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Exhibit 10.19
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement ("this Agreement") is made as of January
30, 1998 between FlexInternational Software, Inc., a Delaware corporation (the
"Borrower") and Fleet National Bank (the "Bank"). For good and valuable
consideration, receipt and sufficiency of which are hereby acknowledged, the
Borrower and the Bank act and agree as follows:
1. Reference is made to: (i) that certain letter agreement dated April 30,
1997 (the "Letter Agreement") between the Borrower and Fleet National Bank, (ii)
that certain $2,000,000 face principal amount promissory note dated April 30,
1997 (the "1997 Revolving Note") made by the Borrower and payable to the order
of the Bank, (iii) that certain Accounts Receivable Security Agreement dated
April 30, 1997 (the "AR Security Agreement") given by the Borrower to Fleet
National Bank and (iv) that certain $5,000,000 face principal amount promissory
note of even date herewith (the "1998 Revolving Note"). The Letter Agreement,
the AR Security Agreement and the 1998 Revolving Note are hereinafter
collectively referred to as the "Financing Documents".
2. The Letter Agreement is hereby amended, effective as of the date hereof:
a. By deleting in its entirety clause (i) of Section 1.1 of the Letter
Agreement and by substituting in its stead the following:
"(i) that certain $5,000,000 face principal amount promissory note (the
"Revolving Note") dated January 30, 1998 made by the Borrower and
payable to the order of the Bank,"
As a result, all references in the Letter Agreement to a "Revolving Note" will
be deemed to refer to the 1998 Revolving Note.
b. By deleting in its entirety clause (i) of the fourth sentence of Section
1.2 of the Letter Agreement and by substituting in its stead the following:
"(i) four (4%) percent per annum plus"
c. By inserting into the eighth sentence of Section 1.2 of the Letter
Agreement, immediately after the words "immediately available funds", the
following:
"in lawful currency of the United States"
d. By deleting from the eighth sentence of Section 1.2 of the Letter
Agreement, the words "75 Xxxxx Xxxxxx, Xxxxxx, XX 00000" and by substituting in
their stead the following:
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"One Xxxxxxx Xxxxxx, Xxxxxx, XX 00000"
e. By deleting the number "365" appearing in the last sentence of Section
1.2 of the Letter Agreement and by replacing it with the number "360".
f. By deleting from clause (i) of the first sentence of Section 1.5 of the
Letter Agreement the amount $2,000,000 and by substituting in its stead the
following:
"$5,000,000"
g. By deleting from the first sentence of clause (i) of Section 3.6 of the
Letter Agreement the words "120 days" and substituting in their stead the
following:
"90 days"
h. By deleting in its entirety Section 2.1(b) of the Letter Agreement and
substituting in its stead the following:
"(b) At the date of this letter agreement, no person is known by the
Borrower to own (based on records as of the date hereof unless otherwise
indicated in item 2.1(b)), of record or beneficially, 5% or more of the
outstanding shares of any class of capital stock of the Borrower, except
as set forth on item 2.1(b) of the attached Disclosure Schedule."
i. By deleting in their entirety Sections 3.7, 3.8 and 3.9 of the Letter
Agreement and substituting in their stead the following:
"3.7. CAPITAL BASE. The Borrower will maintain as at the end of each
fiscal quarter (commencing with its results as at December 31, 1997) a
consolidated Capital Base of not less than the then-effective Capital
Base Requirement. The Capital Base Requirement will be deemed to be have
been $2,300,000 as at September 30, 1997 and as at the last day of each
fiscal quarter thereafter (December 31, 1997 and each such subsequent
fiscal quarter-end being hereinafter referred to as a 'Determination
Date'), the Capital Base Requirement will be deemed to become an amount
equal to the sum of: (i) that Capital Base Requirement which had been in
effect at the last day of the immediately preceding fiscal quarter, plus
(ii) 75% of the net proceeds of any equity securities sold by the
Borrower during the fiscal quarter ending at such Determination Date,
plus (iii) 75% of the consolidated Net Income of the Borrower and
Subsidiaries during the fiscal quarter ending at such Determination Date
(but without giving effect to any Net Income which is less than zero for
any such fiscal quarter).
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3.8. PROFITABILITY. The Borrower will achieve quarterly Net Income of at
least $400,000 for its fiscal quarter ending December 31, 1997 and for
each fiscal quarter thereafter. The Borrower will achieve an annual Net
Income of at least $2,000,000 for its fiscal year ending December 31,
1998.
3.9. LIQUIDITY. The Borrower will maintain as at the end of each fiscal
quarter of Borrower (commencing with December 31, 1997) a Quick Ratio
which shall be not less than 2.0 to 1. As used herein, 'Quick Ratio'
means the ratio of (x) Net Quick Assets of the Borrower and Subsidiaries
to (y) consolidated Current Liabilities of the Borrower and
Subsidiaries."
j. By deleting the period at the end of the first sentence of Section 6.3 of
the Letter Agreement and by substituting in its stead the following:
"provided, however, that for each calendar quarter (or partial calendar
quarter) commencing on or about January 30, 1998, said quarterly
facility fee (payable as aforesaid) will be $6,250."
k. By deleting from Section 6.6 of the Letter Agreement the words "Xxxxxx X.
Xxxxxx, Vice President, 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000" and by substituting
in their stead the following:
"Xxxxx Xxxxx, Vice President
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000"
l. By inserting in Section 7.1 of the Letter Agreement, immediately after
the definition of "Business Day", the following definition:
'Capital Base' - At any time, the sum of (i) the consolidated Tangible
Net Worth of the Borrower and Subsidiaries then existing, plus (ii) the
principal amount of the Subordinated Debt of the Borrower then
outstanding."
m. By deleting from the definition of "Expiration Date" the words "June 1,
1998" and by substituting in their stead the following:
"April 1, 1999"
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n. By deleting from clause (x) of the definition of "Maximum Revolving
Amount", appearing in Section 7.1 of the Letter Agreement the amount
"$2,000,000" and by substituting in its stead the following:
"$5,000,000"
o. By inserting the following sentence after the first sentence in the
definition of "Qualified Receivables", appearing in Section 7.1 of the Letter
Agreement:
"Notwithstanding the foregoing, the Bank will also include in Qualified
Receivables a Receivable from Skandinaviska Enskilda Banken which meets
all the criteria set forth in the first and last sentences of this
definition, other than the location of the customer."
p. By inserting in Section 7.1 of the Letter Agreement, immediately after
the definition of "Receivables", the following definition:
"Subordinated Debt" - Any Indebtedness of the Borrower which is
expressly subordinated, pursuant to a subordination agreement in form
and substance satisfactory to the Bank, to all Indebtedness now or
hereafter owed by the Borrower to the Bank."
3. Wherever in any Financing Document, or in any certificate or opinion to
be delivered in connection therewith, reference is made to a "letter agreement"
or to the "Letter Agreement", from and after the date hereof same will be deemed
to refer to the Letter Agreement, as hereby amended.
4. Simultaneously with the execution and delivery of this Agreement, the
Borrower is executing and delivering to the Bank the 1998 Revolving Note, in
substitution for the 1997 Revolving Note. The 1998 Revolving Note is a
$5,000,000 promissory note of the Borrower, substantially in the form attached
hereto as Exhibit 1. Wherever in any of the Financing Documents or in any
certificate or opinion to be delivered in connection therewith, reference is
made to a "Revolving Note", from and after the date hereof same will be deemed
to refer to the 1998 Revolving Note.
5. In order to induce the Bank to enter into this Agreement, the Borrower
further represents and warrants as follows:
a. The execution, delivery and performance of this Agreement and the 1998
Revolving Note have been duly authorized by the Borrower by all necessary
corporate and other action, will not require the consent of any third party and
will not conflict with, violate the provisions of, or cause a default or
constitute an event which, with the passage of time or the giving of notice or
both, could cause a default
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on the part of the Borrower under its charter documents or by-laws or under any
contract, agreement, law, rule, order, ordinance, franchise, instrument or other
document, or result in the imposition of any lien or encumbrance (except in
favor of the Bank) on any property or assets of the Borrower.
b. The Borrower has duly executed and delivered each of this Agreement and
the 1998 Revolving Note.
c. Each of this Agreement and the 1998 Revolving Note is the legal, valid
and binding obligation of the Borrower, enforceable against the Borrower in
accordance with its respective terms.
d. The statements, representations and warranties made in the Letter
Agreement and/or in the AR Security Agreement continue to be correct as of the
date hereof, except as amended, updated and/or supplemented by the attached
Supplemental Disclosure Schedule.
e. Giving effect to the amendments contained in this Agreement, the
covenants and agreements of the Borrower contained in the Letter Agreement
and/or in the AR Security Agreement have been complied with on and as of the
date hereof.
f. Giving effect to the amendments contained in this Agreement, no event
which constitutes or which, with notice or lapse of time, or both, could
constitute, an Event of Default (as defined in the Letter Agreement) has
occurred and is continuing.
g. No material adverse change has occurred in the financial condition of the
Borrower from that disclosed in the financial statements of the Borrower
heretofore most recently furnished to the Bank.
6. Except as expressly affected hereby, the Letter Agreement and each of the
other Financing Documents remains in full force and effect as heretofore.
7. Nothing contained herein will be deemed to constitute a waiver or a
release of any provision of any of the Financing Documents. Nothing contained
herein will in any event be deemed to constitute an agreement to give a waiver
or release or to agree to any amendment or modification of any provision of any
of the Financing Documents on any other or future occasion.
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Executed, as an instrument under seal, as of the day and year first above
written.
FLEXIINTERNATIONAL SOFTWARE, INC.
By: /s/XXXXXX X. XXXXX
--------------------------------
Name:
Title:
Accepted and agreed:
FLEET NATIONAL BANK
By: /s/XXXXX XXXXX
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Name: Xxxxx Xxxxx
Title: VP
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EXHIBIT 1
PROMISSORY NOTE
$5,000,000.00 Boston, Massachusetts
January ___, 1998
FOR VALUE RECEIVED, the undersigned FlexiInternational Software, Inc., a
Delaware corporation (the "Borrower") hereby promises to pay to the order of
FLEET NATIONAL BANK (the "Bank") the principal amount of Five Million and 00/100
($5,000,000.00) Dollars or such portion thereof as may have been advanced by the
Bank or may hereafter be advanced by the Bank pursuant to ss.1.2 of that certain
letter agreement dated April 30, 1997 between the Bank and the Borrower, as
amended (as so amended, the "Letter Agreement") and remains outstanding from
time to time hereunder ("Principal"), with interest, at the rate hereinafter set
forth, on the daily balance of all unpaid Principal, from the date hereof until
payment in full of all Principal and interest hereunder.
Interest on all unpaid Principal shall be due and payable monthly in
arrears, on the first day of each month, commencing on the first such date after
the advance of any Principal and continuing on the first day of each month
thereafter and on the date of payment of this note in full, at a fluctuating
rate per annum (computed on the basis of a year of three hundred sixty (360)
days for the actual number of days elapsed) which shall at all times be equal to
the Prime Rate as in effect from time to time (but in no event in excess of the
maximum rate permitted by then applicable law). A change in the aforesaid rate
of interest shall become effective on the same day on which any change in the
Prime Rate is effective. Overdue Principal and, to the extent permitted by law,
overdue interest shall bear interest at a fluctuating rate per annum which at
all times shall be equal to the sum of (i) four (4%) percent per annum plus (ii)
the per annum rate otherwise payable under this note (but in no event in excess
of the maximum rate permitted by then applicable law), compounded monthly and
payable on demand. As used herein, "Prime Rate" means the variable rate of
interest per annum designated by the Bank from time to time as its prime rate,
it being understood that such rate is merely a reference rate and does not
necessarily represent the lowest or best rate being charged to any customer. If
the entire amount of any required Principal and/or interest is not paid within
ten (10) days after the same is due, the Borrower shall pay to the Bank a late
fee equal to five percent (5%) of the required payment.
All outstanding Principal and all interest accrued thereon shall be due and
payable in full on the first to occur of: (i) an acceleration under ss.5.2 of
the Letter Agreement or (ii) April 1, 1999. The Borrower may at any time and
from time to time prepay all or any portion of said Principal, without premium
or penalty. Under
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certain circumstances set forth in the Letter Agreement, prepayments of
Principal may be required.
Payments of both Principal and interest shall be made, in immediately
available funds in lawful currency of the United States, at the office of the
Bank located at Xxx Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, or at such
other address as the Bank may from time to time designate.
The undersigned Borrower irrevocably authorizes the Bank to make or cause to
be made, on a schedule attached to this note or on the books of the Bank, at or
following the time of making any Revolving Loan (as defined in the Letter
Agreement) and of receiving any payment of Principal, an appropriate notation
reflecting such transaction and the then aggregate unpaid balance of Principal.
Failure of the Bank to make any such notation shall not, however, affect any
obligation of the Borrower hereunder or under the Letter Agreement. The unpaid
Principal amount of this note, as recorded by the Bank from time to time on such
schedule or on such books, shall constitute presumptive evidence of the
aggregate unpaid principal amount of the Revolving Loans.
The Borrower hereby (a) waives notice of and consents to any and all
advances, settlements, compromises, favors and indulgences (including, without
limitation, any extension or postponement of the time for payment), any and all
receipts, substitutions, additions, exchanges and releases of collateral, and
any and all additions, substitutions and releases of any person primarily or
secondarily liable, (b) waives presentment, demand, notice, protest and all
other demands and notices generally in connection with the delivery, acceptance,
performance, default or enforcement of or under this note, and (c) agrees to
pay, to the extent permitted by law, all costs and expenses, including, without
limitation, reasonable attorneys= fees, incurred or paid by the Bank in
enforcing this note and any collateral or security therefor, all whether or not
litigation is commenced.
This note is the Revolving Note referred to in the Letter Agreement and it
amends and restates in its entirety that certain Promissory Note dated April 30,
1997 in the original principal amount of $2,000,000 issued by Borrower to the
Bank. This note is secured by, and is entitled to the benefit of, the Security
Agreement (as defined in the Letter Agreement). This note is subject to
prepayment as set forth in the Letter Agreement. The maturity of this note may
be accelerated upon the occurrence of an Event of Default, as provided in the
Letter Agreement.
THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED ON THIS NOTE OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY RELATED DOCUMENTS OR OUT OF
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF ANY PERSON. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE
BANK TO ACCEPT THIS
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NOTE AND TO MAKE THE REVOLVING LOANS AS CONTEMPLATED IN THE LETTER AGREEMENT.
Executed, as an instrument under seal, as of the day and year first above
written.
FLEXIINTERNATIONAL SOFTWARE, INC.
By:
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Name:
Title:
Accepted and agreed:
FLEET NATIONAL BANK
By:
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Name:
Title:
