FIRST LOAN MODIFICATION AGREEMENT
Exhibit
10.1
This First Loan Modification Agreement
(this “First Loan Modification
Agreement”) is entered into as of September 30, 2009, 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 One Newton Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx, 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, 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”.
3. DESCRIPTION OF CHANGE IN
TERMS.
A. Modifications
to Loan Agreement.
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1
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The
Loan Agreement shall be amended by deleting the following, appearing as
Section 2.3(a) thereof, in its
entirety:
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“(a) Interest Rate; Advances. Subject
to Section 2.3(b), (a) the principal amount of the Revolving Line outstanding
due to Advances made in respect of Eligible Accounts shall accrue interest at a
floating per annum rate equal to the aggregate of the Prime Rate plus one and
three-quarters of one percentage point (1.75%), provided, however, during a
Streamline Period, the principal amount of the Revolving Line outstanding due to
Advances made in respect of Eligible Accounts shall accrue interest at a
floating per annum rate equal to the aggregate of the Prime Rate plus
three-quarters of one percentage point (0.75%); and (b) the principal amount of
the Revolving Line outstanding due to Advances made in respect of Eligible
Retail Backlog Accounts shall accrue interest at a floating per annum rate equal
to the aggregate of the Prime Rate plus two and one-quarter of one percentage
point (2.25%), provided, however, during a
Streamline Period, the principal amount of the Revolving Line outstanding due to
Advances made in respect of Eligible Retail Backlog Accounts shall accrue
interest at a floating per annum rate equal to the aggregate of the Prime Rate
plus one and one-half of one percentage point (1.50%). Interest on
any Credit Extension shall be payable monthly.”
and inserting in lieu thereof the
following:
“(a) Interest Rate; Advances. Subject
to Section 2.3(b), (a) the principal amount of the Revolving Line outstanding
due to Advances made in respect of Eligible Accounts shall accrue interest at a
floating per annum rate equal to the aggregate of the Prime Rate
plus two
and one-quarter of one percentage point (2.25%), provided, however, during a
Streamline Period, the principal amount of the Revolving Line outstanding due to
Advances made in respect of Eligible Accounts shall accrue interest at a
floating per annum rate equal to the aggregate of the Prime Rate plus one and
one-quarter percentage points (1.25%); and (b) the principal amount of the
Revolving Line outstanding due to Advances made in respect of Eligible Retail
Backlog Accounts shall accrue interest at a floating per annum rate equal to the
aggregate of the Prime Rate plus two and three-quarters of one percentage point
(2.75%), provided, however, during a
Streamline Period, the principal amount of the Revolving Line outstanding due to
Advances made in respect of Eligible Retail Backlog Accounts shall accrue
interest at a floating per annum rate equal to the aggregate of the Prime Rate
plus two percentage points (2.00%). Interest on any Credit Extension
shall be payable monthly.”
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2
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The
Loan Agreement shall be amended by deleting the following, appearing as
Section 2.4(d) thereof, in its
entirety:
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“(d) Unused Revolving Line
Facility Fee. A fee (the “Unused Revolving Line Facility
Fee”), which fee shall be paid monthly, in arrears, on the last Business
Day of each month, in an amount equal to one-half of one percent (0.50%) per
annum of the average unused portion of the Revolving Line, as determined by
Bank. Borrower shall not be entitled to any credit, rebate or
repayment of any Unused Revolving Line Facility Fee previously earned by Bank
pursuant to this Section notwithstanding any termination of the within
Agreement, or suspension or termination of Bank’s obligation to make loans and
advances hereunder; and”
and inserting in lieu thereof the
following:
“(d) Unused Revolving Line
Facility Fee. A fee (the “Unused Revolving Line Facility
Fee”), which fee shall be paid monthly, in arrears, on the last Business
Day of each month, in an amount equal to three-quarters of one percent (0.75%)
per annum of the average unused portion of the Revolving Line, as determined by
Bank. Borrower shall not be entitled to any credit, rebate or
repayment of any Unused Revolving Line Facility Fee previously earned by Bank
pursuant to this Section notwithstanding any termination of the within
Agreement, or suspension or termination of Bank’s obligation to make loans and
advances hereunder; and”
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3
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The
Loan Agreement shall be amended by deleting the following, appearing as
Section 6.2(a)(vi) thereof, in its
entirety:
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“(vi) as
soon as available, and in any event within one hundred fifty (150) days
following the end of Borrower's fiscal year, annual financial statements
certified by, and with an unqualified opinion of, independent certified public
accountants acceptable to Bank.”
and inserting in lieu thereof the
following:
“(vi) as
soon as available, and in any event within ninety (90) days following the end of
Borrower's fiscal year, annual financial statements certified by, and with an
unqualified opinion of, independent certified public accountants acceptable to
Bank.”
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4
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The
Loan Agreement shall be amended by deleting the following, appearing as
Section 6.6 thereof, in its
entirety:
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“6.6 Access to Collateral; Books and
Records. At reasonable times, on one (1) Business Day’s notice
(provided no notice is required if an Event of Default has occurred and is
continuing), 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 $750 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.”
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 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.”
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5
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The
Loan Agreement shall be amended by deleting the following, appearing as
Section 6.9(a) thereof, in its
entirety:
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“(a) Tangible Net
Worth. A Tangible Net Worth of at least Five Hundred Thousand
Dollars ($500,000.00).”
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:
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Trailing
Three Month Period Ended
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Minimum
EBITDA (maximum loss)
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September
30, 2009
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($450,000)
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October
31, 2009 through and including November 30, 2010
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($350,000)
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December
31, 2010 and each monthly period ending thereafter
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$1.00
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6
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The
Loan Agreement shall be amended by deleting the following definition
appearing in Section 12.1thereof:
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“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 Fifteen
Thousand Dollars ($15,000.00) provided that 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 (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.”
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7
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The
Loan Agreement shall be amended by deleting the following definition
appearing in Section 13.1thereof:
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““Prime Rate” is Bank’s most
recently announced “prime rate,” even if it is not Bank’s lowest
rate.
“Revolving Maturity Date” is
September 7, 2009.
“Tangible Net Worth” is, on any
date, the consolidated total assets of Borrower and its Subsidiaries minus (a)
any amounts attributable to (i) goodwill, (ii) intangible items including
unamortized debt discount and expense, patents, trade and service marks and
names, copyrights and research and development expenses except prepaid expenses,
(iii) notes, accounts receivable and other obligations owing to Borrower from
its officers or other Affiliates, and (iv) reserves not already deducted from
assets, minus (b) Total Liabilities plus (c) Subordinated Debt.”
and inserting in lieu thereof the
following:
““EBITDA” is (a) Net Income,
plus (b) Interest Expense, plus (c) to the extent deducted in the calculation of
Net Income, depreciation expense and amortization expense, plus (d) income tax
expense plus (f) non-cash stock-based compensation expense.
“First Loan Modification
Agreement” is that certain First Loan Modification Agreement by and
between Borrower and Bank, dated as of September 30, 2009.
“Interest Expense” means for
any fiscal period, interest expense (whether cash or non-cash) determined in
accordance with GAAP for the relevant period ending on such date, including, in
any event, interest expense with respect to any Credit Extension and other
Indebtedness of Borrower and its Subsidiaries, if any, including, without
limitation or duplication, all commissions, discounts, or related amortization
and other fees and charges with respect to letters of credit and bankers’
acceptance financing and the net costs associated with interest rate swap, cap,
and similar arrangements, and the interest portion of any deferred payment
obligation (including leases of all types).
“Net Income” means, as
calculated on a consolidated basis for Borrower and its Subsidiaries, if
any, for any period as at any date of determination, the net profit
(or loss), after provision for taxes, of Borrower and its Subsidiaries for such
period taken as a single accounting period.
“Prime Rate” is the greater of
(i) four percent (4.00%) per annum and (ii) Bank’s most recently announced
“prime rate,” even if it is not Bank’s lowest rate.
“Revolving Maturity Date” is
March 7, 2011.”
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8
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The
Compliance Certificate appearing as Exhibit B to
the Loan Agreement is hereby replaced with the Compliance Certificate
attached as Exhibit A
hereto.
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4. FEES. Borrower
shall pay to Bank a modification fee equal to Twenty Six Thousand Dollars
($26,000), 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 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 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 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 September 8, 2008 (as updated,
amended, amended and restated, supplemented and/or modified as of the date
hereof), and acknowledges, confirms and agrees the disclosures and information
above Borrower provided to Bank in the Perfection Certificate (as updated,
amended, amended and restated, supplemented and/or modified as of the date
hereof) 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
First 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
First 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:
By /s/
Xxxxx
Xxxxxxx
Name: Xxxxx
Xxxxxxx
Title: Chief Financial
Officer
WORLD
ENERGY SECURITIES CORP.
By /s/
Xxxxx Xxxxxxx
Name: Xxxxx
Xxxxxxx
Title: Treasurer
BANK:
SILICON
VALLEY BANK
By /s/
Xxxxx
Xxxxx
Name: Xxxxx
Xxxxx
Title: VP
Exhibit
A
EXHIBIT
B
COMPLIANCE
CERTIFICATE
| TO: | SILICON VALLEY BANK |
Date:
_______
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| 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.
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Please
indicate compliance status by circling Yes/No under “Complies”
column.
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Reporting Covenant
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Required
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Complies
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Monthly
financial statements with
Compliance
Certificate
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Monthly
within 30 days
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Yes
No
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Annual
financial statement (CPA Audited) + XX
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XXX
within 90 days
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Yes
No
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10-Q,
10-K and 8-K
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Within
5 days after filing with SEC
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Yes
No
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A/R
& A/P Agings, Deferred Revenue report, and
schedule
of expected collections
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Monthly
within 20 days
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Yes
No
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Borrowing
Base Certificate
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Monthly
within 20 Days
during
Streamline Period
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Yes
No
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Transaction
Report
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Weekly
when not Streamline Period
and
upon each request for a Credit Extension
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Yes
No
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Board-approved
projections
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Within
30 days of approval
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Yes
No
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Financial Covenant
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Required
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Actual
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Complies
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Maintain,
to be tested monthly, on a trailing three-month basis:
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Minimum
EBITDA (maximum loss)
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*
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$________
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Yes No
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*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.”)
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By: ___________________________
Name: _________________________
Title: _________________________
WORLD
ENERGY SECURITIES CORP.
By: ___________________________
Name: _________________________
Title: __________________________
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BANK
USE ONLY
Received
by: ____________________________
authorized
signer
Date: __________________________________
Verified:
________________________________
authorized
signer
Date: __________________________________
Compliance
Status: Yes No
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Schedule 1 to Compliance
Certificate
Financial Covenants of
Borrower
Dated: ____________________
I. Minimum EBITDA (Section
6.9(a))
Required: 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:
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Trailing
Three month Period Ended
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Minimum
EBITDA (maximum loss)
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September
30, 2009
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($450,000)
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October
31, 2009 through and including November 30, 2010
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($350,000)
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December
31, 2010 and each monthly period ending thereafter
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$1.00
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Actual:
All amounts measured on a trailing three month basis, ending as of the date of
measurement.
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A.
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Net
Income
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$ ______
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B.
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Interest
Expense
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$ ______
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C.
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To
the extent deducted in the calculation of Net Income, depreciation expense
and amortization expense
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$ ______
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D.
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Income
tax expense
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$ ______
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E.
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Non-cash
stock-based compensation expense
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$ ______
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F.
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EBITDA
(line A plus line B plus line C plus line D plus line E)
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$ ______
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Is line F
in an amount not less than (no greater loss than) $[
___________________________________ ]?
______ No, not in
compliance ______
Yes, in compliance
