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EXHIBIT 10.2
COAST
Amendment #2 to
Loan and Security Agreement
Borrower: CyberGuard Corporation
Address: 0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Date: October 6, 1999
THIS AMENDMENT #2 TO LOAN AND SECURITY AGREEMENT (THE "AMENDMENT") IS
ENTERED INTO ON THE ABOVE DATE BY AND BETWEEN COAST BUSINESS CREDIT(R), A
DIVISION OF SOUTHERN PACIFIC BANK ("COAST") AND CYBERGUARD CORPORATION
("CYBERGUARD"). THIS AMENDMENT AMENDS THAT CERTAIN LOAN AND SECURITY AGREEMENT
DATED DECEMBER, 1997 (THE "LOAN AGREEMENT") BETWEEN COAST, ON THE ONE HAND AND
CYBERGUARD AND TRADEWAVE CORPORATION. THE LOAN AGREEMENT AND SCHEDULE, AS
MODIFIED BY THIS AMENDMENT AND PREVIOUS AMENDMENTS, SHALL FOR ALL PURPOSES BE
DEEMED TO BE, AND THE SAME SHALL CONSTITUTE AN INTEGRAL PART OF THE LOAN
AGREEMENT AND SCHEDULE. (DEFINITIONS AND CERTAIN TERMS USED IN THIS AMENDMENT
SHALL HAVE THE MEANINGS SET FORTH IN THE LOAN AGREEMENT, THE SCHEDULE AND ALL
OTHER DOCUMENTS AND AGREEMENTS EXECUTED IN CONNECTION THEREWITH OR IN
FURTHERANCE THEREOF).
FOR GOOD AND VALUABLE CONSIDERATION, RECEIPT OF WHICH IS HEREBY
ACKNOWLEDGED, THE LOAN AGREEMENT IS HEREBY AMENDED IN THE FOLLOWING RESPECTS:
THE LOAN AGREEMENT
DEFINITION OF BORROWER: "BORROWER" SHALL MEAN CYBERGUARD. ALL
REFERENCES TO TRADEWAVE CORPORATION ARE HEREBY DELETED.
Except as expressly modified herein, all other terms and conditions of
the Loan Agreement, as previously modified or amended, remain
unchanged.
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THE SCHEDULE TO LOAN AGREEMENT
SECTION 3 OF THE SCHEDULE (with respect to Interest and Fees) is amended to
read as follows:
3. INTEREST AND FEES
Section 3.1 -Interest Rate:
THE FOLLOWING IS ADDED TO SECTION 3.1 TO THE SCHEDULE:
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE
CONTRARY, THE INTEREST RATE APPLICABLE TO THE
OBLIGATIONS SHALL REMAIN AT THREE PERCENT (3%) HIGHER
THAN ALL OF THE ABOVE-REFERENCED INTEREST RATES UNTIL
SUCH TIME AS ALL OF THE FOLLOWING CONDITIONS HAVE BEEN
MET TO THE SATISFACTION OF COAST, IN ITS SOLE
DISCRETION:
(A) BORROWER BECOMES CURRENT WITH RESPECT TO ALL OF
THE REPORTING REQUIREMENTS INCLUDING THOSE SPECIFIED
IN SECTION 8.3 OF THE SCHEDULE;
(B) BORROWER COMES INTO FULL COMPLIANCE WITH
APPLICABLE FEDERAL AND STATE SECURITIES STATUTES,
RULES AND REGULATIONS INCLUDING THE RULES AND
REGULATIONS PROMULGATED BY THE SECURITIES AND EXCHANGE
COMMISSION; AND
(C) BORROWER QUALIFIES, PURSUANT TO A "CLEAN" COAST
COLLATERAL REVIEW AUDIT, THAT ITS BOOKS AND RECORDS
ARE UP TO DATE.
Except as expressly modified hereby, all other terms and provisions of
Section 3.1 of the Schedule remain unchanged.
The following is added to Section 3.2 of the Schedule:
Section 3.2 - Amendment Fee:
IN ADDITION TO ALL PREVIOUSLY EARNED ORIGINATION,
AMENDMENT AND OTHER FEES, A SUPPLEMENTAL AMENDMENT FEE
OF $10,000 IS FULLY EARNED AND PAYABLE UPON THE
EFFECTIVE DATE OF THIS AMENDMENT.
Except as expressly modified herein, all other terms and conditions of
Section 3 of the Schedule, as previously modified or amended, remain
unchanged.
Section 9.2 - Early Termination Fee:
Section 9.2 of the Schedule is superseded in its entirety by the
following:
AN AMOUNT EQUAL TO THREE PERCENT (3%) OF THE MAXIMUM
DOLLAR AMOUNT IF TERMINATION OCCURS ON OR BEFORE
DECEMBER 29, 2000, AND TWO PERCENT (2%) OF THE MAXIMUM
DOLLAR AMOUNT IF TERMINATION OCCURS ON OR BEFORE
DECEMBER 29, 2001.
SECTION 8 OF THE SCHEDULE is amended in the following respects:
SECTION 8.1 - OTHER PROVISIONS:
(1) [UNCHANGED]
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(2) [UNCHANGED]
(3) [UNCHANGED]
(4) [UNCHANGED]
(5) [UNCHANGED]
(6) [UNCHANGED]
(7) [UNCHANGED]
(8) FROM THE EFFECTIVE DATE OF THIS AMENDMENT, BORROWER
SHALL MAINTAIN A MINIMUM ONGOING TANGIBLE NET WORTH
OF NOT LESS THAN THE FOLLOWING: ($1,577,000) FOR THE
PERIOD ENDED SEPTEMBER 30, 1999; ($1,649,000) FOR
THE PERIOD ENDED DECEMBER 31, 1999; ($1,037,000) FOR
THE PERIOD ENDED MARCH 31, 2000; ($233,000) FOR THE
PERIOD ENDED JUNE 30, 2000; AND, THEREAFTER, NOT
LESS THAN EIGHTY PERCENT (80%) OF PROJECTED TANGIBLE
NEW WORTH, WHICH PROJECTIONS MUST BE SATISFACTORY TO
COAST IN COAST'S SOLE AND ABSOLUTE DISCRETION.
(9) [UNCHANGED]
(10) [UNCHANGED]
(11) [UNCHANGED]
(12) NOT LATER THAN NINETY (90) DAYS FROM THE EFFECTIVE
DATE OF THIS AMENDMENT, BORROWER SHALL DELIVER TO
COAST AND OTHERWISE BECOME FULLY CURRENT WITH
RESPECT TO ALL REPORTS, DOCUMENTS AND STATEMENTS
THAT, ABSENT THIS AMENDMENT, WOULD OTHERWISE HAVE
BEEN DUE PURSUANT TO SECTION 8.3 OF THE SCHEDULE.
BORROWER SHALL THEREAFTER REMAIN CURRENT WITH
RESPECT TO SUCH REPORTING REQUIREMENTS.
Except as expressly modified herein, all other terms and conditions of
Section 8 of the Schedule, as previously modified or amended, remain
unchanged.
SECTION 9 OF THE SCHEDULE (with respect to Term) is amended to read as follows:
Section 9.1 of the Schedule dealing with the Maturity Date is
superseded in its entirety by the following:
Section 9.1 - Maturity Date:
December 29, 2001, subject to automatic renewal as
provided in Section 9.1 of the Agreement, and early
termination as provided in Section 9.2 of the
Agreement
CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT #2:
IN AUGUST, 1999, BORROWER REQUESTED COAST'S CONSENT TO BORROWER
OBTAINING $4,313,484.38 IN SUBORDINATED LOANS FROM FERNWOOD PARTNERS II, LLC
AND CERTAIN EMPLOYEES. COAST CONSENTED TO THE TRANSACTIONS AS GENERALLY
DESCRIBED IN CORRESPONDENCE BETWEEN BORROWER AND COAST. THIS AMENDMENT #2 IS
SUBJECT TO AND CONDITIONED UPON BORROWER HAVING RECEIVED SUBSTANTIALLY ALL
PROCEEDS OF SUBORDINATED LOANS FROM FERNWOOD PARTNERS II, LLC AND CERTAIN
EMPLOYEES OF BORROWER UPON THE FOLLOWING GENERALLY-DESCRIBED TERMS: THE
SUBORDINATED LOANS ARE IN THE APPROXIMATE AMOUNT OF $4,313,484.38; THE LOANS
BEAR INTEREST AT 11.5% PER ANNUM; INTEREST IS PAYABLE QUARTERLY COMMENCING JULY
1, 2000; NO PRINCIPAL IS DUE UNTIL JUNE 30, 2002 AT WHICH TIME ALL PRINCIPAL
AND ACCRUED INTEREST WILL BE FULLY DUE AND PAYABLE; APPROXIMATELY $1.2 MILLION
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OF THE LOAN PROCEEDS ARE FOR REPAYMENT OF CERTAIN LOANS FROM FERNWOOD PARTNERS,
LLC AND THE BALANCE OF THE LOAN PROCEEDS ARE TO BE USED BY BORROWER FOR GENERAL
CORPORATE PURPOSES; ALTHOUGH THE SUBORDINATED LOANS MAY BE SECURED BY SECURITY
INTERESTS IN BORROWER'S ASSETS, SUCH SECURITY INTERESTS ARE AND SHALL AT ALL
TIMES REMAIN SUBORDINATE TO CLAIMS AND SECURITY INTERESTS OF COAST PURSUANT TO
THE TERMS OF THE STANDARD SUBORDINATION AGREEMENT THAT COAST REQUIRED BE SIGNED
BY EACH OF THE LENDERS.
CyberGuard Corporation
By:
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Title:
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COAST BUSINESS CREDIT(R), a division oF
Southern Pacific Bank
By:
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Title:
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CONSENT AND REAFFIRMATION
The undersigned, having executed and delivered to Coast a
Subordination Agreement and a Continuing Guaranty, hereby (a) consents to the
foregoing Amendment #2 to Loan and Security Agreement, (b) reaffirms that its
Subordination Agreement and Continuing Guaranty agreement are in full force and
effect, and (c) acknowledges that its Subordination Agreement and Continuing
Guaranty agreement shall include the modifications provided in Amendment #2 to
Loan and Security Agreement in addition to all prior modifications and
amendments to the Loan and Security Agreement.
"SUBORDINATING CREDITOR"
"GUARANTOR"
CYBERGUARD EUROPE LIMITED
By:
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Title:
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CONSENTS AND REAFFIRMATIONS
BY PARTIES WHO PROVIDED SUBORDINATION AGREEMENTS ONLY
The undersigned, each having executed and delivered to Coast a
Subordination Agreement, hereby (a) consent to the foregoing Amendment #2 to
Loan and Security Agreement, (b) reaffirm that their respective Subordination
Agreements are in full force and effect, and (c) acknowledge that their
respective Subordination Agreements shall include the modifications provided in
Amendment #2 to Loan and Security Agreement in addition to all prior
modifications and amendments to the Loan and Security Agreement.
[SIGNATURES IMMEDIATELY FOLLOW ON NEXT PAGE]
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"SUBORDINATING CREDITORS":
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XXXXXXXX X. XXXXXXXXX
ATTORNEY AND ATTORNEY IN FACT FOR AND ON BEHALF
OF THE FOLLOWING PERSONS:
XXXX GARNISH, XXXXXXX XXXXXXX, XXXXXXXX XXXXXXX, XXXXXXXX X. XXXXXXXXX,
XXXXXXX XXXXXX, XXX XXXX, XXXX XXX XXXXX, XX., XXXXXXXX XXXXXXX, XXXXXXX
XXXXXXXXXX, XXXX SCHOLINE, XXXXX XXXXXXXXX, XXXXXXX XXXXXX, XXXX XXXXXX,
XXXXXXXXX XXXX XX XXXXXXXX, XXXXX XXXXXXXX, XXXX METTAWA, XXXX XXXXXXX,
XXXX XXXX, XXXXXXX XXXXXX, XXXXXXX XXXXX, XXXXX X. XXXXXXX, XXXXXXXXX X.
XXXXXX, XXXXXXX XXXXX, XXXXX XXXXXX, XXXX XXXXX, XXXXX XXXXXXXX, XXXXX
XXXXXXX, C. XXXXXXX XXXXX; XXXXX XXXXXXXXXX; XXXXX XXXXXXX; XXXXXXX
XXXXXXXXXX; XXXXXXX X. XXXXXXX; XXXXX XXXXXXX; XXXXXXX XXXXX; XXXXXX X.
XXXXXXX; AND XXXXXXX X. XXXXX
FERNWOOD PARTNERS II, LLC
By:
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Title:
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