EXHIBIT 10.13
LOAN MODIFICATION AGREEMENT
BETWEEN: ANALOGY, INC., an Oregon corporation ("Borrower"), whose
address is 0000 X.X. Xxxxxx Xxxxx, Xxxxxxxxx, XX 00000;
AND: Silicon Valley Bank ("Silicon"), whose address is 0000 Xxxxxx
Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000;
DATE: March 5, 1998
This Loan Modification Agreement is entered into on the above date by
Borrower and Silicon.
1. BACKGROUND. Borrower entered into a Loan and Security Agreement
with Silicon in March 1997 (as amended from time to time, the "Loan
Agreement"). Capitalized terms used in this Loan Modification Agreement
shall, unless otherwise defined in this Agreement, have the meaning given to
such terms in the Loan Agreement.
Silicon and Borrower are entering into this Agreement to state the
terms and conditions of certain modifications to the Loan Agreement and the
Schedule, as amended prior to the date of this Agreement.
2. MODIFICATIONS TO LOAN AGREEMENT AND SCHEDULE.
2.1. The Schedule to the Loan Agreement is hereby deleted
and replaced by the Amended and Restated Schedule to Loan and Security
Agreement attached to this Agreement.
2.2. Borrower acknowledges and agrees that all Obligations,
including without limitation Borrower's obligation to repay amounts advanced
by Silicon to Borrower on the terms of the Loan Agreement and Schedule as
modified by this Loan Modification Agreement, are secured by all liens and
security interests granted by Borrower to Silicon in the Loan Agreement.
3. CONDITIONS PRECEDENT. This Loan Modification Agreement shall
not take effect until Borrower delivers to Silicon a Certified Resolution of
Borrower and such other documents as Silicon shall reasonably require to give
effect to the terms of this Loan Modification Agreement.
4. NO OTHER MODIFICATIONS. Except as expressly modified by this
Loan Modification Agreement, the terms of the Loan Agreement, as amended
prior to the date of this Loan Modification Agreement, shall remain unchanged
and in full force and effect. Silicon's agreement to modify the Loan
Agreement pursuant to this Loan Modification Agreement shall not obligate
Silicon to make any future modifications to the Loan Agreement or any other
loan document. Nothing in this Loan Modification Agreement shall constitute a
satisfaction of any indebtedness of any Borrower to Silicon. It is the
intention of Silicon and Borrower to retain as liable parties all makers and
endorsers of the Loan Agreement or any other loan document. Except as provided
in the Amended and Restated Schedule to Loan and Security Agreement attached
to this Agreement, no maker, endorser, or guarantor shall be released by
virtue of this Loan Modification Agreement. The terms of this paragraph shall
apply not only to this Loan Modification Agreement, but also to all subsequent
loan modification agreements.
Page 1 - LOAN MODIFICATION AGREEMENT
5. REPRESENTATIONS AND WARRANTIES.
5.1. The Borrower represents and warrants to Silicon that
the execution, delivery and performance of this Agreement are within the
Borrower's corporate powers, and have been duly authorized and are not in
contravention of law or the terms of the Borrower's articles of
incorporation, bylaws or of any undertaking to which the Borrower is a party
or by which it is bound.
5.2. The Borrower understands and agrees that in entering
into this Agreement, Silicon is relying upon the Borrower's representations,
warranties and agreements as set forth in the Loan Agreement and other loan
documents. Borrower hereby reaffirms all representations and warranties in
the Loan Agreement, all of which are true as of the date of this Agreement.
BORROWER:
ANALOGY, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------
Title: Vice President
-----------------------
SILICON:
SILICON VALLEY BANK
By: /s/ Xxxxx Xxxxxxx
--------------------------
Title: Vice President
-----------------------
Page 2 - LOAN MODIFICATION AGREEMENT
AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
BORROWER: Analogy, Inc.
SECURED ACCOUNTS RECEIVABLE LINE OF CREDIT
CREDIT LIMIT: An amount not to exceed the lesser of: (i) $5,000,000
at any one time outstanding, minus the Cash Management
Services Sublimit; or (ii) the amount of the "Borrowing
Base", as defined below. For purposes of this Schedule,
the "Borrowing Base" shall mean the sum of 50% of the Net
Amount of Borrower's eligible accounts receivable. With
respect to Borrower's accounts, "Net Amount" means the
gross amount of the account, minus all applicable sales,
use, excise and other similar taxes and minus all
discounts, credits and allowances of any nature granted or
claimed. The amount of all letters of credit and foreign
exchange contracts issued by Silicon at the request of
Borrower shall reduce, dollar for dollar, the amount
otherwise available to be borrowed under the formula
described in this paragraph.
Without limiting the fact that the determination of which
accounts are eligible for borrowing is a matter of Silicon's
discretion, the following shall not be deemed eligible for
borrowing: accounts outstanding for more than 90 days from
the invoice date and accounts subject to any contingencies.
In addition, if more than 50% of the accounts owing from an
account debtor are outstanding more than 90 days from the
invoice date or are otherwise not eligible accounts, then all
accounts owing from that account debtor shall be deemed
ineligible for borrowing. Silicon may, in its sole
discretion, extend the 90-day cross-aging period to equal any
extended terms offered by Borrower to an account debtor.
Approval of such extended terms must be obtained from
Silicon in advance, and will only serve to extend the
cross-aging period and not the 90-day eligibility period.
(If more than 50% of such account debtor's outstanding
accounts exceed the approved extended terms, then all of such
account debtor's accounts will be ineligible.) As of the
date of this Amended and Restated Schedule to Loan and
Security Agreement, extended terms of up to 120 days have
been approved for accounts owing from Volvo.
INTEREST RATE: The interest rate applicable to this Loan shall be a rate
equal to the "Prime Rate" in effect from time to time, plus
0.50% per annum. Interest calculations shall be made on the
basis of a 360-day year and the actual number of days
elapsed. "Prime Rate" means the rate announced from time to
time by Silicon as its "prime rate"; it is a base rate upon
which other rates charged by Silicon are based, and it is
not necessarily the best rate available at Silicon. The
interest rate applicable to the Obligations shall change on
each date there is a change in the Prime Rate.
COMMITMENT FEE: One-fifth of one percent (1/5%) per annum of the maximum
commitment amount of $5,000,000 or $10,000, which is fully
earned and payable at closing. (Any
Page 1 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
Commitment Fee previously paid by the Borrower in connection
with this loan shall be credited against this Fee.)
MATURITY DATE: March 5, 1999, at which time all unpaid principal and
accrued but unpaid interest shall be due and payable.
LETTERS OF CREDIT: Subject to the terms of this Agreement, as amended from
time to time, Silicon shall issue or cause to be issued under
the Credit Limit standby and commercial letters of credit for
the account of Borrower in an aggregate face amount not to
exceed the Credit Limit. Each such standby letter of credit
shall have an expiry date of no later than the Maturity Date.
All such letters of credit shall be, in form and substance,
acceptable to Silicon in its sole discretion and shall be
subject to the terms and conditions of Silicon's form
application and letter of credit agreement.
CASH MANAGEMENT
SERVICES SUBLIMIT: Borrower may utilize up to an aggregate amount not to
exceed $75,000 for Cash Management Services provided by
Silicon, which services will include business credit card
through MBNA America Bank as defined in certain cash
management service agreements provided to Borrower from time
to time in connection herewith (a "Cash Management Service"
or the "Cash Management Services"). All amounts actually
paid by Silicon in respect of a Cash Management Service or
Cash Management Services shall, when paid, constitute an
advance under the Secured Accounts Receivable Line of Credit.
FOREIGN EXCHANGE
SUBLIMIT: Borrower may utilize up to the Credit Limit for spot and
future foreign exchange contracts (the "Exchange Contracts").
All Exchange Contracts must provide for delivery of
settlement on or before the Maturity Date. The limit
available at any time shall be reduced by the following
amounts (the "Foreign Exchange Reserve") on each day (the
"Determination date"): (i) on all outstanding Exchange
Contracts on which delivery is to be effected or settlement
allowed more than two business days from the Determination
Date, 20% of the gross amount of the Exchange Contracts; plus
(ii) on all outstanding Exchange Contracts on which delivery
is to be effected or settlement allowed within two business
days after the Determination Date, 100% of the gross amount
of the Exchange Contract, the Borrower may request that
Silicon debit the Borrower's bank account with Silicon for
such amount, provided Borrower has immediately available
funds in such amounts in its bank account.
Whenever Borrower desires an advance, Borrower will notify
Silicon by facsimile transmission or by telephone not later
than 11:00 a.m. California time, two business days before
the advance is to be made. Each such notification shall be
promptly confirmed by a borrowing base certificate. Silicon
shall be entitled to rely on any such telephone notice given
by any person who Silicon reasonably believes to be an
officer of Borrower, and Borrower shall indemnify and hold
Silicon harmless for any damages or loss suffered by Silicon
as a result of such reliance.
Page 2 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
Silicon may, in its discretion, terminate the Exchange
Contracts at any time (a) that an Event of Default occurs or
(b) that there is no sufficient availability under the
Credit Limit and Borrower does not have available funds in
its bank account to satisfy the Foreign Exchange Reserve. If
Silicon terminates the Exchange Contracts, and without
limitation of the FX Indemnity Provisions (as referred to
below), Borrower agrees to reimburse Silicon for any and all
fees, costs and expenses relating thereto or arising in
connection therewith.
Borrower shall not permit the total gross amount of all
Exchange Contracts on which delivery is to be effected and
settlement allowed in any two business day period to be
more than the Credit Limit, nor shall Borrower permit the
total gross amount of all Exchange Contracts to which
Borrower is a party, outstanding at any one time, to exceed
the Credit Limit.
The Borrower shall execute all standard form applications and
agreements of Silicon in connection with the Exchange
Contracts, and without limiting any of the terms of such
applications and agreements the Borrower will pay all
standard fees and charges of Silicon in connection with the
Exchange Contracts.
Without limiting any of the other terms of this Agreement or
any such standard form applications and agreement of
Silicon, Borrower agrees to indemnify Silicon and hold it
harmless, from and against any and all claims, debts,
liabilities, demands, obligations, actions, costs and
expenses (including, without limitation, attorneys fees of
counsel of Silicon's choice), of every nature and
description which it may sustain or incur, based upon,
arising out of, or in any way relating to any of the
Exchange Contracts or any transactions relating thereto or
contemplated thereby (collectively referred to as the "FX
Indemnity Provisions").
PRIOR NAMES OF
BORROWER: See attached Exhibit B
TRADE NAMES OF
BORROWER: See attached Exhibit B
TRADEMARKS OF
BORROWER: See attached Exhibit B
OTHER LOCATIONS
AND ADDRESSES: See attached Exhibit B
MATERIAL ADVERSE
LITIGATION: See attached Exhibit B
FINANCIAL
COVENANTS: The Borrower shall at all times comply with all of the
following covenants, all of which shall be determined and
measured on a quarterly basis in accordance with generally
accepted accounting principles, on a consolidated basis with
any subsidiary of Borrower, except as otherwise stated below:
Page 3 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
TANGIBLE NET
WORTH: Borrower shall at all times maintain a Tangible Net Worth of
not less than $6,500,000.
DEBT TO TANGIBLE
NET WORTH RATIO: Borrower shall at all times maintain a ratio of total
liabilities to Tangible Net Worth of not more than 1.00:1.0.
For purposes of this calculation, total liabilities shall
exclude deferred revenues and debt, if any, that has been
subordinated to the Loans in a written subordination
agreement on terms satisfactory to Silicon.
PROFITABILITY: Borrower shall not incur a quarterly loss (as defined below)
in excess of $750,000, shall not incur any loss in two
consecutive quarters in excess of $1,000,000 in the
aggregate, and shall not incur losses in any three
consecutive quarters. For purposes of this paragraph, "loss"
means net income after taxes of less than $0.00, as reported
on Borrower's financial statements.
QUICK RATIO: Borrower shall maintain a ratio of Quick Assets (defined
below) to current liabilities less deferred revenue of not
less than 2.00:1.0.
DEFINITIONS: "Quick Assets" means cash on hand or on deposit in banks,
readily marketable securities issued by the United States,
readily marketable commercial paper rated "A-1" by Standard
& Poor's Corporation (or a similar rating by a similar
rating organization), certificates of deposit and banker's
acceptances, and accounts receivable (net of allowance for
doubtful accounts).
"Tangible Net Worth" means stockholders' equity plus debt,
if any, that has been subordinated to the Loans in a written
subordination agreement on terms satisfactory to Silicon,
and accrued interest thereon, less goodwill, patents,
capitalized software costs, deferred organizational costs,
tradenames, trademarks, and all other assets which would be
classified as intangible assets under generally accepted
accounting principles.
OTHER COVENANTS: Borrower shall at all times comply with all of the following
additional covenants:
BANKING RELATIONSHIP. Borrower shall at all times maintain
its primary domestic banking relationship with Silicon,
unless it obtains Silicon's prior written consent.
FINANCIAL STATEMENTS AND REPORTS. The Borrower shall
provide Silicon: (a) within 50 days after the end of each
quarter, a quarterly financial statement (consisting of a
income statement and a balance sheet) prepared by the
Borrower in accordance with generally accepted accounting
principles; (b) within 20 days after the end of each month,
an accounts receivable aging report, in such form as Silicon
shall reasonably specify; (c) within 20 days after the end of
each month, a Borrowing Base Certificate in the form attached
to this Agreement as Exhibit A, as Silicon may reasonably
modify such Certificate from time to time, signed by the
Chief Financial Officer of the Borrower; (d) within 50 days
after the end of each quarter, a Compliance Certificate in
such form as Silicon shall reasonably specify, signed by the
Chief Financial Officer of the Borrower, setting forth
calculations
Page 4 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
showing compliance (at the end of each such calendar
quarter) with the financial covenants set forth on the
Schedule, and certifying that throughout such quarter the
Borrower was in full compliance with all other terms and
conditions of this Agreement and the Schedule, and
providing such other information as Silicon shall
reasonably request; (e) within 5 days after filing, any
10K or 10Q filed by Borrower with the Securities and
Exchange Commission; and (f) within 95 days following the
end of the Borrower's fiscal year, complete annual
CPA-audited financial statements, such audit being
conducted by independent certified public accountants
reasonably acceptable to Silicon, together with an
unqualified opinion of such accountants. Notwithstanding
the foregoing, Borrower will not be required to provide
the reports required in clauses (b) and (c) above unless
the Borrower utilizes the Secured Accounts Receivable Line
of Credit.
CONDITIONS TO
CLOSING: Without in any way limiting the discretionary nature of
advances under this Agreement, before requesting any such
advance, the Borrower shall satisfy each of the following
conditions:
1. LOAN DOCUMENTS:
Silicon shall have received this Agreement, the Schedule,
and such other loan documents as Silicon shall require, each
duly executed and delivered by the parties thereto.
2. DOCUMENTS RELATING
TO AUTHORITY, ETC.:
Silicon shall have received each of the following in form
and substance satisfactory to it:
(a) Certified Copies of the Articles of Incorporation
and Bylaws of the Borrower;
(b) A Certificate of Good Standing issued by the
Secretary of State of the Borrower's state of incorporation
and such other states as Silicon may reasonably request with
respect to the Borrower;
(c) A certified copy of a Resolution adopted by the
Board of Directors of the Borrower authorizing the
execution, delivery and performance of this Agreement, and
any other documents or certificates to be executed by the
Borrower in connection with this transaction; and
(d) Incumbency Certificates describing the office and
identifying the specimen signatures of the individuals
signing all such loan documents on behalf of the Borrower.
Page 5 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
3. PERFECTION AND
PRIORITY OF SECURITY:
Silicon shall have received evidence satisfactory to it
that its security interest in the Collateral has been duly
perfected and that such security interest is prior to all
other liens, charges, security interests, encumbrances and
adverse claims in or to the Collateral other than Permitted
Liens, which evidence shall include, without limitation, a
certificate from the appropriate state agencies showing the
due filing and first priority of the UCC Financing Statements
to be signed by the Borrower covering the Collateral, and
evidence of the due filing of any Security Agreement in
Copyrighted Works with the U.S. Copyright Office or other
security documents required by Silicon.
4. INSURANCE: Silicon shall have received evidence satisfactory to it
that all insurance required by this Agreement is in full
force and effect, with loss payee designations and additional
insured designations as required by this Agreement.
5. OTHER INFORMATION:
Silicon shall have received such other statements, opinions,
certificates, documents and information with respect to
matters contemplated by this Agreement as it may reasonably
request, all of which must be acceptable to Silicon.
Silicon shall have conducted an examination of the Borrower's
books, records, ledgers, journals, and registers, as Silicon
may deem necessary, and shall be satisfied with the results
of such examination in its sole discretion.
Silicon and the Borrower agree that the terms of this Schedule
supplement the Loan and Security Agreement between Silicon and the Borrower
and agree to be bound by the terms of this Schedule.
BORROWER:
ANALOGY, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------
Title: Vice President
-----------------------
SILICON:
SILICON VALLEY BANK
By: /s/ Xxxxx Xxxxxxx
--------------------------
Title: Vice President
-----------------------
Page 6 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
EXHIBIT A
[INSERT BORROWING BASE CERTIFICATE]
Page 7 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
EXHIBIT B
TRADENAMES
PRIOR NAMES
TRADEMARKS
OTHER LOCATIONS AND ADDRESSES
MATERIAL ADVERSE LITIGATION
[OTHER DISCLOSURES]
Page 8 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
