Exhibit 10.31
LOAN DOCUMENT MODIFICATION AGREEMENT
NUMBER 2; DATED AS OF FEBRUARY 25, 1999
LOAN DOCUMENT MODIFICATION AGREEMENT dated as of February 25, 1999
(this "Agreement") by and among Lionbridge Technologies Holdings B.V. and
Lionbridge Technologies B.V. (each a "Borrower" and together the "Borrowers")
and Lionbridge Technologies, Inc., a Delaware company with its principal place
of business located at 000 Xxxxxx Xxxxxx, #0000, Xxxxxxx, Xxxxxxxxxxxxx 00000
(the "Parent Guarantor") and SILICON VALLEY BANK (the "Bank"), a California
chartered bank with its principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx
Xxxxx, Xxxxxxxxxx 00000, and with a loan production office located at Wellesley
Xxxxxx Xxxx, 00 Xxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, doing business under the
name "Silicon Valley East".
1. REFERENCE TO EXISTING LOAN DOCUMENTS.
Reference is hereby made to that Loan Agreement dated September 26,
1997 between the Bank and the Borrowers, as so amended on May 21, 1998 (with the
attached schedules and exhibits, and as the same may hereafter be further
amended, modified, supplemented, extended or restated from time to time, the
"Credit Agreement") and the Loan Documents referred to therein, including
without limitation that certain Amended and Restated Promissory Note of the
Borrowers dated May 21, 1998 in the principal amount of $8,000,000 (the "Note"),
and the Security Documents referred to therein, including the Amended and
Restated Guarantee of the Parent Guarantor dated as of May 21, 1998 in favor of
the Bank (the "Parent Guarantee"). Unless otherwise defined herein, capitalized
terms used in this Agreement shall have the same respective meanings as set
forth in the Credit Agreement.
2. EFFECTIVE DATE.
Except for the provisions of Section 7 which shall be effective as of
the date hereof, this Agreement shall become effective as of February 25, 1999
(the "Effective Date"), provided that the Bank shall have received the following
on or before February 26, 1999 and provided further, however, in no event shall
this Agreement become effective until signed by an officer of the Bank in
California:
a. two copies of this Agreement, duly executed by each Borrower and
the Parent Guarantor.
b. the attached consents of U.S. organized affiliated entities who
have previously furnished guaranties in favor of the Bank of the obligations of
the Borrowers, duly executed by officers thereof (executed consents of foreign
organized affiliated entities shall be furnished to the Bank within ten (10)
days of the date hereof);
c. a certificate or certificates of the Chief Financial Officer of
Lionbridge Technologies Holdings, Inc. ("LHTI") and Lionbridge Technologies
Holdings, B.V. (the "Dutch Holding Company") to the effect that, but for the
effectiveness and delivery of this Agreement and the execution by CRL, LHTI and
the Dutch Holding Company of a subordination agreement in the form previously
circulated to and approved by the Bank (the "Subordination Agreement"),
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which such parties indicate they are prepared to sign, the conditions to the
closing of the CRL Senior Subordination Debt Transaction (as defined below),
have been satisfied and LHTI and the Dutch Holding Company are prepared to close
such transaction, including the execution and delivery of the Subordination
Agreement, and a certificate of Capital Resource Lenders III, L.P. ("CRL") that
it is prepared to close such transaction, including the execution and delivery
of the Subordination Agreement (for purposes hereof, the term "CRL Senior
Subordination Debt Transaction" shall mean: (a) LTHI's entering into with CRL a
First Amended and Restated Senior Subordinated Note Purchase Agreement and the
issuance by LTHI to CRL pursuant thereto of its First Amended and Restated 12%
Senior Subordinated Promissory Note due February __, 2006 in the principal
amount of $6,000,000 (it being understood that the proceeds thereof shall be
used in part to refinance a bridge subordinated note previously issued by LTHI
to CRL in the principal amount of $4 million); (b) the Dutch Holding Company's
entering into with CRL of a Senior Subordinated Note Purchase Agreement and the
issuance pursuant thereto of its Senior Subordinated Promissory Note due
February __, 2006 in the principal amount of $4,000,000; and (c) the other
transactions and documents as contemplated by the foregoing, as set forth on the
closing agenda attached hereto as Exhibit B, including without limitation
guaranties by certain U.S. and foreign organized affiliates.
d. copies of all documentation relating to the acquisition of
VeriTest, Inc. as previously required by the Bank; and
e. a legal opinion of Xxxxx, Xxxxxxx and Xxxxxxxxx, LLP, counsel to
the Borrowers, the Parent Guarantor and LTHI in form and substance reasonably
acceptable to the Bank and its special counsel; and
f. a check or a wire transfer in the previously billed by Xxxxxxxx &
Worcester LLP, special counsel to the Bank.
By the signature of its authorized officer below, each Borrower and the
Parent Guarantor is hereby representing that, except as modified in SCHEDULE A
attached hereto, the representations of the Borrowers and the Parent Guarantor
set forth in the Credit Agreement and the other Loan Documents (including those
contained in the Parent Guarantee, as amended by this Agreement) are true and
correct as of the Effective Date as if made on and as of such date. Finally,
each Borrower (and the Parent Guarantor signing below) agrees that, as of the
Effective Date, it has no defenses against its obligations to pay any amounts
under the Credit Agreement, the Parent Guarantee and the other Loan Documents to
which it is a party. Finally, by the signature of its authorized officer set
forth below, Lionbridge Technologies, Inc. authorizes the debiting of its
depository account in the amount of $2,500 to cover payment of the Bank's
modification fee.
The Borrowers agree to deliver to the Bank within one business day of
the Effective Date fully executed originals of the Subordination Agreement, and
within five (5) business days of the Effective Date conformed copies of all of
the other closing documents, relating to the CRL Senior Subordinated Debt
Financing, certified by the Chief Financial Office of the Parent Guarantor and
3. DESCRIPTION OF CHANGE IN TERMS.
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As of the Effective Date, the Parent Guarantee is modified in the
following respects:
a. Section 13(b) is hereby amended by decreasing the minimum
required quarterly ratio of Quick Asset to Current Liabilities, commencing with
the fiscal quarter ending March 31, 1999, from 0.75 to 1.0 to 0.5 to 1.0.
b. Section 13(c) is hereby amended (i) by decreasing the Minimum
EBITDA requirement for the fiscal quarter ending December 31, 1998 from
$1,000,000 to $500,000 and (ii) by decreasing the Minimum EBITDA requirement for
the fiscal quarter ending March 31, 1999 from $750,00 to ($250,000).
c. The Compliance Certificate attached to the Parent Guarantee as
Exhibit A is hereby amended and restated in its entirety by the form of
Compliance Certificate attached hereto as EXHIBIT A.
d. The Guarantee, the Credit Agreement and the other Loan
Documents are hereby amended wherever necessary or appropriate to reflect the
foregoing changes.
4. VERITEST, INC. AS A DESIGNATED SUBSIDIARY.
The Borrowers agree to co-operate with the Bank in the Bank's
conducting of an accounts receivable audit at VeriTest, Inc., a California
corporation with its principal place of business at 0000 Xxxxx Xxxx Xxxxxxxxx,
Xxxxx 0000, Xxxxx Xxxxxx, Xxxxxxxxxx 00000 ("Veritest"), the cost of such audit
to be borne by the Borrowers on a joint and several basis. Upon notice by the
Bank to the Borrowers that the results of such audit are acceptable to the Bank,
the Credit Agreement shall be deemed to be amended as of such date so as to add
Veritest as a "Designated Subsidiary" within the meaning of such definition as
set forth in the Credit Agreement.
5. WAIVER OF DEFAULT OR EVENT OF DEFAULT ON FINANCIAL COVENANT.
The Bank hereby waives any default or any event of default that may
have arisen under the Credit Agreement, the Parent Guarantee or any of the other
Loan Documents as a result of the failure to comply with the Minimum EBITDA
covenant set forth in Section 13(c) of the Parent Guarantee for the fiscal
quarter ending September 30, 1998 or the fiscal quarter ending December 31,
1998. This waiver does not constitute a waiver or modification of any term,
condition or covenant of the Parent Guarantee, the Credit Agreement or any other
Loan Document and shall not prejudice any rights which the Bank may now or
hereafter have under or in connection with the Parent Guarantee, the Credit
Agreement or other Loan Documents except with respect to the subject matter of
the waiver set forth above, and shall not obligate the Bank to grant any further
waivers.
6. CONTINUING VALIDITY.
Upon the effectiveness hereof, each reference in each Security
Instrument or other Loan
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Document to "the Parent Guarantee", "thereunder", "thereof", "therein", or words
of like import, shall mean and be a reference to the Parent Guarantee, as
amended hereby. Except as specifically set forth above, the Parent Guarantee
shall remain in full force and effect and is hereby ratified and confirmed.
Each of the other Loan Documents is in full force and effect and is
hereby ratified and confirmed. The amendments and limited waiver set forth above
(i) do not constitute a waiver or modification of any term, condition or
covenant of the Credit Agreement or any other Loan Document, other than as
expressly set forth herein, and (ii) shall not prejudice any rights which the
Bank may now or hereafter have under or in connection with the Credit Agreement,
as modified hereby, or the other Loan Documents and shall not obligate the Bank
to assent to any further modifications.
7. CONSENT TO CRL SUBORDINATED DEBT TRANSACTION.
The Bank hereby consents to the CRL Senior Subordinated Note
Transaction and agrees that the consummation of the CRL Senior Subordinated Note
Transaction will not in and of itself constitute an Event of Default under the
Credit Agreement or any of the Loan Documents, provided that such transaction
closes within thirty (30) days of the date hereof and the Subordination
Agreement is executed and delivered in a timely manner to the Bank in accordance
with the terms hereof.
8. MISCELLANEOUS.
a. This Agreement may be signed in one or more counterparts each of
which taken together shall constitute one and the same document.
b. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
c. EACH BORROWER AND THE PARENT GUARANTOR 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 AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY
REASON THE BANK CANNOT AVAIL ITSELF OF THE COURTS OF THE
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COMMONWEALTH OF MASSACHUSETTS, THEN VENUE SHALL LIE IN SANTA XXXXX COUNTY,
CALIFORNIA.
d. Each Borrower agrees, jointly and severally, to promptly pay on
demand all costs and expenses of the Bank in connection with the preparation,
reproduction, execution and delivery of this Agreement and the other instruments
and documents to be delivered hereunder, including the reasonable fees and
out-of-pocket expenses of Xxxxxxxx & Worcester LLP, special counsel for the Bank
with respect thereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Bank and the Borrower have caused this
Agreement to be signed under seal by their respective duly authorized officers
as of the date set forth above.
BANK:
SILICON VALLEY EAST, a Division
of Silicon Valley Bank
By:
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Name: Xxxxxx X. Xxxx
Title: Vice President
SILICON VALLEY BANK
By:
--------------------------------
Name:
Title:
(signed in Santa Clara, CA)
PARENT GUARANTOR:
LIONBRIDGE TECHNOLOGIES, INC.
By:
--------------------------------
Name: Xxxx X. Xxxxx
Title: Managing Director
BORROWERS:
LIONBRIDGE TECHNOLOGIES HOLDINGS
B.V.
By:
--------------------------------
Name:
Title:
LIONBRIDGE TECHNOLOGIES B.V.
By:
--------------------------------
Name:
Title:
SCHEDULE A
EXCEPTIONS TO LOAN DOCUMENT REPRESENTATIONS
None
EXHIBIT A
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: LIONBRIDGE TECHNOLOGIES, INC.
The undersigned authorized officer of Lionbridge Technologies, Inc.
(the "Parent Guarantor") hereby certifies that in accordance with the terms
and conditions of the Guarantee in favor of Bank (the "Guarantee"), (i)
except as noted below, Consolidated Group is in complete compliance for the
period ending _________ with all required financial covenants set forth
herein and the Borrowers are in complete compliance with their covenants as
set forth in the Credit Agreement to which they are a party and (ii) all
representations and warranties of Parent Guarantor in the Guarantee and
Borrowers stated in the Credit 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.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES"
COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
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Monthly financial statements Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
10Q and 10K Within 5 days after filing Yes No
with the SEC
A/R & A/P Agings Monthly within 30 days Yes No
A/R Audit Initial and Semi-Annual Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain for the quarters indicated:
Minimum Quarterly Quick Ratio
commencing with the quarter
ending March 31, 1999 0.50 to 1.0 _____:1.0 Yes No
Minimum Profitability
Quarter Ending 6/30/98 ($500,000) $________ Yes No
Quarter Ending 9/30/98 $500,000 $________ Yes No
Quarter Ending 12/31/98 $500,000 $________ Yes No
Quarter Ending 3/31/99
and thereafter ($250,000) $________ Yes No
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COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
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SIGNATURE
TITLE:
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DATE:
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