Exhibit 10.40
LOAN DOCUMENT MODIFICATION AGREEMENT
NUMBER 3; DATED AS OF MAY 20, 1999
LOAN DOCUMENT MODIFICATION AGREEMENT dated as of May 20, 1999 (this
"Agreement") by and among Lionbridge Technologies Holdings B.V. and Lionbridge
Technologies B.V. (each a "Borrower" and together the "Borrowers") and
Lionbridge Technologies, Inc., a Delaware company with its principal place of
business located at 000 Xxxxxx Xxxxxx, #0000, Xxxxxxx, Xxxxxxxxxxxxx 00000 (the
"Parent Guarantor") and SILICON VALLEY BANK (the "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 Wellesley Xxxxxx
Xxxx, 00 Xxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, doing business under the name
"Silicon Valley East".
1. REFERENCE TO EXISTING LOAN DOCUMENTS.
Reference is hereby made to that Loan Agreement dated September 26,
1997 among the Bank and the Borrowers, as so amended on May 21, 1998 and
February 25, 1999 (with the attached schedules and exhibits, and as the same may
hereafter be further amended, modified, supplemented, extended or restated from
time to time, the "Credit Agreement") and the Loan Documents referred to
therein, including without limitation that certain Amended and Restated
Promissory Note of the Borrowers dated May 21, 1998 in the principal amount of
$8,000,000 (the "Note"), and the Security Documents referred to therein,
including the Amended and Restated Guarantee of the Parent Guarantor dated as of
May 21, 1998 in favor of the Bank (the "Parent Guarantee"). Unless otherwise
defined herein, capitalized terms used in this Agreement shall have the same
respective meanings as set forth in the Credit Agreement.
2. EFFECTIVE DATE.
This Agreement shall become effective as of May 20, 1999 (the
"Effective Date"), provided that the Bank shall have received the following on
or before June 22, 1999 and provided further, however, in no event shall this
Agreement become effective until signed by an officer of the Bank in California:
1. two copies of this Agreement, duly executed by each
Borrower and the Parent Guarantor.
2. an amended and restated Promissory Note in the form
enclosed herewith (the "Amended Note") duly executed by the Borrowers;
3. the attached consents of U.S. organized affiliated entities
who have previously furnished guaranties in favor of the Bank of the obligations
of the Borrowers, duly executed by officers thereof (executed consents of
foreign organized affiliated entities shall be furnished to the Bank within ten
(10) days of the date hereof);
By the signature of its authorized officer below, each Borrower and the
Parent Guarantor is hereby representing that, except as modified in SCHEDULE A
attached hereto, the representations
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of the Borrowers and the Parent Guarantor set forth in the Credit Agreement and
the other Loan Documents (including those contained in the Parent Guarantee, as
amended by this Agreement) are true and correct as of the Effective Date as if
made on and as of such date. Finally, each Borrower (and the Parent Guarantor
signing below) agrees that, as of the Effective Date, it has no defenses against
its obligations to pay any amounts under the Credit Agreement, the Parent
Guarantee and the other Loan Documents to which it is a party. Finally, by the
signature of its authorized officer set forth below, Lionbridge Technologies,
Inc. authorizes the debiting of its depository account in the amount of $10,000
to cover payment of the Bank's modification fee.
3. DESCRIPTION OF CHANGE IN TERMS.
As of the Effective Date, the Parent Guarantee is modified in the
following respects:
1. Section 13(b) is hereby amended and restated in its
entirety as follows:
(b) QUICK RATIO. The Guarantor shall cause the
Consolidated Group to maintain at the end of each of the following fiscal
periods a ratio of Quick Assets to Current Liabilities not less than the
respective ratios set forth below opposite such periods:
Fiscal Periods Minimum Quick Ratio
-------------- -------------------
Quarter ending 3/31/99 0.50 to 1.0
Quarter ending 6/30/99 and thereafter 0.50 to 1.0
For purposes of this subparagraph (b), "Quick Assets" shall mean, as of any
applicable date, the consolidated cash, cash equivalents, accounts receivable
and investments with maturities of less than 90 days of the Consolidated Group
determined in accordance with GAAP; and "Current Liabilities" shall mean, as of
any applicable date, all amounts that should, in accordance with GAAP, be
included as current liabilities on the consolidated balance sheet of the
Guarantor and its Subsidiaries, as at such date, plus, to the extent not already
included therein, all outstanding Credit Extensions made under the Loan
Agreement, including all Indebtedness that is payable upon demand or within one
year from the date of determination thereof unless such Indebtedness is
renewable or extendable at the option of the Guarantor, a Borrower or any
Subsidiary to a date more than one year from the date of determination, but
excluding any Indebtedness incurred by the Guarantor or any Subsidiary that is
subordinated to debt owing by the Guarantor or any Subsidiary to the Bank on
terms acceptable to the Bank and is identified as such by the Bank
("Subordinated Debt").
2. Section 13(d) is hereby amended and restated in its
entirety as follows:
(d) The Guarantor shall cause the Consolidated Group
to have at the end of the following fiscal period minimum EBITDA not less than
the respective amount set forth below opposite such fiscal period:
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Fiscal Period Minimum Ebitda
------------- --------------
Quarter Ending 3/31/99 ($600,000)
Quarter Ending 6/30/99 ($2,500,000), excluding charges
against earnings of warrant/option
value, accrued dividends and
employee non-cash compensation of
no greater than $6,500,000.
For purposes of this subparagraph (c) "EBITDA" means, for any applicable fiscal
period, consolidated net income (or loss) after taxes for such period of the
Guarantor and its Subsidiaries as determined in accordance with GAAP, plus the
following to the extent deducted in computing the foregoing: (i) Interest
Expense (as defined below); (ii) taxes; (iii) depreciation; (iv) amortization of
good will and other intangibles; and (v) foreign exchange transaction gains and
losses. "Interest Expense" means, for any applicable fiscal period, the sum of
the aggregate amount of interest required to be paid in cash during such period
on Indebtedness of the Guarantor and its Subsidiaries (on a consolidated basis).
3. Section 13(e) is hereby amended by deleting:
"(ii) as soon as available, but in any event within
ninety (90) days after the end of the fiscal year of
the Consolidated Group, audited consolidated and
consolidating financial statements of the
Consolidated Group, 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 "
and replacing it with the following language:
"(ii) as soon as available, but in any event within
ninety (90) days after the end of the fiscal year of
the Consolidated Group, audited consolidated and
consolidating financial statements of the
Consolidated Group, 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; notwithstanding the
foregoing, such financial statements for the fiscal
year 1998 are due by June 25, 1999, and within 90
days thereafter".
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4. The Compliance Certificate attached to the Parent Guarantee
as Exhibit A is hereby amended and restated in its entirety by the form of
Compliance Certificate attached hereto as EXHIBIT A.
5. The Guarantee, the Credit Agreement and the other Loan
Documents are hereby amended wherever necessary or appropriate to reflect the
foregoing changes.
4. CONTINUING VALIDITY.
Upon the effectiveness hereof, each reference in each Security
Instrument or other Loan Document to "the Parent Guarantee", "thereunder",
"thereof", "therein", or words of like import, shall mean and be a reference to
the Parent Guarantee, as amended hereby. Except as specifically set forth above,
the Parent Guarantee shall remain in full force and effect and is hereby
ratified and confirmed.
Each of the other Loan Documents is in full force and effect and is
hereby ratified and confirmed. The amendments and limited waiver set forth above
(i) do not constitute a waiver or modification of any term, condition or
covenant of the Credit Agreement or any other Loan Document, other than as
expressly set forth herein, and (ii) shall not prejudice any rights which the
Bank may now or hereafter have under or in connection with the Credit Agreement,
as modified hereby, or the other Loan Documents and shall not obligate the Bank
to assent to any further modifications.
5. MISCELLANEOUS.
1. This Agreement may be signed in one or more counterparts
each of which taken together shall constitute one and the same document.
2. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
3. EACH BORROWER AND THE PARENT GUARANTOR ACCEPTS FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND
AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS AGREEMENT; PROVIDED,
HOWEVER, THAT IF FOR ANY REASON THE BANK CANNOT AVAIL ITSELF OF THE COURTS OF
THE COMMONWEALTH OF MASSACHUSETTS, THEN VENUE SHALL LIE IN SANTA XXXXX COUNTY,
CALIFORNIA.
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4. Each Borrower agrees, jointly and severally, to promptly
pay on demand all costs and expenses of the Bank in connection with the
preparation, reproduction, execution and delivery of this Agreement and the
other instruments and documents to be delivered hereunder, including the
reasonable fees and out-of-pocket expenses of Xxxxxxxx & Worcester LLP, special
counsel for the Bank with respect thereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Bank and the Borrower have caused this
Agreement to be signed under seal by their respective duly authorized officers
as of the date set forth above.
BANK:
SILICON VALLEY EAST, a Division
of Silicon Valley Bank
By:_____________________________
Name: Xxxxxx X. Xxxx
Title: Vice President
SILICON VALLEY BANK
By:______________________________
Name:
Title:
(signed in Santa Clara, CA)
PARENT GUARANTOR:
LIONBRIDGE TECHNOLOGIES, INC.
By:______________________________
Name: Xxxx X. Xxxxx
Title: Managing Director
BORROWERS:
LIONBRIDGE TECHNOLOGIES HOLDINGS
B.V.
By:______________________________
Name:
Title:
LIONBRIDGE TECHNOLOGIES B.V.
By:______________________________
Name:
Title:
CONSENT
The undersigned, as Guarantor under the Guarantee dated as of September
26, 1997 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents to
the foregoing Loan Document Modification Agreement and hereby confirms and
agrees that the Guarantee is, and shall continue to be, in full force and effect
and is hereby ratified and confirmed in all respects, except that, upon the
effectiveness of, and on and after the date of, said amendment, each reference
in the Guarantee and in each other Loan Document (as defined in the Loan
Agreement) to which the undersigned is a party, including, to "the Credit
Agreement", the "Loan Agreement," "thereunder", "thereof", "therein", or words
of like import referring to the Loan Agreement, shall mean and be a reference to
the Loan Agreement, as amended hereby, and each reference in the Guarantee and
in each such other Loan Document to "the Note", "thereof", "therein",
"thereunder", or words of like import referring to the Amended and Restated
Promissory Note dated May 21, 1998, shall mean and be a reference to such
Promissory Note, as amended and restated by the Amended Note dated May 20, 1999.
LIONBRIDGE TECHNOLOGIES IRELAND
By:___________________________
Name:
Title:
CONSENT
The undersigned, as Guarantor under the Guarantee dated as of May 21,
1998 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents to the
foregoing Loan Document Modification Agreement and hereby confirms and agrees
that the Guarantee is, and shall continue to be, in full force and effect and is
hereby ratified and confirmed in all respects, except that, upon the
effectiveness of, and on and after the date of, said amendment, each reference
in the Guarantee and in each other Loan Document (as defined in the Loan
Agreement) to which the undersigned is a party, including, to "the Credit
Agreement", the "Loan Agreement," "thereunder", "thereof", "therein", or words
of like import referring to the Loan Agreement, shall mean and be a reference to
the Loan Agreement, as amended hereby, and each reference in the Guarantee and
in each such other Loan Document to "the Note", "thereof", "therein",
"thereunder", or words of like import referring to the Amended and Restated
Promissory Note dated May 21, 1998, shall mean and be a reference to such
Promissory Note, as amended and restated by the Amended Note dated May 20, 1999.
LIONBRIDGE TECHNOLOGIES, INC.
By:___________________________
Name:
Title:
CONSENT
The undersigned, as Guarantor under the Guarantee dated as of May 21,
1998 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents to the
foregoing Loan Document Modification Agreement and hereby confirms and agrees
that the Guarantee is, and shall continue to be, in full force and effect and is
hereby ratified and confirmed in all respects, except that, upon the
effectiveness of, and on and after the date of, said amendment, each reference
in the Guarantee and in each other Loan Document (as defined in the Loan
Agreement) to which the undersigned is a party, including, to "the Credit
Agreement", the "Loan Agreement," "thereunder", "thereof", "therein", or words
of like import referring to the Loan Agreement, shall mean and be a reference to
the Loan Agreement, as amended hereby, and each reference in the Guarantee and
in each such other Loan Document to "the Note", "thereof", "therein",
"thereunder", or words of like import referring to the Amended and Restated
Promissory Note dated May 21, 1998, shall mean and be a reference to such
Promissory Note, as amended and restated by the Amended Note dated May 20, 1999
JAPANESE LANGUAGE SERVICES, INC.
By:___________________________
Name:
Title:
CONSENT
The undersigned, as Guarantor under the Guarantee dated as of May 21,
1998 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents to the
foregoing Loan Document Modification Agreement and hereby confirms and agrees
that the Guarantee is, and shall continue to be, in full force and effect and is
hereby ratified and confirmed in all respects, except that, upon the
effectiveness of, and on and after the date of, said amendment, each reference
in the Guarantee and in each other Loan Document (as defined in the Loan
Agreement) to which the undersigned is a party, including, to "the Credit
Agreement", the "Loan Agreement," "thereunder", "thereof", "therein", or words
of like import referring to the Loan Agreement, shall mean and be a reference to
the Loan Agreement, as amended hereby, and each reference in the Guarantee and
in each such other Loan Document to "the Note", "thereof", "therein",
"thereunder", or words of like import referring to the Amended and Restated
Promissory Note dated May 21, 1998, shall mean and be a reference to such
Promissory Note, as amended and restated by the Amended Note dated May 20, 1999.
LIONBRIDGE TECHNOLOGIES
CALIFORNIA, INC.
By:___________________________
Name:
Title:
CONSENT
The undersigned, as Guarantor under the Guarantee dated as of May 21,
1998 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents to the
foregoing Loan Document Modification Agreement and hereby confirms and agrees
that the Guarantee is, and shall continue to be, in full force and effect and is
hereby ratified and confirmed in all respects, except that, upon the
effectiveness of, and on and after the date of, said amendment, each reference
in the Guarantee and in each other Loan Document (as defined in the Loan
Agreement) to which the undersigned is a party, including, to "the Credit
Agreement", the "Loan Agreement," "thereunder", "thereof", "therein", or words
of like import referring to the Loan Agreement, shall mean and be a reference to
the Loan Agreement, as amended hereby, and each reference in the Guarantee and
in each such other Loan Document to "the Note", "thereof", "therein",
"thereunder", or words of like import referring to the Amended and Restated
Promissory Note dated May 21, 1998, shall mean and be a reference to such
Promissory Note, as amended and restated by the Amended Note dated May 20, 1999.
LIONBRIDGE JAPAN K.K.
By:___________________________
Name:
Title:
CONSENT
The undersigned, as Guarantor under the Guarantee dated as of May 21,
1998 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents to the
foregoing Loan Document Modification Agreement and hereby confirms and agrees
that the Guarantee is, and shall continue to be, in full force and effect and is
hereby ratified and confirmed in all respects, except that, upon the
effectiveness of, and on and after the date of, said amendment, each reference
in the Guarantee and in each other Loan Document (as defined in the Loan
Agreement) to which the undersigned is a party, including, to "the Credit
Agreement", the "Loan Agreement," "thereunder", "thereof", "therein", or words
of like import referring to the Loan Agreement, shall mean and be a reference to
the Loan Agreement, as amended hereby, and each reference in the Guarantee and
in each such other Loan Document to "the Note", "thereof", "therein",
"thereunder", or words of like import referring to the Amended and Restated
Promissory Note dated May 21, 1998, shall mean and be a reference to such
Promissory Note, as amended and restated by the Amended Note dated May 20, 1999.
LIONBRIDGE TECHNOLOGIES FRANCE
By:___________________________
Name:
Title:
CONSENT
The undersigned, as Guarantor under the Guarantee dated as of January
8, 1999 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents to
the foregoing Loan Document Modification Agreement and hereby confirms and
agrees that the Guarantee is, and shall continue to be, in full force and effect
and is hereby ratified and confirmed in all respects, except that, upon the
effectiveness of, and on and after the date of, said amendment, each reference
in the Guarantee and in each other Loan Document (as defined in the Loan
Agreement) to which the undersigned is a party, including, to "the Credit
Agreement", the "Loan Agreement," "thereunder", "thereof", "therein", or words
of like import referring to the Loan Agreement, shall mean and be a reference to
the Loan Agreement, as amended hereby, and each reference in the Guarantee and
in each such other Loan Document to "the Note", "thereof", "therein",
"thereunder", or words of like import referring to the Amended and Restated
Promissory Note dated May 21, 1998, shall mean and be a reference to such
Promissory Note, as amended and restated May 20, 1999.
VERITEST, INC.
By:___________________________
Name:
Title:
SCHEDULE A
EXCEPTIONS TO LOAN DOCUMENT REPRESENTATIONS
None
EXHIBIT A
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: LIONBRIDGE TECHNOLOGIES, INC.
The undersigned authorized officer of Lionbridge Technologies, Inc.
(the "Parent Guarantor") hereby certifies that in accordance with the terms and
conditions of the Guarantee in favor of Bank (the "Guarantee"), (i) except as
noted below, Consolidated Group is in complete compliance for the period ending
with all required financial covenants set forth herein and the Borrowers are in
complete compliance with their covenants as set forth in the Credit Agreement to
which they are a party and (ii) all representations and warranties of Parent
Guarantor in the Guarantee and Borrowers stated in the Credit Agreement are true
and correct in all material respects as of the date hereof. Attached herewith
are the required documents supporting the above certification. The Officer
further certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) and are consistently applied from one period to the
next except as explained in an accompanying letter or footnotes.
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
10Q and 10K Within 5 days after filing Yes No
with the SEC
A/R & A/P Agings Monthly within 30 days Yes No
A/R Audit Initial and Semi-Annual Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain for the quarters indicated:
Minimum Quarterly Quick Ratio
Quarter Ending March 31, 1999 0.50 to 1.0 _____:1.0 Yes No
Quarter Ending June 30, 1999 0.50 to 1.0 _____:1.0 Yes No
Minimum Quarterly Profitability
Quarter Ending 3/31/99 ($600,000) $________ Yes No
Quarter Ending 6/30/99
and thereafter ($2,500,000)1 $________ Yes No
--------
1 Excluding charges against earnings of warrant/option value, accrued
dividends and
--------
employee non-cash compensation of no greater than $6,500,000.
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
-----------------------------------
SIGNATURE
TITLE:_____________________________
DATE:_____________________________
