1
EXHIBIT 10.2
THIRD LOAN MODIFICATION AGREEMENT
This Third Loan Modification Agreement is entered into as of August 2,
1999 by and between HIE, Inc., formerly known as Healthdyne Information
Enterprises, Inc., a Georgia corporation ("Borrower") whose address is 0000
Xxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxxx 00000 and Silicon Valley Bank, a
California-chartered bank ("Bank") with a loan production office located at 0000
Xxxxxxxxx Xxxx, X.X., Xxxxx 000, Xxxxxxx, Xxxxxxx 00000.
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 August 3, 1998 by and
between Borrower and Bank, as amended by that certain Loan Modification
Agreement dated November 13, 1998 between Borrower and Bank, that certain Second
Loan Modification Agreement dated May 13, 1999 between Borrower and Bank, and as
may be further amended from time to time (the "Loan Agreement") and Promissory
Note in the principal amount of $5,000,000 dated August 3, 1998 (the "Note").
The Loan Agreement and Note provide for, among other things, a line of credit in
the original principal amount of Five Million Dollars ($5,000,000). Defined
terms used herein without definition shall have the same meaning ascribed
thereto in the Loan Agreement and Note.
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the obligations
is secured by the Collateral as described in the Loan Agreement and is
guaranteed by HubLink, Inc. ("Guarantor") a subsidiary of Borrower. The
obligations are also secured by all the assets of Guarantor pursuant to a
Security Agreement dated August 3, 1998 between Guarantor and Bank, a pledge of
the stock of Guarantor pursuant to a Stock Pledge Agreement dated August 3, 1998
between Borrower and Bank, and certain Intellectual Property Security Agreements
by and between Borrower and the Bank and by and between Guarantor and the Bank
(the "IP Security Agreements"), filed with the U.S. Patent and Trademark Office.
Hereinafter, the above-described security documents, together with all other
documents securing repayment of the Note shall be referred to as the "Security
Documents". Hereinafter, the Loan Agreement, the Security Documents, together
with all other documents evidencing or securing the Committed Revolving Line,
shall be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Waiver of Certain Covenants. The Bank hereby waives the
Company's failure to meet (1) the Adjusted Quick Ratio
covenant set forth in Section 6.8 of the Loan Agreement for
the second calendar quarter ending June 30, 1999 and (2) the
Profitability covenant as set forth in Section 6.9 of the Loan
Agreement for the second calendar quarter ending June 30 1999.
This waiver shall apply to the specific covenant violations
set forth above for the time periods set for above, and shall
not be deemed a waiver of any other breaches or defaults, or
future breaches or defaults.
1
2
B. Modification of Committed Revolving Line.
(1) The Committed Revolving Line is hereby renewed until
September 30, 1999.
(2) The interest rate for the Committed Revolving Line is
hereby increased to two (2.0) percentage points in excess of
the Prime Rate.
C. Modification to Loan Agreement.
(a) Section 1.1 of the Loan Agreement shall be amended by
deleting the definition in the Loan Agreement for "Revolving
Maturity Date" and replacing it with the following:
"Revolving Maturing Date" means September 30, 1999."
(b) Section 2.3(a) is hereby amended by deleting it in its
entirety and replacing it with the following:
"(a) Interest Rate. Except as set forth in Section 2.3(b), any
Advances shall bear interest, on the average daily balance
thereof, at a per annum rate equal to two (2.0) percentage
points above the Prime Rate.
(c) Section 6.3 of the Loan Agreement is amended by
adding at the end thereof the following:
"Borrower shall deliver a Compliance Certificate with
the monthly financial statements signed by a
Responsible Officer in substantially the form of
Exhibit B attached hereto."
(d) Section 6.8 shall be deleted in its entirety and
replaced with the following new Section 6.8:
"6.8 Adjusted Quick Ratio. Borrower shall
maintain a ratio of Quick Assets to Current
Liabilities, less deferred maintenance
revenue as follows:
(a) as of the last day of each fiscal quarter,
of at least 1.50 to 1.0; and
(b) as of the last day of each month that is not
the last month of a fiscal quarter, of at
least 1.0 to 1.0."
(e) Section 6.9 shall be deleted in its entirety and
replaced with the following new Section 6.9:
"6.9 Profitability. Borrower shall maintain a
cumulative maximum Net Loss after taxes,
less all increase in capitalized software
costs, and
2
3
exclusive of one-time write-offs for
acquisitions of the time periods set forth
below:
Time Period Max Net Loss
----------- ------------
April 1, 1999 - June 30, 1999 $(1,650,000)
July 1, 1999 - September 30, 1999 $(1,000,000)
(f) Exhibit D to the Loan Agreement is deleted in its
entirety and replaced with a new Exhibit D attached hereto as
Schedule 1.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE. In connection with this Agreement, Borrower shall
pay a fee equal to One Thousand ($1,000.00) which facility fee shall be fully
earned and non-refundable (the "Loan Fee".)
6. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants
to Bank as follows:
(a) Borrower has adequate corporate power and authority to execute
and deliver this Third Loan Modification Agreement and the other documents
executed and/or delivered in connection herewith (collectively, the
"Modification Documents") and to perform its respective obligations hereunder
and thereunder, and under the Existing Loan Documents, as amended hereby. Each
of this Third Loan Modification Agreement and the other Modification Documents
has been duly authorized, executed and delivered by Borrower and does not
contravene any law, rule or regulation applicable to Borrower or any of the
terms of its Certificate of Incorporation or bylaws, or any other indenture,
agreement or undertaking to which Borrower is a party. This Third Loan
Modification Agreement and the other Modification Documents effectively amend
the Existing Loan Documents in accordance with the terms hereof and thereof.
Borrower's obligations hereunder and under the other Modification Documents, and
under the Loan Agreement and the other Existing Loan Documents, each as amended
hereby and thereby, constitute legally valid and binding obligations of Borrower
enforceable against Borrower in accordance with their respective terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting the rights of creditors generally
and by equitable principles.
(b) All of the representations and warranties made by Borrower in
the Loan Agreement and the other Existing Loan Documents are true and correct on
the date hereof as if made on and as of the date hereof and are so repeated
herein, except that representations and warranties of financial statements or
conditions as of an earlier date relate solely to such earlier date.
(c) Upon the execution and delivery of this Third Loan
Modification Agreement and the satisfaction of the conditions precedent set
forth in Section 7 hereof, no Event of Default shall exist and be continuing.
3
4
7. CONDITIONS PRECEDENT.
(a) The agreements contained herein and the amendments
contemplated hereby shall not be effective unless each of the following
conditions precedent is satisfied:
(1) All of the representations and warranties made by
Borrower in Section 6 hereof shall be true and correct;
(2) Bank shall receive in form and substance satisfactory
to Bank, a Certificate of Officer of Borrower and Guarantor, as to the
satisfaction of the condition specified in paragraph (1) of this
Section 7(a);
(3) Borrower's payment of the Loan Fee;
(4) Delivery of a Certificate of an Officer of Borrower
stating that no changes have occurred with respect to Borrower's
Certificate of Good Standing issued by the State of Georgia and
Borrower's Certificate of Authority to transact business issued by the
states of Tennessee and Texas, since the respective dates of issuance
thereof;
(5) Delivery of a Certificate of an Officer of Guarantor
stating that no changes have occurred with respect to Guarantor's
Certificate of Good Standing issued by the State of Ohio and
Guarantor's Certificate of Authority to transact business issued by the
State of Georgia, since the respective dates of issuance thereof;
(6) Amended and Restated Revolving Credit Note; and
(7) Bank shall have received, in form and substance
satisfactory to Bank, such other documents as Bank shall deem necessary
and/or appropriate.
Upon satisfaction of each of the conditions precedent set forth in this Section
7, the agreements contained herein and the amendments contemplated hereby shall
be deemed effective as of the date hereof.
(b) From and after the satisfaction of the conditions precedent set
forth in Section 7(a) hereof, Bank's obligations to make any Advances to
Borrower under the Loan Agreement and the other Loan Documents shall be subject
to the additional conditions that (i) all of the representations and warranties
made by Borrower herein, whether directly or incorporated herein by reference,
shall be true and correct immediately prior to the time of the proposed Advance
as if made at and as of such time, except that representations and warranties of
financial statements or conditions as of an earlier date relate solely to such
earlier date, and (ii) no Event of Default, or event or condition which, with
notice or lapse of time, or both, would constitute an Event of Default, would
occur after giving effect to the making of such Advance. From and after the
satisfaction of the conditions precedent set forth in Section 7(a) hereof, each
request by Borrower for a Advance under the Loan Agreement and the other Loan
Documents shall be deemed to be a representation and warranty by Borrower that
all of the conditions precedent in this Section 7(b) have been met.
4
5
8. NO DEFENSES OF BORROWER. Borrower agrees that it has no defenses
against the obligations to pay any amounts under the Loan Agreement or Note.
9. CONTINUING VALIDITY. Borrower understands and agrees that in modifying
the Existing Loan Documents, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents and
herein, and Borrower hereby ratifies and affirms all such representations and
warranties as if fully restated herein. Except as expressly modified pursuant to
this Third Loan Modification Agreement, the terms of the Existing Loan Documents
remain unchanged and in full force and effect. Bank's agreement to modification
of the Existing Loan Documents pursuant to this Third Loan Modification
Agreement in no way shall obligate Bank to make any future amendments or
modifications to the Existing Loan Documents. Nothing in this Third Loan
Modification Agreement shall constitute a novation or satisfaction of the
Borrower's Obligations to Bank. It is the intention of Bank and Borrower to
retain as liable parties all makers and endorsers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker, endorser,
or guarantor will be released by virtue of this Third Loan Modification
Agreement. The terms of this paragraph apply not only to this Third Loan
Modification Agreement, but also to all subsequent loan modification agreements.
10. MISCELLANEOUS. THIS LOAN MODIFICATION AGREEMENT SHALL BE CONSIDERED A
"LOAN DOCUMENT" UNDER AND AS DEFINED IN THE LOAN AGREEMENT. TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OR 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. THE BORROWER AND THE
BANK ALSO AGREE THAT ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ENFORCE ANY JUDGMENT OBTAINED
AGAINST THE BORROWER IN CONNECTION WITH THIS AGREEMENT OR SUCH OTHER LOAN
DOCUMENT, MAY BE BROUGHT BY THE BANK OR BORROWER IN ANY STATE OR FEDERAL COURT
SITTING IN THE COUNTY OF THE STATE IN WHICH BANK'S ADDRESS SHOWN IN SECTION 10
OF THE LOAN AGREEMENT IS LOCATED, OR IN ANY OTHER COURT TO THE JURISDICTION OF
WHICH SUCH BORROWER OR ANY OF ITS PROPERTY IS OR MAY BE SUBJECT. EACH OF THE
BORROWER AND THE BANK IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE AFORESAID
STATE AND FEDERAL COURTS, AND IRREVOCABLY WAIVES ANY PRESENT OR FUTURE OBJECTION
TO VENUE IN ANY SUCH COURT, AND ANY PRESENT OR FUTURE CLAIM THAT ANY SUCH COURT
IS
5
6
AN INCONVENIENT FORUM, IN CONNECTION WITH ANY ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
This Loan Modification Agreement is executed as of the date first
written above.
BORROWER: BANK:
HIE, INC. F/K/A
HEALTHDYNE INFORMATION SILICON VALLEY BANK
ENTERPRISES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx By: /s/ Xxxxxx Xxxx
----------------------------- ------------------------
Its: Chief Financial Officer Its: Vice President
----------------------------- ------------------------
[CORPORATE SEAL]
Agreed and consented to as Guarantor:
HUBLINK, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Its: President
-----------------------------
[CORPORATE SEAL]
6
7
SCHEDULE 1
TO: SILICON VALLEY BANK
FROM: HIE, INC., formerly know as HEALTHDYNE INFORMATION ENTERPRISES, INC.
The undersigned authorized officer of Healthdyne Information
Enterprises, Inc. hereby certifies that in accordance with the terms and
conditions of the Loan and Security Agreement between Borrower and Bank, as
amended by that certain Loan Modification dated November 13, 1998, as amended,
and as may be further amended from time to time (the "Agreement"), (i) Borrower
is in complete compliance for the period ending _________ with all required
covenants except as noted below and (ii) all representations and warranties of
Borrower stated in the Agreement are true and correct in all material respects
as of the date hereof. Attached herewith are the required documents supporting
the above certification. The Officer further certifies that these are prepared
in accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The Officer expressly acknowledges that no
borrowings may be requested by the Borrower at any time or date of determination
that Borrower is not in compliance with any of the terms of the Agreement, and
that such compliance is determined not just at the date this certificate is
delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Monthly financial statements Monthly within 30 days Yes No
Quarterly financial statements Quarterly within 45 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
10Q and 10K Within 5 days after filing with the SEC Yes No
A/R Agings Monthly within 30 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Monthly Basis(1):
Minimum Adjusted Quick Ratio(2) 1.0:1.0 _____:1.0 Yes No
Maintain on a Quarterly Basis:
Minimum Adjusted Quick Ratio(2) 1.50:1.0 _____:1.0 Yes No
Profitability
Q 2 99 ($1,650,000) $________ Yes No
Q 3 99 ($1,000,000) $________ Yes No
(1) Only for those months that are not at the end of a fiscal quarter
(2) Quick Ratio" means, as of an applicable date, the ratio of (i) Quick Assets
to (ii) Current Liabilities less deferred maintenance revenue.
=====================================================
BANK USE ONLY
RECEIVED BY:__________________DATE:___________
REVIEWED BY:____________________
COMPLIANCE STATUS: YES / NO
=====================================================
COMMENTS REGARDING EXCEPTIONS:
Sincerely,
_______________________ Date:_______________
SIGNATURE
_______________________
TITLE
7
