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Exhibit 10(x)
LOAN DOCUMENT MODIFICATION AGREEMENT
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(No. 2; dated as of December 4, 1995)
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LOAN DOCUMENT MODIFICATION AGREEMENT dated as of December 4, 1995 by and
between LTX Corporation, a Massachusetts corporation with its principal place of
business at XXX Xxxx xx Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000 (the
"BORROWER") 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.
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Reference is hereby made to that Credit Agreement dated October 6, 1994
between the Bank and the Borrower, as previously amended as of July 20, 1995
(with the attached schedules and exhibits, the "CREDIT AGREEMENT") and the Loan
Documents referred to therein, including without limitation that certain
Promissory Note of the Borrower dated October 6, 1994 in the principal amount of
$5,000,000 (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.
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This Agreement shall become effective as of December 4, 1995 (the
"EFFECTIVE DATE"), provided that the Bank shall have received the following on
or before January 26, 1996, 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;
b. an amended and restated promissory note (working capital
line of credit) in the form enclosed herewith (the "AMENDED WORKING CAPITAL
NOTE"), duly executed by the Borrower;
c. a promissory note in the principal amount of $2,000,000
in respect of the Equipment Line Commitment in the form enclosed herewith (the
"EQUIPMENT LINE NOTE"), duly executed by the Borrower; and
d. a Security Agreement in respect of the Equipment Line
Commitment (the "SECURITY AGREEMENT"), in the form enclosed herewith, duly
executed by the Borrower; and
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e. evidence of the approval by your Board of Directors of
this Agreement the Amended Working Capital Note, the Equipment Line Note and the
Security Agreement.
By the signature of its authorized officer below, the Borrower is hereby
representing that, except as modified in SCHEDULE A attached hereto, the
representations of the Borrower 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 Borrower confirms its authorization as to the debiting of its account with
the Bank in the aggregate amount of $15,000 ($10,000 in respect of the Working
Capital Line of Credit Commitment and $5,000 in respect of the Equipment Line
Commitment) in order to pay the Bank's facility fee for the period up to and
including the extended Commitment Expiration Date. Finally, the Borrower agrees
that, as of the Effective Date, it has no defenses against its obligations to
pay any amounts outstanding under the Credit Agreement and the other Loan
Documents.
3. Description of Change in Terms.
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As of Effective Date, the Credit Agreement is modified in the following
respects:
a. Section 1.1 is hereby amended by deleting the date
"December 4, 1995" appearing in the third and fourth lines thereof and
substituting in place thereof the date "December 3, 1996."
b. Section 1.4, as previously amended by the Letter Amendment
dated as of July 20, 1995, is hereby amended by deleting the percentage
"seventy-five percent (75%)" appearing on the nineteenth line thereof in clause
(ii) and substituting in place thereof "eighty percent (80%)."
c. Section 1.5 is hereby amended by deleting the date
"December 5, 1995" appearing in the second line thereof and substituting in
place thereof the date "December 4, 1996."
d. Section 1.7 is hereby amended by deleting the amount
"$1,000,000" appearing in the first line thereof and substituting in place
thereof the amount "$5,000,000."
e. Section 1.8, as previously added by the Letter Agreement
dated as of July 20, 1995, is hereby amended by deleting the amount
"$4,000,000" appearing in the second line of subsection (a) and the third line
of subsection (c) thereof and substituting in place thereof the amount
"$5,000,000."
f. There is hereby inserted immediately following Section 1
the following new Section 1A:
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Section 1A Equipment Line of Credit Loans.
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1A.1 AMOUNT. Subject to and upon the terms and conditions set forth
below, the Bank agrees to make loans (each an "EQUIPMENT LINE OF CREDIT LOAN"
and collectively, the "EQUIPMENT LINE OF CREDIT LOANS") to the Borrower under
this Section 1A.1 from time to time and including September 30, 1996 (the
"EQUIPMENT LINE COMMITMENT EXPIRATION DATE"), unless earlier terminated pursuant
to Section 1A.6, in an aggregate amount not to exceed at any one time
outstanding $2,000,000 (the "EQUIPMENT LINE COMMITMENT"), subject to the
limitation set forth in Section 1A.4.
1A.2. EQUIPMENT NOTE. The Equipment Line of Credit Loans shall be
evidenced by and payable with interest in accordance with the note of the
Borrower in the form of attached EXHIBIT A-1, dated as of the date hereof (the
"EQUIPMENT LINE NOTE"). The Working Capital Line Note and the Equipment Line
Note are sometimes together referred to as the "BORROWER NOTES."
1A.3. REQUESTS FOR EQUIPMENT LINE LOANS. The Borrower may make
requests for Equipment Line of Credit Loans, and the Bank shall make such loans
in the same manner as provided in Section 1.3 with respect to Working Capital
Line of Credit Loans, except that together with the Notice of Borrowing, the
Borrower shall furnish to the Bank copies of all invoices for items of Eligible
Equipment and such other information as the Bank shall reasonably request.
1A.4. RESTRICTIONS ON ADVANCES. Equipment Line of Credit Loans may be
made only with respect to an item or items of Eligible Equipment specifically
identified in accordance with Section 1A.4, and the principal amount of any such
Equipment Line of Credit Loans may not exceed 100% of the invoice price of such
item or items of Eligible Equipment, including sales taxes, shipping charges,
installation charges and similar charges and expenses.
1A.5. MATURITY DATE OF EQUIPMENT LINE LOANS. All Equipment Line of
Credit Loans shall be repayable in installments in accordance with the terms of
the Equipment Line Note, provided that all Equipment Line of Credit Loans shall
mature and the total principal amount thereunder shall be prepayable on April 4,
2000 (the "EQUIPMENT LINE MATURITY DATE"), at which time all amounts advanced
under this Section 1A shall be immediately due and payable.
1A.6. TERMINATION OF COMMITMENT. The Borrower, upon (a) at least two
(2) Banking Days' prior written notice to the bank and (b) the repayment in full
of the outstanding principal balance of the Equipment Line of Credit Loans (and
accrued interest thereon) and the payment in full of any expenses or other fees
owed by the Borrower to the Bank under or pursuant to this Agreement, may elect
to permanently terminate the Equipment Line Commitment.
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g. Section 2.1(a) is hereby amended by deleting the phrase "Prime
Rate plus 1%" appearing in the fourth line thereof and substituting in place
thereof the phrase "Prime Rate."
h. Section 2.1(a) is hereby further amended by deleting the word
"last" appearing on the sixth line thereof and substituting in place thereof the
word "fourth."
i. Subparagraph(b) of Section 2.1 is hereby relettered as
"subparagraph (c)" and is further amended by inserting immediately following the
words "Line of Credit Loans" in the first line thereof the following: "or the
Equipment Line of Credit Loans (together, the "BORROWER LOANS").
j. There is hereby inserted immediately following subparagraph (a)
of Section 2.1 the following new subparagraph (b):
"(b) The Borrower agrees to pay interest on the unpaid
principal amount of each Equipment Line of Credit Loan for each day
from and including the date such Equipment Line of Credit Loan was
made to it, but excluding the date the principal on such Equipment
Line of Credit Loan is due (whether at maturity, by acceleration
of otherwise), at a fluctuating rate per annum equal to the Prime Rate
plus 1%, which interest shall change when the Prime Rate shall
change. Such interest shall be payable monthly in arrears on the
fourth day of each month commencing with the first such date hereafter
and when the principal amount of such Equipment Line of Credit Loan is
due (whether at maturity, by acceleration or otherwise)."
k. Section 3.1 is hereby deleted in its entirety and there is
hereby substituted in place thereof the following:
3.1 SECURITY INTERESTS. The Borrower agrees to grant to the
Bank a security interest in, and a lien on, all right, title and
interest of the Borrower in and to Eligible Equipment financed by the
Bank and to enter a Security Agreement in favor of the Bank in a form
reasonably satisfactory to the Bank (the "SECURITY AGREEMENT") in
order to secure payment and performance of the Borrower's obligations
to the Bank under this Agreement in respect of the Equipment Line of
Credit Loans and Equipment Line Commitment, under the Equipment Line
Note and under the other Loan Documents in respect of the Equipment
Line of Credit Loans and the Equipment Line Commitment.
l. Section 4 is hereby amended by deleting the words "Line of
Credit Loans" appearing in the third line of the initial unnumbered paragraph
thereof and substituting the words "Borrower Loans."
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m. Section 5 is hereby amended by deleting the words "Line of Credit
Loans" appearing in the fifth line of the initial unnumbered paragraph thereof
and substituting the words "Borrower Loans."
n. Section 5.5 is hereby amended by inserting at the end of the
section after the words "(as defined in the Security Agreement)," the words "and
the filing of termination statements in the appropriate UCC filing offices
listed on the Perfection Certificate with respect to the Security Agreement
between the Borrower and the Bank dated as of October 6, 1994."
o. Section 6.4, subsection(d) is hereby amended by inserting at the
end of the subsection after the words "appropriately completed" the following:
", provided, however, that the foregoing information need not be
furnished if there are no Working Capital Line of Credit Loans or
Extension of Credit under the Working Capital Line of Credit Commitment
outstanding, but shall be required as a precondition to any future
Working Capital Line of Credit Loans or Extensions of Credit under the
Working Capital Line of Credit Commitment."
p. Section 6.8 is hereby amended by inserting at the end of the
subsection after the words "as often as the Bank may reasonably request and
cause each of its Subsidiaries to do so" the following:
", provided, however, that as long as no event of default has occurred
or is continuing, the Bank will not conduct more than one such
inspection per calendar year, and in such case, only if the aggregate
outstanding borrowings and Extensions of Credit under the Working
Capital Line of Credit Commitment have exceeded 10% of the Working
Capital Line of Credit Commitment at any quarter end in the prior
twelve month fiscal period."
q. Sections 7.11 through 7.14 of the Credit Agreement are amended
in their entirety to read as follows:
"7.11 QUICK RATIO. The Borrower will not permit the Quick Ratio
at the end of any fiscal quarter, commencing with the quarter
ending January 31, 1996, to be less than 1.75 to 1.
7.12 MINIMUM PROFITABILITY. The Borrower will not permit the Net
Income at the end of any fiscal quarter, commencing with the
fiscal quarter ending January 31, 1996, to be less than
$2,500,000.
7.13 DEBT SERVICE RATIO. The Borrower will not permit the Debt
Service Ratio at the end of any fiscal quarter, commencing with
the quarter ending January 31, 1996, to be less than 1.5 to 1.
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7.14 TANGIBLE NET WORTH. The Borrower will not permit Tangible Net
Worth at the end of any fiscal quarter, commencing with the fiscal
quarter ending January 31, 1996, to be less than $145,000,000."
r. Section 9 is hereby further amended by inserting the following
additional definitions in alphabetical order:
"BORROWER LOANS" shall have the meaning specified in Section 2.1(b).
"BORROWER NOTES" shall have the meaning specified in Section 1A.2.
"COMMITMENTS" shall mean the Working Capital Line Commitment and the
Equipment Line Commitment.
"DEBT SERVICE RATIO" shall mean, for any fiscal period, the ratio of
(a) Net Income, PLUS the sum of depreciation and amortization for such
period, PLUS tax expense for such period, PLUS the sum of the aggregate
amount of interest accrued during such period on Indebtedness of the
Borrower and its Subsidiaries on a consolidated basis ("INTEREST
EXPENSE") to (b) the sum of Interest Expense and the current
portion of Long-Term Indebtedness.
"ELIGIBLE EQUIPMENT" means any items of equipment that the Borrower has
requested that the Bank finance the purchase of through an Equipment
Line of Credit Loan under this Agreement, and which, both on the date
of such request and the date of such loan, meets the following
requirements:
(a) such equipment is not (i) a motor vehicle, airplane or
similar mode of transportation, (ii) a fixture or leasehold
improvement, or (iii) intended by the Borrower to become a fixture or
leasehold improvement;
(b) such equipment has been purchased by the Borrower from the
manufacturer or a distributor thereof, has not been put in service by
any Person prior to the date of the invoice furnished to the Borrower
by such manufacturer or distributor, and has an invoice date of not
earlier than September 30, 1995 or later than September 30, 1996;
(c) such equipment is owned solely by the Borrower and is not
subject to any leasehold interest, assignment, claim, lien or security
interest, other than a security interest in favor of the Bank pursuant
to the Security Agreement; and
(d) such equipment is in the possession of the Borrower and is
located in the State Massachusetts or another jurisdiction of which the
Borrower has given the Bank written notice.
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"Equipment Line Commitment" shall have the meaning set forth in
Section 1A.1.
"Equipment Line Expiration Date" shall have the meaning
specified in Section 1A.1.
"Equipment Line of Credit Loans" shall have the meaning set
forth in Section 1A.1.
"Equipment Line Maturity Date" shall have the meaning specified
in Section 1A.5.
"Equipment Line Note" shall have the meaning set forth in
Section 1A.1.
s. The definitions of "Line of Credit Loans," and "Line of Credit
Commitment," are hereby changed to "Working Capital Line of Credit Loans" and
"Working Capital Line of Credit Commitment," respectively, and all references
to such terms throughout the Credit Agreement and the other Loan Documents are
changed accordingly.
t. All references to the term "Note" in Section 1 of the Credit
Agreement are changed to the term "Working Capital Line of Credit Note." All
other references to the term "Note" in the Credit Agreement and the other Loan
Documents shall (unless it is clear from the context that the reference is
solely to the Working Capital Line of Credit Note) shall be changed to refer to
"the Borrower Notes."
u. The Credit Agreement and the other Loan Documents are hereby
amended wherever necessary or appropriate to reflect the foregoing changes.
4. The Bank agrees with the Borrower that from and after the effective
Date, the Security Agreement between the Borrower and the Bank dated as of
October 6, 1994 shall be of no further force and effect. The Bank agrees to
execute and cause to be filed with the appropriate filing authorities the UCC
termination statements and other appropriate documentation to confirm
termination of the security interests granted by the foregoing document.
5. Continuing Validity
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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, except the Security Agreement between the Borrower and the Bank
dated as of October 6, 1994, is in full force and effect and is hereby
ratified and confirmed. The amendments set forth above
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(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.
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a. This Agreement may be signed in one or more
counterparts each of which taken together shall constitute one and the same
document.
b. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
c. THE BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE 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 Borrower agrees 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, special counsel for the Bank
with respect thereto.
[This space is intentionally left blank.]
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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.
Sincerely,
SILICON VALLEY EAST, a Division
of Silicon Valley Bank
By: /s/ XXXX XXXXXXXXX
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Name: Xxxx Xxxxxxxxx
Title: Vice President
SILICON VALLEY BANK
By:
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Name:
Title:
(signed in Santa Clara, CA)
LTX CORPORATION
By: /s/ XXXX X. XXXXXX
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Name: Xxxx X. Xxxxxx
Title: Chief Financial Officer
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Schedule A
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- No modifications -
