Exhibit 10.21
FIRST LOAN MODIFICATION AGREEMENT
This First Loan Modification Agreement is entered into as of
August 16, 1998, by and between BLUESTONE SOFTWARE, INC., a Delaware
corporation with its principal place of business at 1000 Briggs Road, Mount
Laurel, New Jersey 08054-4101 ("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 December 8, 1997, evidenced by, among other documents, a
certain Loan and Security Agreement dated as of December 8, 1997 (the "Loan
Agreement"). The Loan Agreement established in favor of the Borrower: (i) a
revolving line of credit in the maximum principal amount of One Million Seven
Hundred Fifty Thousand Dollars ($1,750,000.00) (the "Revolving Line"), and (ii)
an equipment line of credit in the maximum principal amount of Five Hundred
Thousand Dollars ($500,000.00) (the "Equipment 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 AND GUARANTIES. 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.
A. MODIFICATION(S) TO LOAN AGREEMENT.
1. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Committed Equipment Line" means a credit
extension of up to Five Hundred Thousand
Dollars ($500,000.00)."
and inserting in lieu thereof the following:
""Committed Equipment Line" means a credit
extension of up to Two Million Dollars
($2,000,000.00). Notwithstanding the
foregoing, the Committed Equipment Line
shall be reduced by the outstanding balance
of Equipment Advances made to Borrower
pursuant to Section 2.1.2 hereof."
2. The Loan Agreement shall be amended by inserting the
following new definition after the definition of
"Credit Extension" appearing in Section 1.1 thereof:
""Current Liabilities" means, as of any
applicable date, all amounts that should, in
accordance with GAAP, be included as current
liabilities on the consolidated balance
sheet of Borrower and its Subsidiaries, as
at such
date, plus, to the extent not already
included therein, all outstanding Credit
Extensions made under this Agreement,
including all Indebtedness that is payable
upon demand or within one year from the date
of determination thereof unless such
Indebtedness is renewable or extendable at
the option of Borrower or any Subsidiary to
a date more than one year from the date of
determination, but excluding Subordinated
Debt, and excluding deferred revenues."
3. The Loan Agreement shall be amended by deleting the
following definition appearing in Section 1.1
thereof:
""Maturity Date" means the later of the
Equipment Maturity Date or the Revolving
Maturity Date."
and inserting in lieu thereof the following:
""Maturity Date" means the later of the
Second Equipment Maturity Date or the
Revolving Maturity Date."
4. The Loan Agreement shall be amended by inserting the
following new definition after the definition of
"Prime Rate" appearing in Section 1.1 thereof:
""Quick Assets" means, as of any applicable
date, the consolidated cash, cash
equivalents, accounts receivable and
investments with maturities of fewer than 90
days of Borrower determined in accordance
with GAAP."
5. No further Equipment Advances shall be made under
Section 2.1.2.
6. The Loan Agreement shall be amended by inserting
after Section 2.1.2 thereof entitled "Equipment
Advances" the following new section:
"2.1.2.A. 1998-1999 EQUIPMENT ADVANCES.
(a) Subject to and upon the terms and conditions of
this Agreement, at any time through March 31, 1999
(the "Second Equipment Availability End Date"), Bank
agrees to make Equipment Advances under this Section
2.1.2.A to Borrower in an aggregate outstanding
amount not to exceed the Committed Equipment Line. To
evidence the Equipment Advance or Equipment Advances,
Borrower shall deliver to Bank, at the time of each
Equipment Advance request, an invoice for the
equipment to be purchased. The Equipment Advances
shall be used only to purchase Equipment or refinance
Equipment purchased after January 1, 1998 and shall
not exceed One Hundred Percent (100%) of the invoice
amount of such equipment approved from time to time
by Bank, excluding taxes, shipping, warranty charges,
freight discounts and installation expense. Software
may, however, constitute up to twenty-five percent
(25.0%) of aggregate Equipment Advances under this
Section 2.1.2.A.
(b) Interest shall accrue from the date of each
Equipment Advance made pursuant to this Section
2.1.2.A at a per annum rate equal to One and One
Quarter percentage points (1.25%) above the Prime
Rate and shall be payable monthly on
-2-
the Payment Date of each month through the month in
which the Second Equipment Availability End Date
falls. Amounts currently amortizing under Section
2.1.2 above shall continue to be repaid as provided
in Section 2.1.2 above, and shall be treated as
existing Equipment Advances under the Committed
Equipment Line. Any Equipment Advances made pursuant
to this Section 2.1.2.A that are outstanding on the
Second Equipment Availability End Date will be
payable in thirty-six (36) equal monthly installments
of principal, plus all accrued interest, beginning on
the Payment Date of each month following the Second
Equipment Availability End Date and ending on March
31, 2002 (the "Second Equipment Maturity Date").
Equipment Advances, once repaid, my not be
reborrowed.
(c) When Borrower desires to obtain an Equipment
Advance, Borrower shall notify Bank (which notice
shall be irrevocable) by facsimile transmission to be
received no later than 3:00 p.m. Pacific time one (1)
Business Day before the day on which the Equipment
Advance is to be made. Such notice shall be
substantially in the form of Exhibit B. The notice
shall be signed by a Responsible Officer or its
designee and include a copy of the invoice for the
Equipment to be financed."
7. The Loan Agreement shall be amended by deleting the
following text appearing as paragraph (a) of Section
2.3 entitled "Interest Rates, Payments, and
Calculations":
"(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
and One Half percentage point (1.50%) 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 made pursuant
to Section 2.1.1 shall bear interest, on the
average daily balance thereof, at a per
annum rate equal to Three Quarters of One
percentage point (0.75%) above the Prime
Rate."
8. The Loan Agreement shall be amended by deleting the
following text appearing in the first paragraph of
Section 6.3 entitled "Financial Statements, Reports,
Certificates":
"(b) as soon as available, but in any event
within ninety (90) 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;"
and inserting in lieu thereof the following:
"(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
-3-
of an independent certified public
accounting firm reasonably acceptable to
Bank;"
9. The Loan Agreement shall be amended by deleting the
following text appearing as Sections 6.8 and 6.9
thereof:
"6.8 TANGIBLE NET WORTH. Borrower shall
maintain, as of the last day of each
calendar month, a Tangible Net Worth of not
less than One Million Dollars
($1,000,000.00); provided however, the
Borrower shall evidence a Tangible Net Worth
of not less than One Million Five Hundred
Thousand Dollars ($1,500,000.00) for the
third quarter of fiscal year ending 1997.
"6.9 LIQUID ASSETS. Borrower shall maintain,
as of the last day of each calendar month,
Liquid Assets of not less than One Million
Dollars ($1,000,000.00)."
and inserting in lieu thereof the following:
""6.8 TANGIBLE NET WORTH. Borrower shall
maintain, as of the last day of each
calendar month, a Tangible Net Worth of not
less than Three Million Dollars
($3,000,000.00). For purposes hereof,
Tangible Net Worth shall be defined as
Borrower's equity plus Subordinated Debt
less intangible assets.
6.9 ADJUSTED QUICK RATIO. Borrower shall
maintain, as of the last day of each
calendar month, a ratio of Quick Assets to
Current Liabilities of at least 1.25 to
1.0."
10. The Compliance Certificate appearing as EXHIBIT D to
the Loan Agreement is hereby replaced with the
Compliance Certificate attached as EXHIBIT A hereto.
4. FEE. Borrower shall pay to Bank a modification fee equal to Three Thousand
Seven Hundred Fifty Dollars ($3,750.00), which fee shall be due on the date
hereof and which shall be deemed fully earned as of the date hereof. The
Borrower shall also reimburse Lender for legal fees and expenses incurred in
connection with this amendment to the Loan Documents.
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.
-4-
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 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).
This Loan Modification Agreement is executed as of the date first
written above.
BORROWER: BANK:
BLUESTONE SOFTWARE, INC. SILICON VALLEY BANK, doing business as
SILICON VALLEY EAST
By:/s/ E. J. Ballezzi By:/s/ Pamela Aldsworth
------------------------------- -------------------------------
Name: E. J. Ballezzi Name: Pamela Aldsworth
----------------------------- -----------------------------
Title: Chief Financial Officer Title: Vice President
---------------------------- ----------------------------
SILICON VALLEY BANK
By:/s/ Michelle D. Giannini
------------------------------
Name: Michelle D. Giannini
----------------------------
Title: Assistant Vice President
---------------------------
(signed in Santa Clara County,
California)
-5-