EXHIBIT 10.9
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of April 14, 1998, however
effective as of April 9, 1998, by and between Data Critical Corp. ("Borrower")
whose address is 0000 000xx Xxxxxx, XX, Xxxxxxx, 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 be
owing by Borrower to Lender, Borrower is indebted to Lender pursuant to, among
other documents, a Promissory Note, dated April 10, 1997, in the original
principal amount of Five Hundred Thousand and 00/100 Dollars ($500,000.00), as
amended from time to time (the "Line") and a Promissory Note dated April 10,
1997 in the original principal amount of One Hundred Thousand and 00/100 Dollars
($100,000.00) ("Term Note #1) and being executed concurrently herewith, a
Promissory Note in the original principal amount of Two Hundred Fifty Thousand
and 00/100 Dollars ($250,000.00) ("Term Note #2). The Line, Term Note #1 and
Term Note #2 are collectively referred to as the "Notes". The Notes, together
with other promissory notes from Borrower to Lender, are governed by the terms
of a Business Loan Agreement, dated April 10, 1997, as such agreement may be
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 the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Lender shall be referred to
as the "Indebtedness".
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
secured by a Commercial Security Agreement, dated April 10, 1997, and a
Collateral Assignment, Patent Mortgage and Security Agreement dated April 10,
1997.
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 Term Note.
1. The principal amount of the Note is hereby increased to One
Million and 00/100 Dollars ($1,000,000.00).
2. Payable in one payment of all outstanding principal plus all
unpaid interest on April 8, 1999. In addition, Borrower will pay
regular monthly payments of all accrued unpaid interest due as of
each payment date beginning May 8, 1998, and all subsequent
interest payments will be due on the same day of each month
thereafter.
3. The interest rate to be applied to the unpaid principal balance
of the Note is hereby decreased, effective as of this date, to
three-quarters of one percentage point (0.750%) over the Lender's
current Index.
B. Modification(s) to Loan Agreement.
1. The paragraph entitled "Financial Covenants" is hereby amended in
its entirety to read as follows:
Borrower shall maintain on a monthly basis, beginning with the
month ending April 30, 1998, a minimum quick ratio of 1.50 to
1.00; a minimum Tangible Net Worth of $1,500,000.00, and a
minimum Liquidity Coverage ratio of 1.75 to 1.00. Furthermore,
Borrower shall not permit losses to exceed $1,600,000.00 for the
quarter ended March 31, 1998, $500,000.00 for the quarter ending
June 30, 1998 and $250,000.00 for the quarter ending September
30, 1998. Borrower shall not incur a loss beginning with the
quarter ending December 31, 1998 and thereafter.
For purposes of the foregoing, Liquidity Coverage shall be
defined as cash (and equivalents) plus availability under
Borrower's line of credit facility divided by outstandings under
Borrower's equipment term loan facilities. The Liquidity Coverage
covenant shall pertain to Borrowers equipment term loan
facilities only.
Quick Ratio is a ratio of "Quick Assets" to "Current
Liabilities". Quick Assets is, on any date, the Borrower's
consolidated, unrestricted cash, cash equivalents, net billed
accounts receivable and investments with maturities of less than
one (1) year determined according to GAAP. Current Liabilities is
the aggregate amount of Borrowers Debt which matures within one
(1) year.
2. The first sentence of the paragraph entitled "Borrowing Base
Formula" is hereby amended in its entirety to read as follows:
Funds shall be advanced under Borrower's line of credit facility
according to a Borrowing Base Formula as determined by Lender on
a monthly basis, defined as follows: the lesser of (i)
$1,000,000.00 minus the face amount of all outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit) or
(ii) seventyfive (75%) of Eligible Accounts Receivable minus the
face amount of all outstanding Letters of Credit (including drawn
but unreimbursed Letters of Credit),
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 Lender a fee in the amount of
Five Thousand and 00/100 Dollars ($5,000.00) (the "Loan Fee") plus all out-of-
pocket expenses.
6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that 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, 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 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 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.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon (i) Borrowers payment of the Loan Fee and (ii) Borrower's
execution and delivery of the Promissory Note of even date herewith.
This Loan Modification Agreement is executed as of the date first written above.
BORROWER: LENDER:
DATA CRITICAL CORPORATION SILICON VALLEY BANK
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxx
Name: Xxxxxx X. Xxxxxx Name: Xxxxx Xxxxxxx
Title: CFO Title: Vice President
