SECOND LOAN MODIFICATION AGREEMENT
Exhibit 10.1
SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement (this “Loan Modification Agreement”) is entered into
as of March 8, 2011, by and between (i) SILICON VALLEY BANK, a California corporation, with its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a loan
production office located at 000 Xxxxx Xxxxxx, Xxxxx 0-000, Xxxxxx, Xxxxxxxxxxxxx 00000 (“Bank”)
and (ii) WORLD ENERGY SOLUTIONS, INC., a Delaware corporation with offices located at 000 Xxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000, and WORLD ENERGY SECURITIES CORP., a Massachusetts
securities corporation with offices located at 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000
(individually and collectively, jointly and severally, “Borrower”).
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and
obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan
arrangement dated as of September 8, 2008, evidenced by, among other documents, a certain Loan and
Security Agreement dated as of September 8, 2008, between Borrower and Bank, as amended by a
certain First Loan Modification Agreement, dated as of September 30, 2009 (as amended, the “Loan
Agreement”). Capitalized terms used but not otherwise defined herein shall have the same meaning
as in the Loan Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as
described in the Loan Agreement (together with any other collateral security granted to Bank, the
“Security Documents”).
Hereinafter, the Security Documents, together with all other documents evidencing or securing
the Obligations shall be referred to as the “Existing Loan Documents”.
1 | The Loan Agreement shall be amended by deleting the following
text appearing as Section 6.6 thereof: |
“6.6 Access to Collateral; Books and Records. At
reasonable times, whenever there are any outstanding Credit
Extensions, on one (1) Business Day’s notice (provided no
notice is required if an Event of Default has occurred and is
continuing), Bank, or its agents, shall have the right on a
semi-annual basis (or more frequently if an Event of Default
has occurred and is continuing), to inspect the Collateral
and the right to audit and copy Borrower’s Books. The
foregoing inspections and audits shall be at Borrower’s
expense, and the charge therefor shall be $850 per person per
day (or such higher amount as shall represent Bank’s
then-current standard charge for the same), plus reasonable
out-of-pocket expenses. In the event Borrower and Bank
schedule an audit more than ten (10) days in advance, and
Borrower cancels or seeks to reschedules the audit with less
than ten (10) days written notice to Bank, then (without
limiting any of Bank’s rights or remedies), Borrower shall
pay Bank a fee of $1,000 plus any out-of-pocket expenses
incurred by Bank to compensate Bank for the anticipated costs
and expenses of the cancellation or rescheduling. Borrower
acknowledges and agrees that prior to the first Credit
Extension request to be made after the execution of the First
Loan Modification Agreement, Bank shall have completed an
audit and
inspection of Borrower’s Accounts, the Collateral, and
Borrower’s Books, with results satisfactory to Bank in its
sole and absolute discretion.”
and inserting in lieu thereof the following:
“6.6 Access to Collateral; Books and Records. At reasonable
times, whenever there are any outstanding Credit Extensions,
on one (1) Business Day’s notice (provided no notice is
required if an Event of Default has occurred and is
continuing), Bank, or its agents, shall have the right on a
semi-annual basis (or more frequently if an Event of Default
has occurred and is continuing), to inspect the Collateral
and the right to audit and copy Borrower’s Books. The
foregoing inspections and audits shall be at Borrower’s
expense, and the charge therefor shall be $850 per person per
day (or such higher amount as shall represent Bank’s
then-current standard charge for the same), plus reasonable
out-of-pocket expenses. In the event Borrower and Bank
schedule an audit more than ten (10) days in advance, and
Borrower cancels or seeks to reschedules the audit with less
than ten (10) days written notice to Bank, then (without
limiting any of Bank’s rights or remedies), Borrower shall
pay Bank a fee of $1,000 plus any out-of-pocket expenses
incurred by Bank to compensate Bank for the anticipated costs
and expenses of the cancellation or rescheduling. Borrower
acknowledges and agrees that prior to the first Credit
Extension request to be made after the execution of the
Second Loan Modification Agreement, Bank shall have completed
an audit and inspection of Borrower’s Accounts, the
Collateral, and Borrower’s Books, with results satisfactory
to Bank in its sole and absolute discretion.”
2 | The Loan Agreement shall be amended by deleting the following
text appearing as Section 6.9(a) thereof: |
“(a) Minimum EBITDA. A minimum EBITDA, measured on a
trailing three-month basis ending as of the date indicated
below, in an amount not less than (no greater loss than) the
amounts indicated below:
Trailing Three Month | Minimum EBITDA | |||
Period Ended | (maximum loss) | |||
September 30, 2009 |
$ | (450,000 | ) | |
October 31, 2009 through and including November
30, 2010 |
$ | (350,000 | ) | |
December 31, 2010 and each monthly period
ending thereafter |
$ | 1.00” |
and inserting in lieu thereof the following:
“(a) Minimum EBITDA. A minimum EBITDA, measured on a
trailing three-month basis ending as of the date indicated
below, in an amount not less than (no greater loss than) the
amounts indicated below:
Trailing Three Month | Minimum EBITDA | |||
Period Ended | (maximum loss) | |||
January 31, 2011 through
and including March 31,
2011 |
$ | 1.00 | ||
April 30, 2011 through
and including August 31,
2011 |
$ | (250,000 | ) | |
September 30, 2011
through and including
November 31, 2011 |
$ | 1.00 | ||
December 31, 2011 and
each monthly period
ending thereafter |
$ | 250,000” |
3 | The Loan Agreement shall be amended by deleting the following
text appearing in Section 10 thereof: |
“If to Bank:
|
Silicon Valley Bank | |
One Newton Executive Park, Suite 200 | ||
0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, XX 00000 | ||
Attn: Mr. Xxxxx Xxxxxxxxx | ||
Fax: (000) 000-0000 | ||
Email: xxxxxxxxxx@xxx.xxx” |
and inserting in lieu thereof the following:
“If to Bank:
|
Silicon Valley Bank | |
000 Xxxxx Xxxxxx, Xxxxx 0-000 | ||
Xxxxxx, XX 00000 | ||
Attn: Xx. Xxxxxx Xxxxxxxx | ||
Fax: (000) 000-0000 | ||
Email: xxxxxxxxx@xxx.xxx” |
4 | The Loan Agreement shall be amended by deleting the following
text appearing as Section 12.1 thereof: |
“12.1 Termination Prior to Maturity Date. This Agreement may
be terminated prior to the Revolving Line Maturity Date by
Borrower, effective three (3) Business Days after written
notice of termination is received by Bank or if Bank’s
obligation to fund Credit Extensions terminates pursuant to
the terms of Section 2.1.1(b). Notwithstanding any such
termination, Bank’s lien and security interest in the
Collateral shall continue until Borrower fully satisfies its
Obligations. If such termination is at Borrower’s election
or at Bank’s election due to the occurrence and continuance
of an Event of Default, Borrower shall pay to Bank, in
addition to the payment of any other expenses or fees
then-owing, a termination fee in an amount equal to (i) if
terminated on or before
the first anniversary of the First Loan Modification
Agreement, Twenty Thousand Dollars ($20,000.00) and (ii) if
terminated after the first anniversary of the First Loan
Modification Agreement but prior to the Revolving Line
Maturity Date, Ten Thousand Dollars ($10,000.00);
provided that in either case no termination fee shall
be charged if the credit facility hereunder is replaced with
a new facility from another division of Silicon Valley Bank.
Upon payment in full of the Obligations and at such time as
Bank’s obligation to make Credit Extensions has terminated,
Bank shall release its liens and security interests in the
Collateral and all rights therein shall revert to Borrower.”
and inserting in lieu thereof the following:
“12.1 Termination Prior to Maturity Date. This Agreement may
be terminated prior to the Revolving Line Maturity Date by
Borrower, effective three (3) Business Days after written
notice of termination is received by Bank or if Bank’s
obligation to fund Credit Extensions terminates pursuant to
the terms of Section 2.1.1(b). Notwithstanding any such
termination, Bank’s lien and security interest in the
Collateral shall continue until Borrower fully satisfies its
Obligations. If such termination is at Borrower’s election
or at Bank’s election due to the occurrence and continuance
of an Event of Default, Borrower shall pay to Bank, in
addition to the payment of any other expenses or fees
then-owing, a termination fee in an amount equal to Ten
Thousand Dollars ($10,000.00); provided that in
either case no termination fee shall be charged if the credit
facility hereunder is replaced with a new facility from
another division of Silicon Valley Bank. Upon payment in
full of the Obligations and at such time as Bank’s obligation
to make Credit Extensions has terminated, Bank shall release
its liens and security interests in the Collateral and all
rights therein shall revert to Borrower.”
5 | The Loan Agreement shall be amended by deleting the following
definition appearing in Section 13.1thereof: |
“Revolving Maturity Date” is March 7, 2011.
and inserting in lieu thereof the following:
“Revolving Maturity Date” is March 6, 2012.”
6 | The Compliance Certificate appearing as Exhibit B to
the Loan Agreement is hereby replaced with the Compliance Certificate attached
as Exhibit A hereto. |
4. FEES. Borrower shall pay to Bank a modification fee equal to Fifteen Thousand Dollars
($15,000), which fee shall be due on the date hereof and shall be deemed fully earned as of the
date hereof. Borrower shall also reimburse Bank for all legal fees and expenses incurred in
connection with this amendment to the Existing Loan Documents.
5. RATIFICATION OF NEGATIVE PLEDGE. Borrower hereby ratifies, confirms and reaffirms, all
and singular, the terms and conditions of a certain negative pledge arrangement with respect to
Borrower’s intellectual property, between Borrower and Bank, and Borrower acknowledges, confirms
and agrees that said negative pledge arrangement remains in full force and effect.
6. ADDITIONAL COVENANTS: RATIFICATION OF PERFECTION CERTIFICATE. Borrower shall not,
without providing the Bank with thirty (30) days prior written notice: (i) relocate its principal
executive office or add any new offices or business locations or keep any Collateral, in excess of
Ten Thousand Dollars ($10,000.00) in any additional locations, or (ii) change its jurisdiction of
organization, or (iii) change its organizational structure or type, (iv) change its legal name, or
(v) change any organizational number (if any) assigned by its jurisdiction of organization. In
addition, the Borrower hereby certifies that no Collateral in excess of Ten Thousand Dollars
($10,000.00) is in the possession of any third party bailee (such as at a warehouse). In the event
that Borrower, after the date hereof, intends to store or otherwise deliver the Collateral in
excess of Ten Thousand Dollars ($10,000.00) to such a bailee, then Borrower shall first receive,
the prior written consent of Bank and such bailee must acknowledge in writing that the bailee is
holding such Collateral for the benefit of Bank. Borrower hereby ratifies, confirms and reaffirms,
all and singular, the terms and disclosures contained in a certain Perfection Certificate dated as
of the date hereof, and acknowledges, confirms and agrees the disclosures and information above
Borrower provided to Bank in the Perfection Certificate has not changed.
7. AUTHORIZATION TO FILE. Borrower hereby authorizes Bank to file UCC financing statements
without notice to Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in order
to further perfect or protect Bank’s interest in the Collateral, including a notice that any
disposition of the Collateral, by either the Borrower or any other Person, shall be deemed to
violate the rights of the Bank under the Code.
8. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary
to reflect the changes described above.
9. 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 Obligations.
10. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that Borrower has no
offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or
otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or
counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby
expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.
11. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing
Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan
Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force
and effect. Bank’s agreement to modifications to the existing Obligations pursuant to this Loan
Modification Agreement in no way shall obligate Bank to make any future modifications to the
Obligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the
Obligations. It is the intention of Bank and Borrower to retain as liable parties all makers 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.
12. RIGHT OF SET-OFF. In consideration of Bank’s agreement to enter into this Loan
Modification Agreement, Borrower hereby reaffirms and hereby grants to Bank, a lien, security
interest and right of set off as security for all Obligations to Bank, whether now existing or
hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter
in the possession, custody, safekeeping or control of Bank or any entity under the control of
Silicon Valley Bank (including a Bank subsidiary) or in transit to any of them. At any time after
the occurrence and during the continuance of an Event of Default, without demand or notice, Bank
may set off the same or any part thereof and apply the same to any liability or obligation of
Borrower even though unmatured and regardless of the adequacy of any other collateral securing the
loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY
AND IRREVOCABLY WAIVED.
13. CONFIDENTIALITY. Bank may use confidential information for the development of
databases, reporting purposes, and market analysis, so long as such confidential information is
aggregated and anonymized prior to distribution unless otherwise expressly permitted by Borrower.
The provisions of the immediately preceding sentence shall survive the termination of the Loan
Agreement.
14. JURISDICTION/VENUE. Borrower accepts for itself and in connection with its properties,
unconditionally, the 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 avail itself of the courts of the Commonwealth
of Massachusetts, then venue shall lie in Santa Xxxxx County, California. NOTWITHSTANDING THE
FOREGOING, THE BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR
ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH THE BANK DEEMS NECESSARY OR APPROPRIATE
IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE BANK’S RIGHTS AGAINST THE
BORROWER OR ITS PROPERTY.
15. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only when it
shall have been executed by Borrower and Bank.
[The remainder of this page is intentionally left blank]
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: | ||||||
WORLD ENERGY SOLUTIONS, INC. | ||||||
/s/ Xxxxx Xxxxxxx | ||||||
By |
||||||
Name: | Xxxxx Xxxxxxx | |||||
Title: | CFO | |||||
WORLD ENERGY SECURITIES CORP. | ||||||
/s/ Xxxxx Xxxxxxx | ||||||
By |
||||||
Name: | Xxxxx Xxxxxxx | |||||
Title: | Treasurer | |||||
BANK: | ||||||
SILICON VALLEY BANK | ||||||
/s/ Xxxxx Xxxxxxxxx | ||||||
By |
||||||
Name: | Xxxxx Xxxxxxxxx | |||||
Title: | SVP |
Exhibit A
EXHIBIT B
COMPLIANCE CERTIFICATE
TO:
|
SILICON VALLEY BANK | Date: | ||
FROM:
|
WORLD ENERGY SOLUTIONS, INC. | |||
AND WORLD ENERGY SECURITIES CORP. |
The undersigned authorized officers of World Energy Solutions, Inc., and World Energy
Securities Corp. (individually and collectively, jointly and severally, “Borrower”), solely in
their capacities as officers of their respective entities, certify that under the terms and
conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (1)
Borrower is in complete compliance for the period ending
___________
with all required
covenants except as noted below, (2) there are no Events of Default, (3) all representations and
warranties in the Agreement are true and correct in all material respects on this date except as
noted below; provided, however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties expressly referring to a
specific date shall be true, accurate and complete in all material respects as of such date, (4)
Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and
contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9
of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its
Subsidiaries, if any, relating to unpaid employee payroll or benefits of which Borrower has not
previously provided written notification to Bank. Attached are the required documents supporting
the certification. The undersigned solely in their capacities as officers of their respective
entities, certify that these are prepared in accordance with GAAP consistently applied from one
period to the next except as explained in an accompanying letter or footnotes. The undersigned
solely in their capacities as officers of their respective entities, acknowledge that no borrowings
may be requested at any time or date of determination that Borrower is not in compliance with any
of the terms of the Agreement, and that compliance is determined not just at the date this
certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the
meanings given them in the Agreement.
Please indicate compliance status by circling Yes/No under “Complies” column.
Reporting Covenant | Required | Complies | ||||
Monthly financial statements with Compliance Certificate |
Monthly within 30 days | Yes | No | |||
Annual financial statement (CPA Audited) + XX |
XXX within 90 days | Yes | No | |||
10-Q, 10-K and 8-K |
Within 5 days after filing with SEC | Yes | No | |||
A/R & A/P Agings, Deferred Revenue report, and schedule of expected collections |
Monthly within 20 days | Yes | No | |||
Borrowing Base Certificate |
Monthly within 20 Days during Streamline Period | Yes | No | |||
Transaction Report |
Weekly when not Streamline Period and upon each request for a Credit Extension | Yes | No | |||
Board-approved projections |
Within 30 days of approval | Yes | No |
Financial Covenant | Required | Actual | Complies | |||||
Maintain, to be tested monthly, on a trailing three-month basis: |
||||||||
Minimum EBITDA (maximum loss) |
* | $ | Yes | No |
* | See Section 6.9(a) of the Loan Agreement |
The following financial covenant analyses and information set forth in Schedule 1 attached
hereto are true and accurate as of the date of this Certificate.
The following are the exceptions with respect to the certification above: (If no exceptions
exist, state “No exceptions to note.”)
WORLD ENERGY SOLUTIONS, INC. | BANK USE ONLY | |||||||||||
By: |
Received by: | |||||||||||
Name: | authorized signer | |||||||||||
Title: | Date: | |||||||||||
WORLD ENERGY SECURITIES CORP. | Verified: | |||||||||||
authorized signer | ||||||||||||
By: |
||||||||||||
Name: | Date: | |||||||||||
Title: | Compliance Status: Yes No |
Schedule 1 to Compliance Certificate
Dated:
I. Minimum EBITDA (Section 6.9(a))
Required: Achieve a minimum EBITDA, measured on a trailing three-month basis ending as of the
date indicated below, in an amount not less than (no greater loss than) the amounts indicated
below:
Trailing Three Month Period Ended | Minimum EBITDA (maximum loss) | |||
January 31, 2011 through and
including March 31, 2011 |
$ | 1.00 | ||
April 30, 2011 through and
including August 31, 2011 |
$ | (250,000 | ) | |
September 30, 2011 through and
including November 31, 2011 |
$ | 1.00 | ||
December 31, 2011 and each
monthly period ending thereafter |
$ | 250,000” |
Actual: All amounts measured on a trailing three month basis, ending as of the date of measurement.
A. Net Income |
$ | |||
B. Interest Expense |
$ | |||
C. To the extent deducted in the calculation of Net Income, depreciation expense and amortization expense |
$ | |||
D. Income tax expense |
$ | |||
E. Non-cash stock-based compensation expense |
$ | |||
F. EBITDA
(line A plus line B plus line C plus line D
plus line E) |
$ |
Is line F in an amount not less than (no greater loss than) $[ ]?
No, not in compliance
|
Yes, in compliance |