Exhibit 10.14
LOAN MODIFICATION AGREEMENT
THIS LOAN MODIFICATION AGREEMENT (this "Agreement") is entered into as of
the 30th day of March, 2001, by and among SILICON VALLEY BANK ("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 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, XX 00000, KANBAY INTERNATIONAL,
INC. (successor to Kanbay LLC), a Delaware corporation ("Kanbay International"),
with its principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx,
XX 00000, KANBAY INCORPORATED, an Illinois corporation ("Kanbay Inc."), with its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, XX 00000.
KANBAY EUROPE LTD., a company formed under the laws of the United Kingdom
("Kanbay Europe"), with its principal place of business at Compass House, Vision
Park, Histon, Cambridge, UK XXX 0XX, XXXXXX XXXXXXXXX PTY. LTD., a company
formed under the laws of Australia ("Kanbay Australia"), with its principal
place of business at 000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx 0000, Xxxxxxxxx
MEGATEC PTY. LTD., a company formed under the laws of Australia ("Megatec"),
with its principal place of business at 000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx
0000, Xxxxxxxxx, and KANBAY HK LTD., a company formed under the laws of Hong
Kong ("Kanbay HK"), with its principal place of business at 12th Floor Xxxx Xxxx
Hong Bldg., Suite 1201, 00 Xxxx Xxx Xxxxxx, Xxxxxx Xxx, Xxxx Xxxx (Kanbay
International, Kanbay Inc., Kanbay Europe, Kanbay Australia, Megatec and Kanbay
HK being sometimes herein called collectively the "Borrowers" and each
individually a "Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS. Among other indebtedness which may be
owing by Borrowers to Bank. Borrowers are indebted to Bank pursuant to, among
other documents, a Loan and Security Agreement, dated as of April 19, 2000,
between Kanbay LLC, a Delaware limited liability company ("Kanbay LLC"), Kanbay
Inc., Kanbay Europe, Kanbay Australia, Megatec, Kanbay HK and the Bank as
corrected and conformed by a certain Correction Agreement, dated as of May 1,
2000, among the parties thereto (the "Loan Agreement"). The Loan Agreement
provides for, among other things, a Committed A/R Revolving Line in the
aggregate amount of up to $4,500,000, including a Letters of Credit sublimit in
an amount not to exceed $250,000 and a Foreign Exchange sublimit in an amount
not to exceed $100,000, and a Term Loan in the amount of $750,000. Pursuant to
Section 7.10 of the Loan Agreement, on or about August 24, 2000, Kanbay LLC
converted into Kanbay International. A Ratification and Assumption Agreement,
dated as of August 24, 2000, was executed by Kanbay International, and
acknowledged and ratified by Kanbay Inc., Kanbay Europe, Kanbay Australia,
Megatec, and Kanbay HK, wherein Kanbay International ratified the Loan Documents
and assumed all of Kanbay LLC's obligations thereunder (the "Ratification
Agreement"). Also, in connection with the conversion of Kanbay LLC into Kanbay
International and the Ratification Agreement, Kanbay International executed and
delivered other Loan Documents, including without limitation a Stock Pledge
Agreement, dated as of August 24, 2000 (the Stock Pledge Agreement). All terms
that are used herein that are defined in the Loan Agreement and not otherwise
defined herein shall have the meaning ascribed to such terms in the Loan
Agreement.
Hereinafter, all indebtedness owing by Borrowers 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 and Stock Pledge Agreement.
Hereinafter, the above-described security documents, together with all other
documents securing repayment of the indebtedness shall be referred to as 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. MODIFICATIONS TO LOAN AGREEMENT.
3.1 Section 2.3(a) of the Loan Agreement shall be deleted in its entirety
and the following shall be inserted in lieu thereof:
"(a) Interest Rate. Advances made under the Committed A/R Revolving
Line accrue interest on the outstanding principal balance at a per annum
rate one and one-half (1 1/2) percentage points above the Prime Rate:
provided, however, that upon Kanbay International achieving quarterly
profitability on a
consolidated basis for two consecutive quarters, Advances made under the
Committed A/R Revolving Line thereafter shall accrue interest on the
outstanding principal balance at a per annum rate one (1.00) percentage
point above the Prime Rate. Upon an event of Default, all Obligations
accrue interest at 5 percent above the rate effective immediately before
the Event of Default. The interest rate increases or decreases when the
Prime Rate changes. Interest is computed on a 360 day year for the actual
number of days elapsed."
3.2 Section 6.7 of the Loan Agreement shall be deleted in its entirety and
the following shall be inserted in lieu thereof:
"6.7 FINANCIAL COVENANTS.
Borrowers will maintain as of the last day of each month, unless
otherwise noted:
(a) QUICK RATIO. A ratio of Quick Assets to Current Liabilities minus
Deferred Revenue and any current portions of Subordinated Debt, of at least
1.40 to 1.00 through March 31, 2001, and of at least 1.25 to 1.00 from and
after April 1, 2001.
(b) PROFITABILITY. Kanbay may not incur a consolidated Loss for the
quarter ended March 31, 2001, in excess of $850,000.00 or fail to earn a
Profit of less than $100,00.00 on a consolidated basis for any subsequent
quarter.
(c) EBITDA. An EBITDA of at least $200,000.00 for the month ended
July 31, 2001 and on a monthly basis thereafter."
3.3 The definition of "BORROWING BASE" and "REVOLVING MATURITY DATE" are
deleted and the following definitions shall be inserted in lieu thereof.
"BORROWING BASE" is (i) 75% of Eligible Accounts of Kanbay Inc., plus
(ii) up to the lesser of (A) 50% of all unbilled Accounts of Kanbay Inc.
that are no older than 30 days from the date of performance, or (B)
$750,000.00, as determined by Bank from Borrower's most recent Borrowing
Base Certificate.
"REVOLVING MATURITY DATE" is March 5, 2002.
3.4 The following definition of "EBITDA" shall be inserted in the Loan
Agreement.
"EBITDA" is defined in Section 2.1.1(a); provided however that for
purposes of Section 6.7(c) the word "quarterly" shall be deemed to be
"monthly."
3.5 Exhibit C of the Loan Agreement, Borrowing Base Certificate, shall be
deleted in its entirety and Exhibit C attached hereto shall be inserted in lieu
thereof.
3.6 Exhibit D of the Loan Agreement, Compliance Certificate, shall be
deleted in its entirety and Exhibit D attached hereto shall be inserted in lieu
thereof.
4. WAIVER OF EVENT OF DEFAULT UNDER PROFITABILITY COVENANT. Pursuant to
Section 6.7(b) of the Loan Agreement, Borrower may not incur a consolidated loss
for the quarters ended September 30, 2000 and December 31, 2000. Borrower has,
in fact, incurred a consolidated loss for both quarters, and accordingly, the
Bank has a right to declare an Event of Default under Section 8.2 of the Loan
Agreement. Bank hereby waives such Event of Default.
5. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
6. PAYMENT OF FEES AND EXPENSES. Simultaneously with the execution and
delivery hereof, Borrowers shall pay to Bank: (i) a renewal fee of $11,250.00
(being the amount of the Committed A/R Revolving Line,
2
multiplied by 25 basis points (.25 percent)) ("Renewal Fee"), and (ii) a waiver
fee of $2,000.00 (for and in consideration of the waiver of the Event of Default
provided in Section 4 of this Loan Modification Agreement) ("Waiver Fee"). Both
the Renewal Fee and the Waiver Fee shall be fully earned and non-refundable at
the time of their payment. In addition, Borrowers shall pay all of Bank's
out-of-pocket expenses (including reasonable attorneys' fees and expenses for
documentation of the Loan Modification Agreement not to exceed $1,000.00 plus
expenses) with respect to this Loan Modification Agreement ("Expenses").
7. NO DEFENSES OF BORROWER. Borrowers agree that, as of the date hereof, they
have no defenses against the obligations to pay any amounts under the
indebtedness.
8. CONTINUING VALIDITY. Borrowers understand and agree that in modifying the
Existing Loan Documents and existing Indebtedness, Bank is relying upon
Borrowers' 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 Loan Documents and existing Indebtedness pursuant to this Loan
Modification Agreement in no way shall obligate Bank to make any future
modifications to the Existing Loan Documents or the existing Indebtedness.
Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Indebtedness. It is the intention of Bank and Borrowers to retain as liable
parties all makers and endorsers of Existing Loan Documents. No maker, endorser,
or guarantor will be released by virtue of this Loan Modification Agreement. The
terms of this paragraph apply not only to this Loan Modification Agreement, but
also to all subsequent loan modification agreements.
9. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon payment of the Renewal Fee, the Waiver Fee and Expenses.
This Loan Modification Agreement is executed as of the date first written
above.
BORROWERS:
KANBAY INTERNATIONAL, INC. KANBAY AUSTRALIA PTY. LTD
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxxxx Xxxxxxxx
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Title CFO/Secretary Title Director
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KANBAY INCORPORATED MEGATEC PTY. LTD.
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxxxx Xxxxxxxx
-------------------------- ---------------------------
Title Director Title Director
----------------------- ------------------------
KANBAY EUROPE LTD. KANBAY HK LTD.
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxxxx Xxxxxxxx
-------------------------- ---------------------------
Title Director Title Director
----------------------- ------------------------
3
BANK:
SILICON VALLEY BANK
By: Authorized Party
--------------------------------
Title: Authorized Party
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4
EXHIBIT C
BORROWING BASE CERTIFICATE
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Borrowers: Kanbay International, Inc. and certain direct and wholly-owned
Subsidiaries
Lender: Silicon Valley Bank
Commitment Amount: $4,500,000
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ACCOUNTS RECEIVABLE
1. Kanbay Inc. Accounts Receivable Value as of ____ $_______
2. Additions (please explain on reverse) $_______
3. TOTAL ACCOUNTS RECEIVABLE $_______
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 75 days due $_______
5. Balance of accounts for 50% over 75 day accounts $_______
6. Credit balances over 75 days $_______
7. Concentration Limits $_______
8. Non-Eligible Foreign Accounts $_______
9. Balance of Governmental Accounts over assigned U.S.
Accounts and $250,000 other Governmental Accounts $_______
10. Contra Accounts $_______
11. Promotion or Demo Accounts $_______
12. Intercompany/Employee Accounts $_______
13. Other (please explain on reverse) $_______
14. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $_______
15. Eligible Accounts (#3 minus #14) $_______
16. LOAN VALUE OF ACCOUNTS (75% of #15) $_______
17. The lesser of (i) 50% of all unbilled Accounts of
Kanbay Inc. that are no older than 30 days from (i) $_______
date of performance, or (ii) $750,000 (ii)$_______
18. TOTAL LOAN VALUE (#16 plus the lesser of #17(i) or (ii)) $_______
BALANCES
19. Maximum Loan Amount (Committed A/R Revolving Line plus
Term Loan Outstanding) $_______
20. Total Funds Available (#18) $_______
21. Present balance owing on Line of Credit $_______
22. Outstanding under Sublimits (Letters of Credit &
Foreign Exchange) $_______
23. Outstanding under Term Loan $_______
24. RESERVE POSITION (lesser of #19 or #20, minus
the total of #21, #22 & #23) $_______
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THIS IS TRUE, COMPLETE AND CORRECT,
AND THAT THE INFORMATION IN THIS BORROWING BASE CERTIFICATE COMPLIES WITH THE
REPRESENTATIONS AND WARRANTIES IN THE LOAN AND SECURITY AGREEMENT BETWEEN THE
UNDERSIGNED AND SILICON VALLEY BANK.
COMMENTS:
By: __________________________
Authorized Signer
2
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: KANBAY INTERNATIONAL, INC.
The undersigned authorized officer of Kanbay International, Inc.
("Kanbay") certifies that under the terms and conditions of the Loan and
Security Agreement between Kanbay and certain of Kanbay's direct and indirect
subsidiaries (collectively the "Borrowers") and Bank (the "Agreement"), (i)
Borrowers are 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 Borrowers are 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 Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
A/R & A/P Agings Monthly within 20 days Yes No
Aggregate Transfers to Foreign Borrowers
(less than or equal to $500,000, less the Monthly within 30 days Yes No
aggregate amount of Permitted Investments
by Domestic Borrowers in Foreign Borrowers
and Foreign Subsidiaries, in fiscal year)
Total Transfers for ___________ (month)
equal $_____________ Monthly within 30 days
Total Transfers for year to date period
equal $_____________ Monthly within 30 days
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Monthly Basis (ATTACHED DETAILS OF CALCULATIONS):
Minimum Quick Ratio: 1.40:1.00 _____:1.0 Yes No
(Section 6.7(a) of (through 3/31/01)
the Agreement)
1.25:1.00 _____:1.0 Yes No
(after 3/31/01)
Profitability: Quarterly
( Section 6.7(b) of the Agreement) Q ended 3/31/01
$850,000 $________ Yes No
Qs ended 6/30/01
and thereafter
$100,000.00 $________ Yes No
EBITDA: Month ended 7/31/01
(Section 6.7(c) of and thereafter
the Agreement) $200,000 $________ Yes No
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY
Sincerely, Received by:_________________
AUTHORIZED SIGNER
_______________________ Date:________________________
SIGNATURE
Verified:____________________
AUTHORIZED SIGNER
_______________________
TITLE Date:________________________
Compliance Status: Yes No
DATE___________________
2
SILICON VALLEY BANK
PRO FORMA INVOICE FOR LOAN CHARGES
BORROWERS: Kanbay International, Inc., Kanbay Incorporated, Kanbay
Europe Ltd., Kanbay Australia Pty. Ltd., Megatec Pty. Ltd.,
and Kanbay HK Ltd.
LOAN OFFICER: Xxxx Xxxxxx
DATE: March 30, 2001
Renewal Fee $11,250.00
Waiver Fee $ 2,000.00
Legal Expenses $ 1,020.00
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TOTAL FEE DUE $14,270.00
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Please indicate the method of payment:
( ) A check for the total amount is attached.
(X) Debit DDA #3300229901 for the total amount.
( ) Loan proceeds
BORROWERS:
KANBAY INTERNATIONAL, INC. KANBAY AUSTRALIA PTY. LTD.
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxxxx Xxxxxxxx
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Title: CFO/Secretary Title: Director
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KANBAY INCORPORATED MEGATEC PTY. LTD.
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxxxx Xxxxxxxx
--------------------------- ---------------------------
Title: Director Title: Director
------------------------ ------------------------
KANBAY EUROPE LTD. KANBAY HK LTD.
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxxxx Xxxxxxxx
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Title: Director Title: Director
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BANK:
SILICON VALLEY BANK
By: Authorized Party
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Title: Authorized Party
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