Exhibit 10.35
ACCOUNTS RECEIVABLE FINANCING MODIFICATION AGREEMENT
This Accounts Receivable Financing Modification Agreement is entered
into as of March 27, 2002, by and between Giga Information Group, Inc. (the
"Borrower") and Silicon Valley Bank ("Bank").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which
may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant
to, among other documents, an Accounts Receivable Financing Agreement,
dated April 7, 2000 by and between Borrower and Bank, as may be amended
from time to time (the "Accounts Receivable Financing Agreement").
Capitalized terms used without definition herein shall have the
meanings assigned to them in the Accounts Receivable Financing
Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness" and the Accounts Receivable Financing Agreement and any and
all other documents executed by Borrower in favor of Bank shall be referred to
as the "Existing Documents."
2. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Accounts Receivable Financing Agreement:
1. The following defined terms in Section 1 are hereby amended
to read as follows:
"Advance Rate" is 80% or another percentage as Bank
establishes under Section 2.2.
"Applicable Rate" is a rate per annum equal to the "Prime
Rate" plus 1.0 percentage point.
"Facility Amount" is $5,000,000.00.
"Facility Period" is the period beginning on this date and
continuing until March 26, 2003, unless the period is
terminated sooner by the Bank with notice to Borrower.
2. Section 3.5 entitled Collateral Handling Fee is hereby
amended as follows:
On each Reconciliation Day, Borrower will pay to Bank a
collateral handling fee, equal to 0.25% per month of the
average daily Financed Receivable Balance outstanding during
the applicable Reconciliation Period. After an Event of
Default, the Collateral Handling Fee will increase to 0.750%
effective immediately before the Event of Default.
3. Section 6.2 entitled Affirmative Covenants is hereby
amended in part as follows:
Subsection (M) is hereby deleted and replaced with the
following:
(M) Borrower to maintain a minimum net income of $1.00 on a
quarterly basis, with a one time quarterly net loss of
($100,000.00) to be permitted.
Subsection (O) is hereby deleted and replaced with the
following:
(O) Borrower will maintain an Adjusted Quick Ratio of at least
1.40:1.00 on a quarterly basis, with the exception of the
quarter ending June 30, 2002 only, in which Borrower shall
maintain an Adjusted Quick Ratio of at least 1.25:1.00.
B. Waiver of Financial Covenant Defaults.
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1. Bank hereby waives Borrower's existing default under the
Loan Agreement by virtue of Borrower's failure to comply with
the Adjusted Quick Ratio and the Increase in Annual Value
covenant for the quarter ended December 31, 2001. Bank's
waiver of Borrower's compliance of these covenants shall apply
only to the foregoing period. Accordingly, for the quarter
ended March 31, 2002, Borrower shall be in compliance with
these covenants, as amended herein.
Bank's agreement to waive the above-described
defaults (1) in no way shall be deemed an agreement by the
Bank to waive Borrower's compliance with the above-described
covenants as of all other dates and (2) shall not limit or
impair the Bank's right to demand strict performance of these
covenants as of all other dates and (3) shall not limit or
impair the Bank's right to demand strict performance of all
other covenants as of any date.
3. CONSISTENT CHANGES. The Existing Documents are each hereby amended
wherever necessary to reflect the changes described above.
4. PAYMENT OF LINE FEE. Borrower shall pay Bank a fee in the amount of
Thirty Seven Thousand Five Hundred Dollars ($37,500) ("Line Fee") plus
all out-of-pocket expenses.
5. NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has
no defenses against the obligations to pay any amounts under the
Indebtedness.
6. CONTINUING VALIDITY. Borrower understands and agrees that in modifying
the existing Indebtedness, Bank is relying upon Borrower's
representations, warranties, and agreements, as set forth in the
Existing Documents. Except as expressly modified pursuant to this
Accounts Receivable Financing Modification Agreement, the terms of the
Existing Documents remain unchanged and in full force and effect.
Bank's agreement to modifications to the existing Indebtedness pursuant
to this Accounts Receivable Financing Modification Agreement in no way
shall obligate Bank to make any future modifications to the
Indebtedness. Nothing in this Accounts Receivable Financing
Modification Agreement shall constitute a satisfaction of the
Indebtedness. It is the intention of Bank and Borrower to retain as
liable parties all makers and endorsers of Existing Documents, unless
the party is expressly released by Bank in writing. No maker, endorser,
or guarantor will be released by virtue of this Accounts Receivable
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Financing Modification Agreement. The terms of this paragraph apply not
only to this Accounts Receivable Financing Modification Agreement, but
also to any subsequent Accounts Receivable Financing modification
agreements.
7. CONDITIONS. The effectiveness of this Accounts Receivable Financing
Modification Agreement is conditioned upon payment of the Line Fee.
8. COUNTERSIGNATURE. This Accounts Receivable Financing Modification
Agreement shall become effective only when executed by Borrower and
Bank.
This Accounts Receivable Financing Modification Agreement is executed as of the
date first written above.
BORROWER: BANK:
Giga Information Group, Inc. Silicon Valley Bank
By: /s/ X.X. Xxxxx By: /s/ Xxxx Xxxxx
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Name: Xxxxxxxx X. Xxxxx Name: Xxxx Xxxxx
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Title: Senior VP & CFO Title: Senior Vice President
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