless made in a written document signed on behalf of
Bank and then shall be effective only in the specific instance and for the
specific purpose for which it was given.
8.4 Demand; Protest. Borrower waives demand, protest, notice of
---------------
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Bank on which Borrower may in any way be liable.
9. NOTICES
-------
Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by a recognized overnight
delivery service, certified mail, postage prepaid, return receipt requested, or
by telefacsimile to Borrower or to Bank, as the case may be, at its addresses
set forth below:
If to Borrower: ULTRADATA Corporation
5020 Franklin Drive
Pleasanton, CA 94588-3354
Attn: Ms. Debra A. Dehn-Hunt
FAX: (510)
If to Bank: Silicon Valley Bank
1731 Embarcadero Road, Suite 220
Palo Alto, CA 94303
Attn: Ms. Colleen Atkinson
FAX: (415) 812-0640
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
10. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
------------------------------------------
This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of California, without regard to principles of
conflicts of law. Each of Borrower and Bank hereby submits to the exclusive
jurisdiction of the state and Federal courts located in the County of Santa
Clara, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY
15
<PAGE>
RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
11. GENERAL PROVISIONS
------------------
11.1 Successors and Assigns. This Agreement shall bind and inure to
----------------------
the benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
-------- -------
may be assigned by Borrower without Bank's prior written consent, which consent
may be granted or withheld in Bank's sole discretion. Bank shall have the right
without the consent of or notice to Borrower to sell, transfer, negotiate, or
grant participation in all or any part of, or any interest in, Bank's
obligations, rights and benefits hereunder.
11.2 Indemnification. Borrower shall defend, indemnify and hold
---------------
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank
as a result of or in any way arising out of, following, or consequential to
transactions between Bank and Borrower whether under this Agreement, or
otherwise (including without limitation reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
11.3 Time of Essence. Time is of the essence for the performance of
---------------
all obligations set forth in this Agreement.
11.4 Severability of Provisions. Each provision of this Agreement
--------------------------
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
11.5 Amendments in Writing, Integration. This Agreement cannot be
----------------------------------
amended or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents.
11.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
11.7 Survival. All covenants, representations and warranties made in
--------
this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described
in Section 11.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Bank have run.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
ULTRADATA CORPORATION
By:
-------------------------------
Title:
---------------------------
By:
-------------------------------
Title:
---------------------------
SILICON VALLEY BANK
By:
-------------------------------
Title:
---------------------------
17
<PAGE>
EXHIBIT A
---------
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.
TO: CENTRAL CLIENT SERVICE DIVISION DATE:
------------------------
FAX#: (408) 496-2426 TIME:
------------------------
FROM: ULTRADATA CORPORATION
-----------------------------------------------------------------------
CLIENT NAME (BORROWER)
REQUESTED BY:
-----------------------------------------------------------------
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:
---------------------------------------------------------
PHONE NUMBER:
-----------------------------------------------------------------
FROM ACCOUNT # TO ACCOUNT #
---------------------- ---------------------------
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
- -------------------------- ---------------------
PRINCIPAL INCREASE (ADVANCE) $
-------------------------------------------
PRINCIPAL PAYMENT (ONLY) $
-------------------------------------------
INTEREST PAYMENT (ONLY) $
-------------------------------------------
PRINCIPAL AND INTEREST (PAYMENT) $
-------------------------------------------
OTHER INSTRUCTIONS:
-----------------------------------------------------------
- ------------------------------------------------------------------------------
All representations and warranties of Borrower stated in the Loan Agreement
are true, correct and complete in all material respects as of the date of the
telephone request for an Advance confirmed by this Borrowing Certificate;
provided, however, that those representations and warranties expressly referring
to another date shall be true, correct and complete in all material respects as
of such date.
BANK USE ONLY
TELEPHONE REQUEST:
- -----------------
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
- ----------------------------------------- ------------------------------
Authorized Requester Phone #
- ----------------------------------------- ------------------------------
Received By (Bank) Phone #
-----------------------------------------
Authorized Signature (Bank)
18
<PAGE>
EXHIBIT B
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: ULTRADATA CORPORATION
The undersigned authorized officer of ULTRADATA Corporation hereby
certifies that in accordance with the terms and conditions of the Loan Agreement
between Borrower and Bank (the "Agreement"), (i) Borrower is in complete
compliance for the period ending with all required covenants
--------------
except as noted below and (ii) all representations and warranties of Borrower
stated in the Agreement are true and correct in all material respects as of the
date hereof. Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
<TABLE>
<CAPTION>
REPORTING COVENANT REQUIRED COMPLIES
- ------------------ -------- --------
<S> <C> <C> <C>
Quarterly financial statements Quarterly within 45 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
A/R & A/P Agings Monthly within 25 days (if Advances) Yes No
A/R Audit Initial Yes No
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
- ------------------ -------- ------ --------
<S> <C> <C> <C> <C>
Maintain on a Quarterly Basis:
Minimum Quick Ratio* 1.25:1.0** _____:1.0 Yes No
Maximum Debt*/Tangible Net Worth 1.0:1.0 _____:1.0 Yes No
Debt Service Coverage 1.5:1.0 _____:1.0 Yes No
</TABLE>
*Minus current portion of deferred revenue.
**1.5:1.0 beginning with quarter ending 3/31/97.
BANK USE ONLY
Received by:
-------------------------------
AUTHORIZED SIGNER
Date:
------------------------------
Verified:
---------------------------------
AUTHORIZED SIGNER
Date:
-----------------------------
Compliance Status: Yes No
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
- -------------------------------------
SIGNATURE
- -------------------------------------
TITLE
- -------------------------------------
DATE
19
<PAGE>
DISBURSEMENT REQUEST AND AUTHORIZATION
Borrower: ULTRADATA CORPORATION Bank: Silicon Valley Bank
============================================================================
LOAN TYPE. This is a Variable Rate, Revolving Line of Credit of a principal
amount up to $5,000,000 and Equipment Facility of up to $1,500,000.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for business.
SPECIFIC PURPOSE. The specific purpose of this loan is: Short Term Working
Capital.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Bank's conditions for making the loan have been
satisfied. Please disburse the loan proceeds as follows:
<TABLE>
<CAPTION>
Revolving Line Equipment Facility
-------------- ------------------
<S> <C> <C>
Amount paid to Borrower directly: $ $
Undisbursed Fun $ $
Principal $ $
</TABLE>
CHARGES PAID IN CASH. Borrower will pay in cash as agreed the following
charges:
$ Counsel Fees and Expenses (Estimate)
$ Other Fees
$ Total Charges Paid in Cash
AUTOMATIC PAYMENTS. Borrower hereby authorizes Bank automatically to deduct
from Borrower's account numbered the amount of any loan payment.
--------------
If the funds in the account are insufficient to cover any payment, Bank shall
not be obligated to advance funds to cover the payment. At any time and for any
reason, Borrower or Bank may voluntarily terminate Automatic Payments.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO BANK THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION AS
DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO BANK. THIS
AUTHORIZATION IS DATED AS OF SEPTEMBER 23, 1996.
BORROWER:
ULTRADATA CORPORATION
- -------------------------------
Authorized Officer
============================================================================
<PAGE>
EXHIBIT 10.20
CORPORATE RESOLUTIONS TO BORROW
BORROWER: ULTRADATA CORPORATION
I, the undersigned Secretary or Assistant Secretary of ULTRADATA
Corporation (the "Corporation"), HEREBY CERTIFY that the Corporation is
organized and existing under and by virtue of the laws of the State of Delaware.
I FURTHER CERTIFY that attached hereto as Attachment 1 is a true and
complete copy of the Certificate of Incorporation of the Corporation, which is
in full force and effect on the date hereof.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation
(or by other duly authorized corporate action in lieu of a meeting), duly called
and held, at which a quorum was present and voting, the following resolutions
were adopted.
BE IT RESOLVED, that ANY ONE (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
NAMES POSITIONS ACTUAL SIGNATURES
------------------------------------------------------------------
- ----------------------- ------------------ ----------------------
- ----------------------- ------------------ ----------------------
- ----------------------- ------------------ ----------------------
- ----------------------- ------------------ ----------------------
- ----------------------- ------------------ ----------------------
acting for and on behalf of this Corporation and as its at and deed be, and they
hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Silicon Valley Bank
("Bank"), on such terms as may be agreed upon between the officers, employees,
or agents and Bank, such sum or sums of money as in their judgment should be
borrowed, without limitation, including such sums as are specified in that
certain Loan Agreement dated as of September 23, 1996 (the "Loan Agreement").
EXECUTE NOTES. To execute and deliver to Bank the promissory note or
notes of the Corporation, on Lender's forms, at such rates of interest and on
such terms as may be agreed upon, evidencing the sums of money so borrowed or
any indebtedness of the Corporation to Bank, and also to execute and deliver to
Lender one or more renewals, extensions, modifications, refinancings,
consolidations, or substitutions for one or more of the notes, or any portion of
the notes.
NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation may have an
interest, and either to receive cash for the same or to cause such proceeds to
be credited to the account of the Corporation with Bank, or to cause such other
disposition of the proceeds derived therefrom as they may deem advisable.
1
<PAGE>
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder, and in
all cases, to do and perform such other acts and things, to pay any and all fees
and costs, and to execute and deliver such other documents and agreements as
they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to
these resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full force
and effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
I FURTHER CERTIFY that the officers, employees, and agents named above
are duly elected, appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set forth opposite their respective names; that
the foregoing Resolutions now stand of record on the books of the Corporation;
and that the Resolutions are in full force and effect and have not been modified
or revoked in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on September 23, 1996 and
attest that the signatures set opposite the names listed above are their genuine
signatures.
CERTIFIED TO AND ATTESTED BY:
X
-------------------------------------------
2
<PAGE>
EXHIBIT 10.21
LIBOR SUPPLEMENT TO AGREEMENT
This LIBOR Supplement to Agreement (the "Supplement") is a supplement to
the Loan Agreement (the "Agreement") dated as of September 23, 1996, between
SILICON VALLEY BANK ("Bank") and ULTRADATA CORPORATION ("Borrower"), and forms a
part of and is incorporated into the Agreement. Except as otherwise defined in
this Supplement, capitalized terms shall have the meanings assigned in the
Agreement.
1. Definitions.
-----------
"Business Day" means a day of the year (a) that is not a Saturday, Sunday
or other day on which banks in the State of California or the City of London are
authorized or required to close and (b) on which dealings are carried on in the
interbank market in which Bank customarily participates.
"Interest Period" means (i) for each LIBOR Rate Advance, a period of
approximately one, two or three months as the Borrower may elect and (ii) for
each LIBOR Rate Equipment Advance, a period of approximately one month, provided
--------
that the last day of an Interest Period for a LIBOR Rate Advance or LIBOR Rate
Equipment Advance shall be determined in accordance with the practices of the
LIBOR interbank market as from time to time in effect, provided, further, in all
-------- -------
cases such period shall expire not later than the applicable Maturity Date or
Equipment Facility Maturity Date, as the case may be.
"Interest Rate" shall mean as to: (a) Prime Rate Advances, a rate equal to
the Prime Rate plus any margin as provided in Section 2.3(b) of the Agreement;
(b) LIBOR Rate Advances, a rate of 2.50% per annum in excess of the LIBOR Rate
(based on the LIBOR Rate applicable for the Interest Period selected by the
Borrower); and (c) LIBOR Rate Equipment Advances, a rate of 2.75% per annum in
excess of the LIBOR Rate.
"LIBOR Base Rate" means, for any Interest Period for a LIBOR Rate Advance
or LIBOR Rate Equipment Advance, the rate of interest per annum determined by
Bank to be the per annum rate of interest at which deposits in United States
Dollars are offered to Bank in the London interbank market in which Bank
customarily participates at 11:00 a.m. (local time in such interbank market) two
(2) Business Days before the first day of such Interest Period for a period
approximately equal to such Interest Period and in an amount approximately equal
to the amount of such Advance or Equipment Advance.
"LIBOR Rate" shall mean, for any Interest Period for a LIBOR Rate Advance
or LIBOR Rate Equipment Advance, as the case may be, a rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) equal to (i) the LIBOR Base
Rate for such Interest Period divided by (ii) 1 minus the Reserve Requirement
for such Interest Period.
"LIBOR Rate Advances" means any Advances made or a portion thereof on which
interest is payable based on the LIBOR Rate in accordance with the terms hereof.
"LIBOR Rate Equipment Advances" means any Equipment Advances made or a
portion thereof on which interest is payable based on the LIBOR Rate in
accordance with the terms hereof.
"Prime Rate Advances" means any Advances or Equipment Advances made or a
portion thereof on which interest is payable based on the Prime Rate in
accordance with the terms hereof.
"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
1
<PAGE>
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.
"Reserve Requirement" means, for any Interest Period, the average maximum
rate at which reserves (including any marginal, supplemental or emergency
reserves) are required to be maintained during such Interest Period under
Regulation D against "Eurocurrency liabilities" (as such term is used in
Regulation D) by member banks of the Federal Reserve System. Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by Bank by reason of any Regulatory Change
against (i) any category of liabilities which includes deposits by reference to
which the LIBOR Rate is to be determined as provided in the definition of "LIBOR
Base Rate" or (ii) any category of extensions of credit or other assets which
include Advances or Equipment Advances.
2. Requests for Advances; Confirmation of Initial Advances. Each LIBOR
-------------------------------------------------------
Rate Advance and/or LIBOR Rate Equipment Advance, as the case may be, shall be
made upon the irrevocable written request of Borrower received by Bank not later
than 11:00 a.m. (Santa Clara, California time) on the Business Day three (3)
Business Days prior to the date such Advance and/or Equipment Advance is to be
made. Each such notice shall specify the date such Advance and/or Equipment
Advance is to be made, which day shall be a Business Day; the amount of such
Advance and/or Equipment Advance, the Interest Period for such Advance and/or
Equipment Advance, and comply with such other requirements as Bank determines
are reasonable or desirable in connection therewith.
Each written request for a LIBOR Rate Advance or LIBOR Rate Equipment
Advance shall be in the form of a LIBOR Rate Advance Form as set forth on
Exhibit A, which shall be duly executed by a Responsible Officer.
3. Conversion/Continuation of Advances.
-----------------------------------
(a) Borrower may from time to time submit in writing a request that
Prime Rate Advances be converted to LIBOR Rate Advances or LIBOR Rate Equipment
Advances, as the case may be, or that any existing LIBOR Rate Advances or LIBOR
Rate Equipment Advances continue for an additional Interest Period. Such
request shall specify the amount of the Prime Rate Advances which will
constitute LIBOR Rate Advances or LIBOR Rate Equipment Advances, as the case may
be, (subject to the limits set forth below) and the Interest Period to be
applicable to such LIBOR Rate Advances or LIBOR Rate Equipment Advances. Each
written request for a conversion to a LIBOR Rate Advance or LIBOR Rate Equipment
Advance or a continuation of a LIBOR Rate Advance or LIBOR Rate Equipment
Advance shall be substantially in the form of a LIBOR Rate
Conversion/Continuation Certificate as set forth on Exhibit B, which shall be
duly executed by a Responsible Officer. Subject to the terms and conditions
contained herein, three (3) Business Days after Bank's receipt of such a request
from Borrower, such Prime Rate Advances shall be converted to LIBOR Rate
Advances or LIBOR Rate Equipment Advances or such LIBOR Rate Advances, as the
case may be, or LIBOR Rate Equipment Advances shall continue, as the case may
be, provided that any conversion of Prime Rate Advances to LIBOR Rate Advances
--------
or LIBOR Rate Equipment Advances shall only be made as of the last day of the
applicable Interest Period, and, provided further, that:
-------- -------
(i) no Event of Default or event which with notice or passage
of time or both would constitute an Event of Default exists;
(ii) no party hereto shall have sent any notice of termination
of this Supplement or of the Agreement;
2
<PAGE>
(iii) Borrower shall have complied with such customary
procedures as Bank has established from time to time for Borrower's requests for
LIBOR Rate Advances or LIBOR Rate Equipment Advances;
(iv) the amount of a LIBOR Rate Advance or LIBOR Rate Equipment
Advances shall be $500,000 or such greater amount which is an integral multiple
of $50,000; and
(v) Bank shall have determined that the Interest Period or
LIBOR Rate is available to Bank which can be readily determined as of the date
of the request for such LIBOR Rate Advance or LIBOR Rate Equipment Advances, as
the case may be.
Any request by Borrower to convert Prime Rate Advances to LIBOR Rate
Advances or LIBOR Rate Equipment Advances, as the case may be, or continue any
existing LIBOR Rate Advances or LIBOR Rate Equipment Advances, as the case may
be, shall be irrevocable. Notwithstanding anything to the contrary contained
herein, Bank shall not be required to purchase United States Dollar deposits in
the London interbank market or other applicable LIBOR Rate market to fund any
LIBOR Rate Advances or LIBOR Rate Equipment Advances, as the case may be, but
the provisions hereof shall be deemed to apply as if Bank had purchased such
deposits to fund the LIBOR Rate Advances or LIBOR Rate Equipment Advances, as
the case may be.
(b) Any LIBOR Rate Advances or LIBOR Rate Equipment Advances shall
automatically convert to Prime Rate Advances upon the last day of the applicable
Interest Period, unless Bank has received and approved a complete and proper
request to continue such LIBOR Rate Advance or LIBOR Rate Equipment Advance at
least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any LIBOR Rate Advances or LIBOR Rate Equipment Advances shall,
at Bank's option, convert to Prime Rate Advances in the event that (i) an Event
of Default, or event which with the notice or passage of time or both would
constitute an Event of Default, shall exist, (ii) this Supplement or the
Agreement shall terminate, or (iii) the aggregate principal amount of the Prime
Rate Advances which have previously been converted to LIBOR Rate Advances and/or
LIBOR Rate Equipment Advances, or the aggregate principal amount of existing
LIBOR Rate Advances and/or LIBOR Rate Equipment Advances continued, as the case
may be, at the beginning of an Interest Period shall at any time during such
Interest Period exceed the Committed Line. Borrower agrees to pay to Bank, upon
demand by Bank (or Bank may, at its option, charge Borrower's deposit account)
any amounts required to compensate Bank for any loss (including loss of
anticipated profits), cost or expense incurred by such person, as a result of
the conversion of LIBOR Rate Advances to Prime Rate Advances and/or LIBOR Rate
Equipment Advances, as the case may be, pursuant to any of the foregoing.
(c) On all Advances and Equipment Advances, interest shall be payable
by Borrower to Bank monthly in arrears not later than the twenty-second (22nd)
day of each calendar month at the applicable Interest Rate.
4. Additional Requirements/Provisions Regarding LIBOR Rate Advances; Etc.
----------------------------------------------------------------------
(a) If for any reason (including voluntary or mandatory prepayment or
acceleration), Bank receives all or part of the principal amount of a LIBOR Rate
Advance or LIBOR Rate Equipment Advance prior to the last day of the Interest
Period for such Advance or Equipment Advance, Borrower shall immediately notify
Borrower's account officer at Bank and, on demand by Bank, pay Bank the amount
(if any) by which (i) the additional interest which would have been payable on
the amount so received had it not been received until the last day of such
Interest Period exceeds (ii) the interest which would have been recoverable by
Bank by placing the amount so received on deposit in the certificate of deposit
markets or the offshore currency interbank markets or United States Treasury
investment products, as the case may be, for a period starting on the date on
which it was so received and ending on the last day of such Interest Period at
the interest rate
3
<PAGE>
determined by Bank in its reasonable discretion. Bank's determination as to
such amount shall be conclusive absent manifest error.
(b) Borrower shall pay to Bank, upon demand by Bank, from time to time
such amounts as Bank may determine to be necessary to compensate it for any
costs incurred by Bank that Bank determines are attributable to its making or
maintaining of any amount receivable by Bank hereunder in respect of any
Advances or Equipment Advances relating thereto (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"), in
each case resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to
Bank under this Supplement in respect of any Advances or Equipment Advances
(other than changes which affect taxes measured by or imposed on the overall net
income of Bank by the jurisdiction in which such Bank has its principal office);
or
(ii) imposes or modifies any reserve, special deposit or
similar requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of Bank (including any Advances or
Equipment Advances or any deposits referred to in the definition of "LIBOR Base
Rate"); or
(iii) imposes any other condition affecting this Supplement (or
any of such extensions of credit or liabilities).
Bank will notify Borrower of any event occurring after the date of the Agreement
which will entitle Bank to compensation pursuant to this section as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation. Bank will furnish Borrower with a statement setting forth the
basis and amount of each request by Bank for compensation under this Section 4.
Determinations and allocations by Bank for purposes of this Section 4 of the
effect of any Regulatory Change on its costs of maintaining its obligations to
make Advances or Equipment Advances or of making or maintaining Advances or
Equipment Advances or on amounts receivable by it in respect of Advances or
Equipment Advances, and of the additional amounts required to compensate Bank in
respect of any Additional Costs, shall be conclusive absent manifest error.
(c) Borrower shall pay to Bank, upon the request of Bank, such amount
or amounts as shall be sufficient (in the sole good faith opinion of such Bank)
to compensate it for any loss, costs or expense incurred by it as a result of
any failure by Borrower to borrow a LIBOR Rate Advance and/or LIBOR Rate
Equipment Advance on the date for such borrowing specified in the relevant
notice of borrowing hereunder.
(d) If Bank shall determine that the adoption or implementation of any
applicable law, rule, regulation or treaty regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its
applicable lending office) with any respect or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on capital of Bank or any person or entity controlling Bank (a "Parent")
as a consequence of its obligations hereunder to a level below that which Bank
(or its Parent) could have achieved but for such adoption, change or compliance
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by Bank to be material, then from time to time, within 15 days
after demand by Bank, Borrower shall pay to Bank such additional amount or
amounts as will compensate Bank for such reduction. A statement of Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive absent manifest error.
4
<PAGE>
(e) If at any time Bank, in its sole and absolute discretion,
determines that: (i) the amount of the LIBOR Rate Advances and/or LIBOR Rate
Equipment Advances for periods equal to the corresponding Interest Periods are
not available to Bank in the offshore currency interbank markets, or (ii) the
LIBOR Rate does not accurately reflect the cost to Bank of lending the LIBOR
Rate Advance and/or LIBOR Rate Equipment Advance, then Bank shall promptly give
notice thereof to Borrower, and upon the giving of such notice Bank's obligation
to make the LIBOR Rate Advances and/or LIBOR Rate Equipment Advances, as the
case may be, shall terminate, unless Bank and the Borrower agree in writing to a
different interest rate, Advances or Equipment Advances shall terminate, unless
Bank and the Borrower agree in writing to a different interest rate applicable
to LIBOR Rate Advances and/or LIBOR Rate Equipment Advances, as the case may be.
If it shall become unlawful for Bank to continue to fund or maintain any
Advances or Equipment Advances, or to perform its obligations hereunder, upon
demand by Bank, Borrower shall prepay the Advances or Equipment Advances in full
with accrued interest thereon and all other amounts payable by Borrower
hereunder (including, without limitation, any amount payable in connection with
such prepayment pursuant to Section 4(a)).
IN WITNESS WHEREOF, the undersigned have executed this LIBOR Supplement to
Agreement as of the first date above written.
ULTRADATA CORPORATION
By:
--------------------------
Title:
------------------------
SILICON VALLEY BANK
By:
--------------------------
Title:
------------------------
5
<PAGE>
EXHIBIT A
---------
LIBOR RATE ADVANCE FORM
The undersigned hereby certifies as follows:
I, , am the duly elected and
-----------------------
acting of ULTRADATA Corporation ("Borrower").
--------------------------
This certificate is delivered pursuant to Section 2 of that certain
LIBOR Supplement to Agreement together with the Loan Agreement by and between
Borrower and Silicon Valley Bank ("Bank") (the "Agreement"). The terms used in
this Borrowing Certificate which are defined in the Agreement have the same
meaning herein as ascribed to them therein.
(1) Borrower hereby requests on , 19 a LIBOR Rate
-------------- ---
Advance (the "Advance") as follows:
(a) The date on which the Advance is to be made is
, 19 .
- ------------------- ---
(b) The amount of the Advance is to be ($ ), for
-------------- --------
an Interest Period of one/two/three month(s).
(2) Borrower hereby requests on , 19 a LIBOR Rate
------------- ---
Equipment Advance (the "Equipment Advance") as follows:
(a) The date on which the Equipment Advance is to be made is
, 19 .
- --------------- ---
(b) The amount of the Equipment Advance is to be
-----------------
($ ), for an Interest Period of one month.
All representations and warranties of Borrower stated in the Agreement
are true, correct and complete in all material respects as of the date of this
request for a loan; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date.
IN WITNESS WHEREOF, this LIBOR Rate Advance Form is executed by the
undersigned as of this day of , 19 .
------- ------------- ---
ULTRADATA CORPORATION
By:
------------------------------
Title:
---------------------------
FOR INTERNAL BANK USE ONLY
<TABLE>
<CAPTION>
=========================================================================
LIBOR Pricing Date LIBOR Rate LIBOR Rate Variance Maturity Date
<S> <C> <C> <C>
%
------
==========================================================================
</TABLE>
6
<PAGE>
EXHIBIT B
---------
LIBOR RATE CONVERSION/CONTINUATION CERTIFICATE
The undersigned hereby certifies as follows:
I, , am the duly elected and acting
---------------------------
of Ultradata Corporation ("Borrower").
- -----------------
This certificate is delivered pursuant to Section 2 of that certain
LIBOR Supplement to Agreement together with the Loan Agreement by and between
Borrower and Silicon Valley Bank ("Bank") (the "Agreement"). The terms used in
this LIBOR Rate Conversion/Continuation Certificate which are defined in the
Agreement have the same meaning herein as ascribed to them therein.
Borrower hereby requests on , 19 a LIBOR Rate Advance/
-------------- ---
LIBOR Rate Equipment Advance (the "Advance") as follows:
(a) (i) A rate conversion of an existing Prime Rate Advance from
--- a Prime Rate Advance to a LIBOR Rate Advance/LIBOR Rate
Equipment Advance; or
--- (ii) A continuation of an existing LIBOR Rate Advance/LIBOR
Rate Equipment Advance as a LIBOR Rate Advance/LIBOR
Rate Equipment Advance;
[Check (i) or (ii) above]
(b) The date on which the Advance is to be made is , 19 .
------------- ---
(c) The amount of the Advance is to be ($ ), for an
------------ --------
Interest Period of month(s).
-------
All representations and warranties of Borrower stated in the Agreement
are true, correct and complete in all material respects as of the date of this
request for a loan; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date.
IN WITNESS WHEREOF, this LIBOR Rate Conversion/Continuation Certificate is
executed by the undersigned as of this day of , 19 .
------ ----------- ---
ULTRADATA CORPORATION
By:
--------------------------------
Title:
----------------------------
FOR INTERNAL BANK USE ONLY
<TABLE>
<CAPTION>
===============================================================================
LIBOR Pricing Date LIBOR Rate LIBOR Rate Variance Maturity Date
<S> <C> <C> <C>
%
------
===============================================================================
</TABLE>
7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY AS REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> SEP-30-1996 DEC-31-1996
<CASH> 3,746 7,036
<SECURITIES> 0 0
<RECEIVABLES> 13,456 13,908
<ALLOWANCES> (1,155) (255)
<INVENTORY> 1,786 2,041
<CURRENT-ASSETS> 19,913 24,103
<PP&E> 3,896 3,740
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 24,110 28,125
<CURRENT-LIABILITIES> 7,062 9,843
<BONDS> 0 0
0 0
0 0
<COMMON> 7 7
<OTHER-SE> 14,753 14,283
<TOTAL-LIABILITY-AND-EQUITY> 24,110 28,125
<SALES> 3,524 17,163
<TOTAL-REVENUES> 8,692 25,049
<CGS> 2,209 7,965
<TOTAL-COSTS> 5,301 14,024
<OTHER-EXPENSES> 6,002 9,524
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 96 90
<INCOME-PRETAX> (2,516) 1,722
<INCOME-TAX> (931) 637
<INCOME-CONTINUING> (1,586) 1,085
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,586) 1,085
<EPS-PRIMARY> (0.21) 0.15
<EPS-DILUTED> (0.21) 0.15
</TABLE>
