EXHIBIT 10.37
-------------
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement (this "Loan Modification Agreement') is entered
into as of November 15, 2002, by and between SILICON VALLEY BANK, a
California-chartered bank, with its principal place of business at 3003 Tasman
Drive, Santa Clara, California 95054 and with a loan production office located
at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton,
Massachusetts 02462, doing business under the name "Silicon Valley East"
("Bank") and DATAWATCH CORPORATION, a Delaware corporation with offices at 175
Cabot Street, Suite 503, Lowell, Massachusetts ("Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of October 30, 2001,
evidenced by, among other documents, (i) a certain Amended and Restated Loan and
Security Agreement dated as of October 30, 2001, between Borrower and Bank (as
amended from time to time, the "Loan Agreement"), and (ii) a certain
Intellectual Property Security Agreement dated as of October 30, 2001 (the "IP
Security Agreement"). Capitalized terms used but not otherwise defined herein
shall have the same meaning as in the Loan Agreement.
Hereinafter, all indebtedness and obligations owing by Borrower to Bank shall be
referred to as the "Obligations".
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement and the IP Security 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 Obligations shall be referred to as the "Existing
Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modifications to Loan Agreement.
1. Section 1 (A)(i) of the Schedule to the Loan Agreement is hereby
amended by deleting the text "$1,000,000.00 at any one time
outstanding" therefrom and inserting the text "$1,500,000.00" in lieu
thereof.
2. Section 1 (B)(i) of the Schedule to the Loan Agreement is hereby
amended by deleting the text "$500,000.00" therefrom and inserting
the text "$750,000.00" in lieu thereof.
3. Section 1 of the Schedule to the Loan Agreement is hereby amended by
adding the text "Letter of Credit/Foreign Exchange Contract/Cash
Management Services Sublimit -$ 100,000.00" at the end of the
Section.
4. Section 2 of the Schedule to the Loan Agreement is hereby amended by
deleting the text "2.00%" therefrom and inserting the text "3/4%" in
lieu thereof.
5. Section 3 of the Schedule to the Loan Agreement is hereby amended by
adding the text "($400.00 when not borrowing)" at the end of the
Collateral Handling Fee subsection.
6. Section 4 of the Schedule to the Loan Agreement is hereby amended by
deleting the text "October 1, 2002" therefrom and inserting the text
"October 29, 2003" in lieu thereof.
7. Section 5a.(i) of the Schedule to the Loan Agreement is hereby
amended by deleting the text "plus" at the end of subsection (m) and
adding the following text after subsection (m):
"(n)$1,500,000.00 at the month ending October 31, 2002;
(o)$1,500,000.00 at the month ending November 30, 2002;
(p)$2,250,000.00 at the quarter ending December 31, 2002:
(q)$1,500,000.00 at the month ending January 31, 2003;
(r)$1,500,000.00 at the month ending February 28, 2003;
(s)$2,700,000.00 at the quarter ending March 31, 2003;
(t)$2,000,000.00 at the month ending April 30, 2003:
(u)$2,000,000.00 at the month ending May 31, 2003;
(v)$2,700,000.00 at the quarter ending June 30, 2003;
(w)$2,000,000.00 at the month ending July 31, 2003;
(x)$2,000,000.00 at the month ending August 31, 2003;
(y)$2,700,000.00 at the quarter ending September 30, 2003; plus"
8. Section 5b. of the Schedule to the Loan Agreement is hereby amended
by deleting the text "$400,000.00" therefrom and inserting the text
"$500,000.00" in lieu thereof .
4. FEES. Borrower shall pay to Bank a modification fee equal to Seven Thousand
Five Hundred Dollars ($7,500.00), which fee shall be due on the date hereof and
shall be deemed fully earned as of the date hereof. The Borrower shall also
reimburse Bank for all legal fees and expenses incurred in connection with this
amendment to the Existing Loan Documents.
5. CONSENT. Bank hereby consents to the acquisition by Borrower of Auxilor, Inc.
upon such terms and conditions as have been previously disclosed to Bank in
writing and as further set forth in that certain Stock Purchase Agreement dated
October 16, 2002.
6. RATIFICATION OF INTELLECTUAL PROPERTY SECURITY AGREEMENT. Borrower hereby
ratifies, confirms and reaffirms, all and singular, the terms and conditions of
the IP Security Agreement and acknowledges, confirms and agrees that, except as
set forth in the revised Exhibits A, B, C, and D, the IP Security Agreement
contains an accurate and complete listing of all Intellectual Property
Collateral as defined in IP Security Agreement and that such IP Security
Agreement remains in full force and effect.
7. RATIFICATION OF PERFECTION CERTIFICATE. Simultaneous herewith, Borrower has
delivered to Bank a Perfection Certificate, dated of even date herewith (the
"Updated Certificate"). Borrower and Bank agree that, upon delivery of the
Updated Certificate, that certain Perfection Certificate dated as of February
26, 2001 delivered by Borrower to Bank (the "Prior Certificate") shall be of no
further force and effect, and Borrower makes no further certifications with
respect to, the disclosures and information about Borrower provided to Bank in
the Prior Certificate. Effective as of the date hereof, all references in the
Existing Loan Documents to the Perfection Certificate shall be deemed to refer
to the Updated Certificate and not to the Prior Certificate.
8. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
9. 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 Obligations.
10. NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has no
defenses against the obligations to pay any amounts under the Obligations.
11. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, 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 Obligations pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Obligations. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Obligations. It is the intention of
Bank
and Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this Loan Modification Agreement.
12. 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.
13. COUNTERSIGNATURE/EFFECTIVENESS. This Loan Modification Agreement shall
become effective only (i) when it shall have been executed by Borrower and Bank,
(ii) after the Bank's review and approval of updated tax and UCC lien search
reports., and (iii) after receipt by the Bank of confirmation and ratification
by all existing guarantors.
This Loan Modification Agreement is executed as a sealed instrument under
the laws of the Commonwealth of Massachusetts as of the date first written
above.
BORROWER:
DATAWATCH CORPORATION
By: /s/ Robert Hagger
----------------------------------
Name: Robert Hagger
--------------------------------
Title: President & CEO
-------------------------------
BANK:
SILICON VALLEY BANK, d/b/a
SILICON VALLEY EAST
By: /s/ David E. Rodriguez
----------------------------------
Name: David E. Rodriguez
--------------------------------
Title: VP
-------------------------------
738837.3
EXHIBIT"A"
COPYRIGHTS
SCHEDULE A - ISSUED COPYRIGHTS
- ------------------------------
None
SCHEDULE B PENDING COPYRIGHT APPLICATIONS
- -----------------------------------------
None
SCHEDULE C - UNREGISTERED COPYRIGHTS
- ------------------------------------
Datawatch and its affiliates regularly create original works of authorship fixed
in a tangible form that, although unregistered, are copyrighted. Because of the
large and growing number of such works, it would be impractical to schedule
them.
EXHIBIT "B"
PATENTS
None
EXHIBIT "C"
TRADEMARKS
TRADEMARK
DESCRIPTION COUNTRY SERIAL NO. REG. NO. STATUS
- ----------- ------- ---------- -------- ------
DATAWATCH US 74/553,269 1,963,783 Registered
(07/25/1994) (03/26/1996)
DATAWATCH Canada 1,013,488 566,659 Registered
(04/27/1999) (08/29/2002)
DATAWATCH EU 210,476 210,476 Registered
(04/01/1996) (04/01/1996)
Q-SUPPORT EU 210,682 210,682 Registered
(04/01/1996) (04/01/1996)
QUETZAL EU 210,831 210,831 Registered
(04/01/1996) (04/01/1996)
QUETZAL Australia 634,675 A634,675 Registered
(07/11/1994) (09/13/1995)
QUETZAL/SC US 75/580,763 2,471,994 Registered
(10/29/1998) (07/21/2001)
QUETZAL/SC Australia 821,537 821,537 Registered
(01/28/2000) (01/28/2000)
QUETZAL/SC Canada 1,045,423 Allowed
(02/03/2000)
Q-BROWSER US 75/315,418 2,255,961 Registered
(06/26/1997) (06/22/1999)
Q-BROWSER EU 547,323 547,323 Registered
(05/21/1997) (05/21/1997)
Q-BROWSER Australia 752,268 752,268 (Registered)
(01/07/1998) (01/07/1998)
Q-FLOW US 75/364,269 2,256,046 Registered
(09/29/1997) (06/22/1999)
TRADEMARK
DESCRIPTION COUNTRY SERIAL NO. REG. NO. STATUS
- ----------- ------- ---------- -------- ------
Q-FLOW EU 633,834 633,834 Registered
(09/22/1997) (09/22/1997)
Q-FLOW Canada 873,647 528,267 Registered
(03/27/1998) (05/24/2000)
Q-FLOW Australia 744,567 744,567 Registered
(09/22/1997) (11/06/1998)
VISUAL HELP US 2,593,147 Registered
DESK (07/09/02)
VORTEXML AND US 76/209,512 Published
DESIGN (02/12/2001)
VORTEXML AND Australia 873,785 873,785 Registered
DESIGN (04/26/2001) (09/02/2002)
VORTEXML AND Canada 1,100,922 Pending
DESIGN (04/24/2001)
VORTEXML AND EU 2,192,922 Published
DESIGN (04/24/2001)
EXHIBIT D
MASK WORKS
None