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Exhibit 10.24
THIRD LOAN MODIFICATION AGREEMENT
This Third Loan Modification Agreement is entered into as of November
30, 1999, by and between ALLAIRE CORPORATION, a Delaware corporation with its
principal place of business at One Alewife Center, Cambridge, Massachusetts
02140 ("Borrower") and SILICON VALLEY BANK, a California-chartered bank
("Bank"), with its principal place of business at 3003 Tasman Drive, Santa
Clara, CA 95054 and with a loan production office located at Wellesley Office
Park, 40 William Street, Suite 350, Wellesley, MA 02481, doing business under
the name "Silicon Valley East".
1. DESCRIPTION OF EXISTING INDEBTEDNESS. Among other indebtedness which
may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a
loan arrangement dated as of March 26, 1998, evidenced by, among other
documents, a certain Loan and Security Agreement dated as of March 26, 1998, as
amended by certain Loan Modification Agreements dated as of August 6, 1998 and
December 9, 1998 (as amended, the "Loan Agreement"). The Loan Agreement
established in favor of the Borrower a revolving line of credit in the maximum
principal amount of Two Million Dollars ($2,000,000.00) (the "Committed
Revolving Line"). Capitalized terms used but not otherwise defined herein shall
have the same meaning as in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness".
2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured by
the Collateral as described in the Loan Agreement (together with any other
collateral security granted to Bank, the "Security Documents").
Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Indebtedness shall be referred to as the "Existing
Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
1. MODIFICATION(S) TO LOAN AGREEMENT.
1. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Committed Revolving Line" means a credit
extension of up to Two Million Dollars
($2,000,000.00)."
and inserting in lieu thereof the following:
""Committed Revolving Line" means a credit
extension of up to Twelve Million Five
Hundred Thousand Dollars ($12,500,000.00),
less the face amount of outstanding Letters
of Credit issued pursuant to Section 2.1.2
hereof."
2. The Loan Agreement shall be amended by inserting
immediately after the definition of "ERISA" appearing
in Section 1.1 thereof the following definitions:
""Exchange Contract" has the meaning set
forth in Section 2.1.3.
"Foreign Exchange Reserve" has the meaning
set forth in Section 2.1.3."
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3. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Maturity Date" means the earlier of (i)
March 26, 1999 or (ii) the Equity Event."
and inserting in lieu thereof the following:
""Maturity Date" means November 30, 2000."
4. The Loan Agreement shall be amended by deleting the
following text appearing as the first sentence of
Section 2.1.1(a) thereof:
"Subject to and upon the terms and
conditions of this Agreement, Bank agrees to
make Advances to Borrower in an aggregate
outstanding amount not to exceed (i) the
Committed Revolving Line or the Borrowing
Base, whichever is less, minus (ii) the face
amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of
Credit)."
and inserting in lieu thereof the following:
"Subject to and upon the terms and
conditions of this Agreement, Bank agrees to
make Advances to Borrower in an aggregate
outstanding amount not to exceed (i) the
Committed Revolving Line or the Borrowing
Base, whichever is less, minus (ii) the
Foreign Exchange Reserve."
5. The Loan Agreement shall be amended by deleting the
following text appearing as paragraph (a) in Section
2.1.2 thereof entitled "Letters of Credit":
"Subject to the terms and conditions of this
Agreement, Bank agrees to issue or cause to
be issued Letters of Credit for the account
of Borrower in an aggregate outstanding face
amount not to exceed (i) the lesser of the
Committed Revolving Line or the Borrowing
Base, minus (ii) the then outstanding
principal balance of the Advances; PROVIDED
that the face amount of outstanding Letters
of Credit (including drawn but unreimbursed
Letters of Credit and any Letter of Credit
Reserve) shall not in any case exceed Eight
Hundred Thousand Dollars ($800,000.00). Each
Letter of Credit shall have an expiry date
no later the Maturity Date. All Letters of
Credit shall be, in form and substance,
acceptable to Bank in its sole discretion
and shall be subject to the terms and
conditions of Bank's form of standard
Application and Letter of Credit Agreement."
and inserting in lieu thereof the following:
"Subject to the terms and conditions of this
Agreement, Bank agrees to issue or cause to
be issued Letters of Credit for the account
of Borrower provided that the aggregate
outstanding face amount of such Letters of
Credit shall not exceed (i) the Committed
Revolving Line, minus (ii) the then
outstanding principal balance of the
Advances, Foreign Exchange Reserve, and all
other Obligations hereunder (exclusive of
undrawn Letters of Credit). Each Letter of
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Credit shall have an expiry date no later
than two hundred seventy (270) days after
the Maturity Date provided that Borrower's
Letter of Credit reimbursement obligation
shall be secured by cash on terms acceptable
to Bank at any time after the Maturity Date
if the term of this Agreement is not
extended by Bank. All Letters of Credit
shall be, in form and substance, acceptable
to Bank in its sole discretion and shall be
subject to the terms and conditions of
Bank's form of standard Application and
Letter of Credit Agreement."
6. The Loan Agreement shall be amended by inserting
immediately after Section 2.1.2 thereof the following
new section entitled "Foreign Exchange Contracts;
Foreign Exchange Settlements":
"2.1.3 FOREIGN EXCHANGE CONTRACT; FOREIGN
EXCHANGE SETTLEMENTS.
(a) Subject to the terms of this Agreement,
Borrower may enter into foreign exchange
contracts with the Bank (the "Exchange
Contracts") not to exceed an aggregate
amount of Twelve Million Five Hundred
Thousand Dollars ($12,500,000.00) (the
"Contract Limit"), pursuant to which Bank
shall sell to or purchase from Borrower
foreign currency on a spot or future basis.
Borrower shall not request any Exchange
Contracts at any time it is out of
compliance with any of the provisions of
this Agreement. All Exchange Contracts must
provide for delivery of settlement on or
before the Maturity Date. The amount
available under the Committed Revolving Line
at any time shall be reduced by the
following amounts (the "Foreign Exchange
Reserve") on any given day (the
"Determination Date"): (i) on all
outstanding Exchange Contracts on which
delivery is to be effected or settlement
allowed more than two business days after
the Determination Date, 10% of the gross
amount of the Exchange Contracts; plus (ii)
on all outstanding Exchange Contracts on
which delivery is to be effected or
settlement allowed within two business days
after the Determination Date, 100% of the
gross amount of the Exchange Contracts.
(b) Bank may, in its discretion, terminate
the Exchange Contracts at any time (a) that
an Event of Default occurs or (b) that there
is no sufficient availability under the
Committed Revolving Line and Borrower does
not have available funds in its bank account
to satisfy the Foreign Exchange Reserve. If
Bank terminates the Exchange Contracts, and
without limitation of any applicable
indemnities, Borrower agrees to reimburse
Bank for any and all fees, costs and
expenses relating thereto or arising in
connection therewith.
(c) Borrower shall not permit the total
gross amount of all Exchange Contracts on
which delivery is to be effected and
settlement allowed in any two business day
period to be more than $300,000.00 (the
"Settlement Limit") nor shall Borrower
permit the total gross amount of all
Exchange Contracts to which Borrower is a
party, outstanding at any one time, to
exceed the Contract Limit. Notwithstanding
the above, however, the amount which may be
settled in any two (2) business day period
may be increased above the
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Settlement Limit up to, but in no event to
exceed, the amount of the Contract Limit
under either of the following circumstances:
(i) if there is sufficient
availability under the Committed
Revolving Line in the amount of the
Foreign Exchange Reserve as of each
Determination Date, provided that
Bank in advance shall reserve the
full amount of the Foreign Exchange
Reserve against the Committed
Revolving Line; or
(ii) if there is insufficient
availability under the Committed
Revolving Line, as to settlements
within any two (2) business day
period, provided that Bank, in its
sole discretion, may: (A) verify
good funds overseas prior to
crediting Borrower's deposit account
with Bank (in the case of Borrower's
sale of foreign currency); or (B)
debit Borrower's deposit account
with Bank prior to delivering
foreign currency overseas (in the
case of Borrower's purchase of
foreign currency).
(d) In the case of Borrower's purchase of
foreign currency, Borrower in advance shall
instruct Bank upon settlement either to
treat the settlement amount as an advance
under the Committed Revolving Line, or to
debit Borrower's account for the amount
settled.
(e) Borrower shall execute all standard form
applications and agreements of Bank in
connection with the Exchange Contracts and,
without limiting any of the terms of such
applications and agreements, Borrower will
pay all standard fees and charges of Bank in
connection with the Exchange Contracts.
(f) Without limiting any of the other terms
of this Agreement or any such standard form
applications and agreement of Bank, Borrower
agrees to indemnify Bank and hold it
harmless, from and against any and all
claims, debts, liabilities, demands,
obligations, actions, costs and expenses
(including, without limitation, reasonable
attorneys' fees and any costs arising out of
the failure of the Borrower to fulfill its
obligations on a timely basis) which the
Bank incurs arising out of or in any way
relating to any of the Exchange Contracts or
any transactions contemplated thereby
(collectively, the "Foreign Exchange
Costs"), provided, however, in no event
shall the Borrower be responsible for
Foreign Exchange Costs to the extent (i)
caused by the Bank's gross negligence or
willful misconduct, or (ii) attributable to
Exchange Contracts entered into by the Bank
for the benefit of other parties."
7. The Loan Agreement shall be amended by deleting the
following text appearing as Section 2.2 thereof
entitled "Overadvances":
"2.2 OVERADVANCES. If, at any time or for
any reason, the amount of Obligations owed
by Borrower to Bank pursuant to Section
2.1.1 or 2.1.2 of this Agreement is greater
than the lesser of (i) the
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Committed Revolving Line or (ii) the
Borrowing Base, Borrower shall immediately
pay to Bank, in cash, the amount of such
excess."
and inserting in lieu thereof the following:
"2.2 OVERADVANCES. If, at any time or for
any reason, the amount of Obligations owed
by Borrower to Bank pursuant to Section
2.1.1 and 2.1.3 of this Agreement is
greater than: (a) the lesser of (i) the
Committed Revolving Line or (ii) the
Borrowing Base, minus (b) the Foreign
Exchange Reserve, Borrower shall
immediately pay to Bank, in cash, the
amount of such excess."
8. The Loan Agreement shall be amended by deleting the
following text appearing as Section 2.3(a) thereof
entitled "Interest Rate":
"(a) INTEREST RATE. Except as set forth in
Section 2.3(b), any Advances shall bear
interest, on the average daily balance
thereof, at a per annum rate equal to One
percentage point (1.00%) above the Prime
Rate."
and inserting in lieu thereof the following:
"(a) INTEREST RATE. Except as set forth in
Section 2.3(b), any Advances shall bear
interest, effective as of November 30,
1999, on the average daily balance thereof,
at a per annum rate equal to the Prime
Rate."
9. The Loan Agreement shall be amended by deleting
Section 6.3 in its entirety and inserting in lieu
thereof the following:
"6.3 FINANCIAL STATEMENTS, REPORTS,
CERTIFICATES. Borrower shall deliver to
Bank: (a) as soon as available, but in any
event within forty-five (45) days after the
end of each quarter, a company prepared
consolidated balance sheet and income
statement covering Borrower's consolidated
operations during such period, in a form and
certified by an officer of Borrower
reasonably acceptable to Bank; (b) as soon
as available, but in any event within one
hundred twenty (120) days after the end of
Borrower's fiscal year, audited consolidated
financial statements of Borrower prepared in
accordance with GAAP, consistently applied,
together with an unqualified opinion on such
financial statements of an independent
certified public accounting firm reasonably
acceptable to Bank; (c) promptly upon
receipt of notice thereof, a report of any
legal actions pending or threatened against
Borrower or any Subsidiary that could result
in damages or costs to Borrower or any
Subsidiary of One Hundred Thousand
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Dollars ($100,000) or more; and (d) such
budgets, sales projections, operating plans
or other financial information as Bank may
reasonably request from time to time.
Within twenty-five (25) days after
the last day of each month with respect to
which either (i) Obligations under the
Committed Revolving Line are outstanding, or
(ii) Advances were made or Letters of Credit
were issued, Borrower shall deliver to Bank
a Borrowing Base Certificate signed by a
Responsible Officer in substantially the
form of EXHIBIT C hereto, together with aged
listings of accounts receivable (by invoice
date).
Within forty-five (45) days after
the last day of each quarter, Borrower shall
deliver to Bank with the quarterly financial
statements a Compliance Certificate signed
by a Responsible Officer in substantially
the form of EXHIBIT D hereto.
Bank shall have a right from time to
time hereafter to audit Borrower's Accounts
at Borrower's expense (subject to Section
2.5(c)), provided that such audits will be
conducted no more often than every twelve
(12) months unless an Event of Default has
occurred and is continuing."
10. The Loan Agreement shall be amended by deleting
Sections 6.8 and 6.9 in their entirety and inserting
in lieu thereof the following: 1.
"6.8 ADJUSTED QUICK RATIO. Borrower shall
maintain, as of the last day of each quarter
with respect to which either (i) Obligations
under the Committed Revolving Line are
outstanding, or (ii) Advances were made or
Letters of Credit were issued, a ratio of
Quick Assets to Current Liabilities of at
least 2.0 to 1.0. For calculation purposes
of this Section 6.8, Current Liabilities
shall (i) exclude "deferred maintenance
revenue" and (ii) include all Credit
Extensions under this Loan and Security
Agreement.
11. The Loan Agreement shall be amended by deleting the
following text appearing as the second sentence of
Section 7.2 entitled "Changes in Business, Ownership,
or Management, Business
Locations":
"Borrower will not, without at least thirty
(30) days prior written notification to
Bank, issue any equity (other than in
conjunction with stock-based awards granted
under the Borrower's 1997 Stock Incentive
Plan) relocate its chief executive office or
add any new offices or business locations."
and inserting in lieu thereof the following:
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"Borrower will not, without at least thirty
(30) days prior written notification to
Bank, issue any equity which results in a
material change in ownership or management
(other than in conjunction with stock-based
awards granted under the Borrower's Stock
Incentive Plans), relocate its chief
executive office or add any new offices or
business locations."
12. The Loan Agreement shall be amended by deleting the
following text appearing in Section 7.3 thereof
entitled "Mergers or Acquisitions":
"and (iv) the aggregate purchase price for
such transaction(s) will be a maximum amount
of $1,000,000.00,"
13. The Loan Agreement shall be amended by deleting the
following text appearing as Section 7.6 thereof:
"7.6 DISTRIBUTIONS. Pay any dividends or
make any other distribution or payment on
account of or in redemption, retirement or
purchase of any capital stock (other than
distributions and payments made in
conjunction with stock-based awards granted
under the Borrower's 1997 Stock Incentive
Plan)."
and inserting in lieu thereof the following:
"7.6 DISTRIBUTIONS. Pay any dividends or
make any other distribution or payment on
account of or in redemption, retirement or
purchase of any capital stock (other than
distributions and payments made in
conjunction with stock-based awards granted
under the Borrower's Stock Incentive
Plans)."
14. The Loan Agreement shall be amended by inserting
therein the following text to appear as the last
paragraph of Section 9.1 entitled "Rights and
Remedies":
"(k) Liquidate any Exchange Contracts not
yet settled and demand that Borrower
immediately deposit cash with Bank in an
amount sufficient to cover any losses
incurred by Bank due to liquidation of the
Exchange Contracts at the then prevailing
market price."
15. The Borrower hereby ratifies, confirms and reaffirms,
all and singular, the terms and conditions of a
certain Negative Pledge Agreement dated as of March
26, 1998 between Borrower and Bank, and acknowledges,
confirms and agrees that said Negative Pledge
Agreement shall remain in full force and effect.
16. The Borrowing Base Certificate appearing as EXHIBIT C
to the Loan Agreement is hereby replaced with the
Borrowing Base Certificate attached as EXHIBIT A
hereto.
17. The Compliance Certificate appearing as EXHIBIT D to
the Loan Agreement is hereby replaced with the
Compliance Certificate attached as EXHIBIT B hereto.
4. FEE. Borrower shall pay to Bank a modification fee equal to Thirty-One
Thousand Two Hundred Fifty Dollars ($31,250.00), which fee shall be due on the
date hereof and shall be deemed fully earned as of the date hereof.
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5. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.
6. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Indebtedness.
7. 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.
8. 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 Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank's agreement to modifications to the existing Indebtedness pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Indebtedness. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Indebtedness. It is the intention of Bank
and Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this Loan Modification Agreement.
9. JURISDICTION/VENUE. 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 Bank cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa Clara County, California.
10. COUNTERSIGNATURE. This Loan Modification Agreement shall become
effective only when it shall have been executed by Borrower and Bank (provided,
however, in no event shall this Loan Modification Agreement become effective
until signed by an officer of Bank in California).
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This Loan Modification Agreement is executed as a sealed instrument
under the laws of the Commonwealth of Massachusetts as of the date first written
above.
BORROWER: BANK:
ALLAIRE CORPORATION SILICON VALLEY BANK, doing
business as SILICON VALLEY EAST
By: /s/ David A. Gerth By: /s/ Michael Tramack
----------------------------------- --------------------------------
Name: David A. Gerth Name: Michael Tramack
----------------------------------- --------------------------------
Title: CFO Title: Assistant Vice President
----------------------------------- --------------------------------
SILICON VALLEY BANK
By: /s/ Michael Jordan
--------------------------------
Name: Michael Jordan
--------------------------------
Title: AVP
--------------------------------
(signed in Santa Clara County,
California)
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EXHIBIT A
BORROWING BASE CERTIFICATE
Borrower: ALLAIRE CORPORATION Bank: Silicon Valley Bank
Commitment Amount: $12,500,000.00, less the face amount of outstanding Letters
of Credit issued pursuant to Section 2.1.2
ACCOUNTS RECEIVABLE
1) Accounts Receivable Book Value as of $
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2) Additions (please explain on reverse) $
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3) TOTAL ACCOUNTS RECEIVABLE $
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ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4) Amounts over 90 days due $
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5) Balance of 50% over 90 day accounts $
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6) Concentration Limits $
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7) Foreign Accounts $
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8) Governmental Accounts $
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9) Contra Accounts $
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10) Promotion or Demo Accounts $
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11) Intercompany/Employee Accounts $
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12) Other (please explain on reverse) $
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13) TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $
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14) Eligible Accounts (#3 minus #13) $
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15) LOAN VALUE OF ACCOUNTS (80.0% of #14) $
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BALANCES
16) Maximum Loan Amount $
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17) Total Funds Available [Lesser of #16 or #15] $
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18) Present balance owing on Line of Credit $
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19) Outstanding under Sublimits (F/E) $
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20) RESERVE POSITION (#17 minus #18 and #19) $
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The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Silicon Valley Bank.
COMMENTS: ==================================
BANK USE ONLY
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RECEIVED BY:____________________
By: _______________________
Authorized Signer DATE:________________
REVIEWED BY:____________________
COMPLIANCE STATUS: YES / NO
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EXHIBIT B
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: ALLAIRE CORPORATION
The undersigned authorized officer of ALLAIRE CORPORATION hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending _________ with all required
covenants except as noted below and (ii) all representations and warranties of
Borrower stated in the Agreement are true and correct in all material respects
as of the date hereof. Attached herewith are the required documents supporting
the above certification. The Officer further certifies that these are prepared
in accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The Officer expressly acknowledges that no
borrowings may be requested by the Borrower at any time or date of determination
that Borrower is not in compliance with any of the terms of the Agreement, and
that such compliance is determined not just at the date this certificate is
delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Financial statements & CC Quarterly 45 days Yes No
Annual (CPA Audited) FYE within 120 days (w/ CC) Yes No
Monthly BBC & A/R Agings Monthly within 25 days (when borrowing) Yes No
(by invoice date)
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain (quarterly):
Minimum Adjusted Quick Ratio 2.0:1.0 (when borrowing) ____:1.0 Yes No
Minimum Tangible Net Worth $1,5000,000 $________ Yes No
(when borrowing)
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BANK USE ONLY
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RECEIVED BY:____________________
DATE:________________
REVIEWED BY:____________________
COMPLIANCE STATUS: YES / NO
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COMMENTS REGARDING EXCEPTIONS:
Sincerely,
___________________ Date:_______________
SIGNATURE
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TITLE