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EXHIBIT 10.1
AMENDMENT NUMBER ONE
TO EXTENSION AND MODIFICATION AGREEMENT
THIS AMENDMENT NUMBER ONE TO THE EXTENSION AND MODIFICATION AGREEMENT
(this "Amendment") is entered into as of August 3, 2001, but effective as of
July 13, 2001, by and among SUNRISE TECHNOLOGY INTERNATIONAL, INC. ("Borrower"),
XXXXX X. XXXXXX, an individual ("Guarantor"), and SILICON VALLEY BANK ("Bank"),
and is based on the following facts:
RECITALS
A. Borrower and Bank previously entered into that certain Loan and
Security Agreement, dated June 29, 2000, as amended by that certain Loan
Modification Agreement, dated September 20, 2000 and by the Extension and
Modification Agreement dated June 22, 2001 (the "Loan Agreement"). Under the
Loan Agreement, Bank made certain loans and advances to Borrower.
B. In order to secure the present and future Obligations (as that term
is defined in the Loan Agreement), Borrower granted to Bank a security interest
in certain "Collateral," as that term is defined in the Loan Agreement.
C. In order to induce Bank to enter into the Loan Agreement, Guarantor
executed and delivered to Bank that certain Unconditional Guaranty, dated June
29, 2000, (the "Guaranty"), guaranteeing all of Borrower's Obligations, up to a
maximum of $10,000,000, plus interest, costs, and expenses (the "Guaranty").
D. To secure the Guaranty, Guarantor executed that certain Third Party
Pledge and Security Agreement, dated as of June 29, 2000, relating to Account
Number H10-0000000, maintained by Guarantor at Chase H&Q (the "Pledge
Agreement").
E. Guarantor and Bank also entered into that certain Subordination
Agreement, dated as of June 29, 2000 (the "Subordination Agreement"), pursuant
to which Guarantor subordinated all present and future indebtedness of Borrower
owing to Guarantor to the repayment of all Obligations owing to Bank.
F. In view of the fact that the Obligations were maturing on June 26,
2001, Borrower and Guarantor requested that Bank enter into an extension
agreement extending the maturity date of the Obligations to August 26, 2001.
G. Bank agreed to extend the maturity date of the Obligations to August
26, 2001, pursuant to the terms of that certain Extension and Modification
Agreement, dated June 22, 2001, among Borrower, Guarantor and Bank (the
"Extension and Modification Agreement").
H. Pursuant to the terms of the Extension and Modification Agreement,
Borrower was obligated to either obtain additional financing of $1,500,000 by no
later than June 26, 2001, or to pledge to Bank an additional 2,000,000 shares of
Borrower's common stock by not later
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than June 27, 2001. In addition, Guarantor was obligated to cause certain
investment accounts at Xxxxxxx Xxxxx to be pledged to Bank as additional
collateral for the Obligations.
I. Borrower made a prepayment of $1,200,000 on or before June 25, 2001,
but was delayed in obtaining the Additional Financing or in pledging the
2,000,000 shares of common stock to Bank, and Guarantor was delayed in pledging
to Bank investment accounts at Xxxxxxx Xxxxx and 1,161,600 shares of the common
stock of Notify Technology Corporation.
J. Borrower and Guarantor have requested that Bank accept alternative
performance pursuant to the terms of this Extension and Modification Agreement.
Bank has agreed to the request of Borrower and Guarantor, subject to the terms
of this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals (which are
hereby incorporated into and shall be deemed part of this Amendment) and of the
covenants and mutual agreements contained in this Amendment, each of Borrower,
Guarantor and Bank agrees as follows:
SECTION 1. Amendments. Borrower, Guarantor and Bank hereby agree that
the Extension and Modification Agreement shall be amended as follows:
(A) Section 4 of the Extension and Modification Agreement shall be
deleted in its entirety and the following shall be substituted therefor:
"4. Voluntary and Mandatory Payments. Borrower shall be entitled
to voluntarily prepay in full or in part the Obligations at any time.
Borrower is obligated to make the following prepayments to reduce the
outstanding principal amount of the Obligations: (i) on or before June
25, 2001 a mandatory prepayment of $1,200,000; (ii) on or before July
11, 2001, a mandatory prepayment of $600,000; and (iii) an amount equal
to 70% of any additional funds (net of finder's fees) received by
Borrower as a result of equity investments, debt, or other sources of
funding obtained by Borrower; (iv) an amount equal to 100% of any
Accounts not collected which were 90 days or more past due their
original invoice date as of June 20, 2001 (collectively, the "Aged
Accounts"), except for Aged Accounts where the account debtor is the
University of California-San Francisco."
(B) Section 6 of the Extension and Modification Agreement shall be
deleted in its entirety and the following shall be substituted therefor:
"6. Additional Collateral; Payments; Equity. In order to secure
all Obligations, Borrower hereby grants to Bank a security interest in
all of its present and future deposit accounts (the "Deposit Accounts").
Borrower shall execute and deliver to Bank by no later than August 3,
2001, a pledge, in form and substance satisfactory to Bank, of 2,000,000
shares of Borrower's common stock. Borrower shall make available to Bank
the 2,000,000 shares by no later than August 15, 2001. Upon receipt by
Bank of at least $300,000 pursuant to
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Section 4(iii), as well as all amounts due under Sections 4(iv) hereof,
Bank shall terminate its security interest in said 2,000,000 shares of
Borrower's common stock."
(C) Section 8.4 of the Extension and Modification Agreement shall be
deleted in its entirety and the following shall be substituted therefor:
"8.4 Borrower shall pay to Bank all costs, fees and expenses
incurred by Bank in connection with this Agreement, including, without
limitation, all attorneys' fees incurred by Bank in connection with the
preparation of this Agreement and any related agreements, provided,
however, that Borrower will only be required to pay 50% of any expenses
in excess of $20,000."
(D) Subsection 9.1 of the Extension Agreement is amended to provide
that Borrower's only obligation under that section is to cooperate with Bank in
obtaining a Deposit Account Control Agreement satisfactory to Bank. Bank
acknowledges that each of the conditions subsequent contained in subsections 9.2
through 9.3 have been satisfied.
SECTION 2. Waiver; Modification Fee. Borrower acknowledges making
payment to Bank on July 11, 2001, of a modification fee (the "Modification Fee")
of $100,000 as consideration for Bank's agreement to accept alternative
performance of certain obligations of Borrower and Guarantor, as set forth in
this Amendment. Borrower and Guarantor acknowledge that if they fail to perform
any of their obligations under this Amendment or if they default in the payment
or performance of any other their obligations under the Extension and
Modification Agreement, as amended hereby, then Bank shall be entitled to
immediately declare an event of default under the Loan Agreement, the Extension
and Modification Agreement, the Guaranty and all collateral documents.
SECTION 3. Miscellaneous. Except as specifically amended herein, all
other terms and provisions of the Extension and Modification Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, Borrower, Guarantor and Bank have caused this
Amendment to be duly executed as of the date first above written.
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BORROWER:
SUNRISE TECHNOLOGY INTERNATIONAL, INC.
By:
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Name:
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Title:
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GUARANTOR:
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XXXXX X. XXXXXX
BANK:
SILICON VALLEY BANK
By:
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Name:
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Title:
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SIGNATURE PAGE TO AMENDMENT TO EXTENSION AND MODIFICATION AGREEMENT
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