Exhibit 10.25
FOURTH LOAN MODIFICATION AGREEMENT
This Fourth Loan Modification is entered into as of May 12, 1999, by
and between ART TECHNOLOGY GROUP, INC., a Delaware corporation with its
principal place of business at 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000 ("Borrower") and SILICON VALLEY BANK, a California-chartered bank
("Bank"), with its principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx
Xxxxx, XX 00000 and with a loan production office located at Wellesley Office
Park, 00 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, doing business under
the name "Silicon Valley East."
1. DESCRIPTION OF EXISTING INDEBTEDNESS. Among other indebtedness which
may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a
loan arrangement dated as of November 26, 1997, evidenced by, among other
documents, a certain Loan and Security Agreement dated as of November 26, 1997
between Borrower and Bank, as amended by certain Loan Modification Agreements
dated as of March 31, 1998, July 2, 1998 and September 8, 1998 (as amended, the
"Loan Agreement"). Capitalized terms used but not otherwise defined herein shall
have the same meaning as in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Banks shall be referred to as
the "Indebtedness".
2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured by
the Collateral as described in the Loan Agreement and a certain Intellectual
Property Security Agreement dated as of November 26, 1997 between Borrower and
Bank (together with any other collateral security granted to Bank, the "Security
Documents").
Hereinafter, the Security Documents, together with all other documents
evidencing or security the Indebtedness shall be referred to as the "Existing
Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. MODIFICATION(S) TO LOAN AGREEMENT.
1. The Loan Agreement shall be amended by deleting the
definition of "Cash Management Services" appearing in
Section 1.1 thereof.
2. The Loan Agreement shall be amended by deleting the
definition of "Committed Revolving Line" appearing in
Section 1.1 and inserting in lieu thereof the
following:
"Committed Revolving Line" means a credit
extension of up to Five Million Dollars
($5,000,000.00).
3. All references to "Committed Equipment Line" in the
Loan Agreement shall mean and refer to the "1998
Committed Equipment Line".
4. The Loan Agreement shall be amended by deleting
paragraph (c) in the definition of "Eligible
Accounts" appearing in Section 1.1 and inserting in
lieu thereof the following:
"(c) Accounts with respect to an account
debtor, including Affiliates, whose total
obligations to Borrower exceed twenty-five
percent (25%) of all Accounts, to the extent
such obligations exceed the aforementioned
percentage, except as approved in writing by
Bank."
5. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Equipment Advance" has the meaning set
forth in Section 2.1.3."
and inserting in lieu thereof the following:
""Equipment Advance" or "Equipment Advances"
shall mean any advance made hereunder
pursuant to Sections 2.1.3.A or 2.1.3.B."
6. The Loan Agreement shall be amended by deleting the
definition of "Letter of Credit" appearing in Section
1.1 and inserting in lieu thereof the following:
""Letter of Credit" means a letter of credit
or similar undertaking issued by Bank
pursuant to Section 2.1.4."
7. The Loan Agreement shall be amended by deleting the
definition of "Maturity Date" appearing in Section
1.1 and inserting in lieu thereof the following:
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""Maturity Date" means, as applicable, (i)
the Revolving Maturity Date for Advances
made pursuant to Section 2.1.1; (ii) the
Term Loan Maturity Date for Term Loan
advances made pursuant to Section 2.1.2;
(iii) the Equipment Line Maturity Date for
Equipment Advances made pursuant to Section
2.1.3.A; and (iv) the 1999 Equipment
Maturity Date for Equipment Advances made
pursuant to Section 2.1.3.B."
8. The Loan Agreement shall be amended by deleting the
definition of "New Equity" appearing in Section 1.1
and inserting in lieu thereof the following new
definition:
""Capitalization Event" means the issuance
by the Borrower of equity resulting in the
receipt by Borrower of at least Two Million
Five Hundred Thousand Dollars
($2,500,000.00)."
9. The Loan Agreement shall be amended by inserting
immediately after the definition of "Negotiable
Collateral" appearing in Section 1.1 thereof the
following definitions:
""1999 Committed Equipment Line" means a
credit extension of up to Two Hundred
Thousand Dollars ($200,000.00).
"1999 Equipment Availability End Date" has
the meaning set forth in Section 2.1.3.B.
""1999 Equipment Maturity Date" means thirty
(30) months after the 1999 Equipment
Availability End Date."
10. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Revolving Maturity Date" means July 1,
1999."
and inserting in lieu thereof the following:
""Revolving Maturity Date" means May 12,
2000."
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11. The Loan Agreement shall be amended by inserting
immediately after the definition of "Term Loan"
appearing in Section 1.1 thereof the following
definition:
""Term Loan Maturity Date" means December
29, 2000."
12. The Loan Agreement shall be amended by deleting
Section 2.1.1 entitled "Revolving Advances" and
inserting in lieu thereof the following:
"2.1.1 REVOLVING ADVANCES.
(a) Subject to and upon the terms and
conditions of this Agreement, Bank agrees to
make Advances to Borrower in an aggregate
outstanding amount not in exceed (i) the
Committed Revolving Line or the Borrowing
Base, whichever is less, minus (ii) the face
amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of
Credit) and minus (iii) any other amounts
outstanding to the Bank (excluding advances
made pursuant to Sections 2.1.2, 2.1.3.A and
2.1.3.B). Subject to the terms and
conditions of this Agreement, amounts
borrowed pursuant to this Section 2.1 may be
repaid and reborrowed at any time during the
term of this Agreement.
(b) Whenever Borrower desires an Advance,
Borrower will notify Bank by facsimile
transmission or telephone no later than 3:00
p.m. Eastern time, on the Business Day that
the Advances is to be made. Each such
notification shall be promptly confirmed by
a Payment/Advance Form in substantially the
form of EXHIBIT B hereto. Bank is authorized
to make Advances under this Agreement, based
upon instructions received from a
Responsible Officer or a designee of a
Responsible Officer, or without instructions
if in Bank's discretion such Advances are
necessary to meet Obligations which have
become due and remain unpaid. Bank shall be
entitled to rely on any telephonic notice
given by a person who Bank reasonably
believes to be a Responsible Officer or a
designee thereof, and
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Borrower shall indemnify and hold Bank
harmless for any damages or loss suffered by
Bank as a result of such reliance. Bank will
credit the amount of Advances made under
this Section 2.1 to Borrower's deposit
account.
(c) The Committed Revolving Line shall
terminate on the Revolving Maturity Date, at
which time all Advances under this Section
2.1 and other amounts due under this
Agreement (except as otherwise expressly
specified herein) shall be immediately due
and payable."
13. All references to "Maturity Date" in Section 2.1.2 of
the Loan Agreement shall mean and refer to the "Term
Loan Maturity Date."
14. All Term Loan advances currently amortizing under
Section 2.1.1 shall continue to be repaid as provided
in Section 2.1.2. The outstanding principal balance
of all Term Loan advances made pursuant to Section
2.1.2 as of April 21, 1999, is Two Hundred
Seventy-Seven Thousand Seven Hundred Seventy-Seven
and 92/100 Dollars ($277,777.92).
15. Section 2.1.3 of the Loan Agreement entitled
"Equipment Advances" shall be renumbered as Section
2.1.3.A and retitled as "1998 Equipment Advances."
16. All Equipment Advances currently amortizing under
Section 2.1.3.A shall continue to be repaid as
provided in Section 2.1.3.A. The outstanding
principal balance of all Equipment Advances made
pursuant to Section 2.1.3.A as of April 21, 1999 is
One Hundred Seventy-Nine Thousand Nine Hundred
Twenty-Three and 86/100 Dollars ($179,923.86).
17. The Loan Agreement shall be amended by inserting
after Section 2.1.3.A thereof the following new
section entitled "1998 Equipment Advances":
"2.1.3.B 1999 EQUIPMENT ADVANCES.
(a) Subject to and upon the terms and
conditions of this Agreement, at any time
through November 12, 1999 (the "1999
Equipment Availability End
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Date"). Bank agrees to make Equipment
Advances (each an "Equipment Advance" and
collectively, the "Equipment Advances") to
Borrower under this Section 2.1.3.B in an
aggregate outstanding amount not to exceed
the 1999 Committed Equipment Line. To
evidence the Equipment Advances, Borrower
shall deliver to Bank, at the time of each
Equipment Advance request, an invoice for
the equipment to be purchased. The Equipment
Advances shall be used only to purchase or
refinance Equipment purchased after December
1, 1998 and shall not exceed One Hundred
Percent (100%) of the invoice amount of such
equipment approved from time to time by
Bank, excluding taxes, shipping, warranty
charges, freight discounts and installation
expense. Software may only constitute up to
twenty-five percent (25%) of aggregate
Equipment Advances under this Section
2.1.3.B.
(b) Interest shall accrue from the date of
each Equipment Advance made pursuant to this
Section 2.1.3.B at a per annum rate equal to
the aggregate of the Prime Rate, PLUS three
quarters of one percent (0.75%), and shall
be payable monthly on the Payment Date of
each month through the month in which the
1999 Equipment Availability End Date falls.
Any Equipment Advances made pursuant to this
Section 2.1.3.B that are outstanding on the
1999 Equipment Availability End Date will be
payable in thirty (30) equal monthly
installments of principal, plus all accrued
interest, beginning on the Payment Date of
each month following the 1999 Equipment
Availability End Date and ending on the 1999
Equipment Maturity Date. Equipment Advances,
once repaid, may not be reborrowed.
(c) When Borrower desires to obtain an
Equipment Advance, Borrower shall notify
Bank (which notice shall be irrevocable) by
facsimile transmission to be received no
later than 3:00 p.m. Eastern time one (1)
Business Date before the day on which the
Equipment Advance is to be made. Such notice
shall be substantially in the form of
Exhibit B. The notice shall be signed by a
Responsible Officer
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or its designee and include a copy of the
invoice for the Equipment to be financed."
18. Section 2.1.3 of the Loan Agreement entitled "Letters
of Credit" shall be renumbered as Section 2.1.4.
19. The Loan Agreement shall be amended by deleting the
following text appearing as the first sentence of the
redesignated Section 2.1.4 entitled "Letters of
Credit":
"Subject to the terms and conditions of this
Agreement, Bank agrees to issue or cause to
be issued Letters of Credit for the account
of Borrower in an aggregate outstanding face
amount not to exceed (i) the lesser of the
Committed Revolving Line or the Borrowing
Base, whichever is less, minus (ii) the then
outstanding principal balance of the
Advances; PROVIDED that the face amount of
outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit
shall not in any case exceed One Hundred
Thousand Dollars ($100,000.00)."
and inserting in lieu thereof the following:
"Subject to the terms and conditions of this
Agreement, Bank agrees to issue or cause to
be issued Letters of Credit for the account
of Borrower in an aggregate outstanding face
amount not to exceed (i) the Lesser of the
Committed Revolving Line or the Borrowing
Base, minus (ii) the then outstanding
principal balance of the Advances, and minus
(iii) any other amounts outstanding to the
bank (excluding advances made pursuant to
Sections 2.1.2, 2.1.3.A and 2.1.3.B);
PROVIDED that the face amount of outstanding
Letters of Credit (including drawn but
unreimbursed Letters of Credit and any
Letter of Credit reserve as described in
this Section 2.1.4) shall not in any case
exceed Four Million Seven Hundred Sixty-Two
Thousand Five Hundred Dollars
($4,762,500.00)."
20. The Loan Agreement shall be amended by deleting in
its entirety Section 2.1.4 of the Loan Agreement
entitled "Cash Management Sublimit."
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21. The Loan Agreement shall be amended by deleting
Section 2.2. entitled "Overadvances" and inserting in
lieu thereof the following:
"2.2 OVERADVANCES. If, at any time or for
any reason, the amount of Obligations owed
by Borrower to Bank pursuant to Sections
2.1.1 and 2.1.4 of this Agreement is greater
than: (a) the lesser of (i) the Committed
Revolving Line or (ii) the Borrowing Base,
minus (b) the face amount of all outstanding
Letters of Credit (including drawn but
unreimbursed letters of credit), and minus
(c) any other amounts outstanding to the
Bank (excluding advances made pursuant to
Sections 2.1.2, 2.1.3.A and 2.1.3.B),
Borrower shall immediately pay to Bank, in
cash, the amount of such excess."
22. The Loan Agreement shall be amended by deleting
Section 2.3(a) entitled "Interest Rate" and inserting
in lieu thereof the following:
"(a) INTEREST RATE. Except as set forth in
Section 2.3(b), any Advances made pursuant
to Section 2.1.1 shall bear interest,
effective July 2, 1998, on the average daily
balance thereof, at a per annum rate equal
to the aggregate of the Prime Rate, PLUS One
Quarter of One Percent (0.25)."
23. Notwithstanding anything in the Loan Agreement to the
contrary, the audited consolidated financial
statements of the Borrower for Fiscal Year 1998 must
be received by the Bank on or before May 31, 1999.
24. The Loan Agreement shall be amended by deleting
Section 6.3(ii) and inserting in lieu thereof the
following:
"(ii) Bank shall have a right from time to
time hereafter to audit Borrower's Accounts
at Borrower's expense, provided that such
audits will be conducted no more often than
every twelve (12) months unless an Event of
Default has occurred and is continuing. The
Borrower shall provide the Bank with access
to all of its records and financial
information during regular business hours in
order to permit the Bank to complete an
audit of
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Borrower's Accounts on or before December
31, 1999."
25. The Loan Agreement shall be amended by deleting
Section 6.B entitled "Quick Ratio" and inserting in
lieu thereof the following:
"6.8 QUICK RATIO. Borrower shall maintain,
as of the last day of each calendar month, a
ratio of Quick Assets to Current Liabilities
(excluding deferred revenues) of at least:
(i) 1.50 to 1.0 for each month through the
month ending June 30, 1999, and (ii) 1.25 to
1.0 for the month ending July 31, 1999 and
each month thereafter. For purposes hereof,
the definition of "Current Liabilities shall
include all outstanding Credit Extensions
under this Agreement, including, without
limitation, any Letters of Credit issued by
the Bank, and any other amounts outstanding
to the Bank."
26. The Loan Agreement shall be amended by deleting
Section 6.9 entitled "Tangible Net Worth" and
inserting in lieu thereof the following:
"6.9 ADJUSTED QUICK RATIO. Borrower shall
maintain, as of the last day of each
calendar month, a ratio of Quick Assets to
Current Liabilities (excluding deferred
revenues) of at least 1.75 to 1.0. For
purposes hereof, the definition of "Current
Liabilities" shall include all current and
long term portions of direct borrowings by
Borrower owed to Bank, but shall exclude any
issued but undrawn Letters of Credit and any
amounts owing under Bank's cash management
services, including business credit card
services."
27. The Loan Agreement shall be amended by deleting
Section 6.11 entitled "New Equity" and inserting in
lieu thereof the following:
"6.11 CAPITALIZATION EVENT. A Capitalization
Event shall occur on or before October 31,
1999."
28. No security instrument or other promissory note is
necessary in order to evidence the indebtedness of
Borrower to Bank described in the Loan Agreement, as
amended hereby.
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29. The Borrowing Base Certificate appearing as EXHIBIT C
to the Loan Agreement is hereby replaced with the
Borrowing Base Certificate attached as EXHIBIT A
hereto.
30. The Compliance Certificate appearing as EXHIBIT D to
the Loan Agreement is hereby replaced with the
Compliance Certificate attached as EXHIBIT B hereto.
4. FEE. Borrower shall pay to Bank a modification fee equal to the Four
Thousand Five Hundred Dollars ($4,500.00), which fee shall be due on the date
hereof and shall be deemed fully earned as of the date hereof. The Borrower
shall also reimburse Bank for all legal fees and expenses incurred in connection
with this amendment to the Existing Loan Documents.
5. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.
6. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms,
and reaffirms all terms and conditions of all security or other collateral
granted to the Bank, and confirms that the indebtedness secured thereby
includes, without limitation, the Indebtedness.
7. NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has
no defense against the obligations to pay any amounts under the Indebtedness.
8. CONTINUING VALIDITY. Borrower understands and agrees that in modifying
the existing indebtedness, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank's Agreement to modifications to the existing indebtedness pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Indebtedness. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Indebtedness. It is the intention of Bank
and Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this Loan Modification Agreement.
9. JURISDICTION/VENUE. Borrower accepts for itself and in connection with
its properties, unconditionally, the non-exclusive jurisdiction of any state or
federal court of competent jurisdiction in the Commonwealth of Massachusetts in
any action, suit, or proceeding of any kind against it which arises out of or by
reason of this Loan Modification Agreement; provided, however, that if for any
reason Bank cannot
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avail itself of the courts of the Commonwealth of Massachusetts, then venue
shall lie in Santa Xxxxx County, California.
10. COUNTERSIGNATURE. This Loan Modification Agreement shall become
effective only when it shall have been executed by Borrower and Bank (provided,
however, in no event shall this Loan Modification Agreement become effective
until signed by an officer of Bank in California).
This Loan Modification Agreement is executed as a sealed instrument
under the laws of the Commonwealth of Massachusetts as of the date first written
above.
BORROWER: BANK:
ART TECHNOLOGY GROUP, INC. SILICON VALLEY BANK, doing business as
SILICON VALLEY EAST
By: /s/ Xxxx Xxxxx By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------- ------------------------------------
Name: Xxxx Xxxxx Name: Xxxxxx Xxxxxxxxx
-------------------------------- ----------------------------------
Title: President Title: Senior Vice President
------------------------------- ---------------------------------
SILICON VALLEY BANK
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxx
----------------------------------
Title: Assistant Vice President
---------------------------------
(signed in Santa Xxxxx County,
California)
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EXHIBIT A
BORROWING BASE CERTIFICATE
Borrower: ART TECHNOLOGY GROUP, INC. Bank: Silicon Valley Bank
Commitment Amount: $5,000,000.00
ACCOUNTS RECEIVABLE
1) Accounts Receivable Book Value as of ______ $____________
2) Additions (please explain on reverse) $____________
3) TOTAL ACCOUNTS RECEIVABLE $____________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4) Amounts over 90 days due $____________
5) Balance of 50% over 90 day accounts $____________
6) Concentration Limits $____________
7) Ineligible Foreign Accounts $____________
8) Governmental Accounts $____________
9) Contra Accounts $____________
10) Promotion or Demo Accounts $____________
11) Intercompany/Employee Accounts $____________
12) Other (please explain or reverse) $____________
13) TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $____________
14) Eligible Accounts (#3 minus #13) $____________
15) LOAN VALUE OF ACCOUNTS (80.0% of #14) $____________
BALANCES
16) Maximum Loan Amount $____________
17) Total Funds Available [Lesser of #16 or #15] $____________
18) Present balance owing on Line of Credit $____________
19) Outstanding under Sublimits (Letters of Credit and cash
management services) $____________
20) RESERVE POSITION (#17 minus #18 and #19) $____________
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE FOREGOING IS TRUE, COMPLETE AND
CORRECT, AND THAT THE INFORMATION REFLECTED IN THIS BORROWING BASE CERTIFICATE
COMPLIES WITH THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THE LOAN AND
SECURITY AGREEMENT BETWEEN THE UNDERSIGNED AND SILICON VALLEY BANK.
COMMENTS:
ART TECHNOLOGY GROUP, INC.
By:_______________________________
Authorized Signer
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EXHIBIT B
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: ART TECHNOLOGY GROUP, INC.
The undersigned authorized officer of ART TECHNOLOGY GROUP, INC. hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending ________________ with all required
covenants except as noted below and (ii) all representations and warranties of
Borrower stated in the Agreement are true and correct 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. The Officer expressly acknowledges that no
borrowings may be requested by the Borrower at any time or date of determination
that Borrower is not in compliance with any of the terms of the Agreement, and
that such compliance is determined not just at the date this certificate is
delivered.
Please indicate compliance status by circling Yes/No under
"Complies" column.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Monthly financial statements & CC Monthly within 25 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
Monthly BBC & A/R Agings Monthly within 25 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Monthly Basis:
Minimum Quick Ratio 1.50:1.0 thru 6/30/99 _____:1.0 Yes No
1.25:1.0 thereafter _____:1.0 Yes No
Minimum Adjusted Quick Ratio 1.75:1.0 _____:1.0 Yes No
Capitalization Event by 10/31/99 $2,500,000 $_______ Yes No
Comments Regarding Exceptions:
Sincerely,
------------------- Date:
Signature ------------------
-------------------
Title
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SILICON VALLEY BANK
INVOICE FOR LOAN CHARGES
BORROWER: ART TECHNOLOGY GROUP, INC.
LOAN OFFICER: Xxxxxx X. Xxxxxxxxx, Senior Vice President
DATE: ________________, 1999
Working Capital Line Commitment Fee $4,500.00
TOTAL FEES DUE $4,500.00
Please indicate the method of payment:
( ) A check for the total amount is attached.
( ) Debit DDA _______ for the total amount.
( ) Loan proceeds
ART TECHNOLOGY GROUP, INC.
----------------------------------
Authorized Signer
----------------------------------
Silicon Valley Bank (Date)
Account Officer's Signature
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