Exhibit 10.22
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LOAN MODIFICATION AGREEMENT
This LOAN MODIFICATION AGREEMENT is entered into as of December
28,1999, by and between SILICON VALLEY BANK, a California-chartered 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" ("Bank"), and MATRIXONE, INC., a Delaware corporation with its
principal place of business at Two Executive Drive, Chelmsford, MA 01824
("Borrower").
RECITALS
Borrower has borrowed money from Bank pursuant to certain Existing Loan
Documents, as defined below. In consideration of certain financial
accommodations from Bank, and Borrowers continuing obligations under the
Existing Loan Documents, Borrower and Bank agree as follows:
AGREEMENT
1. DESCRIPTION OF EXISTING INDEBTEDNESS. Among other indebtedness
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which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant
to, among other documents, a Loan and Security Agreement dated as of December
29, 1998 between Borrower and Bank providing for an extension of credit up to a
maximum of SEVEN MILLION AND NO/100THS DOLLARS ($7,000,000) for working capital
and equipment finance purposes, as amended by a Loan Modification Agreement
dated as of September 28, 1999 (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
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secured pursuant to the Loan Agreement. Hereinafter, the Loan Agreement,
together with all other documents securing payment of the Indebtedness, shall be
referred to as the "Existing Loan Documents."
3. DESCRIPTION OF CHANGES IN TERMS.
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3.1 Modifications to Definitions. Section 1.1 of the Loan Agreement is
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hereby amended by substituting the following definitions for those set forth
therein for the same terms, and in the case of new definitions, by adding those
new definitions to that Section 1.1:
"Revolving Maturity Date" means December 28, 2000.
"Eligible Accounts" means those Accounts that arise in the ordinary
course of Borrower's business that comply with all of Borrower's representations
and warranties to Bank set forth in
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Section 5.4. Unless otherwise agreed to by Bank in writing, Eligible Accounts
shall not include the following:
(a) Accounts that the account debtor has failed to pay within 180
days of invoice date;
(b) Accounts with respect to an account debtor, fifty percent (50%)
of whose Accounts the account debtor has failed to pay within 180 days
of invoice date, except as approved in writing by Bank;
(c) Accounts which are more than sixty (60) days past the original
due date;
(d) Accounts with respect to an account debtor, including Affiliates,
whose total obligations to Borrower exceed twenty-five percent (25%) of
all Accounts, to the extent such obligations exceed the aforementioned
percentage, except as approved in writing by Bank and except for
Accounts covered by insurance complying with Section 6.6(b);
(e) Accounts with respect to which the account debtor does not have
its principal place of business in the United States or Canada;
(f) Accounts with respect to which the account debtor is a federal,
state, or local governmental entity or any department, agency, or
instrumentality thereof;
(g) Accounts with respect to which Borrower is liable to the account
debtor, but only to the extent of any amounts owing to the account
debtor (sometimes referred to as 'contra' accounts, e.g. accounts
payable, customer deposits, credit accounts etc.);
(h) Accounts generated by demonstration or promotional equipment, or
with respect to which goods are placed on consignment, guaranteed sale,
sale or return, sale on approval, xxxx and hold, or other terms by
reason of which the payment by the account debtor may be conditional;
(i) Accounts with respect to which the account debtor is an
Affiliate, officer, employee, or agent of Borrower;
(j) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Bank
believes, in its sole discretion, that there may be a basis for dispute
(but only to the extent of the amount subject to such dispute or
claim), or is subject to any Insolvency Proceeding, or becomes
insolvent, or goes out of business; and
(k) Accounts the collection of which Bank reasonably determines, in
accordance with its standard commercial practices, to be doubtful.
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Subsection (d) of the definition of Permitted Liens is hereby replaced
in its entirety with the following:
(d) Liens on Equipment leased by Borrower or any Subsidiary pursuant
to an operating or capital lease in the ordinary course of business
(including proceeds thereof and accessions thereto) incurred solely for
the purpose of financing the lease of such Equipment (including Liens
pursuant to leases permitted pursuant to Section 7.1 and Liens arising
from UCC financing statements regarding leases permitted by this
Agreement);
3.2 Modifications to Revolving Advance Provisions. Section 2.1.1(a)
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of the Loan Agreement is hereby replaced in its entirety with the following:
(a) Subject to and upon the terms and conditions of this Agreement,
Bank agrees to make Advances to Borrower in an aggregate outstanding
amount not to exceed (i) the Committed Revolving Line or the Borrowing
Base, whichever is less, minus (ii) any amounts reserved for cash
management services as agreed between Bank and Borrower from time to
time, minus (iii) the FX Reserve as agreed between Bank and Borrower
from time to time. Subject to the terms and conditions of this
Agreement, amounts borrowed pursuant to this Section 2.1.1 may be
repaid and reborrowed at any time during the term of this Agreement.
3.3 Modification to Financial Reporting Provisions. Section 6.3 of
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the Loan Agreement is hereby replaced in its entirety with the following:
6.3 Financial Statements, Reports, Certificates. (i) Borrower shall
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deliver to Bank:
(a) as soon as available, but in any event within thirty (30) days
after the end of each month when Credit Extensions are outstanding, a
company prepared consolidated balance sheet and income statement
covering Borrowers consolidated operations during such period, in a
form and certified by an officer of Borrower reasonably acceptable to
Bank;
(b) as soon as available, but in any event within ninety (90) days
after the end of Borrowees fiscal year, audited consolidated financial
statements of Borrower prepared in accordance with GAAP, consistently
applied, together with an unqualified opinion on such financial
statements of an independent certified public accounting firm
reasonably acceptable to Bank;
(c) within five (5) days of filing, copies of all statements, reports
and notices sent or made available generally by Borrower to its
security holders or to any holders of Subordinated Debt and all reports
on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange
Commission;
(d) promptly upon receipt of notice thereof, a report of any legal
actions pending or threatened against Borrower or any Subsidiary that
could reasonably be likely to result in damages or costs to Borrower or
any Subsidiary of One Hundred Fifty Thousand Dollars
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($150,000) or more;
(e) such budgets, sales projections, operating plans or other
financial information as Bank may reasonably request from time to time.
(f) (i) prior to any Credit Extensions at a time when no Credit
Extensions are outstanding, and (ii) within thirty (30) days after the
last day of each month in which any Credit Extensions are outstanding,
a Borrowing Base Certificate signed by a Responsible Officer in
substantially the form of Exhibit C hereto, together with aged listings
of accounts receivable.
(g) prior to any Credit Extensions at a time when no Credit
Extensions are outstanding, and (ii) within thirty (30) days after the
last day of each month in which any Credit Extensions are outstanding,
a Compliance Certificate signed by a Responsible Officer in
substantially the form of Exhibit D hereto.
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(ii) Bank shall have a right from time to time hereafter, upon
reasonable prior notice, to audit Borrower's Accounts at Borrower's
expense, provided that such audits will be conducted no more often than
once every twelve (12) months unless an Event of Default has occurred
and is continuing.
3.4 Modifications to Financial Covenants. Sections 6.8, 6.9 and 6.10
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of the Loan Agreement are hereby replaced in their entirety with the following:
6.8 Adjusted Quick Ratio. Borrower shall maintain a ratio of
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Quick Assets to Current Liabilities (exclusive of deferred
revenues), (i) as of the last day of each calendar quarter, of at
least 1.50 to 1.0, and (ii) intraquarterly, as of the last day of
each calendar month, of at least 1.25 to 1.0.
6.9 Profitability. Borrower will not suffer a net loss (as
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defined by GAAP, but excluding stock-based compensation charges
as required by rules and regulations of the Securities and
Exchange Commission) greater than (a) $800,000 for the quarter
ended September 30, 1999, (b) $2,200,000 for the quarter ended
December 31, 1999, (c) $3,500,000 for the quarter ended March 31,
2000 and (d) $2,000,000 for the quarter ended June 30, 2000 and
for each quarter thereafter.
6.10 Liquidity. INTENTIONALLY OMITTED
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3.5 Modifications to Negative Covenants. Sections 7.2 and 7.3 of the
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Loan Agreement are hereby replaced in their entirety with the following:
7.2 Changes in Business, Ownership, or Management, Business
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Locations. Engage in any business, or permit any of its
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Subsidiaries to engage in any business, other than the businesses
currently engaged in by Borrower and any business substantially
similar or related thereto (or incidental thereto), or suffer a
material
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change in Borrower's ownership (other than changes resulting from
or connected to equity financing events, including public
offerings of securities) or any three (3) of the persons holding
the positions of CEO, CFO, VP-Marketing, VP-Engineering and VP-
Customer Support as of the Closing Date cease to be employees of
Borrower and replacements reasonably satisfactory to Bank are not
made within ninety (90) days from the date such employees cease
to be employees. Borrower will not, without at least thirty (30)
days prior written notification to Bank, relocate its chief
executive office or add any new offices or business locations;
provided that Borrower need not give Bank such notice with
respect to sales offices with equipment having a value, either
per office or in the aggregate, that is immaterial, and from
which no invoices are billed or collected.
7.3 Mergers or Acquisitions. Merge or consolidate, or permit
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any of its Subsidiaries to merge or consolidate, with or into any
other business organization, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital
stock or property of another Person, other than a transaction or
series of transactions in which the stockholders of Borrower
immediately prior to the transaction or series of transactions,
as the case may be, continue to hold a majority of the voting
capital stock of the resulting company, provided that an Event of
Default has not occurred and is continuing prior to such
transaction or series of transactions or would not exist after
giving effect to such transaction or series of transactions.
3.6 Modifications to Borrowing Base Certificate and Compliance
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Certificate. Exhibits C and D of the Loan Agreement are hereby replaced in their
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entirety with Exhibits C and D to this Agreement.
4. WAIVER OF COMPLIANCE. Bank hereby waives Borrowers compliance
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with the Tangible Net Worth covenant set forth in Section 6.9 of the Loan
Agreement for the period ending March 31, 1999.
5. FACILITY FEE. Borrower shall pay to Bank a facility fee of
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$17,500 plus any out-of pocket expenses incurred by the Bank through the date
hereof, including reasonable attorneys' fees and expenses, and after the date
hereof, all Bank Expenses, including reasonable attorneys' fees and expenses, as
and when they become due.
6. CONDITIONS PRECEDENT TO FURTHER ADVANCES. The obligation of Bank
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to make further advances to Borrower under this line is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, the following:
(a) this Loan Modification Agreement duly executed by Borrower;
(b) payment of the fees and Bank Expenses then due specified in
Section 5 hereof, and
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(c) such other documents, and completion of such other matters,
as Bank may reasonably deem necessary or appropriate.
7. CONSISTENT CHANGES. The Existing Loan Documents are hereby
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amended wherever necessary to reflect the changes described in this Loan
Modification Agreement.
8. NO DEFENSES OF BORROWER. Borrower agrees that as of this date, it
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has no defenses against any of the obligations to pay any amounts under the
Indebtedness.
9. CONTINUING VALIDITY. Borrower understands and agrees that (i) in
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modifying the Existing Loan Documents, Bank is relying upon Borrowers
representations, warranties and agreements, as set forth in the Existing Loan
Documents, (ii) except as expressly modified pursuant to this Loan Modification
Agreement (including the effects of Section 7 hereof), the Existing Loan
Documents remain unchanged and in full force and effect, (iii) Bank's agreement
to modify the Existing Loan Documents pursuant to this Loan Modification
Agreement shall in no way obligate Bank to make any future modifications to the
Existing Loan Documents, (iv) it is the intention of Bank and Borrower to retain
as liable parties all makers and endorsers of the Existing Loan Documents,
unless a party is expressly released by Bank in writing, (v) no maker, endorser
or guarantor will be released by virtue of this Loan Modification Agreement, and
(vi) the terms of this Section 9 apply not only to this Loan Modification
Agreement but also to all subsequent loan modification agreements, if any.
10. CHOICE OF LAW AND VENUE: JURY TRIAL WAIVER. The laws of the
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Commonwealth of Massachusetts shall apply to this Agreement. 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
AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY REASON BANK CANNOT AVAIL ITSELF OF
THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS, BORROWER ACCEPTS JURISDICTION
OF THE COURTS AND VENUE IN SANTA XXXXX COUNTY, CALIFORNIA. BORROWER AND BANK
EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY
RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
11. EFFECTIVENESS. This Agreement shall become effective only when it
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shall have been executed by Borrower and Bank (provided, however, in no event
shall this Agreement become effective until signed by an officer of Bank in
California).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument as of the date first set forth above.
"Borrower" "Bank"
MATRIXONE, INC. SILICON VALLEY BANK, doing business
as SILICON VALLEY EAST
By: /s/ Xxx Xxxxxxxxxx By: /s/ Xxxxxxxx Xxxx
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Xxx Xxxxxxxxxx, CFO Xxxxxxxx Xxxx, SVP
SILICON VALLEY BANK
By: /s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
Title: Loan Documentation Officer
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(Signed in Santa Xxxxx County,
California)
EXHIBITS C and D FOLLOW
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EXHIBIT C
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BORROWING BASE CERTIFICATE
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Borrower: MatrixOne, Inc. Bank: Silicon Valley Bank
Two Executive Drive 0000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000 Xxxxx Xxxxx, XX 00000
Commitment Amount: $7,000,000
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of _____________ $ ___________
2. Additions (please explain on reverse) $ ___________
3. TOTAL ACCOUNTS RECEIVABLE $ ___________
ACCOUNTS RECEIVABLE DEDUCTIONS
4. Amounts over 180 days from invoice date $ __________
5. Balance of 50% over 180 day accounts from invoice date $ __________
6. Amounts over 60 days pas due $ __________
7. Concentration Limits $ __________
8. Foreign Accounts $ __________
9. Governmental Accounts $ ___________
10. Contra Accounts $ ___________
11. Promotion or Demo Accounts $ __________
12. Intercompany/Employee Accounts $ __________
13. Other (please explain on reverse) $ ___________
14. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $ ___________
15. Eligible Accounts (#3 - #14) $ ___________
16. LOAN VALUE OF ACCOUNTS (80% of #15) $ ___________
BALANCES
17. Maximum Loan Amount $7,000,000
18. Total Funds Available (Lesser of #17 or #16) $ ___________
19. Present balance owing on Line of Credit $ ___________
20. Outstanding under Sublimits (FX, CMS) $ __________
21. RESERVE POSITIVE (#18 MINUS #19 AND #20) $ ___________
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 dated as of December 29, 1998, as may be amended from time to
time, between the undersigned and Silicon Valley Bank.
COMMENTS:
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BANK USE ONLY
___________________________ Rec'd By:______________________
Date:__________________________
Reviewed By:___________________
Compliance Status: Yes/No
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By: _______________________
Authorized Signer
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EXHIBIT D
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COMPLIANCE CERTIFICATE
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Borrower: MatrixOne, Inc. Bank: Silicon Valley Bank
Two Executive Drive 0000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000 Xxxxx Xxxxx, XX 00000
The undersigned authorized officer of MatrixOne, INC. hereby certifies
that in accordance with the terms and conditions of the Loan and Security
Agreement dated as of December 29, 1998 between Borrower and Bank, as may be
amended from time to time (the "Agreement"), (i) Borrower is in complete
compliance for the period ending _________________ of all required conditions
and terms except as noted below and (ii) all representations and warranties of
Borrower stated in the Agreement are true, accurate and complete 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 consistent from one period to the next except as explained in an
accompanying letter or footnotes. The Officer further expressly acknowledges
Borrower may not request any borrowings 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
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Interim financial statements Quarterly when not borrowing within 45 days Yes No
Interim financial statements & Compliance Quarterly when borrowing within 30 days Yes No
Certificate
Annual financials (CPA Audited) FYE within 90 days Yes No
A/R Agings & BBC Monthly when borrowing within 30 days Yes No
A/R Audit Initial and Annual Yes No
Financial Covenants Required Actual Complies
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Maintain on a Monthly Basis:
Minimum Adjusted Quick Ratio 1.25:1.0 :1.0 Yes No
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Maintain on a Quarterly Basis:
Minimum Adjusted Quick Ratio 1.50:1.0 :1.0 Yes No
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Profitability - Maximum net loss (as defined)
FQE 9/30/99 ($800,000) $ Yes No
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Profitability - Maximum net loss (as defined)
FQE 12/31/99 ($2,200,000) $ Yes No
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Profitability - Maximum net loss (as defined)
FQE 3/31/99 ($3,500,000) $ Yes No
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Profitability - Maximum net loss (as defined)
FQE 6/30/00 and each FQ thereafter ($2,000,000) $ Yes No
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Comments Regarding Exceptions: (on reverse)
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_____________________________________________ BANK USE ONLY
Signature Received by:__________________
Date:_________________________
_____________________________________________ Reviewed:_____________________
TITLE Compliance Status: Yes No
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_____________________________________________
DATE
