Exhibit 10.25
LOAN MODIFICATION AGREEMENT
This LOAN MODIFICATION AGREEMENT is entered into as of March 10, 2000,
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 Xxxxxx Xxxx, 00 Xxxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000, doing business under the name "Silicon Valley East"
("Bank"), and NETSCOUT SYSTEMS, INC., a Delaware corporation with its principal
place of business at 0 Xxxxxxxxxx Xxxx Xxxxx, Xxxxxxxx, XX 00000 ("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 Borrower's continuing obligations under the
Existing Loan Documents, Borrower and Bank agree as follows:
AGREEMENT
1. DESCRIPTION OF EXISTING INDEBTEDNESS. Among other indebtedness which
may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to,
among other documents, an Amended and Restated Loan and Security Agreement dated
as of March 12, 1998, between Borrower and Bank, as amended by a Loan
Modification Agreement dated as of March 11, 1999, providing for a revolving
credit facility up to a maximum principal amount of FIVE MILLION AND NO/100THS
DOLLARS ($5,000,000), as such Loan and Security Agreement may be further amended
from time to time (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
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.
3.1 MODIFICATIONS TO DEFINITIONS. Section 13.1 of the Loan Agreement is
hereby amended by substituting the following definitions for those set forth
therein for the same terms:
"REVOLVING MATURITY DATE" means March 9, 2001.
3.2 MODIFICATIONS TO COMPLIANCE CERTIFICATE. Section 6.7(ii) of the
Loan Agreement is hereby replaced in its entirety with the following:
(ii) PROFITABILITY. Borrower shall have minimum quarterly
profits of $2,000,000.
-2-
3.3 MODIFICATIONS TO PROFITABILITY COVENANT. Exhibit D of the Loan
Agreement is hereby replaced in its entirety with Exhibit D to this Agreement.
4. FEES. Borrower shall pay to Bank a variance fee of TEN THOUSAND
DOLLARS ($10,000) as well as 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.
5. CONDITIONS TO FURTHER ADVANCES. The obligation of Bank 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:
(i) this Loan Modification Agreement duly executed by
Borrower;
(ii) payment of the fees and Bank Expenses then due specified
in Section 4 hereof;
(iii) a certificate of the Secretary of Borrower with respect
to charter, bylaws, incumbency and resolutions authorizing the
execution and delivery of this Agreement; and
(iv) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.
6. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described in this Loan Modification
Agreement.
7. NO DEFENSES OF BORROWER. Borrower agrees that as of this date, it
has no defenses against any of the obligations to pay any amounts under the
Indebtedness.
8. CONTINUING VALIDITY. Borrower understands and agrees that (i) in
modifying the Existing Loan documents, Bank is relying upon Borrower's
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 6 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 8 apply not only to this Loan Modification
Agreement but also to all subsequent loan modification agreements, if any.
-3-
9. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. The laws of the
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 WAIVER 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.
10. EFFECTIVENESS. This Agreement shall become effective only when it
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).
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Modification Agreement to be executed as a sealed instrument as of the date
first set forth above.
"Borrower": NETSCOUT SYSTEMS, INC. "Bank" SILICON VALLEY BANK, doing
business as SILICON VALLEY EAST
By: /s/ Xxxx Xxxxxxxxxx By: /s/ Xxxx X. Xxxxxxx
------------------- -------------------
Xxxx X. Xxxxxxx
SILICON VALLEY BANK
By: /s/ Xxxxxx Xxxxxx
---------------------------
Title: Documentation Officer
------------------------
(signed in Santa Xxxxx County, California)
EXHIBIT D FOLLOWS
-4-
EXHIBIT D
COMPLIANCE CERTIFICATE
Borrower: NetScout Systems, Inc. Bank: Silicon Valley Bank
0 Xxxxxxxxxx Xxxx Xxxxx 0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000 Xxxxx Xxxxx, XX 00000
The undersigned authorized officer of NETSCOUT SYSTEMS, INC. hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement dated as of March 12, 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 Principals (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
--------------------------------------------- ---------------------------------------- ---------- ----------
Interim financial statements and CC Annual Quarterly within 45 days Yes No
(CPA Audited) and CC Borrowings Base FYE within 120 days Yes No
Certificate and A/R Agings Monthly within 30 days, if borrowing, Yes No
otherwise quarterly within 45 days
--------------------------------------------- ---------------------------------------- ---------- ----------
--------------------------------------------- ---------------------------------------- ---------- ----------
Maintain on a Quarterly Basis:
--------------------------------------------- ---------------------------------------- ---------- ----------
Minimum Quick Ratio 1.5:1.0 _________: 1.0 Yes No
--------------------------------------------- ---------------------------------------- ---------- ----------
Minimum Profitability $2,000,000 $____________ Yes No
--------------------------------------------- ---------------------------------------- ---------- ----------
--------------------------------------------- ---------------------------------------- ---------- ----------
Comments Regarding Exceptions:
--------------------------------------------- ---------------------------------------- ---------- ----------
Sincerely,
----------------------------
Signature
--------------------------------------
---------------------------- BANK USE ONLY
TITLE Received by:________________________
Date:_______________________________
---------------------------- Reviewed by:________________________
DATE Compliance Status: Yes No
--------------------------------------
