Exhibit 10.12
LOAN MODIFICATION AGREEMENT
This LOAN MODIFICATION AGREEMENT Is entered into as of November 29, 1999,
by and between SILICON VALLEY BANK, a California-chartered bank with its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, XX 00000 and with
a loan production office located at Wellesley Office Park, 00 Xxxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxx, XX 00000, doing business under the name "Silicon Valley
East" ("Bank"), and SONUS NETWORKS, INC., a Delaware corporation with its
principal place of business at 0 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000
("Borrower").
RECITALS
Borrower has borrowed money from Bank pursuant to certain Existing Loan
Documents, as defined below. In consideration of certain financial
accommodations from Bank, and Borrower's continuing obligations under the
Existing Loan Documents, Borrower and Bank agree as follows:
AGREEMENT
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 March 6,1998, as
amended by a Loan Modification Agreement dated as of November 30,1998, providing
for equipment lines of credit up to a maximum aggregate principal amount of
THREE MILLION FIVE HUNDRED THOUSAND AND NO/100THS DOLLARS ($3,500,000) and a
revolving line of credit for Letters of Credit of up to a maximum principal
amount of TWO HUNDRED THOUSAND AND NO/100THS DOLLARS ($200,000) (the "Loan
Agreement").
Hereinafter, all Indebtedness owing by Borrower to Bank shall be referred
to as the "Indebtedness."
2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured
pursuant to the Loan Agreement. Hereinafter, the Loan Agreement, together with
all other documents securing payment of the Indebtedness, shall be referred to
as the "Existing Loan Documents."
3. DESCRIPTION OF CHANGES IN TERMS.
3.1 Modifications to Definitions. Section 1.1 of the Loan Agreement is
hereby amended by substituting the following definitions for those set forth
therein for the same terms, and in the case of new definitions, by adding those
new definitions to that Section 1.1:
"1999 Committed Equipment Line" means a credit extension of up to
THREE MILLION FIVE HUNDRED THOUSAND AND NO/100THS Dollars
($3,500,000).
"Equipment Advance" has the meaning set forth in Sections 2.1.1,
2.1.2 and 2.1.4, as applicable.
"Maturity Date" means December 5, 2003.
3.2 Addition of 1999 Equipment Line. Section 2.1.4 is hereby added to the
Loan Agreement as follows:
2.1.4 1999 Committed Equipment Line.
(a) in addition to any Equipment Advances made pursuant to Sections
2.1.1 and 2.1.2 of this Agreement, at any time after November 29,
1999 and before JANUARY 1, 2000, Borrower may from time to time
request advances from Bank in an aggregate amount not to exceed the
lesser of the 1999 Committed Equipment Line or TWO MILLION FIVE
HUNDRED THOUSAND AND NO/100THS DOLLARS ($2,500,000) to finance
Equipment purchased after JUNE 30, 1999 end prior to JANUARY 1,
2000.
(b) In addition to any Equipment Advances made pursuant to Sections
2.1.1 and 2.1.2 of this Agreement, at any time after DECEMBER 31,
1999 and before JULY 1, 2000, Borrower may from time to time request
advances from Bank in an aggregate amount not to exceed the 1999
Committed Equipment Line less any advances made under Section
2.1.4(a) of this Agreement, to finance Equipment purchased after
OCTOBER 31,1999 and prior to JULY 1, 2000.
(c) The advances under Sections 2.1.4(a) and 2.1.4(b) of this
Agreement (each an "Equipment Advance" and collectively, the
"Equipment Advances") shall not exceed ONE HUNDRED Percent (100%) of
the invoice amount of such equipment approved from time to time by
Bank, excluding taxes, shipping, warranty charges, freight discounts
and installation expense. Software may, however, constitute up to
FIFTY percent (50%) of aggregate Equipment Advances. In order to be
eligible for financing under the 1999 Committed Equipment Line,
invoices must be submitted to Bank for financing within sixty (60)
days of invoice date; provided, however, that Borrower's initial
Equipment Advance under the 1999 Committed Equipment Line, if made
on or before December 29, 1999, may be used to finance equipment
purchased after JUNE 30, 1999 but more than 60 days after invoice
date.
(d) Interest shall accrue from the date of each Equipment Advance at
the rate specified in Section 2.2(a), and shall be payable on the
Payment Date of each month through the month in which the applicable
Equipment Advance converts to a term loan as set forth in this
Section 2.1.4(d). Any Equipment Advances made under Section 2.1.4(a)
of this Agreement that are outstanding on JANUARY 1, 2000 will be
payable in FORTY EIGHT (48) equal monthly installments of principal,
plus all accrued interest, beginning on the Payment Date of each
month commencing JANUARY 5, 2000 and ending with the last payment
due on DECEMBER 5, 2003. Any Equipment Advances made under Section
2.1.4(b) of this Agreement that are outstanding on JULY 1, 2000 will
be payable in FORTY TWO (42) equal monthly installments of
principal, plus all accrued interest, beginning on the Payment Date
of each month commencing JULY 5, 2000 and ending with the last
payment due on DECEMBER 5, 2003. Equipment Advances may be prepaid
without penalty. Equipment Advances, once repaid, may not be
reborrowed.
(e) When Borrower desires to obtain an Equipment Advance under this
Section 2.1.4, Borrower shall notify Bank (which notice shall be
irrevocable) by facsimile transmission to be received no later than
3:00 p.m. East Coast time at least one (1) Business Day before the
day on which the Equipment Advance is to be made. Such notice shall
be substantially in the form of Exhibit B. The notice shall be
signed by a Responsible Officer or its designee and include a copy
of the invoice(s) for the Equipment to be financed.
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3.3 Modifications to Tangible Net Worth Covenant. Section 6.8 of the Loan
Agreement is hereby replaced In Its entirety with the following:
6.8 Tangible Net Worth. Borrower shall maintain, as of the last day
of each calendar month, a Tangible Net Worth of not less than the
total outstanding principal and accrued interest under all credit
facilities from Bank to Borrower plus TWO HUNDRED THOUSAND AND
NO/100THS Dollars ($200,000).
3.4 Addition of Adjusted Quick Ratio Covenant. Section 6.10 is hereby
added to the Loan Agreement as follows:
6.10 Adjusted Quick Ratio. Borrower shall maintain, as of the last
day of each calendar month, a ratio of Quick Assets to Current
Liabilities of at least 1.5 to 1.0.
3.5 Modifications to Compliance Certificate. Exhibit C of the Loan
Agreement is hereby replaced in its entirety with Exhibit C to this Agreement.
4. FACILITY FEE. Borrower shall pay to Bank any out-of-pocket expenses
incurred by the Bank through the date hereof, including reasonable attorneys'
fees end expenses, and after the date hereof, all Bank Expenses, including
reasonable attorneys' fees and expenses, as and when they become due.
5. CONDITIONS PRECEDENT TO FURTHER ADVANCES. The obligation of Bank to
make further advances to Borrower is subject to the condition precedent that
Bank shall have received, in form and substance satisfactory to Bank the
following:
(a) this Loan Modification Agreement duly executed by Borrower;
(b) payment of the fees and Bank Expenses then due specified in
Section 4 hereof; and
(c) such other documents, and completion of such other matters, as
Bank may reasonably deem necessary or appropriate.
6. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described in this Loan Modification
Agreement
7. NO DEFENSES OF BORROWER. Borrower agrees that as of this date, It has
no defenses against any of the obligations to pay any amounts under the
Indebtedness.
8. CONTINUING VALIDITY. Borrower understands and agrees that (i) in
modifying the Existing Loan Documents, Bank is relying upon Borrower's
representations, warranties and agreements, as set forth in the Existing Loan
Documents, (ii) except as expressly modified pursuant to this Loan Modification
Agreement (including the effects of Section 6 hereof), the Existing Loan
Documents remain unchanged and in full force and effect, (iii) Bank's agreement
to modify the Existing Loan Documents pursuant to this Loan Modification
Agreement shall in no way obligate Bank to make any future modifications to the
Existing Loan Documents, (iv) it is the intention of Bank and Borrower to retain
as liable parties all makers and endorsers of the Existing Loan Documents,
unless a party is expressly released by Bank in writing, (v) no maker, endorser
or guarantor will be released by virtue of this Loan Modification Agreement, and
(vi) the terms of this Section 8 apply not only to this Loan Modification
Agreement but also to all subsequent loan modification agreements, if any.
9. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. The laws of the
Commonwealth of Massachusetts shall apply to this Agreement. BORROWER ACCEPTS
FOR ITSELF AND IN
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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 BANK CANNOT AVAIL ITSELF OF THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS, BORROWER ACCEPTS JURISDICTION OF THE COURTS AND VENUE IN SANTA
XXXXX COUNTY, CALIFORNIA. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
10. EFFECTIVENESS. This Agreement shall become effective only when it
shall have been executed by Borrower and Bank (provided, however, in no event
shall this Agreement become effective until signed by an officer of Bank in
California).
IN WITNESS WHEREOF, the parties hereto have caused this Loan Modification
Agreement to be executed as a sealed instrument as of the date first set forth
above.
"Borrower" "Bank"
SONUS NETWORKS, INC. SILICON VALLEY BANK, doing business
as SILICON VALLEY EAST
By: /s/ Xxxxxx Xxxxx By:
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Xxxxxx Xxxxx, President
SILICON VALLEY BANK
By:
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Title:
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(Signed in Santa Xxxxx County, California)
EXHIBIT C FOLLOWS
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