SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement is entered into as of February
3,1999, by and between MAKER COMMUNICATIONS, INC., a Delaware corporation with
its principal place of business at 00 Xxxxx Xxxxx Xxxxxx, 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 February 18, 1997, evidenced by, among other documents,
(i) an Equipment Line Promissory Note in the original principal amount of One
Million Dollars ($1,000,000.00) (the "Equipment Note"), and (ii) a Revolving
Promissory Note in the original principal amount of One Million Dollars
($1,000,000.00) (the "Revolving Promissory Note"). The Equipment Note and the
Revolving Note are governed by the terms of a certain Loan and Security
Agreement dated as of February 18, 1997 between Borrower and Bank, as amended by
a certain Loan Modification Agreement dated as of May 12, 1998 (as amended, the
"Loan Agreement"). 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:
""Committed Revolving Line" means a credit extension of up
to Two Million Dollars ($2,000,000.00)."
and inserting in lieu thereof the following:
""Committed Revolving Line" means a credit extension of up
to Two Million Five Hundred Thousand Dollars
($2,500,000.00)."
2. 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 2.1.2,2.1.3 and
2.1.5."
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; (iii) the 1998 Equipment Maturity Date for
1998 Equipment Advances pursuant to Section 2.1.3; and (iv)
the 1999 Equipment Maturity Date for Equipment Advances
pursuant to Section 2.1.5."
4. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 1.1 thereof:
""1998 Committed Equipment Line" means a credit extension of
up to One Million Five Hundred Thousand Dollars
($1,500,000.00)."
and inserting in lieu thereof the following:
""1998 Committed Equipment Line" means a credit extension of
up to One Million One Hundred Thirty-Nine Thousand Dollars
($1,139,000.00)."
5. The Loan Agreement shall be amended by inserting immediately
after the definition of "1998 Equipment Advance" appearing in
Section 1.1 thereof the following definitions:
""1999 Committed Equipment Line" means a credit extension of
up to One Million Dollars ($1,000,000.00).
"1999 Equipment Availability End Date" has the meaning set
forth in Section 2.1.5.
"1999 Equipment Maturity Date" means thirty-six (36) months
after the 1999 Equipment Availability End Date."
6. The Loan Agreement shall be amended by deleting the following
definition appearing in Section 1.1 thereof:
""Revolving Maturity Date" means May 11, 1999."
and inserting in lieu thereof the following:
""Revolving Maturity Date" means February 3, 2000."
7. The outstanding principal balance of all 1998 Equipment Advances
made pursuant to Section 2.1.3, as of January 25, 1999, is Six
Hundred Eighty-Nine Thousand Dollars ($689,000.00).
All Equipment Advances currently amortizing under Section 2.1.2
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 January 25, 1999, is Two Hundred
Forty-Six Thousand Seven Hundred Fifty-Two Dollars ($246,752.00).
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8. The Loan Agreement shall be amended by deleting the following
text appearing as the first sentence of paragraph (a) of Section
2.1.3 thereof entitled "1998 Equipment Advances":
"Subject to and upon the terms and conditions of this
Agreement, at any time through May 11, 1999, Bank agrees to
make advances (each an "1998 Equipment Advance" and
collectively, the "1998 Equipment Advances") to Borrower in
an aggregate outstanding amount not to exceed the Committed
Equipment Line."
and inserting in lieu thereof the following:
"Subject to and upon the terms and conditions of this
Agreement, at any time through February 15, 1999 (the "1998
Equipment Availability End Date"), Bank agrees to make
Equipment Advances (each a "1998 Equipment Advance" and
collectively, the "1998 Equipment Advances") to Borrower
under this Section 2.1.3 in an aggregate outstanding amount
not to exceed the 1998 Committed Equipment Line."
9. The Loan Agreement shall be amended by deleting paragraph (b) of
Section 2.1.3 entitled "1998 Equipment Advances" and inserting in
lieu thereof the following:
"(b) Interest shall accrue from the date of each 1998
Equipment Advance made pursuant to this Section 2.1.3 at a
per annum rate equal to the aggregate of Prime Rate, plus
One Quarter of One percent (0.25%), and shall be payable
monthly on the Payment Date of each month through the month
in which the 1998 Equipment Availability End Date falls. Any
1998 Equipment Advances made pursuant to this Section 2.1.3
that are outstanding on the 1998 Equipment Availability End
Date will be payable in thirty-nine (39) equal monthly
installments of principal, plus all accrued interest,
beginning on the Payment Date of each month following the
1998 Equipment Availability End Date and ending on May 5,
2002 (the "1998 Equipment Maturity Date"). Equipment
Advances, once repaid, may not be reborrowed."
10. The Loan Agreement shall be amended by inserting after Section
2.1.4 thereof the following new section entitled "1999 Equipment
Advances".
"2.1.5 1999 Equipment Advances.
(a) Subject to and upon the terms and conditions of this
Agreement, at any time through February 3, 2000 (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 2.1.5 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 shall be used only to purchase or refinance
Equipment purchased after November 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 twenty-five percent
(25%) of aggregate Equipment Advances under this Section 2.1.5.
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(b) Interest shall accrue from the date of each Equipment Advance
made pursuant to this Section 2.1.5 at a per annum rate equal to
the aggregate of the Prime Rate, plus One Quarter of One percent
(0.25%), 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 made pursuant to this
Section 2.1.5 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."
11. 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 Revolving 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."
12. The Loan Agreement shall be amended by deleting paragraph (f) of
Section 6.3 thereof entitled "Financial Statements, Reports,
Certificates" and inserting in lieu thereof the following:
"(f) Within twenty-five (25) days after the last day of each
month with respect to which either (i) Obligations are
outstanding, or (ii) Credit Extensions 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."
13. The Loan Agreement shall be amended by deleting in its entirety
Section 6.8 thereof entitled "Adjusted Quick Ratio".
14. The Loan Agreement shall be amended by deleting the following
text appearing as Section 6.10 thereof entitled "Tangible Net
Worth" and inserting in lieu thereof the following:
"6.10 Tangible Net Worth. Borrower shall maintain, as of the
last day of each calendar month, a Tangible Net Worth of not
less than: (i) Seven Million Dollars ($7,000,000.00) for
each month through the month ending June 30, 1999, and (ii)
Four Million Five Hundred Thousand Dollars ($4,500,000.00)
for each month thereafter."
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15. The Borrower shall execute and deliver to the Bank
contemporaneously with the execution of this Loan Modification
Agreement each of the following instruments in form and substance
acceptable to the Bank: (i) an Amended and Restated Revolving
Promissory Note in the original principal amount of Two Million
Five Hundred Thousand Dollars ($2,500,000.00), (ii) an Equipment
Line Promissory Note in the original principal amount of One
Million Dollars ($1,000,000.00), and (iii) an Equipment Line
Promissory Note dated as of May 12, 1998 in the original
principal amount of One Million Five Hundred Thousand Dollars
($1,500,000.00).
16. The Borrowing Base Certificate appearing as Exhibit C to the Loan
Agreement is hereby replaced with the Compliance Certificate
attached as Exhibit A hereto.
17. 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 Eleven Thousand
Two Hundred Fifty Dollars ($11,250.00), 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.
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 DEFENSE 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).
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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:
MAKER COMMUNICATIONS, INC. SILICON VALLEY BANK, doing business as
S1LICON VALLEY EAST
By: /s/ XXXXXXX X. XXXXXXX By:______________________________________
Name: Xxxxxxx X. Xxxxxxx Name:____________________________________
Title: President Title:___________________________________
/s/ XXXXXXX XXXXXX SILICON VALLEY BANK
Xxxxxxx Xxxxxx By:______________________________________
VP & CFO Name:____________________________________
Title:___________________________________
(signed in Santa Xxxxx County, California)
TCP/
56120/148
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