EXHIBIT 10.52
SECOND AMENDMENT TO
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (the "Second Amendment") is entered into as of January 30, 2004, by
and between SILICON VALLEY BANK, a California-chartered bank (the "Bank"), and
CRITICAL PATH, INC., a California corporation (the "Borrower"), in reliance on
the following:
RECITALS
A. On or about July 18, 2003, the Borrower and the Bank entered
into that certain Amended and Restated Loan and Security Agreement (the "Loan
Agreement") pursuant to which the Bank made available to the Borrower a
revolving credit facility (the "Senior Debt Facility") in the principal amount
of up to Fifteen Million Dollars ($15,000,000.00).
B. On or about November 18, 2003, the Borrower entered into that
certain Convertible Note Purchase and Exchange Agreement among the Borrower,
General Atlantic Partners 74, L.P. ("GAP 74"), GAP Coinvestment Partners II,
L.P. ("GAP Coinvestment"), GapStar, LLC ("GapStar") and GAPCO GmbH & Co. KG
("GAPCO" and, together with GAP 74, GAP Coinvestment and GapStar, the
"Investors"), and the other entities listed on the signature pages thereto
(collectively with the notes and other documents executed and delivered by the
Borrower in connection therewith, as amended in accordance with the terms of the
Subordination Agreement defined below, the "First Junior Debt Documents"),
pursuant to which the Borrower issued to such Investors convertible notes in the
aggregate principal amount of Ten Million Dollars ($10,000,000) (the "First
Junior Debt") and granted a security interest to the Investors in certain of the
Collateral on November 26, 2003.
C. The Bank consented to the Borrower's entering into the First
Junior Debt Documents and performing its obligations thereunder pursuant to the
terms of that certain First Amendment to Amended and Restated Loan and Security
Agreement dated as of November 26, 2003 (the "Amendment"). The Amendment
provided, in part, that the Investors would enter into that certain
Subordination Agreement with the Bank dated as of November 26, 2003 (the "First
Subordination Agreement") to evidence the terms by which the First Junior Debt
is subordinated to the Senior Debt Facility. The Loan Agreement as amended by
the Amendment, along with all other documents entered into by the parties in
connection with the Loan Agreement and the Amendment, are hereinafter referred
to as the "Senior Loan Documents," and each capitalized term used in this Second
Amendment shall have the meaning accorded to it in the Senior Loan Documents
unless it is otherwise defined herein.
D. On or about January 16, 2004, the Borrower entered into that
certain Convertible Note Purchase Agreement dated as of January 16, 2004, by and
among the Borrower as issuer, on the one hand, and Permal U.S. Opportunities
Limited, Zaxis Equity Neutral, L.P., Zaxis Partners, L.P., Zaxis Offshore
Limited, Zaxis Institutional Partners, L.P., and Passport Master
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Fund, L.P. as creditors (collectively, the "Second Subordinated Creditors"), on
the other hand, and the Notes, the Guaranty and Security Agreement and the other
documents executed and delivered in connection therewith (collectively, the
"Second Junior Debt Documents"). The Bank consented to the Borrower's entering
into the Second Junior Debt Documents and the Borrower's granting to the Second
Subordinated Creditors a security interest in certain of the Collateral, all as
more fully set forth in the Second Junior Debt Documents, conditioned upon the
execution and delivery by the Second Subordinated Creditors of a Subordination
Agreement by and among the Bank, as senior creditor, and the Second Subordinated
Creditors, as junior creditors, in form and substance acceptable to the Bank,
and the consent of the Investors to the Borrower's entering into the Second
Junior Debt Documents.
E. The Borrower now desires to amend the Senior Loan Documents
further in order to extend the Maturity Date, and the Bank is willing to do so
upon the terms set forth herein.
AGREEMENT
NOW, THEREFORE, in reliance upon the foregoing and in consideration of
the mutual covenants set forth herein and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. Change in the Calculation of the Credit Limit.
1.1 The Credit Limit. On and after the date on which this
Second Amendment becomes effective pursuant to Section 9 hereof (the "Effective
Date"), the Credit Limit shall be an amount equal to the lesser of (i)
$5,000,000.00 or (ii) the Borrowing Base. Section 1.1 of Schedule 1 to the Loan
Agreement ("Schedule 1") is hereby amended accordingly.
1.2 Definition of the Borrowing Base. The Borrowing Base
shall hereafter be the sum of (i) 80% of Eligible Accounts, plus (ii) 100% of
unrestricted Investment Cash, plus (iii) 100 % of the face amount of all letters
of credit issued to the Bank, as beneficiary thereof, by such bank(s) and in
such form as is acceptable to the Bank in its sole discretion. The foregoing
definition hereby replaces in full the definition of Borrowing Base set forth in
Section 1.2 of Schedule 1, and said Section 1.2 is hereby amended accordingly.
1.3 Investment Cash. The term "Investment Cash" shall
mean that amount of cash deposited in the Borrower's Account No. 88602595 at SVB
Securities, an Affiliate of the Bank, and the second clause of the last sentence
of Section 1.2 of the Schedule is hereby deleted.
2. Change in the Letter of Credit Sub-Limit. On and after the
Effective Date, the Letter of Credit Sublimit shall be Three Million Dollars
($3,000,000.00). Section 1.5 of Schedule 1 is hereby amended accordingly, and
the definition of "Sublimit Loans" in said Section 1.5 is hereby deleted.
3. Change in the Interest Rate. On and after the Effective Date,
the Borrower shall pay interest on all Loans at a rate determined for each
calendar month as follows: (i) so long as the Borrower maintains at least
$10,000,000.00 on deposit with the Bank and its Affiliates at all
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times during such calendar month, the Prime Rate plus one percent per annum
(1.00% p.a.); (ii) if the Borrower maintains less than $10,000,000.00 but at
least $5,000,000.00 on deposit with the Bank and its Affiliates at all times
during such calendar month, the Prime Rate plus one and one-half percent per
annum (1.50% p.a.); and (iii) if at any time during such month the Borrower
maintains less than $5,000,000.00 on deposit with the Bank and its Affiliates,
the Prime Rate plus two percent per annum (2.00% p.a.). In no event shall the
Prime Rate be less than 4.00% per annum for purposes of the Senior Loan
Documents. Section 2 of Schedule 1 is hereby amended accordingly.
4. Fees.
4.1 The Facility Fee. Borrower will pay the Bank a
facility fee on the Effective Date in the amount of $20,000.00 (the "Facility
Fee"), which Facility Fee shall be fully-earned and non-refundable upon payment.
4.2 Other Fees. The following provisions of Section 3 of
Schedule 1 are hereby amended as follows:
a. The last sentence of Section 3.3 is hereby
amended to read in full as follows: "For purposes of calculating the Unused
Facility Fee, the Credit Limit shall be deemed to be $5,000,000.00."
b. Section 3.5 of Schedule 1 is hereby amended
to read in full as follows:
"3.5 Termination Fee. If the Agreement
is terminated at any time during the six-month period
following the Effective Date due to an Event of
Default or as a result of the Borrower's termination
under Section 6.2 of the Agreement, the Borrower
shall pay to the Bank, within two Business Days after
such termination, a termination fee (the "Termination
Fee") in an amount equal to $50,000.00."
5. Extension of the Maturity Date. The Maturity Date shall be
extended to October 31, 2004, and Section 4 of Schedule 1 is hereby amended
accordingly.
6. Change to Financial Covenants.
6.1 Consolidated Revenues Covenant. The existing Section
5.1 of Schedule 1 is hereby deleted and a new Section 5.1 is hereby added to
read in full as follows:
"5.1 Minimum Consolidated Revenues. Borrower
shall maintain minimum Consolidated Revenues on a
rolling three-month basis (the first such three-month
period being 10/1/03 - 12/31/03), measured by the
Bank each month commencing on December 31, 2003, in
the following amounts: (i) $18,500,000.00 for each
month
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through May 31, 2004; and (ii) $20,500,000.00 for
each month thereafter. For purposes of this covenant,
"Consolidated Revenues" shall mean the revenues of
the Borrower and its subsidiaries as reported to the
Bank on a consolidated basis in the Borrower's
monthly financial statements."
6.2 Minimum Cash Balance. The existing Section 5.2 of
Schedule 1 is hereby deleted and a new Section 5.2 is hereby added to read in
full as follows:
"5.2 Minimum Cash Balance. The Borrower
shall maintain at least $3,000,000.00 in deposits
with the Bank and its Affiliates at all times."
7. Reporting.
7.1 Transaction Reports. On and after the Effective Date,
transaction reports shall be required daily at all times that any Loans are
outstanding and the Borrower maintains less than $5,000,000.00 on deposit with
the Bank and its Affiliates. Otherwise, transaction reports shall be required on
a weekly basis.
7.2 Monthly Financial Reports. Clause (v) of Section 6 of
Schedule 1 is hereby amended to read in full as follows:
"(v) Monthly unaudited financial
statements, as soon as available and in any event
within 30 days after the end of each month, prepared
on a consolidating basis for the Borrower and its
subsidiaries;"
8. Reaffirmation of Obligations. The Borrower reaffirms to the
Bank that, as of the date hereof, the outstanding principal amount of all Loans
under the Senior Loan Documents (including the face amount of all Letters of
Credit outstanding under the Letter of Credit Sublimit) is Two Million Seven
Hundred One Thousand Five Hundred One and No/100 Dollars ($2,701,501.00). The
Borrower acknowledges that the Senior Loan Documents fully and accurately
reflect and constitute the valid and enforceable Obligations of the Borrower to
the Bank, and the Borrower remains fully obligated to perform all covenants
thereunder and has no defenses to or offsets against such Obligations.
9. Conditions to Effectiveness. The following conditions must be
satisfied in full, or waived in writing by the Bank, before this Second
Amendment shall be effective and the Bank shall become obligated hereunder.
9.1 Execution and Delivery of Documents. The Borrower
shall have executed and delivered to the Bank this Second Amendment, and the
Bank shall have received any and all other instruments and documents, fully
executed and in form and substance acceptable to the Bank, as are contemplated
hereby or otherwise reasonably requested by the Bank.
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9.2 Payment of Fees and Expenses. The Borrower shall have
paid to the Bank all fees due and owing under the Senior Loan Documents as
amended hereby (including but not limited to the Facility Fee), as well as a sum
sufficient to reimburse the Bank for all costs and expenses incurred by the Bank
in entering into this Second Amendment and any and all other documents and
instruments contemplated hereby or thereby (including but not limited to all
attorneys' fees and expenses.)
9.3 Representations and Warranties; No Default. The
representations and warranties of the Borrower as set forth in the Senior Loan
Documents shall be true and correct in all material respects as of the date on
which this Second Amendment becomes effective, and no Event of Default shall
have occurred and be continuing as of such date without having been cured.
10. Condition Subsequent. In the event that the Borrower fails to
obtain within 15 days after the Effective Date an acknowledgement from each of
the Investors and the Second Subordinated Creditors, in form and substance
acceptable to the Bank, that the First Subordination Agreement and the Second
Subordination Agreement remain in full force and effect subsequent to the
Effective Date, this Second Amendment shall be of no further force or effect
whatsoever and the Senior Debt Facility shall be deemed to have matured on
January 30, 2004.
11. Continued Full Force and Effect. Except to the extent
expressly amended hereby, all of the terms and provisions of the Senior Loan
Documents shall remain in full force and effect, and the lien in favor of the
Bank in the Collateral shall be and remain a fully perfected senior lien upon
all of the Collateral pursuant to the terms of the Senior Loan Documents, it
being the intent of the parties that nothing herein shall affect or impair the
Bank's rights or remedies under the Senior Loan Documents or its lien upon the
Collateral. Henceforth, the term "Loan Documents" shall be deemed to mean the
Senior Loan Documents as modified and supplemented by the terms of this Second
Amendment, and any default of the Borrower hereunder shall constitute an Event
of Default under the Senior Loan Documents.
12. General Provisions.
12.1 Choice of Law and Venue. This Second Amendment shall
be governed by and construed in accordance with the internal laws of the State
of California, without regard to principles of conflicts of law, and any action
or proceeding arising out of this Second Amendment shall be commenced in the
Superior Court of the State of California for the County of Santa Clara, or in
the District Court of the United States in the Northern District of California.
12.2 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, ON THE
ONE HAND, AND THE BANK, ON THE OTHER HAND, WAIVES ITS RIGHT TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS SECOND AMENDMENT,
THE SENIOR LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT,
TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT
FOR EACH OF THE PARTIES TO ENTER INTO THIS
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AMENDMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL AND UNDERSTANDS
THE RAMIFICATIONS THEREOF.
12.3 Entire Agreement. This Second Amendment, along with
the Loan Agreement and the other Senior Loan Documents, together constitute the
entire agreement and understanding between the parties hereto with respect to
the transactions contemplated hereunder and thereunder and supersede all prior
negotiations, understandings and agreements between the parties with respect to
such transactions.
12.4 Counterparts. This Second Amendment may be executed
and delivered in any number of counterparts, each of which shall be an original
and all of which together shall constitute one and the same agreement.
12.5 Time of the Essence. Time is of the essence in the
performance by each party of its obligations hereunder and the satisfaction of
all conditions specified herein.
IN WITNESS WHEREOF, each of the parties hereto has caused its duly
authorized representative to execute this Second Amendment as of the date first
set forth above.
BORROWER: BANK:
CRITICAL PATH, INC. SILICON VALLEY BANK,
a California corporation a California-chartered bank
By: /s/ Andrew P. Morrison By: /s/ Brian Harrison
-------------------------------- -------------------------------
Name: Andrew P. Morrison Name: Brian Harrison
Title: Vice President, Finance Title: Vice President
[Acknowledgement of Investors and Second
Subordinated Creditors Follow Immediately.]
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ACKNOWLEDGEMENT
THE UNDERSIGNED, as all of the Investors and the Second Subordinated
Creditors, hereby consent to the foregoing Second Amendment and acknowledge that
each of the First Subordination Agreement and the Second Subordination Agreement
remains in full force and effect subsequent to the Effective Date.
IN WITNESS WHEREOF, the undersigned have executed this Acknowledgment
as of the date first set forth above.
THE INVESTORS:
GAP COINVESTMENT PARTNERS II, L.P., GENERAL ATLANTIC PARTNERS, 74, L.P.,
a Delaware limited partnership a Delaware limited partnership
By: GENERAL ATLANTIC PARTNERS,
LLC, its Managing Member
By: /s/ Matthew Nimetz By: /s/ Matthew Nimetz
--------------------------------- ----------------------------
Name: Matthew Nimetz Name: Matthew Nimetz
Title: A General Partner Title: A Managing Member
GAPSTAR, LLC, a Delaware limited GAPCO GMBH & CO. KG., a German limited
liability company partnership
By: GENERAL ATLANTIC PARTNERS, By: GAPCO MANAGEMENT GMBH, its
LLC, its Sole Member General Partner
By: /s/ Matthew Nimetz By: /s/ Matthew Nimetz
--------------------------------- ----------------------------
Name: Matthew Nimetz Name: Matthew Nimetz
Title: A Managing Member Title: A Managing Director
THE SECOND SUBORDINATED
CREDITORS:
PERMAL U.S. OPPORTUNITIES LIMITED ZAXIS PARTNERS, L.P.
By: Apex Capital, LLC By: Apex Capital, LLC
Its: Authorized Investment Advisor Its: General Partner
By: /s/ Sanford J. Colen By: /s/ Sanford J. Colen
----------------------- ----------------------------
Name: Sanford J. Colen Name: Sanford J. Colen
Title: Manager and Principal Title: Manager and Principal
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THE SECOND SUBORDINATED
CREDITORS (CON'T.):
ZAXIS EQUITY NEUTRAL, L.P.
ZAXIS OFFSHORE LIMITED
By: Apex Capital, LLC By: Apex Capital
Its: General Partner Its: General Partner
By: /s/ Sanford J. Colen By: /s/ Sanford J. Colen
----------------------- ---------------------
Name: Sanford J. Colen Name: Sanford J. Colen
Title: Manager and Principal Title: Manager and Principal
ZAXIS INSTITUTIONAL PARTNERS, L.P. PASSPORT MASTER FUND, L.P.
By: Apex Capital By: /s/ John Burbank
Its: General Partner -----------------
Name: John Burbank
Title: Managing Partner
By: /s/ Sanford J. Colen
---------------------
Name: Sanford J. Colen
Title: Manager and Principal
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