LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of August 6, 1998, by
and between Allaire Corporation ("Borrower") and Silicon Valley Bank, a
California-chartered bank doing business as "Silicon Valley East" ("Bank").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may
be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among
other documents, a Loan and Security Agreement dated March 26, 1998, as may be
amended (the "Loan Agreement"). The Loan Agreement provides for, among other
things, a Committed Revolving Line in the original principal amount of Two
Million Dollars ($2,000,000.00). Capitalized terms used but not otherwise
defined herein shall have the same meanings as set forth 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 defined in the Loan Agreement. Additionally, Borrower has
agreed with Bank not to further encumber any of its intellectual property
pursuant to a Negative Pledge Agreement dated March 26, 1998.
Hereinafter, the above-described security documents, together with all
other documents securing payment of the Note (and other notes executed by
Borrower in favor of Bank) 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.
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A. Modification(s) to Loan Agreement.
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1. Notwithstanding anything to the contrary provided in Sections 6.7,
6.8 and 6.9, Bank shall not test the covenants provided therein
through the month ending October 31, 1998. Accordingly, beginning
with the month ending November 30, 1998, Bank shall resume testing
such covenants. Additionally, Bank further reserves the right to
amend such covenants in any manner as Bank may deem appropriate.
2. The following Section 6.11 is hereby incorporated into the Loan
Agreement, as follows:
6.11 Equity Event.
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Borrower shall complete an initial public offering of its common
stock or receive a minimum of $5,000,000.00 in new equity from the
sale of its stock on or before November 30, 1998.
3. Section 8.2 entitled "Covenant Default" is hereby amended to
include Section 6.11.
B. Waiver of Financial Covenant Defaults.
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1. Bank hereby waives Borrower's existing default under the Loan
Agreement by virtue of Borrower's failure to comply with the Quick
Ratio and Tangible Net Work covenants as of the months ended May
31, 1998 and June 30, 1998. Bank's waiver of Borrower's compliance
of these covenants shall apply only to the foregoing periods.
Accordingly, Borrower shall be in compliance with these covenants
beginning with the month ending November 30, 1998.
Bank's agreement to waive the above-described default (1) in no
way shall be deemed an agreement by the Bank to waive Borrower's
compliance with the above-described covenants as of all other
dates and (2) shall not limit or impair the Bank's right to demand
strict performance of these covenants as of all other dates and
(3) shall not limit or impair the Bank's right to demand strict
performance of all other covenants as of any date.
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, 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 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
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virtue of this Loan Modification Agreement. The terms of this Paragraph apply no
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 Bank cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa Clara County, California.
8. 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).
This Loan Modification Agreement is executed 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/ Pamela Aldsworth
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Name: David A. Gerth Name: Pamela Aldsworth
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Title: CFO Title: Vice President
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SILICON VALLEY BANK
By: /s/ Heidi Fetty
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Name: Heidi Fetty
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Title: Documentation Officer
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(Signed at Santa Clara County, CA)
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