EXHIBIT 10.35
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SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement (this "Loan Modification
Agreement') is entered into as of _______________, 2001, by and between SILICON
VALLEY 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 One Newton Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, doing business under the name "Silicon Valley East"
("Bank") and EXCHANGE APPLICATIONS, INC. d/b/a Xchange, Inc., Xxx Xxxxxxx Xxxxx,
00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 and EXSTATIC SOFTWARE, INC.,
formerly known as Xxxx Xxxxxxx, Inc., 0000 Xxxxxxxxx Xxx Xxxxxxx, Xxxxxxxxxx
00000 (hereinafter, collectively, the "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 with Bank, evidenced by, among
other documents, (i) a certain Loan and Security Agreement dated as of April 25,
2001, as amended by a certain First Loan Modification Agreement dated August 1,
2001 (the "Loan Agreement"), (ii) a certain Intellectual Property Security
Agreement dated as of April 25, 2001 (the "IP Security Agreement"), and (iii) a
certain Pledge Agreement dated April 25, 2001 (the "Pledge Agreement").
Capitalized terms used but not otherwise defined herein shall have the same
meaning as in the Loan Agreement.
Hereinafter, all indebtedness and obligations owing by Borrower to Bank shall be
referred to as the "Obligations".
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement, the IP Security Agreement and the
Pledge 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.
Modifications to Loan Agreement.
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1. The Loan Agreement is hereby amended by deleting the following text
appearing in Section 5(a) of the Schedule to the Loan Agreement:
"A. EBITDA: THE BORROWER SHALL SUFFER MAXIMUM LOSS OR MAINTAIN A
MINIMUM PROFIT PER MONTH AND PER QUARTER IN ACCORDANCE WITH THE
SCHEDULE PROVIDED BELOW:
April 2001 - ($5,500,000) October 2001 - ($3,000,000)
May 2001 - ($3,000,000) November 2001 - ($1,750,000)
June 2001 - $5,000,000 December 2001 - $3,250,000
2nd Quarter 2001
Maximum Loss ($2,600,000) 4th Quarter 2001
July 2001 - ($4,500,000) Minimum Profit - $1.00
August 2001 -($1,750,000)
September 2001 - $3,000,000 Each Quarter thereafter
3rd Quarter 2001 Minimum Profit - $1,000,000"
Maximum Loss - ($2,000,000)
and substituting the following text therefor:
"A. EBITDA: THE BORROWER SHALL SUFFER MAXIMUM LOSS OR MAINTAIN A
MINIMUM PROFIT PER MONTH AND PER QUARTER IN ACCORDANCE WITH THE
SCHEDULE PROVIDED BELOW:
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October 2001 - ($2,250,000)
November 2001 - ($1,500,000)
December 2001 - $2,000,000
4th Quarter 2001
Maximum Loss ($500,000)
January 2002 - ($2,000,000)
February 2002 - ($1,500,000)
March 2002 - $2,500,000
1st Quarter 2002
Minimum Profit - $1.00"
2. The Loan Agreement is hereby amended by deleting Section 5(c) of the
Schedule to the Loan Agreement in its entirety.
3. The Loan Agreement is hereby amended by deleting the following text
appearing at the end of Section 5 of the Schedule to the Loan
Agreement:
" DEFINITIONS. For purposes of the foregoing financial covenants, the
following term shall have the following meaning:
"EBITDA" shall mean the Borrower's earnings before interest, taxes,
depreciation and amortization, each as determined in accordance with
generally accepted accounting principles."
and substituting the following text therefor:
"DEFINITIONS. For purposes of the foregoing financial covenants, the
following term shall have the following meaning:
"EBITDA" shall mean the Borrower's earnings before interest, taxes,
depreciation and amortization, each as determined in accordance with
generally accepted accounting principles. For the purposes of
calculating EBITDA hereunder, Borrower's restructuring charges for such
period shall not be included as an expense."
4. WAIVERS. Bank hereby waives Borrower's existing defaults under the Loan
Agreement by virtue of Borrower's failure to comply with the quarterly EBITDA
covenants for June 2001 and September 2001 set forth in Section 5(a) of the
Schedule to the Loan Agreement. Bank's waiver of Borrower's compliance of said
covenants shall apply only to the foregoing specific periods.
5. FEES. Borrower shall pay to Bank a modification fee equal to Ten Thousand
Dollars ($10,000.00), which fee shall be due on the date hereof and shall be
deemed fully earned as of the date hereof. The Borrower shall also reimburse
Bank for all legal fees and expenses incurred in connection with this amendment
to the Existing Loan Documents.
6. RATIFICATION OF INTELLECTUAL PROPERTY SECURITY AGREEMENT. Borrower hereby
ratifies, confirms and reaffirms, all and singular, the terms and conditions of
the IP Security Agreement and acknowledges, confirms and agrees that the IP
Security Agreement contains an accurate and complete listing of all Intellectual
Property Collateral as defined in the IP Security Agreement.
7. ADDITIONAL COVENANTS: RATIFICATION OF PERFECTION CERTIFICATE. Borrower
shall not, without providing the Bank with thirty (30) days prior written
notice: (i) relocate its principal executive office or add
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any new offices or business locations or keep any Collateral in any additional
locations, or (ii) change its jurisdiction of organization, or (iii) change its
organizational structure or type, (iv) change its legal name, or (v) change any
organizational number (if any) assigned by its jurisdiction of organization. In
addition, the Borrower hereby certifies that no Collateral is in the possession
of any third party bailee (such as at a warehouse). In the event that Borrower,
after the date hereof, intends to store or otherwise deliver the Collateral to
such a bailee, then Borrower shall first receive, the prior written consent of
Bank and such bailee must acknowledge in writing that the bailee is holding such
Collateral for the benefit of Bank. Borrower hereby ratifies, confirms and
reaffirms, all and singular, the terms and disclosures contained in a certain
Perfection Certificate dated as of April 24, 2001 between Borrower and Bank, and
acknowledges, confirms and agrees the disclosures and information Borrower
provided to Bank in the Perfection Certificate has not changed, as of the date
hereof.
8. AUTHORIZATION TO FILE. Borrower hereby authorizes Bank to file financing
statements without notice to Borrower, with all appropriate jurisdictions, as
Bank deems appropriate, in order to further perfect or protect Bank's interest
in the Collateral.
9. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
10. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.
11. NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has no
defenses against the obligations to pay any amounts under the Obligations.
12. 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.
13. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank.
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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.
EXCHANGE APPLICATIONS, INC. SILICON VALLEY BANK, d/b/a
SILICON VALLEY EAST
By By
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President or Vice President Title
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By
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Secretary or Ass't Secretary
EXSTATIC SOFTWARE, INC., formerly known as
XXXX XXXXXXX, INC.
By
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President or Vice President
By
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Secretary or Ass't Secretary
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The undersigned each ratify confirm and reaffirm, all and singular, the
terms and conditions of certain Unconditional Guaranties each dated April 24,
2001 (collectively, the "Guaranty") and a certain Security Agreement dated April
24, 2001 (the "Security Agreement") and acknowledge, confirm and agree that the
Guaranty and the Security Agreement 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. Further, the undersigned each hereby grant to Bank, and
reaffirm the grant to Bank of, a continuing security interest in and to the
property listed on Exhibit A to the Security Agreement to secure the
Obligations.
ACTION SYSTEMS, INC.
By:
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Name:
Title:
CUSTOMER ANALYTICS HOLDINGS, INC.
By:
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Name:
Title:
CUSTOMER ANALYTICS, INC.
By:
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Name:
Title:
EXCHANGE APPLICATIONS SECURITIES CORPORATION
By:
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Name:
Title:
KNOWLEDGE STREAM PARTNERS, INC.
By:
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Name:
Title:
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