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EXHIBIT 10.36
MODIFICATION TO LOAN & SECURITY AGREEMENT
AND VARIABLE RATE-INSTALLMENT NOTE
This Third Modification to Revolving Credit Loan & Security Agreement,
and First Modification to Variable Rate-Installment Note (this "Modification")
is entered into by and between Versant Corporation, a California corporation
("Borrower") and Comerica Bank-California, a California banking corporation
("Bank") as of June 18, 1999 at San Jose, California.
RECITALS
A. Bank and Versant Object Technology Corporation, a California
corporation (the "Original Borrower") previously entered into that certain
Revolving Credit Loan & Security Agreement (Accounts and Inventory) dated as of
May 15, 1997, (the "Agreement").
B. Subsequently, Original Borrower executed that certain Variable
Rate-Installment Note dated as of March 19, 1998 in the original principal
amount of Two Million, Five Hundred Twenty-Two Thousand, Eighty Nine and 95/100
Dollars ($2,522,089.95), (the "Term Note").
C. Thereafter, the Agreement was amended pursuant to the following:
(i) that certain Modification To Loan & Security Agreement dated as of May 6,
1998, (the "First Modification") and (ii) that certain Modification to Loan &
Security Agreement dated as of August 11, 1998, (the "Second Modification"). The
First Modification, the Second Modification and this Modification are sometime
hereinafter referred to collectively as the "Modifications". The Agreement, as
amended by the Modifications; the Term Note; and all other instruments and
documents executed in connection therewith, are hereinafter referred to
collectively as the "Loan Documents".
D. Subsequent to the Agreement and the Term Note, Original Borrower
did, pursuant to that certain Certificate of Amendment of Amended and Restated
Articles of Incorporation of Versant Object Technology Corporation dated as of
June 10, 1998 and filed on July 14, 1998 under filing No. A0511339, change its
corporate name to Versant Corporation, (the "Name Change").
D. Borrower's obligations under the Loan Documents are secured by,
among other things, a first lien priority security interest granted to Bank in
and to all of Borrower's assets, including, without limitation, accounts,
inventory, machinery, equipment, and cash deposits.
E. Borrower has now requested that Bank (i) consent to the Name
Change, and (ii) modify the terms of the Agreement to extend the term thereof to
June 1, 2000 and revise certain covenants contained in the Agreement.
F. Notwithstanding the provisions of the Agreement, Bank has agreed
to consent to the Name Change, and to the further modification of the terms of
the Agreement, subject to the terms and conditions set forth below:
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AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
A. Recitals. The foregoing recitals of facts and understandings of
the parties are incorporated herein as the agreement of the parties.
B. Modification of the Agreement. The Agreement is hereby modified
as set forth below:
1. Section 1.5. Section 1.5 is amended by adding the
following at the end thereof:
"and (3) one hundred percent (100%) of accounts with respect to
which the account debtor does not have its principal place of business in the
United States and that are insured by FCIA on terms satisfactory to bank, but in
no event in excess of an aggregate sum for all such accounts of Two Million
Dollars ($2,000,000.00)."
2. Section 2.
a. Section 2.1 Paragraph 1.31 and 2.1 of the
Agreement are hereby deleted in their entirety, and replaced with the following:
"2.1 Upon the request of Borrower, made at any time and from
time to time during the term hereof, but in no event, more frequently than once
during any calendar week, and so long as no Event of Default has occurred, Bank
shall lend to Borrower an amount equal to the Borrowing Base; provided, however,
that in no event shall Bank be obligated to make advances to Borrower under this
Section 2.1 whenever the Daily Balance exceeds, at any time, either the
Borrowing Base or the sum of Five Million Dollars ($5,000,000), such amount
being referred to herein as an "Overadvance", however, reserving therefrom the
aggregate sum of One Million Five Hundred Thousand Dollars ($1,500,000) for the
issuance of Letters of Credit, (the "Letter of Credit Sublimit") subject to the
following:
Bank agrees from time to time during the term of this Agreement
to (i) issue Letters of Credit for the account of Borrower containing terms and
conditions acceptable to Bank, provided however that (a) no Letter of Credit
shall have an expiration date beyond the Maturity Date (as defined in Section
3.1 of this Agreement), and (b) no Letter of Credit shall be issued unless, on
the date of the proposed issuance of any Letter of Credit the advances available
to Borrower hereunder are equal to 100% of the face amount of such Letter of
Credit, (ii) each Letter of Credit shall be subject to the additional terms and
conditions required by Bank in connection with the issuance thereof, and (iii)
each draft paid by Bank under a Letter of Credit shall be deemed an advance
under this Agreement and shall be subject to the terms hereof."
b. Section 2.2. Section 2.2 is hereby amended by
deleting therefrom the first sentence in its entirety, and replacing it with the
following:
"Except as herein below provided, the Credit shall bear
interest, on the Daily Balance owing, at a rate of Two (2.0) percentage points
per annum above the Base Rate (the "Rate")."
3. Section 3. Section 3.1 is hereby amended by deleting
therefrom the first sentence in its entirety, and replacing with the following:
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"3.1 This Agreement shall remain in full force and
effect until June 1, 2000, or until sooner terminated by notice by Borrower
(such date being the "Maturity Date")."
4. Section 6.
a. Section 6.16. The following sub-sections of
Section 6.16 are hereby amended as follows:
(i) by adding the following to the end of
sub-section b. thereof:
. . . "In addition, Borrower shall deliver to
Bank, within fifteen (15) days of the end of each month, a company prepared
profit and loss statement, balance sheet and statement of cash flow reflecting
comparatives of actual financial results, versus the projected financial
results."
(ii) by adding the following to the end of
sub-section c. thereof:
. . ."and in addition, a Borrowing Base
Certificate on a weekly basis as of the end of the business day of each Friday,
to be delivered to Bank on or before Wednesday of the immediately following
week."
b. Section 6.17. The following sub-sections of
Section 6.17 are hereby deleted in their entirety and replaced with the
following:
"b. Tangible Effective Net Worth in an amount
not less than $1,900,000 plus 100% of the net proceeds of any additional equity
capital made available to Borrower;
d. A Liquidity Ratio ( defined as (a) the
sum of (i) cash plus (ii) accounts receivable to (b) the sum of the balance
outstanding under this Agreement, plus (ii) the current portion of long term
debt, plus (iii) accounts payable of not less than 2.25:1.0 on a fiscal
quarterly basis commencing with the quarter ending September 30, 1999;
e. none; and
f. net operating cash, as defined in FASB
95 and 102, equal to or greater than $600,000 per quarter commencing with
quarter ending September 30, 1999; . . . "
g. Net income after taxes of at least One
Dollar ($1.00), for each fiscal quarter of Borrower commencing with the fiscal
quarter ending September 30, 1999.
c. Section 6.27 Section 6.27 is hereby added at the
end of Section 6.
"6.27 Borrower shall perform all acts reasonably necessary to
ensure that: (i)Borrower and any business in which Borrower holds a substantial
interest, and (ii) all customers, suppliers and vendors that are material to
Borrower's business, become Year 2000 Compliant in a timely manner. Such acts
shall include, without limitation, performing a comprehensive review and
assessment of all Borrower's systems and adopting a detailed plan, with itemized
budget, for the remediation, monitoring and testing of such systems. As used in
this paragraph, "Year 2000 Compliant" shall mean, in regard to any entity, that
all software, hardware, firmware, equipment, goods or systems utilized by or
material to the business operations or financial condition of such entity, will
properly perform date sensitive functions before, during and after the year
2000. Borrower shall, immediately upon request, provide to
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Bank such certifications or other evidence of Borrower's compliance with terms
of this section as Bank may from time to time require."
5. Cash Collateral Account. Pursuant to the provisions of
Section 4.5 of this Agreement, Borrower hereby agrees that it shall maintain a
"dominion of funds" lock box account into which all proceeds of accounts shall
be deposited. Such account has been, or will be established by Borrower with
Bank under account No. 1891-170456 (the "Cash Collateral Account"). Borrower
hereby acknowledges that the Cash Collateral Account constitutes a portion of
the Collateral as defined in the Agreement.
B. Modification of Term Note. Effective with the Effective Date,
(as defined below) the Term Note is hereby amended by changing the rate of
interest which is accruing on any unpaid balance thereunder from the Bank's base
rate from time to time in effect plus one-half of one percent (.50%) per annum;
to, the Bank's base rate from time to time in effect plus two and one-half
percent (2.50%) per annum.
C. General Provisions.
1. Modification Fee. In consideration for Bank's
willingness to enter into this Modification, Borrower shall pay to Bank in cash,
as a non-refundable fee, the sum of Fifty Thousand Dollars ($50,000) on or
before the Effective Date, (the "Modification Fee").
2. Legal Effect. Except as specifically set forth in this
Modification, all of the terms and conditions of the Loan Documents shall remain
in full force and effect in accordance with their original terms and conditions,
and Borrower hereby affirms, ratifies and approves the Loan Documents executed
by Original Borrower all as if the same had been executed and delivered by
Borrower. Wherever the term "Borrower" is used in the Loan Documents, it shall
hereafter mean Versant Corporation.
3. Further Documents. Borrower hereby agrees to execute any
documents requested by Bank to effectuate this Modification, including without
limitation a resolution authorizing this Modification, and the Loan Documents.
4. Definitions. Unless otherwise defined herein, the
capitalized terms used herein shall have the definitions set forth in the Loan
Documents.
5. Integration. This is an integrated Modification, and
supersedes all prior negotiations and agreements regarding the subject matter
hereof.
6. Release. Borrower does hereby release, discharge and
acquit Bank, and its officers, directors, shareholders, agents and employees,
and their respective successors, heirs and assigns, (collectively, the "Released
Parties") of and from any and all rights, claims, demands, obligations,
liabilities, indebtedness, breaches of contract, breaches of duty or any
relationship, acts, omissions, misfeasance, malfeasance, causes of action,
promises, damages, costs, losses and expenses of every kind, nature, description
or character, and irrespective of how, why or by reason of what facts, which
could or may be claimed to exist, whether known or unknown, suspected or
unsuspected, liquidated or unliquidated, claimed or unclaimed, whether based on
contract, tort, breach of any duty, or other legal or equitable theory or
recovery, each as though fully set forth herein at length, which in any way
arise out of, are connected with or relate to the Loan, as the same has been
modified by this Modification, or the administration of the Loan, as well as any
action or inaction of the Released Parties or any of them with respect to the
Loan or the administration thereof. Notwithstanding the foregoing, this release
shall not
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apply to the extent of any such rights, claims or the like arising from any acts
or omissions of the Released Parties after the Effective Date.
As to all matters being released by Borrower pursuant to the
provisions hereof, Borrower waives any and all rights which it may have under
the provisions of California Civil Code section 1542 or under any comparable
statute or rule of law. California Civil Code section 1542 provides:
A General Release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of executing the
release which if known by him must have materially affected his settlement with
the debtor.
7. Effective Date. For purposes of this Modification, the
term "Effective Date" shall mean the date upon which there shall have been
delivered to Bank, in form and substance satisfactory to Bank, and its counsel,
duly executed and acknowledged as appropriate, this Modification, a new
Certified Copy of Borrowing Resolutions (Corporation), financing statements,
updated schedules of Borrower's intellectual property, filing of documents with
the U.S. Patent and Trade Office and U.S. Copyright Office as necessary to
continue the perfection of Bank's security interest in Borrower's intellectual
property, the Modification Fee, and such other documents and completion of such
other matters as Bank shall reasonably deem necessary or appropriate.
Signatures Contained On Following Page.
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IN WITNESS WHEREOF, the parties hereto have executed this Modification
as of the day and year first written above.
BORROWER:
VERSANT CORPORATION,
a California corporation
By: _________________________
Xxxx Xxxx
Its: Chief Financial Officer
BANK:
COMERICA BANK-CALIFORNIA,
a California banking corporation
By: _______________________________
Xxxxxx Xxxxxx
Its: Vice President
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