SECOND LOAN MODIFICATION AGREEMENT
EXHIBIT 10.4b
SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement (this “Loan Modification Agreement”) is entered into
as of February 18, 2011, and is effective as of November 1, 2010, by and between 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 SOUNDBITE COMMUNICATIONS, INC., a Delaware corporation,
with its principal executive office located at 00 Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000
(“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 November 2, 2009, evidenced by, among other documents, a certain Loan and
Security Agreement dated as of November 2, 2009, as amended by a certain First Loan Modification
Agreement dated as of March 8, 2010 (as amended and affected, 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.
| 1 | The Loan Agreement shall be amended by deleting the following, appearing as Section 2.2 thereof: |
“ 2.2 Overadvances. If, at any time, the Credit Extensions under
Sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4 exceed the lesser of either
(a) the Revolving Line or (b) the Borrowing Base, Borrower shall
immediately pay to Bank in cash such excess (the “Overadvance”). To
the extent that the Overadvance exists as a result of Bank decreasing
the percentages of the Borrowing Base, or adjustment of the criteria
for Eligible Accounts, Borrower shall have two (2) Business Days to
pay such portion of the Overadvance.”
and inserting in lieu thereof the following:
“ 2.2 Overadvances. If, at any time, the Credit Extensions under
Sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4 exceed the Revolving Line,
Borrower shall immediately pay to Bank in cash such excess (the
“Overadvance”).”
| 2 | The Loan Agreement shall be amended by deleting the following text, appearing in Section 2.3(a) thereof: |
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“Subject to Section 2.3(b), the principal amount outstanding under
the Revolving Line shall accrue interest at a floating per annum rate
equal to one-half of one percent (0.50%) above the Prime Rate.”
and inserting in lieu thereof the following:
“Subject to Section 2.3(b), the principal amount outstanding under
the Revolving Line shall accrue interest at the greater of (i) a
floating per annum rate equal to one-quarter of one percent (0.25%)
above the Prime Rate and (ii) four and one-quarter of one percent
(4.25%).”
| 3 | The Loan Agreement shall be amended by deleting the following, appearing as Section 5.3 thereof: |
“ 5.3 Accounts Receivable. For any Eligible Account in any Borrowing
Base Certificate, all statements made and all unpaid balances
appearing in all invoices, instruments and other documents evidencing
such Eligible Accounts are and shall be true and correct and all such
invoices, instruments and other documents, and all of Borrower’s
Books are genuine and in all respects what they purport to be. All
sales and other transactions underlying or giving rise to each
Eligible Account shall comply in all material respects with all
applicable laws and governmental rules and regulations. Borrower has
no knowledge of any actual or imminent Insolvency Proceeding of any
Account Debtor whose accounts are an Eligible Account in any
Borrowing Base Certificate. To the best of Borrower’s knowledge, all
signatures and endorsements on all documents, instruments, and
agreements relating to all Eligible Accounts are genuine, and all
such documents, instruments and agreements are legally enforceable in
accordance with their terms.”
and inserting in lieu thereof the following:
“ 5.3 Intentionally Omitted.”
| 4 | The Loan Agreement shall be amended by deleting the following text, appearing in Section 6.2 thereof: |
“ (b) Within thirty (30) days after the last day of each month in
which Credit Extensions made pursuant to Section 2.1.1 are
outstanding or in which any such Credit Extensions have been
requested, deliver to Bank a duly completed Borrowing Base
Certificate signed by a Responsible Officer, with aged listings of
accounts receivable and accounts payable (by invoice date).”
and inserting in lieu thereof the following:
“ (b) Intentionally omitted.”
| 5 | The Loan Agreement shall be amended by deleting the following text, appearing in Section 6.2 thereof: |
“ (d) Upon the occurrence of the first request for an Advance
pursuant to Section 2.1.1, allow Bank to audit Borrower’s Collateral
at Borrower’s expense. Such audits shall be conducted no more often
than once every twelve (12) months unless a Default or an Event of
Default has occurred
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and is continuing. Borrower hereby acknowledges that the first such
audit will be conducted within sixty (60) days after the date on
which Borrower requests the first Advance pursuant to Section 2.1.1.
The charge for each audit shall not exceed Eight Hundred Fifty
Dollars ($850.00) (or such higher amount as shall represent Bank’s
then-current standard charge for the same), per person per day, plus
out of pocket expenses.”
and inserting in lieu thereof the following:
“ (d) After the occurrence of an Event of Default, Bank may audit
Borrower’s Collateral, including, but not limited to, Borrower’s
Accounts at Borrower’s expense and at Bank’s sole and exclusive
discretion and without notification and authorization from Borrower.”
| 6 | The Loan Agreement shall be amended by deleting the following text, appearing in Section 6.7 thereof: |
“ (b) Minimum Quarterly Net Revenue. For the quarter ended June 30,
2009, and as of the last day of each quarter thereafter, Borrower
shall have quarterly net revenue of at least the greater of (i) Nine
Million Dollars ($9,000,000.00), and (ii) seventy-five percent
(75.0%) of Borrower’s board-approved operating plan.”
and inserting in lieu thereof the following:
“ (b) Minimum Quarterly Net Revenue. Borrower shall have quarterly
net revenue of at least (i) for the quarters ended June 30, 2009,
September 30, 2009, December 31, 2009, March 31, 2010, June 30, 2010
and September 30, 2010, the greater of (A) Nine Million Dollars
($9,000,000.00), and (B) seventy-five percent (75.0%) of Borrower’s
board-approved operating plan, and (ii) for the quarter ending
December 31, 2010, and as of the last day of each quarter thereafter,
Nine Million Dollars ($9,000,000.00).”
| 7 | The Loan Agreement shall be amended by inserting the following new definition, appearing alphabetically in Section 13.1 thereof: |
“ “Overadvance” is defined in Section 2.2.”
| 8 | The Loan Agreement shall be amended by deleting the following definitions, appearing in Section 13.1 thereof: |
“ “Borrowing Base” is eighty percent (80.0%) of Eligible Accounts, as
determined by Bank from Borrower’s most recent Borrowing Base
Certificate; provided, however, that Bank, upon notice to Borrower,
may decrease the foregoing percentage in its good faith business
judgment based on events, conditions, contingencies, or risks which,
as determined by Bank may adversely affect Collateral.”
“ “Borrowing Base Certificate” is that certain certificate in the
form attached hereto as Exhibit C.”
“ “Eligible Accounts” are Accounts which arise in the ordinary course
of Borrower’s business that meet all Borrower’s representations and
warranties in
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Section 5.3. Bank reserves the right, at any time and from time to
time after the Effective Date, and upon notice to Borrower, to adjust
any of the criteria set forth below and to establish new criteria in
its good faith business judgment. Unless Bank agrees otherwise in
writing, Eligible Accounts shall not include:
(a) Accounts for which the Account Debtor has not been invoiced;
(b) Accounts that the Account Debtor has not paid within ninety
(90) days of invoice date;
(c) Accounts owing from an Account Debtor, fifty percent (50%)
or more of whose Accounts have not been paid within one hundred
twenty days (120) days of invoice date;
(d) Accounts with credit balances over one hundred twenty (120)
days from invoice date;
(e) Accounts owing from an Account Debtor, including Affiliates,
whose total obligations to Borrower exceed twenty-five percent (25%) of all Accounts, for the amounts that exceed that
percentage, unless Bank approves in writing; provided that with
respect to the Accounts of NCO, such percentage shall be thirty-five
percent (35%);
(f) Accounts owing from an Account Debtor which does not have
its principal place of business in the United States;
(g) Accounts owing from an Account Debtor which is a federal,
state or local government entity or any department, agency, or
instrumentality thereof;
(i) Accounts owing from an Account Debtor to the extent that
Borrower is indebted or obligated in any manner to the Account Debtor
(as creditor, lessor, supplier or otherwise — sometimes called
“contra” accounts, accounts payable, customer deposits or credit
accounts), with the exception of customary credits, adjustments
and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business;
(j) Accounts for demonstration or promotional equipment, or in
which goods are consigned, or sold on a “sale guaranteed”, “sale or
return”, “sale on approval”, “xxxx and hold”, or other terms if
Account Debtor’s payment may be conditional;
(k) Accounts for which the Account Debtor is Borrower’s
Affiliate, officer, employee, or agent;
(l) Accounts in which the Account Debtor disputes liability or
makes any claim (but only up to the disputed or claimed amount), or
if the Account Debtor is subject to an Insolvency Proceeding, or
becomes insolvent, or goes out of business;
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(m) Accounts owing from an Account Debtor with respect to which
Borrower has received Deferred Revenue (but only to the extent of
such deferred revenue);
(n) Accounts for which Bank in its good faith business judgment
determines collection to be doubtful; and
(o) other Accounts Bank deems ineligible, after consultation
with Borrower, in the exercise of its good faith business judgment.”
| 9 | The Loan Agreement shall be amended by deleting the following definitions, appearing in Section 13.1 thereof: |
“ “Availability Amount” is (a) the lesser of (i) the Revolving Line
or (ii) the Borrowing Base minus (b) the amount of all outstanding
Letters of Credit (including drawn but unreimbursed Letters of
Credit) plus an amount equal to the Letter of Credit Reserves, minus
(c) the FX Reduction Amount, and minus (d) the outstanding principal
balance of any Advances (including any amounts used for Cash
Management Services).”
“ “Quick Assets” is, on any date, Borrower’s unrestricted cash,
Eligible Accounts, and investments with maturities of fewer than
twelve (12) months determined according to GAAP.”
“ “Revolving Line Maturity Date” is November 1, 2010.”
and inserting in lieu thereof the following:
“ “Availability Amount” is (a) the Revolving Line, minus (b) the
amount of all outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit) plus an amount equal to the Letter of
Credit Reserves, minus (c) the FX Reduction Amount, and minus (d) the
outstanding principal balance of any Advances (including any amounts
used for Cash Management Services).”
“ “Quick Assets” is, on any date, Borrower’s unrestricted cash, net
billed accounts receivable, and investments with maturities of fewer
than twelve (12) months determined according to GAAP.”
“ “Revolving Line Maturity Date” is February 18, 2013.” [2 YEARS FROM
THE DATE OF THIS LOAN MODIFICATION AGREEMENT — TO BE INSERTED AT
CLOSING]
| 10 | The Borrowing Base Certificate appearing as Exhibit C to the Loan Agreement is hereby deleted in its entirety. | ||
| 11 | The Compliance Certificate appearing as Exhibit D to the Loan Agreement is hereby replaced with the Compliance Certificate attached as Schedule 1 hereto. |
4. FEES. Borrower shall pay to Bank a modification fee equal to Fifteen Thousand Dollars
($15,000.00), which fee shall be deemed fully earned as of the date hereof, and shall be due and
payable as follows: (a) Seven Thousand Five Hundred Dollars ($7,500.00) is due and payable on the
date hereof, and (b) Seven Thousand Five Hundred Dollars ($7,500.00) is due and payable upon the
earlier to occur of (i) the date that is one (1) year from the
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date of this Loan Modification Agreement, (ii) early termination of the Loan Agreement, or (iii) an
Event of Default. 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 PERFECTION CERTIFICATE. Borrower hereby ratifies, confirms and
reaffirms, all and singular, the terms and disclosures contained in a certain Perfection
Certificate dated as of November 2, 2009 between Borrower and Bank, and acknowledges, confirms and
agrees the disclosures and information Borrower provided to Bank in the Perfection Certificate have
not changed, as of the date hereof.
6. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary
to reflect the changes described above.
7. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all
terms and conditions of all security or other collateral granted to Bank, and confirms that the
indebtedness secured thereby includes, without limitation, the Obligations.
8. 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.
9. 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.
10. 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]
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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:
|
BANK: | |||||
SOUNDBITE COMMUNICATIONS, INC.
|
SILICON VALLEY BANK | |||||
By: /s/ Xxxxxx X. Xxxxx
|
By: /s/ Xxxxxx X. Xxxxx
|
|||||
Name: Xxxxxx X. Xxxxx
|
Name: Xxxxxx X. Xxxxx | |||||
Title: CFO & COO
|
Title: Vice President |
The undersigned, SOUNDBITE COMMUNICATIONS SECURITIES CORPORATION, a Massachusetts corporation
(“Guarantor”) hereby: (a) ratifies, confirms and reaffirms, all and singular, the terms and
conditions of (i) a certain Unconditional Guaranty of the obligations of Borrower to Bank dated as
of November 2, 2009 (as amended, the “Guaranty”), and (ii) a certain Security Agreement by
Guarantor in favor of Bank dated as of November 2, 2009 (as amended, the “Security Agreement”); (b)
acknowledges, confirms and agrees that the Guaranty and Security Agreement shall remain in full
force and effect and shall in no way be limited by the execution of this Loan Modification
Agreement or any other documents, instruments and/or agreements executed and/or delivered in
connection herewith; and (c) acknowledges, confirms and agrees that the obligations of Borrower to
Bank under the Guaranty include, without limitation, all Obligations of Borrower to Bank under the
Loan Agreement, as amended by this Loan Modification Agreement.
| SOUNDBITE COMMUNICATIONS SECURITIES CORPORATION | ||||||
| By: Name: |
/s/ Xxxxxx X. Xxxxx
|
|||||
| Title: | CFO & COO | |||||
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SCHEDULE 1
EXHIBIT D
COMPLIANCE CERTIFICATE
| TO: SILICON VALLEY BANK FROM: SOUNDBITE COMMUNICATIONS, INC. |
Date: |
The undersigned authorized officer of SoundBite Communications, Inc. (“Borrower”)
certifies in such capacity that under the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (as amended, 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 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 certifies 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 acknowledges 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 | ||
Compliance Certificate
|
Within five (5) days of filing 10-Q with SEC, but no later than 45 days after quarter end | Yes No | ||
Board Projections
|
Annually and within 45 days of approval | Yes No | ||
10-Q
|
Within five (5) days of filing with SEC, but no later than 45 days after quarter end | Yes No | ||
8-K
|
Within five (5) days of filing with SEC | Yes No | ||
10-K, together with an unqualified opinion
|
Within five (5) days of filing with SEC, but no later than 90 days after year end | Yes No |
| Financial Covenant | Required | Actual | Complies | |||||||||
Maintain on a Quarterly Basis: |
||||||||||||
Adjusted Quick Ratio |
2.0:1.0 | ____:1.0 | Yes No | |||||||||
Minimum Quarterly Net Revenue |
$ | 9,000,000 | $ | ________ | Yes No | |||||||
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.
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The following are the exceptions with respect to the certification above: (If no exceptions
exist, state “No exceptions to note.”)
| SoundBite Communications, Inc. | BANK USE ONLY | |||||||
| Received by: | ||||||||
| AUTHORIZED SIGNER | ||||||||
| By: | Date: | |||||||
| Name: | Verified: | |||||||
| Title: | Date: | |||||||
| Compliance Status: Yes No | ||||||||
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Schedule 1 to Compliance Certificate
Financial Covenants of Borrower
Dated: ____________________
In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan
Agreement shall control.
I. Adjusted Quick Ratio (Section 6.7(a))
| Required: | 2.0:1.0 |
| Actual: | __:1.0 |
| No, not in compliance | Yes, in compliance |
II. Minimum Quarterly Net Revenue (Section 6.7(b))
| Required: | $9,000,000.00 |
| Actual: | $_________ |
| No, not in compliance | Yes, in compliance |
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