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EXHIBIT 10.5
MERGE/SIRROM REVISED MODIFICATION AGREEMENT
AGREEMENT as of this 30th day of October, 1997 between Merge Technologies
Incorporated, a Wisconsin corporation ("Borrower") and Sirrom Funding
Corporation ("Lender"), the assignee and wholly-owned subsidiary of
Sirrom Capital Corporation ("Sirrom").
RECITALS
0.1 The Borrower borrowed $2,000,000 (the "Loan") from Sirrom pursuant to
a Loan Agreement dated June 30, 1997 ("Loan Agreement") and Sirrom has assigned
the Loan Agreement and all documents evidencing, securing or relating to the
Loan to Lender, its wholly-owned subsidiary. Capitalized terms of the Loan
Agreement and not otherwise defined shall have the same meaning set forth in the
Loan Agreement.
0.2 The Borrower issued a Stock Purchase Warrant (the "Warrant") to Sirrom
to purchase 21,449 shares of its Common Stock for nominal consideration, and
provided Sirrom the right to put to the Borrower any Common Stock purchased
pursuant to the Warrant during the 30 day period preceding the fifth anniversary
of the outside date for exercising the Warrant, and the Warrant has been
assigned to Lender.
0.3 The Borrower proposes to declare a 5.77217-for-1 stock dividend of
its Common Stock, which would increase the shares purchasable per the Warrant to
145,256 shares as of the date hereof. The Borrower purposes to make an initial
public offering ("IPO") of its Common Stock through an underwriting led by X.X.
Xxxxxxxxxx & Co. as representative of the Underwriters of not less than
1,900,000 post-dividend shares at a price range of approximately $6.50 to $8.50
per share (the actual per share price being the "IPO Price").
0.4 The parties are desirous of modifying the Loan Agreement and Warrant
on the terms set forth below, and this document shall supercede the agreement
between the parties dated as of October 6, 1997.
NOW THEREFORE, in consideration of the premises and covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Recitals. The recitals set forth above are incorporated by reference
herein and made a part hereof as if fully rewritten.
2. Loan Agreement and Warrant Modification. Effective on the date of the
initial closing of the IPO ("Closing Date") the parties shall take the following
steps with respect to the Warrant and Loan Agreement:
a. Lender shall exercise the Warrant as to seventy-five percent (75%)
of the shares of Common Stock purchasable pursuant to the Warrant (presently
expected to be 108,942 shares -- the "Lender Shares");
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b. Lender shall terminate its put rights with respect to the Warrant
(or otherwise existing under the Loan Agreement) and Lender shall terminate its
right to exercise the Warrant for the remaining one-quarter of the shares
purchasable thereunder (presently expected to be 36,314 shares - the "Cancelled
Warrant Shares") in consideration for payment of a termination fee equal to
ninety percent of the IPO Price multiplied by the number of Cancelled Warrant
Shares;
c. The Borrower shall pay off all outstanding indebtedness to
Lender pursuant to the Loan Agreement; and
d. The Borrower shall agree to file a registration statement under
Form SB-2 or S-1, as applicable, 120 days following the Closing Date, to
register the Lender Shares and shall use its best efforts to cause such
registration statement to be declared effective as quickly as possible, but in
no event prior to 180 days following the Closing Date, and Lender further agrees
to not sell, pledge, encumber or otherwise dispose of any of its Lender Shares
or its interest in the Warrant or in any rights in said securities for a period
of 180 days following the closing date. Borrower agrees to maintain the
effectiveness of the registration statement for a period of at least 6 months,
all at the Borrower's sole cost and expense. The parties agree to execute a
registration rights agreement incorporating the above terms and the terms and
conditions presently in force and effect with respect to the Registration
Rights Agreement between the parties.
3. Term. This Agreement shall be for a term ending February 28, 1998.
Prior to the earlier of such date or the day following the Closing Date Lender
agrees it shall not sell the Warrant or any of the shares purchasable
thereunder. If the IPO is not consummated by February 28, 1998 the terms of this
Agreement shall be null and void in all respects, with no liability to any
party.
4. Miscellaneous. The term of sections 7.1 through 7.16 of the Loan
Agreement are incorporated by reference herein and made a part hereof as if
fully rewritten.
In witness whereof, the undersigned have executed this Agreement as of the
date first set forth above.
SIRROM FUNDING CORPORATION MERGE TECHNOLOGIES
INCORPORATED
By: /s/ [signature] /s/ Xxxxxxx X. Xxxxxxxxx
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Its: Xxxxxxx X. Xxxxxxxxx, President
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Consented and agreed to:
SIRROM CAPITAL CORPORATION
By: /s/ Xxxx Xxxxxx
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Its: VP
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