EXHIBIT 10.23
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement entered into as of April 30, 1996, by
and between Red Brick Systems ("Borrower") whose address is 000 Xxxxxxx Xxx.
Xxx Xxxxx, XX 00000, and Silicon Valley Bank ("Lender") whose address is 0000
Xxxxxx Xxxxx, Xxxxx Xxxxx, XX 00000.
1. DESCRIPTION OF EXISTING INDEBTEDNESS Among other indebtedness which may
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be owing by Borrower to Lender, Borrower is Indebted to Lender pursuant to,
among other documents, a Promissory Note, dated September 28, 1993, in the
original principal amount of Five Hundred Thousand and 00/100 Dollars
($500,000.00)(the "Note"). The Note has been amended pursuant to Loan
Modification Agreements, dated May 1, 1994, and May 1, 1995, pursuant to
which, among other things, the principal amount of the Note was increased to
Two Million and 00/100 Dollars (S2,000,000.00) The Note, together with other
promissory notes from Borrower to Lender, is governed by the terms of a
Business Loan Agreement dated September 28, 1993, as amended from time to
time, between Borrower and Lender (the "Loan Agreement"). Defined terms used
but not otherwise defined herein shall have the same meanings as in Loan
Agreement.
Hereinafter, all indebtedness owning by Borrower to Lender shall be referred
to as the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES Repayment of the
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Indebtedness is secured by a Commercial Security Agreement, dated September 28,
1993 (the "Security Agreement"). Concurrently herewith, Lender shall agree
to release the security interest in the Collateral described in the Security
Agreement.
Hereinafter the above-described security documents and guaranties, together
with all other documents securing payment 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.
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A. Modification(s) to Note.
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1. Payable in one payment of all outstanding principal
plus all accrued unpaid interest on April 30, 1997
("Maturity Date"). In addition, Borrower will pay
regular monthly payments of all accrued unpaid interest
due as of each payment date beginning May 30, 1996,
and all subsequent interest payments are due on the
same day of each month thereafter.
2. The interest rate to be applied to the unpaid principal
balance of the Note is hereby decreased effective as
of this date, to a rate equal to the Lender's current
Index.
3. The principal amount of the Note is hereby increased
to Three Million and 00/1000 Dollars ($3,000,000.00).
B. Modification(s) to Loan Agreement.
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1. The paragraph entitled "Borrowing Base Formula" is
hereby deleted in its entirety.
2. The paragraph entitle "Financial Covenants" is hereby
amended to read, in its entirety:
Borrower shall maintain, on a quarterly basis, a
minimum quick ratio of 2.25 to 1.00; a minimum
tangible net worth plus subordinated debt of
$30,000,000.00; a maximum total debt minus
subordinated debt to tangible net worth plus
subordinated debt ratio of .60 to 2.00.
For the purposes of the foregoing, deferred revenue
shall be excluded from liabilities in calculating quick
ration and debt to tangible net worth covenants.
3. The paragraph entitled "Account Receivable and
Accounts Payable" is hereby deleted in its entirety.
4. The paragraph entitled "Financial Statements" is
hereby amended to read, in its entirety:
Borrower shall provide to Lender, as soon as
available, but not later than five (5) days of filing,
with the Securities and Exchange Commission ("SEC"),
copies of all statements, reports and notices sent or
made available generally by Borrower to its
shareholders, or to any holders of subordinated debt
and all reports on Form 10Q, 10-K and 8-K.
Additionally, Borrower shall deliver to Lender, as
soon as available, but in no event later than five (5)
days after filing its 10-K report with SEC,
Borrower's balance sheet and income statement for the
year ended, audited by as certified public accountant
satisfactory to Lender. All financial reports required
to be provided under this Agreement shall be prepared
in accordance with generally accepted accounting
principles, applied on a consistent basis, and certified
by Borrower as being true and correct.
5. Borrower shall now deliver to Lender; as soon as
available, but in no event later than five (5) days
after filing its 10-Q report with SEC, a compliance
certificate prepared and certified as correct to the
best knowledge and belief by Borrower's chief
financial officer or other officer or person acceptable
to Lender.
6. The following paragraphs are hereby incorporated into
the Loan Agreement:
Letter of Credit Sublimit. Subject to the terms and
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conditions of this Agreement, as may be amended from
time to time, Lender agrees to issue or cause to be
issued under the Note standby and commercial letters
of credit for the account of Borrower in an aggregate
face amount not to exceed $1,000,000.00 (subject to
the Sublimit Cap, as defined herein). Each such letter
of credit shall have an expiry date of no later than
ninety (90) days after the Maturity Date of the Note
(as described therein); provided that Borrowers letter
of credit reimbursement obligation shall be secured by
cash on terms acceptable to Lender at any time after
the maturity date if the term of this Agreement is not
extended by Lender. All such letters of credit shall
be, in form and substance, acceptable to Lender in its
sole discretion and shall be subject to the terms and
conditions of Lender's form of application and letter
of credit agreement.
Foreign Exchange Sublimit. Subject to the terms or this
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Agreement as amended from time to time, Borrower may utilize
up to $1,000,000.00 (subject to the Sublimit Cap, as defined
herein) for spot and future foreign exchange contracts (the
"Exchange Contracts"). Borrower shall not request an Exchange
Contract at any time it is not in compliance with any of the
terms of this Agreement. All Exchange Contracts must provide
for delivery of settlement on or before Maturity Date. The
limit available at any time shall be reduced by the following
amounts (the "Foreign Exchange Reserve") on each day (the
"Determination Date"): (i) on all outstanding Exchange
Contracts on which delivery is to be effected or settlement
allowed more than two business days from the Determination
Date, 10% of the gross amount of the Exchange Contracts; plus
(ii) on all outstanding Exchange Contracts on which delivery
is to be effected or settlement allowed within two business
days after the Determination Date, 100% of the gross amount of
the Exchange Contracts. In lieu of the Foreign Exchange
Reserve for 100% of the gross amount of any Exchange Contract,
the Borrower may request that the Lender debit Borrower's bank
account with Lender for such amount, provided Borrower has
immediately available funds in such amounts in its Bank
Account.
Lender may, in its discretion, terminate the Exchange
Contracts at any time (a) that an Event of Default occurs or
(b) that there is not sufficient availability under the Note
and Borrower does not have available funds in its bank account
to satisfy the Foreign Exchange Reserve. If Lender terminates
the Exchange Contracts, and without limitation of the FX
Indemnity Provisions (as referred to below). Borrower agrees to
reimburse Lender for any and all fees, costs and expenses
relating thereto or arising in connection therewith.
Borrower shall not permit the total gross amount of all
Exchange Contracts on which delivery is to be effected and
settlement allowed in any two business day period to be more
than $1,000,000.00 nor shall Borrower permit the total gross
amount of all EXchange Contracts to which Borrower is a party,
outstanding at any one time, to exceed $1,000,000.00.
Borrower shall execute all standard form applications and
agreements of Lender in connection with the Exchange
Contracts, and without limiting any of the terms of such
applications and agreements, Borrower will pay all standard
fees and charges of Lender in connection with the Exchange
Contracts.
Without limiting any of the other terms of this Agreement or
any such standard form applications and agreement of Lender,
Borrower agrees to indemnify Lender and hold it harmless,
from and against any and all claims, debts, liabilities,
demands, obligations, actions, costs and expenses (including,
without limitation, attorneys' fees of counsel of Lender's
choice), of every nature and description which it may sustain
or incur, based upon, arising out of, or in any way relating
to any of the Exchange Contracts or any transactions relating
thereto or contemplated thereby (collectively referred to as
the "FX Indemnity Provisions").
Cash Management Services Sublimit. Borrower may utilize up to
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an aggregate amount not to exceed One Million and 00/100
Dollars ($1,000,000.00) (subject to the Sublimit Cap, as
defined herein) for Cash Management Services provided by
Lender, which Services may include merchant services, PC-ACH,
direct deposit of
payroll, Business Visa, Firstax, and other check cashing
services as defined in that certain Cash Management Services
Agreement provided to Borrower in connection herewith (a "Cash
Management Service", or the "Cash Management Services"). All
amounts actually paid by Lender in respect of a Cash
Management Service or Cash Management Services shall, when
paid, constitute an Advance under the Note.
Sublimit Cap. Notwithstanding the foregoing paragraphs, the
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outstandings under the Letter or Credit Sublimit, the Foreign
Exchange Sublimit, and the Cash Management Services Sublimit
shall not at any time exceed One Million and 00/100 Dollars
($1,000,000.00), in the aggregate (the "Sublimit Cap").
C. Release of Security Agreement.
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1. As an accommodation to Borrower and for good and
valuable consideration, Lender, with this Loan
Modification Agreement, has agreed to release its
security interest granted under the Security Agreement
and the related UCC financing statements.
4. CONSISTENT CHANGE. The Existing Loan Documents are herby amended
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wherever necessary to reflect the changes described above.
5. NO DEFENSE OF BORROWER. Borrower (and each guarantor and xxxxxxx
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signing below) agrees that, as of this date, it has no defenses against the
obligations to pay any amount under the Indebtedness.
6. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
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below) understands and agrees that in modifying the existing Indebtedness,
Lender 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. Lender's agreement
to modifications to the existing Indebtedness pursuant to this Loan
Modification Agreement in no way shall obligate Lender to mane any future
modifications to the Indebtedness. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Indebtedness. It is the intention of
Lender and Borrower to retain as liable parties all makers and endorsers of
Existing Loan Documents, unless the party is expressly released by Lender 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: LENDER:
RED BRICK SYSTEMS SILICON VALLEY BANK
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx Xxxx
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Name: Xxxxxx X. Xxxxxxxx Name: Xxxx Xxxx
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Title: VP & CFO Title: VP
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