Exhibit 10.1
LOAN DOCUMENT MODIFICATION AGREEMENT
(No. 6; dated as of March 7, 1997)
LOAN DOCUMENT MODIFICATION AGREEMENT dated as of March 7, 1997 by and
between FOCUS ENHANCEMENTS, INC., a Delaware corporation and LAPIS TECHNOLOGIES,
INC., a California corporation, (each a "Borrower" and together the "Borrowers")
and SILICON VALLEY BANK (the "Bank"), a California chartered bank with its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000,
and with a loan production office located at Wellesley Xxxxxx Xxxx, 00 Xxxxxxx
Xxxxxx, Xxxxxxxxx, XX 00000, doing business under the name "Silicon Valley
East".
1. Reference to Existing Loan Documents.
Reference is hereby made to that Credit Agreement dated January 20,
1994 between the Bank and the Borrower as previously amended as of January 24,
1994, March 30,1994, October 6, 1994, June 15, 1995 and April 5, 1996 (with the
attached schedules and exhibits, the "Credit Agreement") and the Loan Documents
referred to therein, including without limitation that certain Amended and
Restated Promissory Note of the Borrower dated April 5, 1996 in the principal
amount of $900,000 (the "Note"), and the Security Documents referred to therein.
Unless otherwise defined herein, capitalized terms used in this Agreement shall
have the same respective meanings as set forth in the Credit Agreement.
2. Effective Date.
This Agreement shall become effective as of March 7, 1997 (the
"Effective Date"), provided that the Bank shall have received the following on
or before May 14, 1997 and provided further, however, in no event shall this
Agreement become effective until signed by an officer of the Bank in California:
a. two copies of this Agreement, duly executed by the Borrower,
with the attached consent letter duly executed by C. Xxxxx Xxxxxxxxx, duly
executed thereby; and
b. an amended and restated promissory note in the form enclosed
herewith (the "Amended Note"), duly executed by the Borrower.
By the signature of its authorized officer below, each Borrower is
hereby representing that, except as modified in Schedule A attached hereto, the
representations of the Borrowers set forth in the Loan Documents (including
those contained in the Credit Agreement, as amended by this Agreement) are true
and correct as of the Effective Date as if made on and as of such date. In
addition, the Borrowers confirm their authorization as to the debiting of their
account with the Bank in the amount of $7,500 in order to pay the Bank's
facility fee for the period up to and including the extended Expiry Date and in
the amount of $1,800 to pay the fees of Xxxxxxxx & Worcester LLP, special
counsel to the Bank for services rendered to the Bank in connection with this
Agreement. Finally, each Borrower (and each guarantor, if any, signing below)
agrees that, as of the Effective Date, it has no defenses against its
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obligations to pay any amounts under the Credit Agreement and the other Loan
Documents; and in consideration for the Bank's entering into this Amendment, the
Borrowers hereby also agree to release and forever discharge the Bank and its
affiliates, officers, directors, agents, attorneys, employees, successors and
assigns of and from all manner of actions, causes of action, suits, judgments,
claims and demands whatsoever in law or in equity, which have arisen from the
beginning of time up to the date of the Borrower's acceptance of this Amendment,
whether arising in connection with the transaction contemplated hereby or by the
Credit Agreement or otherwise.
3. Description of Change in Terms.
As of the Effective Date, the Credit Agreement is modified in the
following respects:
a. The figure "$900,000" appearing on the cover page and in the
fifth line of Section 1.1 of the Credit Agreement is hereby deleted and there is
hereby substituted the figure "$800,000."
b. Section 1.5 of the Credit Agreement is hereby amended by
deleting "March 7, 1997" appearing in the second line thereof as the Maturity
Date and substituting in place thereof "March 7, 1998." Section 1.5 is further
amended by restating the last sentence of such sections as follows: "The Bank
shall meet with an officer of the Borrowers on or about January 7, 1998 in order
to discuss (a) an extension to the Guarantee of C. Xxxxx Xxxxxxxxx; and (b) a
plan acceptable to the Bank for repayment of the entire outstanding balance of
the Note by the Maturity Date."
c. Numbered paragraphs 7.10 through 7.13 are hereby restated in
their entirety as follows:
"7.10 Ratio of Eligible Accounts Receivable to Aggregate
Extensions of Credit. The Borrowers will not permit the ratio cash plus
of the aggregate amount of Eligible Domestic Accounts Receivable and
Eligible International Accounts Receivable (excluding in any event from
such calculation accounts receivable falling within the definition of
Apple Collateral as such term is defined in the Intercreditor Agreement
dated as of October 18, 1994 between Focus Enhancements, Inc., the Bank
and Xxxx Xxxxxxx) to aggregate Extensions of Credit to exceed 2.5 to 1
at the end of any month.
7.11 Minimum Working Capital. The Borrower will not permit
Working Capital, net of Deferred Revenue, to be less than $800,000 at
the end of any month, commencing May 31, 1997. For purposes hereof, (a)
"Working Capital" shall mean Current Assets less Current Liabilities,
and (b) "Deferred Revenue" shall mean revenue that is deferred in
accordance with GAAP.
7.12 Minimum Profitability. The Borrowers will not permit Net
Losses to be greater than, or Net Income to be less than, the amounts
set forth opposite the respective fiscal quarter ends listed below.
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Quarter Ending Minimum Profitability
March 31, 1997 ($250,000)
June 30, 1997 $100,000
September 30, 1997 $100,000
December 31, 1997 and each fiscal
quarter thereafter $100,000
7.13 [Not Utilized]"
d. Section 9.1 is hereby amended by inserting the following new
definition in alphabetical order:
"'Current Assets' means, as of any applicable, date, all
amounts that should, in accordance with GAAP, be included as current
assets on the consolidated balance sheet of Borrowers and their
respective Subsidiaries taken as a whole."
e. The form of Compliance Certificate attached to the Credit
Agreement as Exhibit C is hereby restated in its entirety in the form of Exhibit
C hereto.
f. The Credit Agreement and the other Loan Documents are hereby
amended wherever necessary or appropriate to reflect the foregoing changes.
4. Waivers.
The Bank hereby waives any Event of Default arising as a result of
non-compliance by the Borrowers with any financial covenants set forth in
numbered Sections 7.10 through 7.13 for any fiscal period through February 28,
1997.
5. Continuing Validity.
Upon the effectiveness hereof, each reference in each Security
Instrument or other Loan Document to "the Credit Agreement", "thereunder",
"thereof", "therein", or words of like import referring to the Credit Agreement,
shall mean and be a reference to the Credit Agreement, as amended hereby. Except
as specifically set forth above, the Credit Agreement shall remain in full force
and effect and is hereby ratified and confirmed. Each of the other Loan
Documents is in full force and effect and is hereby ratified and confirmed. The
amendments set forth above (i) do not constitute a waiver or modification of any
term, condition or covenant of the Credit Agreement or any other Loan Document,
other than as expressly set forth herein, and (ii) shall not prejudice any
rights which the Bank may now or hereafter have under or in connection with the
Credit Agreement, as modified hereby, or the other Loan Documents and shall not
obligate the Bank to assent to any further modifications.
6. Miscellaneous.
a. This Agreement may be signed in one or more counterparts each
of which taken together shall constitute one and the same document.
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b. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
c. EACH BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, UNCONDITIONALLY, THE NONEXCLUSIVE 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.
d. The Borrowers agree, jointly and severally to promptly pay on
demand all costs and expenses of the Bank in connection with the preparation,
reproduction, execution and delivery of this letter amendment and the other
instruments and documents to be delivered hereunder, including the reasonable
fees and out-of-pocket expenses of Xxxxxxxx & Worcester LLP, special counsel for
the Bank with respect thereto.
IN WITNESS WHEREOF, the Bank and the Borrower have caused this
Agreement to be signed under seal by their respective duly authorized officers
as of the date set forth above.
SILICON VALLEY EAST, a Division
of Silicon Valley Bank
By: /s/Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
SILICON VALLEY BANK
By: /s/Xxx Xxxxx
Name: Xxx Xxxxx
Title: AVP
(signed in Santa Clara, CA)
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FOCUS ENHANCEMENTS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Sr. Vice President & CFO
LAPIS TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Sr. Vice President & CFO
