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[LOGO] BANK OF AMERICA AMENDMENT TO DOCUMENTS
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AMENDMENT NO. 2 TO BUSINESS LOAN AGREEMENT
This Amendment No. 2 (the "Amendment") dated as of December 31, 1997, is
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between Bank of America NT & SA (the "Bank") and Claremont Technology Group,
Inc. (the "Borrower").
RECITALS
A. The Bank and the Borrower entered into a certain Business Loan
Agreement dated as of August 21, 1997, (the "Agreement").
B. The Bank and the Borrower desire to further amend the Agreement.
AGREEMENT
1. DEFINITIONS. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. AMENDMENTS. The Agreement is hereby amended as follows:
2.1 In Subparagraph 1.1(a) of the Agreement, the amount "Five
Million Dollars ($5,000,000)" is substituted for the amount "Two
Million Dollars ($2,000,000)".
2.2 In Subparagraph 1.3(a) of the Agreement, the rate "Reference
Rate" is substituted for the rate "Reference Rate plus .25
percentage point".
2.3 In Paragraph 1.6 of the Agreement, the rate "Offshore Rate
plus 1.75 percentage points" is substituted for the rate "Offshore
Rate plus 2.0 percentage points".
2.4 In Paragraph 1.7 of the Agreement, the rate "LIBOR Rate plus
1.75 percentage points" is substituted for the rate "LIBOR
Rate plus 2.0 percentage points".
2.5 Subparagraph 5.3(a) of the Agreement is amended in its entirety
to read as follows:
(a) The Borrower will repay principal and interest in
Twenty successive monthly installments of Sixty
Thousand Six Hundred Fifty Nine and 47/100 Dollars
($60,659.47) starting September 1, 1997. On
March 31, 2000, the Borrower will repay the remaining
principal balance plus any interest then due.
2.6 A new Article 5A is hereby added to the Agreement as follows:
5A. FACILITY NO. 6: LINE OF CREDIT AMOUNT AND TERMS
5A.1 LINE OF CREDIT AMOUNT.
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(a) During the availability period described below, the
Bank will provide a line of credit to the Borrower.
The amount of the line of credit (the "Facility No. 6
Commitment") is Three Million Dollars ($3,000,000).
Each advance shall be used to purchase equipment for
use in the Borrower's business. All equipment acquired
with the proceeds of such advances shall be free and
clear of any security interests, liens, encumbrances
or rights of others except the security interests of
the Bank under any security agreements required under
this Agreement. Each request for an advance shall be
accompanied by a detailed list of the equipment to
be purchased with the proceeds of the advance,
setting forth a brief description and the purchase
price of the equipment to be purchased. The amount
of each advance shall not exceed 75% of the purchase
price of such equipment.
(b) This is a non-revolving line of credit with a term
repayment option. Any amount borrowed, even if repaid
before the end of the availability period, permanently
reduces the remaining available line of credit.
(c) The Borrower agrees not to permit the outstanding
principal balance of the line of credit to exceed the
Facility No. 6 Commitment.
5A.2 AVAILABILITY PERIOD.
The line of credit is available between the date of this
Agreement and September 1, 1998 (the "Expiration Date")
unless the Borrower is in default.
5A.3 INTEREST RATE.
(a) Unless the Borrower elects an Optional interest rate
as described below, the interest rate is the Reference
Rate plus .25 percentage points.
5A.4 REPAYMENT TERMS.
(a) The Borrower will pay interest on February 1, 1998,
and then monthly thereafter until payment in full of
any principal outstanding under this line of credit.
(b) The Borrower will repay the principal amount
outstanding on the Expiration Date in 36 successive
equal monthly installments starting October 1, 1998.
On September 1, 2001, the Borrower will repay the
remaining principal balance plus any interest then
due.
(c) The Borrower may prepay the loan in full or in part
at any time. The prepayment will be applied to the
most remote installment of principal due under this
Agreement.
5A.5. OPTIONAL INTEREST RATES. Instead of the interest
rate based on the Reference Rate, the Borrower may elect
to have all or portions of the line of credit (during the
availability period and during the term repayment period)
bear interest at the rate(s) described below during an
interest period agreed to by the Bank and the Borrower.
Each interest rate is a rate per year. Interest will be
paid on the first day of every month and on the last day of
each interest period. At the end of any interest period,
the interest rate will revert to the rate based on the
Reference Rate, unless the Borrower has designated another
optional interest rate for the portion.
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5A.6 LONG TERM RATE. The Borrower may elect to have all or
portions of the principal balance of the term loan bear
interest at the Long Term Rate, subject to the following
requirements:
(a) The interest period during which the Long Term Rate
will be in effect will be one year or more.
(b) The "Long Term Rate" means the fixed interest rate
the Bank and the Borrower agree will apply to the
portion during the applicable interest period.
(c) Each Long Term Rate portion will be for an amount not
less than One Hundred Thousand Dollars ($100,000).
(d) Any portion of the principal balance of the term loan
already bearing interest at the Long Term Rate will
not be converted to a different rate during its
interest period.
(e) The Borrower may prepay the Long Term Rate portion in
whole or in part in the minimum amount of One Hundred
Thousand Dollars ($100,000). The Borrower will give
the Bank irrevocable written notice of the Borrower's
intention to make the prepayment, specifying the date
and amount of the prepayment. The notice must be
received by the Bank at least 5 banking days in
advance of the prepayment. All prepayments of
principal on the Long Term Rate portion will be
applied on the most remote principal installment or
installments then unpaid.
(f) Each prepayment of a Long Term Rate portion, whether
voluntary, by reason of acceleration or otherwise, will
be accompanied by payment of all accrued interest on the
amount of the prepayment and the prepayment fee
described below.
(g) The prepayment fee will be the sum of fees calculated
separately for each Prepaid Installment, as follows:
(i) The Bank will first determine the amount of
interest which would have accrued each month for
the Prepaid Installment had it remained outstanding
until the applicable Original Payment Date, using
the Long Term Rate;
(ii) The Bank will then subtract from each monthly
interest amount determined in (i), above, the
amount of interest which would accrue for that
Prepaid Installment if it were reinvested from
the date of prepayment through the Original
Payment Date, using the following rate:
(A) If the Original Payment Date is more than 5 years
after the date of prepayment: the Treasury Rate
plus one-quarter of one percentage point;
(B) If the Original Payment Date is 5 years or less
after the date of prepayment: the Money Market
Rate.
(iii) If (i) minus (ii) for the Prepaid
Installment is greater than zero, the Bank
will discount the monthly differences to
the date of prepayment by the rate used in
(ii) above. The sum of the discounted
monthly differences is the prepayment fee
for that Prepaid Installment.
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(h) The following definitions will apply to the
calculation of the prepayment fee:
"Money Market" means the domestic certificate of deposit
market, the eurodollar deposit market or other appropriate
money market selected by the Bank.
"Money Market Rate" means the fixed interest rate per
annum which the Bank determines could be obtained by
reinvesting a specified Prepaid Installment in the Money
Market from the date of prepayment through the Original
Payment Date.
"Original Payment Dates" mean the dates on which principal
of the Long Term Rate portion would have been paid if there
had been no prepayment. If a portion of the principal would
have been paid later than the end of the interest period in
effect at the time of prepayment, then the Original Payment
Date for that portion will be the last day of the interest
period.
"Prepaid Installment" means the amount of the prepaid
principal of the Long Term Rate portion which would have
been paid on a single Original Payment Date.
"Treasury Rate" means the interest rate yield for U.S.
Government Treasury Securities which the Bank determines
could be obtained by reinvesting a specified Prepaid
Installment in such securities from the date of prepayment
through the Original Payment Date.
(i) The Bank may adjust the Treasury Rate and Money
Market Rate to reflect the compounding, accrual basis,
or other costs of the Long Term Rate portion. Each of
the rates is the Bank's estimate only and the Bank is
under no obligation to actually reinvest any
prepayment. The rates will be based on information
from either the TELERATE or REUTERS information
services, THE WALL STREET JOURNAL, or other information
sources the Bank deems appropriate.
5A.7 OFFSHORE RATE. Borrower may elect to have all or
portions of the principal balance of the line of credit
bear interest at the Offshore Rate plus 2.00 percentage
points.
Designation of an Offshore Rate portion is subject to the
following requirements:
(a) The interest period during which the Offshore Rate
will be in effect will be no shorter than 30 days and
no longer than one year. The last day of the interest
period will be determined by the Bank using the
practices of the offshore dollar inter-bank market.
(b) Each Offshore Rate portion will be for an amount not
less than Five Hundred Thousand Dollars ($500,000).
(c) The "Offshore Rate" means the interest rate
determined by the following formula, rounded upward to
the nearest 1/100 of one percent. (All amounts in the
calculation will be determined by the Bank as of the
first day of the interest period.)
Offshore Rate = Grand Cayman Rate
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(1.00 - Reserve Percentage)
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Where,
(i) "Grand Cayman Rate" means the interest rate
(rounded upward to the nearest 1/16th of one
percent) at which the Bank's Grand Cayman Branch,
Grand Cayman, British West Indies, would offer
U.S. dollar deposits for the applicable interest
period to other major banks in the offshore
dollar inter-bank market.
(ii) "Reserve Percentage" means the total of the
maximum reserve percentages for determining the
reserves to be maintained by member banks of the
Federal Reserve System for Eurocurrency
Liabilities, as defined in the Federal Reserve
Board Regulation D, rounded upward to the nearest
1/100 of one percent. The percentage will be
expressed as a decimal, and will include, but
not be limited to, marginal, emergency,
supplemental, special, and other reserve
percentages.
(d) The Borrower may not elect an Offshore Rate with
respect to any portion of the principal balance of the
line of credit which is scheduled to be repaid before
the last day of the applicable interest period.
(e) Any portion of the principal balance of the line of
credit already bearing interest at the Offshore Rate
will not be converted to a different rate during its
interest period.
(f) Each prepayment of an Offshore Rate portion, whether
voluntary, by reason of acceleration or otherwise,
will be accompanied by the amount of accrued interest
on the amount prepaid, and a prepayment fee equal to
the amount (if any) by which
(i) the additional interest which would have been
payable on the amount prepaid had it not been
paid until the last day of the interest period,
exceeds
(ii) the interest which would have been recoverable
by the Bank by placing the amount prepaid on
deposit in the offshore dollar market for a
period starting on the date on which it was
prepaid and ending on the last day of the
interest period for such portion.
(g) The Bank will have no obligation to accept an
election for an Offshore Rate portion if any of the
following described events has occurred and is
continuing:
(i) Dollar deposits in the principal amount, and for
periods equal to the interest period, of an
Offshore Rate portion are not available in the
offshore Dollar inter-bank market; or
(ii) the Offshore Rate does not accurately reflect
the cost of an Offshore Rate portion.
5A.81. LIBOR RATE. The Borrower may elect to have all
or portions of the principal balance of the line of credit
bear interest at the LIBOR Rate plus 2.00 percentage
points.
Designation of a LIBOR Rate portion is subject to the
following requirements:
(a) The interest period during which the LIBOR Rate will
be in effect will be 30, 60, 90, 180 or 365 days. The
last day of the interest period will be determined by
the Bank using the practices of the London inter-bank
market.
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(b) Each LIBOR Rate portion will be an amount not less
than Five Hundred Thousand Dollars ($500,000).
(c) The Borrower shall irrevocably request a LIBOR Rate
portion no later than 9:00 a.m. San Francisco time
three (3) banking days before the commencement of the
interest period.
(d) The "LIBOR Rate" means the interest rate determined
by the following formula, rounded upward to the
nearest 1/100 of one percent. (All amounts in the
calculation will be determined by the Bank as of the
first day of the interest period.)
LIBOR Rate = London Rate
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(1.00 - Reserve Percentage)
Where,
(i) "London Rate" means the interest rate (rounded
upward to the nearest 1/16th of one percent) at
which the Bank's London Branch, London, Great
Britain, would offer U.S. dollar deposits for the
applicable interest period to other major banks
in the London inter-bank market at approximately
11:00 a.m. London time two (2) banking days before
the commencement of the interest period.
(ii) "Reserve Percentage" means the total of the
maximum reserve percentages for determining the
reserves to be maintained by the member banks of
the Federal Reserve System for Eurocurrency
Liabilities, as defined in the Federal Reserve
Board Regulation D, rounded upward to the nearest
1/100 of one percent. The percentage will be
expressed as a decimal, and will include, but not
be limited to, marginal, emergency, supplemental,
special, and other reserve percentages.
(e) The Borrower may not elect a LIBOR Rate with respect
to any portion of the appreciable balance of the line
of credit which is scheduled to be repaid before the
last day of the applicable interest period.
(f) Any portion of the principal balance of the line of
credit already bearing interest at the LIBOR Rate will
not be converted to a different rate during its
interest period.
(g) Each prepayment of a LIBOR Rate portion, whether
voluntary, by reason of acceleration or otherwise,
will be accompanied by the amount of accrued interest
on the amount prepaid, and a prepayment fee equal to
the amount (if any) by which:
(i) the additional interest which would have been
payable on the amount prepaid had it not been paid
until the last day of the interest period, exceeds
(ii) the interest which would have been recoverable
by the Bank by placing the amount prepaid on
deposit in the London inter-bank market for a
period starting on the date on which it was
prepaid and ending on the last day of the interest
period for such portion.
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(h) The Bank will have no obligation to accept an
election for LIBOR Rate portion if any of the following
described events has occurred and is continuing:
(i) Dollar deposits in the principal amount, and for
periods equal to the interest period, of a LIBOR
Rate portion are not available in the London
inter-bank market; or
(ii) the LIBOR Rate does not accurately reflect the
cost of a LIBOR Rate portion.
2.6 Paragraph 6.1 of the Agreement is amended in its entirety
to read as follows:
(a) FACILITY NO. 1 UNUSED COMMITMENT FEE. The Borrower
agrees to pay a fee on any difference between the
Facility 1 Commitment and the amount of credit it
actually uses, determined by the weighted average loan
balance maintained during the specified period. The
fee will be calculated at .20% per year. This fee is
paid quarterly in arrears.
(b) FACILITY NO. 6 LOAN FEE. The Borrower agrees to pay a
Three Thousand Seven Hundred Fifty Dollar ($3,750) fee
due upon execution of this Agreement.
2.7 Paragraph 11.4 of the Agreement is amended in its entirety
to read as follows:
TANGIBLE NET WORTH. To maintain on a consolidated basis
tangible net worth equal to at least Thirty Million Dollars
($30,000,000) plus 75% of any new equity issued after
December 31, 1997.
"Tangible net worth" means the gross book value of the
Borrower's assets (excluding goodwill, patents, trademarks,
trade names, organization expense, treasury stock,
unamortized debt discount and expense, deferred research
and development costs, deferred marketing expenses, and
other like intangibles) less total liabilities, including
but not limited to accrued and deferred income taxes, and
any reserves against assets.
2.8 Paragraph 11.5 of the Agreement is amended in its
entirety to read as follows:
PROFITABILITY. Not to incur on a consolidated basis a net
loss after taxes and extraordinary items during any two
consecutive fiscal quarters, and to maintain on a
consolidated basis a positive net income after taxes and
extraordinary items as of fiscal year end.
2.9 A new Paragraph 11.5A is hereby added to the Agreement as
follows:
MAXIMUM FUNDED DEBT TO CAPITALIZATION. To maintain Maximum
Funded Debt to Capitalization of 50%.
"Funded Debt" is defined as the sum of all interest
bearing indebtedness plus capital lease obligations plus
outstanding letters of credit plus any obligations
guaranteed by the Borrower.
"Capitalization" is defined as the sum of Funded Debt plus
Consolidated Net Worth.
"Consolidated Net Worth" is defined as shareholders'
equity, as defined according to generally accepted
accounting principles.
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3. EFFECT OF AMENDMENT. Except as provided in this Amendment, all of
the terms and conditions of the Agreement shall remain in full force and
effect.
This Amendment is executed as of the date stated at the beginning of
this Amendment.
BANK OF AMERICA NT & SA CLAREMONT TECHNOLOGY GROUP, INC.
X /s/ Xxxxxx Xxxxxxxxxx X /s/ Xxxxxxx X. Xxxxxxxxx
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By: Xxxxxx Xxxxxxxxxx By: Xxxxxxx X. Xxxxxxxxx
Title: Vice President Title: Vice President
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