EXHIBIT 10.1
SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement is entered into as of July 25,
2000, by and between SEACHANGE INTERNATIONAL, INC., a Delaware corporation with
its principal place of business at 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx
("Borrower"), and SILICON VALLEY BANK, a California-chartered bank ("Lender"),
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".
1. DESCRIPTION OF EXISTING INDEBTEDNESS. Among other indebtedness which may be
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owing by Borrower to Lender, Borrower is indebted to Lender pursuant to, among
other documents, a Loan and Security Agreement dated November 10, 1998, as
amended by First Loan Modification Agreement dated as of March 27, 2000 (as
may be amended, the "Loan Agreement"). Capitalized terms used but not otherwise
defined herein shall have the same meaning 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
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secured as described in the Loan Agreement (together with any other collateral
security granted to Lender, 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 TERM.
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A. Modifications to Loan Agreement.
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1. The Loan Agreement shall be amended by deleting the following
definitions:
"Approved Foreign Accounts" means Accounts with respect to which
the account debtor does not have its principal place of business
in the United States, which the Bank approves on a case by case
basis.
"Eligible Foreign Accounts" means Accounts with respect to which
the account debtor does not have its principal place of business
in the United States or Canada and that are: (1) covered by
credit insurance in form and amount, and by an insurer
satisfactory to Bank less the amount of any deductible(s) which
may be or become owing thereon; or (2) supported by one or more
letters of credit in an amount and of a tenor, and issued by a
financial institution, acceptable to Bank.
2. The Loan Agreement shall be amended by deleting the following
definition in Section 1.1:
"Code" means the California Uniform Commercial Code."
and substituting therefor the following:
"Code" means the Uniform Commercial Code, as adopted in
Massachusetts, as may be amended from time to time."
3. The Loan Agreement shall be amended by deleting the following
definition in Section 1.1:
"Eligible Accounts" means those Accounts that arise in the ordinary
course of Borrower's business that comply with all of Borrower's
representations and warranties to Bank set forth in Section 5.4.
Unless otherwise agreed to by Bank in writing, Eligible Accounts shall
not include the following:
(a) Accounts that the account debtor has failed to pay within
ninety (90) days of invoice date;
(b) Accounts with respect to an account debtor, fifty percent
(50%) of whose Accounts the account debtor has failed to pay within
ninety (90) days of invoice date;
(c) Accounts with respect to an account debtor, including
Affiliates, whose total obligations to Borrower exceed twenty-five
percent (25%) of all Accounts, to the extent such obligations exceed
the aforementioned percentage, except as approved in writing by Bank;
(d) Accounts with respect to which the account debtor does not
have its principal place of business in the United States, except for
account debtors having their principal place of business in Canada;
(e) Accounts with respect to which the account debtor is a
federal, state, or local governmental entity or any department,
agency or instrumentality thereof, except for those Accounts of the
United States or any department, agency or instrumentality thereof as
to which the payee has assigned its rights to payment thereof to Bank
and the assignment has been acknowledged, pursuant to the Assignment
of Claims Act of 1940, as amended (31 U.S.C. 3727);
(f) Accounts with respect to which Borrower is liable to the
account debtor, but only to the extent of any amounts owing to the
account debtor (sometimes referred to as "contra" accounts, e.g.
accounts payable, customer deposits, credit accounts etc.);
(g) Accounts generated by demonstration or promotional
equipment, or with respect to which goods are placed on consignment,
guaranteed sale, sale or return, sale on approval, xxxx and hold, or
other terms by reason of which the payment by the account debtor may
be conditional;
(h) Accounts with respect to which the account debtor is an
Affiliate, officer, employee, or agent of Borrower;
(i) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Bank has
reasonably determined, in accordance with its standard commercial
practices, that there may be a basis for dispute (but only to the
extent of the amount subject to such dispute or claim), or is subject
to any Insolvency Proceeding, or becomes insolvent, or goes out of
business; and
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(j) Accounts the collection of which Bank reasonably determines
in accordance with its standard commercial practices to be doubtful.
and by substituting therefor the following:
"Eligible Accounts" means those Accounts that arise in the ordinary
course of Borrower's business that comply with all of Borrower's
representations and warranties to Bank set forth in Section 5.4.
Unless otherwise agreed to by Bank in writing, Eligible Accounts shall
not include the following:
(a) Accounts that the account debtor has failed to pay within
ninety (90) days of invoice date;
(b) Accounts with respect to an account debtor, fifty percent
(50%) of whose Accounts the account debtor has failed to pay within
ninety (90) days of invoice date;
(c) Accounts with respect to an account debtor, including
Affiliates, whose total obligations to Borrower exceed thirty-five
percent (35%) of all Accounts (forty percent (40.0%) for Time Warner
Accounts), which shall be limited to fifteen percent (15.0%) per site
(twenty percent (20.0%) for Time Warner Accounts), to the extent such
obligations exceed the aforementioned percentage, except as approved
in writing by Bank;
(d) Accounts with respect to which the account debtor does not
have its principal place of business in the United States;
(e) Accounts with respect to which the account debtor is a
federal, state, or local governmental entity or any department,
agency, or instrumentality thereof, except for those Accounts of the
United States or any department, agency or instrumentality thereof as
to which the payee has assigned its rights to payment thereof to Bank
and the assignment has been acknowledged, pursuant to the Assignment
of Claims Act of 1940, as amended (31 U.S.C. 3727);
(f) Accounts with respect to which Borrower is liable to the
account debtor, but only to the extent of any amounts owing to the
account debtor (sometimes referred to as "contra" accounts, e.g.
accounts payable, customer deposits, credit accounts etc.);
(g) Accounts generated by demonstration or promotional
equipment, or with respect to which goods are placed on consignment,
guaranteed sale, sale or return, sale on approval, xxxx and hold, or
other terms by reason of which the payment by the account debtor may
be conditional;
(h) Accounts with respect to which the account debtor is an
Affiliate, officer, employee, or agent of Borrower;
(i) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Bank
believes, in its sole discretion, that there may be a basis for
dispute (but only to the extent of the amount subject to such
dispute or claim), or is subject to any Insolvency Proceeding, or
becomes insolvent, or goes out of business; and
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(j) Accounts the collection of which Bank reasonably determines
in accordance with its standard commercial practices to be doubtful.
4. The Loan Agreement shall be amended by deleting the following
definition for Maturity Date:
""Maturity Date" means, as applicable, (i) the Revolving Maturity
Date with respect to Advances, and (ii) the Equipment Maturity
Date No. 1 and the Equipment Maturity Date No. 2, as applicable,
with respect to Equipment Advances."
and substituting therefor the following:
""Maturity Date" means, as applicable, (i) the Revolving Maturity
Date with respect to Advances, and (ii) the Equipment Maturity
Date No. 1, Equipment Maturity Date No. 2, Equipment Maturity
Date No. 3, Equipment Maturity Date No. 4, and Equipment Maturity
Date No. 5, as applicable, with respect to Equipment Advances."
5. The Loan Agreement shall be amended by deleting the following
definition for Committed Equipment Line:
"Committed Equipment Line" means a credit extension of up to
Three Million Dollars ($3,000,000.00) for Equipment Line Xx. 0,
xxx Xxxxxxxxx Xxxx Xx. 0, plus Two Million Dollars
($2,000,000.00) for Equipment Line No. 3."
and substituting therefor the following"
"Committed Equipment Line" means a credit extension of up to
Three Million Dollars ($3,000,000.00) for Equipment Line Xx. 0,
xxx Xxxxxxxxx Xxxx Xx. 0, plus Two Million Dollars
($2,000,000.00) for Equipment Line No. 3, plus Four Million
Dollars ($4,000,000.00) for Equipment Line No. 4."
6. The Loan Agreement shall be amended by deleting the following
definition for Committed Revolving Line:
"Committed Revolving Line" means a credit extension of up to Six
Million Dollars ($6,000,000.00)."
and substituting therefor the following:
"Committed Revolving Line" means a credit extension of up to
Seven Million Five Hundred Thousand Dollars ($7,500,000.00)."
7. The Loan Agreement shall be amended by deleting the following
definition for Revolving Maturity Date:
""Revolving Maturity Date" means March 31, 2000."
and substituting therefor the following:
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""Revolving Maturity Date" means March 31, 2001"
8. The Loan Agreement shall be amended by deleting the following
Section 2.3 (a):
"(a) Interest Rate. Except as set forth in Section 2.3(b), any
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Advances under the Committed Revolving Line shall bear interest,
on the average daily balance thereof, at a per annum rate equal
to: (i) One Half of One percent (0.5%) above the Prime Rate prior
to the Debt Service Coverage Event, and (ii) the Prime Rate
beginning on the date which is the Debt Service Coverage Event."
and by substituting therefor the following:
"(a) Interest Rate. Except as set forth in Section 2.3(b), any
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Advances under the Committed Revolving Line shall bear interest
in accordance with the LIBOR Supplement to Agreement attached
hereto as Appendix 1."
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9. The Loan Agreement shall be amended by inserting into Section
1.1, the following definitions:
"Equipment Line No. 4" has the meaning set forth in Section
2.1.2.
"Equipment Availability End Date No. 4" has the meaning set forth
in Section 2.12.
"Equipment Availability End Date No. 5" has the meaning set forth
in Section 2.1.2.
"Equipment Maturity Date No. 4" means September 1, 2003.
"Equipment Maturity Date No. 5" means March 1, 2004.
"EXIM Loan" means a certain Export-Import Bank Loan and Security
Agreement between the Borrower and Bank dated as of _________ __,
2000, and all documents executed in connection therewith and
related thereto.
10. The Loan Agreement shall be amended by deleting the following
Section 2.1.2:
"2.1.2 Equipment Advances.
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(a) Subject to and upon the terms and conditions of this
Agreement, Bank agrees to make advances (each an
"Equipment Advance" and collectively, the "Equipment
Advances") to Borrower: (i) in one advance to take
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place at any time after the Closing Date through thirty
(30) days after the Closing Date (the "Equipment
Availability End Date No. 1") in the aggregate
outstanding amount not to exceed Two Million Dollars
($2,000,000.00) (the "Equipment Line No. 1"), and (ii)
at any time and from time to time from the Equipment
Availability End Date No. 1 through June 30, 1999 (the
"Equipment Availability End Date No. 2") in the
aggregate outstanding amount not to exceed Three
Million Dollars ($3,000,000.00) less the
----
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cumulative Equipment Advances made under Equipment Line
No. 1 (the "Equipment Line No. 2"), and (iii) at any
time and from time to time from March 13, 2000 through
March 31, 2000 (the "Equipment Availability End Date
No. 3") in the aggregate outstanding amount not to
exceed Two Million Dollars ($2,000,000.00) (the
"Equipment Line No. 3"). To evidence the Equipment
Advances, Borrower shall deliver to Bank, at the time
of each Equipment Advance request, an invoice for the
equipment to be purchased or refinanced. Equipment
Advance requests under Equipment Line No. 1 shall only
be permitted for Equipment purchased between July 2,
1997 and June 30, 1998. Equipment Advance requests
under Equipment Line No. 2 shall only be permitted for
Equipment purchased between July 1, 1998 and June 30,
1999. Equipment Advance requests under Equipment Line
No. 3 shall be used only for Equipment purchased
through March 31, 2000. The Equipment Advances shall be
used only to purchase or refinance Equipment and shall
not exceed: (i) eighty percent (80.0%) of the invoice
amount on such equipment, including software, approved
from time to time by Bank under Equipment Line No. 1,
and (ii) one hundred percent (100%) of the invoice
amount on such equipment, including software, approved
from time to time by Bank in accordance with its
standard commercial practices under Equipment Line No.
2, and Equipment Line No. 3, each of (i) and (ii)
excluding taxes, shipping, warranty charges, freight
discounts, and installation expense.
(b) Interest shall accrue from the date of each Equipment
Advance at the per annum rate of: (i) for Equipment
Line No. 1, and Equipment Line No. 2, one percent
(1.0%) above the Prime Rate, and (ii) for Equipment
Line No. 3, at one half of one percent (.50%) above the
Prime Rate. Interest shall be payable monthly on the
Payment Date of each month. Any Equipment Advances made
pursuant to the Equipment Line No. 1 that are
outstanding on the Equipment Availability End Date No.
1 will be payable in Thirty (30) equal monthly
installments of principal, plus all accrued interest,
beginning on the Payment Date of the month following
Equipment Availability End Date No. 1 and ending on the
Equipment Maturity Date No. 1. Any Equipment Advances
made pursuant to the Equipment Line No. 2 that are
outstanding on the Equipment Availability End Date No.
2 will be payable in Thirty-Six (36) equal monthly
installments of principal, plus all accrued interest,
beginning on the Payment Date of the month following
Equipment Availability End Date No. 2 and ending on the
Equipment Maturity Date No. 2. Any Equipment Advances
made pursuant to the Equipment Line No. 3 that are
outstanding on the Equipment Availability End Date No.
3 will be payable in Thirty-Six (36) equal monthly
installments of principal, plus all accrued interest,
beginning on the Payment Date of the month following
Equipment Availability End Date No. 3 and ending on the
Equipment Maturity Date No. 3. Equipment Advances, once
repaid, may not be reborrowed.
(c) When Borrower desires to obtain an Equipment Advance,
Borrower shall notify Bank (which notice shall be
irrevocable) by facsimile transmission to be received
no later than 3:00 p.m. Eastern time one (1) Business
Day before the day on which the Equipment Advance is to
be made. Such notice
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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 for the Equipment to be
financed."
and substituting therefor the following:
"2.1.2 Equipment Advances.
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(a) Subject to and upon the terms and conditions of this
Agreement, Bank agrees to make advances (each an "Equipment
Advance" and collectively, the "Equipment Advances") to
Borrower: (i) in one advance to take place at any time after
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the Closing Date through thirty (30) days after the Closing
Date (the "Equipment Availability End Date No. 1") in the
aggregate outstanding amount not to exceed Two Million
Dollars ($2,000,000.00) (the "Equipment Line No. 1"), and
(ii) at any time and from time to time from the Equipment
Availability End Date No. 1 through June 30, 1999 (the
"Equipment Availability End Date No. 2") in the aggregate
outstanding amount not to exceed Three Million Dollars
($3,000,000.00) less the cumulative Equipment Advances made
----
under Equipment Line No. 1 (the "Equipment Line No. 2"), and
(iii) at any time and from time to time from March 13, 2000
through March 31, 2000 (the "Equipment Availability End Date
No. 3") in the aggregate outstanding amount not to exceed
Two Million Dollars ($2,000,000.00) (the "Equipment Line
No. 3"), and (iv) at any time and from time to time from
__________, 2000 through September 30, 2000 (the "Equipment
Availability End Date No. 4") in the aggregate outstanding
amount not to exceed Four Million Dollars ($4,000,000.00)
(the "Equipment Line No. 4"), and (v) at any time and from
time to time from the Equipment Availability End Date No. 4
through March 31, 2001 (the "Equipment Availability End
Date No. 5") in the aggregate outstanding amount not to
exceed Four Million Dollars ($4,000,000.00) less the
----
cumulative Equipment Advances made under Equipment Line
No. 4. To evidence the Equipment Advances, Borrower shall
deliver to Bank, at the time of each Equipment Advance
request, an invoice for the equipment to be purchased or
refinanced. Equipment Advance requests under Equipment Line
No. 1 shall only be permitted for Equipment purchased
between July 2, 1997 and June 30, 1998. Equipment Advance
requests under Equipment Line No. 2 shall only be permitted
for Equipment purchased between July 1, 1998 and June 30,
1999. Equipment Advance requests under Equipment Line No. 3
shall be used only for Equipment purchased through March 31,
2000. Equipment Advance requests under Equipment Line No. 4
shall be used only for Equipment purchased on or after April
1, 2000. Equipment Advance Requests under Equipment Line
No. 5 shall be used only for Equipment purchased on or after
October 1, 2000, for invoices dated no more that sixty (60)
days prior to the requested Equipment Advance. The Equipment
Advances shall be used only to purchase or refinance
Equipment and shall not exceed: (i) eighty percent (80.0%)
of the invoice amount on such equipment, including
software, approved from time to time by Bank under Equipment
Line No. 1, and (ii) one hundred percent (100%) of the
invoice amount on such equipment, including software,
approved from time to time by Bank in accordance with its
standard commercial practices under
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Equipment Line No. 2, Equipment Line Xx. 0, Xxxxxxxxx Xxxx
Xx. 0, and Equipment Line No. 5 each of (i) and (ii)
excluding taxes, shipping, warranty charges, freight
discounts, and installation expense. No more that twenty
five percent (25.0%) of aggregate Equipment Advances shall
constitute software.
(b) Interest shall accrue from the date of each Equipment
Advance at the per annum rate of: (i) for Equipment Line No.
1, and Equipment Line No. 2, one percent (1.0%) above the
Prime Rate, and (ii) for Equipment Line Nos. 3, 4 and 5, at
one half of one percent (.50%) above the Prime Rate.
Interest shall be payable monthly on the Payment Date of
each month. Any Equipment Advances made pursuant to the
Equipment Line No. 1 that are outstanding on the Equipment
Availability End Date No. 1 will be payable in Thirty (30)
equal monthly installments of principal, plus all accrued
interest, beginning on the Payment Date of the month
following Equipment Availability End Date No. 1 and ending
on the Equipment Maturity Date No. 1. Any Equipment Advances
made pursuant to the Equipment Line No. 2 that are
outstanding on the Equipment Availability End Date No. 2
will be payable in Thirty-Six (36) equal monthly
installments of principal, plus all accrued interest,
beginning on the Payment Date of the month following
Equipment Availability End Date No. 2 and ending on the
Equipment Maturity Date No. 2. Any Equipment Advances made
pursuant to the Equipment Line No. 3 that are outstanding on
the Equipment Availability End Date No. 3 will be payable in
Thirty-Six (36) equal monthly installments of principal,
plus all accrued interest, beginning on the Payment Date of
the month following Equipment Availability End Date No. 3
and ending on the Equipment Maturity Date No. 3. Any
Equipment Advances made pursuant to the Equipment Line No. 4
that are outstanding on the Equipment Availability End Date
No. 4 will be payable in Thirty-Six (36) equal monthly
installments of principal, plus all accrued interest
beginning on the Payment Date of the month following
Equipment Availability End Date No. 4 and ending on the
Equipment Maturity Date No. 4. Any Equipment Advances made
pursuant to the Equipment Line No. 5 that are outstanding on
the Equipment Availability End Date No. 5 will be payable in
Thirty-Six (36) equal monthly installments of principal,
plus all accrued interest, beginning on the Payment Date of
the month following Equipment Availability End Date No. 5
and ending on the Equipment Maturity Date No. 5. Equipment
Advances, once repaid, may not be reborrowed.
(c) When Borrower desires to obtain an Equipment Advance,
Borrower shall notify Bank (which notice shall be
irrevocable) by facsimile transmission to be received no
later than 3:00 p.m. Eastern time 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 for the Equipment
to be financed."
11. The Loan Agreement shall be amended by deleting the following in
Section 6.3:
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"6.3 Financial Statements, Reports, Certificates. Borrower shall
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deliver to Bank: (a) as soon as available, but in any event within
forty-five (45) days after the end of each quarter, a company prepared
consolidated balance sheet and income statement covering Borrower's
consolidated operations during such period, in a form and certified by
an officer of Borrower reasonably acceptable to Bank; (b) as soon as
available, but in any event within thirty (30) days after the end of
each month, a company prepared consolidated revenue and expense
statement covering Borrower's consolidated operations during such
period, in form reasonably acceptable to Bank; (c) as soon as
available, but in any event within ninety (90) 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; (d) promptly upon receipt of notice (thereof, a report of any
legal actions pending or threatened against Borrower or any Subsidiary
that could result in damages or costs to Borrower or any Subsidiary of
Two Hundred Fifty Thousand Dollars ($250,000) or more; (e) prompt
notice of any material change in the composition of the Intellectual
Property Collateral, including, but not limited to, any subsequent
ownership right of the Borrower in or to any Copyright, Patent or
Trademark not specified in any intellectual property security
agreement between Borrower and Bank or knowledge of an event other
than information that is publicly available and applicable generally
to Borrower's business practices and industry that materially
adversely effects the value of the Intellectual Property Collateral;
and (f) such budgets, sales projections, operating plans or other
financial information as Bank may reasonably request from time to
time.
Within twenty (20) days after the last day of each month, Borrower
shall deliver to Bank a Borrowing Base Certificate signed by a
Responsible Officer in substantially the form of Exhibit C hereto,
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together with aged listings of accounts receivable.
Within forty-five (45) days after the fast day of each quarter,
Borrower shall deliver to Bank with the quarterly financial statements
a Compliance Certificate signed by a Responsible Officer in
substantially the form of Exhibit D hereto.
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Bank shall have a right from time to time hereafter to audit
Borrower's Accounts at Borrower's expense, provided that such audits
will be conducted no more often than every six (6) months unless an
Event of Default has occurred and is continuing."
and inserting in lieu thereof the following:
"6.3 Financial Statements, Reports, Certificates. Borrower shall
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deliver to Bank: (a) as soon as available, but in any event within
forty-five (45) days after the end of each quarter, a company
prepared consolidated balance sheet and income statement covering
Borrower's consolidated operations during such period, in a form and
certified by an officer of Borrower reasonably acceptable to Bank;
(b) as soon as available, but in any event within thirty (30) days
after the end of each month, a company prepared consolidated revenue
end expense statement covering Borrower's consolidated operations
during such period. in form reasonably acceptable to Bank; (c) 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
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applied, together with an unqualified opinion on such financial
statements of an independent certified public accounting firm
reasonably acceptable to Bank; (d) promptly upon receipt of notice
thereof, a report of any legal actions pending or threatened against
Borrower or any Subsidiary that could result in damages or costs to
Borrower or any Subsidiary of Two Hundred Fifty Thousand Dollars
($250,000) or more; (e) prompt notice of any material change in the
composition of the Intellectual Property Collateral, including, but
not limited to, any subsequent ownership right of the Borrower in or
to any Copyright, Patent or Trademark not specified in any
intellectual property security agreement between Borrower and Bank or
knowledge of an event other than information that is publicly
available and applicable generally to Borrower's business practices
and industry that materially adversely effects the value of the
Intellectual Property Collateral; and (f) such budgets, sales
projections, operating plans or other financial information as Bank
may reasonably request from time to time.
Within twenty (20) days after the last day of each month in which any
Credit Extensions are outstanding or requested, Borrower shall deliver
to Bank a Borrowing Base Certificate signed by a Responsible Officer
in substantially the form of Exhibit C hereto, together with aged
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listings of accounts receivable.
Within forty-five (45) days after the last day of each quarter,
Borrower shall deliver to Bank with the quarterly financial statements
a Compliance Certificate signed by a Responsible Officer in
substantially the form of Exhibit D hereto.
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Bank shall have a right from time to time hereafter to audit
Borrower's Accounts at Borrower's expense, provided that such audits
will be conducted no more often than every twelve (12) months unless
an Event of Default has occurred and is continuing."
12. The Loan Agreement shall be amended by deleting the following
financial covenant appearing as Section 6.12:
"6.12 Profitability. Borrower shall maintain, measured as of the last
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day of each quarter: (i) a profit of One Hundred Thousand Dollars
($100,000.00) as of the last day of the first quarter of fiscal year
2000; (ii) a profit of Two Hundred Thousand Dollars ($200,000.00) as
of the last day of the second and third quarters of fiscal year 2000;
and (iii) a profit of Three Hundred Thousand Dollars ($300,000.00) as
of the last day of the fourth quarter of fiscal year 2000, with an
allowance for one quarterly loss during such fiscal year of no greater
than One Hundred Thousand Dollars ($100,000.00). Notwithstanding the
foregoing, the Borrower shall maintain a profit for fiscal year 2000
of Eight Hundred Thousand Dollars ($800,000.000)."
and substituting the following:
"6.12 Profitability. Borrower shall maintain, measured as of the last
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day of each quarter: (i) a profit of One Hundred Thousand Dollars
($100,000.00) as of the last day of the first quarter of fiscal year
2001; (ii) a profit of Two Hundred Thousand Dollars ($200,000.00) as
of the last day of the second and third quarters of fiscal year 2001;
and (iii) a profit of Three Hundred Thousand Dollars ($300,000.00) as
of the last day of the fourth quarter of fiscal year 2001, with an
allowance for one quarterly loss during such fiscal year of no greater
than One Hundred Thousand Dollars ($100,000.00). Notwithstanding the
foregoing, the Borrower shall maintain a profit for fiscal year 2001
of Eight Hundred Thousand Dollars ($800,000.000).
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Borrower shall maintain, measured as of the last day of each quarter:
(i) a profit of One Dollar ($1.00) as of the last day of each quarter
of fiscal years 2002, and 2003"
13. The Loan Agreement shall be amended by deleting the following Section
2.1.1 (a):
"2.1.1(a) Subject to and upon the terms and conditions of this
Agreement, Bank agrees to make Advances to Borrower in an aggregate
outstanding amount not to exceed the Committed Revolving Line of the
Borrowing Base, whichever is less. Subject to the terms and conditions
of this Agreement, amounts borrowed pursuant to this Section 2.1 may
be repaid and reborrowed at any time during the term of this
Agreement."
and substituting therefor the following:
"2.1.1(a) Subject to and upon the terms and conditions of this
Agreement, Bank agrees to make Advances to Borrower in an aggregate
outstanding amount not to exceed (a) the lesser of the Committed
Revolving Line of the Borrowing Base, minus(b) all Obligations under
the Committed Equipment Line, minus (c)the amount of all other
extensions of credit by the Bank (other than the EXIM Loan). Subject
to the terms and conditions of this Agreement, amounts borrowed
pursuant to this Section 2.1 may be repaid and reborrowed at any time
during the term of this Agreement. Notwithstanding the foregoing, the
Obligations (as defined hereunder) and obligations under the EXIM
Loan, in the aggregate, shall not exceed the amount of Twelve Million
Five Hundred Thousand Dollars ($12,500,000.00)."
14. The Loan Agreement shall be amended by deleting the following Section
2.2:
"2.2 Overadvances. If, at any time or for any reason, the amount of
------------
Obligations owed by Borrower to Bank pursuant to Section 2.1.l plus,
prior to the Debt Service Coverage Event, Section 2.1.2, is greater
than the Borrowing Base, Borrower shall immediately pay to Bank, in
cash, the amount of such excess (the "Overadvance")."
and substituting therefor the following:
"2.2 Overadvances. If, at any time or for any reason, the amount of
------------
(a) Obligations (as defined hereunder) owed by Borrower to Bank (not
including the EXIM Loan), is greater than (b) the lesser of the
Committed Revolving Line or the Borrowing Base, Borrower shall
immediately pay to Bank, in cash, the amount of such excess. In
addition, if, at any time or for any reason, the Obligations (as
defined hereunder) and the obligations under the EXIM Loan, in the
aggregate, exceed the amount of Twelve Million Five Hundred Thousand
Dollars ($12,500,000.00). Borrower shall immediately pay to Bank, in
cash, the amount of such excess. Any excess calculated pursuant to
this Section shall be referred to as the "Overadvance""
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Borrower shall immediately pay to Bank, in cash, the amount
of such excess. Any excess calculated pursuant to this
Section shall be referred to as the "Overadvance"
4. EXIM LOAN. The occurrence of an Event of Default under the EXIM Loan shall
---------
constitute an Event of Default under the Loan Agreement. The occurrence of an
Event of Default under the Loan Agreement shall constitute an Event of Default
under the EXIM Loan.
5. LOAN FEES. The Borrower shall pay to the Bank the following:
---------
(a) Committed Revolving Line Facility Fee. A Committed Revolving
-------------------------------------
Line Facility Fee equal to Eighteen Thousand Seven Hundred
Fifty Dollars ($18,750,00), which fee shall be due on the
date hereof and shall be fully earned and nonrefundable.
(b) Committed Equipment Line Facility Fee. A Committed Equipment
-------------------------------------
Line Facility Fee equal to: (i) Ten Thousand Dollars
($10,000.00), which fee shall be due on the date hereof, and
shall be fully earned and non-refundable.
6. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
------------------
necessary to reflect the changes described above.
7. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
------------------------------
reaffirms all terms and conditions of all security or other collateral granted
to the Lender, and confirms that the indebtedness secured thereby includes,
without limitation, the Indebtedness.
8. NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has no
-----------------------
defenses against the obligations to pay any amounts under the Indebtedness.
9. CONTINUING VALIDITY. Borrower 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;
provided however that the Schedule to the Loan Agreement shall be amended and
restated as set forth on Exhibit C attached hereto. 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.
10. JURISDICTION/VENUE. Borrower 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 Loan Modification Agreement; provided, however, that if for any
reason Lender cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa Xxxxx County, California.
11. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
----------------
only when it shall have been executed by Borrower and Lender (provided, however,
in no event shall this Loan Modification Agreement become effective until signed
by an officer of Lender in California).
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This Loan Modification Agreement is executed as of the date first written
above.
BORROWER: LENDER:
SEACHANGE INTERNATIONAL, INC. SILICON VALLEY BANK, doing business as
SILICON VALLEY EAST
By: X X XXXXXXX By:_________________________________
----------------------------
Name: X X XXXXXXX Name:_______________________________
----------------------------
Title: Vice President Title:______________________________
----------------------------
SILICON VALLEY BANK
By:_________________________________
Name:_______________________________
Title:______________________________
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APPENDIX 1
----------
LIBOR SUPPLEMENT TO AGREEMENT
This LIBOR Supplement to Agreement (the "Supplement") is a supplement to the
Loan and Security Agreement (the "Loan Agreement") dated as of November 10,
1998, between Silicon Valley Bank ("Bank") and Seachange International, Inc.
("Borrower"), and forms a part of and is incorporated into the Loan Agreement.
1. Definitions.
-----------
"Business Day" means a day of the year (a) that is not a Saturday, Sunday
or other day on which banks in the State of California or the City of London are
authorized or required to close and (b) on which dealings are carried on in the
interbank market in which Bank customarily participates.
"Interest Period" means for each LIBOR Rate Loan, a period of approximately
one, two or three months as the Borrower may elect, provided that the last day
--------
of an Interest Period for a LIBOR Rate Loan shall be determined in accordance
with the practices of the LIBOR interbank market as from time to time in effect,
provided, further, in all cases such period shall expire not later than the
-------- -------
applicable Maturity Date.
"Interest Rate" shall mean as to: (a) Prime Rate Loans, a rate equal to the
Prime Rate; and (b) LIBOR Rate Loans, a rate of 2.0% per annum in excess of the
LIBOR Rate (based on the LIBOR Rate applicable for the Interest Period selected
by the Borrower).
"LIBOR Base Rate" means, for any Interest Period for a LIBOR Rate Loan, the
rate of interest per annum determined by Bank to be the per annum rate of
interest as which deposits in United States Dollars are offered to Bank in the
London interbank market in which Bank customarily participates at 11:00 A.M.
(local time in such interbank market) two (2) Business Days before the first
day of such Interest Period for a period approximately equal to such Interest
Period and in an amount approximately equal to the amount of such Loan.
"LIBOR Rate" shall mean, for any Interest Period for a LIBOR Rate Loan, a
rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) equal
to (i) the LIBOR Base Rate for such Interest Period divided by (ii) 1 minus the
Reserve Requirement for such Interest Period.
"LIBOR Rate Loans" means any Loans made or a portion thereof on which
interest is payable based on the LIBOR Rate in accordance with the terms hereof.
"Prime Rate" means the variable rate of interest per annum, most recently
announced by Bank as its "prime rate," whether or not such announced rate is the
lowest rate available from Bank. The interest rate applicable to the Prime Rate
Loans shall change on each date there is a change in the Prime Rate.
"Prime Rate Loans" means any Loans made or a portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms hereof.
"Regulatory Change" means, with respect to Bank, any change on or after the
date of this Loan Agreement in United States federal, state or foreign laws or
regulations, including Regulation D, or the adoption or making on or after such
date of any interpretations, directives or requests applying to a class of
lenders including Bank of or under any United States federal or state, or any
foreign, laws or
-14-
regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"Reserve Requirement" means, for any Interest Period, the average maximum
rate at which reserves (including any marginal, supplemental or emergency
reserves) are required to be maintained during such Interest Period under
Regulation D against "Eurocurrency liabilities" (as such term is used in
Regulation D) by member banks of the Federal Reserve System. Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by Bank by reason of any Regulatory Change
against (I) any Category of liabilities which includes deposits by reference to
which the LIBOR Rate is to be determined as provided in the definition of "LIBOR
Base Rate" or (ii) any category of extensions of credit or other assets which
include Loans.
2. Requests for Loans; Confirmation of Initial Loans. Each LIBOR Rate Loan
-------------------------------------------------
shall be made upon the irrevocable written request of Borrower received by Bank
not later than 11:00 a.m. (Santa Clara, California time) on the Business Day
three (3) Business Days prior to the date such Loan is to be made. Each such
notice shall specify the date such Loan is to be made, which day shall be a
Business Day; the amount of such Loan, the Interest Period for such Loan, and
comply with such other requirements as Bank determines are reasonable or
desirable in connection therewith.
Each written request for a LIBOR Rate Loan shall be in the form of a LIBOR
Rate Loan Borrowing Certificate as set forth on Exhibit A, which shall be duly
---------
executed by the Borrower.
3. Conversion/Continuation of Loans.
--------------------------------
(a) Borrower may from time to time submit in writing a request that Prime
Rate Loans be converted to LIBOR Rate Loans or that any existing LIBOR Rate
Loans continue for an additional Interest Period. Such request shall specify the
amount of the Prime Rate Loans which will constitute LIBOR Rate Loans (subject
to the limits set forth below) and the Interest Period to be applicable to such
LIBOR Rate Loans. Each written request for a conversion to a LIBOR Rate Loan or
a continuation of a LIBOR Rate Loan shall be substantially in the form of a
LIBOR Rate Conversion/Continuation Certificate as set forth on Exhibit B, which
---------
shall be duly executed by the Borrower. Subject to the terms and conditions
contained herein, three (3) Business Days after Bank's receipt of such a request
from Borrower, such Prime Rate Loans shall be converted to LIBOR Rate Loans or
such LIBOR Rate Loans shall continue, as the case may be provided that:
(i) no Event of Default or event which with notice or passage of time or
both would constitute an Event of Default exists;
(ii) no party hereto shall have sent any notice of termination of this
Supplement or of the Loan Agreement;
(iii) Borrower shall have complied with such customary procedures as Bank
has established from time to time for Borrower's requests for LIBOR Rate Loans;
(iv) the amount of a LIBOR Rate Loan shall be $100,000 or such greater
amount which is an integral multiple of $50,000; and
(v) Bank shall have determined that the Interest Period or LIBOR Rate is
available to Bank which can be readily determined as of the date of the request
for such LIBOR Rate Loan.
-15-
Any request by Borrower to convert Prime Rate Loans to LIBOR Rate Loans or
continue any existing LIBOR Rate Loans shall be irrevocable. Notwithstanding
anything to the contrary contained herein, Bank shall not be required to
purchase United States Dollar deposits in the London interbank market or other
applicable LIBOR Rate market to fund any LIBOR Rate Loans, but the provisions
hereof shall be deemed to apply as if Bank had purchased such deposits to fund
the LIBOR Rate Loans.
(b) Any LIBOR Rate Loans shall automatically convert to Prime Rate Loans
upon the last day of the applicable Interest Period, unless Bank has received
and approved a complete and proper request to continue such LIBOR Rate Loan
at least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any LIBOR Rate Loans shall, at Bank's option, convert to Prime
Rate Loans in the event that (i) an Event of Default, or event which with the
notice or passage of time or both would constitute an Event of Default, shall
exist, (ii) this Supplement or the Loan Agreement shall terminate, or (iii) the
aggregate principal amount of the Prime Rate Loans which have previously been
converted to LIBOR Rate Loans, or the aggregate principal amount of existing
LIBOR Rate Loans continued, as the case may be, at the beginning of an Interest
Period shall at any time during such Interest Period exceeds the Revolving
Maturity Date. Borrower agrees to pay to Bank, upon demand by Bank (or Bank may,
at its option, charge Borrowers loan account) any amounts required to compensate
Bank for any loss (including loss of anticipated profits), cost or expense
incurred by such person, as a result of the conversion of LIBOR Rate Loans to
Prime Rate Loans pursuant to any of the foregoing.
(c) On all Loans, Interest shall be payable by Borrower to Bank monthly in
arrears not later than the first day of each calendar month at the applicable
Interest Rate.
4. Additional Requirements/Provisions Regarding LIBOR Rate Loan: Etc.
------------------------------------------------------------------
(a) If for any reason (including voluntary or mandatory prepayment or
acceleration), Bank receives all or part of the principal amount of a LIBOR Rate
Loan prior to the last day of the Interest Period for such Loan, Borrower shall
immediately notify Borrower's account officer at Bank and, on demand by Bank,
pay Bank the amount (if any) by which (i) the additional interest which would
have been payable on the amount so received had it not been received until the
last day of such Interest Period exceeds (ii) the interest which would have been
recoverable by Bank by placing the amount so received on deposit in the
certificate of deposit markets or the offshore currency interbank markets or
United States Treasury investment products, as the case may be, for a period
starting on the date on which it was so received and ending on the last day of
such Interest Period at the interest rate determined by Bank in its reasonable
discretion. Bank's determination as to such amount shall be conclusive absent
manifest error.
(b) Borrower shall pay to Bank, upon demand by Bank, from time to time
such amounts as Bank may determine to be necessary to compensate it for any
costs incurred by Bank that Bank determines are attributable to its making or
maintaining of any amount receivable by Bank hereunder in respect of any Loans
relating thereto (such increases in costs and reductions in amounts receivable
being herein called "Additional Costs"), in each case resulting from any
Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to Bank
under this Supplement in respect of any Loans (other than changes which affect
taxes measured by or imposed on the overall net income of Bank by the
jurisdiction in which such Bank has its principal office); or
-16-
(ii) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of Bank (including any Loans or any deposits
referred to in the definition of "LIBOR Base Rate"): or
(iii) imposes any other condition affecting this Supplement (or any of
such extensions of credit or liabilities).
Bank will notify Borrower of any event occurring after the date of the Loan
Agreement which will entitle Bank to compensation pursuant to this section as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation. Bank will furnish Borrower with a statement setting
forth the basis and amount of each request by Bank for compensation under this
Section 4. Determinations and allocations by Bank for purposes of this Section 4
of the effect of any Regulatory Change on its costs of maintaining its
obligations to make Loans or of making or maintaining Loans or on amounts
receivable by it in respect of Loans, and of the additional amounts required to
compensate Bank in respect of any Additional Costs, shall be conclusive absent
manifest error.
(c) Borrower shall pay to Bank, upon the request of Bank, such amount or
amounts as shall be sufficient (in the sole good faith opinion of such Bank) to
compensate it for any loss, costs or expense incurred by it as a result of any
failure by Borrower to borrow a Loan on the date for such borrowing specified in
the relevant notice of borrowing hereunder.
(d) If Bank shall determine that the adoption or implementation of any
applicable law, rule, regulation or treaty regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
Interpretation or administration thereof, or compliance by Bank (or its
applicable lending office) with any respect or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would, have the effect of reducing the rate of
return on capital of Bank or any person or entity controlling Bank (a "Parent")
as a consequence of its obligations hereunder to a level below that which Bank
(or its Parent) could have achieved but for such adoption, change or compliance
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by Bank to be material, then from time to time, within 15 days
after demand by Bank, Borrower shall pay to Bank such additional amount or
amounts as will compensate Bank for such reduction. A statement of Bank claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive absent manifest error.
(e) If at any time Bank, in its sole and absolute discretion, determines
that: (i) the amount of the LIBOR Rate Loans for periods equal to the
corresponding Interest Periods are not available to Bank in the offshore
currency interbank markets, or (ii) the LIBOR Rate does not accurately reflect
the cost to Bank of lending the LIBOR Rate Loan, then Bank shall promptly give
notice thereof to Borrower, and upon the giving of such notice Bank's obligation
to make the LIBOR Rate Loans shall terminate, unless Bank and the Borrower agree
in writing to a different interest rate Loans shall terminate, unless Bank and
the Borrower agree in writing to a different interest rate applicable to LIBOR
Rate Loans. If it shall become unlawful for Bank to continue to fund or maintain
any Loans, or to perform its obligations hereunder, upon demand by Bank,
Borrower shall prepay the Loans in full with accrued interest thereon and all
other amounts payable by Borrower hereunder (including, without limitation, any
amount payable In connection with such prepayment pursuant to Section 4(a)).
-17-
