Exhibit 10.12
FIRST LOAN MODIFICATION AGREEMENT
The First Loan Modification Agreement is entered into as of ________,
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
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be 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
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 by the Collateral 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 TERMS.
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A. Modification(s) to Loan Agreement.
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1. 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).
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.
2. The Loan Agreement shall be amended by inserting into Section
1.1, the following definitions:
"Equipment Line No. 1" has the meaning set forth in Section
2.1.2.
"Equipment Line No. 2" has the meaning set forth in Section
2.1.2.
"Equipment Line No. 3" has the meaning set forth in Section
2.1.2.
"Equipment Availability End Date No. 3" has the meaning set
forth in Section 2.1.2.
"Equipment Maturity Date No. 3" means March 31, 2003.
3. 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 place
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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"). 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. 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, 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 one percent
(1.0%) above the Prime Rate and 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.
Equipment Advances, once repaid, may not be reborrowed.
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(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."
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 once advance to take place
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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"). 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, warrant 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
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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 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."
2. The Loan Agreement shall be amended by deleting the following in
Section 6.3:
"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 affects the
value of the Intellectual
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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, together with aged 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.
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
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 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 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, together with aged listings of accounts
receivable.
Within forty-five (45) days after the last day of each quarter,
Borrower shall deliver to Bank with 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."
3. The Loan Agreement shall be amended by deleting the following
financial covenants appearing as Sections 6.8 through 6.12:
"6.8 Quick Ratio. Borrower shall maintain, measured as of the
last day of each quarter, a ratio of Quick Assets to Current
Liabilities of at least 0.75 to 1.0.
6.9 Tangible Net Worth. Borrower shall maintain, measured as of
the last day of each quarter, a Tangible Net Worth of not less
than: (i) Twenty Nine Million Dollars ($29,000,000.00) as of the
last day of the quarter ending September 30, 1998; and (ii)
Twenty-Eight Million Five Hundred Thousand Dollars
($28,500,000.00) as of the last day of each calendar quarter
thereafter.
6.10 Debt-Net Worth Ratio. Borrower shall maintain, measured as
of the last day of each quarter, a ratio of Total Liabilities to
Tangible Net Worth of not greater than 0.80 to 1.0.
6.11 Profitability. Borrower shall maintain, measured as of the
last day of each quarter: (i) a maximum net loss of One Million
Five Hundred Thousand Dollars ($1,500,000.00) as of the last day
of the third quarter of 1998; (ii) a maximum net loss of One
Million Dollars ($1,000,000.00) as of the last day of the fourth
quarter of 1998; and (iii) a profit for each quarter commencing
with the first quarter of Borrower's fiscal year 1999 with an
allowance for one quarterly loss during such fiscal year of no
greater than Two Hundred Fifty Thousand Dollars ($250,000.00).
6.12 Debt Service Coverage Ratio. Beginning with the last day of
the first quarter following the Debt Service Coverage Event,
Borrower shall maintain, measured as of the last day of each
quarter, a Debt Service Coverage Ratio of 1.50 to 1.0."
and substituting the following:
"6.8 [Intentionally Deleted]
6.9 [Intentionally Deleted]
6.10 Quick Ratio. Borrower shall maintain, measured as of the
last day of each quarter, a ratio of Quick Assets to Current
Liabilities of at least 1.0 to 1.0.
6.11 Tangible Net Worth. Borrower shall maintain, measured as of
the last day of each quarter, a Tangible Net Worth of not less
than Thirty Million ($30,000,000.00) as of the month ending
December 31, 1999, and as of the last day of each month
thereafter.
6.12 Profitability. Borrower shall maintain, measured as of the
last 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
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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 ($800,000.00)."
2. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
3. 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.
4. 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.
5. 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. 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.
6. 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.
7. 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: /s/ XX XXXXXXX By:
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Name: XX XXXXXXX Name:
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Title: Vice President Title:
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SILICON VALLEY BANK
By:
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Name:
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Title:
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