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EXHIBIT 10.16
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of June 22, 1999, by
and between Accrue Software, Inc. ("Borrower") and Silicon Valley Bank ("Bank").
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, a Loan and Security Agreement, dated September 19, 1997, as may be
amended from time to time, (the "Loan Agreement"). The Loan Agreement provided
for, among other things, a Committed Line in the original principal amount of
One Million Dollars ($1,000,000), an Equipment facility in the original
principal amount of One Million Dollars ($1,000,000) and a Committed Equipment 2
Line in the original principal amount of Seven Hundred Fifty Thousand Dollars
($750,000). Defined terms used but not otherwise defined herein shall have the
same meanings as in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
secured by the Collateral as described in the Loan Agreement and in that certain
Intellectual Property Security Agreement, dated September 19, 1997, by and
between Borrower and Bank.
Hereinafter, the above-described security documents and guaranties, 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. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Loan Agreement
1. The following terms set forth in Section 1.1 entitled
"Definitions" are hereby amended as follows:
"Committed Line" means $2,000,000.
"Deferred Revenue" is all amounts received in advance of
performance and not yet recognized as revenue.
Sub-Sections (f) and (i) of the defined term "Eligible
Accounts" are hereby amended to read as follows:
(f) Accounts with respect to which the account debtor does
not have its principal place of business in the United
States, and Accounts arising from products shipped to or
services provided to branches or offices located in the
United States of any account debtor that does not have its
principal place of business in the United States except
for Eligible Foreign Accounts.
(i) Accounts with respect to an account debtor, including
Subsidiaries and Affiliates, whose total obligations to
Borrower exceed twenty-five percent (25%) of all Accounts,
to the extent such obligations exceed the aforementioned
percentage.
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"Revolving Maturity Date" means June 22, 2000.
2. Sub-section (a) of Section 2.1 entitled "Advances" is
hereby amended in part to provide that "Borrowing Base"
shall mean an amount equal to 80% of Eligible Accounts.
3. Sub-section (a) of Section 2.1.1 entitled "Letters of
Credit" is hereby amended in part to provide that the face
amount of all outstanding Letters of Credit, (including
drawn but unreimbursed Letters of Credit) shall not in any
case exceed Two Million Dollars ($2,000,000).
4. Sub-sections (a) and (c) of Section 2.1.2 entitled
"Foreign Exchange Contract; Foreign Exchange Settlements"
are hereby amended in part to provide for a $2,000,000
Contract Limit and a $2,000,000 Settlement Limit.
5. Section 2.1.3 entitled "Cash Management Sublimit" is
hereby amended in part to provide for a Two Million
Dollars ($2,000,000) Cash Management Sublimit.
6. Section 2.2 entitled "Overadvances" is hereby amended in
its entirety to read as follows:
If, at any time or for any reason, the amount of the
Obligations owed by Borrower to Bank pursuant to Sections
2.1, 2.1.1, and 2.1.2 of this Agreement is greater than
the lesser of (i) the Committed Line minus the amount
outstanding under the Cash Management Sublimit or (ii) the
Borrowing Base, Borrower shall immediately pay to Bank, in
cash, the amount of such excess. Additionally, Obligations
owed by Borrower pursuant to Sections 2.1.1, 2.1.2 and
2.1.3 shall not exceed Two Million Dollars ($2,000,000).
7. Sub-section (a) of Section 2.3 entitled "Interest Rates,
Payments, and Calculations" is hereby amended in part to
provide for (a) through the month ending September 30,
1999, Advances shall bear interest, on the average Daily
Balance, at a rate equal to three (3.00) percentage points
above the Prime Rate at such times as Borrower's Tangible
Net Worth is less than Four Million Dollars ($4,000,000),
decreasing to a rate equal to one (1.00) percentage point
above the Prime Rate at such time as Borrower's Tangible
Net Worth is equal to or greater than Four Million Dollars
($4,000,000) and (b) from October 1, 1999 and thereafter,
Advances shall bear interest on the average Daily Balance,
at a rate equal to five (5.00) percentage points above the
Prime rate at such times as Borrower's Tangible Net Worth
is less than Four Million Dollars ($4,000,000), decreasing
to a rate equal to one (1.00) percentage point above the
Prime Rate at such times as Borrower's Tangible Net Worth
is equal to or greater than Four Million Dollars
($4,000,000). Such interest rate changes will be effective
the first day of the month following Bank's receipt of
evidence that Borrower has complied with the criteria
stated above.
8. Sub-section (c) of Section 2.3 entitled "Interest Rates,
Payments, and Calculations" is hereby amended in part to
provide that interest on all Advances shall be due and
payable on the 22nd of each calendar month during the term
hereof.
9. Sub-section (b) of Section 6.3 entitled "Financial
Statements, Reports, Certificates" is hereby amended to
read as follows:
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...as soon as available, but in any event within one
hundred twenty (120) days after the end of Borrower's
fiscal year, audited consolidated financial statements of
Borrower prepared in accordance with GAAP, consistently
applied, together with an unqualified opinion on such
financial statements of an independent certified public
accounting firm reasonably acceptable to Bank.
10. The third paragraph of Section 6.3 entitled "Financial
Statements, Reports, Certificates" is hereby amended in
its entirety to read as follows:
Bank shall have the right from time to time hereafter to
audit Borrower's Collateral at Borrower's expense,
provided that such audits will be conducted no more often
than annually unless an Event of Default has occurred and
is continuing.
11. Section 6.8 entitled "Quick Ratio" is hereby amended in
its entirety to read as follows:
Beginning with the month ended March 31, 1999, Borrower
shall maintain, as of last day of each month, a ratio of
Quick Assets to Current Liabilities minus Deferred Revenue
of at least 1.50 to 1.00.
12. Section 6.9 entitled "Net Income" is hereby amended to
read as follows:
Beginning with the quarter ended March 31, 1999, Borrower
shall maintain quarterly net income after taxes, net of
any and all non-cash expenses associated directly with
Borrower's initial public offering, as determined by Bank
as follows:
For the 12 months ended 3/31/99: Net loss after taxes not
greater than $5,400,000.
For the 3 months ended 6/30/99: Net loss after taxes not
greater than $1,200,000.
For the 3 months ended 9/30/99: Net loss after taxes not
greater than $900,000.
For the 3 months ended 12/31/99: Net loss after taxes not
greater than $200,000.
For the 3 months ended 3/31/00: Profitable.
13. Section 6.10 entitled "Minimum Liquidity/Debt Service
Coverage" is hereby amended and replaced with "Minimum
Liquidity" to read as follows:
Beginning with the month ended March 31, 1999, Borrower
shall maintain, as of the last day of each calendar month,
cash plus Eligible Accounts divided by outstandings
Equipment Advances and Equipment 2 Advances of at least
1.50 to 1.00.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE. Borrower shall pay to Bank a fee in the amount of
Fifteen Thousand Dollars ($15,000) (the "Loan Fee") plus all out-of-pocket
expenses.
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6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of the date hereof, it has no defenses against the
obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing below)
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 and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. 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.
This Loan Modification Agreement is executed as of the date first
written above.
BORROWER: BANK:
ACCRUE SOFTWARE, INC. SILICON VALLEY BANK
By: /s/ XXXXXXX X. XXXXXX By: /s/ R. XXXXX XXXXX
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Name: Xxxxxxx X. Xxxxxx Name: R. Xxxxx Xxxxx
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Title: CFO Title: Account Officer
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