SECOND AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This Second Amendment to Loan and Security Agreement (this
"Amendment") is entered into as of September 11, 1998, by and between Silicon
Valley Bank ("Bank") and ObjectSpace, Inc. ("Borrower").
RECITALS
Borrower and Bank are parties to that certain Loan and Security
Agreement dated as of February 9, 1998, as amended by that certain First
Amendment to Loan and Security Agreement dated as of March 5, 1998 (the
"Agreement"). Borrower and Bank desire to make certain changes to the
Agreement, subject to the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. Bank waives Borrower's obligation to comply with Section 6.7 of
the Agreement for the month ending May 31, 1998 only. Such waiver does not
constitute a waiver (i) of compliance with that section as of any other date,
(ii) of any other failure by Borrower to comply with the Agreement or any
other Events of Default, now existing or hereafter arising, or (iii) Bank's
right to require compliance at all times with the terms and conditions of the
Agreement. Bank reserves all rights under the Agreement and under applicable
law.
2. Bank waives Borrower's obligation to comply with Section 6.9 of
the Agreement for the month ending May 31, 1998 only. Such waiver does not
constitute a waiver (i) of compliance with that section as of any other date,
(ii) of any other failure by Borrower to comply with the Agreement or any
other Events of Default, now existing or hereafter arising, or (iii) Bank's
right to require compliance at all times with the terms and conditions of the
Agreement. Bank reserves all rights under the Agreement and under applicable
law.
3. Each of Bank and Borrower agree and acknowledge that the
Overadvance portion of the Committed Revolving Line has matured and that all
Overadvance principal and interest thereon have been paid in full by the
Borrower and that Bank's commitment to make any Overadvance is and was
satisfied and terminated in full as of the Overadvance Maturity Date. Bank
has no existing, ongoing or continuing obligation of any kind to make any
Overadvance to Borrower.
4. Section 6.7 of the Agreement is hereby deleted in its entirety
and replaced with the following:
6.7 QUICK RATIO. Borrower shall maintain, as of the
last day of each calendar month, a ratio of Quick Assets to
Current Liabilities less deferred maintenance revenue of at
least 1.50 to 1.0.
5. Section 6.9 of the Agreement is hereby deleted in its entirety and
replaced with the following:
6.9 TANGIBLE NET WORTH. Borrower shall maintain, as
of the last day of each calendar month, a Tangible Net Worth of
not less than Three Million and No/100 Dollars ($3,000,000.00)
("Minimum Tangible Net Worth") which Minimum Tangible Net Worth
shall, automatically and without any further action by Bank or
Borrower, be increased by twenty-five percent (25%) of the amount
of equity received by Borrower in connection with any issuance of
its securities or otherwise.
6. Section 6.10(c) of the Agreement is hereby deleted in its entirety
and replaced with the following:
(c) Borrower shall (i) protect, defend and maintain the validity
and enforceability of the Trademarks, Patents, Copyrights, and
Mask Works and (ii) use commercially reasonable efforts to detect
infringements of the Trademarks, Patents, Copyrights and Mask
Works and promptly advise Bank in writing of material
infringements detected.
7. Section 7.1 of the Agreement is hereby deleted in its entirety and
replaced with the following:
7.1 DISPOSITIONS. Convey, sell, lease, transfer or
otherwise dispose of (collectively, a "Transfer"), or permit
any of its Subsidiaries to Transfer, all or any part of its
business or property, other than Transfers: (i) of inventory in
the ordinary course of business, (ii) of licenses and similar
arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business; (iii) that
constitute payment of normal and usual operating expenses in the
ordinary course of business; or (iv) of worn-out or obsolete
Equipment.
8. Unless otherwise defined herein, all capitalized terms in this
Amendment shall be as defined in the Agreement. As amended hereby, the Agreement
remains in full force and effect.
9. Borrower represents and warrants that the representations and
warranties contained in the Agreement are true and correct as of the date of
this Amendment and Borrower acknowledges that Bank is relying on the
representation and warranty of Borrower set forth in this Section 9 in entering
into this Amendment.
10. This Amendment may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one instrument.
11. As a condition to the effectiveness of this Amendment, Borrower
shall reimburse Bank for all Bank Expenses incurred in connection with this
Amendment.
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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the first date above written.
OBJECTSPACE, INC.
By: /s/ DEBORAH A. THOMAS
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Name: Deborah A. Thomas
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Title: Vice President
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SILICON VALLEY BANK
By: /s/ MICHAEL E. DRAEKEN
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Michael E. Draeken, Assistant Vice President
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