FOURTH LOAN MODIFICATION AGREEMENT
This FOURTH LOAN MODIFICATION AGREEMENT is entered into as of January
27, 1999, by and between SILICON VALLEY BANK, a California-chartered bank 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 ("Bank"), and ENDOGEN, INC., a MASSACHUSETTS corporation with its
principal place of business at 00 XXXXXXXX XXX, XXXXXX, XXXXXXXXXXXXX 00000
("Borrower").
RECITALS
Borrower has borrowed money from Bank pursuant to certain Existing Loan
Documents, as defined below. In consideration of certain financial
accommodations from Bank, and Borrower's continuing obligations under the
Existing Loan Documents, Borrower and Bank agree as follows:
AGREEMENT
1. DESCRIPTION OF EXISTING INDEBTEDNESS. Among other indebtedness which
may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a
Revolving Promissory Note dated August 28, 1996 in the maximum principal amount
of $850,000 (the "Revolving Note") a Term Promissory Note dated August 28, 1996
in the maximum principal amount of $400,000 (the "Term Note") and an Equipment
Line Promissory Note dated October 8, 1997 in the maximum principal amount of
$250,000 (the "Equipment Note"). The Revolving Note, the Term Note and the
Equipment Note are governed by the terms of a Loan and Security Agreement dated
August 28, 1996 between Borrower and Bank, as amended by Loan Modification
Agreements dated as of May 7, 1997, August 27, 1997 and August 27, 1998 between
Borrower and Bank, and as such Loan and Security Agreement may be further
amended from time to time (the "Loan Agreement").
Hereinafter, all indebtedness owing by Borrower to Bank under the
Revolving Note, the Term Note and the Loan Agreement shall be referred to as the
"Indebtedness."
2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured
pursuant to the Loan Agreement. Hereinafter, the Loan Agreement, the Revolving
Note, the Term Note and the Equipment Note, together with all other documents
securing payment of the Indebtedness, shall be referred to as the "Existing Loan
Documents."
3. DESCRIPTION OF CHANGES IN TERMS.
3.1 Modification to Profitability Covenant. Section 6.11 of the Loan
Agreement is hereby replaced in its entirety with the following:
6.11 Profitability. Borrower shall be profitable for each fiscal
quarter beginning with the fiscal quarter ending May 31, 1999,
provided, however, that Borrower shall not suffer a loss greater
than ONE HUNDRED FIFTY THOUSAND AND NO/100THS Dollars ($150,000) in
the fiscal quarter ending February 28, 1999.
3.2 Modifications to Debt Service Covenant. Section 6.12 of the Loan
Agreement is hereby replaced in its entirety with the following:
6.12 Minimum Debt Service. Borrower shall maintain, as of the last
day of the fiscal quarter ending November 30, 1998 and as of the
last day of each fiscal quarter beginning with the fiscal quarter
ending August 31, 1999, a Debt Service ratio of at least 1.50 to
1.00.
4. WAIVER OF PRIOR DEFAULT. Bank hereby waives Borrower's violation of
the Profitability Covenant, as set forth in section 6.11 of the Loan Agreement
prior to the date of this Fourth Loan Modification Agreement, for the period
ending November 30, 1998.
5. CONDITIONS PRECEDENT TO FURTHER ADVANCES. The obligation of Bank to
make further advances to Borrower under this line is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, the following:
(a) this Fourth Loan Modification Agreement duly executed by
Borrower;
(b) such other documents, and completion of such other matters, as
Bank may reasonably deem necessary or appropriate.
6. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described in this Fourth Loan
Modification Agreement.
7. NO DEFENSES OF BORROWER. Borrower agrees that as of this date, it
has no defenses against any of the obligations to pay any amounts under the
Indebtedness.
8. CONTINUING VALIDITY. Borrower understands and agrees that (i) in
modifying the Existing Loan Documents, Bank is relying upon Borrower's
representations, warranties and agreements, as set forth in the Existing Loan
Documents, (ii) except as expressly modified pursuant to this Fourth Loan
Modification Agreement (including the effects of Section 6 hereof), the Existing
Loan Documents remain unchanged and in full force and effect, (iii) Bank's
agreement to modify the Existing Loan Documents pursuant to this Fourth Loan
Modification Agreement shall in no way obligate Bank to make any future
modifications to the Existing Loan Documents, (iv) it is the intention of Bank
and Borrower to retain as liable parties all makers and endorsers of the
Existing Loan Documents, unless a party is expressly released by Bank in
writing, (v) no maker, endorser or guarantor will be released by virtue of this
Fourth Loan Modification Agreement, and (vi) the terms of this Section 8 apply
not only to this Fourth Loan Modification Agreement but also to all subsequent
loan modification agreements, if any.
9. EFFECTIVENESS. This Agreement shall become effective only when it
shall have been executed by Borrower and Bank (provided, however, in no event
shall this Agreement become effective until signed by an officer of Bank in
California).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument as of the date first set forth above.
"Borrower": ENDOGEN, INC. "Bank": SILICON VALLEY BANK, doing
business as SILICON VALLEY EAST
By: __________________________________ By: ______________________________
Xxxx X. Xxxxxxx, President Xxxxxxx X. Xxxxx, VP
SILICON VALLEY BANK
By: _______________________________
Title: ______________________________
(Signed in Santa Xxxxx County, California)
EXHIBIT D FOLLOWS
EXHIBIT D
COMPLIANCE CERTIFICATE
Borrower: Endogen, Inc. Lender: Silicon Valley Bank
00 Xxxxxxxx Xxx 0000 Xxxxxx Xxxxx
Xxxxxx, XX 00000 Xxxxx Xxxxx, XX 00000
The undersigned authorized officer of ENDOGEN, INC. hereby certifies
that in accordance with the terms and conditions of the Loan and Security
Agreement dated AUGUST 28, 1996 between Borrower and Bank, as amended (the "Loan
Agreement"), (i) Borrower is in complete compliance for the period ending
___________ of all required conditions and terms except as noted below and (ii)
all representations and warranties of Borrower stated in the Agreement are true,
accurate and complete 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 Principals (GAAP) and are consistent from one period to the
next except as explained in an accompanying letter or footnotes.
Please indicate compliance status by circling Yes/No under '"Complies" column
Reporting Covenant Required Complies
------------------ -------- --------
SEC Form 10Q Within 5 days of SEC filing Yes No
SEC Form 10K Within 5 days of SEC filing Yes No
A/R & A/P Agings Monthly within 25 days Yes No
A/R Audit Annual Yes No
Financial Covenants Required Actual Complies
------------------- -------- ------ --------
Maintain on a Quarterly Basis:
------------------------------
Minimum Quick Ratio commencing 8/31/97 1.10:1.0 __________:1.0 Yes No
Maximum Debt/TNW 0.75:1.0 __________:1.0 Yes No
Minimum Profitability commencing FQE 5/31/99 $1 $____________ Yes No
Maximum Loss - FQE 2/28/99 ($150,000) $____________ Yes No
Minimum Debt Service commencing FQE 8/31/99 1.5:1.0 __________:1.0 Yes No
Comments Regarding Exceptions:
On behalf of Borrower, the Officer further acknowledges that at any such time as
Borrower is out of compliance with any of the terms set forth in the Agreement,
including, without limitation, any of the financial covenants, Borrower cannot
receive any advances.
Sincerely,
-----------------------------------
----------------------------------- BANK USE ONLY
Signature
----------------------------------- Received by:
TITLE ___________________________
Date:
----------------------------------- _________________________________
DATE Verified:
______________________________
Date:
_________________________________
Compliance Status: Yes No
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