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Ex - 10.18
FIRST LOAN MODIFICATION AGREEMENT
This First Loan Modification Agreement is entered into as of March 26,
1999, by and between EPRISE CORPORATION, formerly known as NovaLink USA
Corporation, a Delaware corporation with its principal place of business at 0000
Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 ("Borrower") and SILICON VALLEY
BANK, a California-chartered bank ("Bank"), with its principal place of business
at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, XX 00000 and with a loan production office
located at Wellesley Office Park, 00 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX
00000, doing business under the name "Silicon Valley East".
1. DESCRIPTION OF EXISTING INDEBTEDNESS. Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan
arrangement dated as of January 28, 1998, evidenced by, among other documents, a
certain Loan and Security Agreement dated as of January 28, 1998 (the "Loan
Agreement"). The Loan Agreement established in favor of the Borrower: (i) a
revolving line of credit in the maximum principal amount of Eight Hundred
Thousand Dollars ($800,000.00) (the "Committed Revolving Line"), and (ii) an
equipment line of credit in the maximum principal amount of Four Hundred
Thousand Dollars ($400,000.00) (the "1998 Committed Equipment Line").
Capitalized terms used but not otherwise defined herein shall have the same
meaning as in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness".
2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness 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 Indebtedness shall be referred to as the "Existing
Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Loan Agreement.
1. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 1.1 thereof:
""Borrowing Base" means an amount equal to Seventy-Five
percent (75.0%) of Eligible Accounts, as determined by Bank
with reference to the most recent Borrowing Base Certificate
delivered by Borrower."
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and inserting in lieu thereof the following:
""Borrowing Base" means an amount equal to Eighty percent
(80.0%) of Eligible Accounts, as determined by Bank with
reference to the most recent Borrowing Base Certificate
delivered by Borrower."
2. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 1.1 thereof:
""Committed Revolving Line" means a credit extension of up
to Eight Hundred Thousand Dollars ($800,000.00)."
and inserting in lieu thereof the following:
""Committed Revolving Line" means a credit extension of up
to One Million Dollars ($1,000,000.00)."
3. The Loan Agreement shall be amended by inserting immediately
after the definition of "Material Adverse Effect" appearing in
Section 1.1 thereof the following definition:
""Maturity Date" means, as applicable, (i) the Revolving
Maturity Date for Advances pursuant to Section 2.1.1; (ii)
the Equipment Maturity Date for Equipment Advances pursuant
to Section 2.1.2; and (iii) the 1999 Equipment Maturity Date
for Equipment Advances pursuant to Section 2.1.3."
4. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 1.1 thereof:
""Equipment Advance" has the meaning set forth in Section
2.1.2."
and inserting in lieu thereof the following:
""Equipment Advance" or "Equipment Advances" shall mean any
advance made hereunder pursuant to Sections 2.1.2 and
2.1.3."
5. All references to "Committed Equipment Line" in the Loan
Agreement shall mean and refer to the "1998 Committed Equipment
Line".
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6. The Loan Agreement shall be amended by inserting immediately
after the definition of "Negotiable Collateral" appearing in
Section 1.1 thereof the following definitions:
""1999 Committed Equipment Line" means a credit extension of
up to Five Hundred Thousand Dollars ($500,000.00).
"1999 Equipment Availability End Date" has the meaning set
forth in Section 2.1.3.
"1999 Equipment Maturity Date" means that date which is
thirty-six (36) months after the 1999 Equipment Availability
End Date."
7. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 1.1 thereof:
""Payment Date" means the first calendar day of each month
commencing on the first such date after the Closing Date and
ending on the Revolving Maturity Date."
and inserting in lieu thereof the following:
""Payment Date" means the first calendar day of each month
commencing on the first such date after the Closing Date and
ending on the Maturity Date."
8. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 1.1 thereof:
""Quick Assets" means, as of any applicable date, the
consolidated cash and accounts receivable of Borrower."
and inserting in lieu thereof the following:
""Quick Assets" means, as of any applicable date, the
consolidated cash and accounts receivable (not greater than
ninety (90) days from invoice date) of Borrower."
9. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 1.1 thereof:
""Revolving Maturity Date" means the date which is one day
prior to one year from the Closing Date."
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and inserting in lieu thereof the following:
""Revolving Maturity Date" means March ____, 2000."
10. Section 2.1.2 of the Loan Agreement shall be retitled as "1998
Equipment Advances".
11. All Equipment Advances currently amortizing under the 1998
Committed Equipment Line shall continue to be repaid as provided
in Section 2.1.2. The outstanding principal balance of all
Equipment Advances made pursuant to Section 2.1.2, as of March 4,
1999, is Two Hundred Twenty-Nine Thousand One Hundred Ten and
97/100 Dollars ($229,110.97).
12. The Loan Agreement shall be amended by inserting after Section
2.1.2 thereof the following new section entitled "1999 Equipment
Advances":
"2.1.3 1999 Equipment Advances.
(a) Subject to and upon the terms and conditions of this
Agreement, at any time through December _____, 1999 (the "1999
Equipment Availability End Date"), Bank agrees to make Equipment
Advances (each an "Equipment Advance" and collectively, the
"Equipment Advances") to Borrower under this Section 2.1.3 in an
aggregate outstanding amount not to exceed the 1999 Committed
Equipment Line. To evidence the Equipment Advances, Borrower
shall deliver to Bank, at the time of each Equipment Advance
request, an invoice for the equipment to be purchased. The
Equipment Advances made pursuant to this Section 2.1.3 shall be
used only to finance Equipment purchased after June 30, 1998 and
shall not exceed One Hundred Percent (100%) of the invoice amount
of such equipment approved from time to time by Bank, excluding
taxes, shipping, warranty charges, freight discounts and
installation expense. Software may only constitute up to Two
Hundred Thousand Dollars ($200,000.00) of aggregate Equipment
Advances under this Section 2.1.3.
(b) Interest shall accrue from the date of each Equipment
Advance made pursuant to this Section 2.1.3 at a per annum rate
equal to the aggregate of the Prime Rate, plus One and One Half
percent (1.50%), and shall be payable monthly on the Payment Date
of each month through the month in which the 1999 Equipment
Availability End Date falls. Any Equipment Advances
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made pursuant to this Section 2.1.3 that are outstanding on the
1999 Equipment Availability End Date will be payable in
thirty-six (36) equal monthly installments of principal, plus all
accrued interest, beginning on the Payment Date of each month
following the 1999 Equipment Availability End Date and ending on
the 1999 Equipment Maturity Date. Equipment Advances, once
repaid, may not be reborrowed.
(c) When Borrower desires to obtain an Equipment Advance,
Borrower shall notify Bank (which notice shall be irrevocable) by
facsimile transmission to be received no later than 3:00 p.m.
Eastern time one (1) Business Day before the day on which the
Equipment Advance is to be made. Such notice shall be
substantially in the form of Exhibit B. The notice shall be
signed by a Responsible Officer or its designee and include a
copy of the invoice for the Equipment to be financed."
13. The Loan Agreement shall be amended by deleting the following
text appearing as the first sentence of Section 2.7 thereof
entitled "Term":
"Except as otherwise set forth herein, this Agreement shall
become effective on the Closing Date and, subject to Section
12.7, shall continue in full force and effect for a term
ending on the later of the Revolving Maturity Date or the
Equipment Maturity Date."
and inserting in lieu thereof the following:
"Except as otherwise set forth herein, this Agreement shall
become effective on the Closing Date and, subject to Section
12.7, shall continue in full force and effect for a term
ending on the Maturity Date."
14. The Loan Agreement shall be amended by deleting the following
text appearing as the second paragraph of Section 6.3 thereof
entitled "Financial Statements, Reports, Certificates":
"Unless there are no amounts borrowed or outstanding under
the Committed Revolving Line, within fifteen (15) days after
the last day of each month, Borrower shall deliver to Bank a
Borrowing Base Certificate signed by a Responsible Officer
in substantially the form of Exhibit C hereto, together with
aged listings of accounts receivable."
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and inserting in lieu thereof the following:
"Within twenty-five (25) days after the last day of each
month with respect to which either (i) Obligations under the
Committed Revolving Line are outstanding, or (ii) Advances
were made, Borrower shall deliver to Bank a Borrowing Base
Certificate signed by a Responsible Officer in substantially
the form of Exhibit C hereto, together with aged listings of
accounts receivable."
15. The Loan Agreement shall be amended by deleting the following
text appearing as the fourth paragraph of Section 6.3 thereof
entitled "Financial Statements, Reports, Certificates":
"Bank shall have a right from time to time hereafter to
audit Borrower's Accounts at Borrower's expense, provided
that such audits will be conducted no more often than every
six (6) months unless an Event of Default has occurred and
is continuing."
and inserting in lieu thereof the following:
"Bank shall have a right from time to time hereafter to
audit Borrower's Accounts at Borrower's expense, provided
that such audits will be conducted: (a) no more often than
every six (6) months (or less frequently at the Bank's sole
discretion), and (b) only when (i) Obligations under the
Committed Revolving Line are outstanding or (ii) Advances
were made during the preceding six (6) month period.
Notwithstanding the foregoing, the Bank shall have the right
to audit Borrower's Accounts at Borrower's expense at any
time after the occurrence of an Event of Default."
16. The Loan Agreement shall be amended by deleting the following
text appearing as Sections 6.8, 6.9, 6.10, 6.11 and 6.12 thereof:
"6.8 Liquidity. Borrower shall maintain, as of the last day
of each calendar month, Unrestricted Cash plus amounts
available to be borrowed under the Committed Revolving Line
in an amount not less than Seven Hundred Thousand Dollars
($700,000.00).
6.9 Adjusted Quick Ratio. Borrower shall maintain, as of the
last day of each calendar month, a ratio of Quick
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Assets to Current Liabilities minus any deferred maintenance
revenue of at least 1.3 to 1.0.
6.10 Net Income/Loss. Borrower shall maintain, as of the
last day of each fiscal quarter of the Borrower, a maximum
net loss of: (i) One Million Nine Hundred Thousand Dollars
($1,900,000.00) for the fiscal quarter ending February 28,
1998; (ii) One Million Four Hundred Thousand Dollars
($1,400,000.00) for the fiscal quarter ending May 31, 1998;
(iii) Five Hundred Thousand Dollars ($500,000.00) for the
fiscal quarter ending August 31, 1998; and (iv) Five Hundred
Thousand Dollars ($500,000.00) for the fiscal quarter ending
November 30, 1998 and each fiscal quarter thereafter.
6.11 Tangible Net Worth. Borrower shall maintain, as of the
last day of each calendar month, a Tangible Net Worth of not
less than Seven Hundred Thousand Dollars ($700,000.00).
6.12 Further Assurances. At any time and from time to time
Borrower shall execute and deliver such further instruments
and take such further action as may reasonably be requested
by Bank to effect the purposes of this Agreement."
and inserting in lieu thereof the following:
"6.8 Adjusted Quick Ratio. Borrower shall maintain, as of
the last day of each calendar month, a ratio of Quick Assets
to Current Liabilities minus any deferred revenue of the
Borrower of at least 1.50 to 1.0.
6.9 Tangible Net Worth. Borrower shall maintain, as of the
last day of each calendar month, a Tangible Net Worth of not
less than: (i) Three Million Five Hundred Thousand Dollars
($3,500,000.00) for each month through the month ending
Xxxxx 00, 0000, (xx) One Million Seven Hundred Fifty
Thousand Dollars ($1,750,000.00) for the months ending April
30, 1999, May 31, 1999, and June 30, 1999, (iii) One Million
Four Hundred Thousand Dollars ($1,400,000.00) for the months
ending July 31, 1999, August 31, 1999, and September 30,
1999, and (iv) One Million Dollars ($1,000,000.00) for each
month thereafter.
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6.10 Further Assurances. At any time and from time to time
Borrower shall execute and deliver such further instruments
and take such further action as may reasonably be requested
by Bank to effect the purposes of this Agreement."
17. The Loan Agreement shall be amended by deleting the following
text appearing as paragraph (a) of Section 8.2 entitled "Covenant
Default":
"(a) If Borrower fails to perform any obligation under
Sections 6.3, 6.6, 6.7, 6.8, 6.9, 6.10 or 6.11 or violates
any of the covenants contained in Article 7 of this
Agreement;"
and inserting in lieu thereof the following:
"(a) If Borrower fails to perform any obligation under
Sections 6.3, 6.6, 6.7, 6.8 or 6.9 or violates any of the
covenants contained in Article 7 of this Agreement;"
18. The Bank acknowledges that Borrower has changed its fiscal year
end to December 31.
19. The Borrower hereby ratifies, confirms and reaffirms, all and
singular, the terms and conditions of a certain Negative Pledge
Agreement dated as of December 5, 1997 between Borrower and Bank,
and acknowledges, confirms and agrees that said Negative Pledge
Agreement shall remain in full force and effect.
20. The Borrowing Base Certificate appearing as Exhibit C to the Loan
Agreement is hereby replaced with the Compliance Certificate
attached as Exhibit A hereto.
21. The Compliance Certificate appearing as Exhibit D to the Loan
Agreement is hereby replaced with the Compliance Certificate
attached as Exhibit B hereto.
4. FEE. Borrower shall pay to Bank a modification fee equal to Five Thousand
Five Hundred Dollars ($5,500.00), which fee shall be due on the date hereof and
shall be deemed fully earned as of the date hereof.
5. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
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6. 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 Indebtedness.
7. NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has no
defenses against the obligations to pay any amounts under the Indebtedness.
8. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Indebtedness, 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 Indebtedness pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Indebtedness. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Indebtedness. 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.
9. JURISDICTION/VENUE. Borrower 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 Loan Modification Agreement; provided, however, that if for any
reason Bank cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa Xxxxx County, California.
10. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank (provided, however,
in no event shall this Loan Modification Agreement become effective until signed
by an officer of Bank in California).
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.
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BORROWER: BANK:
EPRISE CORPORATION SILICON VALLEY BANK, doing
business as SILICON VALLEY
EAST
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxx Name: Xxxx Xxxxxxxxx
Title: Chief Financial Officer Title: AVP
SILICON VALLEY BANK
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: AVP
(signed in Santa Xxxxx
County, California)
TCP/
56120/51
369549.2
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EXHIBIT A
BORROWING BASE CERTIFICATE
Borrower: EPRISE CORPORATION Bank: Silicon Valley Bank
Commitment Amount: $1,000,000.00
ACCOUNTS RECEIVABLE
1) Accounts Receivable Book Value as of $
2) Additions (please explain on reverse) $
3) TOTAL ACCOUNTS RECEIVABLE $
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4) Amounts over 90 days due $
5) Balance of 50% over 90 day accounts $
6) Concentration Limits $
7) Ineligible Foreign Accounts $
8) Governmental Accounts $
9) Contra Accounts $
10) Promotion or Demo Accounts $
11) Intercompany/Employee Accounts $
12) Other (please explain on reverse) $
13) TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $
14) Eligible Accounts (#3 minus #13) $
15) LOAN VALUE OF ACCOUNTS (80.0% of #14) $
BALANCES
16) Maximum Loan Amount $
17) Total Funds Available [Lesser of #16 or #15] $
18) Present balance owing on Line of Credit $
19) RESERVE POSITION (#17 minus #18) $
The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Silicon Valley Bank.
COMMENTS:
___________________________
By: _______________________
Authorized Signer
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EXHIBIT B
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: EPRISE CORPORATION
The undersigned authorized officer of EPRISE CORPORATION hereby certifies
that in accordance with the terms and conditions of the Loan and Security
Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is in
complete compliance for the period ending with all required covenants
except as noted below and (ii) all representations and warranties of Borrower
stated in the 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
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consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The Officer expressly acknowledges that no
borrowings may be requested by the Borrower at any time or date of determination
that Borrower is not in compliance with any of the terms of the Agreement, and
that such compliance is determined not just at the date this certificate is
delivered.
Please indicate compliance status by circling Yes/No under "Complies"
column.
Reporting Covenant Required Complies
Monthly financial statements
& CC Monthly within 25 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
Monthly BBC & A/R Agings Monthly within 25 days (when borrowing) Yes No
Financial Covenant Required Actual Complies
Maintain on a Monthly Basis:
Minimum Adjusted Quick Ratio 1.50:1.0 ____:1.0 Yes No
Minimum Tangible Net Worth $3,500,000 thru 3/31/99; $_______ Yes No
$1,750,000 thru 6/30/99;
$1,400,000 thru 9/30/99;
$1,000,000 thereafter
Comments Regarding Exceptions:
Sincerely,
_______________________ Date:_______________
SIGNATURE
__________________________
TITLE
