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EXHIBIT 10.38
SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement is entered into as of September
9, 1997, by and between VMARK SOFTWARE, INC. ("Borrower"), whose address is 50
Washington Street, Westborough, MA 01581, and SILICON VALLEY BANK, a
California-based 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 02181, doing
business under the name "Silicon Valley East."
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Borrower is indebted to Bank
pursuant to, among other documents, a certain Loan and Security Agreement dated
as of May 3, 1996, as amended by a Loan Modification Agreement dated as of March
26, 1997, as may be amended from time to time (the "Loan Agreement") and a
certain Amended and Restated Promissory Note dated as of May 3, 1996, as may be
amended from time to time, evidencing a Committed Revolving Line in the maximum
principal amount of Five Million Dollars ($5,000,000.00) (the "Revolving
Facility").
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness." Capitalized terms used but not otherwise defined herein
shall have the same meaning as in the Loan Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured by
the Collateral as described in the Loan Agreement.
Hereinafter, the above-described Loan Agreement, together with all other
documents securing repayment 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. MODIFICATIONS TO LOAN AGREEMENT.
(i) The Loan Agreement shall be amended by deleting the
definition of "Committed Revolving Line" appearing in
Section 1.1 on Page 2 of the Loan Agreement, and
inserting in lieu thereof the following text:
""Committed Revolving Line" means Ten
Million Dollars ($10,000,000.00)."
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(ii) The Loan Agreement shall be amended by deleting the
definition of "Eligible Foreign Accounts" appearing in
Section 1.1 on Page 3 of the Loan Agreement, and
inserting in lieu thereof the following text:
""Eligible Foreign Accounts" means
Accounts with respect to which the account
debtor does not have its principal place of
business in the United States and that are (i)
covered by credit insurance in form and amount,
and by an insurer satisfactory to Bank, less the
amount of any deductible(s) which may be or
become owing thereon; or (ii) approved by the
Bank in writing on a case-by-case basis." (iii)
The Loan Agreement shall be amended by deleting
the definition of "Revolving Maturity Date"
appearing in Section 1.1 on Page 6 of the Loan
Agreement, and inserting in lieu thereof the
following text:
""Revolving Maturity Date" means June 5,
1998."
(iv) The Loan Agreement shall be amended by inserting after
the definition of "Schedule" appearing in Section 1.1 on
Page 6 the following text:
""Secured Foreign Accounts" means
Accounts with respect to which (i) the account
debtor does not have its principal place of
business in the United States; (ii) would
otherwise be Eligible Accounts; and (iii) are
secured by a first perfected security interest
acceptable to the Bank in all respects."
(v) The Loan Agreement shall be amended by deleting in the
first paragraph of Section 2.1 on Page 7 of the Loan
Agreement the following text:
"For purposes of this Agreement, "Borrowing
Base" shall mean an amount equal to Eighty
Percent (80%) of Eligible Accounts."
And substituting in lieu thereof the following text:
"For purposes of this Agreement, "Borrowing
Base" shall mean an amount equal to the sum of:
(i) eighty percent (80%) of Eligible Accounts;
(ii) eighty percent (80%) of Eligible Foreign
Accounts; and (iii) seventy percent (70%) of
Secured Foreign Accounts."
(vi) The Loan Agreement shall be amended by deleting in its
entirety Subsection 2.6(a) on Page 11 of the Loan
Agreement.
(vii) The Loan Agreement shall be amended by deleting the last
paragraph of Section 6.3 on Page 16 of the Loan
Agreement, and inserting in lieu thereof the following
text:
"Bank shall have a right from time to
time hereafter to audit Borrower's Accounts at
Borrower's expense, provided that such audits
will be conducted no more often than annually
unless an Event of Default has occurred and is
continuing."
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(viii) The Loan Agreement shall be amended by deleting Section
6.8 on Page 16 of the Loan Agreement, and inserting in
lieu thereof the following text:
"6.8 QUICK RATIO. Beginning on June 30, 1997,
Borrower shall maintain, as of the last day of
each calendar month, or as of the last day of
each quarter if there are no Obligations
outstanding, a ratio of Quick Assets to Current
Liabilities (net of current Deferred Revenues)
of at least 1.50 to 1.00."
(ix) The Loan Agreement shall be amended by deleting Section
6.9 on Page 16 of the Loan Agreement, and inserting in
lieu thereof the following text:
"6.9 TANGIBLE NET WORTH. Borrower shall
maintain, as of the last day of each calendar
month, or as of the last day of each quarter if
there are no Obligations outstanding, a Tangible
Net Worth of not less than Twenty Million
Dollars ($20,000,000.00) as of June 30, 1997,
which amount shall be increased at the end of
each quarter thereafter by: (i) fifty percent
(50%) of cumulative net income after June 30,
1997 PLUS (ii) one hundred percent (100%) of the
cumulative proceeds of the issuances of shares
of stock or other equity financings after June
30, 1997."
(x) The Loan Agreement shall be amended by inserting after
Section 6.12 on Page 17 of the Loan Agreement the
following text:
"6.13 MONEY MARKET ACCOUNT. Borrower
shall maintain a Money Market Account at the
Bank with a minimum balance, at all times, of
$2,000,000.00."
(xi) The Loan Agreement shall be amended by deleting the
notice provision appearing in Section 10 on Page 22 of
the Loan Agreement as it pertains to the address of the
Bank's counsel, and inserting in lieu thereof the
following text:
"Riemer & Braunstein
Three Center Plaza
Boston, MA 02108
Attn: David A. Ephraim, Esquire
FAX: (617)723-6831"
4. 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 and Obligations secured thereby
includes, without limitation, the Indebtedness.
5. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.
6. NO DEFENSES OF BORROWER. Borrower agrees that it has no defenses against
the obligations to pay any amounts under the Indebtedness.
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7. 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 Second 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 Second Loan Modification Agreement in no way shall obligate Bank to make
any future modifications to the Indebtedness. Nothing in this Second 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 and
endorsers of Existing Loan Documents, unless the party is expressly released by
Bank in writing. No maker, endorser, or guarantor will be released by virtue of
this Second Loan Modification Agreement. The terms of this paragraph apply not
only to this Second Loan Modification Agreement, but also to all subsequent loan
modification agreements.
8. 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 Second 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.
9. COUNTERSIGNATURE. This Second Loan Modification Agreement shall become
effective only when it shall have been executed by Borrower and Bank (provided,
however, in no event shall this Second Loan Modification Agreement become
effective until signed by an officer of Bank in California).
This Second Loan Modification Agreement is executed as of the date first
written above.
BORROWER: BANK:
VMARK SOFTWARE, INC. SILICON VALLEY BANK, doing business as
SILICON VALLEY EAST
By: By:
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Name:Charles F. Kane Name:Andrew Tsao
Title:Chief Financial Officer Title:Vice President
SILICON VALLEY BANK
By:
---------------------------------------
Name:Michael E. Jordan
Title:Loan Officer
(signed in Santa Clara County, California)
TCP/
56120/13
241805.1
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FIRST AMENDMENT TO AMENDED AND RESTATED PROMISSORY NOTE
This First Amendment to Amended and Restated Promissory Note (the "First
Amendment") to a certain Amended and Restated Promissory Note dated as of May 3,
1996 (the "Note"), in the maximum principal amount of $5,000,000.00, made
payable by VMARK Software, Inc. (the "Borrower"), to Silicon Valley Bank, a
California-based bank ("Bank"), with its principal place of business at 3003
Tasman Drive, Santa Clara, California 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", is
made this ninth day of September, 1997, in consideration of the covenants
contained herein and the mutual benefits to be derived herefrom.
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Bank amend certain terms of
the Note, including, without limitation, to increase the maximum principal
amount and to extend the "Maturity Date", as defined in the Note; and
WHEREAS, the Bank has agreed to amend certain terms of the Note, subject
to the terms and conditions stated herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Bank and the Borrower hereby
agree as follows:
1. The Note is hereby amended by deleting the following language
appearing on page one of the Note:
"For value received, the undersigned, VMARK
SOFTWARE, INC., a Delaware corporation (the "BORROWER"),
promises to pay to SILICON VALLEY BANK (the "BANK") at
the office of the Bank located at 3003 Tasman Drive,
Santa Clara, California 95054, or to its order, the
lesser of (a) FIVE MILLION DOLLARS ($5,000,000) or (b)
the outstanding principal amount hereunder, on June 5,
1997 (the "MATURITY DATE"), together with interest on
the principal amount hereof from time to time
outstanding at a fluctuating rate per annum equal to the
Prime Rate (as defined below) until the Maturity Date,
payable monthly in arrears on the fifth day of each
calendar month occurring after the date hereof and on
the Maturity Date." and by substituting therefor the
following:
"For value received, the undersigned, VMARK
SOFTWARE, INC., a Delaware corporation (the "BORROWER"),
promises to pay to SILICON VALLEY BANK (the "BANK") at
the office of the Bank located at 3003 Tasman Drive,
Santa Clara, California 95054, or to its order, the
lesser of (a) TEN MILLION DOLLARS ($10,000,000) or (b)
the outstanding principal amount hereunder, on June 5,
1998 (the "MATURITY DATE"), together with interest on
the principal amount hereof from time to time
outstanding at a fluctuating rate per annum equal to the
Prime Rate
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(as defined below) until the Maturity Date, payable
monthly in arrears on the fifth day of each calendar
month occurring after the date hereof and on the
Maturity Date."
2. Except as provided herein, all of the terms and conditions of
the Note remain in full force and effect. Without limiting the
foregoing, nothing contained herein shall be deemed to
constitute a modification or waiver of the Bank's right to
accelerate the payment of the Note upon the occurrence of an
event of default under the Note, as amended hereby.
3. The Borrower acknowledges, confirms, and agrees that the Bank
and its representatives, including, but not limited to, its
officers, employees and any independent contractors, has
fulfilled all of its obligations under the Note and that the
amount of principal recited herein, together with accrued
interest, is due and owing as of the date of this First
Amendment. The Borrower hereby represents and warrants that it
has no defenses, off-sets, set-offs, claims, or counterclaims to
the payment of its liabilities and obligations to the Bank as
set forth in the Note, as amended hereby, with respect to any
actions, inactions or statements of fact arising or existing
prior and up to the date of this First Amendment and to the
extent that the Borrower has any defense, off-sets, claims,
set-offs, or counterclaims, the Borrower affirmatively WAIVES
any such claim. The Borrower hereby RELEASES and forever
discharges the Bank and its representatives from any and all
claims, defenses, actions, causes of action, suits,
controversies, agreements, provisions and demands in law or in
equity which the Borrower ever had, now has or may have against
the Bank or its representatives, including, but not limited to,
claims relating to and arising out of the Note, as amended
hereby, or the administration of the Note to date.
4. THE BORROWER, TO THE EXTENT OTHERWISE ENTITLED THERETO, HEREBY
IRREVOCABLY WAIVES ANY PRESENT OR FUTURE RIGHT OF THE BORROWER,
TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY INITIATED BY
THE BORROWER OR ANY GUARANTOR OF THE BORROWER'S LIABILITIES AND
OBLIGATIONS, WHICH CASE OR CONTROVERSY ARISES OUT OF, OR IS IN
RESPECT OF, ANY RELATIONSHIP BETWEEN THE BORROWER AND THE BANK.
5. 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
First Amendment; provided, however, that if for any reason the
Bank cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa Clara County,
California.
6. This First Amendment shall become effective only when it shall
have been executed by the Borrower and the Bank (provided,
however, in no event shall this First Amendment become effective
until signed by an officer of the Bank in California).
This First Amendment is executed as of the date first written above.
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BORROWER: BANK:
VMARK SOFTWARE, INC. SILICON VALLEY BANK, doing business as
SILICON VALLEY EAST
By: By:
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Name: Charles F. Kane Name: Andrew Tsao
Title: Chief Financial Officer Title: Vice President
SILICON VALLEY BANK
By:
----------------------------------------
Name: Michael E. Jordan
Title: Loan Officer
(signed in Santa Clara County,
California)
56120/13
242795.1
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