Exhibit 10.1
SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement (this "Loan Modification
Agreement") is entered into as of June 15, 2006, 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 Newton Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 ("Bank") and APPLIX, INC., a Massachusetts corporation with
its chief executive office located at 000 Xxxxxxxx Xxxx, Xxxxxxxx, 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 March 19, 2004,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of March 19, 2004, between Borrower and Bank, as amended by that certain
First Loan Modification Agreement dated as of April 14, 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 adding the following new
subsections to Section 2.4 thereof:
"(e) Termination Fee. If, pursuant to this Agreement, the
Borrower is acquired prior to the Term Loan Maturity Date,
Borrower shall promptly pay bank an early termination fee
equal to Sixty-Five Thousand Dollars ($65,000.00).
(f) Term Loan Commitment Fee. A fully earned, non-refundable
facility fee of thirty thousand ($30,000.00) is due and
payable on June 15, 2006."
2. The Loan Agreement shall be amended by inserting the following
new section, Section 2.1.7, in its appropriate numerical place
therein:
"2.1.7 TERM LOAN.
(a) Availability. Bank shall make one (1) loan available to
Borrower in an amount up to the Term Loan on June 15, 2006,
subject to the satisfaction of the terms and conditions of this
Agreement.
(b) Interest Rate. The principal amount outstanding under the
Term Loan shall accrue interest at a floating per annum rate
equal to the Term Loan Interest Rate.
(c) Interest Payments. Commencing on July 1, 2006, and continuing
on the Term Loan Payment Date of each month thereafter, Borrower
shall make monthly payment of interest only, at the rate set
forth in Section 2.1.7(b).
(d) Repayment. Commencing on October 1, 2006, and continuing on
the Term Loan Payment Date of each month thereafter, Borrower
shall repay the Term Loan in (i) thirty-six (36) equal
installments of principal, plus (ii) monthly payments of accrued
interest (the "TERM LOAN PAYMENT"). Borrower's final Term Loan
Payment, due on the Term Loan Maturity Date, shall include all
outstanding principal and accrued and unpaid interest under the
Term Loan."
3. The Loan Agreement shall be amended by deleting the following
provision appearing as subsection (a) of Section 6.2 thereof:
"(a) Borrower shall deliver to Bank: (i) as soon as
available, but no later than thirty (30) days after the last
day of each month, a company prepared consolidated balance
sheet and income statement covering Borrower's consolidated
operations during the immediately preceding month certified
by a Responsible Officer and in a form reasonably acceptable
to Bank; (ii) 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; (iii) within five (5) Business Days of
filing, copies of all statements, reports and notices made
available to Borrower's 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; (iv)
a prompt report of any legal actions pending or threatened
against Borrower or any Subsidiary that is reasonably likely
to result in damages or costs to Borrower or any Domestic
Subsidiary of One Hundred Thousand Dollars ($100,000.00) or
more; and (v) annually, and as revised, Board approved
quarterly financial and operating plans and (vi) other
financial information reasonably requested by Bank."
and inserting in lieu thereof the following:
"(a) Borrower shall deliver to Bank: (i) as soon as
available, but no later than thirty (30) days after the last
day of each month, a company prepared consolidated balance
sheet and income statement covering Borrower's consolidated
operations during the immediately preceding month certified
by a Responsible Officer and in a form reasonably acceptable
to Bank; (ii) 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; (iii) within five (5) Business Days of
filing, copies of all statements, reports and notices made
available to Borrower's 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; (iv)
a prompt report of any legal actions pending or threatened
against Borrower or any Subsidiary that is reasonably likely
to result in damages or costs to Borrower or any Domestic
Subsidiary of One Hundred Thousand Dollars ($100,000.00) or
more; and (v) annually, and as revised, but no later than
thirty (30) days after the date of Board approval, Board
approved quarterly financial and operating plans and (vi)
other financial information reasonably requested by Bank."
4. The Loan Agreement shall be amended by inserting the following
sentence to appear at the end of Section 6.6(a) thereof:
"Any Guarantor shall maintain all depository, operating and
securities accounts with Bank, or SVB Securities."
5. The Loan Agreement shall be amended by deleting the following
first sentence in Section 6.7 entitled "Financial Covenants" in
its entirety:
"Borrower shall maintain at all times, to be tested as of
the last day of each month, unless otherwise noted:"
and inserting in lieu thereof the following:
"Borrower shall maintain at all times, to be tested as of
the last day of each month, unless otherwise noted, on a
consolidated basis:"
6. The Loan Agreement shall be amended by deleting the following
provision appearing as subsection (b) of Section 6.7 thereof:
"(b) EBITDA. Borrower shall have: (i) quarterly EBITDA
losses not to exceed: (A) Five Hundred Thousand Dollars
($500,000.00) for the quarter ending March 31, 2005, and (B)
One Hundred Thousand Dollars ($100,000.00) for the quarter
ending June 30, 2005; and (ii) quarterly positive EBITDA of
at least: (A) Two Hundred Fifty Thousand Dollars
($250,000.00) for the quarter ending September 30, 2005, and
(B) Two Million Dollars ($2,000,000.00) for the quarter
ending December 31, 2005; and (C) the greater of either (i)
One Dollar ($1.00) or (ii) fifty (50.0%) percent of the
Borrower's board of director's approved operating plan for
Borrower for the quarter ending March 31, 2006 and as of the
last day of each quarter thereafter."
and inserting in lieu thereof the following:
"(b) EBITDA. Borrower shall have: (i) quarterly positive
EBITDA of at least: (A) One Million Dollars ($1,000,000.00)
for the quarter ending June 30, 2006, (B) Seven Hundred
Fifty Thousand Dollars ($750,000.00) for the quarter ending
September 30, 2006, (C) One Million Five Hundred Thousand
Dollars ($1,500,000.00) for the quarter ending December 31,
2006, and (D) the greater of either: (i) One Million Dollars
($1,000,000.00) or (ii) seventy-five percent (75.0%) of the
Borrower's board of director's approved operating plan for
Borrower for the quarter ending March 31, 2007 and as of the
last day of each quarter thereafter."
7. The Loan Agreement shall be amended by inserting the following
new provision to appear as Section 8.9 thereof:
"8.9 GUARANTY. (a) Any guaranty of any Obligations terminates or
ceases for any reason to be in full force and effect; (b) any
Guarantor does not perform any obligation or covenant under any
guaranty of the Obligations; (c) any circumstance described in
Sections 8.3, 8.4, 8.5, 8.7, or 8.8. occurs with respect to any
Guarantor; (d) the liquidation, winding up, or termination of
existence of any Guarantor; or (e) a material adverse change in
the general affairs,
management, results of operation, condition (financial or
otherwise) or the prospect of repayment of the Obligations occurs
with respect to any Guarantor."
8. The Loan Agreement shall be amended by deleting the following
definitions appearing in Section 13.1 thereof:
""CREDIT EXTENSION" is each Advance, Equipment Advance,
Letter of Credit, F/X Forward Contract, or any other
extension of credit by Bank for Borrower's benefit."
""EBITDA" means earnings before interest, taxes,
depreciation and amortization in accordance with GAAP."
""GUARANTOR" is any present or future guarantor of the
Obligations."
""REVOLVING MATURITY DATE" is March 18, 2007."
and inserting in lieu thereof:
""CREDIT EXTENSION" is any Advance, Equipment Advance,
Letter of Credit, Term Loan, FX Forward Contract, amount
utilized for Cash Management Services, or any other
extension of credit by Bank for Borrower's benefit."
""EBITDA" means earnings before interest, taxes,
depreciation and amortization in accordance with GAAP, plus
non-cash stock compensation expenses, foreign exchange gains
or losses, adjustments for purchase accounting, and other
non-cash expenses as reasonably determined by Borrower and
allowed by Bank."
""GUARANTOR" is any present or future guarantor of the
Obligations, including, without limitation, Applix
Securities Corp."
""REVOLVING MATURITY DATE" is June 18, 2007."
9. The Loan Agreement shall be amended by inserting the following
definitions in their appropriate alphabetical order in Section
13.1 thereof:
""TERM LOAN" is an aggregate amount equal to Six Million
Five Hundred Thousand Dollars ($6,500,000.00) outstanding at
any time."
""TERM LOAN INTEREST RATE" is the floating per annum rate
equal to three-quarters of one percentage points (0.75%)
above the Prime Rate."
""TERM LOAN MATURITY DATE" is September 1, 2009."
""TERM LOAN PAYMENT" is defined in Section 2.1.7(c)."
""TERM LOAN PAYMENT DATE" is the first day of each calendar
month."
10. The Compliance Certificate appearing as Exhibit D to the Loan
Agreement is hereby replaced with the Compliance Certificate
attached as Exhibit A hereto.
4. FEES. Borrower shall pay to Bank a modification fee equal to Three Thousand
Seven Hundred and Fifty Dollars ($3,750.00) due and payable on the date hereof.
Borrower shall also reimburse Bank for all legal fees and expenses incurred in
connection with this amendment to the Existing Loan Documents.
5. RATIFICATION OF NEGATIVE PLEDGE. Borrower hereby ratifies, confirms and
reaffirms, all and singular, the terms and conditions of a certain Negative
Pledge Agreement dated as of March 19, 2004, between Borrower and Bank, and
acknowledges, confirms and agrees that said Negative Pledge Agreement shall
remain in full force and effect.
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 hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses, claims, or counterclaims against Bank, whether
known or unknown, at law or in equity, all of them are hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.
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.
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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:
APPLIX, INC. SILICON VALLEY BANK
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxx
-------------------- --------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxx
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Title: Chief Financial Officer Title: Relationship Manager
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EXHIBIT A
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: APPLIX, INC.
The undersigned authorized officer of Applix, Inc. certifies that under 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 in the Agreement are true and correct in
all material respects on this date. Attached are the required documents
supporting the certification. The Officer certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) consistently
applied from one period to the next except as explained in an accompanying
letter or footnotes. The Officer 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.
..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
Annual (CPA Audited) with XX XXX within 120 days Yes No
Board Approved Financial Plans Annually, as revised within 30 days Yes No
BBC A/R Agings Monthly within 30 days Yes No
Audit Annually Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Monthly Basis:
Minimum Quick Ratio 1.50:1.0 _____:1.0 Yes No
Maintain on a Quarterly Basis
Minimum EBITDA $_______* $_______ Yes No
* As set forth in Section 6.7(b) of the Agreement
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BANK USE ONLY
COMMENTS REGARDING EXCEPTIONS: See Attached. Received by: _____________________
Sincerely, AUTHORIZED SIGNER
_____________________________ Date: _________________________
SIGNATURE
_____________________________ Verified: ________________________
TITLE AUTHORIZED SIGNER
_____________________________ Date: _________________________
DATE
Compliance Status: Yes No
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