EXHIBIT 99.2
SILICON VALLEY BANK
LIMITED WAIVER AND
AMENDMENT TO LOAN DOCUMENTS
BORROWER: VERSO TECHNOLOGIES, INC.
PROVO PREPAID (DELAWARE) CORP.
XXXXXXXX.XXX SOFTWARE, INC.
XXXXXXX (DELAWARE) CORP.
DATE: JULY 25, 2005
THIS LIMITED WAIVER AND AMENDMENT TO LOAN DOCUMENTS is entered into
between Silicon Valley Bank ("Silicon") and the borrower named above
("Borrower").
The Parties agree to amend the Loan and Security Agreement between them,
dated December 14, 2001 (as otherwise amended, if at all, the "Loan Agreement"),
as follows, effective as of the date hereof. (Capitalized terms used but not
defined in this Amendment shall have the meanings set forth in the Loan
Agreement.)
Reference is hereby made to the Verso Technologies, Inc. ("Verso") 7.50%
Convertible Debentures Due November 22, 2005 (the "November 2005 Debentures").
Borrower has advised Silicon that Verso intends to restructure the payment of
the November 2005 Debentures to be as follows: (i) $1,125,000, in the aggregate,
upon the execution of the restructuring agreement between Verso and each of the
holders of the November 2005 Debentures; (ii) $225,000, in the aggregate, on
each of August 1, 2005, September 1, 2005 and October 1, 2005, (iii) $450,000,
in the aggregate, on November 22, 2005 and (iv) $225,000, in the aggregate, on
each of January 1, 2006, February 1, 2006, March 1, 2006, April 1, 2006, May 1,
2006, June 1, 2006, July 1, 2006, August 1, 2006, September 1, 2006 and October
1, 2006 (the "Restructured Payments"). Borrower has also advised Silicon that
the interest rate on the November 2005 Debentures will increase from 7.50% to
12% per annum after November 22, 2005 (the "Modified Interest Rate," which
together with the Restructured Payments is hereinafter referred to as the
"Transaction").
The Borrower is prohibited from entering into the Transaction pursuant to
the terms of Sections 5.5(iii) and 5.5(iv) of the Loan Agreement, absent
compliance with the terms thereof.
NOW, THEREFOR, the parties hereto agree as follows:
1. LIMITED WAIVER AND CONSENT RE TRANSACTION. Silicon and Borrower agree
that (a) the prohibitions set forth in Sections 5.5(iii) and 5.5(iv) of the Loan
Agreement are hereby
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SILICON VALLEY BANK LIMITED WAIVER AND AMENDMENT
waived with respect to the Transaction only and (b) Silicon hereby consents to
the Transaction in accordance with the terms previously disclosed to Silicon. It
is understood by the parties hereto, however, that such waiver and consent do
not constitute a waiver of any other provision or term of the Loan Agreement or
any related document or a consent to any other matter, nor an agreement to waive
in the future this covenant or any other provision or term of the Loan Agreement
or any related document or to consent to any other matter.
2. MODIFIED INTEREST RATE. The Interest Rate set forth in Section 2 of the
Schedule to the Loan Agreement is hereby amended in its entirety to read as
follows:
INTEREST RATE (Section 1.2):
A rate equal to the "Prime Rate" in effect from
time to time, plus 2.25% per annum; provided,
however, that the foregoing interest rate shall be
reduced to a rate equal to the "Prime Rate" in
effect from time to time, plus 1.75% per annum as
set forth below if Borrower (i) achieves EBITDA
(as defined below) in excess of $0.00 for two
consecutive fiscal quarters ending after the date
of this Agreement and for so long as Borrower
maintains EBITDA in excess of $0.00 for each
fiscal quarter ending thereafter and (ii)
maintains a minimum Modified Quick Ratio of at
least 1.50 to 1.0. If Borrower does not maintain
EBITDA in excess of $0.00, or does not maintain a
Modified Quick Ratio of at least 1.50 to 1.0, the
interest rate will be increased to a rate equal to
the "Prime Rate" in effect from time to time plus
2.25% per annum.
For purposes hereof, "EBITDA" means, on a
consolidated basis, Borrower's earnings before
interest, taxes, depreciation and other non-cash
amortization expenses and other non-cash expenses,
determined in accordance with generally accepted
accounting principles, consistently applied.
For purposes hereof, "Modified Quick Ratio" means
(a) Borrower's cash and cash equivalents (each
maintained at Silicon) plus Borrower's Eligible
Receivables divided by (b) Borrower's current
liabilities (as defined herein) less deferred
revenues.
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SILICON VALLEY BANK LIMITED WAIVER AND AMENDMENT
Changes in the interest rate based on the
Borrower's EBITDA and Modified Quick Ratio as
provided above shall go into effect as of the
first day of the month following the month in
which Borrower's financial statements are
received, reviewed and approved by Silicon. If,
based on the Borrower's EBITDA and Modified Quick
Ratio as shown in Borrower's financial statements
there is to be an increase in the interest rate,
the interest rate increase may be put into effect
by Silicon as of the first day of the month
closest to the date on which the financial
statements are due, even if the delivery of the
financial statements is delayed. Notwithstanding
the foregoing, in no event shall an interest rate
reduction go into effect if, at the date it is to
go into effect, a Default or Event of Default has
occurred and is continuing.
Interest shall be calculated on the basis of a
360-day year for the actual number of days
elapsed. "Prime Rate" means the rate announced
from time to time by Silicon as its "prime rate;"
provided that the "Prime Rate" in effect on any
day shall not be less than 4.25% per annum; 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.
3. MODIFIED MINIMUM TANGIBLE NET WORTH FINANCIAL COVENANT. The Minimum
Tangible Net Worth Financial Covenant set forth in Section 5 of the Schedule to
Loan Agreement is hereby amended in its entirety to read as follows:
MINIMUM TANGIBLE
NET WORTH:
Borrower shall maintain a Tangible Net Worth of not less
than the following:
For the month ending June 30, 2005: $14,650,000 plus (i)
75% of all consideration received after the date hereof
for equity securities and subordinated debt of the
Borrower, plus (ii) 75% of the Borrower's net income in
each fiscal quarter ending after the date hereof;
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SILICON VALLEY BANK LIMITED WAIVER AND AMENDMENT
For each of the months ending July 31, 2005, August 31,
2005 and September 30, 2005: $10,000,000 plus (i) 75% of
all consideration received after the date hereof for
equity securities and subordinated debt of the Borrower,
plus (ii) 75% of the Borrower's net income in each
fiscal quarter ending after the date hereof;
For each of the months ending October 31, 2005, November
30, 2005 and December 31, 2005: $6,500,000 plus (i) 75%
of all consideration received after the date hereof for
equity securities and subordinated debt of the Borrower,
plus (ii) 75% of the Borrower's net income in each
fiscal quarter ending after the date hereof; and
For the months ending January 31, 2005, February 28,
2005, and March 31, 2006 and each month ending
thereafter: $3,500,000 plus (i) 75% of all consideration
received after the date hereof for equity securities and
subordinated debt of the Borrower, plus (ii) 75% of the
Borrower's net income in each fiscal quarter ending
after the date hereof.
Increases in the Minimum Tangible Net Worth Covenant
based on consideration received for equity securities
and subordinated debt of the Borrower shall be effective
as of the end of the month in which such consideration
is received, and shall continue effective thereafter.
Increases in the Minimum Tangible Net Worth Covenant
based on net income shall be effective on the last day
of the fiscal quarter in which said net income is
realized, and shall continue effective thereafter. In no
event shall the Minimum Tangible Net Worth Covenant be
decreased.
4. FEE. In consideration for Silicon entering into this Agreement,
Borrower shall pay Silicon a fee in the amount of $7,500, which fee shall be
non-refundable and in addition to all interest and other fees payable to Silicon
under the Loan Documents. Silicon is authorized to charge said fees to
Borrower's loan account.
5. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon that
all representations and warranties set forth in the Loan Agreement, as amended
hereby, are true and correct.
6. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and Borrower, and the
other written
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SILICON VALLEY BANK LIMITED WAIVER AND AMENDMENT
documents and agreements between Silicon and Borrower set forth in full all of
the representations and agreements of the parties with respect to the subject
matter hereof and supersede all prior discussions, representations, agreements
and understandings between the parties with respect to the subject hereof.
Except as herein expressly amended, all of the terms and provisions of the Loan
Agreement, and all other documents and agreements between Silicon and Borrower
shall continue in full force and effect and the same are hereby ratified and
confirmed.
BORROWER: SILICON:
VERSO TECHNOLOGIES, INC. SILICON VALLEY BANK
BY /s/ Xxxxxx X. Xxxxxxx BY /s/ Xxxxx Xxxxxxxx
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PRESIDENT OR VICE PRESIDENT TITLE Relationship Manager
BY /s/ Xxxxx Xxxx
----------------------------
SECRETARY OR ASS'T SECRETARY
BORROWER: BORROWER:
PROVO PREPAID (DELAWARE) XXXXXXXX.XXX SOFTWARE, INC.
CORP. (FKA NACT
TELECOMMUNICATIONS, INC.)
BY /s/ Xxxxxx X. Xxxxxxx
----------------------------
PRESIDENT OR VICE PRESIDENT BY /s/ Xxxxxx X. Xxxxxxx
-----------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ Xxxxx Xxxx
----------------------------
SECRETARY OR ASS'T SECRETARY BY /s/ Xxxxx Xxxx
-----------------------------
SECRETARY OR ASS'T SECRETARY
BORROWER:
XXXXXXX (DELAWARE) CORP. (FKA
MCK COMMUNICATIONS, INC.)
BY /s/ Xxxxxx X. Xxxxxxx
----------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ Xxxxx Xxxx
----------------------------
SECRETARY OR ASS'T SECRETARY
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SILICON VALLEY BANK LIMITED WAIVER AND AMENDMENT
CONSENT
The undersigned acknowledges that its consent to the foregoing Agreement
is not required, but the undersigned nevertheless does hereby consent to the
foregoing Agreement and to the documents and agreements referred to therein and
to all future modifications and amendments thereto, and any termination thereof,
and to any and all other present and future documents and agreements between or
among the foregoing parties. Nothing herein shall in any way limit any of the
terms or provisions of the Cross-Corporate Continuing Guaranty of the
undersigned, all of which are hereby ratified and affirmed.
CLARENT CANADA LTD.
BY /s/ Xxxxxx X. Xxxxxxx
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TITLE Director
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