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EXHIBIT 10.1B
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of March 29, 1999, by
and between ObjectShare, Inc. ("Borrower") and Silicon Valley Bank ("Bank").
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 December 10, 1998, as may
be amended from time to time. (the "Loan Agreement"). The Loan Agreement
provided for, among other things, a Committed Revolving Line in the original
principal amount of Five Million Dollars ($5,000,000). 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 Bank shall be referred to as
the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the indebtedness
is secured by the Collateral as described in the Loan Agreement and in that
certain Collateral Assignment, Patent Mortgage and Security Agreement, dated
December 10, 1998, by and between Borrower and Bank.
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 Loan Agreement.
1. Item "(a)" under Section 2.3 entitled "Interest Rates,
Payments, and Calculations" is hereby amended to read as
follows:
Except as set forth in Section 2.3(b). Advances shall bear
interest, on the average daily balance, at a per annum rate
equal to:
1.75 percentage points above the Prime Rate if Borrower's Total
Liabilities to Tangible Net Worth is greater than or equal to
2.50 to 1.00; or
1.00 percentage point above the Prime Rate if Borrower's Total
Liabilities to Tangible Net Worth is less than 2.50 to 1.00,
but greater than or equal to 2.00 to 1.00; or
0.75 percentage points above the Prime Rate if Borrower's Total
Liabilities to Tangible Net Worth is less than 2.00 to 1.00.
The per annum rate applied to Advances shall be adjusted, if
needed, on the first day of the month following Bank's receipt
of Borrower's Compliance Certificate indicating a material
change in Borrower's Total Liabilities to Tangible Net Worth.
2. Notwithstanding the requirements contained in the second
paragraph under Section 6.3 entitled "Financial Statements,
Reports, Certificates," until the earlier of either (a) June
30, 1999 or (b) Borrower's Quick Assets to Current Liabilities
less deferred revenues are greater than or equal to 1.50 to
1.00, within five (5) days after the last day and the 15th of
each month, Borrower shall deliver to Bank
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a Borrowing Base Certificate signed by a Responsible Officer,
together with aged listings of accounts receivable and accounts
payable.
3. Notwithstanding the financial covenant requirement in Section
6.8 entitled "Quick Ratio", Borrower shall maintain a ratio of
Quick Assets to Current Liabilities less deferred revenues of at
least 1.30 to 1.00 for the fiscal quarter ending March 31, 1999.
4. Section 6.9 entitled "Tangible Net Worth" is hereby amended to
read as follows:
Borrower shall maintain as of fiscal quarter ending March 31,
1999, a Tangible Net Worth of not less than $1,000,000, and
increasing to $2,000,000 as of each fiscal quarter ending
thereafter.
B. Waiver of Financial Covenant Defaults
1. Bank hereby waives Borrower's existing defaults under the Loan
Agreement by virtue of Borrower's failure to comply with the
Tangible Net Worth covenant as of fiscal quarters ended
September 30, 1998 and December 31, 1998. Bank's waiver of
Borrower's compliance of this covenant shall apply only to the
foregoing periods. Accordingly, for the fiscal quarter ending
March 31, 1999, Borrower shall be in compliance with this
covenant, as amended herein.
Bank's agreement to waive the above-described default (1) in no
way shall be deemed an agreement by the Bank to waive Borrower's
compliance with the above-described covenant as of all-other
dates and (2) shall not limit or impair the Bank's right to
demand strict performance of this covenant as of all other dates
and (3) shall not limit or impair the Bank's right to demand
strict performance of all other covenants as of any date.
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 Bank a fee in the amount of One
Thousand Dollars ($1,000) (the "Loan Fee") plus all out-of-pocket expenses.
6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of the date hereof, 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, Bank
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. Bank's agreement to
modifications to the existing indebtedness pursuant to this Loan Modification
Agreement in no way shall obligate Bank to make any future modifications to the
indebtedness. 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 Loan Modification Agreement. The terms of this
paragraph apply not only to this Loan Modification Agreement, but also to all
subsequent loan modification agreements.
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8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon Borrower's payment of the Loan Fee.
This Loan Modification Agreement is executed as of the date first written
above.
BORROWER: BANK:
OBJECTSHARE, INC. SILICON VALLEY BANK
By: /s/ XXXXX X. XXXXXX By: /s/ XXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx Name: Xxx X. Xxxxxx
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Title: Chief Financial Officer Title: Vice President
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