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Exhibit 10.21
March 25, 1996
Concord Communications, Inc.
Jack Blaeser, CEO
33 Boston Post Road West
Marlboro, MA 01752
Dear Jack:
We are pleased to inform you that Silicon Valley Bank, a California-chartered
bank ("Lender") 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, Massachusetts 02181 doing
business under the name "Silicon Valley East," has approved an equipment line of
credit in the amount of One Million and 00/100 Dollars ($1,000,000.00) (the
"Equipment Line") for use by Concord Communications, Inc., (the "Borrower")
subject to the following terms and to the Lender's periodic review.
The Equipment Line shall not become effective unless and until an executed copy
of this letter together with all necessary accompanying documentation as well as
the facility fee described below has been returned to the Lender, which must
take place within 30 days from the date of this letter.
Borrowings under the Equipment Line will be permitted through March 25, 1997
(the "Draw Period"). Borrower shall pay regular monthly payments of all accrued
interest due as of each payment date, beginning April 25, 1996 and all
subsequent interest payments will be due on the same day of each month
thereafter. The Equipment Line shall convert to a term loan payable in
thirty-six (36) even payments of principal plus interest beginning March 25,
1997, and all subsequent payments of principal plus interest will be due on the
same day of each month thereafter. The final payment, due March 25, 2000, shall
be for all outstanding principal plus all accrued interest not yet paid.
Borrowings under the Equipment Line shall be secured by a first security
interest in the Borrower's accounts receivable, inventory, machinery, equipment,
general intangibles all other assets, all monies, and all other property in
Lender's possession which Lender may use to pay Borrower's obligations.
At any time from the date hereof through the end of the Draw Period, Borrower
may request advances (each an "Advance" and collectively the "Advances") from
Lender in an aggregate amount not to exceed the principal amount of the Note. To
evidence the Advances, Borrower shall deliver to Lender, at the time of each
advance request, an invoice for the equipment to be purchased. The Advances
shall be used for purchases of equipment only and shall not exceed ninety
percent (90%) of the invoice amount approved from time to time by Lender,
excluding taxes, shipping and installation expenses. Software may, however,
comprise up to $300,000.00 of the Advances.
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Borrowings under the Equipment Line shall bear interest at a rate of two
percentage point (2.000%) over Lender's Prime Rate. Prime Rate means the rate
from time to time announced and made effective by Lender as its Prime Rate.
Borrower's interest rate shall change each time the Prime Rate changes. Interest
will be charged monthly in arrears and shall be calculated on a 360-day year.
Lender shall be authorized to debit Borrower's principal account or any other
account maintained by Borrower with Lender for any principal, interest or fees
associated with Borrower's Equipment Line with or without notice to Borrower.
Borrower shall pay to Lender a facility fee in the amount of Five Thousand and
00/100 Dollars ($5,000.00) for the Equipment Line, as well as all out-of-pocket
expenses incurred by Lender in connection with the establishment of the
Equipment Line, which must be paid at the time the documents are returned to
Lender.
Borrowings under the Equipment Line shall be secured by a security interest in
all of Borrower's assets pursuant to a Commercial Security Agreement of even
date and perfected pursuant to a UCC Financing Statement.
Any advances hereunder or renewal hereof will be made only if in the opinion of
the Lender there exists no default under any loan documentation executed by you
with the Lender. A default is as defined in the accompanying Promissory Note of
even date.
A. REQUIREMENTS.
1. AFFIRMATIVE COVENANTS. So long as the Equipment Line remains
outstanding, Borrower agrees to maintain the following
covenants:
a. To provide the Lender with duplicate unaudited
monthly financial statements, together with a
Compliance Certificate, prepared in accordance with
generally accepted accounting principals and
duplicate audited annual (consolidated and
consolidating) financial statements certified by
public accountants with an unqualified opinion, to be
received 25 and 90 days, respectively after the close
of the period. Notwithstanding the foregoing,
Borrower shall deliver its audited annual financial
statements for the fiscal year ended 1995 on or
before April 30, 1996.
b. LIQUIDITY - (Tested Quarterly) Maintain minimum
unrestricted cash plus eighty percent (80%) of
eligible accounts receivable under 90 days from date
of invoice, of $2,300,000.00.
C. PROFITABILITY - (Tested Quarterly) Borrower shall
achieve profitability on a quarterly basis.
Notwithstanding the foregoing, Borrower may incur
quarterly losses, provided such losses shall not to
exceed $1,300,000.00 for quarter ending March 31,
1996, decreasing to $1,200,000.00 for the quarter
ending June 30, 1996, further decreasing to
$900,000.00 for the quarter ending September 30,
1996, and further decreasing to $100,000.00 for the
quarter ending December 31, 1996. In addition, a
maximum loss of $2,500,000.00 shall be allowed for
the fiscal year ending December 31, 1996.
d. TANGIBLE NET WORTH - (Tested Quarterly) Maintain a
minimum Tangible Net Worth (TNW) of $2,000,000.00.
TNW is defined as Stockholders' Equity plus
Subordinated Debt (debt which is formally
subordinated to the Lender) less intangibles
(including but not limited to Goodwill, Capitalized
Software and Excess Purchase Costs).
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e. TOTAL LIABILITIES/TANGIBLE NET WORTH - (Tested
Quarterly) Maintain a ratio of Total Liabilities
divided by TNW not to exceed 1.00 to 1.00, increasing
to 1.25 to 1.00 beginning with the month ending April
30, 1996, and thereafter.
f. File all tax returns and to pay all taxes due.
g. Reimburse the Lender for any reasonable expenses
incurred by the Lender to enforce the terms of this
obligation.
h. Maintain adequate fire and liability insurance
satisfactory to the Lender, a copy of which shall be
forwarded to the Lender.
2. NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that
while this Agreement is in effect, Borrower shall not, without the
prior written consent of Lender.
a. Participate in any merger or consolidation or to pay
any dividends.
b. Dispose of any material assets other than in the
ordinary course of business.
c. Be in default of any other loan agreement with any
other bank.
d. File for protection under the Bankruptcy Code.
e. Directly or indirectly pledge, grant, create or
permit to exist any security interest, lien or other
encumbrance upon any of Borrower's assets except in
favor of the Lender. Without the Lender's prior
written consent, which will not be unreasonably
withheld.
f. Invest in any securities other than U.S. Treasury
securities, commercial paper and money market
instruments acceptable to the Lender, without the
Lender's prior written consent which will not be
unreasonably withheld.
g. Incur indebtedness for borrowed money, except for
either a) indebtedness to Silicon Valley Bank or
b)indebtedness incurred for the purchase or lease of
equipment.
If the Lender waives any rights under this Agreement, it will not affect any
future action the Lender may wish to take. This Agreement shall be binding upon
any of the Borrower's successors in interest. The laws of the Commonwealth of
Massachusetts shall apply to this Agreement. 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 LETTER AGREEMENT; PROVIDED,
HOWEVER, THAT IF FOR ANY REASON LENDER IS PROHIBITED FROM AVAILING ITSELF OF
THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS, THEN VENUE SHALL LIE IN SANTA
CLARA COUNTY, CALIFORNIA. (INITIAL HERE [/s/ JB]) LENDER AND BORROWER HEREBY
WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
BROUGHT BY EITHER LENDER OR BORROWER AGAINST THE OTHER.
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It is our understanding that the Borrower will consider the Silicon Valley Bank
to be one of its banks. Among other things, the Borrower agrees to maintain a
reasonable portion of its excess funds in Silicon Valley Bank.
This Agreement shall become effective only when it shall have been executed by
the Borrower and the Lender (provided, however, in no event shall this Agreement
become effective until signed by an officer of the Lender in California).
We are delighted to expand our relationship with Concord Communications, Inc.
and look forward to many successful years of working together.
Sincerely,
SILICON VALLEY BANK, doing
business as SILICON VALLEY EAST
By: /s/
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Name:
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Title:
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SILICON VALLEY BANK
By: /s/
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Name:
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Title:
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(Signed at Santa Clara County, CA)
Agreed and Accepted this 25th day of March, 1996.
CONCORD COMMUNICATIONS, INC.
By: /s/ John A. Blaeser
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Name: John A. Blaeser
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Title: President
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LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of November 14,
1996, by and between Concord Communications, Inc. ("Borrower") whose address is
33 Boston Post Road West, Suite 400, Marlboro, MA 01752 and Silicon Valley
Bank, a California-chartered bank ("Lender"), 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 02181 doing business under the name "Silicon Valley East".
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which
may be owing by Borrower to Lender, Borrower is indebted to Lender pursuant to,
among other documents, a Promissory Note, dated March 25, 1996 in the original
principal amount of One Million and 00/100 Dollars ($1,000,000.00), which may be
amended from time to time (the "Note). The Note, together with other promissory
notes from Borrower to Lender, is governed by the terms of a Letter Agreement,
dated March 25, 1996, between Borrower and Lender, as such agreement may be
amended from time to time (the "Loan Agreement"). 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 Lender shall be referred to
as the "Indebtedness."
2. DESCRIPTION OF COLLATERAL: Repayment of the Indebtedness is secured by
a Commercial Security Agreement, dated March 25, 1996 (the "Security
Agreement").
Hereinafter, the above-described security documents, together with all other
documents securing payment of the Indebtedness shall be referred to as 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.
A. MODIFICATION(S) TO LOAN AGREEMENT.
1. Lender hereby waives Borrower's existing default
under the Loan Agreement by virtue of Borrower's
failure to comply with the Tangible Net Worth, the
Total Liabilities/Tangible Net Worth and the
Profitability covenants as of period ended June 30,
1996. Lender's waiver of Borrower's compliance of
these covenants shall apply only to the foregoing
period. Accordingly, for the quarter ended September
30, 1996, Borrower shall be in compliance with these
covenants, as modified herein.
Lender's agreement to waive the above-described
default (1) in no way shall be deemed an agreement by
the Lender to waive Borrower's compliance with the
above-described covenants as of all other dates and
(2) shall not limit or impair the Lender's right to
demand strict performance of these covenants as of
all other dates and (3) shall not limit or impair the
Lender's right to demand strict performance of all
other covenants as of any date.
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2. Paragraphs "c", "d" and "e" under the sub-heading
"AFFIRMATIVE COVENANTS" are hereby amended, in their
entirety, to read as follows:
c. PROFITABILITY - (Tested Quarterly) Borrower shall
achieve profitability on a quarterly basis.
Notwithstanding the foregoing, Borrower may incur
quarterly losses, provided such losses shall not
exceed $900,000.00 for quarter ended September 30,
1996 and decreasing to $500,000.00 for quarter ending
December 31, 1996. In addition, a maximum loss of
$4,000,000.00 shall be allowed for the fiscal year
ending December 31, 1996.
d. TANGIBLE NET WORTH - (Tested Quarterly) Maintain a
minimum Tangible Net Worth (TNW) of $500,000.00,
beginning as of the quarter ended September 30, 1996.
TNW is defined as Stockholders' Equity plus
Subordinated Debt (debt which is formally
subordinated to the Lender) less intangibles
(including but not limited to Goodwill, Capitalized
Software and Excess Purchase Costs).
e. TOTAL LIABILITIES/TANGIBLE NET WORTH - (Tested
Quarterly) Maintain a ratio of Total Liabilities
divided by TNW not to exceed 7.00 to 1.00, beginning
as of the quarter ended September 30, 1996.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
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, Lender 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.
Lender's agreement to modifications to the existing Indebtedness pursuant to
this Loan Modification Agreement in no way shall obligate Lender 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 Lender and Borrower to retain as liable parties all makers and
endorsers of Existing Loan Documents, unless the party is expressly released by
Lender in writing. No maker, endorser, or guarantor will be released by virtue
of this Loan Modification Agreement. The terms of this Paragraph apply not only
to this Loan Modification Agreement, but also to all subsequent loan
modification agreements.
7 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 Lender cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa Clara County, California.
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8. COUNTERSIGNATURE. This Loan Modification Agreement shall become
effective only when it shall have been executed by Borrower and Lender
(provided, however, in no event shall this Loan Modification Agreement become
effective until signed by an officer of Lender in California).
This Loan Modification Agreement is executed as of the date first
written above.
BORROWER:
CONCORD COMMUNICATIONS, INC.
By: /s/ Mary Campopiano
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Name: Mary Campopiano
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Title: Controller
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LENDER:
SILICON VALLEY BANK, doing business as
SILICON VALLEY EAST
By: /s/ Pamela J. Lowe
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Name: Pamela J. Lowe
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Title: Vice President
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SILICON VALLEY BANK
By: /s/ Christina Ware
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Name: Christina Ware
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Title: Vice President
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(Signed at Santa Clara County, CA)
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