Exhibit 10.25.2
SECOND LOAN MODIFICATION TO THE ACCOUNTS RECEIVABLE FINANCING AGREEMENT
This Second Loan Modification Agreement to the Accounts Receivable
Financing Agreement (this "Loan Modification Agreement') is entered into as of
December 20, 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 Xxxxxx
Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
doing business under the name "Silicon Valley East" ("Bank") (i) VISUAL
NETWORKS, INC., a Delaware corporation, (ii) VISUAL NETWORKS OPERATIONS, INC., a
Delaware corporation, (iii) VISUAL NETWORKS INVESTMENTS, INC., a California
corporation, (iv) VISUAL NETWORKS TECHNOLOGIES, INC., a California corporation,
(v) VISUAL NETWORKS OF TEXAS, L.P., a Texas limited partnership, (vi) VISUAL
NETWORKS INSURANCE, INC., a Vermont corporation, (vii) INVERSE NETWORK
TECHNOLOGY, a California corporation, and (viii) AVESTA TECHNOLOGIES, INC., a
Delaware corporation (jointly, severally and collectively, the "Borrower" or
"Borrowers").
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 February 28, 2001,
evidenced by, among other documents, (i) a certain Accounts Receivable Financing
Agreement dated as of February 28, 2001, between Borrower and Bank, as amended
by a certain First Loan Modification to the Accounts Receivable Financing
Agreement dated as of May 24, 2001, (as may be amended from time to time, the
"Financing Agreement") and, (ii) a certain Loan and Security Agreement dated as
of February 28, 2001, between Borrower and Bank, as amended by a certain First
Loan Modification Agreement dated as of May 24, 2001, (as may be amended from
time to time, the "Loan Agreement"). The Financing Agreement established: (i) an
accounts receivable line of credit in favor of Borrower in the maximum principal
amount of Ten Million Dollars ($10,000,000.00) (the "Accounts Receivable Line").
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 Financing 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 Financing Agreement.
1. The Financing Agreement shall be amended by deleting the following,
appearing as Section 6.3(M)(2) thereof, in its entirety:
(M) Borrower shall maintain as of the last day of each month unless
otherwise noted:
(2) Maximum Net Loss/Minimum Net Profit. (i) quarterly Net Losses not to
exceed (A) Nineteen Million Five Hundred Thousand Dollars ($19,500,000.00) for
the quarter ending December 31, 2000, (B) Seven Million Two Hundred Fifty
Thousand Dollars ($7,250,000.00) for the quarter ending March 31, 2001, (C) Four
Million Five Hundred Thousand Dollars ($4,500,000.00) for the quarter ending
June 30, 2001; (D) One Million Two Hundred Fifty Thousand Dollars
($1,250,000.00) for the quarter ending September 30, 2001; (ii) quarterly Net
Profit of at least One Million Dollars ($1,000,000.00) for the quarter ending
December 31, 2001; and (iii) a quarterly Net Profit of One Dollar ($1.00), for
each quarter thereafter."
and inserting in lieu thereof the following:
(M) Borrower shall maintain as of the last day of each month unless
otherwise noted:
(2) Maximum Net Loss/Minimum Net Profit. (i) quarterly Net Losses not to
exceed (A) Nineteen Million Five Hundred Thousand Dollars ($19,500,000.00) for
the quarter ending December 31, 2000, (B) Seven Million Two Hundred Fifty
Thousand Dollars ($7,250,000.00) for the quarter ending March 31, 2001, (C) Four
Million Five Hundred Thousand Dollars ($4,500,000.00) for the quarter ending
June 30, 2001; (D) One Million Two Hundred Fifty Thousand Dollars
($1,250,000.00) for the quarter ending September 30, 2001; (ii) quarterly Net
Profit of at least One Hundred Thousand Dollars ($100,000.00) for the quarter
ending December 31, 2001; and (iii) a quarterly Net Profit of One Dollar
($1.00), for each quarter thereafter."
2. The Financing Agreement shall be amended by deleting the following,
definition appearing as in Section 1 thereof, in its entirety:
"Current Liabilities" are the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year (excluding all Deferred Revenue),
and which shall include, without limitation, all obligations and liabilities of
Borrowers to Bank, including all Obligations."
and inserting in lieu thereof the following:
"Current Liabilities" are the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year (excluding all Deferred Revenue),
and which shall include, without limitation, all obligations and liabilities of
Borrowers to Bank, including all Obligations but excluding cash secured letters
of credit."
3. The Financing Agreement shall be amended by inserting the following
definition appearing in Section 1 after the definition of Current Liabilities:
"Deferred Revenue" is all amounts identified as such in Borrower's
consolidated balance sheet representing amounts that have been billed for
services yet to be performed or products yet to be determined."
4. The Compliance Certificate appearing as Exhibit C to the Financing
Agreement is hereby replaced with the Compliance Certificate attached as Exhibit
A hereto.
B. Waivers.
1. Bank hereby waives Borrower's existing defaults under the Financing
Agreement by virtue of Borrower's failure to comply with the "Maximum Net
Loss/Minimum Net Profit" requirements set forth in Section 6.3(M)(2) thereof as
to the quarter ending September 30, 2001. Bank's waiver of Borrower's compliance
of said affirmative covenant shall apply only to the foregoing specific period.
4. RATIFICATION OF INTELLECTUAL PROPERTY SECURITY AGREEMENT. Borrower hereby
ratifies, confirms and reaffirms, all and singular, the terms and conditions of
a certain Intellectual Property Security Agreement dated as of February 28,
2001, between Borrower and Bank, and acknowledges, confirms and agrees that said
Intellectual Property Security Agreement (including all Exhibits attached
thereto) shall remain in full force and effect and contain an accurate and
complete listing of all Intellectual Property Collateral as defined in said
Intellectual Property Security Agreement.
5. 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 any new offices or business
locations or keep any Collateral in any additional locations, or (ii) change its
state of formation, or (iii) change its organizational structure, (iv) change
its legal name, or (v) change any organizational number (if any) assigned by its
state of formation. Borrower hereby ratifies, confirms and reaffirms, all and
singular, the terms and disclosures contained in certain Perfection Certificates
dated as of February 28, 2001, between Borrower and Bank, and acknowledges,
confirms and agrees the disclosures and information above Borrower provided to
Bank in the Perfection Certificates have not changed, as of the date hereof.
6. 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.
7. CONCERNING REVISED ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE. The Borrower
affirms and reaffirms that notwithstanding the terms of the Security Documents
to the contrary, (i) that the definition of "Code", "UCC" or "Uniform Commercial
Code" as set forth in the Security Documents shall be deemed to mean and refer
to "the Uniform Commercial Code as adopted by The Commonwealth of Massachusetts
(presently, Mass. Gen. Laws. Ch. 106), may be amended and in effect from time to
time and (ii) the Collateral is all assets of the Borrower. In connection
therewith, the Collateral shall include, without limitation, the following
categories of assets as defined in the Code: goods (including inventory,
equipment and any accessions thereto), instruments (including promissory notes),
documents, accounts (including health-care-insurance receivables, and license
fees), chattel paper (whether tangible or electronic), deposit accounts,
letter-of-credit rights (whether or not the letter of credit is evidenced by a
writing), commercial tort claims, securities and all other investment property,
general intangibles (including payment intangibles and software), supporting
obligations and any and all proceeds of any thereof, wherever located, whether
now owned or hereafter acquired.
8. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.
9. 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.
10. 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.
11. 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.
12. RIGHT OF SET-OFF. In consideration of Bank's agreement to enter into this
Loan Modification Agreement, Borrower and any guarantor hereby reaffirm and
hereby grant to Bank, a lien, security interest and right of setoff as security
for all Obligations to Bank, whether now existing or hereafter arising upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the
control of Silicon Valley Bank or in transit to any of them. At any time after
the occurrence and during the continuance of an Event of Default, without demand
or notice, Bank may set off the same or any part thereof and apply the same to
any liability or obligation of Borrower and any guarantor even though unmatured
and regardless of the adequacy of any other collateral securing the loan. ANY
AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT
TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS
RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE
BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.
13. 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.
14. 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.
BORROWERS: BANK:
VISUAL NETWORKS, INC. SILICON VALLEY BANK, doing business as
SILICON VALLEY EAST
By /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. XxXxxxxxxx
Title Executive Vice President Name: Xxxxxx X. XxXxxxxxxx
Title: Vice President
VISUAL NETWORKS OPERATIONS, INC.
By /s/ Xxxxx X. Xxxxxxxx
Title Executive Vice President
VISUAL NETWORKS INVESTMENTS, INC.
By /s/ Xxxxx X. Xxxxxxxx
Title Executive Vice President
VISUAL NETWORKS TECHNOLOGIES, INC.
By /s/ Xxxxx X. Xxxxxxxx
Title Executive Vice President
VISUAL NETWORKS OF TEXAS, L.P.
by Visual Networks Texas Operations, Inc., its
General Partner
By /s/ Xxxxx X. Xxxxxxxx
Title Executive Vice President
VISUAL NETWORKS INSURANCE, INC.
By /s/ Xxxxx X. Xxxxxxxx
Title Executive Vice President
INVERSE NETWORK TECHNOLOGY
By /s/ Xxxxx X. Xxxxxxxx
Title Executive Vice President
AVESTA TECHNOLOGIES, INC.
By /s/ Xxxxx X. Xxxxxxxx
Title Executive Vice President
EXHIBIT A
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: VISUAL NETWORKS, INC.
The undersigned Responsible Officer of Visual Networks, Inc. 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 certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
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 with CC Monthly within 30 days Yes No
Deferred Revenue Schedules with CC Monthly within 30 days Yes No
10K, 10Q and 8K Within 5 days after
filing w/ SEC Yes No
A/R Aging with CC Monthly within 30 days Yes No
Annual (CPA Audited) with XX XXX within 90 days Yes No
Financial Covenant Required Actual Complies
Maintain on Monthly Basis
(unless otherwise noted):
Minimum Quick Ratio .70:1.0 _____:1.0 Yes No
Maximum (Net Loss) Profit
(quarterly): ($* ) ($_________) Yes No
*(i) ($19,500,000.00) for the quarter ending 12/31/00;
*(ii) ($7,250,000.00) for the quarter ending 3/31/01;
*(iii) ($4,500,000.00) for the quarter ending 6/30/01;
*(iv) ($1,250,000.00) for the quarter ending 9/30/01;
*(v) $100,000.00 for the quarter ending 12/31/01;
*(vi) a quarterly net profit of $1.00 thereafter.
Debt Service Coverage Ratio **
** See First Loan Modification Agreement to the Accounts Receivable
Financing Agreement
BANK USE ONLY
Received By:____________________
Date:___________________________
Reviewed By:____________________
Compliance Status: Yes / No
Comments Regarding Exceptions: See Attached.
Sincerely,
______________________________ Date:_______________
SIGNATURE
______________________________
TITLE
