EXHIBIT 10.32
NINTH LOAN MODIFICATION AGREEMENT
This Ninth Loan Modification Agreement (this "Loan Modification
Agreement") is entered into as of February 10, 2006, and effective as of
February 7, 2006, by and between SILICON VALLEY BANK, a California corporation,
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
("Bank") and ART TECHNOLOGY GROUP, INC., a Delaware corporation with its
principal place of business at 00 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000
("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 dated as of June 13, 2002,
evidenced by, among other documents, a certain Amended and Restated Loan and
Security Agreement dated as of June 13, 2002, between Borrower and Bank, as
amended by a certain First Loan Modification Agreement dated as of September 27,
2002, as further amended by a certain Amendment dated as of October 4, 2002, as
further amended by a certain Second Loan Modification Agreement dated as of
December 24, 2002, as further amended by a certain Third Loan Modification
Agreement dated as of October 20, 2003, as further amended by a certain Fourth
Loan Modification Agreement dated November 26, 2003, as further amended by a
certain Letter Agreement dated June 16, 2004, as further amended by a certain
Fifth Loan Modification Agreement dated June 30, 2004, as further amended by a
certain Sixth Loan Modification Agreement dated November 24, 2004, as further
amended by a certain Seventh Loan Modification Agreement dated December 21,
2004, and as further amended by a certain Eighth Loan Modification Agreement
dated December 30, 2005 (as amended, the "Loan Agreement"). Capitalized terms
used but not otherwise defined herein shall have the same meaning as in the Loan
Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations 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 Obligations shall be referred to as the "Existing
Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modifications to Loan Agreement.
1. The Loan Agreement shall be amended by deleting the following
text, appearing in Section 6.2 thereof:
"6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower shall deliver to Bank: (i) as
soon as available, but no later than one hundred twenty
(120) days after the last day of Borrower's fiscal year,
audited consolidated financial statements prepared under
GAAP, consistently applied, together with an unqualified
opinion on the financial statements from an independent
certified public accounting firm reasonably acceptable
to Bank; (ii) a prompt report of any legal actions
pending or threatened against Borrower or any Subsidiary
that could result in damages or costs to Borrower or any
Subsidiary of Five Hundred Thousand Dollars
($500,000.00) or more; (iii) prompt notice of any
material change in the composition of the Intellectual
Property, including any subsequent ownership right of
Borrower in or to any Copyright, Patent or Trademark not
shown in any intellectual property security agreement
between Borrower and Bank or knowledge of an event that
materially adversely affects the value of the
Intellectual Property; and (iv) budgets, sales
projections, operating plans or other financial
information reasonably requested by Bank."
and inserting in lieu thereof the following:
"6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower shall deliver to Bank: (i) as
soon as available, but no later than five (5) days after
filing, copies of all of Borrower's reports on Form 10-Q
and Form 10-K filed with the Securities and Exchange
Commission, (ii) as soon as available, but no later than
ninety (90) days after the last day of Borrower's fiscal
year, Borrower's operating plan, including balance sheet
and income statement, reflecting projections on a
quarterly basis for the upcoming fiscal year, as
approved by Borrower's board of directors, (iii) as soon
as available, but no later than one hundred twenty (120)
days after the last day of Borrower's fiscal year,
audited consolidated financial statements prepared under
GAAP, consistently applied, together with an unqualified
opinion on the financial statements from an independent
certified public accounting firm reasonably acceptable
to Bank; (iv) a prompt report of any legal actions
pending or threatened against Borrower or any Subsidiary
that could result in damages or costs to Borrower or any
Subsidiary of Seven Hundred Fifty Thousand Dollars
($750,000.00) or more; and (v) other financial
information reasonably requested by Bank."
2. The Loan Agreement shall be amended by deleting the following
text, appearing in Section 6.6 thereof, in its entirety:
"6.6 PRIMARY ACCOUNTS. In order to permit the Bank to
monitor the Borrower's financial performance and
condition, Borrower shall maintain its primary domestic
depository and operating accounts with Bank. Borrower
shall identify to Bank, in writing, any bank or
securities account opened by Borrower with any
institution other than Bank. In addition, for each such
account that the Borrower at any time opens or
maintains, Borrower shall, at the Bank's request and
option, pursuant to an agreement in form and substance
acceptable to the Bank, cause the depositary bank or
securities intermediary to agree that such account is
the collateral of the Bank pursuant to the terms
hereunder. The provisions of this paragraph shall not
apply to deposit accounts exclusively used for payroll,
payroll taxes and other employee wage and benefit
payments to or for the benefit of the Borrower's
employees."
and inserting in lieu thereof the following:
"6.6 PRIMARY ACCOUNTS. In order to permit the Bank to
monitor the Borrower's financial performance and
condition, Borrower shall maintain its primary domestic
depository, operating and securities accounts with Bank.
Borrower shall identify to Bank, in writing, any bank or
securities account opened by Borrower with any
institution other than Bank. In addition, for each such
account that the Borrower at any time opens or
maintains, Borrower shall, at the Bank's request and
option, pursuant to an agreement in form and substance
acceptable to the Bank, cause the depositary bank or
securities intermediary to agree that such account is
the collateral of the Bank pursuant to the terms
hereunder. The provisions of this paragraph shall not
apply to deposit accounts exclusively used for payroll,
payroll taxes and other employee wage and benefit
payments to or for the benefit of the Borrower's
employees."
3. The Loan Agreement shall be amended by deleting the following
text, appearing in Section 6.7 thereof:
"(B) PROFITABILITY. Borrower shall have quarterly: (i)
net losses of not more than (A) $4,500,000.00 for the
quarter ending December 31, 2004; (B) $2,000,000.00 for
the quarter ending March 31, 2005; (C) $500,000.00 for
the quarter ending June 30, 2005; (D) $1,500,000.00 for
the quarter ending September 30, 2005; and (ii) net
profit of at least One Dollar ($1.00) for the quarter
ending December 31, 2005, and as of the last day of each
quarter thereafter."
an inserting in lieu thereof the following:
"(B) PROFITABILITY. Borrower shall have quarterly net
profit of at least: (i) One Dollar ($1.00) for the
quarter ending March 31, 2006; and (ii) Five Hundred
Thousand Dollars ($500,000.00) for the quarter ending
June 30, 2006, and for each quarter thereafter."
4. The Loan Agreement shall be amended by deleting the following
Section 7.1 thereof, in its entirety:
"7.1 DISPOSITIONS. Convey, sell, lease, transfer or
otherwise dispose of (collectively a "Transfer"), or
permit any of its Subsidiaries to Transfer, all or any
part of its business or property, except for Transfers
(i) of Inventory in the ordinary course of business;
(ii) of non-exclusive licenses and similar arrangements
for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business; or
(iii) of worn out or obsolete Equipment."
and inserting in lieu thereof the following:
"7.1 DISPOSITIONS. Convey, sell, lease, transfer or
otherwise dispose of (collectively a "Transfer"), or
permit any of its Subsidiaries to Transfer, all or any
part of its business or property, except for Transfers
(i) of Inventory in the ordinary course of business;
(ii) of non-exclusive licenses and similar arrangements
for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business; or
(iii) of worn out or obsolete Equipment. Borrower shall
not enter into an agreement with any Person other than
Bank which restricts the subsequent granting of a
security interest in Borrower's intellectual property."
5. The Loan Agreement shall be amended by deleting the following
Section 7.5 thereof, in its entirety:
"7.5 ENCUMBRANCE. Create, incur, or allow any Lien on
any of its property, or assign or convey any right to
receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for
Permitted Liens, or permit any Collateral not to be
subject to the first priority security interest granted
herein. The Collateral may also be subject to Permitted
Liens."
and inserting in lieu thereof the following:
"7.5 ENCUMBRANCE. Create, incur, or allow any Lien on
any of its property, or assign or convey any right to
receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for
Permitted Liens, or permit any Collateral not to be
subject to the first priority security interest
granted herein, or enter into any agreement, document,
instrument or other arrangement (except with or in favor
of Bank) with any Person which directly or indirectly
prohibits or has the effect of prohibiting Borrower from
assigning, mortgaging, pledging, granting a security
interest in or upon, or encumbering any of Borrower's
intellectual property. The Collateral may also be
subject to Permitted Liens."
6. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 13.1 thereof:
""REVOLVING MATURITY DATE" is February 7, 2006."
and inserting in lieu thereof the following:
""REVOLVING MATURITY DATE" is January 31, 2008."
7. Exhibit A to the Loan Agreement is hereby replaced by Exhibit
A hereto.
8. The Compliance Certificate appearing as Exhibit D to the Loan
Agreement is hereby replaced with the Compliance Certificate
attached as Exhibit B hereto.
4. FEES. Borrower shall pay to Bank a modification fee equal to $100,000, which
fee shall be deemed fully earned as of the date, and shall be due and payable as
follows: (a) $50,000 on the date of this Loan Modification Agreement, and (b)
$50,000, on the earlier of (A) the one (1) year anniversary of the date of the
Loan Modification Agreement, and (B) the occurrence of an Event of Default.
Borrower shall reimburse Bank for all reasonable legal fees and expenses
incurred in connection with this amendment to the Existing Loan Documents.
5. RATIFICATION OF PERFECTION CERTIFICATE. Borrower hereby ratifies, confirms
and reaffirms, all and singular, the terms and disclosures contained in a
certain Perfection Certificate dated as of June 13, 2002 between Borrower and
Bank, and acknowledges, confirms and agrees the disclosures and information
Borrower provided to Bank in said Perfection Certificate has not changed, as of
the date hereof.
6. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
7. 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.
8. 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.
9. 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.
10. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank.
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.
BORROWER: BANK:
ART TECHNOLOGY GROUP, INC. SILICON VALLEY BANK
By: /s/ Xxxxx M. B. Xxxxxxx By: /s/ Irina Case
------------------------==-- --------------------------
Name: Xxxxx M. B. Bradley_ Name: Irina Case
Title: Chief Financial Officer Title: Senior Vice President
The undersigned, PRIMUS KNOWLEDGE SOLUTIONS, INC. ("Guarantor"),
ratifies, confirms and reaffirms, all and singular, the terms and conditions of
(a) a certain Unlimited Guaranty dated December 21, 2004 executed by Guarantor
in favor of Bank (the "Guaranty"), and (b) a certain Security Agreement dated as
of December 21, 2004 by and between Guarantor and Bank (the "Security
Agreement"), and acknowledges, confirms and agrees that the Guaranty and
Security Agreement shall 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.
PRIMUS KNOWLEDGE SOLUTIONS, INC.
By: /s/ Xxxxx M. B. Xxxxxxx
----------------------------
Name: Xxxxx M. B. Xxxxxxx
Title: Chief Financial Officer
EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest in
and to the following personal property:
All goods, Accounts (including health-care receivables), Equipment,
Inventory, contract rights or rights to payment of money, leases, license
agreements, franchise agreements, General Intangibles (except as provided
below), commercial tort claims, documents, instruments (including any promissory
notes), chattel paper (whether tangible or electronic), cash, deposit accounts,
fixtures, letters of credit rights (whether or not the letter of credit is
evidenced by a writing), securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and
All Borrower's Books relating to the foregoing, and any and all claims,
rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.
Notwithstanding the foregoing, the Collateral does not include any of the
following, whether now owned or hereafter acquired: any copyright rights,
copyright applications, copyright registrations and like protections in each
work of authorship and derivative work, whether published or unpublished, any
patents, patent applications and like protections, including improvements,
divisions, continuations, renewals, reissues, extensions, and
continuations-in-part of the same, trademarks, service marks and, to the extent
permitted under applicable law, any applications therefor, whether registered or
not, and the goodwill of the business of Borrower connected with and symbolized
thereby, know-how, operating manuals, trade secret rights, rights to unpatented
inventions, and any claims for damage by way of any past, present, or future
infringement of any of the foregoing; provided, however, the Collateral shall
include all Accounts, license and royalty fees and other revenues, proceeds, or
income arising out of or relating to any of the foregoing.
Pursuant to the terms of a certain negative pledge arrangement with Bank,
Borrower has agreed not to encumber any of its copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
patent applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the
same, trademarks, service marks and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, and the goodwill of
the business of Borrower connected with and symbolized thereby, know-how,
operating manuals, trade secret rights, rights to unpatented inventions, and any
claims for damage by way of any past, present, or future infringement of any of
the foregoing, without Bank's prior written consent.
EXHIBIT B
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK Date:______________________
FROM: ART TECHNOLOGY GROUP, INC.
The undersigned authorized officer of ART TECHNOLOGY GROUP, INC.
("Borrower") certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (1) Borrower is
in complete compliance for the period ending _______________ with all required
covenants except as noted below, (2) there are no Events of Default, (3) all
representations and warranties in the Agreement are true and correct in all
material respects on this date except as noted below; provided, however, that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, (4) Borrower, and each of its
Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise
permitted pursuant to the terms of Section 5.6 of the Agreement, and (5) no
Liens have been levied or claims made against Borrower relating to unpaid
employee payroll or benefits of which Borrower has not previously provided
written notification to Bank. Attached are the required documents supporting the
certification. The undersigned certifies that these are prepared in accordance
with GAAP consistently applied from one period to the next except as explained
in an accompanying letter or footnotes. The undersigned acknowledges that no
borrowings may be requested at any time or date of determination that Borrower
is not in compliance with any of the terms of the Agreement, and that compliance
is determined not just at the date this certificate is delivered. Capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Agreement.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
--------------------------------- ----------------------------------- --------
Board approved operating plan FYE within 90 days Yes No
Annual financial statement
(CPA Audited) FYE within 120 days Yes No
10-Q and 10-K and CC Within 5 days after filing with SEC Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
--------------------------------- ------------ ------------ --------
Maintain at all times (tested):
Minimum Liquidity (monthly) $20,000,000 $_________ Yes No
Minimum Profitability (quarterly) * $_________ Yes No
-----------
* see Section 6.7(b) of the Loan Agreement
The following are the exceptions with respect to the certification
above: (If no exceptions exist, state "No exceptions to note.")
ART TECHNOLOGY GROUP, INC. BANK USE ONLY
Received by: ____________________
By: ____________________________________ AUTHORIZED SIGNER
Name:___________________________________ Date: __________________________
Title:__________________________________ Verified: _______________________
AUTHORIZED SIGNER
Date: _________________________
Compliance Status: Yes No
